Mar. 3, 2011 (Canada NewsWire Group) --
TORONTO, March 3 /CNW/ - George Weston Limited (TSX: WN) ("GWL") and its subsidiaries (collectively the "Company") today is announcing its unaudited results for the fourth quarter of 2010 and the release of its 2010 Annual Report, including the Company's audited annual Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") for the fiscal year ended December 31, 2010.
The Company's 2010 Annual Report 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.
George Weston Limited's fourth quarter 2010 basic net earnings per common share from continuing operations were $0.70 compared to $0.53 in the same period in 2009, an increase of $0.17. The year-over-year reduction in foreign currency translation losses positively impacted fourth quarter 2010 basic net earnings per common share from continuing operations by $0.27. Excluding these foreign currency translation losses and other specific items identified in the net earnings from continuing operations section below, the Company's basic net earnings per common share from continuing operations were $0.80 for the fourth quarter of 2010 compared to $0.89 in the same period in 2009. The strong improvement in operating performance from the Company's two operating segments, Weston Foods and Loblaw, was more than offset by an increase in income tax expense, primarily relating to certain prior year income tax matters, in the fourth quarter of 2010 compared to the same period in 2009.
2010 basic net earnings per common share from continuing operations were $3.16 compared to $0.64 in 2009, an increase of $2.52. Of this increase, $0.53 was attributable to improvements in the operating performance of the Company's two operating segments. The balance of the improvement was primarily attributable to the positive impact of the year-over-year reduction in foreign currency translation losses. 2010 basic net earnings per common share were $3.16 compared to $7.68 in 2009. Included in 2009 net earnings per common share were net earnings per common share from discontinued operations of $7.04 which included the gain on disposal related to the sale of the U.S. fresh bakery business.
<<
12 Weeks Ended
--------------
Dec. 31, Dec. 31,
($ millions except where 2010 2009
otherwise indicated) (unaudited) (unaudited) Change
-------------------------------------------------------------------------
Sales $ 7,417 $ 7,537 (1.6)%
Operating income $ 330 $ 287 15.0%
Operating margin 4.4% 3.8%
Interest expense and other
financing charges $ 67 $ 99 (32.3)%
Net earnings from continuing
operations $ 101 $ 79 27.8%
Net earnings $ 101 $ 82 23.2%
Basic net earnings per common
share from continuing
operations ($) $ 0.70 $ 0.53 32.1%
Diluted net earnings per common
share from continuing
operations ($) $ 0.70 $ 0.52 34.6%
Basic net earnings per common
share ($) $ 0.70 $ 0.56 25.0%
Diluted net earnings per common
share ($) $ 0.70 $ 0.55 27.3%
-------------------------------------------------------------------------
EBITDA(2) $ 497 $ 442 12.4%
EBITDA margin(2) 6.7% 5.9%
-------------------------------------------------------------------------
--------------
52 Weeks Ended
--------------
Dec. 31, Dec. 31,
($ millions except where 2010 2009
otherwise indicated) (unaudited) (unaudited) Change
-------------------------------------------------------------------------
Sales $ 32,008 $ 31,820 0.6%
Operating income $ 1,483 $ 1,009 47.0%
Operating margin 4.6% 3.2%
Interest expense and other
financing charges $ 388 $ 363 6.9%
Net earnings from continuing
operations $ 452 $ 127 NM(3)
Net earnings $ 452 $ 1,035 NM(3)
Basic net earnings per common
share from continuing
operations ($) $ 3.16 $ 0.64 NM(3)
Diluted net earnings per common
share from continuing
operations ($) $ 3.14 $ 0.63 NM(3)
Basic net earnings per common
share ($) $ 3.16 $ 7.68 NM(3)
Diluted net earnings per common
share ($) $ 3.14 $ 7.67 NM(3)
-------------------------------------------------------------------------
EBITDA(2) $ 2,192 $ 1,654 32.5%
EBITDA margin(2) 6.8% 5.2%
-------------------------------------------------------------------------
--------------
>>
In the fourth quarter of 2010, the Company achieved strong operating performance at Weston Foods and Loblaw despite a decrease in sales of 1.6% to $7,417 million compared to $7,537 million in the same period in 2009. Operating income in the fourth quarter of 2010 was $330 million compared to $287 million in the same period in 2009, an increase of $43 million or 15.0%. Consolidated operating margin in the fourth quarter of 2010 was 4.4% compared to 3.8% in the same period in 2009.
In 2010, both operating segments contributed positively to the Company's overall performance. Sales of $32.0 billion compared to $31.8 billion in 2009, an increase of 0.6%. Operating income in 2010 was $1,483 million compared to $1,009 million in 2009, an increase of $474 million or 47.0%. Consolidated operating margin in 2010 was 4.6% compared to 3.2% in 2009.
FORWARD-LOOKING STATEMENTS
This News Release for the Company contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects and opportunities. 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, are intended to identify forward-looking statements. These forward-looking statements are not historical facts but reflect the Company's current expectations concerning future results and events.
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:
<<
- the possibility that the Company's plans and objectives will not be
achieved;
- changes in economic conditions including the rate of inflation or
deflation and changes in interest and foreign currency exchange
rates;
- changes in consumer spending and preferences;
- heightened competition, whether from new competitors or current
competitors;
- the availability and increased costs relating to raw materials,
ingredients and utilities, including electricity and fuel;
- changes in the Company's or its competitors' pricing strategies;
- failure of the Company's franchised stores to perform as expected;
- failure to realize sales growth, anticipated cost savings or
operating efficiencies from the Company's major initiatives,
including investments in the Company's information technology
systems, supply chain investments and other cost reduction
initiatives, or unanticipated results from these initiatives;
- the inability of the Company to successfully implement its
infrastructure and information technology components of its plan;
- the inability of the Company's information technology infrastructure
to support the requirements of the Company's business;
- the inability of the Company to manage inventory to minimize the
impact of obsolete or excess inventory and to control shrink;
- failure to execute successfully and in a timely manner the Company's
major initiatives, including the implementation of strategies and
introduction of innovative and reformulated products or new and
renovated stores;
- unanticipated results associated with the Company's strategic
initiatives, including the impact of acquisitions or dispositions of
businesses on the Company's future revenues and earnings;
- the inability of the Company's supply chain to service the needs of
the Company's stores;
- failure to achieve desired results in labour negotiations, including
the terms of future collective bargaining agreements which could lead
to work stoppages;
- changes to and failure to comply with the legislative/regulatory
environment in which the Company operates, including failure to
comply with environmental laws and regulations;
- the adoption of new accounting standards and changes in the Company's
use of accounting estimates;
- fluctuations in the Company's earnings due to changes in the value of
stock-based compensation and equity derivative contracts relating to
GWL and Loblaw Companies Limited ("Loblaw") common shares;
- changes in the Company's income, commodity and other tax liabilities
including changes in tax laws or future assessments;
- reliance on the performance and retention of third-party service
providers, including those associated with the Company's supply chain
and apparel business;
- public health events;
- risks associated with product defects, food safety and product
handling;
- the inability of the Company to collect on its credit card
receivables;
- any requirement of the Company to make contributions to its funded
defined benefit pension plans in excess of those currently
contemplated;
- the inability of the Company to attract and retain key executives;
- supply and quality control issues with vendors; and
- failure by the Company to maintain appropriate documentation to
support its compliance with accounting, tax or legal rules,
regulations and policies.
>>
These and other 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 the Company's 2010 Annual Report. These forward-looking statements contained herein reflect management's current assumptions regarding these risks and uncertainties and their respective impact on the Company.
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. 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.
CONSOLIDATED RESULTS OF OPERATIONS
Sales
Sales for the fourth quarter were $7,417 million compared to $7,537 million in the same period in 2009, a decrease of 1.6%. Consolidated sales for the fourth quarter of 2010 were impacted by each reportable operating segment when compared to the same period in 2009 as follows:
<<
- Positively by 0.5% due to the sales increase of 9.7% and volume
increase of 10.1% at Weston Foods. The previously announced
acquisition of Keystone Bakery Holdings, LLC ("Keystone") and ACE
Bakery Ltd. ("ACE") positively impacted sales growth and volume
growth by approximately 11.0% and 9.1%, respectively, while foreign
currency translation negatively impacted sales growth by
approximately 1.9%. Excluding the acquisitions and foreign currency
translation, sales increased 0.6% mainly due to an increase in
volumes of 1.0% partially offset by the negative impact of lower
pricing in certain product categories of 0.4%.
- Negatively by 2.0% due to the sales decrease of 2.1% at Loblaw.
Same-store sales declined 1.6%. Loblaw's average quarterly internal
retail food price index was flat. This compared to average quarterly
internal retail food price deflation in the same period in 2009. Net
retail square footage increased 0.1 million square feet or 0.3%
in the fourth quarter of 2010 to 50.7 million square feet.
>>
Operating Income
Operating income for the fourth quarter of 2010 was $330 million compared to $287 million in the same period in 2009, an increase of 15.0%. Consolidated operating margin increased to 4.4% from 3.8% in the same period in 2009. Consolidated operating income growth for the fourth quarter of 2010 was positively impacted by 4.2% due to an increase in operating income of 4.4% at Loblaw and by 11.8% due to the reduction in foreign currency translation losses. Operating income growth was negatively impacted by 1.0% due to a decrease in operating income of 5.2% at Weston Foods.
The year-over-year change in the following items influenced the Company's operating income for the fourth quarter of 2010 compared to the same period in 2009:
<<
- a charge of $12 million (2009 - $46 million), of which $12 million
(2009 - a gain of $6 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 Dunedin Holdings S.à r.l.
("Dunedin"), a subsidiary of GWL, and certain of its affiliates and
nil (2009 - a charge of $52 million) related to the reversal of
cumulative foreign currency translation losses;
- a charge of $1 million (2009 - income of $11 million) related to the
effect of stock-based compensation net of equity derivatives of both
GWL and Loblaw; and
- income of $5 million (2009 - $12 million) related to the commodity
derivatives fair value adjustment at Weston Foods.
>>
Excluding the impact of the specific items noted above, the Company's operating income remained strong at $338 million for the fourth quarter of 2010 compared to $310 million in the same period in 2009.
EBITDA(2) increased by $55 million to $497 million for the fourth quarter of 2010 compared to $442 million in the same period in 2009. EBITDA margin(2) for the fourth quarter of 2010 increased to 6.7% from 5.9% in the same period in 2009. EBITDA(2) and EBITDA margin (2) growth for the fourth quarter of 2010 were impacted by the increase in operating income and operating margin as described above.
Interest Expense and Other Financing Charges
Interest expense and other financing charges for the fourth quarter of 2010 were $67 million, compared to $99 million in the same period in 2009. This decrease was primarily due to a decrease in the non-cash charge related to the fair value adjustment of Weston Holdings Limited's ("WHL"), a subsidiary of GWL, forward sale agreement for 9.6 million Loblaw common shares of $29 million when compared to the same period in 2009. Excluding the impact of this specific item, interest expense and other financing charges for the fourth quarter of 2010 decreased $3 million when compared to the same period in 2009.
Income Taxes
The fourth quarter 2010 effective income tax rate increased to 38.4% from 20.7% in the same period in 2009. The effective income tax rate for the fourth quarter of 2010 was affected by an increase in income tax expense relating to certain prior year income tax matters and a charge of $15 million related to changes in the federal tax legislation that resulted in the elimination of the Company's ability to deduct costs associated with cash-settled stock options.
Net Earnings from Continuing Operations
Net earnings from continuing operations for the fourth quarter of 2010 were $101 million compared to $79 million in the same period in 2009. Basic net earnings per common share from continuing operations for the fourth quarter of 2010 were $0.70 compared to $0.53 in the same period in 2009.
Basic net earnings per common share from continuing operations were affected in the fourth quarter of 2010 compared to the same period in 2009 by the following factors:
<<
- a $0.09 per common share charge (2009 - $0.36), of which $0.09
(2009 - $0.04 per common share income) related to the effect of
foreign currency translation on a portion of the U.S. dollar
denominated cash and short term investments held by Dunedin and
certain of its affiliates and nil (2009 - a $0.40 per common share
charge) related to the reversal of cumulative foreign currency
translation losses;
- $0.04 per common share non-cash income (2009 - a $0.13 per common
share non-cash charge) related to the accounting for WHL's forward
sale agreement for 9.6 million Loblaw common shares;
- a $0.08 per common share charge (2009 - nil) related to
changes in the federal tax legislation that resulted
in the elimination of the Company's ability to deduct
costs associated with cash-settled stock options;
- $0.02 per common share income (2009 - $0.07) related to the commodity
derivatives fair value adjustment at Weston Foods; and
- $0.01 per common share income (2009 - $0.06) related to the effect of
stock-based compensation net of equity derivatives of both GWL and
Loblaw.
>>
Discontinued Operations
Net earnings from discontinued operations for the fourth quarter of 2010 were nil compared to $3 million in the same period in 2009.
Net Earnings
Net earnings for the fourth quarter of 2010 were $101 million compared to $82 million in the same period in 2009. Basic net earnings per common share for the fourth quarter of 2010 were $0.70 compared to $0.56 in the same period in 2009, including net earnings from discontinued operations per common share of nil compared to $0.03 in the same period in 2009.
GWL's ownership of Loblaw was 62.9% as at year end 2010 and 62.5% as at year end 2009. The increase in GWL's ownership was due to the Company's participation in the Loblaw Dividend Reinvestment Plan.
OPERATING SEGMENTS
Weston Foods
As previously announced, the Company purchased Keystone, a U.S. manufacturer and supplier of frozen cupcakes, doughnuts and cookies during the third quarter of 2010 and ACE, a Canadian manufacturer and supplier of artisan and European-style rustic bread varieties during the fourth quarter of 2010. The results of Keystone and ACE from their respective dates of acquisition were included in Weston Foods results.
For the fourth quarter of 2010, Weston Foods sales of $386 million increased 9.7% and volumes increased 10.1% when compared to the same period in 2009. The acquisition of Keystone and ACE positively impacted sales growth and volume growth by approximately 11.0% and 9.1%, respectively, while foreign currency translation negatively impacted sales growth by approximately 1.9%. Excluding the acquisitions and foreign currency translation, sales increased 0.6% mainly due to an increase in volumes of 1.0% partially offset by the negative impact of lower pricing in certain product categories of 0.4%.
Weston Foods operating income was $55 million in the fourth quarter of 2010 compared to $58 million in the same period in 2009. Operating margin was 14.2% for the fourth quarter of 2010 compared to 16.5% in the same period in 2009.
The year-over-year change in the following items influenced operating income for the fourth quarter of 2010 compared to the same period in 2009:
<<
- income of $6 million (2009 - $16 million) related to the effect of
stock-based compensation net of equity derivatives; and
- income of $5 million (2009 - $12 million) related to the commodity
derivatives fair value adjustment.
>>
Excluding the impact of the specific items noted above, Weston Foods operating income was strong at $44 million for the fourth quarter of 2010 compared to $30 million in the same period in 2009. Operating income was positively impacted by sales growth as a result of the bakery acquisitions and by the benefits realized from productivity improvements and other cost reduction initiatives, which were partially offset by higher restructuring charges and the impact of lower pricing in certain product categories.
Loblaw
Loblaw sales for the fourth quarter of 2010 of $7,161 million decreased 2.1% compared to $7,311 million in the same period in 2009. Same-store sales declined 1.6%. Sales in food declined marginally, sales in drugstore declined moderately, sales growth in apparel was moderate while sales of other general merchandise declined significantly and gas bar sales growth was strong. Loblaw's average quarterly internal retail food price index was flat. This compared to average quarterly internal retail food price deflation in the same period in 2009.
Loblaw operating income for the fourth quarter of 2010 was $287 million compared to $275 million in the same period in 2009, an increase of 4.4%. Operating margin was 4.0% for the fourth quarter of 2010 compared to 3.8% in the same period in 2009. Excluding the impact of the effect of stock-based compensation net of equity forwards, operating income improved as a result of improved control label profitability, continued buying synergies and disciplined vendor management, improved shrink and a stronger Canadian dollar, partially offset by increased transportation costs, incremental costs related to Loblaw's investment in information technology and supply chain and a charge for fixed asset impairments related to asset carrying values in excess of fair values for specific store locations.
OUTLOOK(1)
The consolidated results of George Weston Limited will continue to reflect the performance of both the Weston Foods and Loblaw operating businesses. In addition, the Company's results will be subject to earnings volatility caused by the impact of changes in U.S. foreign currency exchange rates on a portion of the Company's U.S. dollar denominated cash and short term investments. Earnings volatility may also result from other non-operating factors including commodity prices and their impact on the Company's commodity derivatives, the Loblaw common share price and its impact on the forward sale agreement for 9.6 Loblaw common shares and short term interest rates.
In 2011, Weston Foods expects continued progress in operating performance driven by sales growth in existing businesses, the full year impact of the 2010 bakery acquisitions and ongoing efforts to reduce costs through improved efficiencies and productivity. This outlook is tempered by the impact of rapidly rising commodity costs and escalating energy costs. While Weston Foods is planning to increase prices to absorb these cost increases, operating margins could be constrained in 2011 as the timing of price increases may lag cost increases.
Loblaw is entering its fifth and final year of renewal and expects to continue its focus on executing the renewal plan in a market environment that remains unpredictable and competitively intense. Loblaw plans to increase its investments in information technology and supply chain which will negatively impact operating income in 2011.
George Weston Limited continues to assess opportunities for the deployment of its significant holdings of cash and short term investments.
<<
(1) This News Release contains forward-looking information. See
Forward-Looking Statements of this News Release 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) NM - not meaningful.
>>
NON-GAAP FINANCIAL MEASURES
In this News Release, the Company uses EBITDA and EBITDA margin. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company. Non-GAAP measures do not have a standardized meaning prescribed by Canadian 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 Canadian GAAP.
EBITDA and EBITDA Margin
The following tables reconcile earnings from continuing operations before minority interest, income taxes, interest expense and other financing charges and depreciation and amortization ("EBITDA") to Canadian GAAP net earnings from continuing operations reported in the consolidated statements of earnings for the 12 and 52 week periods ended as indicated. For each of its reportable operating segments, segment EBITDA is reconciled to segment operating income.
EBITDA margin is calculated as EBITDA divided by sales.
EBITDA is useful to management in assessing the performance of the Company's ongoing operations and its ability to generate cash flows to fund its cash requirements, including the Company's capital investment program.
<<
----------------------------------------------
12 Weeks Ended Dec. 31, 2010
Weston Consol-
($ millions) Foods Loblaw Other(2) idated
-------------------------------------------------------------------------
Net earnings from continuing
operations $ 101
Add impact of the following:
Minority interest 61
Income taxes 101
Interest expense and other
financing charges 67
-------------------------------------------------------------------------
Operating income (loss) $ 55 $ 287 $ (12) $ 330
Depreciation and
amortization(1) 14 153 167
-------------------------------------------------------------------------
EBITDA $ 69 $ 440 $ (12) $ 497
-------------------------------------------------------------------------
-------------------------------------------
12 Weeks Ended Dec. 31, 2009
Weston Consol-
($ millions) Foods Loblaw Other(2) idated
-------------------------------------------------------------------------
Net earnings from continuing
operations $ 79
Add impact of the following:
Minority interest 70
Income taxes 39
Interest expense and other
financing charges 99
-------------------------------------------------------------------------
Operating income (loss) $ 58 $ 275 $ (46) $ 287
Depreciation and
amortization(1) 12 143 155
-------------------------------------------------------------------------
EBITDA $ 70 $ 418 $ (46) $ 442
-------------------------------------------------------------------------
(1) Includes depreciation of $11 million (2009 - $10 million) presented
in cost of inventories sold.
(2) Operating income for the fourth quarter 2010 includes a loss of $12
million (2009 - gain of $6 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 Dunedin and certain of its
affiliates, which are integrated foreign subsidiaries for accounting
purposes. Operating income for the fourth quarter of 2009 also
includes a loss of $52 million related to the reversal of cumulative
foreign currency translation losses.
----------------------------------------------
52 Weeks Ended Dec. 31, 2010
Weston Consol-
($ millions) Foods Loblaw Other(2) idated
-------------------------------------------------------------------------
Net earnings from continuing
operations $ 452
Add impact of the following:
Minority interest 273
Income taxes 370
Interest expense and other
financing charges 388
-------------------------------------------------------------------------
Operating income (loss) $ 278 $ 1,261 $ (56) $ 1,483
Depreciation and
amortization(1) 54 655 709
-------------------------------------------------------------------------
EBITDA $ 332 $ 1,916 $ (56) $ 2,192
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-------------------------------------------
52 Weeks Ended Dec. 31, 2009
Weston Consol-
($ millions) Foods Loblaw Other(2) idated
-------------------------------------------------------------------------
Net earnings from continuing
operations $ 127
Add impact of the following:
Minority interest 260
Income taxes 259
Interest expense and other
financing charges 363
-------------------------------------------------------------------------
Operating income (loss) $ 123 $ 1,197 $ (311) $ 1,009
Depreciation and
amortization(1) 56 589 645
-------------------------------------------------------------------------
EBITDA $ 179 $ 1,786 $ (311) $ 1,654
-------------------------------------------------------------------------
(1) Includes depreciation of $43 million (2009 - $44 million) presented
in cost of inventories sold.
(2) Operating income for 2010 includes a loss of $56 million (2009 - $225
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 Dunedin and certain of its affiliates, which are
integrated foreign subsidiaries for accounting purposes. Operating
income for 2009 also includes a loss of $86 million related to the
reversal of cumulative foreign currency translation losses.
>>
SELECTED FINANCIAL INFORMATION
The following includes selected quarterly financial information which has been prepared by management in accordance with Canadian Generally Accepted Accounting Principles ("GAAP") and based on the Company's annual financial statements for the year ended December 31, 2010. This financial information does not contain all disclosures required by Canadian GAAP, and accordingly, this financial information should be read in conjunction with the Company's audited annual consolidated financial statements and MD&A for the year ended December 31, 2010 which is contained in the Company's 2010 Annual Report available in the Investor Centre section of the Company's website at www.weston.ca.
Consolidated Statements of Earnings
<<
12 Weeks Ended 52 Weeks Ended
---------- ----------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions except where 2010 2009 2010 2009
otherwise indicated) (unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------------------------------------
Sales $ 7,417 $ 7,537 $ 32,008 $ 31,820
Operating Expenses
Cost of inventories sold 5,507 5,677 23,775 24,015
Selling, administrative
and other expenses 1,424 1,428 6,084 6,122
Depreciation and
amortization 156 145 666 601
Goodwill impairment 73
-------------------------------------------------------------------------
7,087 7,250 30,525 30,811
-------------------------------------------------------------------------
Operating Income 330 287 1,483 1,009
Interest Expense and Other
Financing Charges 67 99 388 363
-------------------------------------------------------------------------
Earnings from Continuing
Operations Before the
Following: 263 188 1,095 646
Income Taxes 101 39 370 259
-------------------------------------------------------------------------
162 149 725 387
Minority Interest 61 70 273 260
-------------------------------------------------------------------------
Net Earnings from
Continuing Operations 101 79 452 127
Discontinued Operations 3 908
-------------------------------------------------------------------------
Net Earnings $ 101 $ 82 $ 452 $ 1,035
-------------------------------------------------------------------------
Net Earnings per Common
Share - Basic ($)
Continuing Operations $ 0.70 $ 0.53 $ 3.16 $ 0.64
Discontinued Operations $ 0.03 $ 7.04
Net Earnings $ 0.70 $ 0.56 $ 3.16 $ 7.68
Net Earnings per Common
Share - Diluted ($)
Continuing Operations $ 0.70 $ 0.52 $ 3.14 $ 0.63
Discontinued Operations $ 0.03 $ 7.04
Net Earnings $ 0.70 $ 0.55 $ 3.14 $ 7.67
-------------------------------------------------------------------------
---------- ----------
>>
Consolidated Balance Sheets
<<
As at
----------
Dec. 31, Dec. 31,
2010 2009
(unaudited) (unaudited)
-------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 1,528 $ 1,535
Short term investments 3,234 3,371
Accounts receivable 820 851
Inventories 2,208 2,210
Future income taxes 61 87
Prepaid expenses and other assets 90 98
-------------------------------------------------------------------------
Total Current Assets 7,941 8,152
Fixed Assets 9,584 9,020
Goodwill and Intangible Assets 1,571 1,296
Future Income Taxes 33 61
Security Deposits 435 348
Other Assets 1,290 1,266
-------------------------------------------------------------------------
Total Assets $ 20,854 $ 20,143
-------------------------------------------------------------------------
LIABILITIES
Current Liabilities
Bank indebtedness $ 4 $ 2
Accounts payable and accrued liabilities 4,717 3,616
Income taxes 20 78
Short term debt 336 300
Long term debt due within one year 733 343
-------------------------------------------------------------------------
Total Current Liabilities 5,810 4,339
Long Term Debt 5,129 5,377
Future Income Taxes 311 269
Other Liabilities 655 617
Capital Securities 221 220
Minority Interest 2,596 2,379
-------------------------------------------------------------------------
Total Liabilities 14,722 13,201
-------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share Capital 950 950
Retained Earnings 5,307 6,084
Accumulated Other Comprehensive Loss (125) (92)
-------------------------------------------------------------------------
Total Shareholders' Equity 6,132 6,942
-------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 20,854 $ 20,143
-------------------------------------------------------------------------
----------
>>
Consolidated Cash Flow Statements
<<
12 Weeks Ended 52 Weeks Ended
---------- ----------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010 2009
($ millions) (unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------------------------------------
Operating Activities
Net earnings from
continuing operations
before minority
interest $ 162 $ 149 $ 725 $ 387
Depreciation and
amortization 167 155 709 645
Goodwill impairment 73
Foreign currency
translation losses 12 46 56 311
Loss on redemption of debt 49
Settlement of equity
forward contracts (17) (55)
Future income taxes 67 (34) 94 (79)
Fair value adjustment of
WHL's forward sale
agreement (6) 23 62 (13)
Change in non-cash
working capital 236 300 26 675
Fixed asset and other
related impairments 33 37 73 47
Other (30) (21) (4) (53)
-------------------------------------------------------------------------
Cash Flows from Operating
Activities of Continuing
Operations 641 638 1,741 1,987
-------------------------------------------------------------------------
Investing Activities
Fixed asset purchases (463) (371) (1,304) (1,011)
Short term investments 165 (127) 50 (2,052)
Proceeds from fixed
asset sales 53 17 90 27
Purchase of subsidiary
interests (35) (35)
Business acquisitions
- net of cash acquired (121) (10) (309) (204)
Credit card receivables,
after securitization (138) (228) 7 8
Franchise investments
and other receivables 2 10 (11) 6
Security deposits (3) 34 (104) 159
Other 5 (7) 20 (50)
-------------------------------------------------------------------------
Cash Flows used in
Investing Activities of
Continuing Operations (500) (717) (1,561) (3,152)
-------------------------------------------------------------------------
Financing Activities
Bank indebtedness (3) (6) (1) (95)
Short term debt 10 9 36 (153)
Long term debt
- Issued 45 32 450 402
- Retired (26) (10) (368) (490)
Capital securities
- Retired (265)
Cancellation of
subsidiary share capital (21) (21)
Dividends
- To common shareholders (186) (139)
- To preferred shareholders (3) (3) (44) (36)
- To minority shareholders (14) (15) (57) (70)
-------------------------------------------------------------------------
Cash Flows from (used in)
Financing Activities of
Continuing Operations 9 (14) (170) (867)
-------------------------------------------------------------------------
Effect of Foreign Currency
Translation on Cash and Cash
Equivalents (6) 8 (17) (71)
-------------------------------------------------------------------------
Cash Flows from (used in)
Continuing Operations 144 (85) (7) (2,103)
Cash Flows from Discontinued
Operations 3,017
-------------------------------------------------------------------------
Change in Cash and Cash
Equivalents 144 (85) (7) 914
Cash and Cash Equivalents,
Beginning of Period 1,384 1,620 1,535 621
-------------------------------------------------------------------------
Cash and Cash Equivalents,
End of Period $ 1,528 $ 1,535 $ 1,528 $ 1,535
-------------------------------------------------------------------------
---------- ----------
>>
Basic and Diluted Net Earnings per Common Share from Continuing Operations
<<
12 Weeks Ended 52 Weeks Ended
---------- ----------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions except where 2010 2009 2010 2009
otherwise indicated) (unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------------------------------------
Net earnings from
continuing operations $ 101 $ 79 $ 452 $ 127
Prescribed dividends on
preferred shares in
share capital (10) (10) (44) (44)
-------------------------------------------------------------------------
Net earnings from
continuing operations
available to common
shareholders for basic
earnings per share $ 91 $ 69 $ 408 $ 83
Reduction in net earnings
due to dilution at Loblaw (1) (1) (2) (2)
-------------------------------------------------------------------------
Net earnings from
continuing operations
available to common
shareholders for diluted
earnings per share $ 90 $ 68 $ 406 $ 81
-------------------------------------------------------------------------
Basic and diluted
weighted average common
shares outstanding
(in millions) 129.1 129.1 129.1 129.1
-------------------------------------------------------------------------
Basic net earnings per
common share from
continuing operations ($) $ 0.70 $ 0.53 $ 3.16 $ 0.64
Diluted net earnings
per common share from
continuing operations ($) $ 0.70 $ 0.52 $ 3.14 $ 0.63
-------------------------------------------------------------------------
---------- ----------
>>
Segment Information
The Company has two reportable operating segments: Weston Foods and Loblaw. The accounting policies of the reportable operating segments are the same as those described in the Company's 2010 Annual Report. The Company measures each reportable operating segment's performance based on operating income. Neither reportable operating segment is reliant on any single external customer.
<<
12 Weeks Ended 52 Weeks Ended
---------- ----------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010 2009
($ millions) (unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------------------------------------
Sales
Weston Foods $ 386 $ 352 $ 1,624 $ 1,686
Loblaw 7,161 7,311 30,997 30,735
Intersegment (130) (126) (613) (601)
-------------------------------------------------------------------------
Consolidated $ 7,417 $ 7,537 $ 32,008 $ 31,820
-------------------------------------------------------------------------
Operating Income
Weston Foods $ 55 $ 58 $ 278 $ 123
Loblaw 287 275 1,261 1,197
Other(1) (12) (46) (56) (311)
-------------------------------------------------------------------------
Consolidated $ 330 $ 287 $ 1,483 $ 1,009
-------------------------------------------------------------------------
---------- ----------
(1) Operating income for the fourth quarter and year-to-date 2010
includes a loss of $12 million and $56 million (2009 - a gain of $6
million and a loss of $225 million), respectively, related to the
effect of foreign currency translation on a portion of the U.S.
dollar denominated cash and short term investments held by Dunedin
and certain of its affiliates, which are integrated foreign
subsidiaries for accounting purposes. Fourth quarter and year-to-
date 2009 operating income also includes losses of $52 million and
$86 million, respectively, related to the reversal of cumulative
foreign currency translation losses.
>>
2010 ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's annual audited Consolidated Financial Statements and MD&A for the year ended December 31, 2010 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 62.9%-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 available on 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 March 3, 2011 at 11:00 AM (EST). To access via teleconference please dial (647) 427-7450. The playback will be made available two hours after the event at (416) 849-0833 passcode: 42347200No.. To access via webcast please visit the Investor Centre section of www.weston.ca. Pre-registration will be available.
Ce rapport est disponible en français.
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