TORONTO, May 8, 2012 /CNW/ - George Weston Limited (TSX:
WN) ("GWL") and its subsidiaries (collectively the "Company") today
is announcing its unaudited results for the 12 weeks ended
March 24, 2012.
The Company's Q1 2012 Quarterly Report to Shareholders,
including the Company's unaudited interim period condensed
consolidated financial statements and Management's Discussion and
Analysis ("MD&A") for the 12 weeks ended March 24, 2012, is available in the Investor
Centre section of the Company's website at www.weston.ca and has
been filed with the System for Electronic Document Analysis and
Retrieval ("SEDAR") and will be available at www.sedar.com.
CONSOLIDATED RESULTS OF OPERATIONS
George Weston Limited's first quarter 2012 adjusted basic net
earnings per common share(2) were
$0.89 compared to $1.07 in the same period in 2011, a decrease of
$0.18. The decrease was primarily
attributable to a decline in the operating performance of Loblaw
Companies Limited ("Loblaw"), partially offset by a decline in the
effective income tax rate. The decline in the operating performance
of Loblaw was primarily due to increased transportation costs and
higher input costs that were not entirely passed on to the consumer
including the incremental investment related to Loblaw's customer
proposition, a charge related to the transition of certain
Ontario conventional stores to the
more cost effective and efficient operating terms of collective
agreements ratified in the third quarter of 2010 and incremental
costs related to investments in information technology ("IT") and
supply chain(3).
| (unaudited) |
|
|
| ($ millions except where otherwise
indicated) |
12 Weeks Ended |
|
| As at or for the periods ended as
indicated |
Mar. 24, 2012 |
Mar. 26, 2011 |
Change |
| Sales |
$ |
7,224 |
$ |
7,148 |
1.1% |
| Operating income
|
$ |
274 |
$ |
303 |
(9.6)% |
| Adjusted operating
income(2) |
$ |
311 |
$ |
380 |
(18.2)% |
| Adjusted operating
margin(2) |
|
4.3% |
|
5.3% |
|
| Net interest expense and other
financing charges |
$ |
44 |
$ |
66 |
(33.3)% |
| Income taxes |
$ |
59 |
$ |
72 |
(18.1)% |
| Net earnings attributable to
shareholders of the Company |
$ |
124 |
$ |
105 |
18.1% |
| Net earnings |
$ |
171 |
$ |
165 |
3.6% |
| Basic net earnings per common share
($) |
$ |
0.89 |
$ |
0.74 |
20.3% |
| Adjusted basic net earnings per common
share(2) ($) |
$ |
0.89 |
$ |
1.07 |
(16.8)% |
| Adjusted EBITDA(2)
|
$ |
495 |
$ |
546 |
(9.3)% |
| Adjusted EBITDA margin(2)
|
|
6.9% |
|
7.6% |
|
|
|
|
The Company's basic net earnings per common share were
$0.89 compared to $0.74 in the same period in 2011, an increase of
$0.15, or 20.3%. Adjusted basic net
earnings per common share(2) declined $0.18, or 16.8%, and excluded the year-over-year
favourable impact of certain items, primarily the fair value
adjustment of the forward sale agreement for 9.6 million Loblaw
common shares, restructuring and other charges and the fair value
adjustment of commodity derivatives at Weston Foods.
The Company uses non-GAAP financial measures. See the "Non-GAAP
Financial Measures" section of this News Release for more
information on these non-GAAP financial measures.
OPERATING SEGMENTS
Weston Foods
| (unaudited) |
|
12 Weeks Ended |
| ($ millions) |
|
|
|
Mar. 24,
2012 |
|
Mar. 26, 2011 |
| Sales |
|
|
$ |
425 |
|
$ |
410 |
| Operating income |
|
|
$ |
60 |
|
$ |
19 |
| Adjusted operating income(2) |
|
|
$ |
59 |
|
$ |
57 |
| Adjusted operating margin(2) |
|
|
|
13.9% |
|
|
13.9% |
| Adjusted EBITDA(2) |
|
|
$ |
73 |
|
$ |
71 |
| Adjusted EBITDA margin(2) |
|
|
|
17.2% |
|
|
17.3% |
| |
|
|
|
|
|
|
|
Weston Foods sales in the first quarter of 2012 increased by
3.7% to $425 million compared to same
period in 2011. Foreign currency translation positively impacted
sales by approximately 0.8%. Excluding this impact, sales increased
2.9% due to the positive impact of higher pricing across key
product categories of 4.2%, partially offset by a decrease in
volumes of 1.3% when compared to the same period in 2011.
Weston Foods operating income in the first quarter of 2012 was
$60 million compared to $19 million in the same period in 2011. The
change in restructuring and other charges, the fair value
adjustment of commodity derivatives and share-based compensation
net of equity derivatives had a year-over-year favourable impact of
$39 million on Weston Foods operating
income.
Weston Foods adjusted operating income(2) was
$59 million in the first quarter of
2012 compared to $57 million in the
same period in 2011, an increase of $2
million, or 3.5%. Weston
Foods adjusted operating margin(2) remained unchanged at
13.9% in the first quarters of both 2012 and 2011. Adjusted
operating income(2) in the first quarter of 2012 was
positively impacted by higher pricing in key product categories and
the benefits realized from productivity improvements and other cost
reduction initiatives, which were partially offset by higher
commodity and fuel costs and lower sales volumes in the first
quarter of 2012 compared to the same period in 2011.
Loblaw
| (unaudited) |
|
12 Weeks Ended |
| ($ millions) |
|
|
|
Mar. 24, 2012 |
|
|
Mar. 26, 2011 |
| Sales |
|
|
$ |
6,937 |
|
$ |
6,872 |
| Operating income |
|
|
$ |
237 |
|
$ |
301 |
| Adjusted operating income(2) |
|
|
$ |
252 |
|
$ |
323 |
| Adjusted operating margin(2) |
|
|
|
3.6% |
|
|
4.7% |
| Adjusted EBITDA(2) |
|
|
$ |
422 |
|
$ |
475 |
| Adjusted EBITDA margin(2) |
|
|
|
6.1% |
|
|
6.9% |
| |
|
|
|
|
|
|
|
In the first quarter of 2012, Loblaw executed on its plan.
Despite a decline in year-over-year operating income, store
conditions improved, Loblaw made steady progress on its IT
implementation and took a disciplined approach to improving its
customer proposition.
Loblaw sales in the first quarter of 2012 increased by 0.9% to
$6,937 million compared to the same
period in 2011. Retail segment sales increased by 0.8% and
same-store sales declined by 0.7% (2011 - 0.1%), both negatively
impacted by the effect of one less day of store operations
estimated to be between 0.8% to 1.0%. Sales in food and drugstore
were flat, gas bar sales growth was strong, sales in general
merchandise, excluding apparel, were flat and sales growth in
apparel was strong. Loblaw experienced modest average quarterly
internal food price inflation during the first quarters of 2012 and
2011, which was lower than the average quarterly national food
price inflation of 3.7% (2011 - 2.5%) as measured by "The Consumer
Price Index for Food Purchased from Stores". Since the end of the
first quarter of 2011, Loblaw opened 25 corporate and franchise
stores and closed five corporate and franchise stores, resulting in
a net increase of 0.6 million square feet, or 1.2%. Loblaw sales in
the first quarter of 2012 were also positively impacted by an
increase in revenue from its Financial Services segment, which
includes President's Choice Bank ("PC Bank"), a subsidiary of
Loblaw. The increase in Financial Services segment revenue was
primarily driven by higher interchange fee income, interest income
and PC Telecom revenues when compared to the same period in
2011.
Loblaw operating income in the first quarter of 2012 decreased
by 21.3% to $237 million from
$301 million in the same period in
2011.
Loblaw adjusted operating income(2) was $252 million in the first quarter of 2012
compared to $323 million in the same
period in 2011. Loblaw adjusted operating margin(2) was
3.6% compared to 4.7% in the same period in 2011. The decreases in
adjusted operating income(2) and adjusted operating
margin(2) were attributable to increased transportation
costs and higher input costs outpacing internal food price
inflation, changes in the value of Loblaw's investments in its
franchise business, a charge related to the transition of certain
Ontario conventional stores to the
more cost effective and efficient operating terms of collective
agreements ratified in the third quarter of 2010 and incremental
costs related to investments in IT and supply chain. These
decreases were partially offset by other operating cost
efficiencies and improved shrink. Higher input costs that were not
entirely passed on to the consumer included an estimated
$10 million incremental investment in
Loblaw's customer proposition. Loblaw's adjusted operating
income(2) was also negatively impacted by the continued
investment in the growth of its Financial Services segment, which
includes PC Bank.
NET INTEREST EXPENSE AND OTHER FINANCING CHARGES
In the first quarter of 2012, net interest expense and other
financing charges decreased by $22
million to $44 million
compared to the same period in 2011. The decrease was due to an
increase of $22 million in non-cash
income related to the fair value adjustment of the forward sale
agreement for 9.6 million Loblaw common shares. Excluding this
impact, net interest expense and other financing charges were flat
compared to the same period in 2011.
INCOME TAXES
In the first quarter of 2012, income tax expense was $59 million compared to $72 million in the same period in 2011. The
effective income tax rate decreased to 25.7% in the first quarter
of 2012 compared to 30.4% in the same period in 2011. The decrease
was primarily due to a decrease in income tax expense related to
certain prior year income tax matters, reductions in the federal
and Ontario statutory income tax
rates and a reduction in non-deductible amounts.
OUTLOOK(1)
This outlook reflects the underlying operating performance of the
Company's operating segments as discussed below.
For the full year 2012, Weston Foods expects to deliver sales in
line with 2011 as market conditions are expected to remain
challenging. Higher commodity and input costs experienced in the
first quarter are expected to continue in the second quarter of
2012, putting increased pressure on operating margins when compared
to the same periods in 2011. Weston Foods will continue its efforts
to reduce costs through improved efficiencies and ongoing cost
reduction initiatives in an effort to achieve full year operating
margins in line with those in 2011.
Loblaw is focused on consistent execution to exceed customer
expectations with the right assortment, improved in-store
experience and competitive prices across all banners. For the full
year 2012, Loblaw estimates operating income to be down
year-over-year, with more pressure in the first half of the year,
as it does not expect its operations to cover the incremental costs
related to investments in IT and supply chain and the ongoing
investments in its customer proposition.
For the remainder of 2012, George Weston Limited anticipates
adjusted basic net earnings per common share(2) to be
down year-over-year, primarily due to the impact of the incremental
costs at Loblaw.
|
(1) |
This News Release contains forward-looking information. See
Forward-Looking Statements for a discussion of material factors
that could cause actual results to differ materially from the
conclusions, forecasts and projections herein and of the material
factors and assumptions that were applied in presenting the
conclusions, forecasts and projections presented herein. This News
Release must be read in conjunction with George Weston Limited's
filings with securities regulators made from time to time, all of
which can be found at www.weston.ca and www.sedar.com. |
|
(2) |
See non-GAAP financial measures. |
|
(3) |
Incremental costs related to investments in IT and supply chain
include IT costs, depreciation and amortization and supply chain
project costs. |
NON-GAAP FINANCIAL MEASURES
In this News Release the Company uses the following non-GAAP
financial measures: adjusted operating income and adjusted
operating margin, adjusted EBITDA and adjusted EBITDA margin and
adjusted basic net earnings per common share. The Company believes
these non-GAAP financial measures provide useful information to
both management and investors in measuring the financial
performance of the Company for the reasons outlined below.
Certain expenses and income that must be recognized under GAAP
are not necessarily reflective of the Company's underlying
operating performance. For this reason, management uses certain
non-GAAP financial measures to exclude the impact of these items
when analyzing consolidated and segment underlying operating
performance. These non-GAAP financial measures are also helpful in
assessing underlying operating performance on a consistent
basis.
From time to time, the Company may exclude additional items if
it believes doing so would result in a more effective analysis of
underlying operating performance. The exclusion of certain items
does not imply that they are non-recurring. Loblaw does not report
its results of operations on an adjusted basis, however the Company
excludes the impact of certain Loblaw items, as applicable, when
reporting its consolidated and segment results.
These non-GAAP financial measures do not have a standardized
meaning prescribed by GAAP and therefore they may not be comparable
to similarly titled measures presented by other publicly traded
companies, and they should not be construed as an alternative to
other financial measures determined in accordance with GAAP.
Adjusted Operating Income and Adjusted EBITDA
The Company believes adjusted operating income is useful in
assessing the Company's underlying operating performance and in
making decisions regarding the ongoing operations of its business.
The Company believes adjusted EBITDA is also useful in assessing
the underlying operating performance of the Company's ongoing
operations and in assessing the Company's ability to generate cash
flows to fund its cash requirements, including its capital
investment program.
The following tables reconcile adjusted operating income and
adjusted EBITDA to GAAP net earnings attributable to shareholders
of the Company reported for the periods ended as indicated.
| |
12 Weeks Ended |
| |
|
Mar.
24, 2012 |
|
Mar. 26,
2011 |
(unaudited)
($ millions) |
|
Weston
Foods |
|
|
Loblaw |
|
|
Other(1) |
|
|
Consolidated |
|
|
Weston
Foods |
|
|
Loblaw |
|
|
Other(1) |
|
|
Consolidated |
| Net earnings
attributable to shareholders of the Company |
|
|
|
|
|
|
|
|
|
$ |
124 |
|
|
|
|
|
|
|
|
|
|
$ |
105 |
| Add impact of the
following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-controlling
interests |
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
60 |
| Income taxes |
|
|
|
|
|
|
|
|
|
|
59 |
|
|
|
|
|
|
|
|
|
|
|
72 |
| Net interest expense
and other financing charges |
|
|
|
|
|
|
|
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
66 |
| Operating income
(loss) |
$ |
60 |
|
$ |
237 |
|
$ |
(23) |
|
$ |
274 |
|
$ |
19 |
|
$ |
301 |
|
$ |
(17) |
|
$ |
303 |
| Add (deduct) impact of
the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restructuring and
other charges(2) |
|
1 |
|
|
3 |
|
|
|
|
|
4 |
|
|
6 |
|
|
29 |
|
|
|
|
|
35 |
| Fair value adjustment
of commodity derivatives at Weston Foods |
|
(3) |
|
|
|
|
|
|
|
|
(3) |
|
|
16 |
|
|
|
|
|
|
|
|
16 |
| Share-based
compensation net of equity derivatives |
|
1 |
|
|
12 |
|
|
|
|
|
13 |
|
|
16 |
|
|
(7) |
|
|
|
|
|
9 |
| Foreign currency
translation losses |
|
|
|
|
|
|
|
23 |
|
|
23 |
|
|
|
|
|
|
|
|
17 |
|
|
17 |
| Adjusted operating
income |
$ |
59 |
|
$ |
252 |
|
$ |
|
|
$ |
311 |
|
$ |
57 |
|
$ |
323 |
|
$ |
|
|
$ |
380 |
| Depreciation and
amortization |
|
14 |
|
|
170 |
|
|
|
|
|
184 |
|
|
14 |
|
|
152 |
|
|
|
|
|
166 |
| Adjusted EBITDA |
$ |
73 |
|
$ |
422 |
|
$ |
|
|
$ |
495 |
|
$ |
71 |
|
$ |
475 |
|
$ |
|
|
$ |
546 |
|
(1) |
Operating income in the first quarter of 2012
included a loss of $23 million (2011 - $17 million) related to the
effect of foreign currency translation on a portion of the U.S.
dollar denominated cash and short term investments held by foreign
operations. |
| (2) |
Other charges at Loblaw in the first quarter of
2012 included $3 million (2011 - $21 million) related to changes in
Loblaw's distribution network. In the first quarter of 2011, a
charge of $8 million was also recorded related to an internal
realignment of Loblaw's business centered around its two primary
store formats, conventional and discount. |
First quarter year-over-year changes in the following
items influenced operating income:
Restructuring and other charges The
Company continuously evaluates strategic and cost reduction
initiatives related to its store infrastructure, manufacturing
assets, distribution networks and administrative infrastructure
with the objective of ensuring a low cost operating structure.
Restructuring activities related to these initiatives are ongoing.
The details of restructuring and other charges are included in the
"Reportable Operating Segments" section of the MD&A included in
GWL's Q1 2012 Quarterly Report to Shareholders.
Fair value adjustment of commodity derivatives at Weston
Foods Weston Foods is exposed to commodity price
fluctuations primarily as a result of purchases of certain raw
materials, fuels and utilities. In accordance with the Company's
risk management strategy, Weston Foods enters into commodity
derivatives to reduce the impact of price fluctuations in
forecasted raw material purchases over a specified period of time.
These commodity derivatives are not acquired for trading or
speculative purposes. Hedge accounting is not applied to these
commodity derivatives and as a result, changes in their fair value,
which include realized and unrealized gains and losses related to
future purchases of raw materials, are recorded in operating
income. In the first quarter of 2012, Weston Foods recorded income
of $3 million (2011 - a charge of
$16 million) related to the fair
value adjustment of exchange traded commodity derivatives. Despite
the impact of accounting for these commodity derivatives on the
Company's reported results, the derivatives have the economic
impact of largely mitigating the associated risks arising from
price fluctuations in the underlying commodities during the period
that the commodity derivatives are held.
Share-based compensation net of equity
derivatives Both GWL and Glenhuron Bank
Limited have entered into equity derivatives to partially hedge
their exposure to the impact of increases in the value of GWL and
Loblaw common shares on share-based compensation cost. The amount
of net share-based compensation cost recorded in operating income
is mainly dependent upon changes in the value of GWL and Loblaw
common shares and the number and vesting of outstanding restricted
share units ("RSU") and performance share units ("PSU") relative to
the number of common shares underlying the equity derivatives. The
Company assesses stock option plan, RSU plan, PSU plan and equity
derivative impacts on a net basis and therefore the impact of stock
options is also excluded from operating income when management
reviews consolidated and segment operating performance. In the
first quarter of 2012, a charge of $13
million (2011 - $9 million)
was recorded related to share-based compensation net of equity
derivatives.
Foreign currency translation losses The
Company's consolidated financial statements are expressed in
Canadian dollars. A portion of the Company's (excluding Loblaw's)
net assets are denominated in U.S. dollars and as a result, the
Company is exposed to foreign currency translation gains and
losses. The impact of foreign currency translation on a portion of
the U.S. dollar denominated net assets, primarily cash and short
term investments, held by foreign operations is recorded in
operating income. In the first quarter of 2012, foreign currency
translation losses of $23 million
(2011 - $17 million) were recorded in
operating income as a result of the appreciation of the Canadian
dollar.
Adjusted Basic Net Earnings per Common Share
The Company believes adjusted basic net earnings per common share
is useful in assessing the Company's underlying operating
performance and in making decisions regarding the ongoing
operations of its business.
The following table reconciles adjusted basic net earnings per
common share to GAAP basic net earnings per common share reported
for the periods ended as indicated.
| (unaudited)
|
|
|
12 Weeks Ended |
| ($) |
|
|
Mar. 24,
2012 |
|
|
Mar. 26, 2011 |
| Basic net earnings per common share
|
|
$ |
0.89 |
|
$ |
0.74 |
| (Deduct) add impact of the
following(1): |
|
|
|
|
|
|
| Fair value adjustment of the forward sale
agreement for 9.6 million Loblaw common shares |
|
|
(0.25) |
|
|
(0.12) |
| Restructuring and other charges |
|
|
0.02 |
|
|
0.13 |
| Fair value adjustment of commodity derivatives at
Weston Foods |
|
|
(0.02) |
|
|
0.09 |
| Share-based compensation net of equity derivatives
|
|
|
0.07 |
|
|
0.10 |
| Foreign currency translation
losses |
|
|
0.18 |
|
|
0.13 |
| Adjusted basic net earnings per
common share |
|
$ |
0.89 |
|
$ |
1.07 |
| |
|
|
|
|
|
|
| (1) |
Net of interest, income taxes and non-controlling interests, as
applicable. |
In addition to the items described in the "Adjusted Operating
Income and Adjusted EBITDA" section above, the first quarter
year-over-year change in the following item also influenced basic
net earnings per common share:
Fair value adjustment of the forward sale agreement for
9.6 million Loblaw common shares The fair
value adjustment of the forward sale agreement for 9.6 million
Loblaw common shares is non-cash and is included in consolidated
net interest expense and other financing charges. The adjustment is
determined by changes in the value of the underlying Loblaw shares.
At maturity, any cash paid under the forward sale agreement could
be offset by the sale of the underlying Loblaw common shares. The
first quarter year-over-year increase in income related to the fair
value adjustment of the forward sale agreement for 9.6 million
Loblaw common shares was $0.13 per
common share and was attributable to a greater decrease in the
market price of Loblaw common shares in the first quarter of 2012
compared to the same period in 2011.
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the
Company's objectives, plans, goals, aspirations, strategies,
financial condition, results of operations, cash flows,
performance, prospects and opportunities. These forward-looking
statements are typically identified by words such as "anticipate",
"expect", "believe", "foresee", "could", "estimate", "goal",
"intend", "plan", "seek", "strive", "will", "may" and "should" and
similar expressions, as they relate to the Company and its
management. In this News Release, forward-looking statements
include the Company's continued expectations that for the full year
2012:
For Weston Foods:
- sales will be in line with 2011;
- commodity and input costs in the first half of 2012 will be
higher than the comparable period in 2011, putting increased
pressure on operating margins in the first half of 2012 when
compared to the same period in 2011; and
- efforts will be made to achieve full year operating margins in
line with those in 2011.
For Loblaw Companies Limited ("Loblaw"):
- there will be incremental costs related to investments in
information technology ("IT") and supply chain, as well as
continued investment in Loblaw's customer proposition; and
- operating income will be down year-over-year, with more
pressure in the first half of the year, as a result of Loblaw's
expectation that its operations will not cover the incremental
costs related to the investments in IT and supply chain and its
customer proposition.
For the Company:
- adjusted basic net earnings per common share(1) will
be down year-over-year.
These forward-looking statements are not historical facts but
reflect the Company's current expectations concerning future
results and events. They also reflect management's current
assumptions regarding the risks and uncertainties referred to below
and their respective impact on the Company. In addition, the
Company's expectation with regard to Weston Foods' operating
margins in 2012 is based in part on the assumptions that there will
be no significant unanticipated increase in the price of
commodities and other input costs that Weston Foods will not be able to offset
through pricing, improved efficiencies and ongoing cost reduction
initiatives. The Company's expectation with regard to Loblaw's
operating income in 2012 is based in part on the assumptions that
Loblaw achieves its plan to increase net retail square footage by
1% and there are no unexpected adverse events or costs related to
Loblaw's investments in IT and supply chain. The Company's
expectation with regard to adjusted basic net earnings per common
share(1) in 2012 is based in part on the assumption that
interest rates, income tax rates and the Company's ownership
interest in Loblaw will be similar to those in 2011.
These forward-looking statements are subject to a number of
risks and uncertainties that could cause actual results or events
to differ materially from current expectations, including, but not
limited to:
- failure to realize sales growth, anticipated cost savings or
operating efficiencies from the Company's major initiatives,
including investments in the Company's IT systems and the Company's
IT systems implementation, or unanticipated results from these
initiatives;
- the inability of the Company's IT infrastructure to support the
requirements of the Company's business;
- unanticipated results associated with the Company's strategic
initiatives and the impact of acquisitions or dispositions of
businesses on the Company's future revenues and earnings;
- heightened competition, whether from current competitors or new
entrants to the marketplace;
- changes in economic conditions including the rate of inflation
or deflation, changes in interest and foreign currency exchange
rates and changes in derivative and commodity prices;
- public health events;
- risks associated with product defects, food safety and product
handling;
- failure to achieve desired results in labour negotiations,
including the terms of future collective bargaining agreements
which could lead to work stoppages;
- the inability of the Company to manage inventory to minimize
the impact of obsolete or excess inventory and to control
shrink;
- failure by the Company to maintain appropriate records to
support its compliance with accounting, tax or legal rules,
regulations and policies;
- the availability and increased costs relating to raw materials,
ingredients and utilities, including electricity and fuel;
- failure of the Company's franchised stores to perform as
expected;
- reliance on the performance and retention of third-party
service providers including those associated with the Company's
supply chain and apparel business;
- supply and quality control issues with vendors;
- changes to or failure to comply with laws and regulations
affecting the Company and its businesses, including changes to the
regulation of generic prescription drug prices and the reduction of
reimbursement under public drug benefit plans and the elimination
or reduction of professional allowances paid by drug
manufacturers;
- changes in the Company's income, commodity, other tax and
regulatory liabilities including changes in tax laws, regulations
or future assessments;
- any requirement of the Company to make contributions to its
registered funded defined benefit pension plans or the
multi-employer pension plans in which it participates in excess of
those currently contemplated;
- the risk that the Company would experience a financial loss if
its counterparties fail to meet their obligations in accordance
with the terms and conditions of their contracts with the Company;
and
- the inability of the Company to collect on its credit card
receivables.
This is not an exhaustive list of the factors that may affect
the Company's forward-looking statements. Other risks and
uncertainties not presently known to the Company or that the
Company presently believes are not material could also cause actual
results or events to differ materially from those expressed in its
forward-looking statements. Additional risks and uncertainties are
discussed in the Company's materials filed with the Canadian
securities regulatory authorities from time to time, including the
Enterprise Risks and Risk Management section of the MD&A
included in GWL's Q1 2012 Quarterly Report to Shareholders and
Section 12, "Enterprise Risks and Risk Management", of MD&A
included in GWL's 2011 Annual Report. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
reflect the Company's expectations only as of the date of this News
Release. The Company disclaims any intention or obligation to
update or revise these forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
| (1) |
See non-GAAP financial measures. |
SELECTED FINANCIAL INFORMATION
The following includes selected quarterly financial information
which is prepared by management in accordance with International
Financial Reporting Standards ("IFRS") and is based on the
Company's 2012 First Quarter Report to Shareholders. This financial
information does not contain all disclosures required by IFRS, and
accordingly, this financial information should be read in
conjunction with the Company's 2011 Annual Report and 2012 First
Quarter Report to Shareholders available in the Investor Centre
section of the Company's website at www.weston.ca.
Condensed Consolidated Statements of Earnings
(unaudited)
| |
|
|
12 Weeks Ended |
| ($ millions except where otherwise
indicated) |
|
|
Mar. 24, 2012 |
|
|
Mar. 26, 2011 |
| Revenue |
|
$ |
7,224 |
|
$ |
7,148 |
| Operating Expenses |
|
|
|
|
|
|
| |
Cost of inventories sold |
|
|
5,422 |
|
|
5,341 |
| |
Selling, general and administrative expenses |
|
|
1,528 |
|
|
1,504 |
|
|
|
|
6,950 |
|
|
6,845 |
| Operating Income |
|
|
274 |
|
|
303 |
| Net Interest Expense and Other
Financing Charges |
|
|
44 |
|
|
66 |
| Earnings Before Income
Taxes |
|
|
230 |
|
|
237 |
| Income Taxes |
|
|
59 |
|
|
72 |
| Net Earnings |
|
|
171 |
|
|
165 |
| Attributable to: |
|
|
|
|
|
|
| |
Shareholders of the Company |
|
|
124 |
|
|
105 |
| |
Non-Controlling Interests |
|
|
47 |
|
|
60 |
| Net Earnings |
|
$ |
171 |
|
$ |
165 |
Net Earnings per Common
Share ($)
|
|
|
|
|
|
|
| Basic |
|
$ |
0.89 |
|
$ |
0.74 |
| Diluted |
|
$ |
0.89 |
|
$ |
0.71 |
| |
|
|
|
|
|
|
Condensed Consolidated Balance Sheets
(unaudited)
| |
|
|
As at |
| ($ millions) |
|
|
Mar. 24,
2012 |
|
|
Mar. 26,
2011 |
|
|
Dec. 31,
2011 |
| ASSETS |
|
|
|
|
|
|
|
|
|
| Current Assets |
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents |
|
$ |
1,134 |
|
$ |
754 |
|
$ |
1,372 |
| |
Short term investments |
|
|
2,221 |
|
|
2,323 |
|
|
2,362 |
| |
Accounts receivable |
|
|
549 |
|
|
479 |
|
|
559 |
| |
Credit card receivables |
|
|
1,987 |
|
|
1,887 |
|
|
2,101 |
| |
Inventories |
|
|
2,027 |
|
|
2,020 |
|
|
2,147 |
| |
Income taxes recoverable |
|
|
52 |
|
|
17 |
|
|
37 |
| |
Prepaid expenses and other assets |
|
|
129 |
|
|
102 |
|
|
122 |
| |
Assets held for sale |
|
|
18 |
|
|
68 |
|
|
32 |
| Total Current Assets |
|
|
8,117 |
|
|
7,650 |
|
|
8,732 |
| Fixed Assets |
|
|
9,135 |
|
|
8,835 |
|
|
9,172 |
| Investment Properties |
|
|
95 |
|
|
74 |
|
|
82 |
| Goodwill and Intangible Assets |
|
|
1,545 |
|
|
1,548 |
|
|
1,555 |
| Deferred Income Taxes |
|
|
299 |
|
|
288 |
|
|
295 |
| Security Deposits |
|
|
348 |
|
|
248 |
|
|
367 |
| Franchise Loans Receivable |
|
|
352 |
|
|
315 |
|
|
331 |
| Other Assets |
|
|
831 |
|
|
859 |
|
|
789 |
| Total Assets |
|
$ |
20,722 |
|
$ |
19,817 |
|
$ |
21,323 |
| LIABILITIES |
|
|
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
|
|
|
|
|
|
| |
Bank indebtedness |
|
|
|
|
$ |
1 |
|
$ |
3 |
| |
Trade and other payables |
|
$ |
3,263 |
|
|
3,280 |
|
|
3,940 |
| |
Provisions |
|
|
65 |
|
|
99 |
|
|
67 |
| |
Short term debt |
|
|
1,290 |
|
|
1,251 |
|
|
1,280 |
| |
Long term debt due within one year |
|
|
82 |
|
|
352 |
|
|
87 |
| Total Current
Liabilities |
|
|
4,700 |
|
|
4,983 |
|
|
5,377 |
| Provisions |
|
|
91 |
|
|
94 |
|
|
94 |
| Long Term Debt |
|
|
6,753 |
|
|
6,164 |
|
|
6,757 |
| Deferred Income Taxes |
|
|
175 |
|
|
164 |
|
|
160 |
| Other Liabilities |
|
|
997 |
|
|
751 |
|
|
1,033 |
| Capital Securities |
|
|
222 |
|
|
221 |
|
|
222 |
| Total Liabilities |
|
|
12,938 |
|
|
12,377 |
|
|
13,643 |
| EQUITY |
|
|
|
|
|
|
|
|
|
| Share Capital |
|
|
950 |
|
|
950 |
|
|
950 |
| Contributed Surplus |
|
|
19 |
|
|
25 |
|
|
24 |
| Retained Earnings |
|
|
4,584 |
|
|
4,362 |
|
|
4,496 |
| Accumulated Other Comprehensive
Loss |
|
|
(25) |
|
|
(33) |
|
|
(11) |
| Total Equity
Attributable to Shareholders of the Company |
|
|
5,528 |
|
|
5,304 |
|
|
5,459 |
| Non-Controlling Interests |
|
|
2,256 |
|
|
2,136 |
|
|
2,221 |
| Total Equity |
|
|
7,784 |
|
|
7,440 |
|
|
7,680 |
| Total Liabilities and
Equity |
|
$ |
20,722 |
|
$ |
19,817 |
|
$ |
21,323 |
| |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flow
(unaudited)
| |
|
12 Weeks Ended |
| ($ millions) |
|
|
Mar. 24, 2012 |
|
|
Mar. 26, 2011 |
| Operating
Activities |
|
|
|
|
|
|
| |
Net earnings |
|
$ |
171 |
|
$ |
165 |
| |
Income taxes |
|
|
59 |
|
|
72 |
| |
Net interest expense and other
financing charges |
|
|
44 |
|
|
66 |
| |
Depreciation and amortization |
|
|
184 |
|
|
166 |
| |
Foreign currency translation
losses |
|
|
23 |
|
|
17 |
| |
Income taxes paid |
|
|
(73) |
|
|
(78) |
| |
Interest received |
|
|
9 |
|
|
17 |
| |
Net decrease in credit card
receivables |
|
|
114 |
|
|
110 |
| |
Change in non-cash working
capital |
|
|
(580) |
|
|
(541) |
| |
Fixed assets and other related
impairments |
|
|
3 |
|
|
4 |
| |
Other |
|
|
8 |
|
|
(4) |
| Cash Flows used in Operating
Activities |
|
|
(38) |
|
|
(6) |
| Investing Activities |
|
|
|
|
|
|
| |
Fixed asset purchases |
|
|
(144) |
|
|
(162) |
| |
Change in short term investments |
|
|
103 |
|
|
901 |
| |
Business acquisitions - net of
cash acquired |
|
|
|
|
|
(12) |
| |
Proceeds from fixed asset sales |
|
|
1 |
|
|
5 |
| |
Change in franchise investments and
other receivables |
|
|
(17) |
|
|
(1) |
| |
Change in security deposits |
|
|
14 |
|
|
183 |
| |
Other |
|
|
|
|
|
(7) |
| Cash Flows (used in) from
Investing Activities |
|
|
(43) |
|
|
907 |
| Financing Activities |
|
|
|
|
|
|
| |
Change in bank indebtedness |
|
|
(4) |
|
|
(11) |
| |
Change in short term debt |
|
|
10 |
|
|
380 |
| |
Long term debt - Issued |
|
|
23 |
|
|
57 |
| |
-
Retired |
|
|
(29) |
|
|
(858) |
| |
Subsidiary share
capital - Issued |
|
|
2 |
|
|
3 |
| |
-
Retired |
|
|
(2) |
|
|
|
| |
Interest paid |
|
|
(92) |
|
|
(111) |
| |
Dividends - To
common shareholders |
|
|
(46) |
|
|
(1,046) |
| |
-
To preferred shareholders |
|
|
(11) |
|
|
(11) |
| Cash Flows used in Financing
Activities |
|
|
(149) |
|
|
(1,597) |
| Effect of foreign
currency exchange rate changes on cash and cash equivalents |
|
|
(8) |
|
|
(3) |
| Change in Cash and Cash
Equivalents |
|
|
(238) |
|
|
(699) |
| Cash and Cash Equivalents, Beginning
of Period |
|
|
1,372 |
|
|
1,453 |
| Cash and Cash
Equivalents, End of Period |
|
$ |
1,134 |
|
$ |
754 |
| |
|
|
|
|
|
|
2011 ANNUAL REPORT AND 2012 FIRST QUARTER REPORT TO
SHAREHOLDERS
The Company's 2011 Annual Report and 2012 First Quarter Report to
Shareholders are available in the Investor Centre section of the
Company's website at www.weston.ca and have been filed with SEDAR
and will be available at www.sedar.com.
INVESTOR RELATIONS
Shareholders, security analysts and investment professionals should
direct their requests to Mr. Geoffrey H.
Wilson, Senior Vice President, Financial Control and
Investor Relations, at the Company's Executive Office or by e-mail
at investor@weston.ca.
Additional financial information has been filed electronically
with the Canadian securities regulatory authorities in Canada through SEDAR. This News Release
includes selected information on Loblaw Companies Limited, a
63.0%-owned public reporting subsidiary company with shares trading
on the Toronto Stock Exchange. For information regarding Loblaw,
readers should also refer to the materials filed by Loblaw with the
Canadian securities regulatory authorities from time to time. These
filings are also maintained at Loblaw's corporate website at
www.loblaw.ca.
CONFERENCE CALL AND WEBCAST PRESENTATION
George Weston Limited will host a conference call as well as an
audio webcast on Tuesday, May 8, 2012
at 11:00 a.m. (EST). To access via
tele-conference, please dial (647) 427-7450. The playback will be
available two hours after the event at (416) 849-0833, passcode:
68967311#. To access via audio webcast, please visit the Investor
Centre section of www.weston.ca. Pre-registration will be
available.
ANNUAL MEETING
The George Weston Limited Annual Meeting of Shareholders will be
held on Thursday, May 10, 2012 at
11:00 a.m. (EST) at The Royal
Conservatory, Koerner Hall, TELUS
Centre for Performance and Learning, 273 Bloor Street West,
Toronto, Ontario, Canada. To
access via tele-conference, please dial (647) 427-7450. The
playback will be available two hours after the event at (416)
849-0833, passcode: 66303839#. To access via audio webcast, please
visit the Investor Centre section of www.weston.ca.
Pre-registration will be available.
SOURCE George Weston Limited
