TORONTO, Feb. 14 /CNW/ - George Weston Limited (TSX: WN) ("Weston" or the "Company") today is providing a financial update for the fourth quarter of fiscal 2006 and the fiscal year ended December 31, 2006, based on management's review of preliminary unaudited results for these periods. Basic net earnings per common share from continuing operations for the fourth quarter, before taking into account a charge with respect to an expected goodwill impairment at Loblaw Companies Limited ("Loblaw"), were $0.42 compared to $1.78 in 2005. For the year, basic net earnings per common share from continuing operations, before taking into account a charge with respect to an expected goodwill impairment at Loblaw, were $4.27 compared to $5.25 in 2005.
Loblaw has performed its annual goodwill impairment test analysis. Based on this analysis, it is anticipated that the carrying value of the $1.5 billion of goodwill associated with the acquisition of the Provigo business in 1998 is impaired. As a result, the Company expects to record in the fourth quarter an initial estimate of a goodwill impairment charge, which the Company estimates to be in the range of $600 million to $900 million, in its audited consolidated financial statements for the year ended December 31, 2006. This is a non-cash charge that is expected to be finalized and adjusted as necessary in the first half of 2007. This expected charge will result in a negative impact to basic net earnings per common share from continuing operations for the fourth quarter and the full year of $2.88 to $4.32 per share. After the impact of this charge, the Company expects a basic net loss per common share from continuing operations in the range of $2.46 to $3.90 in the fourth quarter. For the year, after the impact of this charge, the Company expects, in the range of a basic net earnings per common share from continuing operations of $1.39 to a basic net loss per common share from continuing operations of $0.05.
Adjusted basic net earnings per common share from continuing operations(2) for the quarter and for the year, which will not be impacted by the expected Loblaw goodwill impairment charge, were $1.15 and $4.98, respectively, compared to $1.55 and $5.64 for the same periods last year.
Sales
Sales and sales growth excluding the impact of variable interest entities
("VIEs")(2) are summarized below.
Quarters Ended Years Ended
($ millions except Dec. 31, Dec. 31, Dec. 31, Dec. 31,
where otherwise indicated) 2006 2005(3) 2006 2005(3)
-------------------------------------------------------------------------
Total sales $ 7,578 $ 7,345 $ 32,167 $ 31,189
Less: Sales attributable
to the consolidation
of VIEs 92 98 383 415
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Sales excluding the impact
of VIEs(2) $ 7,486 $ 7,247 $ 31,784 $ 30,774
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Total sales growth 3.2% 4.5% 3.1% 5.3%
Less: Impact on sales growth
attributable to the
consolidation of VIEs (0.1)% 1.4% (0.2)% 1.4%
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Sales growth excluding the
impact of VIEs(2) 3.3% 3.1% 3.3% 3.9%
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Sales for the fourth quarter of 2006 of $7.6 billion increased 3.2%
compared to 2005, including a 0.2% decrease due to foreign currency
translation. On a year-to-date basis, sales increased 3.1% to $32.2 billion
including a 0.7% decrease due to foreign currency translation.
Operating Income Before Expected Loblaw Goodwill Impairment Charge
Operating income for the fourth quarter of 2006 before the expected Loblaw
goodwill impairment charge decreased $270 million or 61.4% from last year, to
$170 million. After the effect of the expected Loblaw goodwill impairment
charge, operating loss for the fourth quarter is expected to be in the range
of $430 million to $730 million. For the full year, operating income before
the expected Loblaw goodwill impairment charge decreased $297 million or 18.2%
from last year, to $1,337 million. After the effect of the expected Loblaw
goodwill impairment charge, operating income for the full year is expected to
be in the range of $437 million to $737 million.
Adjusted operating income(2) for the fourth quarter of 2006 was $362
million compared to $509 million in 2005, a decline of 28.9%. For the full
year, adjusted operating income(2) was $1,643 million compared to $1,894
million in 2005, a decline of 13.3%. Consolidated adjusted operating margin(2)
for the fourth quarter of 2006 was 4.8% compared to 7.0% in 2005 and was 5.2%
compared to 6.2% on a year-to-date basis.
In addition to the expected Loblaw goodwill impairment charge, items which
were excluded in arriving at adjusted operating income(2) and margin(2) as
well as adjusted EBITDA(2) and margin(2) are set out below:
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions) 2006 2005 2006 2005
-------------------------------------------------------------------------
Operating income before
expected Loblaw goodwill
impairment charge $ 170 $ 440 $ 1,337 $ 1,634
Add (deduct) impact of
the following:
Restructuring and other
charges 51 7 90 118
Ontario collective labour
agreement 84 84
Inventory liquidation 68 68
Departure entitlement charge 12
Direct costs associated with
supply chain disruptions 10 30
Goods and Services Tax and
provincial sales taxes 40
Net effect of stock-based
compensation and the
associated equity
derivatives (11) 48 60 72
VIEs 4 (8)
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Adjusted operating income(2) $ 362 $ 509 $ 1,643 $ 1,894
-------------------------------------------------------------------------
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions) 2006 2005 2006 2005
-------------------------------------------------------------------------
Adjusted operating income(2) $ 362 $ 509 $ 1,643 $ 1,894
Add (deduct) impact of
the following:
Depreciation and
amortization 159 168 705 684
VIE depreciation and
amortization (5) (8) (24) (26)
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Adjusted EBITDA(2) $ 516 $ 669 $ 2,324 $ 2,552
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In addition to the expected Loblaw goodwill impairment charge, items which
are excluded in arriving at adjusted basic net earnings per common share from
continuing operations(2) are set out below:
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($) 2006 2005 2006 2005
-------------------------------------------------------------------------
Basic net earnings per
common share from
continuing operations
before expected Loblaw
goodwill impairment
charge $ 0.42 $ 1.78 $ 4.27 $ 5.25
Add (deduct) impact of
the following:
Restructuring and other
charges 0.20 0.02 0.36 0.42
Ontario collective labour
agreement 0.26 0.26
Inventory liquidation 0.21 0.21
Departure entitlement
charge 0.04
Direct costs associated
with supply chain
disruptions 0.03 0.09
Goods and Services Tax and
provincial sales taxes 0.14
Net effect of stock-based
compensation and the
associated equity
derivatives (0.03) 0.31 0.38 0.46
Accounting for Loblaw
forward sale agreement 0.09 (0.63) (0.40) (0.77)
Changes in statutory income
tax rates 0.02 (0.14) 0.02
VIEs 0.02 0.03
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Adjusted basic net earnings
per common share from
continuing operations(2) $ 1.15 $ 1.55 $ 4.98 $ 5.64
-------------------------------------------------------------------------
OPERATING SEGMENTS
The Company's consolidated sales and operating income were impacted by
each of its reportable operating segments as follows:
WESTON FOODS
FISCAL 2006 FINANCIAL UPDATE
Sales
Weston Foods sales for the fourth quarter of 2006 of $1.0 billion
increased 0.6% compared to 2005, as a result of a sales increase of 2.3%
offset in part by the negative impact of foreign currency translation, which
impacted Weston Foods reported sales growth by approximately 1.7%. For the
year, sales of $4.4 billion decreased 0.6% compared to 2005, as a result of a
sales increase of 3.8% offset by the negative impact of foreign currency
translation, which impacted Weston Foods reported sales growth by
approximately 4.4%. Sales growth for 2006 was also impacted by the following:
- price increases in key product categories combined with changes in
sales mix contributed positively to sales growth by approximately
3.7% for the fourth quarter of 2006 and 4.2% on a year-to-date basis;
and
- overall volume decreased 1.4% for the fourth quarter and 0.4% on a
year-to-date basis, both negatively impacted by 1.0% and 0.7%,
respectively, due to the exit from the United States frozen
foodservice bagel business early in the third quarter of 2006 and the
discontinuance of contract manufacturing of biscuits for certain
customers during 2006.
Operating Income
The items which were excluded in arriving at adjusted operating income(2)
and margin(2) as well as adjusted EBITDA(2) and margin(2) are set out below:
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions) 2006 2005 2006 2005
-------------------------------------------------------------------------
Operating income $ 67 $ 48 $ 256 $ 241
Add (deduct) impact of
the following:
Restructuring and other
charges 16 1 46 32
Net effect of stock-based
compensation and the
associated equity
derivatives (5) 21 23 29
-------------------------------------------------------------------------
Adjusted operating income(2) $ 78 $ 70 $ 325 $ 302
-------------------------------------------------------------------------
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions) 2006 2005 2006 2005
-------------------------------------------------------------------------
Adjusted operating income(2) $ 78 $ 70 $ 325 $ 302
Depreciation and
amortization 26 28 115 126
-------------------------------------------------------------------------
Adjusted EBITDA(2) $ 104 $ 98 $ 440 $ 428
-------------------------------------------------------------------------
Operating income for the fourth quarter of 2006 was $67 million compared
to $48 million in 2005. Adjusting for the net negative impact of restructuring
and other charges and stock-based compensation net of the associated equity
derivatives, adjusted operating income(2) for the fourth quarter of 2006 was
$78 million, an increase of 11.4% compared to $70 million in 2005. Adjusted
operating margin(2) and adjusted EBITDA margin(2) for the fourth quarter of
2006 were 7.9% and 10.5%, respectively (2005 - 7.1% and 10.0%). For the year,
2006 operating income of $256 million increased 6.2% from $241 million in
2005. Adjusting for the negative impact of restructuring and other charges and
stock-based compensation net of the associated equity derivatives, adjusted
operating income(2) for 2006 was $325 million, an increase of 7.6% from
$302 million in 2005. Adjusted operating margin(2) and adjusted EBITDA
margin(2) for 2006 were 7.5% and 10.1%, respectively (2005 - 6.9% and 9.8%).
Adjusted operating income(2) for the fourth quarter and year-to-date 2006 were
impacted by the following:
- foreign currency translation negatively impacted adjusted operating
income(2) growth for the fourth quarter and on a year-to-date basis
by approximately 2.7 percentage points and 4.0 percentage points,
respectively;
- operating income and margin for the fourth quarter and year-to-date
2006 were positively impacted by sales growth, primarily due to price
increases in key product categories combined with changes in sales
mix; and
- inflationary cost pressures related to certain ingredients costs
continued to adversely affect operating income and margin in the
fourth quarter and year-to-date 2006.
In addition, Weston Foods operating income and margin growth in 2006 were
adversely affected by higher energy costs as well as higher distribution costs
compared to 2005, in particular in the United States, as Weston Foods
continues to focus its manufacturing capacity for more efficient production
runs and where appropriate, outsourcing shorter-run products to contract
manufacturers.
Weston Foods continues to evaluate strategic and cost reduction
initiatives related to its manufacturing assets, distribution networks and
administrative infrastructure with the objective of ensuring a low cost
operating structure. Certain of these initiatives are in progress while others
are still in the planning stages. During the fourth quarter of 2006, Weston
Foods approved a restructuring plan to downsize its fresh-baked sweet goods
facility in Bay Shore, New York. The plan involves the transfer of full-size
dessert cake and cookie production to existing Weston Foods facilities. Once
the downsizing is complete, the Bay Shore location will be a more focused
facility producing primarily danish and pie products. This restructuring is
expected to be completed by the third quarter of 2008. As a result of this
restructuring, Weston Foods expects to recognize a total fixed asset
impairment charge of $4 million and a total charge of $6 million for employee
termination benefits and other exit related costs over the next 18 months.
Also during the fourth quarter of 2006, Weston Foods approved a plan to
close an ice-cream cone baking facility in Los Angeles, California and
transfer the production to existing Weston Foods facilities. This
restructuring is expected to be completed in the first quarter of 2007. As a
result of this restructuring, Weston Foods expects to recognize total
accelerated depreciation of $3 million and a total charge of $2 million for
employee termination benefits and other exit related costs.
As previously discussed, Weston Foods also approved several other
restructuring plans in 2006. The other significant restructuring activities in
2006 were:
- the plan to restructure a portion of the distribution network in
Quebec, which is expected to be completed by the end of 2007;
- the plan to close a fresh bakery manufacturing facility in Quebec,
which is also expected to be completed by the end of 2007; and
- the plan to close a frozen bagel facility in Nebraska, which was
completed early in the third quarter of 2006.
During the fourth quarter of 2006, Weston Foods recognized $16 million of
restructuring and other charges in connection with all of these restructuring
plans as well as other plans approved in previous years. These restructuring
and other charges consisted of $8 million of employee termination benefits and
other exit related costs, $7 million of fixed asset impairment and accelerated
depreciation and a loss of $1 million on the sale of fixed assets. For the
year, Weston Foods recognized $46 million of restructuring and other charges,
consisting of $26 million of employee termination benefits and other exit
related costs, $19 million of fixed asset impairment and accelerated
depreciation and a loss of $1 million on the sale of fixed assets.
LOBLAW
FISCAL 2006 FINANCIAL UPDATE
Sales
Sales and sales growth excluding the impact of VIEs(2) are summarized
below:
Quarters Ended Years Ended
($ millions except Dec. 31, Dec. 31, Dec. 31, Dec. 31,
where otherwise indicated) 2006 2005(3) 2006 2005(3)
-------------------------------------------------------------------------
Total sales $ 6,784 $ 6,552 $ 28,640 $ 27,627
Less: Sales attributable
to the consolidation
of VIEs 92 98 383 415
-------------------------------------------------------------------------
Sales excluding the impact
of VIEs(2) $ 6,692 $ 6,454 $ 28,257 $ 27,212
-------------------------------------------------------------------------
Total sales growth 3.5% 4.3% 3.7% 6.1%
Less: Impact on sales
growth attributable
to the consolidation
of VIEs (0.2)% 1.6% (0.1)% 1.6%
-------------------------------------------------------------------------
Sales growth excluding the
impact of VIEs(2) 3.7% 2.7% 3.8% 4.5%
-------------------------------------------------------------------------
Loblaw sales for the fourth quarter of 2006 increased 3.5% or $232 million
to $6.8 billion from the $6.6 billion reported in the fourth quarter of 2005.
For the full year, sales of $28.6 billion were 3.7% ahead of last year. Sales
increases were realized across all regions of the country and in all areas of
food, general merchandise and drugstore. Same store sales increased by 1.3%
for the quarter and 0.8% year-to-date. National food price inflation as
measured by "The Consumer Price Index for Food Purchased from Stores" was
approximately 1.5% for the fourth quarter of 2006. The growth in sales and
same-store sales in the fourth quarter is higher by approximately 2.0%
excluding the loss in tobacco sales, which were adversely impacted by the
announcement in the third quarter by a major supplier to commence shipping
directly to certain customers of Loblaw's cash & carry and wholesale club
network.
During the fourth quarter of 2006, Loblaw focused on shelf availability,
targeted pricing investments and incremental marketing. Loblaw experienced
some positive sales momentum particularly when the decrease in tobacco sales
is excluded. A successful Holiday Insider's Report contributed to this
improved sales performance.
During 2006, net retail square footage increased by 1.2 million square
feet or 2.4% due to the net effect of the opening of 37 new corporate and
franchised stores and the closure of 33 stores, inclusive of stores which
underwent conversions and major expansions. During the fourth quarter of 2006,
8 new corporate and franchised stores were opened and 4 stores were closed,
resulting in a net increase of 0.3 million square feet or 0.6%.
Operating Income Before Expected Loblaw Goodwill Impairment Charge
Operating income for the fourth quarter before the expected Loblaw
goodwill impairment charge decreased $289 million or 73.7% from last year, to
$103 million. Operating margin before the expected Loblaw goodwill impairment
charge declined to 1.5% from 6.0% in the comparable period of 2005 due to the
effects of the items described below. After the effect of the expected Loblaw
goodwill impairment charge, operating loss for the fourth quarter is expected
to be in the range of $497 million to $797 million and operating margin is
expected to be in the range of -7.3% to -11.7%.
Adjusted operating income(2) in the fourth quarter of 2006 of $284 million
compared to $439 million in 2005, resulting in adjusted operating margins(2)
of 4.2% and 6.8% respectively.
In addition to the expected Loblaw goodwill impairment charge, items which
were excluded in arriving at adjusted operating income(2) and margin(2) as
well as adjusted EBITDA(2) and margin(2) are set out below:
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions) 2006 2005 2006 2005
-------------------------------------------------------------------------
Operating income before
expected Loblaw goodwill
impairment charge $ 103 $ 392 $ 1,081 $ 1,393
Add (deduct) impact of
the following:
Restructuring and other
charges 35 6 44 86
Ontario collective labour
agreement 84 84
Inventory liquidation 68 68
Departure entitlement charge 12
Direct costs associated with
supply chain disruptions 10 30
Goods and Services Tax and
provincial sales taxes 40
Net effect of stock-based
compensation and the
associated equity
derivatives (6) 27 37 43
VIEs 4 (8)
-------------------------------------------------------------------------
Adjusted operating income(2) $ 284 $ 439 $ 1,318 $ 1,592
-------------------------------------------------------------------------
Quarters Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
($ millions) 2006 2005 2006 2005
-------------------------------------------------------------------------
Adjusted operating income(2) $ 284 $ 439 $ 1,318 $ 1,592
Add (deduct) impact of
the following:
Depreciation and
amortization 133 140 590 558
VIE depreciation and
amortization (5) (8) (24) (26)
-------------------------------------------------------------------------
Adjusted EBITDA(2) $ 412 $ 571 $ 1,884 $ 2,124
-------------------------------------------------------------------------
A number of factors negatively influenced operating income before the
expected Loblaw goodwill impairment charge for the fourth quarter of 2006,
including:
- Higher inventory shrink of approximately $35 million and higher store
labour costs of approximately $20 million;
- An investment of approximately 0.5% in food pricing, resulting in an
impact of approximately $30 million;
- Higher general merchandise mark-downs in the range of $15 million to
$20 million to clear inventory through retail stores;
- A fixed asset impairment charge of $24 million due in part to a
decision to suspend plans for a number of sites scheduled for future
development; and
- Incremental supply chain costs and information technology investments
of approximately $15 million.
During the fourth quarter of 2006, Loblaw and members of certain Ontario
locals of the United Food and Commercial Workers Union ratified a new
four-year collective agreement. The new agreement enables Loblaw to convert
44 stores in Ontario to The Real Canadian Superstore banner or food stores
with equivalent labour economics, and the flexibility to invest in additional
store labour where appropriate. As a result of securing this agreement, Loblaw
recorded a one-time charge of $84 million in the fourth quarter. Loblaw
expects this agreement to generate economic benefits and to provide increased
operating efficiencies, on a store by store basis, in a critical era of
intensifying competition.
Loblaw continues to manage inventory levels down to more desirable levels
in store backrooms, outside storage as well as distribution centres. Some
success was realized in the fourth quarter from the focused clearance pricing
of certain categories as well as the initiation of the previously disclosed
liquidation process for selected general merchandise inventory. In connection
with this liquidation process, a charge of $68 million was recorded in the
fourth quarter reflecting the expected inventory value through liquidation as
well as the associated costs of facilitating the disposition. Total costs
associated with the general merchandise liquidation are expected to be at the
low end of the previously disclosed range of $100 million to $120 million.
As part of a review of its store operations, Loblaw management approved
plans in the fourth quarter of 2006 to close 19 under performing stores in
Quebec, mainly within the Provigo banner, 8 stores in the Atlantic region, and
24 cash & carry and wholesale club outlets. These closures are expected to
result in total costs of $54 million. Of these costs, $35 million was recorded
in the fourth quarter of 2006.
Adjusted EBITDA(2) and EBITDA margin(2) for the fourth quarter and the
year were $412 million and 6.2% and $1,884 million and 6.7% respectively. For
the comparable periods of 2005, adjusted EBITDA(2) and EBITDA margin(2) were
$571 million and 8.8% and $2,124 million and 7.8% respectively.
Loblaw's previously announced "Formula for Growth" is focused on
delivering sustainable long-term growth and Loblaw believes that the actions
described above support this direction. Subsequent to the end of the fourth
quarter of 2006, Loblaw approved and announced the restructuring of its
merchandising and store operations into more streamlined functions. Costs for
this restructuring, including severance, retention and other costs are
expected to be in the range of $150 million to $200 million, the substantial
portion of which should be recorded in the first quarter of 2007.
The new Loblaw management team is highly focused on improving performance
and creating an exciting platform on which Loblaw can execute its "Formula for
Growth". Although Loblaw has many strengths, there is no escaping the fact
that the retailing basics of availability, accountability, value and format
economics are in poorer shape than expected. There is still much hard work to
be done.
NON-GAAP FINANCIAL MEASURES
The Company's consolidated financial statements are prepared in accordance
with Canadian generally accepted accounting principles ("GAAP"). This News
Release includes certain non-GAAP financial measures and ratios, which the
Company believes provide useful information to both management and readers of
this News Release in measuring the financial performance and financial
condition of the Company for the reasons set out below. These measures do not
have a standardized meaning prescribed by Canadian GAAP and, therefore, 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.
Sales and Sales Growth Excluding the Impact of VIEs
These financial measures exclude the impact on sales from the
consolidation by the Company of certain Loblaw independent franchisees, which
resulted from the implementation of Accounting Guideline 15 "Consolidation of
Variable Interest Entities", retroactively without restatement effective
January 1, 2005. This impact on sales is excluded because the Company believes
this allows for a more effective analysis of the operating performance of the
Company. Both the current and comparative measures reflect the retroactive
implementation of EIC 156. A reconciliation of the financial measures to the
Canadian GAAP financial measures is included in the tables "Sales and Sales
Growth Excluding the Impact of VIEs" included on pages 1 and 5 of this News
Release.
Adjusted Operating Income and Margin
Items listed in the tables on pages 2, 4 and 6 of this News Release are
excluded because the Company believes this allows for a more effective
analysis of the operating performance of the Company. In addition, they affect
the comparability of the financial results and could potentially distort the
analysis of trends. The exclusion of these items does not imply that they are
non-recurring. Adjusted operating income and margin are useful to management
in assessing the Company's performance and in making decisions regarding the
ongoing operations of its business. Adjusted operating margin is calculated as
adjusted operating income divided by sales excluding the impact of VIEs.
Adjusted EBITDA and Margin
Adjusted EBITDA as calculated in the tables on pages 2, 4 and 6 of this
News Release is useful to management in assessing the Company's performance of
its ongoing operations and its ability to generate cash flows to fund its cash
requirements, including the Company's capital investment program. Adjusted
EBITDA margin is calculated as adjusted EBITDA divided by sales excluding the
impact of VIEs.
Adjusted Basic Net Earnings per Common Share from Continuing Operations
Items listed in the table on page 3 are excluded because the Company
believes this allows for a more effective analysis of the operating
performance of the Company. In addition, they affect the comparability of the
financial results and could potentially distort the analysis of trends. The
exclusion of these items does not imply that they are non-recurring. Adjusted
basic net earnings per common share from continuing operations is useful to
management in assessing the Company's performance and in making decisions
regarding the ongoing operations of its business.
2006 ANNUAL CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION
AND ANALYSIS ("MD&A")
Weston's audited consolidated financial statements and MD&A for the year
ended December 31, 2006 will be released on or before March 31, 2007. Both
documents will be contained in Weston's 2006 Annual Report and will be
available in the Investor Zone section of Weston's website at www.weston.ca,
or at www.sedar.com.
Investor Relations
Shareholders, market professionals and other interested readers should
direct their requests to Mr. Geoffrey H. Wilson, Senior Vice President,
Financial Services and Investor Relations at the Company's Executive Office or
by e-mail at investor@weston.ca.
Additional information has been filed electronically with various
securities regulators in Canada through the System for Electronic Document
Analysis and Retrieval (SEDAR). This News Release includes selected
information on Loblaw Companies Limited, a 62%-owned public reporting 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 on Loblaw's corporate website at www.loblaw.ca.
CONFERENCE CALL AND WEBCAST PRESENTATION
George Weston Limited will host a conference call on February 14, 2007 at
11:00AM (EST.).
To access the conference call, dial (416) 644-3423 or visit our website at
www.weston.ca to access the webcast. The replay will be available one hour
following the live event. To access the replay dial (416) 640-1917 passcode:
21216642 followed by number sign.
Full details are available on the George Weston Limited website at
www.weston.ca.
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements which reflect
management's expectations regarding the Company's objectives, plans, goals,
strategies, future growth, results of operations, performance and business
prospects and opportunities. These forward-looking statements include a
preliminary unaudited financial update for its fourth quarter and fiscal year
2006. Forward-looking statements are typically identified by words or phrases
such as "anticipates", "expects", "believes", "estimates", "intends" and other
similar expressions.
These forward-looking statements are not guarantees, but only predictions.
Although the Company believes that these statements are based on information
and assumptions which are current, reasonable and complete, these statements
are necessarily subject to a number of factors that could cause actual results
to vary significantly from the estimates, projections and intentions. Such
differences may be caused by factors which include, but are not limited to,
changes in consumer spending, preferences and consumer's nutritional and
health related concerns, changes in the competitive environment including
changes in pricing and market strategies of the Company or its competitors and
the entry of new competitors and expansion of current competitors, the
availability and cost of raw materials and ingredients, fuel and utilities,
the ability to realize anticipated cost savings and efficiencies, including
those resulting from restructuring, inventory liquidation and other cost
reduction and simplification initiatives, the ability to execute restructuring
plans effectively and in a timely manner, changes in the markets for the
inventory intended for liquidation and changes in the expected realizable
value and costs associated with the liquidation, unanticipated, increased or
decreased costs associated with the announced initiatives, including those
related to compensation costs, the Company's relationship with its employees,
results of labour negotiations including the terms of future collective
bargaining agreements, changes to the regulatory environment in which the
Company operates now or in the future, changes in the Company's tax
liabilities, either through changes in tax laws or future assessments,
performance of third-party service providers, public health events, the
ability of the Company to attract and retain key executives, the success rate
of the Company in developing and introducing new products and entering new
markets and supply and quality control issues with vendors. The calculation of
the expected Loblaw goodwill impairment charge described in this News Release
involves the estimation of several variables, including but not limited to
market EBITDA multiples, projected future sales, earnings and capital
investment, discount rates and terminal growth rates. These estimates and
assumptions may change in the future due to uncertain competitive and economic
market conditions or changes in business strategies. The Company cautions that
this list of factors is not exhaustive. These factors and other risks and
uncertainties are discussed in the Company's materials filed with the Canadian
securities regulatory authorities from time to time, including in the
Operating and Financial Risks and Risk Management sections of the Management's
Discussion and Analysis included in the Company's 2005 Financial Report.
The assumptions applied in making the forward-looking statements contained
in this News Release include the following: economic conditions do not
materially change from those expected, patterns of consumer spending and
preferences are reasonably consistent with historical trends, no new
significant competitors enter the Company's markets and neither the Company
nor its existing competitors unexpectedly significantly increase their
presence or change pricing or market strategies materially, anticipated cost
savings and efficiencies are realized as planned, continuing future
restructuring activities are effectively executed and executed in a timely
manner, costs associated with the liquidation of inventory are not higher or
lower than expected, the Company's assumptions regarding average compensation
costs and average years of service for employees affected by the
simplification initiatives are materially correct, the Company does not
significantly change its approach to its current restructuring activities,
there are no material work stoppages and the performance of third-party
service providers is in accordance with expectations.
Potential investors and other readers are urged to consider these factors
carefully in evaluating these forward-looking statements and are cautioned not
to place undue reliance on them. The forward-looking statements included in
this News Release, are made only as of the date of this News Release and the
Company does not undertake to publicly update these forward-looking statements
to reflect new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, the forward-looking events contained in
these forward-looking statements may or may not occur. The Company cannot
assure that projected results or events will be achieved.
(1) This News Release contains forward-looking information. See
Forward-Looking Statements on page 9 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.
(2) See Non-GAAP Financial Measures on page 7.
(3) The Company implemented Emerging Issues Committee Abstract 156,
"Accounting for Consideration by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)" ("EIC 156") in the first quarter
of 2006 on a retroactive basis. Accordingly certain sales incentives
paid by Loblaw to independent franchisees, associates and independent
accounts for 2005 and 2004 have been reclassified between sales and
cost of sales, selling and administrative expenses.
