SOURCE: Premium Brands Holdings Corporation

Premium Brands Holdings Corporation

November 11, 2015 07:00 ET

Premium Brands Holdings Corporation Announces Record Third Quarter 2015 Results

VANCOUVER, BC--(Marketwired - November 11, 2015) - Premium Brands Holdings Corporation (TSX: PBH), a leading producer, marketer and distributor of branded specialty food products, announced today its results for the third quarter of 2015.

HIGHLIGHTS FOR THE QUARTER

  • Record third quarter revenue of $395.5 million representing a 19.7% increase as compared to the third quarter of 2014
  • Record third quarter adjusted EBITDA of $32.7 million as compared to adjusted EBITDA of $24.0 million in the third quarter of 2014
  • Record adjusted earnings for the quarter of $13.8 million or $0.55 per share as compared to $8.4 million or $0.38 per share for the third quarter of 2014
  • Record rolling four quarters free cash flow of $78.1 million resulting in a dividend to free cash flow ratio of 41.7%
  • During the quarter the Company completed three business acquisitions, namely Isernio's Inc., a leading premium branded fresh sausage manufacturer located in Kent, WA; Expresco Foods Inc., a leading manufacturer and marketer of high quality grilled protein products located in Montreal, QC; and the minority shareholders' interests in the Company's SJ Fine Foods Ltd. subsidiary, which operates a modern deli meats facility located in Saskatoon, SK.

SUMMARY FINANCIAL INFORMATION

  
(In thousands of dollars except per share amounts and ratios) 
   13 Weeks Ended Sep 26, 2015  13 Weeks Ended Sep 27, 2014  39 Weeks Ended Sep 26, 2015   39 Weeks Ended Sep 27, 2014  
           
Revenue  395,549  330,434  1,096,250   919,564  
Adjusted EBITDA  32,682  24,019  80,411   56,890  
Earnings attributable to shareholders  9,922  4,643  3,073   10,301  
EPS  0.39  0.21  0.13   0.47  
Adjusted earnings  13,845  8,382  30,652   15,760  
Adjusted EPS  0.55  0.38  1.27   0.72  
                
                
         Rolling Four Quarters Ended  
         Sep 26, 2015   Dec 27, 2014  
           
Free cash flow        78,078   57,374  
Declared dividends        32,539   27,768  
Declared dividend per share        1.3475   1.2500  
Payout ratio        41.7 % 48.4 %
                

"Similar to the year over year trending in our results for the last three quarters, we generated record increases in our sales and operating cash flows during the third quarter. Several factors are driving this with the single most significant being the investments we have made in a number of our businesses over the last three years. These investments have included major capacity expansions, acquisitions and business restructurings.

"Product innovation has also been a key driver of our growth with a diverse array of new specialty and artisanal products being successfully launched over the last year.

"These factors, together with the diversification we have built into our business, have enabled us to continue to generate strong results despite several major challenges including the impact that the weaker Canadian dollar is having on our raw material costs, the oil related economic slowdown in Alberta and interim operating inefficiencies associated with the start-up of our new sandwich plant in Columbus, Ohio," said Mr. George Paleologou, President and CEO.

"Overall, we are very pleased with the progress we have made towards our goal of being one of North America's leading specialty food companies and look forward to continuing to grow our diversified specialty food platform both organically and by acquisition.

"We are also very pleased to have recently added Expresco Foods to our portfolio of great specialty food companies. Expresco is one of North America's leading manufacturers of high quality grilled protein products, including handmade specialty seasoned skewers, for Canadian and U.S. retailers and foodservice distributors. Looking forward, we expect to complete more accretive acquisitions in the relatively near future based on a robust acquisition pipeline and leveraging our strong financial position," added Mr. Paleologou.

About Premium Brands

Premium Brands owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. The Company services a diverse base of customers located across North America and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Bread Garden Go, Hygaard, Hempler's, Isernio's, Quality Fast Foods, Direct Plus, Harlan Fairbanks, Creekside Bakehouse, Stuyver's Bakestudio, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, Ocean Miracle, SK Food Group, OvenPride, Hub City Fisheries, Audrey's, Deli Chef, Piller's, Freybe and Expresco.

RESULTS OF OPERATIONS

Revenue

 
(in thousands of dollars except percentages)
   13 weeks ended Sep 26, 2015  %
 13 weeks ended Sep 27, 2014  %
 39 weeks ended Sep 26, 2015  %
 39 weeks ended Sep 27, 2014  %
Revenue by segment:
 Retail  259,840  65.7%  204,292  61.8%  716,682  65.4%  580,008  63.1%
 Foodservice  135,709  34.3%  126,142  38.2%  379,568  34.6%  339,556  36.9%
 Consolidated  395,549  100.0%  330,434  100.0%  1,096,250  100.0%  919,564  100.0%
                 

Retail's revenue for the third quarter of 2015 as compared to the third quarter of 2014 increased by $55.5 million or 27.2% primarily due to: (i) general organic growth across a range of products and customers; (ii) an increase in the translated value of Retail's U.S. based businesses' sales resulting from a decline in the value of the Canadian dollar; (iii) the acquisitions of Isernio's and Expresco during the quarter which accounted for $6.7 million of the increase; and (iv) selling price increases that were implemented in the latter part of 2014 in response to higher raw material costs. Excluding the impact of acquisitions, exchange translation and selling price increases, Retail's organic growth for the quarter was 14.4%.

Retail's revenue for the first three quarters of 2015 as compared to the first three quarters of 2014 increased by $136.7 million or 23.6% primarily due to the same factors as outlined above. Excluding the impact of acquisitions, exchange translation and selling price increases, Retail's organic growth for the first three quarters of 2015 was 11.3%.

Retail's long-term targeted range for its organic growth rate is 6% to 8%. Looking forward (see Forward Looking Statements), it expects to exceed this range for the balance of 2015 based on (i) continued general growth resulting from a number of factors including the completion of several large production capacity expansion projects over the last three years; and (ii) the favorable impact that the decline in the value of the Canadian dollar is having on the translation of the Company's U.S. based operations. Selling price increases, which had a significant positive impact on the Company's sales growth in the first half of 2015, are not expected (see Forward Looking Statements) to be a factor in the fourth quarter of 2015.

Foodservice's revenue for the third quarter of 2015 as compared to the third quarter of 2014 increased by $9.6 million or 7.6% primarily due to: (i) selling price increases that were implemented in the latter part of 2014 and in 2015 in response to historically high raw material costs (see Gross Profit); and (ii) the acquisition of Ocean Miracle, an Ontario based seafood distribution business, in the fourth quarter of 2014 which accounted for $5.1 million of the increase. Excluding the impact of these factors, Foodservice's sales for the quarter declined by $4.9 million primarily due to: (i) reduced sales in northern Alberta resulting from the economic impact that lower oil commodity prices has had on this region; and (ii) a below average west coast sockeye salmon fishery relative to a very strong fishery in 2014.

Foodservice's revenue for the first three quarters of 2015 as compared to the first three quarters of 2014 increased by $40.0 million or 11.8% primarily due to the same factors as outlined above. Excluding the impact of selling price increases and acquisitions, Foodservice's sales for the first three quarters of 2015 were down 0.8%.

Foodservice's long-term targeted range for its organic growth rate is also 6% to 8%. Looking forward (see Forward Looking Statements), it expects to exceed this range for the balance of 2015 based on continued high selling prices. In terms of volume, Foodservice's growth for 2015 is expected (see Forward Looking Statements) to be relatively flat to slightly negative due to continued weak sales in northern Alberta and the smaller west coast sockeye salmon fishery in 2015 relative to 2014.

Gross Profit

 
(in thousands of dollars except percentages)
   13 weeks ended Sep 26, 2015  %
 13 weeks ended Sep 27, 2014  %
 39 weeks ended Sep 26, 2015  %
 39 weeks ended Sep 27, 2014  %
Gross profit by segment:
 Retail  56,577  21.8%  41,170  20.2%  148,447  20.7%  112,364  19.4%
 Foodservice  22,240  16.4%  21,420  17.0%  61,338  16.2%  58,542  17.2%
 Consolidated  78,817  19.9%  62,590  18.9%  209,785  19.1%  170,906  18.6%
                 

Retail's gross profit as a percentage of its revenue (gross margin) for the third quarter of 2015 as compared to the third quarter of 2014 as well as for the first three quarters of 2015 as compared to the first three quarters of 2014 increased primarily due to: (i) an easing of certain pork raw material costs, albeit this factor was partially offset by longer term purchase commitments, a weaker Canadian dollar as pork commodity prices are generally U.S. dollar based and increases in other raw material commodities such as certain turkey products; (ii) improved operating efficiencies resulting from several factors including higher sales volumes and completion of the restructuring of Retail's deli meats operations in 2014 (see Plant Start-up and Restructuring Costs); and (iii) selling price increases implemented by its protein focused businesses in response to high raw material costs that were resulting in lower than normal gross margins in 2014. These factors were partially offset by temporary operating inefficiencies associated with the ramp up of Retail's new 180,000 square foot sandwich production facility (see Plant Start-up and Restructuring Costs).

Foodservice's gross margin for the third quarter of 2015 as compared to the third quarter of 2014 as well as for the first three quarters of 2015 as compared to the first three quarters of 2014 decreased primarily due to record high beef raw material costs. Foodservice has been able to recover most of its raw material cost increases through higher selling prices, however, due to the extent of the increases it has not been able to achieve its historic gross margin levels.

Looking forward (see Forward Looking Statements), Foodservice expects its gross margin to improve in the fourth quarter of 2015 based on projected lower beef raw material costs.

Selling, General and Administrative Expenses (SG&A)

 
(in thousands of dollars except percentages)
   13 weeks ended Sep 26, 2015  %
 13 weeks ended Sep 27, 2014  %
 39 weeks ended Sep 26, 2015  %
 39 weeks ended Sep 27, 2014  %
SG&A by segment:
 Retail  27,006  10.4%  22,623  11.1%  75,547  10.6%  67,883  11.7%
 Foodservice  15,396  11.3%  13,878  11.0%  44,455  11.7%  40,378  11.9%
 Corporate  3,733     2,070     9,372     5,755   
 Consolidated  46,135  11.7%  38,571  11.7%  129,374  11.8%  114,016  12.4%
                 

Retail's SG&A for the third quarter of 2015 as compared to the third quarter of 2014 as well as for the first three quarters of 2015 as compared to the first three quarters of 2014 increased by $4.4 million and $7.7 million, respectively, primarily due to: (i) incremental costs associated with Retail's organic sales growth including higher advertising, promotion and freight costs as well as additional sales and administration infrastructure; (ii) increased discretionary employee compensation accruals associated with growth in the Company's free cash flow; (iii) the acquisitions of Isernio's and Expresco; and (iv) an increase in the translated value of Retail's U.S. based businesses' SG&A resulting from a decline in the value of the Canadian dollar. These increases were partially offset by reduced costs resulting from the rationalization and subsequent sale of Retail's direct-to-store delivery network for the convenience store channel in 2014.

Retail's SG&A as a percentage of its revenue for the first three quarters of 2015 as compared to the first three quarters of 2014 decreased mainly due to the fixed nature of certain costs relative to the growth in its revenue (see Revenue).

Foodservice's SG&A for the third quarter of 2015 as compared to the third quarter of 2014 increased by $1.5 million primarily due to: (i) increased discretionary employee compensation accruals associated with growth in the Company's free cash flow; (ii) the acquisition of Ocean Miracle; and (iii) $0.5 million in severance payments associated with the restructuring of Foodservice's Harlan Fairbanks business' sales force.

Foodservice's SG&A for the first three quarters of 2015 as compared to the first three quarters of 2014 increased by $4.1 million primarily due to the factors impacting Foodservice's SG&A in the third quarter of 2015 as well as additional sales and administration infrastructure added in 2014.

Foodservice's SG&A as a percentage of its revenue for the first three quarters of 2015 as compared to the first three quarters of 2014 decreased mainly due to the fixed nature of certain costs relative to the growth in its revenue (see Revenue).

Corporate SG&A for the third quarter of 2015 as compared to the third quarter of 2014 as well as for the first three quarters of 2015 as compared to the first three quarters of 2014 increased by $1.7 million and $3.6 million respectively, primarily due to increased discretionary employee compensation accruals associated with the growth in the Company's free cash flow and exchange losses on U.S. dollar denominated liabilities.

Adjusted EBITDA

 
(in thousands of dollars except percentages)
   13 weeks ended Sep 26, 2015   %
 13 weeks ended Sep 27, 2014   %
 39 weeks ended Sep 26, 2015   %
 39 weeks ended Sep 27, 2014   %
Adjusted EBITDA by segment:
 Retail  29,571   11.4%  18,547   9.1%  72,900   10.2%  44,481   7.7%
 Foodservice  6,844   5.0%  7,542   6.0%  16,883   4.4%  18,164   5.3%
 Corporate  (3,733 )    (2,070 )    (9,372 )    (5,755 )  
 Consolidated  32,682   8.3%  24,019   7.3%  80,411   7.3%  56,890   6.2%
                      

The Company's adjusted EBITDA as a percentage of sales (EBITDA margin) was 8.3% for the third quarter which was within the Company's targeted range of 8.0% to 8.5%. The Company's EBITDA margin for the first three quarters of 2015 of 7.3% was below its targeted range primarily due to: (i) temporary operating inefficiencies associated with the ramp up of its new 180,000 square foot sandwich plant in Columbus, OH (see Plant Start-up and Restructuring Costs); and (ii) below normal margins in its foodservice business due to record high beef raw material costs.

Looking forward (see Forward Looking Statements) the Company expects its annualized run rate EBITDA margin to be within its targeted range in the latter half of 2016 based on: (i) improved operating efficiencies resulting from continued organic sales growth; (ii) steady improvement in the performance of the Company's new Columbus sandwich plant; (iii) a reduction in certain beef raw material costs; and (iv) the impact of the recently acquired Isernio's and Expresco businesses.

Plant Start-up and Restructuring Costs

Plant start-up and restructuring costs consist of costs associated with the start-up of new production capacity and/or the significant restructuring of one or more of the Company's businesses. The Company expects these projects to result in significant improvements in its future earnings and cash flows.

                
Project  13 weeks ended Sep 26, 2015  13 weeks ended Sep 27, 2014  39 weeks ended Sep 26, 2015  39 weeks ended Sep 27, 2014  Expected Completion Date
Sandwich Capacity  -  5,562  2,924  8,582  Complete
Deli Capacity  -  -  -  3,449  Complete
NDSD Reconfiguration  -  -  -  1,375  Complete
Other  -  170  -  170  Complete
   -  5,732  2,924  13,576   
           

The Sandwich Capacity project, which included the construction of a new 180,000 square foot production facility in Columbus, OH in 2014, was the Company's only active restructuring initiative in 2015. While no further restructuring costs are anticipated for this project, the Columbus plant is still operating below long-term performance expectation levels.

Looking forward (see Forward Looking Statements), the Company is projecting a steady improvement in the profitability of this operation based on: (i) improved operating efficiencies as production processes are refined and the Columbus plant workforce becomes more experienced; and (ii) continued sales growth which will help to offset the incremental overhead associated with the new plant and the sales and administration infrastructure that was put into place in 2014 to support this growth.

Interest and other financing costs

The Company's interest and other financing costs for the third quarter of 2015 as compared to the third quarter of 2014 and for the first three quarters of 2015 as compared to the first three quarters of 2014 decreased primarily due to: (i) a reduction in the weighted average cost of its funded debt resulting from the conversion and repayment of its 7.00% debentures at the end of 2014 and its 5.75% debentures in the second quarter of 2015; and (ii) a reduction in the Company's total funded debt.

FREE CASH FLOW

                  
(in thousands of dollars)  52 weeks ended Dec 27, 2014   39 weeks ended Sep 26, 2015   39 weeks ended Sep 27, 2014   Rolling Four Quarters  
Cash flow from operating activities  21,344   57,655   9,444   69,555  
Changes in non-cash working capital  20,283   5,894   21,192   4,985  
Acquisition transaction costs  266   171   188   249  
Plant start-up and restructuring costs  20,299   2,924   13,576   9,647  
Capital maintenance expenditures  (4,818 ) (5,237 ) (3,697 ) (6,358 )
Free cash flow  57,374   61,407   40,703   78,078  
             

ADJUSTED EARNINGS PER SHARE

                  
(in thousands of dollars except per share amounts)  13 weeks ended Sep 26, 2015   13 weeks ended Sep 27, 2014   39 weeks ended Sep 26, 2015   39 weeks ended Sep 27, 2014  
Earnings  9,953   4,692   3,009   10,261  
                  
Plant start-up and restructuring costs  -   5,732   2,924   13,576  
Other income  -   -   -   (4,703 )
Acquisition transaction costs  160   44   171   188  
Accretion of provisions  117   80   376   262  
Additional change in puttable interest expense resulting from SJ Fine Foods minority shareholder buyout  3,688   -   3,688   -  
Unrealized loss (gain) on foreign currency contracts  -   (200 ) 100   -  
   13,918   10,348   10,268   19,584  
                  
Current and deferred income tax effect of above items  (73 ) (1,966 ) (1,136 ) (3,824 )
Non-cash write-down of deferred income tax assets resulting from CRA settlement  -   -   21,520   -  
                  
Adjusted earnings  13,845   8,382   30,652   15,760  
                  
Weighted average shares outstanding  25,200   22,115   24,078   22,027  
                  
Adjusted earnings per share  $ 0.55   $ 0.38   $ 1.27   $ 0.72  
             

FORWARD LOOKING STATEMENTS

This press release contains forward looking statements with respect to the Company, including its business operations, strategy and financial performance and condition. These statements generally can be identified by the use of forward looking words such as "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.

Although management believes that the expectations reflected in such forward looking statements are reasonable and represent the Company's internal expectations and belief as of November 10, 2015, such statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements.

Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) changes in the cost of raw materials used in the production of the Company's products; (ii) seasonal and/or weather related fluctuations in the Company's sales; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the cost of products sourced from third party manufacturers and sold through the Company's proprietary distribution networks; (v) risks associated with the Company's conversion from a publicly traded income trust to a publicly traded corporation; (vi) changes in the Company's relationships with its larger customers; (vii) potential liabilities and expenses resulting from defects in the Company's products; (viii) changes in consumer food product preferences; (ix) competition from other food manufacturers and distributors; (x) execution risk associated with the Company's growth and business restructuring initiatives; (xi) risks associated with the Company's business acquisition strategies; (xii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiii) new government regulations affecting the Company's business and operations; (xiv) the Company's ability to raise the capital needed to fund its business activities; (xv) labour related issues including potential labour disputes with employees represented by labour unions and labour shortages; and (xvi) a major disruption or failure of the Company's information technology systems. Details on these risk factors as well as other factors can be found in the Company's 2014 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.

Unless otherwise indicated, the forward looking statements in this document are made as of November 10, 2015 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking statements in this press release.

   
Premium Brands Holdings Corporation  
Consolidated Balance Sheets  
(Unaudited and in thousands of dollars)  
              
   September 26, 2015   December 27, 2014   September 27, 2014  
              
Current assets:             
 Cash and cash equivalents  9,707   9,453   5,026  
 Accounts receivable  150,016   116,544   109,971  
 Inventories  136,187   121,693   134,481  
 Prepaid expenses  6,056   5,798   5,881  
 Other assets  809   763   356  
   302,775   254,251   255,715  
              
Capital assets  224,018   203,340   201,789  
Intangible assets  80,422   71,545   72,178  
Goodwill  208,433   174,846   169,999  
Investment in associates  9,153   9,517   9,801  
Deferred income taxes  -   22,257   23,738  
Other assets  10,248   3,391   3,066  
              
   835,049   739,147   736,286  
              
Current liabilities:             
 Cheques outstanding  6,993   6,353   6,495  
 Bank indebtedness  1,079   -   -  
 Dividend payable  8,742   6,978   6,956  
 Accounts payable and accrued liabilities  133,873   102,598   112,153  
 Current portion of long-term debt  3,369   2,645   2,534  
 Current portion of provisions  1,876   1,746   1,168  
   155,932   120,320   129,306  
              
Long-term debt  193,998   211,292   203,415  
Puttable interest in subsidiaries  25,712   17,900   15,564  
Deferred revenue  4,523   4,520   3,625  
Provisions  4,053   4,556   2,799  
Pension obligation  1,580   1,437   754  
Deferred income taxes  10,794   -   -  
   396,592   360,025   355,463  
              
Convertible unsecured subordinated debentures  177,962   174,549   174,886  
              
Equity attributable to shareholders:             
 Deficit  (57,552 ) (36,838 ) (30,305 )
 Share capital  290,616   227,247   226,195  
 Equity component of convertible debentures  -   1,744   1,744  
 Reserves  26,879   11,804   7,693  
 Non-controlling interest  552   616   610  
   260,495   204,573   205,937  
              
   835,049   739,147   736,286  
          
   
Premium Brands Holdings Corporation  
Consolidated Statements of Operations  
(Unaudited and in thousands of dollars except per share amounts)  
                  
   13 weeks ended September 26, 2015   13 weeks ended September 27, 2014   39 weeks ended September 26, 2015   39 weeks ended September 27, 2014  
                  
Revenue  395,549   330,434   1,096,250   919,564  
Cost of goods sold  316,732   267,844   886,465   748,658  
Gross profit before depreciation and amortization and plant start-up and restructuring costs  78,817   62,590   209,785   170,906  
Selling, general and administrative expenses before depreciation, amortization, plant start-up and restructuring costs, and other income  46,135   38,571   129,374   114,016  
   32,682   24,019   80,411   56,890  
                  
Plant start-up and restructuring costs  -   5,732   2,924   13,576  
Other income  -   -   -   (4,703 )
   32,682   18,287   77,487   48,017  
                  
Depreciation of capital assets  6,683   5,215   19,088   14,411  
Amortization of intangible assets  1,198   1,113   3,254   3,340  
Amortization of other assets  1   1   4   4  
Interest and other financing costs  4,611   5,178   13,891   15,237  
Amortization of financing costs  56   48   165   195  
Acquisition transaction costs  160   44   171   188  
Change in value of puttable interest in subsidiaries  4,331   989   5,226   1,788  
Accretion of provisions  117   80   376   262  
Unrealized loss (gain) on foreign currency contracts  -   (200 ) 100   -  
Equity loss (income) in associates  108   (79 ) 171   (138 )
Earnings before income taxes  15,417   5,898   35,041   12,730  
                  
Provision for (recovery of) income taxes                 
 Current  1,039   (1,298 ) 1,843   (607 )
 Deferred  4,425   2,504   8,669   3,076  
   5,464   1,206   10,512   2,469  
Non-cash write-down of deferred income tax assets resulting from CRA agreement  -   -   21,520   -  
   5,464   1,206   32,032   2,469  
                  
Earnings  9,953   4,692   3,009   10,261  
                  
Earnings (loss) for the period attributable to:                 
 Shareholders  9,922   4,643   3,073   10,301  
 Non-controlling interest  31   49   (64 ) (40 )
                  
   9,953   4,692   3,009   10,261  
                  
Earnings per share                 
 Basic and diluted  0.39   0.21   0.13   0.47  
                  
Weighted average shares outstanding (in 000's)                 
 Basic  25,200   22,115   24,078   22,027  
 Diluted  25,309   22,224   24,187   22,136  
              
   
Premium Brands Holdings Corporation  
Consolidated Statements of Cash Flows  
(Unaudited and in thousands of dollars)  
                  
   13 weeks ended September 26, 2015   13 weeks ended September 27, 2014   39 weeks ended September 26, 2015   39 weeks ended September 27, 2014  
                  
Cash flows from (used in) operating activities:                 
 Earnings  9,953   4,692   3,009   10,261  
  Items not involving cash:                 
   Depreciation of capital assets  6,683   5,215   19,088   14,411  
   Amortization of intangible and other assets  1,199   1,114   3,258   3,344  
   Amortization of financing costs  56   48   165   195  
   Change in value of puttable interest in subsidiaries  4,331   989   5,226   1,788  
   Gain on disposal of capital assets  (107 ) (26 ) (81 ) (4,694 )
   Accrued interest income  (5 ) (6 ) (14 ) (17 )
   Unrealized loss (gain) on foreign currency and interest rate swap contracts  -   (200 ) 100   -  
   Equity loss (income) in associates  108   (79 ) 171   (138 )
   Deferred revenue  (68 ) 138   (164 ) (36 )
   Accretion of convertible debentures, long-term debt and provisions  617   818   2,602   2,446  
   Deferred income taxes  4,425   2,504   8,669   3,076  
   Non-cash write-down of deferred income tax assets resulting from CRA agreement  -   -   21,520   -  
   27,192   15,207   63,549   30,636  
  Change in non-cash working capital  2,214   (18,366 ) (5,894 ) (21,192 )
   29,406   (3,159 ) 57,655   9,444  
                  
Cash flows from (used in) financing activities:                 
  Long-term debt - net  30,340   48,587   (23,483 ) 81,098  
  Bank indebtedness and cheques outstanding  2,976   (24,268 ) (435 ) (28,660 )
  Dividends paid to shareholders  (8,730 ) (6,925 ) (23,798 ) (20,700 )
  Convertible debentures - net of issuance costs  -   -   65,740   -  
  Repayment of debentures  -   -   (1,434 ) -  
  Other  -   (851 ) (64 ) (851 )
   24,586   16,543   16,526   30,887  
                  
Cash flows from (used in) investing activities:                 
  Capital asset additions  (7,689 ) (11,637 ) (21,746 ) (40,820 )
  Business acquisitions  (43,002 ) -   (43,002 ) (1,702 )
  Payments to shareholders of non-wholly owned subsidiaries  (251 ) (179 ) (1,423 ) (774 )
  Payment of provisions  (1,250 ) (10 ) (1,250 ) (2,336 )
  Purchase of shares for employee share loans  -   -   (7,500 ) -  
  Collection of share purchase loans and notes receivable  103   98   236   179  
  Investment in associates  -   -   -   (1,860 )
  Distribution from associate  64   -   193   146  
  Net proceeds from sale and leaseback of asset  -   -   -   10,200  
  Net proceeds from other asset sales  424   29   486   165  
   (51,601 ) (11,699 ) (74,006 ) (36,802 )
                  
Increase in cash and cash equivalents  2,391   1,685   175   3,529  
Effects of exchange on cash and cash equivalents  (10 ) 89   79   60  
Cash and cash equivalents - beginning of period  7,326   3,252   9,453   1,437  
                  
Cash and cash equivalents - end of period  9,707   5,026   9,707   5,026  
                  
Interest and other financing costs paid  4,682   7,020   13,442   14,810  
Net income taxes paid  219   394   276   455  

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