Canada Bread Reports Second Quarter Financial Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of Bread Company, Limited (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CBY CBY Central Bank of Yemen CBY Camp Burn Yourself (Swedish alternative arts festival) CBY Suvorov Military School (Russian acronym) ) today announced its financial results for the second quarter ended June June: see month. 30, 2005. "Our second quarter operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before reflect continued strong results in our Fresh Bakery operations, supported by operating cost improvements and a continued shift towards higher margin premium nutrition nutrition, study of the materials that nourish an organism and of the manner in which the separate components are used for maintenance, repair, growth, and reproduction. Nutrition is achieved in various ways by different forms of life. whole wheat wheat, cereal plant of the genus Triticum of the family Gramineae (grass family), a major food and an important commodity on the world grain market. Wheat Varieties and Their Uses and wholegrain products," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a Lan, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Canada Bread. Sales for the second quarter increased by 5% to $344.6 million from $329.7 million for the prior year, primarily due to the Fresh Bakery business. Sales for the first six months of 2005 were $661.5 million, an increase of 4% over 2004. Net earnings for the quarter were $21.3 million ($0.84 per share) compared to $15.8 million ($0.62 per share) last year. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. net earnings before restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs were $36.4 million ($1.43 per share), compared to $28.3 million ($1.11 per share) last year. Including restructuring costs, year-to-date net earnings were $33.1 million ($1.30 per share). Operating Review Earnings from operations increased 30% to $30.5 million compared to $23.4 million last year, driven by increased earnings in the Fresh Bakery operations. Earnings from operations before restructuring costs for the year-to-date increased 23% to $52.5 million. Comparisons of earnings from operations exclude $4.7 million ($3.2 million after tax) of restructuring costs in the first quarter of 2005. Management believes this is the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of ongoing operating earnings. Fresh Bakery sales increased 5% to $247.0 million in the second quarter, and increased to $467.9 million for the first six months from $445.2 million last year. Earnings from operations increased to $25.7 million in the second quarter from $16.9 million last year, while earnings from operations for the year-to-date increased to $40.7 million from $26.8 million last year. Strong sales of premium nutrition multi-grain and specialty breads, operating cost reductions, particularly in the western and eastern fresh bakery operations, and price increases that offset inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. cost increases all contributed to increased earnings. Fresh pasta While the only basic difference between these names is the shape of the pasta, each pasta is typically matched with a particular sauce based on cooking time, consistency, ability to hold sauce, ease of eating, etc. and sauce earnings also increased due to new U.S. product distribution. Frozen Bakery sales increased to $97.6 million from $95.1 million in the second quarter of 2004, while sales for the first six months increased to $193.6 million from $189.9 million last year, due mainly to ongoing growth in the U.K. bakery operations. Operating earnings declined to $4.7 million in the second quarter from $6.5 million last year, while operating earnings for the year-to-date were $11.8 million compared to $16.0 million in 2004. The decline in second quarter operating earnings was primarily due to higher advertising and promotional spending in the U.K. Bakery operations, as a new marketing campaign was launched to support increased production from the new bagel plant in Rotherham Rotherham (rŏth`ərəm), city (1991 pop. 122,374) and metropolitan district, N England, at the confluence of the Don and Rother rivers. . Cash Flow and Financing Cash flow from operating activities for the second quarter was a source of funds of $30.4 million compared to a source of funds of $32.8 million last year, while year-to-date cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was a source of funds of $26.5 million compared with $61.4 million in the prior year-to-date. This year-over-year change was due primarily to an increased investment in working capital offset by increased net earnings in the first and second quarters of 2005. Capital expenditures increased to $20.7 million from $13.9 million last year, including expenditures related to the installation of new equipment to support the new FroBake(R) line of products in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and completion of the new bagel plant in the United Kingdom. Other Matters The Company declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a dividend of $0.06 per share payable on July July: see month. 4, 2005 to shareholders of record on June 17, 2005. Canada Bread, which is 87.5% owned by Maple Leaf Foods Maple Leaf Foods TSX: MFI is a major Canadian food processing company. The company was originally known as Maple Leaf. It was founded in 1927 as a merger of several major Toronto meat packers, most prominently William Davies Co. Inc., is a leading manufacturer and distributor of fresh bakery products, frozen par-baked products and fresh pasta and sauces. The Company had 2004 sales of $1.3 billion and employs approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 7,300 people at its operations across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and in the United Kingdom.
Consolidated Financial Statements
(Expressed in Canadian dollars)
CANADA BREAD COMPANY, LIMITED
Six months ended June 30, 2005 and 2004
CANADA BREAD COMPANY, LIMITED
Consolidated Balance Sheets
(In thousands of Canadian dollars)
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As at As at As at
June 30, June 30, December 31,
2005 2004 2004
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(Unaudited) (Unaudited)
(As restated) (As restated)
(Note 2 (a)) (Note 2(a))
ASSETS
Current assets
Cash and cash equivalents $ 33,231 $ 33,121 $ 9,312
Accounts receivable (Note 4) 35,434 25,803 24,148
Due from Maple Leaf Foods Inc. - 2,433 -
Inventories 33,014 34,967 33,504
Future tax asset - current 6,723 6,214 5,193
Prepaid expenses and
other assets 5,233 5,388 2,103
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113,635 107,926 74,260
Property and equipment 362,402 341,017 354,128
Other long-term assets 2,799 2,606 3,386
Future tax asset - non-current 7,524 3,774 5,465
Goodwill 322,715 338,646 324,237
Other intangibles 5,661 7,809 6,167
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$ 814,736 $ 801,778 $ 767,643
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LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and
accrued charges $ 143,101 $ 149,398 $ 149,410
Due to Maple Leaf Foods Inc. 256 - 140
Dividends payable 1,525 1,525 1,525
Income and other taxes
payable 18,419 8,068 26,501
Current portion of
long-term debt (Note 5) 123,130 704 91,482
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286,431 159,695 269,058
Long-term debt (Note 5) 282 163,926 344
Future tax liability 24,220 32,558 21,780
Shareholders' equity 503,803 445,599 476,461
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$ 814,736 $ 801,778 $ 767,643
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The accompanying notes to the consolidated financial statements are
an integral part of these statements.
CANADA BREAD COMPANY, LIMITED
Consolidated Statement of Earnings
(In thousands of Canadian dollars, except share amounts)
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(Unaudited) Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
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Sales $ 344,610 $ 329,668 $ 661,471 $ 635,080
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Earnings from operations
before restructuring costs 30,465 23,412 52,490 42,790
Restructuring costs (Note 3) - - 4,723 -
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Earnings from operations 30,465 23,412 47,767 42,790
Other income (expense) 656 (18) 964 94
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Earnings before interest
and income taxes 31,121 23,394 48,731 42,884
Interest expense 1,690 1,537 3,391 2,924
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Earnings before income taxes 29,431 21,857 45,340 39,960
Income taxes 8,169 6,058 12,193 11,612
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Net earnings for the period $ 21,262 $ 15,799 $ 33,147 $ 28,348
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Earnings per share - Basic $ 0.84 $ 0.62 $ 1.30 $ 1.11
Earnings per share - Diluted $ 0.83 $ 0.61 $ 1.29 $ 1.09
Dividends per share declared $ 0.06 $ 0.06 $ 0.12 $ 0.12
Weighted average number
of shares (millions) 25.4 25.4 25.4 25.4
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The accompanying notes to the consolidated financial statements are
an integral part of these statements.
Consolidated Statements of Retained Earnings
(In thousands of Canadian dollars)
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Six months ended June 30,
(Unaudited) 2005 2004
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Retained earnings, beginning of period $ 337,827 $ 277,279
Net earnings for the period 33,147 28,348
Dividends declared (3,050) (3,050)
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Retained earnings, end of period $ 367,924 $ 302,577
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The accompanying notes to the consolidated financial statements are
an integral part of these statements.
CANADA BREAD COMPANY, LIMITED
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
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Three months ended Six months ended
June 30, June 30,
(Unaudited) 2005 2004 2005 2004
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CASH PROVIDED BY (USED IN)
Operating activities
Net earnings $ 21,262 $ 15,799 $ 33,147 $ 28,348
Add (deduct) items not
affecting cash:
Depreciation and
amortization 10,611 10,329 21,210 20,773
Future income taxes (536) (367) (1,149) (655)
Loss (gain) on sale of
property and equipment (629) 66 (881) (8)
Other 1,676 (169) 1,780 (127)
Change in operating
working capital (1,951) 7,163 (27,617) 13,051
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30,433 32,821 26,490 61,382
Financing activities
Dividends paid (1,525) (1,525) (3,050) (3,050)
Change in long-term debt 3,282 (15,250) 28,506 (12,479)
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1,757 (16,775) 25,456 (15,529)
Investing activities
Additions to property
and equipment (20,666) (13,928) (32,606) (24,530)
Proceeds from sale of
property and equipment 2,292 31 4,361 719
Sale (purchase) intangible
assets 344 (325) 218 (449)
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(18,030) (14,222) (28,027) (24,260)
Increase in cash and
cash equivalents 14,160 1,824 23,919 21,593
Cash and cash equivalents,
beginning of period 19,071 31,297 9,312 11,528
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Cash and cash equivalents,
end of period $ 33,231 $ 33,121 $ 33,231 $ 33,121
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The accompanying notes to the consolidated financial statements are
an integral part of these statements.
CANADA BREAD COMPANY, LIMITED
Segmented Financial Information
(In thousands of Canadian dollars)
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Three months ended Six months ended
June 30, June 30,
(Unaudited) 2005 2004 2005 2004
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Sales
Fresh Bakery $ 247,047 $ 234,552 $ 467,860 $ 445,182
Frozen Bakery 97,563 95,116 193,611 189,898
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$ 344,610 $ 329,668 $ 661,471 $ 635,080
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Earnings from operations,
before restructuring costs
Fresh Bakery $ 25,718 $ 16,912 $ 40,738 $ 26,827
Frozen Bakery 4,747 6,500 11,752 15,963
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$ 30,465 $ 23,412 $ 52,490 $ 42,790
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Additions to property
and equipment
Fresh Bakery $ 8,284 $ 8,074 $ 12,465 $ 12,896
Frozen Bakery 12,382 5,854 20,141 11,634
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$ 20,666 $ 13,928 $ 32,606 $ 24,530
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Depreciation and amortization
Fresh Bakery $ 5,552 $ 5,286 $ 11,174 $ 10,607
Frozen Bakery 5,059 5,043 10,036 10,166
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$ 10,611 $ 10,329 $ 21,210 $ 20,773
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As at As at As at
June 30, June 30, December 31,
2005 2004 2004
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(Unaudited) (Unaudited)
Total assets
Fresh Bakery $ 412,693 $ 410,964 $ 395,355
Frozen Bakery 385,094 381,811 364,919
Non-allocated assets 16,949 9,003 7,369
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$ 814,736 $ 801,778 $ 767,643
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CANADA BREAD COMPANY, LIMITED
Notes to Consolidated Financial Statements
(Tabular amounts in thousands of Canadian dollars)
Three months and six months ended June 30, 2005 and 2004
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1. THE COMPANY Canada Bread Company, Limited ("Canada Bread" or "the Company") and its subsidiaries operate in the bakery industry across North America and internationally. Its principal business is the manufacture and sale of bakery and pasta products, including fresh bread, rolls, bagels and par-baked bread. Canada Bread is 87.5% owned by Maple Leaf Foods Inc. ("Maple Leaf maple leaf of Canada. [Flower Symbolism: Jobes, 283] See : Flower Or Plant, National ") as at June 30, 2005. 2. SIGNIFICANT ACCOUNTING POLICIES The unaudited interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge should be read in conjunction with the annual consolidated financial statements for the year ended December December: see month. 31, 2004. These unaudited interim consolidated financial statements have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting using the same accounting policies as were applied in the consolidated financial statements for the year ended December 31, 2004, except for the following: (a) Convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. Effective January January: see month. 1, 2005 the company adopted the amendment to Canadian accounting principles, section 3860 - "Financial Instruments - Disclosure and Presentation" on a retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a basis with restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior periods. The revised standard, which is effective for 2005, requires obligations of a fixed amount that may be settled, at the issuer's option, by a variable number of the issuer's own equity instruments to be presented as liabilities. As a result of adopting the revised standard, the company retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin reclassified $20 million of convertible debt as a liability on the balance sheet. The Company had previously included the $20 million related to a debt facility with Maple Leaf in equity, due to the fact that it can be settled, at the option of Canada Bread, in common shares. There was no impact on net earnings, basic or diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for prior periods as a result of adopting this change retroactively. (b) Variable interest entities The Company adopted the guidance in Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. 15, "Consolidation of Variable Interest Entities" retroactively without restatement of prior periods, effective January 1, 2005. This guideline addresses the consolidation of variable interest entities, which are entities that have insufficient equity and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. their equity investors lack one or more specified essential characteristics of a controlling financial interest. The guideline also provides guidance for determining who, if anyone, should consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the variable interest entity. The adoption of this standard did not have a material impact on the Company. (c) Comparative figures Certain 2004 comparative figures have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the financial statement presentation adopted in 2005. 3. RESTRUCTURING COSTS During the first quarter of 2005, the Company recorded a $4.7 million in restructuring costs ($3.2 million after tax), relating primarily to the closure of its bakery in Peterborough Peterborough, city, Canada Peterborough, city (1991 pop. 68,371), SE Ont., Canada, NE of Toronto. It is at the falls of the Otonabee River, which connects, through the Trent Canal, with lakes Ontario and Huron. Settled early in the 19th cent. , England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. and the closure of a pasta manufacturing line due to the termination of a co-packing arrangement with Maple Leaf. 4. ACCOUNTS RECEIVABLE accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying Under revolving securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. programs, the Company has sold, with limited recourse Limited recourse A term describing a type of loan in which the lender has limited or no claim against the parent company if the collateral is insufficient to repay the debt. See:Nonrecourse. , certain of its trade accounts receivable to financial institutions. The Company retains servicing responsibilities and assumes limited recourse obligations for delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . At June 30, 2005, trade accounts receivable being serviced under this program amounted to $70.0 million (June 30, 2004: $70.0 million; December 31, 2004: $70.0 million). 5. LONG-TERM DEBT Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. As at June 30, 2005, the Company had $123.4 million outstanding in long-term debt of which $84.3 million (June 30, 2004: $86.4 million; December 31, 2004: $90.8 million) was due to Maple Leaf. 6. PENSIONS During the quarter, the Company recorded $2.5 million related to net benefit plan expense (2004: $2.1 million). For the first six months of 2005, the Company recorded $4.8 million in net benefit plan expense (2004: $4.3 million).
7. SUPPLEMENTAL CASH FLOW INFORMATION
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Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
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Interest paid $ 1,627 $ 2,645 $ 3,861 $ 3,735
Income taxes paid 5,307 1,924 20,497 9,287
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8. GOODWILL Commencing January 1, 2002, in accordance with Canadian accounting standards section 3062, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ", the company tests goodwill for possible impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on an annual basis and at any other time if an event occurs or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. During the second quarter of 2005, the company completed the goodwill impairment test for all reporting units. The results of this test have indicated there is no impairment. Canada Bread Company, Limited (TSX:CBY) |
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