Premium Brands Holdings Corporation Announces Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 7, 2013) - 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 2013.

HIGHLIGHTS

• Revenue for the quarter increased by 13.5% to $287.0 million as compared to $252.9 million for the third quarter of 2012. Revenue for the first three quarters of 2013 as compared to the first three quarters of 2012 increased by $76.8 million or 10.7% to $795.1 million.

• Adjusted EBITDA for the quarter increased to $21.8 million as compared to $19.7 million in the third quarter of 2012. For the first three quarters of 2013, adjusted EBITDA increased to $55.5 million as compared to $52.0 million for the first three quarters of 2012.

• The Company declared a quarterly dividend of $0.3125 per share.

• Rolling four quarters free cash flow increased to $47.2 million from $46.8 million in 2012 resulting in a dividend to free cash flow ratio of 54.7%.

• Subsequent to the quarter the Company completed the issuance of $57.5 million of convertible unsecured subordinated debentures bearing interest at 5.5% and due in June 2019.

• Also subsequent to the quarter, the Company's SK Food Group business initiated a project to build a new $21.6 million state-of-the-art sandwich production facility in the north eastern U.S. The new plant will complement SK Food Group's existing facility in Reno, NV.

SUMMARY FINANCIAL INFORMATION

(In thousands of dollars except per share amounts and ratios)	13 Weeks	13 Weeks	39 Weeks	39 Weeks
	Ended	Ended	Ended	Ended
	Sep 28,	Sep 29,	Sep 28,	Sep 29,
	2013	2012	2013	2012
Revenue	286,955	252,887	795,065	718,314
Adjusted EBITDA	21,774	19,723	55,547	52,014
Net earnings	5,180	4,599	11,669	12,773
EPS	0.25	0.22	0.56	0.62

	Rolling Four Quarters Ended
	Sep 28,		Dec 29,
	2013		2012
Free cash flow	47,198		46,784
Declared dividends	25,838		24,381
Declared dividend per share	1.213		1.176
Payout ratio	54.7	%	52.1	%

"The majority of our businesses, including our foodservice and sandwich groups, delivered solid results for the quarter driven by strong demand for their products across a variety of sales channels. Unfortunately a large part of this success was offset by a spike in the cost of certain input protein commodities that temporarily impacted the margins of our deli group," said Mr. George Paleologou, President and CEO.

"Our deli group's results were also negatively impacted by operational issues resulting from the transitioning of production from an older plant that was shut down earlier this year to several of our other plants. The majority of these issues have now been addressed and we expect to see a significant improvement in the deli group's earnings over the next several quarters.

"We are very pleased with the progress all of our businesses are making in positioning themselves for continued growth in both their top and bottom lines. Over the last two years we have invested a significant amount of capital in them and are now on the cusp of realizing on these investments, both through improved margins and sales growth.

"We are also very excited to be announcing our North American sandwich group's new initiative to build a $21.6 million state-of-the-art production facility in the north eastern U.S. This facility will complement the sandwich group's facilities in Reno, NV, Laval, QC and Edmonton, AB and will give the business the capacity needed to continue growing at double digit rates. Furthermore, this project will position our sandwich group, which is already one of, if not the largest, prepared sandwich businesses in North America, to provide national sandwich assembly solutions to retail and restaurant chains across North America," 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 and Washington State. The Company services over 22,000 customers and its family of brands and businesses include Grimm's, Harvest, McSweeney's, Bread Garden Go, Hygaard, Hempler's, Quality Fast Foods, Gloria's Best of Fresh, Direct Plus, National Direct-to-Store Distribution (NDSD), Harlan Fairbanks, Creekside Bakehouse, Centennial Foodservice, B&C Food Distributors, Shahir, Wescadia, Duso's, Maximum Seafood, 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	%		13 weeks	%		39 weeks	%		39 weeks	%
		ended			ended			ended			ended
		Sep 28,			Sep 29,			Sep 28,			Sep 29,
		2013			2012			2013			2012
Revenue by segment:
	Retail	178,963	62.4	%	156,383	61.8	%	491,591	61.8	%	439,197	61.1	%
	Foodservice	107,992	37.6	%	96,504	38.2	%	303,474	38.2	%	279,117	38.9	%
	Consolidated	286,955	100.0	%	252,887	100.0	%	795,065	100.0	%	718,314	100.0	%

Retail's revenue for the third quarter of 2013 as compared to the third quarter of 2012 increased by $22.6 million or 14.4% due to: (i) the acquisition of Freybe which accounted for $19.9 million of the increase; and (ii) organic growth of $5.6 million, representing an average growth rate of 4.1%, from its legacy businesses after excluding NDSD. 

These increases were partially offset by (i) a $1.6 million decrease in fresh sandwich sales to the C-store channel resulting from the sale of Retail's fresh sandwich plant in Etobicoke, ON in the fourth quarter of 2012; and (ii) a $1.3 million decrease in NDSD's sales resulting primarily from the restructuring of its convenience store (C-store) distribution network. The restructuring resulted in the conversion of NDSD's customers in certain geographic regions from being serviced by NDSD's direct-to-store delivery trucks to being serviced by third party distributors and wholesale distributors. Correspondingly, in regions where this conversion has occurred the Company now sells its products at a discounted price to the new distributor who in turn sells and distributes the Company's products to C-store retailers.

The low organic growth rate of Retail's legacy businesses, as compared to its targeted growth rate of 6% to 8%, was primarily due to lost sales resulting from temporary capacity issues associated with the transitioning of products from its Richmond deli meats plant to other production facilities (see Restructuring Costs). Normalizing for the lost sales, Retail's organic growth rate was within Retail's targeted range.

Retail's revenue for the first three quarters of 2013 increased by $52.4 million or 11.9% as compared to the first three quarters of 2012 due to: (i) the acquisition of Freybe which accounted for $40.0 million of the increase; and (ii) organic growth of $23.9 million, representing an average growth rate of 6.2%, from its legacy businesses after excluding NDSD. 

These increases were partially offset by: (i) a $6.5 million decrease in NDSD's sales resulting from the restructuring of its C-store distribution network as well as general contraction of food sales in the C-store channel in the first two quarters of the year; and (ii) the sale of Retail's fresh sandwich plant in Etobicoke, ON in the fourth quarter of 2012 which resulted in a $5.0 million decrease in fresh sandwich sales to the C-store channel.

Looking forward (see Forward Looking Statements), the Company is not providing growth guidance for the balance of 2013 for its Retail segment due to uncertainties associated with its Richmond plant transition initiative (see Restructuring Costs).

Foodservice's revenue for the third quarter of 2013 as compared to the third quarter of 2012 increased by $11.5 million or 11.9% due to: (i) general organic growth of $7.0 million representing an organic growth rate of 7.6%; (ii) the acquisition of certain businesses from Harbour Marine which accounted for $2.0 million of the increase; and (iii) increased sales in its Worldsource food brokerage business of $2.5 million resulting from improved trading opportunities.

Foodservice's revenue for the first three quarters of 2013 as compared to the first three quarters of 2012 increased by $24.4 million or 8.7% due to: (i) general organic growth of $14.4 million representing an organic growth rate of 5.4%; (ii) the acquisition of certain businesses from Harbour Marine which accounted for $5.8 million of the increase; and (iii) increased sales in its Worldsource food brokerage business of $4.2 million resulting from improved trading opportunities.

Foodservice's organic growth rate for the first three quarters of 2013 was below the Company's long-term target of 6% to 8% due to: (i) a general supply shortage of wild and exotic seafood that impacted the sales of Maximum Seafood and Hub City Fisheries, particularly in the second quarter; and (ii) poorer than normal weather in western Canada in the second quarter which impacted Harlan Fairbanks.

Looking forward (see Forward Looking Statements), for the balance of 2013 the Company expects Foodservice's organic sales growth to be within its long-term targeted range of 6% to 8%.

Gross Profit

(in thousands of dollars except percentages)
		13 weeks	%		13 weeks	%		39 weeks	%		39 weeks	%
		ended			ended			ended			ended
		Sep 28,			Sep 29,			Sep 28,			Sep 29,
		2013			2012			2013			2012
Gross profit by segment:
	Retail	38,038	21.3	%	35,692	22.8	%	105,726	21.5	%	99,620	22.7	%
	Foodservice	20,232	18.7	%	18,255	18.9	%	56,243	18.5	%	52,941	19.0	%
	Consolidated	58,270	20.3	%	53,947	21.3	%	161,969	20.4	%	152,561	21.2	%

Retail's gross profit as a percentage of its revenue (gross margin) for the third quarter of 2013 as compared to the third quarter of 2012 decreased primarily due to: (i) several of Retail's businesses experiencing higher input costs that were the result of a temporary spike in certain protein commodity prices. This factor accounted for nearly half of the decrease in Retail's gross margin in the third quarter; (ii) reduced gross margins on product sales transitioned to third party distributors as part of the restructuring of NDSD's business (see Revenue). Corresponding with this change, and the lost margin associated with it, NDSD has been able to significantly reduce its SG&A (see Selling, General and Administrative Expenses); and (iii) approximately $0.3 million in production inefficiencies at SK Food Group's Reno, NV plant resulting from sub-standard input materials received from a third party supplier. SK Food Group is in the process of attempting to recover these costs from the supplier.

Retail's gross margin for the first three quarters of 2013 as compared to the first three quarters of 2012 decreased due to: (i) the restructuring of NDSD's business as discussed above; (ii) the temporary spike in certain protein commodity prices in the third quarter; (iii) temporary production inefficiencies at SK Food Group's Reno, NV plant in the first quarter of 2013 due to a combination of the launch of new sandwich wraps for two large international customers in the fourth quarter of 2012 and the installation of several new pieces of equipment during the first quarter of 2013; and (iv) approximately $0.3 million in production inefficiencies at SK Food Group's Reno, NV plant in the third quarter resulting from sub-standard input materials received from a third party supplier.

Foodservice's gross margin for the third quarter of 2013 as compared to the third quarter of 2012 decreased primarily due to Maximum Seafood not being able to maintain its historic selling margins as a result of global shortages in certain species of wild and exotic seafood combined with regional consumer price resistance. This decrease was, however, mostly offset by strong margins in Hub City Fisheries that were the result of several factors including a strong pink salmon fishery and its first time participation in a test fishery by the Pacific Salmon Commission.

Foodservice's gross margin for the first three quarters of 2013 as compared to the first three quarters of 2012 decreased due to: (i) poor production efficiencies at Hub City Fisheries in the second quarter resulting from record low sockeye salmon runs and a corresponding shortage of wild fish for processing; and (ii) lower gross margins in Maximum Seafood as discussed above.

Selling, General and Administrative Expenses (SG&A)

(in thousands of dollars except percentages)
		13 weeks	%		13 weeks	%		39 weeks	%		39 weeks	%
		ended			ended			ended			ended
		Sep 28,			Sep 29,			Sep 28,			Sep 29,
		2013			2012			2013			2012
SG&A by segment:
	Retail	22,131	12.4	%	20,602	13.2	%	63,985	13.0	%	59,488	13.5	%
	Foodservice	12,926	12.0	%	12,315	12.8	%	37,761	12.4	%	36,483	13.1	%
	Corporate	1,439			1,307			4,676			4,576
	Consolidated	36,496	12.7	%	34,224	13.5	%	106,422	13.4	%	100,547	14.0	%

Retail's SG&A for the third quarter of 2013 as compared to the third quarter of 2012 as well as for the first three quarters of 2013 as compared to the first three quarters of 2012 increased due to: (i) the acquisition of Freybe; and (ii) increased selling and marketing costs associated with Retail's organic sales growth (see Revenue). 

These increases were partially offset by: (i) a significant decrease in NDSD's SG&A as a result of its restructuring (see Gross Profit); and (ii) a $1.2 million gain on the sale of vacant land in Edmonton, AB.

Foodservice's SG&A for the third quarter of 2013 as compared to the third quarter of 2012 as well as for the first three quarters of 2013 as compared to the first three quarters of 2012 increased due to: (i) higher variable selling costs associated with Foodservice's organic sales growth (see Revenue); and (ii) increased costs associated with the development of the infrastructure needed to accelerate the growth of its seafood based initiatives.

Adjusted EBITDA

(in thousands of dollars except percentages)
		13 weeks		%		13 weeks		%		39 weeks		%		39 weeks		%
		ended				ended				ended				ended
		Sep 28,				Sep 29,				Sep 28,				Sep 29,
		2013				2012				2013				2012
Adjusted EBITDA by segment:
	Retail	15,907		8.9	%	15,090		9.6	%	41,741		8.5	%	40,132		9.1	%
	Foodservice	7,306		6.8	%	5,940		6.2	%	18,482		6.1	%	16,458		5.9	%
	Corporate	(1,439	)			(1,307	)			(4,676	)			(4,576	)
	Consolidated	21,774		7.6	%	19,723		7.8	%	55,547		7.0	%	52,014		7.2	%

The Company's adjusted EBITDA for the third quarter of 2013 as compared to the third quarter of 2012 increased by $2.1 million or 10.4% to $21.8 million primarily due to: (i) growth of the Company's sales (see Revenue); (ii) a $1.2 million gain on the sale of vacant land (see Selling, General and Adminisrative Expenses); (iii) the restructuring of the Company's convenience store focused businesses (see Restructuring Costs); and (iv) strong margins in its Hub City Fisheries business (see Gross Profit).

These increases were partially offset by: (i) lower margins in several of the Company's deli meats businesses resulting from a temporary spike in certain commodity prices (see Gross Profit); and (ii) approximately $0.3 million in production inefficiencies at SK Food Group's Reno, NV plant resulting from sub-standard input materials received from a third party supplier (see Gross Profit).

The Company's EBITDA for the quarter was also negatively impacted by lost sales resulting from temporary capacity issues associated with the transitioning of products from its Richmond deli meats plant to other production facilities (see Revenue). 

Looking forward (see Forward Looking Statements) the Company expects its adjusted EBITDA to be favourably impacted by the following:

	(i)	a significant increase in the earnings of Freybe after the realignment of its Langley plant is complete (see Restructuring Costs). Currently the Company expects this process to be finished in the first quarter of 2014, at which time Freybe is projected to be generating annualized adjusted EBITDA of approximately $6.3 million; and
	(ii)	a steady improvement in Stuyver's and Deli Chef's margins as these businesses leverage the incremental capacity of new production facilities built in 2012 to generate new sales.

In terms of NDSD, its business has stabilized with its adjusted EBITDA for the third quarter showing an increase as compared to the third quarter of 2012. The Company recognizes, however, that as a result of the continued contraction of food sales in the C-store channel further consolidation is needed of the distribution companies servicing this industry. Correspondingly, the Company has initiated a process to explore strategic alternatives for better servicing the convenience store channel with the goals of improving the efficiency and effectiveness of the distribution system used for our products in this channel and maximizing the value of its NDSD convenience store distribution business.

Due to uncertainties associated with the timing and impact of the items outlined above, the Company is not providing guidance on its projected adjusted EBITDA for 2013. 

Depreciation and Amortization (D&A)

The Company's D&A expense for the third quarter of 2013 as compared to the third quarter of 2012 and for the first three quarters of 2013 as compared to the first three quarters of 2012 increased due to: (i) the acquisition of Freybe; and (ii) additional depreciation associated with several major capital projects completed in 2012 and 2013 including Stuyver's new artisan bakery, Deli Chef's new sandwich plant, and Centennial Foodservice's new seafood facility.

Interest

The Company's interest and other financing costs for the third quarter of 2013 as compared to the third quarter of 2012 was relatively stable despite an increase in the Company's funded debt primarily due to: (i) lower cost senior bank debt being used to retire maturing vendor take-back notes and capital leases; and (ii) the refinancing of SJ Irvine.

The Company's interest and other financing costs for the first three quarters of 2013 as compared to the first three quarters of 2012 increased by $0.4 million primarily due to the Company's higher funded debt levels partially offset by the benefits associated with: (i) using lower cost senior bank debt to retire vendor take-back notes and capital leases; and (ii) the refinancing of SJ Irvine.

Restructuring Costs

Restructuring costs consist of costs associated with the significant restructuring of one or more of the Company's businesses. During the first three quarters of 2013 the Company incurred $8.7 million in restructuring costs consisting of:

• $6.4 million ($3.9 million of which was in the third quarter) for the transitioning of production from the Company's Richmond, BC deli meat processing plant (the Richmond plant transition) to some of its other deli meat processing plants including Freybe's Langley, BC facility. This transition began in the first quarter of 2013 and the transfer of production was completed by the end of the second quarter.
  
  During the third quarter, Freybe's Langley plant continued to incur restructuring costs due to: (i) setup problems associated with processing equipment transferred from the Richmond plant; (ii) employee training related issues; and (iii) production disruptions resulting from the refinement of production processes and from the installation of new equipment designed to improve production flows and expand capacity. Furthermore, the severity of these issues was compounded, and the time required to resolve them extended, due to production capacity shortages created by significant increases in customer order sizes relative to order sizes in the third quarter of 2012.
  
  Looking forward (see Forward Looking Statements), the Company expects to complete this initiative in the first quarter of 2014 and, correspondingly, will continue to incur restructuring costs until that time.

• $1.9 million ($0.3 million of which was in the third quarter) in costs relating to the restructuring and rationalization of NDSD's direct-to-store distribution network for the C-store channel (see Revenue). NDSD completed its restructuring plan in the third quarter and, correspondingly, has stabilized its adjusted EBITDA (see Adjusted EBITDA).
  
  Looking forward (see Forward Looking Statements) the Company is undergoing a further strategic review of NDSD (see Adjusted EBITDA) which could result in more changes to NDSD's business model and possible additional restructuring costs.

• $0.2 million (none of which was in the third quarter) in non-recurring costs relating to Centennial Foodservice's seafood initiatives, which include the startup of its new seafood processing facility in Richmond, BC and the integration of the businesses acquired from Harbour Marine. This initiative was completed in the first quarter of 2013.

• $0.2 million (none of which was in the third quarter) in restructuring costs associated with a variety of initiatives including moving the Company's head office to a new location in Richmond, BC.

FREE CASH FLOW

(in thousands of dollars)	52 weeks		39 weeks		39 weeks		Rolling
	ended		ended		ended		Four
	Dec 29, 2012		Sep 29, 2012		Sep 28, 2013		Quarters
Cash flow from operating activities	49,849		39,512		13,787		24,124
Changes in non-cash working capital	(6,050	)	(5,279	)	16,975		16,204
Acquisition transaction costs	197		193		534		538
Restructuring costs	5,705		3,991		8,711		10,425
Capital maintenance expenditures	(2,917	)	(2,033	)	(3,209	)	(4,093	)
Free cash flow	46,784		36,384		36,798		47,198

FORWARD LOOKING STATEMENTS

This discussion and analysis 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 6, 2013, 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.

Factors that could cause actual results to differ materially from the Company's expectations include, among other things: (i) seasonal and/or weather related fluctuations in the Company's sales; (ii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iii) changes in the cost of raw materials used in the production of the Company's products; (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, including related changes in Canada's income tax laws; (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; and (xiii) new government regulations affecting the Company's business and operations. Details on these risk factors as well as other factors can be found in the Company's 2012 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.

Unless otherwise indicated, the forward looking information in this document is made as of November 6, 2013 and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward looking information in this document.

Premium Brands Holdings Corporation
Consolidated Balance Sheets
(Unaudited and in thousands of dollars)
		September 28, 2013		December 29, 2012		September 29, 2012		January 1, 2012
Current assets:
	Cash and cash equivalents	2,903		3,758		3,797		4,486
	Accounts receivable	91,729		80,180		83,305		78,343
	Other assets	93		193		162		103
	Inventories	114,749		79,456		87,438		78,831
	Prepaid expenses	5,506		6,631		5,583		13,340
		214,980		170,218		180,285		175,103
Capital assets		177,833		166,447		173,286		158,801
Intangible assets		75,816		71,994		73,001		77,087
Goodwill		167,130		154,451		154,391		150,417
Other assets		4,120		4,866		2,191		2,250
Investment in associate		8,195		5,181		5,279		5,001
Deferred income taxes		25,633		32,575		33,247		41,334
		673,707		605,732		621,680		609,993
Current liabilities:
	Cheques outstanding	3,977		1,928		1,921		2,500
	Bank indebtedness	25,946		11,179		1,370		18,061
	Dividend payable	6,859		6,188		6,187		5,958
	Accounts payable and accrued liabilities	102,188		83,081		92,279		79,998
	Current portion of long-term debt	163,095		127,195		20,812		17,530
	Current portion of provisions	2,994		3,848		2,349		2,924
	Current portion of puttable interest in subsidiaries	2,000		-		-		-
	Other	100		-		300		-
		307,159		233,419		125,218		126,971
Long-term debt		11,824		13,058		126,088		160,915
Convertible unsecured subordinated debentures		122,042		133,842		133,751		89,396
Puttable interest in subsidiaries		14,143		15,649		15,282		15,210
Deferred revenue		1,226		1,443		1,544		1,943
Provisions		4,120		503		9,489		8,360
Pension obligation		1,983		1,873		1,349		1,345
Other		-		-		-		100
		462,497		399,787		412,721		404,240
Equity attributable to shareholders:
	Accumulated earnings	159,707		147,916		145,981		133,370
	Accumulated dividends declared	(174,510	)	(154,878	)	(148,690	)	(130,497	)
Retained earnings (deficit)		(14,803	)	(6,962	)	(2,709	)	2,873
Share capital		221,767		209,093		209,068		198,057
Equity component of convertible debentures		1,747		1,785		1,869		1,916
Reserves		1,822		448		(796	)	1,442
Non-controlling interest		677		1,581		1,527		1,465
		211,210		205,945		208,959		205,753
		673,707		605,732		621,680		609,993

Premium Brands Holdings Corporation
Consolidated Statements of Operations
(Unaudited and in thousands of dollars except per share amounts)
		13 weeks ended September 28,  2013		13 weeks ended September 29,  2012		39 weeks ended September 28,  2013		39 weeks ended September 29,  2012
Revenue		286,955		252,887		795,065		718,314
Cost of goods sold		228,685		198,940		633,096		565,753
Gross profit before depreciation and amortization		58,270		53,947		161,969		152,561
Selling, general and administrative expenses before depreciation and amortization		36,496		34,224		106,422		100,547
		21,774		19,723		55,547		52,014
Depreciation of capital assets		4,586		3,773		13,014		10,535
Amortization of intangible assets		1,092		1,214		3,272		3,701
Amortization of other assets		1		1		4		4
Interest and other financing costs		4,514		4,613		13,353		12,906
Amortization of financing costs		84		94		238		306
Acquisition transaction costs		62		140		534		193
Change in value of puttable interest in subsidiaries		681		500		1,163		1,205
Accretion of provisions for contingent consideration		201		210		305		629
Unrealized loss on foreign currency contracts		500		200		200		300
Unrealized loss (gain) on interest rate swap contracts		100		(100	)	100		(200	)
Restructuring costs		4,192		2,331		8,711		3,991
Reversal of provision for contingent consideration		(762	)	-		(762	)	-
Equity income in associates		(381	)	(118	)	(376	)	(278	)
Earnings before income taxes		6,904		6,865		15,791		18,722
Provision for income taxes
	Current	1,073		1,297		2,279		2,239
	Deferred	651		969		1,843		3,710
		1,724		2,266		4,122		5,949
Earnings		5,180		4,599		11,669		12,773
Earnings for the period attributable to:
	Shareholders	5,246		4,492		11,791		12,611
	Non-controlling interest	(66	)	107		(122	)	162
		5,180		4,599		11,669		12,773
Earnings per share
	Basic	0.25		0.22		0.56		0.62
	Diluted	0.25		0.21		0.56		0.61
Weighted average shares outstanding (in 000's)
	Basic	21,234		20,822		21,057		20,458
	Diluted	21,347		20,917		21,171		20,553

Premium Brands Holdings Corporation
Consolidated Statements of Cash Flows
(Unaudited and in thousands of dollars)
				13 weeks ended September 28,  2013		13 weeks ended September 29,  2012		39 weeks ended September 28,  2013		39 weeks ended September 29,  2012
Cash flows from operating activities:
	Earnings			5,180		4,599		11,669		12,773
		Items not involving cash:
			Depreciation of capital assets	4,586		3,773		13,014		10,535
			Amortization of intangible and other assets	1,093		1,215		3,276		3,705
			Amortization of financing costs	84		94		238		306
			Change in value of puttable interest in subsidiaries	681		500		1,163		1,205
			Loss (gain) on disposal of capital assets	(1,174	)	228		(1,215	)	243
			Accrued interest income	(6	)	(7	)	(19	)	(22	)
			Unrealized loss on foreign currency contracts	500		200		200		300
			Unrealized loss (gain) on interest rate swaps	100		(100	)	100		(200	)
			Equity income in associate	(381	)	(118	)	(376	)	(278	)
			Deferred revenue	(149	)	(142	)	(397	)	(387	)
			Accretion of convertible debentures, long-term debt and provisions	795		896		2,198		2,343
			Reversal of provision for contingent consideration	(762	)	-		(762	)	-
			Change in value of cash conversion option liability	-		-		(170	)	-
			Deferred income taxes	651		969		1,843		3,710
				11,198		12,107		30,762		34,233
		Change in non-cash working capital		(9,484	)	8,385		(16,975	)	5,279
				1,714		20,492		13,787		39,512
Cash flows from financing activities:
		Long-term debt - net		3,875		(844	)	30,339		(31,854	)
		Bank indebtedness and cheques outstanding		5,084		(9,584	)	16,815		(17,270	)
		Convertible debentures - net of issuance costs		-		-		-		54,600
		Dividends paid to shareholders		(6,602	)	(6,005	)	(18,960	)	(17,964	)
		Purchase of 7.00% Debentures under normal course issuer bid		-		(261	)	(219	)	(261	)
		Other		(15	)	-		(69	)	(2	)
				2,342		(16,694	)	27,906		(12,751	)
Cash flows from investing activities:
		Capital asset additions		(5,458	)	(3,097	)	(12,222	)	(26,112	)
		Business acquisitions		(347	)	-		(54,189	)	-
		Repayment of share purchase loans and notes receivable		32		26		124		210
		Promissory note from associate		-		-		500		-
		Proceeds from sale and leaseback of asset		-		-		25,000		-
		Proceeds from sales of assets		2,452		-		2,507		285
		Investment in associates		-		-		(2,638	)	-
		Payments to shareholders of non-wholly owned subsidiaries		(32	)	(74	)	(896	)	(1,227	)
		Payment of provisions		(242	)	(363	)	(742	)	(575	)
				(3,595	)	(3,508	)	(42,556	)	(27,419	)
Increase (decrease) in cash and cash equivalents				461		290		(863	)	(658	)
Effects of exchange on cash and cash equivalents				(80	)	45		8		(31	)
Cash and cash equivalents - beginning of period				2,522		3,462		3,758		4,486
Cash and cash equivalents - end of period				2,903		3,797		2,903		3,797
Interest and other financing costs paid				6,104		1,438		13,839		8,490
Net income taxes paid				45		89		2,010		1,613