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Press release from CNW Group

Canada Bread Reports Results for the Second Quarter 2013

Wednesday, July 31, 2013

Canada Bread Reports Results for the Second Quarter 2013

08:00 EDT Wednesday, July 31, 2013

TSX: CBY

TORONTO, July 31, 2013 /CNW/ - Canada Bread Company, Limited (TSX: CBY) today reported its financial results for the second quarter ended June 30, 2013.  Second quarter highlights include:

  • Adjusted Operating Earnings(1)(2) for the second quarter of $36.5 million was consistent with last year. Year-to-date Adjusted Operating Earnings increased 20.7% to $53.6 million
  • Net earnings(1) for the quarter was $24.5 million compared to $26.1 million last year. For the first six months, net earnings increased to $26.8 million from $26.3 million last year.
  • Adjusted Earnings Per Share(1)(3) for the quarter was $1.07, up from $1.06 in the second quarter of 2012. For the first six months, Adjusted Earnings per Share was $1.51, up from $1.25 last year.

"In the quarter we realized returns on prior strategic investments to lower costs and improve productivity in our manufacturing network," said Richard Lan, President and CEO. "This includes our new bakery in Hamilton, Ontario and our expanded facilities in the U.K. We expect continued operational improvements, along with profitable contributions from many exciting new product launches that are planned throughout the balance of the year."

(1)     2012 figures have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits ("IAS 19"), as disclosed in Note 19 of the Company's unaudited condensed consolidated interim financial statements
(2)     Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results.  It is defined as earnings before income taxes adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release.
(3)     Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate on-going financial operating results.  It is defined as basic earnings per share attributable to common shareholders, and is adjusted for all items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred. Please refer to the section entitled Reconciliation of Non-IFRS Financial Measures at the end of this news release.

Financial Overview

Canada Bread Company, Limited ("the Company") sales for the second quarter decreased 1.8% to $397.6 million compared to $404.9 million last year, or 0.7% after adjusting for discontinued bread categories in the U.K. and currency translation on sales in the U.S. and U.K. Lower sales volumes in the fresh bread business were partially offset by volume growth in the U.K. as well as higher pricing implemented during the first quarter in the fresh and North American frozen bakery businesses.

Sales for the first six months decreased 1.1% to $766.3 million compared to $775.1 million last year, but were consistent with last year after adjusting for discontinued bread categories in the U.K. and currency translation due to similar factors noted above.

Adjusted Operating Earnings for the second quarter of $36.5 million was consistent with last year as a decline in volumes, primarily in the fresh bread business, was offset by operational efficiencies and lower SG&A expenses. For the first six months, Adjusted Operating Earnings increased 20.7% to $53.6 million compared to $44.4 million last year. Operational improvements and lower SG&A expenses more than offset lower volumes, mainly in the fresh bread business. Price increases earlier in the year also contributed to earnings growth, but this was largely offset by higher raw material and other inflationary costs.

Net earnings in the quarter was $24.5 million ($0.97 basic earnings per share) compared to $26.1 million ($1.03 basic earnings per share) last year and included $1.0 million of pre-tax restructuring and other related costs (2012: $1.2 million). Year-to-date net earnings was $26.8 million ($1.05 basic earnings per share) compared to $26.3 million ($1.03 basic earnings per share) last year and included $11.5 million of pre-tax restructuring and other related costs (2012: $7.1 million).

Adjusted Earnings per Share was $1.07 for the second quarter (2012: $1.06) and $1.51 for the first six months of 2013 (2012: $1.25).

Several items are excluded from the discussions of underlying earnings performance as they are not representative of on-going operational activities. Refer to the section entitled Non-IFRS Financial Measures at the end of this News Release for a description and reconciliation of all non-IFRS financial measures.

Business Segment Review

The following table summarizes sales by business segment:

                 
($ thousands) Second Quarter Year-to-Date
(Unaudited)    2013     2012    2013   2012
Fresh Bakery $   271,169 $ 279,164 $ 513,834 $ 527,347
Frozen Bakery     126,461   125,697   252,501   247,758
Sales $   397,630 $ 404,861 $ 766,335 $ 775,105

 

The following table summarized Adjusted Operating Earnings by business segment:

                 
($ thousands) Second Quarter Year-to-Date
(Unaudited)   2013   2012(1)   2013   2012(1)
Fresh Bakery $ 28,568 $ 29,828 $ 41,828 $ 36,417
Frozen Bakery   7,891   6,696   11,732   7,963
Adjusted Operating Earnings $ 36,459 $ 36,524 $ 53,560 $ 44,380
 (1) 2012 Adjusted Operating Earnings have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits ("IAS 19"), as disclosed in Note 19 of the Company's unaudited condensed consolidated interim financial statements

Fresh Bakery

Includes fresh bakery products, including breads, rolls, bagels, sweet goods, and fresh pasta and sauces sold to retail, foodservice and convenience channels. It includes national brands such as Dempster's® and Olivieri® and many leading regional brands.

Fresh Bakery sales for the second quarter decreased 2.9% to $271.2 million compared to $279.2 million last year, as lower volumes were only partly offset by the benefit of an earlier price increase in the fresh bread business. During the first six months of 2013, sales decreased 2.6% to $513.8 million compared to $527.3 million last year due to similar factors.

Earnings declined $1.3 million or 4.2% in the second quarter as higher net corporate costs allocated to the segment more than offset higher earnings at the fresh bread and fresh pasta businesses.

Earnings in the fresh bread business increased as a result of reduced costs and improved operating efficiencies. Also contributing to earnings were lower SG&A expenses. These benefits were partly offset by a decline in volume. During the quarter, the Company closed a third bakery in the Toronto area, eliminating any future duplicative overhead costs associated with consolidating production at its bakery in Hamilton, Ontario. Results in the fresh pasta business increased mainly due to lower SG&A costs.

For the first six months, Adjusted Operating Earnings increased 14.9% to $41.8 million compared to $36.4 million last year. Operational improvements and lower SG&A expenses more than offset lower volumes, mainly attributable to the fresh bread business.

Frozen Bakery

Includes frozen bakery products, including frozen par-baked bakery products, specialty and artisan breads, and bagels sold to retail, foodservice and convenience channels in North America and the U.K. It includes national brands such as Tenderflake® and New York Bakery CoTM.

Frozen Bakery sales for the second quarter were $126.5 million compared to $125.7 million in 2012. After adjusting for discontinued bread categories in the U.K. and currency translation on sales in the U.S. and U.K., sales increased 4.1%. Stronger volumes in the U.K. and the benefit of earlier price increases in the North American business were partly offset by a decline in North American frozen bakery volumes. Year-to-date Frozen Bakery sales increased 1.9% to $252.5 million compared to $247.8 million last year. After adjusting for discontinued bread categories in the U.K. and currency translation on sales in the U.S. and U.K., sales increased 5.1% due to similar factors.

Second quarter Adjusted Operating Earnings increased 17.8% to $7.9 million from $6.7 million last year. Performance in the North American frozen bakery business was consistent as earlier price increases offset inflationary costs and lower volumes. Earnings in the U.K. bakery business improved primarily due to higher volumes in both bagels and croissants. This business continues to benefit from network consolidation, investment in scale facilities and focus on its core categories.

For the first six months of 2013, Adjusted Operating Earnings increased 47.3% to 11.7 million compared to $8.0 million last year, due to similar factors noted above.

Other Matters

On July 30, 2013, the Company declared a dividend of $0.50 per share payable on October 1, 2013 to shareholders of record at the close of business on September 6, 2013. Unless indicated otherwise by the Company in writing on or before the time the dividend is paid, this dividend will be considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".

Reconciliation of Non-IFRS Financial Measures

The Company uses the following non-IFRS measures: Adjusted Operating Earnings and Adjusted Earnings per Share.  Management believes that these non-IFRS measures provide useful information to both Management and investors in measuring the financial performance of the Company for the reasons outlined below.  These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.

Adjusted Operating Earnings

Adjusted Operating Earnings, a non-IFRS measure, is used by Management to evaluate financial operating results.  It is defined as earnings before income taxes adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in the earnings in future periods when the underlying asset is sold or transferred.  The table below provides a reconciliation of net earnings as reported under IFRS in the unaudited consolidated interim statements of earnings to Adjusted Operating Earnings for the three and six months ended, as indicated below. Management believes that this basis is the most appropriate on which to evaluate operating results, as they are representative of the on-going operations of the Company.

           
($ thousands) Three months ended June 30, 2013
(Unaudited) Fresh
Bakery
Frozen
Bakery
Consolidated
Net earnings         $ 24,529
Income taxes           8,717
Earnings before income taxes         $ 33,246
Interest expense           291
Earnings before interest and income taxes $ 27,269 $ 6,268 $ 33,537
Other expense   986   893   1,879
Restructuring and other related costs   313   730   1,043
Adjusted Operating Earnings $ 28,568 $ 7,891 $ 36,459

 

       
($ thousands) Three months ended June 30, 2012(1)
(Unaudited) Fresh
Bakery
Frozen
Bakery
Consolidated
Net earnings         $ 26,095
Income taxes           10,182
Earnings before income taxes         $ 36,277
Interest expense           391
Earnings before interest and income taxes $ 29,972 $ 6,696 $ 36,668
Other income   (1,349)   -   (1,349)
Restructuring and other related costs   1,205   -   1,205
Adjusted Operating Earnings $ 29,828 $ 6,696 $ 36,524
(1) 2012 Net earnings and Adjusted Operating Earnings have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits ("IAS 19"), as disclosed in Note 19 of the Company's unaudited condensed consolidated interim financial statements 

       
($ thousands) Six months ended June 30, 2013
(Unaudited) Fresh
Bakery
Frozen
Bakery
Consolidated
Net earnings         $ 26,810
Income taxes           10,216
Earnings before income taxes         $ 37,026
Interest expense           688
Earnings before interest and income taxes $ 31,416 $ 6,298 $ 37,714
Other (income) expense   (312)   4,704   4,392
Restructuring and other related costs   10,724   730   11,454
Adjusted Operating Earnings $ 41,828 $ 11,732 $ 53,560

 

       
($ thousands) Six months ended June 30, 2012(1)
(Unaudited) Fresh
Bakery
Frozen
Bakery
Consolidated
Net earnings         $ 26,254
Income taxes           11,580
Earnings before income taxes         $ 37,834
Interest expense           828
Earnings before interest and income taxes $ 34,705 $ 3,957 $ 38,662
Other (income) expense   (1,580)   209   (1,371)
Restructuring and other related costs   3,292   3,797   7,089
Adjusted Operating Earnings $ 36,417 $ 7,963 $ 44,380
(1) 2012 Net earnings and Adjusted Operating Earnings have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits ("IAS 19"), as disclosed in Note 19 of the Company's unaudited condensed consolidated interim financial statements 

Adjusted Earnings per Share

Adjusted Earnings per Share, a non-IFRS measure, is used by Management to evaluate on-going financial operating results.  It is defined as basic earnings per share attributable to common shareholders, and is adjusted for items that are not considered representative of on-going operational activities of the business, and items where the economic impact of the transactions will be reflected in earnings in future periods when the underlying asset is sold or transferred.  The table below provides a reconciliation of basic earnings per share as reported under IFRS in the unaudited consolidated interim statements of earnings to Adjusted Earnings per Share for the three and six months ended, as indicated below.  Management believes this basis is the most appropriate on which to evaluate financial results as they are representative of the on-going operations of the Company.

($ per share) Three months ended
June 30,
  Six months ended
June 30,
(Unaudited) 2013 2012(1)   2013 2012(1)
                   
Basic earnings per share $ 0.97 $ 1.03    $ 1.05  $ 1.03
Items not considered representative of on-going operations(2)   0.07   -     0.12   -
Restructuring and other related costs (3)   0.03   0.04     0.33   0.21
Adjusted Earnings per Share (4) $ 1.07 $ 1.06    $ 1.51  $ 1.25
(1) 2012 Basic and Adjusted Earnings per Share have been restated for the impact of adopting the revised International Accounting Standard 19 Employee Benefits ("IAS 19"), as disclosed in Note 19 of the Company's unaudited condensed consolidated interim financial statements
(2) Includes gains/losses associated with non-operational activities, including gains/losses related to restructuring activities, business combinations, discontinued operations, and assets held for sale, all net of tax.
(3) Includes per share impact of restructuring and other related costs, net of tax.
(4) May not add due to rounding

Forward-Looking Statements

This document contains, and the Company's oral and written public communications often contain, "forward-looking information" within the meaning of applicable securities laws. These statements are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates and beliefs and assumptions made by Management. Such statements include, but are not limited to, statements with respect to objectives and goals, as well as statements with respect to beliefs, plans, objectives, expectations, anticipations, estimates and intentions. Specific forward-looking information in this document includes, but is not limited to, statements concerning expectations regarding the use of derivatives, futures and options, expectations regarding the timing and amount of capital investments, expectations regarding the timing and cost of old facility closures and new facility openings, the expected use of cash balances, source of funds for ongoing business requirements including renewal of existing securitization facilities, capital investments and debt repayment, expectations regarding LEED® certification, expectations regarding the impact of new accounting standards, expectations regarding sufficiency of the allowance for uncollectible accounts and expectations regarding pension plan performance and future pension liabilities and contributions. Words such as "expect", "anticipate", "intend", "attempt", "may", "will", "plan", "believe", "seek", "estimate" and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict.

In particular, these statements are based on a variety of factors and assumptions that are discussed throughout this document. In addition, expectations concerning the performance of the Company's business in general are based on a number of factors and assumptions including, but not limited to: the condition of the Canadian, U.S. and U.K. economies; the rate of exchange of the Canadian dollar to the U.S. dollar and British pound; the availability and prices of raw materials, energy and supplies; product pricing; the availability of insurance; the competitive environment and related market conditions; improvement of operating efficiencies; continued access to capital; the cost of compliance with environmental and health standards; no adverse results from ongoing litigation; no unexpected actions of domestic and foreign governments and the general assumption that none of the risks identified below or elsewhere will materialize. All of these assumptions have been derived from information currently available to the Company including information obtained by the Company from third-party sources. These assumptions may prove to be incorrect in whole or in part. In addition, actual results may differ materially from those expressed, implied or forecasted in such forward-looking information, which reflect the Company's expectations only as of the date hereof.

Factors that could cause actual results or outcomes to differ materially from the results expressed, implied or forecasted in such forward-looking information include, among other things:

  • the risks associated with changes in the Company's systems and processes
  • the risks associated with the management service agreement with Maple Leaf
  • the Company's exposure to currency exchange risks
  • the ability of the Company to hedge against the effect of commodity price changes through the use of commodity futures and options
  • the impact of international events on commodity prices and the free flow of goods
  • the risks associated with a consolidating retail environment
  • the risks related to capital expansion projects
  • the risks posed by food contamination, consumer liability and product recalls
  • the risks related to acquisitions and divestitures
  • the risks posed by compliance with extensive government regulation
  • the risks posed by litigation
  • the impact of changes in consumer tastes and buying patterns
  • the impact of extensive environmental regulation and potential environmental liabilities
  • the risks associated with complying with differing employment laws and practices globally, the potential for work stoppages due to non-renewal of collective agreements and recruiting and retaining qualified personnel
  • the impact on pension expense and funding requirements of fluctuations in the market prices of fixed income and equity securities and changes in interest rates
  • the risks associated with the Company's independent distributors
  • the risks posed by competition
  • the risks associated with pricing the Company's products
  • the risks associated with managing the Company's supply chain
  • the risks associated with failing to identify and manage the strategic risks facing the Company.

The Company cautions the reader that the foregoing list of factors is not exhaustive. These factors are discussed in more detail under the heading "Risk Factors" in the Company's Management's Discussion and Analysis for the year ended December 31, 2012 that is available on SEDAR at www.sedar.com. The reader should review such section in detail. The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information, whether written or oral, or whether as a result of new information, future events or otherwise except as required by law.

Additional information concerning the Company, including the Company's Annual Information Form, is available on SEDAR at www.sedar.com.

Canada Bread Company Limited, which is 90.0% owned by Maple Leaf Foods Inc. (TSX:MFI), is a leading manufacturer and distributor of fresh bakery products, frozen par-baked products and fresh pasta and sauces. The Company had 2012 sales of $1.6 billion and employs approximately 6,400 people at its operations across North America and in the United Kingdom.

 

Condensed Consolidated Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited)

CANADA BREAD COMPANY, LIMITED

 Three and six months ended June 30, 2013 and 2012

Consolidated Balance Sheets

(In thousands of Canadian dollars)   As at June 30,       As at June 30,       As at December 31,       As at January 1,
(Unaudited)     2013       2012       2012       2012
                      (Restated)       (Restated)       (Restated)
                                       
ASSETS                                
Current assets                                
  Cash and cash equivalents $ 145,608     $   83,631     $   90,415     $   59,223
  Accounts receivable      43,465       45,363       49,435       56,522
  Note receivable        28,409       39,766       44,063       45,847
  Inventories        60,145       59,770       62,766       60,048
  Income taxes recoverable     -       2,875       -       2,162
  Assets held for sale      5,320       -       -       -
  Prepaid expenses and other assets     5,386       2,481       4,972       5,218
          $ 288,333     $   233,886     $   251,651     $   229,020
  Property and equipment      395,087       416,690       410,479       425,944
  Investment property      8,745       9,522       9,103       8,415
  Other long-term assets     4,848       4,405       4,994       4,456
  Deferred tax asset     18,175       15,974       17,874       17,917
  Goodwill        268,836       266,050       264,243       266,013
  Intangible assets      10,154       12,274       11,647       12,710
  Total assets   $ 994,178     $   958,801     $   969,991     $   964,475
                                       
LIABILITIES AND SHAREHOLDERS' EQUITY                            
Current liabilities                                
  Bank indebtedness $ -     $   1,595     $   -     $   3,153
  Accounts payable and accruals   182,037       176,950       169,431       185,811
  Provisions      9,227       11,642       9,928       23,066
  Due to Maple Leaf Foods Inc.    5,279       4,047       4,830       2,451
  Dividends payable   12,708       12,708       12,708       5,083
  Income taxes payable   2,213       -       2,008       -
  Current portion of long-term debt   547       264       358       2,452
          $ 212,011     $   207,206     $   199,263     $   222,016
  Long-term debt     4,106       3,093       2,921       1,634
  Deferred tax liability   24,867       19,480       19,998       21,784
  Employee benefits    40,007       54,498       56,011       50,434
  Provisions      6,094       5,047       6,277       5,005
  Total liabilities    $ 287,085     $   289,324     $   284,470     $   300,873
                                     
Shareholders' equity                            
Share capital   $ 142,965     $   142,965     $   142,965     $   142,965
Retained earnings     569,646       536,586       555,322       530,852
Accumulated other                              
  comprehensive loss    (5,518)       (10,074)       (12,766)       (10,215)
Total shareholders' equity $ 707,093     $   669,477     $   685,521     $   663,602
Total liabilities and shareholders' equity $ 994,178     $   958,801     $   969,991     $   964,475

Consolidated Statements of Earnings

(In thousands of Canadian dollars, except share amounts)   Three months ended June 30,     Six months ended June 30,
(Unaudited)     2013     2012     2013     2012
          (Restated)           (Restated)
                       
                       
Sales $   397,630   $   404,861   $   766,335   $   775,105
Cost of goods sold           316,676     319,419     617,473     627,908
                       
Gross margin $ 80,954   $ 85,442   $ 148,862   $ 147,197
Selling, general and administrative expenses   44,495     48,918     95,302     102,817
                       
Earnings before the following: $ 36,459   $ 36,524   $ 53,560   $ 44,380
Restructuring and other related costs   (1,043)     (1,205)     (11,454)     (7,089)
Other (expense) income    (1,879)     1,349     (4,392)     1,371
                       
Earnings before interest and income taxes $   33,537   $   36,668   $   37,714   $ 38,662
Interest expense   291     391     688     828
                       
Earnings before income taxes     $   33,246   $ 36,277    $ 37,026   $ 37,834
Income taxes   8,717     10,182     10,216     11,580
                       
Net earnings         $   24,529   $   26,095   $   26,810   $   26,254
                       
Earnings per share                                
  Basic and diluted earnings per share $ 0.97   $ 1.03   $ 1.05   $ 1.03
Weighted average number of shares (millions)   25.4     25.4     25.4     25.4

Consolidated Statements of Comprehensive Income

(In thousands of Canadian dollars)   Three months ended June 30,     Six months ended June 30,
(Unaudited)   2013     2012     2013     2012
          (Restated)           (Restated)
                       
                         
Net earnings $   24,529   $   26,095   $   26,810   $   26,254
                         
Other comprehensive income (loss)                                
Item that will not be reclassified to profit or loss:                        
  Change in actuarial gains and losses     6,428     (2,143)     12,931     (2,763)
Total item that will not be reclassified to profit or loss   6,428     (2,143)     12,931     (2,763)
Items that are or may be reclassified subsequently to profit or loss:                      
  Change in accumulated foreign currency                         
    translation adjustment           5,874     2,861     6,802     563
  Change in unrealized gains and losses                               
    on cash flow hedges           (398)     278     446     (422)
Total items that are or may be reclassified                           
  subsequently to profit or loss   $   5,476   $   3,139   $   7,248   $   141
  $   11,904   $   996   $   20,179   $   (2,622)
Comprehensive income $   36,433   $ 27,091   $   46,989   $   23,632

Consolidated Statements of Changes in Shareholders' Equity

                              Total          
                              accumulated          
                              other       Total  
(In thousands of Canadian dollars)   Share       Retained       comprehensive       shareholders'  
(Unaudited)       capital       earnings       loss       equity  
                                         
Balance at December 31, 2012                              
  (restated)      $   142,965     $   555,322     $   (12,766)     $   685,521  
  Net earnings       -       26,810       -       26,810  
  Other comprehensive income   -       12,931       7,248       20,179  
  Dividends declared ($1.00 per share)   -       (25,417)       -       (25,417)  
Balance at June 30, 2013   $   142,965     $   569,646     $   (5,518)     $   707,093  
                                         
                                         
                              Total          
                              accumulated          
                              other       Total  
(In thousands of Canadian dollars)   Share       Retained       comprehensive       shareholders'  
(Unaudited)       capital       earnings       loss       equity  
                                      (Restated)  
                                         
                                         
Balance at January 1, 2012                              
  (restated)      $   142,965     $   530,852     $   (10,215)     $   663,602  
  Net earnings       -       26,254       -       26,254  
  Other comprehensive loss   -       (2,763)       141       (2,622)  
  Dividends declared ($0.70 per share)   -       (17,757)       -       (17,757)  
Balance at June 30, 2012                                
  (restated)      $   142,965     $   536,586     $   (10,074)     $   669,477

 

Consolidated Statements of Cash Flows

(In thousands of Canadian dollars)       Three months ended June 30,     Six months ended June 30,
(Unaudited)           2013     2012     2013     2012
                        (Restated)           (Restated)
                                     
                                     
CASH (USED IN) PROVIDED BY:                            
                                     
Operating activities                            
  Net earnings         $   24,529   $   26,095   $   26,810   $   26,254
  Add (deduct) items not affecting cash:                        
    Depreciation and amortization         13,119     12,591     25,896     23,940
    Deferred income taxes         1,418     1,125     (1,084)     918
    Income tax current         7,299     9,057     11,300     10,662
    Interest expense         291     391     688     828
    Gain on sale of long-term assets       (41)     105     (1,357)     (126)
    Impairment of assets         642     -     4,212     -
  Increase in pension liability         189     403     1,471     367
  Net income taxes paid          (4,963)     (3,836)     (13,554)     (10,391)
  Interest paid           (200)     (495)     (136)     (854)
  Change in provision for restructuring and                      
    other related costs         (7,140)     (2,248)     (719)     (6,598)
  Other           452     266     594     416
  Change in non-cash operating working capital   40,942     18,482     39,429     11,055
Cash provided by operating activities     $   76,537   $   61,936   $   93,550   $   56,471
                                     
Financing activities                            
  Dividends paid         $   (12,709)   $   (5,049)    $   (25,417)   $   (10,132)
  Net (increase) decrease in long-term debt   (100)     (788)     1,550     (788)
Cash used in financing activities        $   (12,809)   $   (5,837)   $   (23,867)   $   (10,920)
                                     
Investing activities                            
  Additions to long-term assets        $   (11,095)   $   (11,376)    $   (17,583)   $   (22,033)
  Proceeds from sale of long-term assets   537     29     3,093     2,448
Cash used in investing activities        $   (10,558)    $   (11,347)   $   (14,490)    $   (19,585)
                                     
Increase in cash and cash equivalents $   53,170    $   44,752   $   55,193   $   25,966
Net cash and cash equivalents, beginning of period   92,438     37,284     90,415     56,070
Net cash and cash equivalents, end of period  $   145,608    $   82,036    $   145,608    $   82,036
                                     
Net cash and cash equivalents is comprised of:                      
Cash and cash equivalents        $   145,608   $   83,631   $   145,608   $   83,631
Bank indebtedness           -     (1,595)     -     (1,595)
Net cash and cash equivalents, end of period  $   145,608    $   82,036    $   145,608   $   82,036

Segmented Financial Information

              Three months ended June 30,               Six months ended June 30
              2013           2012           2013           2012
                          (Restated)                       (Restated)
Sales                                              
  Fresh Bakery     $     271,169     $       279,164     $       513,834     $       527,347
  Frozen Bakery         126,461           125,697           252,501           247,758
          $   397,630     $       404,861     $       766,335     $       775,105
                                                   
Earnings before restructuring and other related                                          
  costs and other income                                          
  Fresh Bakery     $     28,568     $       29,828     $       41,828     $       36,417
  Frozen Bakery         7,891           6,696           11,732           7,963
          $     36,459     $       36,524     $       53,560     $       44,380
                                                   
Capital expenditures                                            
  Fresh Bakery     $     4,907     $       8,538     $       6,748     $       17,732
  Frozen Bakery         6,188           2,838           10,835           4,301
          $     11,095     $       11,376     $       17,583     $       22,033
                                                   
Depreciation and amortization                                          
  Fresh Bakery     $     8,186     $       7,647     $       16,235     $       14,704
  Frozen Bakery         4,933           4,944           9,661           9,236
          $   13,119     $       12,591     $       25,896     $       23,940

            As at June 30,           As at June 30,           As at December 31,           As at January 1,
            2013           2012           2012           2012
                                                 
Total assets                                            
  Fresh Bakery     $   467,279     $       503,055     $       504,062     $       516,485
  Frozen Bakery       337,004           352,594           356,311           368,534
  Non-allocated assets       189,895           103,152           109,618           79,456
          $   994,178     $       958,801     $       969,991     $       964,475
Goodwill                                            
  Fresh Bakery     $   125,892     $       125,892     $       125,892     $       125,892
  Frozen Bakery       142,944           140,158           138,351           140,121
          $   268,836     $       266,050     $       264,243     $       266,013
                                                 

SOURCE: Canada Bread Company, Limited

For further information:

Investor Contact: Nick Boland,
VP Investor Relations: 416-926-2005
Media Contact: 416-926-2020

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