George Weston Limited - Fourth Quarter and Fiscal Year Ended December 31, 2011(1).

    




 TORONTO, March 1, 2012 /CNW/ - George Weston Limited  ("GWL")  and its subsidiaries (collectively the "Company") today is announcing  its unaudited results for the fourth quarter of 2011 and the release of  its 2011 Annual Report. 

 The Company's 2011 Annual Report to Shareholders, including the  Company's audited annual consolidated financial statements and  Management's Discussion and Analysis ("MD&A") for the fiscal year ended  December 31, 2011, is available in the Investor Centre section of the  Company's website at www.weston.ca and has been filed with the System for Electronic Document Analysis and  Retrieval ("SEDAR") and will be available at www.sedar.com. 

 CONSOLIDATED RESULTS OF OPERATIONS George Weston Limited's fourth quarter 2011 adjusted basic net earnings  per common share((2)) were $1.01 compared to $0.92 in the same period in 2010, an increase of  $0.09 or 9.8%. The increase in the fourth quarter of 2011 was due to  improved operating results at Weston Foods and a decrease in income tax  expense, partially offset by a decline in adjusted operating income((2)) at Loblaw Companies Limited ("Loblaw") compared to the same period in  2010. 





                                                                             

    (unaudited)    12 Weeks Ended                 52 Weeks Ended             

    ($ millions                                                      Change  
    except where    Dec.      Dec.                 Dec.       Dec.
    otherwise        31,       31,                  31,        31,
    indicated)      2011     2010    Change        2011       2010

    Sales        $ 7,636   $ 7,375      3.5%   $ 32,376   $ 31,847       1.7%

    Operating    $         $                   $          $              2.6%
    income           352       367    (4.1)%      1,609      1,568

    Operating                                                                
    margin          4.6%      5.0%                 5.0%       4.9%

    Adjusted     $         $                   $          $              2.5%
    operating
    income(2)        373       378    (1.3)%      1,700      1,659

    Adjusted                                                                 
    operating
    margin(2)       4.9%      5.1%                 5.3%       5.2%

    Net interest $         $                   $          $           (22.3)%
    expense and
    other
    financing
    charges          108        87     24.1%        366        471

    Income taxes $    71   $   108   (34.3)%   $    324   $    394    (17.8)%

    Net earnings $         $                   $          $             40.5%
    attributable
    to
    shareholders
    of the
    Company          109       111    (1.8)%        635        452

    Basic net    $         $                   $          $             44.9%
    earnings per
    common share
    ($)             0.77      0.78    (1.3)%       4.58       3.16

    Adjusted     $         $                   $          $             18.8%
    basic net
    earnings per
    common share
    ($)(2)          1.01      0.92      9.8%       4.86       4.09

    Adjusted     $         $                   $          $              5.0%
    EBITDA(2)        558       545      2.4%      2,459      2,342

    Adjusted                                                                 
    EBITDA
    margin(2)       7.3%      7.4%                 7.6%       7.4%






 Due to the Company's transition to International Financial Reporting  Standards ("IFRS" or "GAAP"), effective the first quarter of 2011, all  comparative figures that were previously reported in accordance with  Canadian Generally Accepted Accounting Principles have been restated to  conform with IFRS. 

 As previously noted in the first quarter of 2011, the Company is using  three new non-GAAP financial measures: adjusted basic net earnings per  common share((2)), adjusted operating income((2)) and adjusted EBITDA((2)). Under GAAP, certain expenses and income must be recognized that are  not necessarily reflective of the Company's underlying operating  performance. These non-GAAP financial measures exclude the impact of  certain items and are used internally when analyzing consolidated and  segment underlying operating performance. These non-GAAP financial  measures are also helpful in assessing underlying operating performance  on a consistent basis. Adjusted operating income((2)) and adjusted EBITDA((2)) exclude restructuring and other charges, a commodity derivatives fair  value adjustment at Weston Foods, foreign currency translation gains  and losses, the impact of share-based compensation net of equity  derivatives, net insurance proceeds recorded by Weston Foods, a gain  related to the sale of a portion of a Loblaw property, and the effect  of certain prior years' commodity tax matters at Loblaw. Adjusted basic  net earnings per common share((2) )also exclude the impact of the accounting for Weston Holdings Limited's  ("WHL"), a subsidiary of GWL, forward sale agreement for 9.6 million  Loblaw common shares and the impact of federal tax legislation changes.  See the "Non-GAAP Financial Measures" section of this News Release for  more information on the Company's non-GAAP financial measures. 

 OPERATING SEGMENTS 

 Weston Foods 





    (unaudited)        12 Weeks Ended                 52 Weeks Ended

    ($ millions)   Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31, 2010
                       2011         2010         2011

    Sales        $      410   $      386   $    1,772   $         1,624

    Operating    $       57   $       57   $      208   $           285
    income

    Operating         13.9%        14.8%        11.7%             17.5%
    margin

    Adjusted     $       56   $       48   $      265   $           235
    operating
    income(2)

    Adjusted          13.7%        12.4%        15.0%             14.5%
    operating
    margin(2)

    Adjusted     $       71   $       63   $      325   $           290
    EBITDA(2)

    Adjusted          17.3%        16.3%        18.3%             17.9%
    EBITDA
    margin(2)






  

 For the fourth quarter of 2011, Weston Foods sales of $410 million  increased by 6.2% and volumes decreased by 0.5% when compared to the  same period in 2010. The acquisition of ACE Bakery Ltd. ("ACE") on  November 1, 2010 positively impacted sales growth and volume by  approximately 1.4% and 0.8%, respectively, and foreign currency  translation positively impacted sales growth by approximately 0.4%.  Excluding the acquisition and foreign currency translation, sales  increased 4.4% due to the positive impact of higher pricing across key  product categories of 5.7%, partially offset by a decrease in volume of  1.3%. Price increases were implemented during 2011 to mitigate higher  commodity and fuel costs. 

 Weston Foods operating income was $57 million in the fourth quarters of  both 2011 and 2010 and operating margin was 13.9% compared to 14.8% in  the same period in 2010. 

 Weston Foods adjusted operating income((2)) was $56 million in the fourth quarter of 2011 compared to $48 million  in the same period in 2010, an increase of 16.7%. Weston Foods adjusted  operating margin((2)) was 13.7% compared to 12.4% in the same period in 2010. Adjusted  operating income((2)) was positively impacted by sales growth mainly as a result of higher  pricing in key product categories and the acquisition of ACE, and by  the benefits realized from productivity improvements and other cost  reduction initiatives, which were partially offset by significant  increases in commodity and fuel costs in the fourth quarter of 2011,  when compared to the same period in 2010. Weston Foods adjusted  operating income((2) )excludes restructuring and other charges, a commodity derivatives fair  value adjustment, the impact of share-based compensation net of equity  derivatives and net insurance proceeds. See the "Non-GAAP Financial  Measures" section of this News Release for more information on the  Company's non-GAAP financial measures. 

 Loblaw 





    (unaudited)           12 Weeks Ended               52 Weeks Ended

    ($ millions)     Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31, 2010
                         2011         2010         2011

    Sales          $    7,373   $    7,119   $   31,250   $        30,836

    Operating      $      313   $      322   $    1,376   $         1,339
    income

    Operating            4.2%         4.5%         4.4%              4.3%
    margin

    Adjusted       $      317   $      330   $    1,435   $         1,424
    operating
    income(2)

    Adjusted             4.3%         4.6%         4.6%              4.6%
    operating
    margin(2)

    Adjusted       $      487   $      482   $    2,134   $         2,052
    EBITDA(2)

    Adjusted             6.6%         6.8%         6.8%              6.7%
    EBITDA
    margin(2)






  

 Loblaw sales in the fourth quarter of 2011 increased by 3.6% to $7.4  billion compared to $7.1 billion in the same period in 2010. Same-store  retail sales growth was 2.5% (2010 - 1.6% decline), with an extra day  of store operations having a positive impact estimated to be between  0.8% and 1.0%. Sales growth in food was strong, partially driven by the  extra day of operations, sales growth in drugstore was flat, gas bar  sales growth was strong, sales in general merchandise, excluding  apparel, declined marginally and sales growth in apparel was strong.  Loblaw experienced moderate average quarterly internal food price  inflation during the fourth quarter of 2011, which was lower than the  average quarterly national food price inflation of 5.2% (2010 - 1.5%)  as measured by "The Consumer Price Index for Food Purchased from  Stores". Loblaw sales in the fourth quarter of 2011 were also  positively impacted by an increase in Financial Services segment  revenue driven by increased credit card transaction values resulting in  higher interchange fee income when compared to the same period in 2010  and higher PC Telecom revenues as a result of the new Mobile Shop kiosk launch in the  fourth quarter of 2011. 

 Loblaw operating income in the fourth quarter of 2011 decreased by 2.8%  to $313 million from $322 million in the same period in 2010 and  operating margin was 4.2% compared to 4.5% in the same period in 2010. 

 Loblaw adjusted operating income((2)) was $317 million in the fourth quarter of 2011 compared to $330 million  in the same period in 2010, a decrease of 3.9%. Loblaw adjusted  operating margin((2)) was 4.3% compared to 4.6% in the same period in 2010. The decreases in  adjusted operating income((2)) and adjusted operating margin((2)) were mainly attributable to costs associated with the transition of  certain Ontario conventional stores to the more cost effective and  efficient operating terms under collective agreements ratified in 2010,  the incremental costs related to the investments in information  technology ("IT") and supply chain, increases in promotional pricing  programs and transportation costs, start up costs associated with the  launch of Loblaw's Joe Fresh brand in the United States, the decrease in operating income from  Loblaw's Financial Services segment and fixed asset impairment charges  net of recoveries, partially offset by growth and performance of  Loblaw's franchisees, continued labour, supply chain and other  operating cost efficiencies, improved control label profitability and  improved shrink. Loblaw adjusted operating income((2)) excludes other charges and the impact of share-based compensation net  of equity derivatives. See the "Non-GAAP Financial Measures" section of  this News Release for more information on the Company's non-GAAP  financial measures. 

 NET INTEREST EXPENSE AND OTHER FINANCING CHARGES  Net interest expense and other financing charges in the fourth quarter  of 2011 increased by $21 million to $108 million compared to the same  period in 2010, primarily due to a $21 million decrease in non-cash  income related to the fair value adjustment of WHL's forward sale  agreement for 9.6 million Loblaw common shares. Excluding the impact of  the fair value adjustment, net interest expense and other financing  charges in the fourth quarter of 2011 was flat when compared to the  same period in 2010 reflecting the net impact of a decrease in interest  expense due to the repayment by Loblaw of its $350 million; 6.50%  Medium Term Note in the first quarter of 2011, offset by lower short  term interest income due to lower cash and short term investment  balances. 

 INCOME TAXES The fourth quarter 2011 effective income tax rate decreased to 29.1%  from 38.6% in the same period in 2010. The decrease in the effective  income tax rate in the fourth quarter of 2011 compared to the same  period in 2010 was primarily due to the decrease in non-deductible  items, a decrease in income tax expense related to certain prior year  income tax matters and reductions in the federal and Ontario statutory  income tax rates. Changes in federal tax legislation that resulted in  the elimination of the Company's ability to deduct costs associated  with cash-settled stock options resulted in a charge of $18 million  which was recorded in income tax expense in the fourth quarter of 2010. 

 OUTLOOK((1)) This outlook reflects the underlying operating performance of the  Company's operating segments as discussed below. 

 In 2012, Weston Foods expects to deliver modest sales growth with market  conditions expected to remain challenging. Higher commodity and input  costs are expected in the first half of 2012, and these higher costs  will put increased pressure on operating margins when compared to the  same period in 2011. Weston Foods is continuing its efforts to reduce  costs through improved efficiencies and ongoing cost reduction  initiatives in an effort to achieve full year operating margins in line  with those in 2011. 

 In 2012, Loblaw will continue to strengthen its customer proposition,  while the completion of its IT systems will remain a key priority.  Loblaw expects there to be incremental costs related to net investments  in IT and supply chain in 2012, as well as continued investment in its  customer proposition. Loblaw does not expect its operations to cover  these incremental costs, and as a result, anticipates full year 2012  operating income to be down year-over-year, with more pressure in the  first half of the year. 

 For 2012, George Weston Limited anticipates adjusted basic net earnings  per common share((2)) to be down year-over-year, primarily due to the impact of the  incremental costs at Loblaw, as discussed above. 

 FORWARD-LOOKING STATEMENTS  This News Release contains forward-looking statements about the  Company's objectives, plans, goals, aspirations, strategies, financial  condition, results of operations, cash flows, performance, prospects  and opportunities. These forward-looking statements are typically  identified by words such as "anticipate", "expect", "believe",  "foresee", "could", "estimate", "goal", "intend", "plan", "seek",  "strive", "will", "may" and "should" and similar expressions, as they  relate to the Company and its management. In this News Release,  forward-looking statements include the Company's expectation that: 

 For Weston Foods: 




        --  sales growth will be modest;
        --  commodity and input costs in the first half of 2012 will be
            higher than the comparable period in 2011, putting increased
            pressure on operating margins in the first half of 2012 when
            compared to the same period in 2011; and
        --  efforts will be made to achieve full year operating margins in
            line with those in 2011.




 For Loblaw: 




        --  there will be incremental costs related to investments in IT
            and supply chain in 2012, as well as continued investment in
            Loblaw's customer proposition; and
        --  full year 2012 operating income will be down year-over-year,
            with more pressure in the first half of the year, as a result
            of Loblaw's expectation that operations will not cover the
            incremental costs related to the investments in IT and supply
            chain and its customer proposition.




 For the Company: 




        --  full year 2012 adjusted basic net earnings per common share(2)
            will be down year-over-year.




 These forward-looking statements are not historical facts but reflect  the Company's current expectations concerning future results and  events. They also reflect management's current assumptions regarding  the risks and uncertainties referred to below and their respective  impact on the Company. In addition, the Company's expectation with  regard to Weston Foods' operating margins in 2012 is based in part on  the assumptions that there will be no significant unanticipated  increase in the price of commodities and other input costs that Weston  Foods will not be able to offset through pricing, improved efficiencies  and ongoing cost reduction initiatives. The Company's expectation with  regard to Loblaw's operating income in 2012 is based in part on the  assumptions that Loblaw achieves its plan to increase net retail square  footage by 1% and there are no unexpected adverse events or costs  related to Loblaw's investments in IT and supply chain. The Company's  expectation with regard to adjusted basic net earnings per common share((2))( )in 2012 is based in part on the assumption that interest rates, tax  rates and the Company's ownership interest in Loblaw will be similar to  those in 2011. 

 These forward-looking statements are subject to a number of risks and  uncertainties that could cause actual results or events to differ  materially from current expectations, including, but not limited to: 




        --  failure to realize sales growth, anticipated cost savings or
            operating efficiencies from the Company's major initiatives,
            including investments in the Company's IT systems and the
            Company's IT systems implementation, or unanticipated results
            from these initiatives;
        --  the inability of the Company's IT infrastructure to support the
            requirements of the Company's business;
        --  unanticipated results associated with the Company's strategic
            initiatives and the impact of acquisitions or dispositions of
            businesses on the Company's future revenues and earnings;
        --  heightened competition, whether from current competitors or new
            entrants to the marketplace;
        --  changes in economic conditions including the rate of inflation
            or deflation, changes in interest and foreign currency exchange
            rates and changes in derivative and commodity prices;
        --  public health events;
        --  risks associated with product defects, food safety and product
            handling;
        --  failure to achieve desired results in labour negotiations,
            including the terms of future collective bargaining agreements
            which could lead to work stoppages;
        --  the inability of the Company to manage inventory to minimize
            the impact of obsolete or excess inventory and to control
            shrink;
        --  failure by the Company to maintain appropriate records to
            support its compliance with accounting, tax or legal rules,
            regulations and policies;
        --  the availability and increased costs relating to raw materials,
            ingredients and utilities, including electricity and fuel;
        --  failure of the Company's franchised stores to perform as
            expected;
        --  reliance on the performance and retention of third-party
            service providers including those associated with the Company's
            supply chain and apparel business;
        --  supply and quality control issues with vendors;
        --  changes to or failure to comply with laws and regulations
            affecting the Company and its businesses, including changes to
            the regulation of generic prescription drug prices and the
            reduction of reimbursement under public drug benefit plans and
            the elimination or reduction of professional allowances paid by
            drug manufacturers;
        --  changes in the Company's income, commodity, other tax and
            regulatory liabilities including changes in tax laws,
            regulations or future assessments;
        --  any requirement of the Company to make contributions to its
            registered funded defined benefit pension plans or the
            multi-employer pension plans in which it participates in excess
            of those currently contemplated;
        --  the risk that the Company would experience a financial loss if
            its counterparties fail to meet their obligations in accordance
            with the terms and conditions of their contracts with the
            Company; and
        --  the inability of the Company to collect on its credit card
            receivables.




 This is not an exhaustive list of the factors that may affect the  Company's forward-looking statements. Other risks and uncertainties not  presently known to the Company or that the Company presently believes  are not material could also cause actual results or events to differ  materially from those expressed in its forward-looking statements.  Additional risks and uncertainties are discussed in the Company's  materials filed with the Canadian securities regulatory authorities  from time to time, including Section 12, "Enterprise Risks and Risk  Management", of MD&A included in GWL's 2011 Annual Report. Readers are  cautioned not to place undue reliance on these forward-looking  statements, which reflect the Company's expectations only as of the  date of this News Release. The Company disclaims any intention or  obligation to update or revise these forward-looking statements,  whether as a result of new information, future events or otherwise,  except as required by law. 

  





    (1)      This News Release contains forward-looking information. See
             Forward-Looking Statements for a discussion of material
             factors that could cause actual results to differ materially
             from the conclusions, forecasts and projections herein and of
             the material factors and assumptions that were applied in
             presenting the conclusions, forecasts and projections
             presented herein. This News Release must be read in
             conjunction with George Weston Limited's filings with
             securities regulators made from time to time, all of which can
             be found at www.weston.ca
             and www.sedar.com.

    (2)      See non-GAAP financial measures.






  

 NON-GAAP FINANCIAL MEASURES In this News Release the Company uses the following non-GAAP financial  measures: adjusted operating income and adjusted operating margin,  adjusted EBITDA and adjusted EBITDA margin and adjusted basic net  earnings per common share. The Company believes these non-GAAP  financial measures provide useful information to both management and  investors in measuring the financial performance of the Company for the  reasons outlined below. These measures do not have a standardized  meaning prescribed by GAAP and therefore they may not be comparable to  similarly titled measures presented by other publicly traded companies,  and they should not be construed as an alternative to other financial  measures determined in accordance with GAAP. 

 Adjusted Operating Income, Adjusted Operating Margin, Adjusted EBITDA  and Adjusted EBITDA Margin The following tables reconcile adjusted operating income and adjusted  EBITDA to GAAP net earnings attributable to shareholders of the Company  reported for the periods ended as indicated. Under GAAP, certain  expenses and income must be recognized that are not necessarily  reflective of the Company's underlying operating performance. These  non-GAAP financial measures exclude the impact of certain items and are  used internally when analyzing consolidated and segment underlying  operating performance. These non-GAAP financial measures are also  helpful in assessing underlying operating performance on a consistent  basis. From time to time, the Company may exclude additional items if  it believes doing so would result in a more effective analysis of  underlying operating performance. The exclusion of the items listed in  the following tables does not imply that they are non-recurring. Loblaw  does not report its results on an adjusted basis, however the Company  excludes the impact of the below items, as applicable, when reporting  the results of the Loblaw segment. 

 The Company believes adjusted operating income is useful in assessing  the Company's underlying operating performance and in making decisions  regarding the ongoing operations of its business. The Company believes  adjusted EBITDA is also useful in assessing the underlying operating  performance of the Company's ongoing operations and in assessing the  Company's ability to generate cash flows to fund its cash requirements,  including its capital investment program. 

 Adjusted operating margin is calculated as adjusted operating income  divided by sales. Adjusted EBITDA margin is calculated as adjusted  EBITDA divided by sales. 

  





                                                                                  12 Weeks Ended

                                                        Dec.31, 2011                                         Dec. 31,
                                                                                                                2010 

    (unaudited)         Weston                Other                      Weston                Other
    ($ millions)         Foods     Loblaw       (1)     Consolidated      Foods     Loblaw       (1)     Consolidated

    Net earnings                                      $          109                                   $          111
    attributable to
    shareholders of
    the Company

    Add impact of                                                                                                    
    the following:

    Non-controlling                                               64                                               61
    interests

    Income taxes                                                  71                                              108

    Net interest                                                 108                                               87
    expense and
    other financing
    charges

    Operating         $     57   $    313   $  (18)   $          352   $     57   $    322   $  (12)   $          367
    income (loss)

    Add (deduct)                                                                                                     
    impact of the
    following:

    Restructuring            5                                     5          3          1                          4
    and other
    charges(2)

    Commodity              (1)                                   (1)        (5)                                   (5)
    derivatives
    fair value
    adjustment at
    Weston Foods

    Foreign                                      18               18                              12               12
    currency
    translation
    losses

    Share-based            (3)          4                          1        (7)          7                           
    compensation
    net of equity
    derivatives

    Net insurance          (2)                                   (2)                                                 
    proceeds at
    Weston Foods

    Adjusted          $     56   $    317   $         $          373   $     48   $    330   $         $          378
    operating
    income

    Depreciation            15        170                        185         15        152                        167
    and
    amortization

    Adjusted EBITDA   $     71   $    487   $         $          558   $     63   $    482   $         $          545










    (1)      Operating income in the fourth quarter of 2011 included a loss
             of $18 million (2010 - $12 million) related to the effect of
             foreign currency translation on a portion of the U.S. dollar
             denominated cash and short term investments held by Dunedin
             Holdings GmbH ("Dunedin"), a subsidiary of GWL, and certain of
             its affiliates, which are foreign operations that have the
             same functional currency as that of the Company.

    (2)      Other charges at Loblaw in the fourth quarter of 2010 included
             $1 million as a result of changes in Loblaw's distribution
             network.












                                                                                   52 Weeks Ended

                                                            Dec. 31,                                          Dec. 31,
                                                                2011                                             2010 

    (unaudited)         Weston                Other                      Weston                Other
    ($ millions)         Foods     Loblaw      (1)      Consolidated     Foods      Loblaw     (1)       Consolidated 

    Net earnings                                      $          635                                   $           452
    attributable to
    shareholders of
    the Company

    Add impact of                                                                                                     
    the following:

    Non-controlling                                              284                                               251
    interests

    Income taxes                                                 324                                               394

    Net interest                                                 366                                               471
    expense and
    other financing
    charges

    Operating         $    208   $  1,376   $    25   $        1,609   $    285   $  1,339   $  (56)   $         1,568
    income (loss)

    Add (deduct)                                                                                                      
    impact of the
    following:

    Restructuring
    and other
    charges(2)              13         31                         44          8         53                          61

    Commodity               31                                    31       (39)                                   (39)
    derivatives
    fair value
    adjustment at
    Weston Foods

    Foreign                                    (25)             (25)                              56                56
    currency
    translation
    (gains) losses

    Share-based             20         27                         47       (19)         32                          13
    compensation
    net of equity
    derivatives

    Certain prior                      15                         15                                                  
    years'
    commodity tax
    matters at
    Loblaw

    Net insurance          (7)                                   (7)                                                  
    proceeds at
    Weston Foods

    Gain on sale of                  (14)                       (14)                                                  
    a portion of a
    Loblaw property

    Adjusted          $    265   $  1,435   $         $        1,700   $    235   $  1,424   $         $         1,659
    operating
    income

    Depreciation            60        699                        759         55        628                         683
    and
    amortization

    Adjusted EBITDA   $    325   $  2,134   $         $        2,459   $    290   $  2,052   $         $         2,342










    (1)      Operating income for the year included a gain of $25 million
             (2010 - a loss of $56 million) related to the effect of
             foreign currency translation on a portion of the U.S. dollar
             denominated cash and short term investments held by Dunedin
             and certain of its affiliates, which are foreign operations
             that have the same functional currency as that of the Company.

    (2)      Other charges for the year at Loblaw included $8 million (2010
             - nil) related to an internal realignment of Loblaw's business
             centred around Loblaw's two primary store formats,
             conventional and discount, and $23 million (2010 - $53
             million) related to changes in Loblaw's distribution network,
             including a charge of nil (2010 - $26 million) due to an asset
             impairment.






  

 The year-over-year change in the following items influenced operating  income in the fourth quarter of 2011: 

 Restructuring and other charges  The Company continuously evaluates strategic and cost reduction  initiatives related to its store infrastructure, manufacturing assets,  distribution networks and administrative infrastructure with the  objective of ensuring a low cost operating structure. Restructuring  activities related to these initiatives are ongoing. The details of  restructuring and other charges are included in Section 7, "Results of  Reportable Operating Segments" of the MD&A included in the 2011 Annual  Report. 

 Commodity derivatives fair value adjustment at Weston Foods  Weston Foods is exposed to commodity price fluctuations primarily as a  result of purchases of certain raw materials, fuels and utilities. In  accordance with the Company's risk management strategy, Weston Foods  enters into commodity derivatives to reduce the impact of price  fluctuations in forecasted raw material purchases over a specified  period of time. These commodity derivatives are not acquired for  trading or speculative purposes. These commodity derivatives are not  designated for financial reporting purposes as cash flow hedges of  anticipated future raw material purchases, and accordingly hedge  accounting does not apply. As a result, changes in the fair value of  these derivatives, which include realized and unrealized gains and  losses related to future purchases of raw materials, are recorded in  operating income. In the fourth quarter of 2011, Weston Foods recorded  income of $1 million (2010 - $5 million), related to the fair value  adjustment of exchange traded commodity derivatives that were not  designated within a hedging relationship. Despite the impact of  accounting for these commodity derivatives on the Company's reported  results, the derivatives have the economic impact of largely mitigating  the associated risks arising from price fluctuations in the underlying  commodities during the period that the commodity derivatives are held. 

 Foreign currency translation gains and losses  The Company's consolidated financial statements are expressed in  Canadian dollars, however a portion of the Company's (excluding  Loblaw's) net assets are denominated in U.S. dollars and as a result,  the Company is exposed to foreign currency translation gains and  losses. The impact of foreign currency translation on a portion of the  U.S. dollar denominated net assets, primarily cash and short term  investments held by Dunedin and certain of its affiliates, which are  foreign operations that have the same functional currency as that of  the Company, is recorded in operating income. In the fourth quarter of  2011, foreign currency translation losses of $18 million (2010 - $12  million) were recorded in operating income as a result of the  appreciation of the Canadian dollar. 

 Share-based compensation net of equity derivatives  The amount of net share-based compensation cost recorded in operating  income is mainly dependent upon the level of fluctuations in the market  prices of GWL and Loblaw common shares, the number of unexercised  Restricted Share Units ("RSU") and their vesting schedules relative to  the number of underlying common shares of the equity derivatives. The  equity derivatives change in value as the market prices of the  respective underlying common shares change and provide a partial offset  to fluctuations in share-based compensation expense, including RSU plan  expense. The Company manages stock option, RSU plan and equity  derivative impacts on a net basis and therefore the impact of stock  options is also excluded from operating income when management reviews  consolidated and segment operating performance. The fourth quarter of  2011 year-over-year increase in the share-based compensation net of  equity derivatives charge was $1 million and was primarily attributable  to changes in the market prices of GWL and Loblaw common shares. 

 Net insurance proceeds at Weston Foods  During the fourth quarter of 2011, Weston Foods received net insurance  proceeds of $2 million representing insurance proceeds related to the  loss of a Quebec facility, net of charges incurred. 

 Adjusted Basic Net Earnings per Common Share The following table reconciles adjusted basic net earnings per common  share to GAAP basic net earnings per common share reported for the  periods ended as indicated. Under GAAP, certain expenses and income  must be recognized that are not necessarily reflective of the Company's  underlying operating performance. This non-GAAP financial measure  excludes the impact of certain items and is used internally when  analyzing consolidated underlying operating performance. This non-GAAP  financial measure is also helpful in assessing underlying operating  performance on a consistent basis. From time to time, the Company may  exclude additional items if it believes doing so would result in a more  effective analysis of underlying operating performance. The exclusion  of the items listed in the following table does not imply that they are  non-recurring. Loblaw does not report its results on an adjusted basis,  however the Company excludes the impact of the below items on the  Loblaw segment, as applicable, when reporting the Company's  consolidated results. 

 The Company believes adjusted basic net earnings per common share is  useful in assessing the Company's underlying operating performance and  in making decisions regarding the ongoing operations of its business. 

  





    (unaudited)           12 Weeks Ended              52 Weeks Ended

    ($)                  Dec.     Dec. 31,     Dec.31, 2011     Dec. 31,
                      31,2011         2010                          2010

    Basic net       $    0.77   $     0.78   $         4.58   $     3.16
    earnings per
    common share

    Add (deduct)                                                        
    impact of the
    following(1):

    Accounting           0.09       (0.04)           (0.10)         0.36
    for WHL's
    forward sale
    agreement for
    9.6 million
    Loblaw common
    shares

    Federal tax                       0.10                          0.10
    legislation
    changes

    Restructuring        0.02         0.03             0.18         0.23
    and other
    charges

    Commodity          (0.01)       (0.02)             0.17       (0.21)
    derivatives
    fair value
    adjustment at
    Weston Foods

    Foreign              0.14         0.09           (0.19)         0.43
    currency
    translation
    losses
    (gains)

    Share-based          0.01       (0.02)             0.27         0.02
    compensation
    net of equity
    derivatives

    Certain prior                                      0.05             
    years'
    commodity tax
    matters at
    Loblaw

    Net insurance      (0.01)                        (0.04)             
    proceeds at
    Weston Foods

    Gain on sale                                     (0.06)             
    of a portion
    of a Loblaw
    property

    Adjusted        $    1.01   $     0.92   $         4.86   $     4.09
    basic net
    earnings per
    common share






 (1) Net of interest, income taxes and non-controlling interests, as  applicable. 

 In addition to the items described in the "Adjusted Operating Income,  Adjusted Operating Margin, Adjusted EBITDA and Adjusted EBITDA Margin"  section above, the year-over-year change in the following items also  influenced basic net earnings per common share in the fourth quarter of  2011: 

 Accounting for WHL's forward sale agreement for 9.6 million Loblaw  common shares  WHL recognizes a non-cash charge or income, which is included in  consolidated net interest expense and other financing charges,  representing the fair value adjustment of WHL's forward sale agreement  for 9.6 million shares. The fair value adjustment in the forward  contract is a non-cash item resulting from fluctuations in the market  price of the underlying Loblaw shares that WHL owns. WHL does not  record any change in the market price associated with the Loblaw shares  it owns. At maturity, if the forward price is greater than (less than)  the market price, WHL will receive (pay) cash equal to the difference  between the notional value and the market value of the forward  contract. Any cash paid under the forward contract could be offset by  the sale of Loblaw shares. In the fourth quarter of 2011, a charge  related to the accounting for WHL's forward sale agreement for 9.6  million Loblaw common shares of $0.09 (2010 - income of $0.04) per  common share was recorded in net interest expense and other financing  charges as a result of the increase (2010 - decrease) in the market  price of Loblaw common shares. 

 Federal tax legislation changes  In the fourth quarter of 2010, the Company recorded a charge of $18  million related to changes in federal tax legislation that resulted in  the elimination of the Company's ability to deduct costs associated  with cash-settled stock options. In the fourth quarter of 2010, a  charge of $0.10 per common share was recorded in income tax expense as  a result of this change in legislation. 

 SELECTED FINANCIAL INFORMATION The following includes selected quarterly financial information which  has been prepared by management in accordance with IFRS and is based on  the Company's audited annual consolidated financial statements for the  year ended December 31, 2011. This financial information does not  contain all disclosures required by IFRS, and accordingly, this  financial information should be read in conjunction with the Company's  audited annual consolidated financial statements and MD&A for the year  ended December 31, 2011 which is contained in the Company's 2011 Annual  Report available in the Investor Centre section of the Company's  website at www.weston.ca. 

 Consolidated Statements of Earnings 





                                                                          

                            12 Weeks Ended               52 Weeks Ended

    ($ millions         Dec. 31,     Dec. 31,     Dec.31,     Dec. 31 2010
    except where            2011         2010        2011
    otherwise
    indicated)                    

    Revenue           $    7,636   $    7,375   $  32,376   $       31,847

    Operating                                                             
    Expenses                      

      Cost of                           5,541      24,421           23,918
      inventories
      sold                 5,794

      Selling,                          1,467       6,346            6,361
      general and
      administrative
       expenses            1,490

                           7,284        7,008      30,767           30,279

    OperatingIncome          352          367       1,609            1,568

    Net Interest             108           87         366              471
    Expense and Other
    Financing Charges             

    Earnings Before          244          280       1,243            1,097
    Income Taxes                  

    Income Taxes              71          108         324              394

    Net Earnings             173          172         919              703

    Attributable to:                                           

      Shareholders of                     111         635              452
      the Company            109

      Non-Controlling                      61         284              251
      Interests               64

    Net Earnings      $      173   $      172   $     919   $          703

    Net Earnings per                                                      
    Common Share
    Attributable
       to
    Shareholders of
    the Company($)                

    Basic             $     0.77   $     0.78   $    4.58   $         3.16

    Diluted           $     0.72   $     0.70   $    4.55   $         2.92






  

 Consolidated Balance Sheets 





                                                          As at

    ($ millions)           Dec. 31, 2011     Dec. 31, 2010     Jan. 1, 2010

    ASSETS                                                                 

    Current Assets                                                         

      Cash and cash      $         1,372   $         1,453   $        1,490
      equivalents

      Short term                   2,362             3,253            3,420
      investments

      Accounts                       559               462              444
      receivable

      Credit card                  2,101             1,997            2,095
      receivables

      Inventories                  2,147             2,050            2,080

      Income taxes                    37                                   
      recoverable

      Prepaid expenses               122                91              107
      and other assets

      Assets held for                 32                71               56
      sale

    Total Current                  8,732             9,377            9,692
    Assets

    Fixed Assets                   9,172             8,823            8,261

    Investment                        82                74               75
    Properties

    Goodwill and                   1,555             1,554            1,293
    Intangible Assets

    Deferred Income                  295               311              390
    Taxes

    Security Deposits                367               435              348

    Franchise Loans                  331               314              344
    Receivable

    Other Assets                     789               808              787

    Total Assets         $        21,323   $        21,696   $       21,190

    LIABILITIES                                                            

    CurrentLiabilities                                                     

      Bank               $             3   $            11   $           10
      indebtedness

      Trade and other              3,940             4,799            3,676
      payables

      Provisions                      67                92               96

      Income taxes                                      12               79
      payable

      Short term debt              1,280               871            1,525

      Long term debt                  87             1,202              312
      due within one
      year

    Total Current                  5,377             6,987            5,698
    Liabilities

    Provisions                        94                95              110

    Long Term Debt                 6,757             6,114            6,256

    Deferred Income                  160               162              140
    Taxes

    Other Liabilities              1,033               813              760

    Capital Securities               222               221              220

    Total Liabilities             13,643            14,392           13,184

    EQUITY                                                                 

    Share Capital                    950               950              950

    Contributed                       24              (14)                 
    Surplus

    Retained Earnings              4,496             4,311            5,153

    Accumulated Other               (11)              (23)                1
    Comprehensive
    (Loss) Income

    Total Equity                   5,459             5,224            6,104
    Attributable to
    Shareholders of
    theCompany

    Non-Controlling                2,221             2,080            1,902
    Interests

    Total Equity                   7,680             7,304            8,006

    Total Liabilities    $        21,323   $        21,696   $       21,190
    and Equity






  

 Consolidated Statements of Cash Flow 





                              12 Weeks Ended            52 Weeks Ended

    ($ millions)          Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,
                              2011         2010         2011         2010

    Operating                                                   
    Activities                                                           

      Net earnings      $      173   $      172   $      919   $      703

      Income taxes              71          108          324          394

      Net interest                           87                       471
      expense and other
      financing charges        108                       366    

      Depreciation and                      167                       683
      amortization             188                       762    

      Foreign currency                       12                        56
      translation
      losses (gains)            18                      (25)    

      Income taxes paid       (61)         (94)        (277)        (336)

      Interest received         20           16           76           67

      Settlement of                                                      
      equity forward
      contracts               (22)                      (22)    

      Net (increase)                      (142)                        98
      decrease in
      credit card
      receivables            (190)                     (104)    

      Change in                             339                       136
      non-cash working
      capital                  351                      (36)    

      Fixed assets and                      (9)                        28
      other related
      impairments              (2)                         7    

      (Gain) loss on                       (10)                         8
      disposal of
      assets                   (7)                      (18)    

      Other                     22          (1)            2         (29)

    Cash Flows from            669          645        1,974    
    Operating
    Activities                                                      2,279

    Investing                                                   
    Activities                                                           

      Fixed asset                         (447)                   (1,214)
      purchases              (362)                   (1,027)    

      Change in short                       159                        80
      term investments          49                       929    

      Business                            (121)                     (308)
      acquisition - net
      of cash acquired                                  (12)    

      Proceeds from                          53                        90
      fixed assets
      sales                      6                        57    

      Change in                             (8)                      (25)
      franchise
      investments and
      other receivables       (27)                      (24)    

      Change in                             (3)                     (104)
      security deposits      (123)                        74    

      Other                   (12)            9         (12)         (12)

    Cash Flows used in       (469)        (358)         (15)    
    Investing
    Activities                                                    (1,493)

    Financing                                                   
    Activities                                                           

      Change in bank                          5                       (2)
      indebtedness             (5)                       (8)    

      Change in short                     (590)                     (654)
      term debt                 10                       409    

      Long term debt -                      609                       981
      Issued                   352                       635    

        - Retired            (353)          (7)      (1,209)        (322)

      Share Capital -                                                    
      Issued                                               1    

        - Retired             (60)                      (61)             

      Subsidiary share                                                   
      capital - Issued           2                        21    

        - Retired             (17)                      (39)             

      Interest paid          (129)        (136)        (489)        (522)

      Dividends  - To                                               (186)
      common
      shareholders                                   (1,186)    

        - To preferred                                  (44)         (44)
        shareholders           (3)          (3)               

        - To minority                                   (79)         (57)
        shareholders          (22)         (14)               

    Cash Flows used in       (225)        (136)      (2,049)    
    Financing
    Activities                                                      (806)

      Effect of foreign                                       
      currency exchange
      rate on cash
            and cash
      equivalents              (2)          (6)            9         (17)

    Change in Cash and        (27)          145         (81)    
    Cash Equivalents                                                 (37)

    Cash and Cash            1,399        1,308        1,453    
    Equivalents,
    Beginning of Period                                             1,490

    Cash and Cash       $    1,372        1,453        1,372   $
    Equivalents, End of
    Period                           $            $                 1,453






   

  

 Basic and Diluted Net Earnings per Common Share 





                            12 Weeks Ended            52 Weeks Ended

    ($ millions      Dec.31,2011     Dec. 31,     Dec. 31,     Dec. 31,
    except where                        2010          2011         2010
    otherwise
    indicated)

    Net earnings   $         109   $      111   $      635   $      452
    attributable
    to
    shareholders
    of the
    Company

    Prescribed              (10)         (10)         (44)         (44)
    dividends on
    preferred
    shares in
    share
    capital

    Net earnings   $          99   $      101   $      591   $      408
    available to
    common
    shareholders

    Impact of                (3)          (8)                      (20)
    GWL equity
    swaps

    Reduction in             (3)          (2)          (4)          (9)
    net earnings
    due to
    dilution at
    Loblaw

    Net earnings   $          93   $       91   $      587   $      379
    available to
    common
    shareholders
    for diluted
    earnings per
    share

    Weighted               128.8        129.1        129.0        129.1
    average
    common
    shares
    outstanding
    (in
    millions)

    Dilutive                 0.1                       0.1             
    effect of
    share-based
    compensation
    (1) (in
    millions)

    Dilutive                 0.6          0.5                       0.6
    effect of
    GWL equity
    swaps(1) (in
    millions)

    Diluted                129.5        129.6        129.1        129.7
    weighted
    average
    common
    shares
    outstanding
    (in
    millions)

    Basic net      $        0.77   $     0.78   $     4.58   $     3.16
    earnings per
    common share
    ($)

    Diluted net    $        0.72   $     0.70   $     4.55   $     2.92
    earnings per
    common share
    ($)










    (1)  In the fourth quarter of 2011 and year-to-date, 1,115,191 (2010 -
         1,530,495) and 1,915,191 (2010 - 1,266,666) outstanding
         potentially dilutive instruments, respectively, were not included
         in the computation of diluted net earnings per common share as
         their impact would have been anti-dilutive.






  

 Segment Information 

 The Company has two reportable operating segments: Weston Foods and  Loblaw. The accounting policies of the reportable operating segments  are the same as those described in the Company's 2011 Annual Report.  The Company measures each reportable operating segment's performance  based on adjusted EBITDA((1) )and adjusted operating income((1)). Neither reportable operating segment is reliant on any single external  customer. 

  





                             12 Weeks Ended            52 Weeks Ended

    ($ millions)         Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,
                             2011         2010         2011         2010

    Revenue                                                             

        Weston Foods   $      410   $      386   $    1,772   $    1,624

        Loblaw              7,373        7,119       31,250       30,836

        Intersegment        (147)        (130)        (646)        (613)

      Consolidated     $    7,636   $    7,375   $   32,376   $   31,847

    Adjusted EBITDA                                                     
    (1)

        Weston Foods   $       71   $       63   $      325   $      290

        Loblaw                487          482        2,134        2,052

      Total            $      558   $      545   $    2,459   $    2,342

    Adjusted                                                            
    OperatingIncome
    (1)

        Weston Foods   $       56   $       48   $      265   $      235

        Loblaw                317          330        1,435        1,424

      Total            $      373   $      378   $    1,700   $    1,659






 (1)  See non-GAAP financial measures. 

 2011 ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS The Company's annual audited consolidated financial statements and MD&A  for the year ended December 31, 2011 are available in the Investor  Centre section of the Company's website at www.weston.ca and have been filed with SEDAR and will be available at www.sedar.com. 

 INVESTOR RELATIONS Shareholders, security analysts and investment professionals should  direct their requests to Mr. Geoffrey H. Wilson, Senior Vice President,  Financial Control and Investor Relations, at the Company's Executive  Office or by e-mail at [e-mail]. 

 Additional financial information has been filed electronically with the  Canadian securities regulatory authorities in Canada through SEDAR.  This News Release includes selected information on Loblaw Companies  Limited, a 63.0%-owned public reporting subsidiary company with shares  trading on the Toronto Stock Exchange. For information regarding  Loblaw, readers should also refer to the materials filed by Loblaw with  the Canadian securities regulatory authorities from time to time. These  filings are also maintained at Loblaw's corporate website at www.loblaw.ca. 

 CONFERENCE CALL AND WEBCAST PRESENTATION George Weston Limited will host a conference call as well as an audio  webcast on Thursday March 1, 2012 at 11:00 a.m. (EST). To access via  teleconference please dial [phone]. The playback will be made  available two hours after the event at [phone] passcode:  46690230#. To access via audio webcast, please visit the "Investor  Centre" section of www.weston.ca. Pre-registration will be available. 

 Ce rapport est disponible en français.  

   

George Weston Limited


CONTACT:  Mr. Geoffrey H. Wilson, Senior Vice President, Financial ControlandInvestor Relations, at the Company's Executive Office or by e-mailat [e-mail] 


    

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