SOURCE: Premium Brands Holdings Corporation

Premium Brands Holdings Corporation

August 06, 2015 07:00 ET

Premium Brands Holdings Corporation Announces Second Quarter 2015 Results

VANCOUVER, BC--(Marketwired - August 06, 2015) - Premium Brands Holdings Corporation (TSX: PBH), a leading producer, marketer and distributor of branded specialty food products, announced today its results for the second quarter of 2015.

HIGHLIGHTS FOR THE QUARTER

  • Record second quarter revenue of $368.1 million representing a 14.2% increase as compared to the second quarter of 2014
  • Record second quarter adjusted EBITDA of $28.7 million as compared to adjusted EBITDA of $21.7 million in the second quarter of 2014
  • Record adjusted earnings for the quarter of $11.3 million or $0.47 per share as compared to $7.1 million or $0.32 per share for the second quarter of 2014. After a $21.5 million non-cash write-down of certain deferred tax assets, which was the result of a previously announced settlement with the Canada Revenue Agency, the Company had a net loss for the quarter of $10.5 million or $0.43 per share.
  • Record rolling four quarters free cash flow of $71.8 million resulting in a dividend to free cash flow ratio of 42.8%
  • Entered into a settlement agreement with the Canada Revenue Agency regarding the deductibility of tax attributes associated with the Company's conversion from an income trust in 2009. Under the agreement the Company solidified $16.6 million in previously realized tax savings and secured $44.8 million of tax attributes which are expected to result in approximately $15.7 million in future tax savings. The agreement also resulted in the loss of $89.1 million in tax attributes and a corresponding non-cash write-off of approximately $21.5 million of deferred tax assets
  • Issued $69.0 million of convertible unsecured subordinated debentures bearing interest at 5% and convertible into common shares at a price of $44.65
  • Issued a notice of intention to redeem all outstanding 5.75% convertible unsecured subordinated debentures. This resulted in the redemption of only $1.2 million of debentures as the balance of the original $57.5 million issuance was converted into common shares
  • Subsequent to the quarter, completed the acquisition of Isernio's Inc. for US$12.0 million. Isernio's is based in the State of Washington and is one of the U.S. Pacific Northwest's leading manufacturers of premium branded fresh sausage

 
SUMMARY FINANCIAL INFORMATION 
  
(In thousands of dollars except per share amounts and ratios) 
             
   13 Weeks  13 Weeks  26 Weeks  26 Weeks
   Ended  Ended  Ended  Ended
   Jun 27,  Jun 28,  Jun 27,  Jun 28,
   2015  2014  2015  2014
             
Revenue  368,097  322,255  700,701  589,130
Adjusted EBITDA  28,662  21,655  47,729  32,871
Earnings (loss) attributable to shareholders  (10,467)  3,764  (6,849)  5,658
EPS  (0.43)  0.17  (0.29)  0.26
Adjusted earnings  11,324  7,148  16,807  7,378
Adjusted EPS  0.47  0.32  0.71  0.33
 
 
   Rolling Four Quarters Ended
         Jun 27,  Dec 27,
         2015  2014
Free cash flow        71,836  57,374
Declared dividends        30,753  27,768
Declared dividend per share        1.3150  1.2500
Payout ratio        42.8%  48.4%
         

"The continuing improvement in our performance is being driven by a number of factors including strong consumer demand for a broad range of our specialty food products and the realization of benefits associated with several large capital investments that we have made over the last three years. Furthermore, the growth in our adjusted EBITDA is despite input cost challenges created by the impact the weakening Canadian dollar is having on the cost of certain food commodities," said Mr. George Paleologou, President and CEO.

"Overall, we are very pleased with our results as we continue to make solid progress towards our goal of being one of North America's leading specialty food companies.

"We are also very pleased to have recently added Isernio's, which is one of the leading premium branded fresh sausage businesses in the U.S. Pacific Northwest, to our portfolio of great specialty food companies. Looking forward we expect to complete more accretive acquisitions in 2015 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 and Freybe.

RESULTS OF OPERATIONS

 
Revenue
 
(in thousands of dollars except percentages) 
                         
   13 weeks ended
 Jun 27,
2015
 %  13 weeks ended
Jun 28,
2014
 %  26 weeks ended
 Jun 27,
2015
 %  26 weeks ended
 Jun 28,
2014
 %
Revenue by segment:
 Retail  237,002  64.4%  203,511  63.2%  456,842  65.2%  375,716  63.8%
 Foodservice  131,095  35.6%  118,744  36.8%  243,859  34.8%  213,414  36.2%
 Consolidated  368,097  100.0%  322,255  100.0%  700,701  100.0%  589,130  100.0%
                 

Retail's revenue for the second quarter of 2015 as compared to the second quarter of 2014 increased by $33.4 million or 16.5% 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; and (iii) selling price increases that were implemented in the later part of 2014 in response to higher raw material costs (see Gross Profit). Excluding the impact of exchange translation and inflation, Retail's organic growth for the quarter was 7.1%.

Retail's revenue for the first two quarters of 2015 as compared to the first two quarters of 2014 increased by $81.1 million or 21.6% primarily due to the same factors as outlined above. Excluding the impact of exchange translation and inflation, Retail's organic growth for the first two quarters of 2015 was 9.6%.

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 2015 based on (i) the factors outlined above; and (ii) leveraging a number of capacity expansion projects that it has completed over the last several years including construction of a new state-of-the-art artisan bakery in 2012 and a new 180,000 square foot sandwich production facility in 2014.

Foodservice's revenue for the second quarter of 2015 as compared to the second quarter of 2014 increased by $12.4 million or 10.4% primarily due to: (i) selling price increases that were implemented in the later part of 2014 and in 2015 in response to higher 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 $4.8 million of the increase. Excluding the impact of these factors, Foodservice's organic growth for the quarter was flat as increases generated from a variety of sales initiatives were offset by: (i) reduced sales in northern Alberta due to the impact that lower oil commodity prices has had on this region; and (ii) an average west coast sockeye salmon fishery relative to a very strong fishery in 2014.

Foodservice's revenue for the first two quarters of 2015 as compared to the first two quarters of 2014 increased by $30.4 million or 14.3% primarily due to the same factors as outlined above. Excluding the impact of inflation and acquisitions, Foodservice's organic growth for the first two quarters of 2015 was 1.2%.

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 2015 based on continued high selling prices as record high costs for certain raw materials are expected to continue until the latter part of the year. In terms of volume, Foodservice's growth for 2015 is expected to be relatively low due to continued weak sales in northern Alberta and a smaller west coast sockeye salmon fishery relative to 2014.

 
Gross Profit
 
(in thousands of dollars except percentages)
                         
   13 weeks ended
 Jun 27,
2015
 %  13 weeks ended
Jun 28,
2014
 %  26 weeks ended
 Jun 27,
2015
 %  26 weeks ended
 Jun 28,
2014
 %
Gross profit by segment:
 Retail  49,869  21.0%  39,966  19.6%  91,870  20.1%  71,194  18.9%
 Foodservice  21,834  16.7%  20,822  17.5%  39,098  16.0%  37,122  17.4%
 Consolidated  71,703  19.5%  60,788  18.9%  130,968  18.7%  108,316  18.4%
                 

Retail's gross profit as a percentage of its revenue (gross margin) for the second quarter of 2015 as compared to the second quarter of 2014 as well as for the first two quarters of 2015 as compared to the first two quarters of 2014 increased primarily due to: (i) selling price increases implemented by its protein focused businesses (see Revenue) in response to a record run up in beef and pork raw material costs in 2014; (ii) an easing of certain pork raw material costs, albeit this factor was partially offset by longer term purchase commitments and a weaker Canadian dollar as pork commodity prices are generally U.S. dollar based; and (iii) improved operating efficiencies resulting from a restructuring of Retail's deli meats production capacity that was completed near the end of the second quarter of 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 second quarter of 2015 as compared to the second quarter of 2014 as well as for the first two quarters of 2015 as compared to the first two 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 (see Revenue), however, due to the extent of the increases it has not been able to achieve its historic gross margins.

Looking forward (see Forward Looking Statements), Foodservice expects its gross margin to improve towards the end 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
 Jun 27,
2015
 %  13 weeks ended
Jun 28,
2014
 %  26 weeks ended
 Jun 27,
2015
 %  26 weeks ended
 Jun 28,
2014
 %
SG&A by segment:
 Retail  25,286  10.7%  23,388  11.5%  48,541  10.6%  45,260  12.0%
 Foodservice  14,904  11.4%  13,734  11.6%  29,059  11.9%  26,500  12.4%
 Corporate  2,851     2,011     5,639     3,685   
 Consolidated  43,041  11.7%  39,133  12.1%  83,239  11.9%  75,445  12.8%
                 

Retail's SG&A for the second quarter of 2015 as compared to the second quarter of 2014 as well as for the first two quarters of 2015 as compared to the first two quarters of 2014 increased by $1.9 million and $3.3 million, respectively, primarily due to: (i) incremental costs associated with Retail's organic sales growth (see Revenue) including higher advertising 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; and (iii) 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 two quarters of 2015 as compared to the first two 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 second quarter of 2015 as compared to the second quarter of 2014 as well as for the first two quarters of 2015 as compared to the first two quarters of 2014 increased by $1.2 million and $2.6 million, respectively, primarily due to: (i) additional sales and administration infrastructure; and (ii) the acquisition of Ocean Miracle in the fourth quarter of 2014.

Foodservice's SG&A as a percentage of its revenue for the first two quarters of 2015 as compared to the first two 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 second quarter of 2015 as compared to the second quarter of 2014 as well as for the first two quarters of 2015 as compared to the first two quarters of 2014 increased by $0.8 million and $2.0 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
 Jun 27,
2015
  %  13 weeks ended
 Jun 28,
2014
  %  26 weeks ended
 Jun 27,
2015
  %  26 weeks ended
 Jun 28,
2014
  %
Adjusted EBITDA by segment:
 Retail  24,583   10.4%  16,578   8.1%  43,329   9.5%  25,934   6.9%
 Foodservice  6,930   5.3%  7,088   6.0%  10,039   4.1%  10,622   5.0%
 Corporate  (2,851 )    (2,011 )    (5,639 )    (3,685 )  
 Consolidated  28,662   7.8%  21,655   6.7%  47,729   6.8%  32,871   5.6%
                     

The Company's adjusted EBITDA for the first two quarters of 2015 as compared to the first two quarters of 2014 increased by $14.9 million or 45.2% to $47.7 million primarily due to; (i) growth in the Company's sales (see Revenue); (ii) improved gross margins resulting from higher selling prices, decreases in certain raw material costs, and improved operating efficiencies associated with the restructuring of the Company's deli meats production capacity (see Gross Profit); and (iii) the rationalization and subsequent sale of the Company's direct-to-store delivery network for the convenience store channel in 2014 (see SG&A).

These increases were partially offset by: (i) temporary operating inefficiencies associated with the ramp up of the Company's new 180,000 square foot sandwich plant (see Plant Start-up and Restructuring Costs); and (ii) below normal margins in the Company's foodservice business due to continued record high beef raw material costs (see Gross Profit).

 
Plant Start-up and Restructuring Costs
                
Project  13 weeks ended
 Jun 27,
2015
 13 weeks ended
Jun 28,
2014
 26 weeks ended
Jun 27,
2015
 26 weeks ended
Jun 28,
2014
 Expected Completion Date
Sandwich Capacity  -  2,173  2,924  3,020  Complete
Deli Capacity  -  1,448  -  3,449  Complete
NDSD Reconfiguration  -  858  -  1,375  Complete
   -  4,479  2,924  7,844   
           

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 the first half of 2015. While no further restructuring costs are anticipated for this project, the Columbus plant is still operating at 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 second quarter of 2015 as compared to the second quarter of 2014 and for the first two quarters of 2015 as compared to the first two quarters of 2014 decreased primarily due to: (i) a reduction in the Company's total funded debt; and (ii) a reduction in the weighted average cost of its funded debt that was mainly the result of the conversion and repayment of its 7.00% debentures in 2014 and its 5.75% debentures in 2015.

 
FREE CASH FLOW
                  
(in thousands of dollars)  52 weeks
ended
Dec 27, 2014
  26 weeks
ended
Jun 27, 2015
  26 weeks
ended
Jun 28, 2014
  Rolling
Four
Quarters
 
Cash flow from operating activities  21,344   28,249   12,603   36,990  
Changes in non-cash working capital  20,283   8,108   2,826   25,565  
Acquisition transaction costs  266   11   144   133  
Plant start-up and restructuring costs  20,299   2,924   7,844   15,379  
Capital maintenance expenditures  (4,818 ) (3,847 ) (2,434 ) (6,231 )
Free cash flow  57,374   35,445   20,983   71,836  
             
 
 
ADJUSTED EARNINGS PER SHARE
                  
(in thousands of dollars except per share amounts)  13 weeks ended
 Jun 27,
2015
  13 weeks ended
Jun 28,
2014
  26 weeks ended
 Jun 27,
2015
  26 weeks ended
Jun 28,
2014
 
Earnings (loss)  (10,504 ) 3,707   (6,944 ) 5,569  
                  
Plant start-up and restructuring costs  -   4,479   2,924   7,844  
Other income  -   -   -   (4,703 )
Acquisition transaction costs  1   144   11   144  
Accretion of provisions  118   80   259   182  
Unrealized loss on foreign currency contracts  300   300   100   200  
   419   5,003   3,294   3,667  
                  
Current and deferred income tax effect of above items  (111 ) (1,562 ) (1,063 ) (1,858 )
Non-cash write-down of deferred income tax assets resulting from CRA settlement  21,520   -   21,520   -  
                  
Adjusted earnings  11,324   7,148   16,807   7,378  
                  
Weighted average shares outstanding  24,297   22,037   23,517   21,983  
                  
Adjusted earnings per share  $ 0.47   $ 0.32   $ 0.71   $ 0.34  
             

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 August 5, 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 August 5, 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) 
              
   June 27,
 2015
  December 27, 2014   June 28,
 2014
 
              
Current assets:             
 Cash and cash equivalents  7,326   9,453   3,252  
 Accounts receivable  134,846   116,544   102,892  
 Inventories  130,712   121,693   119,926  
 Prepaid expenses  6,422   5,798   6,820  
 Other assets  838   763   161  
   280,144   254,251   233,051  
              
Capital assets  208,639   203,340   194,494  
Intangible assets  70,091   71,545   72,874  
Goodwill  175,737   174,846   169,409  
Investment in associates  9,325   9,517   9,722  
Deferred income taxes  -   22,257   26,342  
Other assets  10,395   3,391   3,133  
              
   754,331   739,147   709,025  
              
Current liabilities:             
 Cheques outstanding  2,769   6,353   3,966  
 Bank indebtedness  172   -   26,797  
 Dividend payable  8,729   6,978   6,922  
 Accounts payable and accrued liabilities  122,066   102,598   113,104  
 Current portion of long-term debt  1,620   2,645   147,544  
 Current portion of provisions  1,832   1,746   1,152  
   137,188   120,320   299,485  
              
Long-term debt  159,015   211,292   10,301  
Puttable interest in subsidiaries  17,904   17,900   14,639  
Deferred revenue  4,498   4,520   3,458  
Provisions  5,229   4,556   2,742  
Pension obligation  1,467   1,437   728  
Deferred income taxes  4,430   -   -  
   329,731   360,025   331,353  
              
Convertible unsecured subordinated debentures  177,604   174,549   175,737  
              
Equity attributable to shareholders:             
 Deficit  (58,762 ) (36,838 ) (27,992 )
 Share capital  289,394   227,247   224,626  
 Equity component of convertible debentures  -   1,744   1,744  
 Reserves  15,843   11,804   2,996  
 Non-controlling interest  521   616   561  
   246,996   204,573   201,935  
              
   754,331   739,147   709,025  
          
 
 
Premium Brands Holdings Corporation 
Consolidated Statements of Operations 
(Unaudited and in thousands of dollars except per share amounts)
                  
   13 weeks ended
June 27,
 2015
  13 weeks ended
June 28,
 2014
  26 weeks ended
June 27,
 2015
  26 weeks ended
June 28,
 2014
 
                  
Revenue  368,097   322,255   700,701   589,130  
Cost of goods sold  296,394   261,467   569,733   480,814  
Gross profit before depreciation and amortization and plant start-up and restructuring costs  71,703   60,788   130,968   108,316  
Selling, general and administrative expenses before depreciation, amortization, plant start-up and restructuring costs, and other income  43,041   39,133   83,239   75,445  
   28,662   21,655   47,729   32,871  
                  
Plant start-up and restructuring costs  -   4,479   2,924   7,844  
Other income  -   -   -   (4,703 )
   28,662   17,176   44,805   29,730  
                  
Depreciation of capital assets  6,711   4,617   12,405   9,196  
Amortization of intangible assets  1,026   1,110   2,056   2,227  
Amortization of other assets  2   2   3   3  
Interest and other financing costs  4,526   5,083   9,280   10,059  
Amortization of financing costs  53   74   109   147  
Acquisition transaction costs  1   144   11   144  
Change in value of puttable interest in subsidiaries  645   583   895   799  
Accretion of provisions  118   80   259   182  
Unrealized loss on foreign currency contracts  300   300   100   200  
Equity loss (income) in associates  114   (81 ) 63   (59 )
Earnings before income taxes  15,166   5,264   19,624   6,832  
                  
Provision for income taxes                 
 Current  605   290   804   691  
 Deferred  3,545   1,267   4,244   572  
   4,150   1,557   5,048   1,263  
 Non-cash write-down of deferred income tax assets resulting from CRA agreement  21,520   -   21,520   -  
   25,670   1,557   26,568   1,263  
                  
Earnings (loss)  (10,504 ) 3,707   (6,944 ) 5,569  
                  
Earnings (loss) for the period attributable to:                 
 Shareholders  (10,467 ) 3,764   (6,849 ) 5,658  
 Non-controlling interest  (37 ) (57 ) (95 ) (89 )
                  
   (10,504 ) 3,707   (6,944 ) 5,569  
                  
Earnings (loss) per share                 
 Basic and diluted  (0.43 ) 0.17   (0.29 ) 0.26  
                  
Weighted average shares outstanding (in 000's)                 
 Basic  24,297   22,037   23,517   21,983  
 Diluted  24,406   22,146   23,626   22,092  
              
 
 
Premium Brands Holdings Corporation 
Consolidated Statements of Cash Flows 
(Unaudited and in thousands of dollars)
                  
   13 weeks ended
June 27,
 2015
  13 weeks ended
June 28,
 2014
  26 weeks ended
June 27,
 2015
  26 weeks ended
June 28,
 2014
 
                  
Cash flows from (used in) operating activities:                 
 Earnings (loss)  (10,504 ) 3,707   (6,944 ) 5,569  
  Items not involving cash:                 
   Depreciation of capital assets  6,711   4,617   12,405   9,196  
   Amortization of intangible and other assets  1,028   1,112   2,059   2,230  
   Amortization of financing costs  53   74   109   147  
   Change in value of puttable interest in subsidiaries  645   583   895   799  
   Loss (gain) on disposal of capital assets  (19 ) 34   26   (4,668 )
   Accrued interest income  (4 ) (5 ) (9 ) (11 )
   Unrealized loss on foreign currency contracts  300   300   100   200  
   Equity loss (income) in associates  114   (81 ) 63   (59 )
   Deferred revenue  (68 ) (50 ) (96 ) (174 )
   Accretion of convertible debentures, long-term debt and provisions  1,303   799   1,985   1,628  
   Deferred income taxes  3,545   1,267   4,244   572  
   Non-cash write-down of deferred income tax assets resulting from CRA agreement  21,520   -   21,520   -  
   24,624   12,357   36,357   15,429  
  Change in non-cash working capital  (8,294 ) (10,025 ) (8,108 ) (2,826 )
   16,330   2,332   28,249   12,603  
                  
Cash flows from (used in) financing activities:                 
  Long-term debt - net  (57,356 ) 17,437   (53,823 ) 32,511  
  Bank indebtedness and cheques outstanding  (1,441 ) 7,427   (3,411 ) (4,392 )
  Dividends paid to shareholders  (8,090 ) (6,912 ) (15,068 ) (13,775 )
  Convertible debenture - net of issuance costs (note 5)  65,740   -   65,740   -  
  Repayment of debentures  (1,203 ) -   (1,434 ) -  
  Other  (29 ) -   (64 ) -  
   (2,379 ) 17,952   (8,060 ) 14,344  
                  
Cash flows from (used in) investing activities:                 
  Capital asset additions  (9,517 ) (17,145 ) (14,057 ) (29,183 )
  Business acquisitions  -   (1,702 ) -   (1,702 )
  Payments to shareholders of non-wholly owned subsidiaries  (610 ) (472 ) (1,172 ) (595 )
  Payment of provisions  -   (2,268 ) -   (2,326 )
  Purchase of shares for employee share loans  (7,500 ) -   (7,500 ) -  
  Collection of share purchase loans and notes receivable  51   19   133   81  
  Investment in associates  -   -   -   (1,860 )
  Distribution from associate  65   146   129   146  
  Net proceeds from sale and leaseback of asset  -   -   -   10,200  
  Net proceeds from other asset sales  44   108   62   136  
   (17,467 ) (21,314 ) (22,405 ) (25,103 )
                  
Increase (decrease) in cash and cash equivalents  (3,516 ) (1,030 ) (2,216 ) 1,844  
Effects of exchange on cash and cash equivalents  7   (94 ) 89   (29 )
Cash and cash equivalents - beginning of period  10,835   4,376   9,453   1,437  
                  
Cash and cash equivalents - end of period  7,326   3,252   7,326   3,252  
                  
Interest and other financing costs paid  1,797   1,725   8,760   7,790  
Net income taxes paid  826   33   826   61  
             

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