Canada Bread Reports Results for Fourth Quarter and Fiscal 2008



    TORONTO, Feb. 24 /CNW/ - Canada Bread Company, Limited (TSX: CBY) today
reported its financial results for the fourth quarter and year ended December
31, 2008.

    
    -   Adjusted Operating Earnings increased 7.8% compared to the prior year
        fourth quarter and Adjusted Operating Earnings per Share increased by
        28% to $1.13
    -   Net earnings per share of $1.04 compared to $0.93 last year
    -   Margins were partially restored in the fourth quarter due to earlier
        price increases and lower wheat costs, although Adjusted Operating
        Earnings for the year declined 24.6%

    Note:  All earnings measures are defined as earnings from operations
           before restructuring and other related costs and other income. All
           earnings per share measures are defined as earnings per share
           before restructuring and other related costs and other income.

    "Despite a challenging first half of 2008, we ended the year with a return
to stability and improved earnings," said Richard Lan, President and CEO. "The
recent decline in commodity prices, combined with price increases helped to
restore margins in the fourth quarter. Across our businesses, we remain
focused on building volume through a steadfast commitment to our customers,
innovation and new category expansion."

    Financial Overview
    ------------------
    

    Sales for the fourth quarter increased by 13.1% to $445.0 million
compared to the same period last year, while sales for the year increased by
12.9% to $1.7 billion, reflecting higher selling prices and contributions from
acquisitions. Excluding acquisitions, sales increased by 8.8% in the fourth
quarter compared to last year and by 8.9% for the year.
    For the fourth quarter, earnings from operations before restructuring and
other related costs ("Adjusted Operating Earnings") increased by 7.8% to $33.8
million compared to $31.4 million last year, while Adjusted Operating Earnings
for the year declined by 24.6% to $97.6 million from $129.5 million last year.
Net earnings before restructuring and other related costs for the quarter
increased 28.1% to $28.7 million ($1.13 per share), compared to $22.4 million
($0.88 per share) last year. Net earnings before restructuring and other
related costs for the year declined 13.1% to $73.1 million ($2.87 per share),
compared to $84.2 million ($3.31 per share) last year.
    The following is a summary of Adjusted Earnings per Share (EPS) defined
as EPS before restructuring and other related costs and certain non-recurring
tax adjustments.

    
    -------------------------------------------------------------------------
                                           Fourth quarter       Full year
    Per share                               2008     2007     2008     2007
    -------------------------------------------------------------------------
    EPS                                     $1.04    $0.93    $2.55    $3.30
    Restructuring and other related costs   $0.09    $0.07    $0.32    $0.12
    Tax benefit from lower future
     tax rates(i)                                   ($0.11)           ($0.11)
    -------------------------------------------------------------------------
    Adjusted EPS (ii)                       $1.13    $0.88    $2.87    $3.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)  During the fourth quarter of 2007, the Company recorded an unusually
         large net tax benefit of $2.8 million related to the enactment of
         lower future tax rates
    (ii) This table does not add due to rounding


    Business Segment Review
    -----------------------

    Following is a summary of Adjusted Operating Earnings by business segment:

    -------------------------------------------------------------------------
                         Fourth quarter                Full year
    ($ millions)          2008     2007    Change    2008     2007    Change
    -------------------------------------------------------------------------
    Fresh Bakery          $25.4    $15.7    62.0%    $76.5    $88.4   (13.4%)
    Frozen Bakery          $8.4    $15.7   (46.3%)   $21.1    $41.1   (48.6%)
    -------------------------------------------------------------------------
                          $33.8    $31.4     7.8%    $97.6   $129.5   (24.6%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Fresh Bakery (Fresh bakery products, specialty baked goods and hand-held
snacks, and fresh pasta and sauces)

    Fresh Bakery sales for the fourth quarter increased 16.8% to $279.1
million compared to $239.0 million last year, largely due to the benefit of
price increases implemented during the year and contributions from
acquisitions. North American bakery volumes remained consistent with the
fourth quarter last year. Sales for 2008 increased 15.7% to $1.1 billion
compared to $945.9 million last year.
    Adjusted Operating Earnings for the fourth quarter increased to $25.4
million compared to $15.7 million last year, while Adjusted Operating Earnings
for the year declined to $76.5 million compared to $88.4 million for 2007,
reflecting the significant impact of high commodity prices earlier in 2008.
The combined impacts of price increases implemented in December 2007 and March
2008 and declining wheat prices contributed to margin improvement in the
fourth quarter, but did not cover losses experienced earlier in the year.
While commodity prices declined in the fourth quarter of 2008, the concurrent
strengthening of the U.S. dollar partially reduced the benefit of lower
commodity wheat prices in the Canadian fresh bakery business, impacting margin
recovery.

    Frozen Bakery (North American and U.K. frozen bakery products; including
frozen par-baked and specialty bakery products)

    Frozen Bakery sales for the fourth quarter increased 7.5% to $165.8
million compared to $154.3 million last year, largely due to the benefit of
price increases implemented during the year and mix improvements. Sales for
the year increased 8.3% to $614.1 million compared to $567.3 million last
year.
    Adjusted Operating Earnings for the fourth quarter declined to $8.4
million compared to $15.7 million last year and declined 48.6% from $41.1
million in 2007 to $21.1 million for the year. This reflects the significant
impact of high commodity prices earlier in 2008 and higher production costs.
While North American frozen bakery operations benefited from mix improvements,
higher utility, maintenance costs and production inefficiencies due to the
transfer of production from the Toronto Bagel Plant to other regional plants
impacted their earnings during the quarter. The U.K. bakery operations
experienced higher production costs due to a new bagel oven commissioned at
the Rotherham plant to replace an oven destroyed by fire earlier in the year.
These start-up costs, as well as business interruption losses throughout the
year, were partially offset by an $8.3 million insurance payment in the fourth
quarter that is recorded in other income. In addition, the U.K. business was
further impacted by a weak economy which resulted in decreased sales volumes
of its premium specialty bakery products. To further integrate acquisitions
and improve capacity utilization, two sub-scale bakery plants were closed and
production moved to other plants.

    Other Income: The Company recorded other income for the fourth quarter of
$8.3 million, compared to $0.1 million in 2007 due to insurance proceeds
received to cover business interruption losses resulting from an oven fire
that occurred at the Company's bagel plant in Rotherham, United Kingdom
earlier in the year. During the year, the Company received $14.7 million in
insurance payments related to this fire.

    
    Other Matters
    -------------
    

    On February 23, 2009 Canada Bread Company, Limited declared a dividend of
$0.06 per share payable on April 1, 2009 to shareholders of record on March
10, 2009. Unless indicated otherwise, by the Company, in writing at or before
the time the dividend is paid, each dividend paid by the corporation in 2009
or a subsequent year is an eligible dividend for the purposes of the "Enhanced
Dividend Tax Credit System."


    
    Forward-Looking Statements
    --------------------------
    

    This document contains, and the Company's oral and written public
communications often contain, forward-looking statements that are based on
current expectations, estimates, forecasts and projections about the
industries in which the Company operates and beliefs and assumptions made by
the Management of the Company. Such statements include, but are not limited
to, statements with respect to our objectives and goals, as well as statements
with respect to our beliefs, plans, objectives, expectations, anticipations,
estimates and intentions. 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 statements. These statements are not guarantees of future
performance and involve assumptions and risks and uncertainties that are
difficult to predict.
    In particular, the specific forward looking statements contained in this
document are based on a variety of factors and assumptions including, but not
limited to expectations concerning performance of the Company's business in
general is based on a number of factors and assumptions including, but not
limited to: the condition of the Canadian and United States economies; the
rate of exchange of the Canadian dollar to the U.S. dollar; 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 under "Risk Factors" in the Company's Management Discussion and
Analysis 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 industry 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
statements, 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 or implied by forward-looking statements are
discussed more fully in the Company's Management Discussion and Analysis
including in the section entitled "Risk Factors" that will be available on
SEDAR at www.sedar.com.
    The Company does not intend, and the Company disclaims any obligation to
update any forward-looking statements, whether written or oral, or whether as
a result of new information, future events or otherwise except as required by
law.

    Canada Bread Company Limited, which is 89.8% owned by owned by Maple Leaf
Foods Inc., is a leading manufacturer and distributor of fresh bakery
products, frozen par-baked products and fresh pasta and sauces.  The Company
had 2008 sales of $1.7 billion and employs approximately 8,500 people at its
operations across North America and in the United Kingdom.


    
    Consolidated Financial Statements
    (Expressed in Canadian dollars)

    CANADA BREAD COMPANY,
    LIMITED

    Three and twelve months ended December 31, 2008 and 2007



    CANADA BREAD COMPANY, LIMITED
    Consolidated Balance Sheets
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                                           As at December 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Assets

    Current Assets:
      Cash and cash equivalents                     $    11,721  $     2,847
      Accounts receivable                                57,079       68,464
      Due from Maple Leaf Foods Inc.                         54            -
      Inventories                                        58,696       47,036
      Future tax asset - current                          5,388        5,937
      Prepaid expenses and other receivables             12,923        4,798
      Other current assets                                    -       80,586
      -----------------------------------------------------------------------
                                                    $   145,861  $   209,668

    Property and equipment                              417,150       396,623
    Goodwill                                            404,484       371,066
    Other long-term assets                                9,964         7,955
    Other intangible assets                              17,451        12,870
    -------------------------------------------------------------------------
                                                    $   994,910  $    998,182
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current Liabilities:
      Bank indebtedness                             $     8,894  $      9,845
      Accounts payable and accrued charges              207,928       177,695
      Due to Maple Leaf Foods Inc.                            -         5,408
      Dividends payable                                   1,525         1,525
      Income and other taxes payable                     10,860        15,078
      Current portion of long-term debt                      41       107,644
      -----------------------------------------------------------------------
                                                    $   229,248  $    317,195

    Long-term debt                                        4,477             5
    Future tax liability - non-current                   36,043        33,522
    Other long-term liabilities                          16,802        12,417
    Shareholders' equity                                708,340       635,043
    -------------------------------------------------------------------------
                                                    $   994,910  $    998,182
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANADA BREAD COMPANY, LIMITED
    Consolidated Statements of Earnings
    (In thousands of Canadian dollars, except share amounts)

    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended,
                                       December 31,              December 31,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)

    Sales                 $   444,957  $   393,270  $ 1,708,330  $ 1,513,179
    Cost of goods sold        357,176      310,160    1,411,729    1,194,337
    -------------------------------------------------------------------------

    Gross Margin          $    87,781  $    83,110  $   296,601  $   318,842
    Selling, general and
     administrative
     expenses                  53,950       51,728      198,969      189,388
    -------------------------------------------------------------------------

    Earnings from
     operations before
     the following:       $    33,831  $    31,382  $    97,632  $   129,454
    Restructuring and
     other related costs       (2,082)      (2,427)     (10,492)      (4,619)
    Other income                8,330           95       14,702          581
    -------------------------------------------------------------------------

    Earnings before
     interest and income
     taxes                $    40,079  $    29,050  $   101,842  $   125,416
    Interest expense            1,861        1,542        7,843        5,618
    -------------------------------------------------------------------------

    Earnings before
     income taxes         $    38,218  $    27,508  $    93,999  $   119,798
    Income taxes               11,758        3,979       29,063       36,047

    -------------------------------------------------------------------------
    Net earnings          $    26,460  $    23,529  $    64,936  $    83,751
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
     - basic and diluted  $      1.04  $      0.93  $      2.55  $      3.30

    -------------------------------------------------------------------------

    Weighted average
     number of shares
     (millions)                  25.4         25.4         25.4         25.4

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANADA BREAD COMPANY, LIMITED

    Consolidated Statements of Retained Earnings
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                                     Years ended December 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Retained earnings, beginning of year            $   528,327  $   450,733

    Net earnings                                         64,936       83,751

    Dividends declared ($0.24 per share;
     2007: $0.24 per share)                              (6,100)      (6,100)

    Inter-company acquisitions                                -          (57)
    -------------------------------------------------------------------------
    Retained earnings, end of year                  $   587,163  $   528,327
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended,
                                       December 31,              December 31,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)

    Net earnings for the
     period               $    26,460  $    23,529  $    64,936  $    83,751

    Other comprehensive
     income (loss)

      Change in
       accumulated foreign
       currency translation
       adjustment              16,862      (10,560)      20,161      (29,290)

      Change in unrealized
       derivative gain on
       cash flow hedges        (4,065)      (1,775)      (5,700)      (1,543)
    -------------------------------------------------------------------------
                          $    12,797  $   (12,335) $    14,461  $   (30,833)
    -------------------------------------------------------------------------
    Comprehensive income  $    39,257  $    11,194  $    79,397  $    52,918
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANADA BREAD COMPANY, LIMITED
    Consolidated Statements of Cash Flows
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended,
                                       December 31,              December 31,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)

    CASH PROVIDED BY
     (USED IN)

    Operating activities
      Net earnings        $    26,460  $    23,529  $    64,936  $    83,751
      Add (deduct) items
       not affecting cash:
        Depreciation and
         amortization          14,411       12,676       55,425       49,612
        Future income taxes     2,211        3,386        3,605        4,374
        Loss (gain) on sale
         of property and
         equipment                (36)         (68)         103         (515)
        Other                     332        1,170        1,419       (1,369)
      Asset impairments
       and change in
       restructuring and
       other related costs     (2,867)       1,455        4,037        2,002
      Change in operating
       working capital         41,662       (7,056)       7,910      (15,740)
    -------------------------------------------------------------------------
    Cash provided by
     operating activities $    82,173  $    35,092  $   137,435  $   122,115

    Financing activities
      Dividends paid           (1,525)      (1,525)      (6,100)      (6,100)
      Change in long-term
       debt                   (73,987)     (21,435)    (103,132)      20,764
      Settlement of
       cross-currency
       interest rate swap
       with Maple Leaf
       Foods Inc.                   -            -       80,586            -
    -------------------------------------------------------------------------
    Cash provided by
     (used in)
     financing activities $   (75,512) $   (22,960) $   (28,646) $    14,664

    Investing activities
      Additions to
       property and
       equipment              (14,145)     (21,146)     (54,170)     (85,729)
      Proceeds from sale
       of property and
       equipment                   -           134          512          922
      Acquisition of
       businesses                (114)        (396)     (44,827)     (48,865)
      Change in intangible
       assets                    (382)          (4)        (479)         155
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities           $   (14,641) $   (21,412) $   (98,964) $  (133,517)

    Increase (decrease) in
     cash and cash
     equivalents               (7,980)      (9,280)       9,825        3,262

    Cash and cash
     equivalents (bank
     indebtedness),
     beginning of period       10,807        2,282       (9,668)     (10,260)

    -------------------------------------------------------------------------
    Cash and cash
     equivalents (bank
     Indebtedness), end
     of period            $     2,827  $    (6,998) $     2,827  $    (6,998)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANADA BREAD COMPANY, LIMITED
    Segmented Financial Information
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended,
                                       December 31,              December 31,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)
    Sales
      Fresh Bakery        $   279,132  $   239,003  $ 1,094,190  $   945,853
      Frozen Bakery           165,825      154,267      614,140      567,326
    -------------------------------------------------------------------------
                          $   444,957  $   393,270  $ 1,708,330  $ 1,513,179
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings from
     operations before
     restructuring and
     other related costs
     and other income
      Fresh Bakery        $    25,398  $    15,677  $    76,529  $    88.402
      Frozen Bakery             8,433       15,705       21,103       41,052
    -------------------------------------------------------------------------
                          $    33,831  $    31,382  $    97,632  $   129,454
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Capital Expenditures
      Fresh Bakery        $     7,377  $     9,425  $    24,462  $    40,393
      Frozen Bakery             6,768       11,721       29,708       45,336
    -------------------------------------------------------------------------
                          $    14,145  $    21,146  $    54,170  $    85,729
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and
     amortization
      Fresh Bakery        $     7,588  $     6,507  $    28,563  $    25,683
      Frozen Bakery             6,823        6,169       26,862       23,929
    -------------------------------------------------------------------------
                          $    14,411  $    12,676  $    55,425  $    49,612
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                           As at December 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Total assets
      Fresh Bakery                                  $   440,733  $   400,518
      Frozen Bakery                                     523,843      573,772
      Non-allocated assets                               30,334       23,892
    -------------------------------------------------------------------------
                                                    $   994,910  $   998,182
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Goodwill
      Fresh Bakery                                  $   156,268  $   131,256
      Frozen Bakery                                     248,216      239,810
    -------------------------------------------------------------------------
                                                    $   404,484  $   371,066
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Lynda Kuhn, Senior Vice-President,
Communications & Consumer Relations, (416) 926-2026, www.canadabread.ca


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890