Canada Bread Reports Strong Third 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 third quarter ended September September: see month. 30, 2004. "Canada Bread continues its strong earnings momentum, with excellent earnings per share growth in the third quarter," 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 Chief Executive Officer. "Bread demand has largely returned to normal levels, with a sustained shift towards healthy, premium quality products. With well positioned brands and market share in this growth category, we will continue to provide new varieties to consumers through leading innovation in whole grain, organic and premium par-baked products." Sales for the third quarter of $ 335.7 million compared to $324.0 million for 2003, while year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. sales of $970.8 million compared to $945.5 million last year. Earnings from operations for the third quarter increased to $29.0 million from $16.7 million last year, and year-to-date were $71.8 million compared to $46.2 million last year 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. Results in 2003 were impacted by a strike at one of the Company's distribution centres, resulting in additional costs of $4.8 million in the third quarter ($7.4 million in the first nine months of 2003). Excluding this impact, earnings from operations before restructuring costs for the third quarter and year-to-date increased 35% and 34% respectively from last year. Net earnings for the third quarter increased to $19.0 million ($0.75 per share), compared to $11.3 million ($0.44 per share) last year. Year-to-date net earnings were $47.4 million ($1.86 per share), compared to $23.8 million ($0.95 per share) last year. All year-to-date earnings from operations comparisons exclude $7.4 million of restructuring costs in the first quarter of 2003 in the Fresh Bakery. Management believes this is the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of ongoing 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 . Interest expense for the third quarter increased to $2.1 million from $1.8 million last year but was lower for the year-to-date at $5.0 million compared to $6.5 million last year. As outlined in note 4 to the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: interim financial statements, the Company has fixed approximately 70% of its exposure to short term interest rates. As a result, the Company is now paying higher interest rates in the short term. Management believes this is prudent and that the Company has positioned itself to pay attractive rates in the long term. The effective tax rate for the third quarter increased to 29% from 25% last year, due to rate differences in foreign jurisdictions. Cash flow from operating activities for the third quarter increased to $32.1 million from $28.5 million last year. Year-to-date cash flow from operating activities of $93.0 million increased significantly from $19.1 million last year due to higher earnings and improved working capital performance. Contributing to this improvement in working capital was a $20 million increase in the Company's 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 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. program in the first half of 2004. Capital expenditures for the quarter of $19.9 million included initial payments related to a major expansion at the Company's bagel plant in the U.K. Fresh Bakery (fresh bakery products; specialty 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 sauces) Fresh Bakery sales for the third quarter increased 5% to $242.1 million from $230.9 million last year, and year-to-date were $687.3 million compared to $662.6 million last year. Earnings from operations increased 109% to $19.5 million from $9.4 million last year, and year-to-date were $46.4 million compared to $28.3 million last year. The Fresh Bakery operations continued to perform extremely well in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite reduced carbohydrate carbohydrate, any member of a large class of chemical compounds that includes sugars, starches, cellulose, and related compounds. These compounds are produced naturally by green plants from carbon dioxide and water (see photosynthesis). diets, benefiting from a focus on more nutritious nutritious /nu·tri·tious/ (noo-trish´us) affording nourishment. nu·tri·tious adj. Providing nourishment; nourishing. nutritious affording nourishment. bakery products, and a sales mix sales mix See product mix. that favors higher value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. product lines as consumers shift their buying patterns from white bread products to higher health products such as whole grains. Sales volumes in the third quarter, both in the Company's operations and the industry, indicate that the negative impact on white bread of low carbohydrate diets may be declining, although there continues to be a trend towards increased consumption of whole grain and higher value products. Against this backdrop Backdrop may refer to:
Frozen Bakery (North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. and UK frozen bakery products; including frozen par-baked and specialty bakery products) Frozen Bakery sales for the third quarter increased slightly to $93.6 million compared to $93.1 million last year, while year-to-date sales were $283.5 million compared to $282.9 million last year. Earnings from operations increased 29% to $9.5 million from $7.3 million last year, and year-to-date increased to $25.4 million from $17.9 million last year. The U.K. bakery operations produced strong results in the quarter, from increased volumes in the UK and initial sales into Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . An
expansion at the 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. , Yorkshire Yorkshire, former county, N England. In 1974, Yorkshire was divided into the nonmetropolitan counties of Humberside, Cleveland, North Yorkshire, and partially into the metropolitan county of West Yorkshire. All but North Yorkshire have since been dissolved. will be
commissioned in early 2005 to increase production capacity. The North
American Frozen business benefited from increased food service sales in
the third quarter, although sales and volumes were largely consistent
with last year due to a weaker retail market.In both the fresh and frozen businesses, cost reduction continues to be a significant focus and contributed to results, particularly in eastern Canada Eastern Canada (also the Eastern provinces) is the region of Canada generally considered to be east of Manitoba, consisting of the following provinces:
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 January January: see month. 4, 2005 to shareholders of record on December December: see month. 17, 2004. Canada Bread, which is 84.7% 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 2003 sales of $1.3 billion and employs approximately 7,000 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.
Canada Bread Company, Limited
CONSOLIDATED BALANCE SHEETS
As at As at
September 30, December 31,
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In thousands of Canadian dollars 2004 2003 2003
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(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash $ 25,785 $ 17,864 $ 11,528
Accounts receivable (note 3) 24,366 56,767 44,699
Due from Maple Leaf Foods
Inc. (net) 3,437 2,569 -
Inventories 36,507 30,484 33,205
Future tax asset - current 4,952 6,633 5,838
Prepaid expenses 3,652 5,574 2,081
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98,699 119,891 97,351
Property and equipment 344,545 330,146 335,811
Other long-term assets 3,909 3,986 2,657
Goodwill & other intangibles 339,633 330,687 341,814
Future tax asset - non-current 720 - 2,321
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$ 787,506 $ 784,710 $ 779,954
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
charges $ 143,184 $ 154,907 $ 151,134
Due to Maple Leaf Foods
Inc. (net) - - 443
Dividends payable 1,525 1,525 1,525
Income and other taxes payable 12,915 4,280 4,392
Current portion of long-term debt - 33,586 26,941
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157,624 194,298 184,435
Long-term debt 122,221 136,749 126,710
Future tax liability 27,943 27,245 31,382
Shareholders' equity 479,718 426,418 437,427
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$ 787,506 $ 784,710 $ 779,954
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The accompanying notes to the consolidated financial statements
are an integral part of this statement.
Canada Bread Company, Limited
CONSOLIDATED STATEMENTS OF EARNINGS
Nine
Quarter ended months ended,
September 30, September 30,
In thousands of Canadian dollars, --------------------------------
except per share amounts (Unaudited) 2004 2003 2004 2003
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Sales $335,707 $324,024 $970,787 $945,531
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Earnings from operations before
restructuring costs 29,016 16,698 71,806 46,217
Restructuring costs (note 2) - - - (7,422)
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Earnings from operations 29,016 16,698 71,806 38,795
Other income (expense) (80) 174 14 438
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Earnings before interest and
income taxes 28,936 16,872 71,820 39,233
Interest expense 2,085 1,778 5,009 6,546
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Earnings before income taxes 26,851 15,094 66,811 32,687
Income taxes 7,803 3,793 19,415 8,885
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Net earnings for the period $ 19,048 $ 11,301 $ 47,396 $ 23,802
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Earnings per share - basic $ 0.75 $ 0.44 $ 1.86 $ 0.95
Earnings per share - diluted $ 0.73 $ 0.44 $ 1.82 $ 0.94
Dividends per share declared $ 0.06 $ 0.06 $ 0.18 $ 0.18
Weighted average number of shares
(millions) 25.4 25.4 25.4 25.0
The accompanying notes to the consolidated financial statements are
an integral part of this statement.
Canada Bread Company, Limited
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Nine months ended
September 30,
In thousands of Canadian dollars --------------------
except per share amounts (Unaudited) 2004 2003
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Retained earnings, beginning of period $ 277,279 $ 247,746
Net earnings for the period 47,396 23,802
Dividends declared ($0.18 per share; 2003 -
$0.18 per share) (4,575) (4,575)
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Retained earnings, end of period $ 320,100 $ 266,973
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.
Canada Bread Company, Limited
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine
Quarter ended months ended
September 30, September 30,
In thousands of Canadian dollars --------------------------------
(Unaudited) 2004 2003 2004 2003
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Cash Provided By (used in):
Operating activities
Net earnings for the period $ 19,048 $ 11,301 $ 47,396 $ 23,802
Items not affecting cash:
Depreciation and amortization 10,212 9,821 31,216 28,574
Future income taxes (297) 918 (952) (3,220)
Loss (gain) on sale of property
and equipment 113 (125) 105 (293)
Changes in non-cash operating
working capital 3,060 6,630 15,304 (29,795)
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32,136 28,545 93,069 19,068
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Financing activities
Dividends paid (1,525) (1,525) (4,575) (4,335)
Increase in long-term debt 11,415 22,788 15,625 118,703
Decrease in long-term debt (23,618) (14,600) (40,307)(190,105)
Increase in share capital - - - 106,000
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(13,728) 6,663 (29,257) 30,263
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Investing activities
Additions to property and
equipment (19,922) (19,577) (44,452) (39,500)
Proceeds from sale of property
and equipment 72 255 791 539
Purchase of net assets of
businesses, net of cash
acquired (note 6) (5,894) (5,586) (5,894) (5,586)
Other - 691 - 691
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(25,744) (24,217) (49,555) (43,856)
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Increase (decrease) in cash and
cash equivalents for the period (7,336) 10,991 14,257 5,475
Cash and cash equivalents,
beginning of period 33,121 6,873 11,528 12,389
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Cash and cash equivalents, end of
period $ 25,785 $ 17,864 $ 25,785 $ 17,864
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.
Canada Bread Company, Limited
SEGMENTED FINANCIAL INFORMATION
Nine
Quarter ended months ended
September 30, September 30,
In thousands of Canadian dollars -----------------------------------
(Unaudited) 2004 2003 2004 2003
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Sales
Fresh Bakery $ 242,108 $ 230,893 $ 687,290 $ 662,605
Frozen Bakery 93,599 93,131 283,497 282,927
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$ 337,017 $ 324,024 $ 970,787 $ 945,531
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Earnings from operations before
restructuring costs
Fresh Bakery $ 19,534 $ 9,361 $ 46,361 $ 28,272
Frozen Bakery 9,482 7,337 25,445 17,945
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$ 29,016 $ 16,698 $ 71,806 $ 46,217
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Capital expenditures
Fresh Bakery $ 6,847 $ 5,336 $ 19,743 $ 14,935
Frozen Bakery 13,075 14,241 24,709 24,565
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$ 19,922 $ 19,577 $ 44,452 $ 39,500
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Depreciation and amortization
Fresh Bakery $ 5,456 $ 5,058 $ 16,294 $ 14,704
Frozen Bakery 4,756 4,763 14,922 13,870
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$ 10,212 $ 9,821 $ 31,216 $ 28,574
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As at As at
September 30, December 31,
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In thousands of Canadian dollars 2004 2003 2003
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Total assets
Fresh Bakery $ 405,954 $ 400,988 $ 390,624
Frozen Bakery 375,839 360,726 363,483
Non-allocated assets 5,713 22,996 25,847
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$ 787,506 $ 784,710 $ 779,954
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.
Canada Bread Company, Limited
Notes to Consolidated Financial Statements
(For the quarters ended September 30, 2004 and September 30, 2003)
1. 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 31, 2003. 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, 2003. a) Segmented Information As of January 1, 2004, to reflect its new organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. , the Company has segmented results into two operating segments: Fresh Bakery Group and Frozen Bakery Group. The Fresh Bakery Group comprises fresh bakery products and specialty fresh pasta and sauces. The Frozen Bakery Group comprises frozen bakery products; including frozen par-baked and specialty bakery products. Prior period information has been included for comparability. b) Hedging Relationships As discussed in note 2(l)(i) of the annual consolidated financial statements for the year ended December 31, 2003, the Company is in compliance with CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) 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. 13 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc hedging. c) Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. The application of new accounting standard, Section 3110, "Accounting for Asset Retirement Obligations" as disclosed in note 2(l)(ii) of the annual consolidated financial statements for the year ended December 31, 2003 did not have a material impact on the financial statements of the Company. d) Customer Rebates and Promotional Allowances A new accounting standard, EIC-144, became applicable in the third quarter of 2004.This new standard, which generally requires that rebates and other promotional allowances received from a vendor be accounted for as a reduction of the cost of product acquired, has no material impact on the Company's financial statements. The Company is reviewing its income statement classification of certain sales incentives Noun 1. sales incentive - remuneration offered to a salesperson for exceeding some predetermined sales goal bonus, incentive - an additional payment (or other remuneration) to employees as a means of increasing output which it pays to its customers, including rebates and promotional programs, certain of which are classified as cost of sales. e) Comparative Figures Certain 2003 comparative figures have been reclassified to conform with the financial statement presentation adopted in 2004. 2. Restructuring Costs During the first quarter of 2003, the Company recorded a $7.4 million restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. ($4.8 million net of tax), related to the closure of its bakery in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. and certain other operational restructuring items. 3. Accounts Receivable Under revolving securitization 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 September 30, 2004, trade accounts receivable amounting to $70.0 million (September 30, 2003 - $50.0 million, December 31, 2003 - $50.0 million) had been sold under these programs. 4. Derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. In the ordinary course of business, the Company enters into derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments to reduce underlying fair value and cash flow risks associated with foreign currency, interest rates and commodity prices. If the Company had not entered into these contracts, earnings from operations for the third quarter would have been lower by $0.3 million ($0.5 million year-to-date) and interest expense for the third quarter would have been higher by $0.0 million ($1.3 million year-to-date). On June June: see month. 28, 2004, the Company entered into interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. contracts with Maple Leaf Foods Inc. on a notional amount The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional. of $130 million with maturity dates from June 28, 2007 to June 28, 2014. Consequently, the Company has fixed approximately 70% of its notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. exposure to interest rates, at interest rates between 3.9% and 5.4%. 5. Pensions During the period, the Company recorded $1.8 million in net benefit plan expense (2003: $2.0 million). For the first nine months of 2004, the Company recorded $6.0 million in net benefit plan expense (2003: $6.0 million). 6. Acquisitions As discussed in note 15 of the annual consolidated financial statements for the year ended December 31, 2003, the Company acquired Olafson's Baking baking: see cooking. baking Process of cooking by dry heat, especially in an oven. Baked products include bread, cookies, pies, and pastries. Company in 2002. During the third quarter of 2004, the Company made the final $5.9 million payment related to this purchase. A portion of this payment had been previously provided for, and as a result only $1.6 million of this payment resulted in an increase to goodwill. 7. Supplemental information
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Quarter Ended Nine Months Ended
September 30, September 30,
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2004 2004
Cash taxes paid $ 2,690 $ 11,977
Cash interest paid 2,742 6,477
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Canada Bread Company, Limited (TSX:CBY) |
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