Premium Brands Income Fund
TSX : PBI.UN

Premium Brands Income Fund

November 06, 2006 09:00 ET

Premium Brands Income Fund Announces Record Third Quarter Sales and EBITDA

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 6, 2006) - Premium Brands Income Fund (TSX:PBI.UN), a leading producer, marketer and distributor of specialty branded consumer food products, announced today its third quarter and year-to-date results for the 13 week and 39 week periods ended September 30, 2006.

HIGHLIGHTS FOR THE QUARTER

- The Fund's results for the third quarter of 2006 represent its seventh consecutive quarter of record sales and EBITDA from continuing operations.

- The Fund generated $5.3 million or $0.3556 per unit in distributable cash in the third quarter of 2006 and declared $4.4 million or $0.2940 per unit in cash distributions representing a payout ratio of 82.7%. On a rolling four quarter basis, Premium Brands has generated distributable cash of $18.9 million or $1.2585 per unit and declared $17.6 million or $1.176 per unit in cash distributions representing a payout ratio of 93.4%.

- The Fund posted earnings from continuing operations for the third quarter of $4.2 million or $0.28 per unit versus $1.2 million or $0.10 per unit/share in 2005. On a year-to-date basis earnings from continuing operations increased to $11.4 million or $0.76 per unit as compared to $3.5 million or $0.30 per unit/share for 2005.

- Third quarter sales of the Fund's core specialty food products increased by $4.3 million or 8.1% to $55.5 million with organic growth representing approximately 70% of the increase and acquisitions the remaining 30%. Total sales for the quarter increased by 3.5% to $58.8 million as a $3.8 million decrease in mainstream processed meat sales partially offset the specialty food product sales gains. The Fund's lower mainstream processed meat sales were the result of its decision earlier this year to exit certain lower margin product categories. On a year-to-date basis the Fund's sales were up 8.2% to $163.4 million from $151.1 million in 2005.

- Third quarter EBITDA from continuing operations reached a record $6.6 million despite inflationary pressures on a variety of input costs and the Fund's new Hempler's business still operating in a ramp up mode. On a year-to-date basis EBITDA from continuing operations was up 24.0% to $17.9 million from $14.4 million in 2005.

- Subsequent to the third quarter the Fund completed a treasury offering of 2,444,280 units at $11.60 per unit resulting in gross proceeds of $28.4 million. The net proceeds from the offering of approximately $26.4 million, after deducting the underwriters' fee and expenses of the offering, will initially be used to reduce the amount outstanding on the Fund's credit facilities and then to take advantage of acquisition opportunities and for general corporate purposes. Post the offering the Fund's net funded debt to EBITDA ratio will decrease to approximately 0.3:1.

- The Fund is reaffirming its EBITDA guidance for 2006 of $22 million to $23 million with a bias towards the upper end of its targeted range.

QUARTER SUMMARY



(in thousands of 13 Weeks 13 Weeks 39 Weeks 39 Weeks
dollars except Ended Ended Ended Ended
per unit/share Sept 30, Sept 24, Sept 30, Sept 24,
amounts) 2006 2005 2006 2005

Revenue 58,770 56,795 163,428 151,065
EBITDA 6,567 6,110 17,871 14,407
EBITDA margin 11.2% 10.8% 10.9% 9.5%
Earnings before
non-controlling
interest 4,331 1,205 11,628 3,604
Loss from
discontinued
operations 696 604 1,357 1,397
Net earnings:
Total 3,553 601 10,079 2,121
Per unit/share 0.24 0.05 0.67 0.18
Distributable
cash:
Total 5,334 (i) 14,623 (i)
Per unit/share 0.3556 (i) 0.9749 (i)
Cash
distributions:
Total 4,409 (i) 13,228 (i)
Per unit/share 0.2940 (i) 0.8820 (i)
Payout ratio 82.7% (i) 90.5% (i)

(i) Not applicable as the Fund converted to an income trust on July 27,
2005.


"The primary driver of the continued improvement in our sales, EBITDA and EBITDA margin is our commitment to two core business strategies:

The acquisition and development of branded specialty food businesses that have a leading position in a niche market segment; and

The acquisition and development of unique distribution and wholesale networks that provide our specialty food businesses with proprietary access to a large and diversified customer base.

"Our results for the third quarter show the strength of these strategies as we continued to achieve record sales and EBITDA levels. We are particularly pleased with the growth in our EBITDA and EBITDA margin given that several of our businesses experienced significant inflationary pressures on a variety of their input costs," stated Mr. George Paleologou, President.

"Looking forward we expect to continue to generate solid sales and EBITDA growth, and correspondingly increased distributable cash, through a variety of initiatives including:

- Our newly acquired Hempler's business, which has been ramping up its operations since moving into a new production facility earlier this year. We expect Hempler's to make a significant contribution to our future results beginning in the fourth quarter of 2006.

- Average organic growth of 7% to 8% from our existing specialty food product lines. For 2006 these product lines have grown at an organic rate of approximately 9.7% despite capacity limitations on several key lines including certain meat snack and sandwich products. We have a number of capacity related initiatives coming on line in 2007, which combined with a strong economy in Western Canada and the continued expansion of our lines into new markets in Central Canada and the U.S. Pacific Northwest, positions us well to meet these growth targets.

- The integration of Pop's E-Z Popcorn & Supply and Gloria's Catering, both of which were acquired in the second quarter of this year. These transactions strengthened the competitive position of one or more of our existing specialty food businesses; however, due to integration related costs and the seasonality of their businesses they will not make a significant contribution to our earnings and distributable cash until 2007.

The Fund generated $5.3 million or $0.3556 per unit in distributable cash in the third quarter of 2006 and declared $4.4 million or $0.2940 per unit in cash distributions representing a payout ratio of 82.7%. On a rolling four quarter basis, Premium Brands has generated distributable cash of $18.9 million or $1.2585 per unit and declared $17.6 million or $1.176 per unit in cash distributions representing a payout ratio of 93.4%.

"The end of the third quarter of 2006 marks our first full four quarters of being an income trust. I am pleased to report that our payout ratio has decreased from the initial 100% level set back in July 2005 to the current rolling four quarters average of 93.4%. Longer term we remain committed to further reducing our payout ratio to the 85% to 90% range," commented Mr. Paleologou.

Subsequent to the third quarter the Fund completed a treasury offering of 2,444,280 units at $11.60 per unit resulting in gross proceeds of $28.4 million. The net proceeds from the offering of approximately $26.4 million, after deducting the underwriters' fee and expenses of the offering, will initially be used to reduce the amount outstanding on the Fund's credit facilities and then to take advantage of acquisition opportunities and for general corporate purposes.

"The acquisition of specialty food companies is one of the key strategies we are using to grow and diversify our cash flow streams," said Mr. Fred Knoedler, CEO. "Our recent public offering brings our net funded debt to EBITDA ratio down to approximately 0.3:1 and provides us with the flexibility to execute this component of our growth strategies. Looking forward we see no shortage of opportunities in the specialty food segment and expect acquisitions to continue to play a major role in the evolution of our business."

The Fund's current EBITDA guidance for 2006 is a range of $22 million to $23 million. Based on a third quarter year-to-date EBITDA of $17.9 million the Fund is reiterating its EBITDA guidance with a bias towards the upper end of its targeted range.

Premium Brands owns a broad range of leading branded specialty food businesses with manufacturing and distribution facilities located in British Columbia, Alberta, Saskatchewan, Manitoba and Washington. In addition, the Fund owns proprietary food distribution and wholesale networks through which it sells both its own products and those of third parties to approximately 20,000 customers. The Fund's family of brands includes Grimm's, Harvest, McSweeney's, Quality Fresh Foods, Hempler's, Hygaard and Harlan's.

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")

The following discussion should be read in conjunction with the Fund's 2005 audited consolidated financial statements and the notes thereto, which are prepared in accordance with Canadian generally accepted accounting principles ("GAAP"), the related Management's Discussion and Analysis, and the Fund's 2005 Annual Information Form. These documents, as well as additional information on the Fund, are filed electronically through the System for Electronic Document Analysis and Retrieval ("SEDAR") and are available online at www.sedar.com.

All amounts are expressed in Canadian dollars except as noted otherwise. The information presented is current to November 2, 2006.

FORWARD-LOOKING STATEMENTS

This discussion and analysis includes forward-looking statements with respect to the Fund, 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 Fund's internal expectations and belief at this time, such statements involve unknown risks and uncertainties which may cause the Fund's 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. Important factors that could cause actual results to differ materially from the Fund's expectations include, among other things: (i) seasonal fluctuations in the Fund's sales; (ii) changes in the cost of raw materials used for the Fund's products; (iii) changes in consumer preferences for food products; (iv) competition from other food manufacturers and distributors; and (v) new government regulations affecting the Fund's business and operations.

The Fund disclaims any intention or obligations to revise forward-looking statements whether as a result of new information, future developments, or otherwise.

SUPPLEMENTAL DISCLOSURE

EBITDA and distributable cash are not terms defined under GAAP. As a result, these terms as defined by the Fund may not be comparable to similarly titled measures presented by other publicly traded entities, nor should they be construed as alternatives to other earnings measures determined in accordance with GAAP. The Fund believes that EBITDA is a useful indicator of the amount of cash generated by the Fund's operating businesses and that distributable cash is a useful indicator of the amount of cash available for distribution to unitholders.

EBITDA and distributable cash are calculated as follows:



----------------------------------------------------------------------
(in thousands of 13 weeks 13 weeks 39 weeks 39 weeks
dollars) ended ended ended ended
Sept 30, Sept 24, Sept 30, Sept 24,
2006 2005 2006 2005
----------------------------------------------------------------------

Earnings from
continuing
operations before
non-controlling
interest 4,331 1,205 11,628 3,604
Depreciation of
capital assets 1,422 1,338 4,058 3,866
Interest and
other financing
costs 697 563 1,813 2,127
Amortization of
intangible and
other assets 117 156 352 579
Trust conversion
costs - 2,338 - 2,338
Income taxes - 510 20 1,883
Loss on sale of
assets - - - 10
----------------------------------------------------------------------

EBITDA 6,567 6,110 17,871 14,407
----------------------------------------------------------------------
----------------------------------------------------------------------


----------------------------------------------------------------------
(in thousands of dollars) Rolling
13 weeks 39 weeks 4 quarters
ended ended ended
Sept 30, Sept 30, Sept 30,
2006 2006 2006
----------------------------------------------------------------------

EBITDA 6,567 17,871 22,876
Payments on notes receivable 68 362 427
Interest and other financing
costs (697) (1,813) (2,253)
Maintenance capital
expenditures (501) (1,501) (1,797)
Principal debt repayments (21) (84) (112)
Non-controlling interest (82) (192) (192)
Income taxes - (20) (72)
----------------------------------------------------------------------

Distributable cash 5,334 14,623 18,877
----------------------------------------------------------------------
----------------------------------------------------------------------


Distributable cash reconciles to the Fund's cash flow from operating activities as follows:



----------------------------------------------------------------------
(in thousands of dollars) Rolling
13 weeks 39 weeks 4 quarters
ended ended ended
Sept 30, Sept 30, Sept 30,
2006 2006 2006
----------------------------------------------------------------------

Cash flow from operating
activities 8,596 16,252 18,778
Trust conversion costs - - 705
Change in continuing
non-cash working capital (2,576) (353) 212
Cash flow from discontinued
operations (150) 139 856
Payments on notes receivable 68 362 427
Maintenance capital
expenditures (501) (1,501) (1,797)
Principal debt repayments (21) (84) (112)
Non-controlling interest (82) (192) (192)
----------------------------------------------------------------------

Distributable cash 5,334 14,623 18,877
----------------------------------------------------------------------
----------------------------------------------------------------------


RESULTS OF OPERATIONS

Third Quarter of 2006 as Compared to the Third Quarter of 2005

Sales from continuing operations for the quarter were up $2.0 million or 3.5% to $58.8 million as compared to $56.8 million in the third quarter of 2005. The increase was due to a combination of a $4.3 million or 8.1% rise in sales of the Fund's core specialty food products; and acquisitions, which accounted for $1.6 million of the increase. These increases were partially offset by a $3.8 million decrease in sales of mainstream processed meats due to the Fund's decision to exit from certain lower margin business. The 8.1% increase in sales of the Fund's core specialty food products was driven by a variety of factors including favourable weather conditions and a strong economy in Western Canada.

As a percentage of sales, gross profit from continuing operations ("gross margin") for the quarter improved to 32.9% from 30.2% in 2005 due primarily to a favourable sales mix shift resulting from the Fund's exit from certain lower margin mainstream processed meats business; and production efficiencies associated with increased sales of internally manufactured specialty food products; partially offset by higher manufacturing input costs due to inflationary pressures on labour and certain raw materials.

As a percentage of sales, selling, general and administrative expenses ("SG&A") for the quarter increased to 21.7% from 19.5% in 2005 due primarily to a shift in the Fund's sales mix to higher margin products that have higher selling costs associated with them; increased commission and bonus costs associated with the Fund's increased sales and profitability; and, to a lesser extent, higher fuel and freight costs.

The Fund's EBITDA and EBITDA margin for the quarter were $6.6 million and 11.2%, respectively, as compared to $6.1 million and 10.8%, respectively, in 2005. The improvement in both the Fund's EBITDA and EBITDA margin was due primarily to the successful implementation of the Fund's core specialty food products and distribution strategies.

Net earnings from continuing operations for the quarter were $4.2 million or $0.28 per unit as compared to $1.2 million or $0.10 per unit/share in 2005. Included in the 2005 third quarter results were $2.3 million in expenses relating to the Fund's conversion to an income trust structure on July 27, 2005 and $0.5 million in income tax costs, most of which were incurred under Premium Brands' previous corporate structure.

The Fund's discontinued Goodlife Foods operation incurred a loss of $0.7 million for the quarter as compared to a loss of $0.6 million in the third quarter of 2005. Included in the loss are costs associated with the final wind up of Goodlife which ceased all of its operations on August 31, 2006. From a cash flow perspective, cash resulting from the liquidation of Goodlife's assets during the quarter exceeded its cash loss by approximately $0.2 million.

The Fund's net earnings for the quarter, were $3.6 million or $0.24 per unit as compared to $0.6 million or $0.05 per unit/share in 2005.

Year-To-Date Third Quarter of 2006 as Compared to the Year-To-Date Third Quarter of 2005

The year-to-date trends in sales, gross margin, SG&A as a percentage of sales, earnings from continuing operations, and net earnings in general terms resemble those of the third quarter. For 2006 year-to-date sales were up 8.2% to $163.4 million, gross margin rose to 33.4% from 28.9% in 2005, SG&A as a percentage of sales increased to 22.5% from 19.4% in 2005, EBITDA increased 24.0% to $17.9 million, earnings from continuing operations were up 225% to $11.4 million and net earnings increased by 375% to $10.1 million.

The extent of the increases, on a percentage basis, is generally higher in the 2006 year-to-date results as compared to the 2006 third quarter results due primarily to the following factors:

- The acquisition of Harlan Fairbanks which occurred in the second quarter of 2005 and as a result had a more significant incremental impact in the first quarter comparatives than on the second and third quarter comparatives.

- The Fund's gross margin in the first quarter of 2005 was abnormally low due to a variety of record high commodity input prices. This resulted in a favourable comparison in the first quarter of 2006 due to certain commodity prices being lower in 2006. In the second quarter commodity conditions in 2006 and 2005 were much more similar and, as a result, the favourable impact of commodity prices in 2006 relative to 2005 was reduced. In the third quarter of 2006 inflationary pressures on a number of input costs resulted in commodity prices having a slightly negative effect on the Fund's gross margins relative to the third quarter of 2005.

Also in the year-to-date results for 2006 is a $0.8 million gain resulting from the merger of the Fund's U.S. meat snack operation into Hempler Foods Group LLC (see below for details). This gain was, however, fully offset by a loss of the same amount that resulted from a review of the intangible assets associated with the U.S. meat snack operation. Hence the net impact of these two transactions on the Fund's earnings was nil.

DISTRIBUTIONS

Distributable cash for the 13 week period ended on September 30, 2006 was $5.3 million or $0.3556 per unit as compared to declared distributions of $4.4 million or $0.2940 representing a payout ratio of 82.7%. Distributable cash for the rolling four quarter period ending on September 30, 2006 was $18.9 million or $1.2585 per unit as compared to declared distributions of $17.6 million or $1.1760 per unit representing a payout ratio of 93.4%.

The Fund's lower payout ratio for the third quarter of 2006 relative to the rolling four quarter period was due primarily to the seasonality of its business combined with the fact that its current estimated monthly cash distribution of $0.098 per unit is based on an annual estimated amount averaged over twelve months. The Fund's second and third quarters, which correspond to the spring and summer seasons, are historically its strongest due to increased outdoor activities by consumers which result in increased consumption of the Fund's products. Correspondingly, the Fund's first and fourth quarters are its weakest due to generally poor weather conditions.

Longer term, the Fund has targeted to reduce its payout ratio to 85% to 90% of its distributable cash to ensure that it has the ability to withstand temporary shocks to its business without adjusting the cash distribution paid to its unitholders.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows from Operating Activities

For the third quarter of 2006 the Fund generated $5.9 million in cash from operations and $2.6 million in cash from a reduction in working capital. The Fund's decreased working capital needs were due to a combination of seasonal factors offset partially by its growing sales. On a year-to-date basis the Fund generated $16.0 million in cash from operations and $0.4 million in cash from reduced working capital levels.

The Fund's discontinued operation generated $0.2 million in cash in the third quarter of 2006 as proceeds from the sale of its assets exceeded a $0.7 million loss from operations. On a year-to-date basis the discontinued operation has used $0.1 million in cash.

Cash Flows from Financing Activities

During the third quarter of 2006, the Fund used $3.0 million in cash for the following financing activities:

- $5.2 million was used to reduce the balance outstanding on the Fund's revolving credit facilities. In general terms excess cash available to the Fund is used to reduce these facilities and correspondingly cash shortfalls are funded from them.

- $4.4 million was used for cash distributions to unitholders.

- The above uses were partially offset by the issuance of a US$6.1 million Industrial Development Revenue Bond ("IRB") by the Fund's subsidiary, Hempler's. IRBs are a financing instrument available in the U.S. for U.S. based capital projects that meet certain conditions. Interest rates associated with IRBs tend to be very favourable as interest earned by the holder of the IRB is, subject to meeting certain conditions, not taxable while interest paid by the borrower is deductible for tax purposes.

Proceeds from the IRB were used by Hempler's to acquire the new 28,000 square foot production facility located in Ferndale, Washington that it has been operating in since March 2006.

On a year-to-date basis the Fund's financing activities have used $2.4 million in cash consisting primarily of $13.2 million in distributions to unitholders partially offset by the US$6.1 million in proceeds from the IRB and $4.3 million in draws on its revolving credit facility.

Cash Flows from Investing Activities

For the third quarter of 2006 investing activities used $5.1 million in cash with $7.8 million spent on capital expenditures, including $0.5 million for maintenance capital expenditures and $7.0 million for the purchase of Hempler's new Ferndale, Washington production facility. These cash uses were partially offset by the net collection of $2.8 million in notes receivable.

On a year-to-date basis the Fund's investing activities used $10.9 million in cash for capital expenditures; $1.5 million of which were for maintenance capital expenditures; $3.0 million for business acquisitions; and received a net $1.1 million in cash from the collection of notes receivable.

The $3.0 million used for business acquisitions related to the following four transactions:

- The acquisition of an additional 10% interest in Hempler's thereby increasing the Fund's total interest in Hempler's to 60%.

- The acquisition of 100% of Gloria's Catering, a leading fresh sandwich manufacturer servicing the B.C. south coast.

- The acquisition of 100% of Pop's E-Z Popcorn & Supply, a U.S. based distributor of concessionary equipment and related products to the western Washington region.

- The acquisition of a 50% interest in Made-Rite Meat Products LP, a supplier to the Fund of meat snack products.

Each of these transactions strengthened the competitive position of one or more of the Fund's existing specialty food or distribution businesses.

In addition, during the first quarter of 2006 the Fund acquired its initial 50% interest in Hempler's, a Washington based manufacturer of premium, organic and natural processed meat products, as part of a 50/50 merger of Hempler's with the Fund's U.S. based meat snack operation. The transaction involved the merger of two equivalent businesses and therefore there was no cash component to it other than professional and advisory fees. Concurrent with the merger, the Fund shut down its U.S. plant and moved its operations to the new Ferndale plant.

The Fund has accounted for these acquisitions using the purchase method and has consolidated their assets and liabilities and recorded preliminary estimates for goodwill and, where appropriate, intangible assets and non-controlling interest.



Premium Brands Income Fund

CONSOLIDATED BALANCE SHEET
(Unaudited and in thousands)

----------------------------------------------------------------------
Sept 30, Dec 31, Sept 24,
2006 2005 2005
----------------------------------------------------------------------

Current assets:
Cash and cash equivalents $ 1,441 $ 455 $ 4,262
Accounts receivable 18,760 16,894 17,934
Current portion of notes receivable 671 1,501 435
Inventories 20,847 17,568 19,515
Prepaid expenses 1,530 1,419 1,568
Future income taxes 304 304 304
Current assets of
discontinued operations 82 907 3,557
---------------------------------------------------------------------
43,635 39,048 47,575

Future income taxes 524 524 524
Capital assets 53,308 44,821 45,635
Goodwill 63,970 61,330 63,172
Intangible assets 4,492 5,345 3,579
Other assets 2,877 3,083 2,464
Non-current assets of
discontinued operations 220 1,532 5,613
----------------------------------------------------------------------

$ 169,026 $ 155,683 $ 168,562
----------------------------------------------------------------------
----------------------------------------------------------------------

Current liabilities:
Cheques outstanding $ 1,699 $ 1,501 $ 1,473
Bank indebtedness 4,125 - -
Distributions payable 1,470 1,470 1,470
Accounts payable and
accrued liabilities 21,011 16,840 20,108
Current portion of long-term debt 191 112 110
Current liabilities of
discontinued operations 682 1,604 949
---------------------------------------------------------------------
29,178 21,527 24,110

Long-term debt 29,570 22,296 22,325
----------------------------------------------------------------------
58,748 43,823 46,435

Non-controlling interest 2,254 - -

Unitholders' equity:
Unitholders' capital 127,779 127,810 127,810
Accumulated earnings (deficit) 4,301 (5,778) 48
Accumulated distributions declared (20,816) (7,588) (3,177)
Cumulative translation adjustment (3,240) (2,584) (2,554)
----------------------------------------------------------------------

108,024 111,860 122,127
----------------------------------------------------------------------

$ 169,026 $ 155,683 $ 168,562
----------------------------------------------------------------------
----------------------------------------------------------------------


Premium Brands Income Fund

CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited and in thousands except per unit/share amounts)

----------------------------------------------------------------------
13 weeks 13 weeks 39 weeks 39 weeks
ended ended ended ended
Sept 30, Sept 24, Sept 30, Sept 24,
2006 2005 2006 2005
----------------------------------------------------------------------

Sales $ 58,770 $ 56,795 $ 163,428 $ 151,065
----------------------------------------------------------------------

Gross profit 19,335 17,162 54,658 43,716
Selling, general
and
administrative
expenses 12,768 11,052 36,787 29,309
----------------------------------------------------------------------

6,567 6,110 17,871 14,407
Depreciation of
capital assets 1,422 1,338 4,058 3,866
Interest and
other financing
costs 697 563 1,813 2,127
Amortization of
intangible and
other assets 117 156 352 579
Loss on sale of
assets - - - 10
Trust conversion
costs - 2,338 - 2,338
----------------------------------------------------------------------

4,331 1,715 11,648 5,487
Income tax
provision - 510 20 1,883
----------------------------------------------------------------------

Earnings from
continuing
operations
before
non-controlling
interest 4,331 1,205 11,628 3,604
Non-controlling
interest - net
of income taxes 82 - 192 86
Loss from
discontinued
operations - net
of income taxes 696 604 1,357 1,397
----------------------------------------------------------------------

Net earnings $ 3,553 $ 601 $ 10,079 $ 2,121
----------------------------------------------------------------------
----------------------------------------------------------------------

Earnings per
unit/share from
continuing
operations:
Basic and
diluted $ 0.28 $ 0.10 $ 0.76 $ 0.30

Loss per
unit/share from
discontinued
operations:
Basic and
diluted $ (0.04) $ (0.05) $ (0.09) $ (0.12)

Net earnings per
unit/share
Basic and
diluted $ 0.24 $ 0.05 $ 0.67 $ 0.18

Weighted average
units/shares
outstanding 15,000 12,469 15,000 11,789


Premium Brands Income Fund

CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited and in thousands)

----------------------------------------------------------------------
13 weeks 13 weeks 39 weeks 39 weeks
ended ended ended ended
Sept 30, Sept 24, Sept 30, Sept 24,
2006 2005 2006 2005
----------------------------------------------------------------------

Cash flows from
operating
activities:
Earnings from
continuing
operations
before
non-controlling
interest $ 4,331 $ 1,205 $ 11,628 $ 3,604
Items not
involving cash:
Depreciation of
capital assets 1,422 1,338 4,058 3,866
Amortization of
intangible and
other assets 117 156 352 579
Stock-based
compensation - 4 - 15
Loss on sale of
assets - - - 10
Writedown of
deferred finance
fees - 839 - 839
Future income
taxes - 479 - 1,801
---------------------------------------------------------------------
5,870 4,021 16,038 10,714
Change in
continuing
non-cash working
capital 2,576 1,192 353 (220)
---------------------------------------------------------------------
Funds from
continuing
operations 8,446 5,213 16,391 10,494
---------------------------------------------------------------------

Discontinued
operations 150 (330) (139) (407)
---------------------------------------------------------------------
8,596 4,883 16,252 10,087
---------------------------------------------------------------------

Cash flows from
financing
activities:
Long-term debt -
net 6,800 (19,751) 6,749 (12,420)
Issuance of
units - net of
issuance costs - 31,109 - 31,109
Bank
indebtedness and
cheques
outstanding (5,157) (7,848) 4,303 (7,306)
Distributions
paid to
unitholders (4,409) (1,707) (13,228) (1,707)
Other (184) (174) (214) (545)
---------------------------------------------------------------------
(2,950) 1,629 (2,390) 9,131
---------------------------------------------------------------------

Cash flows from
investing
activities:
Change in notes
receivable - net 2,796 413 1,082 2,778
Proceeds from
sales of assets -
net 7 - 18 21
Capital asset
additions (7,827) (1,525) (10,903) (3,355)
Business
acquisitions (8) (1,521) (3,043) (14,424)
Other (26) - (30) (100)
---------------------------------------------------------------------
(5,058) (2,633) (12,876) (15,080)
---------------------------------------------------------------------

Change in cash
and cash
equivalents 588 3,879 986 4,138
Cash and cash
equivalents -
beginning of
period 853 383 455 124
----------------------------------------------------------------------

Cash and cash
equivalents -
end of period $ 1,441 $ 4,262 $ 1,441 $ 4,262
----------------------------------------------------------------------
----------------------------------------------------------------------


Contact Information

  • Premium Brands Income Fund
    George Paleologou
    President
    (604) 656-3100
    or
    Premium Brands Income Fund
    Will Kalutycz
    CFO
    (604) 656-3100