George Weston Limited Reports a 33.7% Increase in Adjusted Earnings Per Share(1) for the First Quarter of 2015 and Announces 1.2% Increase to Quarterly Common Share Dividend(2)

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May 12, 2015, 06:00 ET

TORONTO, May 12, 2015 /CNW/ - George Weston Limited (TSX: WN) ("GWL" or the "Company") today announced its consolidated unaudited results for the 12 weeks ended March 28, 2015. The Company's first quarter 2015 results include the results of Shoppers Drug Mart Corporation ("Shoppers Drug Mart") as well as the associated acquisition-related accounting adjustments.

GWL's 2015 First Quarter Report to Shareholders has been filed with SEDAR and is available at sedar.com and in the Investor Centre section of the Company's website at weston.ca.

"George Weston Limited continues to focus on creating long term shareholder value and today, for the third consecutive year, we announced a dividend increase. We continue to execute against the strategic initiatives set by each of the Company's operating segments to deliver stable, long term growth and profitability", said W. Galen Weston, Executive Chairman, George Weston Limited.

2015 FIRST QUARTER HIGHLIGHTS

Sales of $10,409 million, an increase of $2,797 million or 36.7%.
Adjusted EBITDA⁽¹⁾ of $850 million, an increase of $302 million or 55.1%.
Adjusted operating income⁽¹⁾ of $586 million, an increase of $249 million or 73.9%.
Adjusted basic net earnings per common share⁽¹⁾ of $1.19, an increase of $0.30 or 33.7%.
Free cash flow⁽¹⁾ of $81 million.
Quarterly common share dividend increase of approximately 1.2% from $0.42 per common share to $0.425 per common share.

(unaudited)	12 Weeks Ended
($ millions except where otherwise indicated)
For the periods ended as indicated	Mar. 28, 2015		Mar. 22, 2014⁽³⁾		Change
Sales	$	10,409	$	7,612	36.7%
EBITDA⁽¹⁾	$	907	$	589	54.0%
Adjusted EBITDA⁽¹⁾	$	850	$	548	55.1%
Adjusted EBITDA margin⁽¹⁾		8.2%		7.2%
Operating income	$	519	$	378	37.3%
Adjusted operating income⁽¹⁾	$	586	$	337	73.9%
Adjusted operating margin⁽¹⁾		5.6%		4.4%
Net earnings attributable to shareholders of the Company	$	167	$	120	39.2%
Adjusted net earnings attributable to shareholders of the Company⁽¹⁾	$	162	$	124	30.6%
Basic net earnings per common share ($)	$	1.23	$	0.86	43.0%
Adjusted basic net earnings per common share⁽¹⁾ ($)	$	1.19	$	0.89	33.7%

Pavi Binning, President, George Weston Limited, commented that "We are pleased with George Weston Limited's first quarter results as the performance of both of the Company's operating segments was in-line with expectations. Loblaw delivered solid operating and financial performance in highly competitive grocery and pharmacy industries. Weston Foods delivered volume growth and higher sales across all business units, while operating income reflected the impact of increased capital expenditures and incremental investments in capabilities and innovation".

GWL's first quarter 2015 adjusted basic net earnings per common share⁽¹⁾ increased to $1.19 from $0.89 in the same period in 2014. The improvement of $0.30 was primarily due to an increase in Loblaw Companies Limited ("Loblaw") earnings offset by the reduction in the Company's ownership as a result of the shares issued by Loblaw to acquire Shoppers Drug Mart. Loblaw earnings were positively impacted in the first quarter of 2015 by Shoppers Drug Mart results, partially offset by higher interest expense driven by the financing associated with the acquisition of Shoppers Drug Mart.

Basic net earnings per common share increased by $0.37 to $1.23 compared to the same period in 2014, and were impacted by the following significant items:

the favourable year-over-year impact of the fair value adjustment of the forward sale agreement for 9.6 million Loblaw common shares of $52 million ($0.31 per common share); and
the favourable year-over-year impact of foreign currency translation of $23 million ($0.11 per common share); partially offset by
the amortization of the acquired Shoppers Drug Mart intangible assets of $124 million ($0.32 per common share).

For a complete list of items that impacted basic net earnings per common share but that are excluded from adjusted basic net earnings per common share⁽¹⁾, see the "Non-GAAP Financial Measures" section of this News Release.

REPORTABLE OPERATING SEGMENTS

Weston Foods
(unaudited)	12 Weeks Ended
($ millions except where otherwise indicated)
For the periods ended as indicated	Mar. 28, 2015		Mar. 22, 2014		Change
Sales	$	504	$	449	12.2 %
EBITDA⁽¹⁾	$	59	$	77	(23.4)%
Adjusted EBITDA⁽¹⁾	$	63	$	68	(7.4)%
Adjusted EBITDA margin⁽¹⁾		12.5%		15.1%
Operating income	$	41	$	61	(32.8)%
Adjusted operating income⁽¹⁾	$	45	$	52	(13.5)%
Adjusted operating margin⁽¹⁾		8.9 %		11.6%

Sales Weston Foods sales in the first quarter of 2015 were $504 million, an increase of $55 million, or 12.2% compared to the same period in 2014. Foreign currency translation positively impacted sales by approximately 7.2%. Excluding the impact of foreign currency translation, sales increased 5.0% primarily due to an increase in volumes across all business units and the combined positive impact of pricing and changes in sales mix. The increase in volumes was positively impacted by the timing of Easter.

EBITDA⁽¹⁾ Weston Foods EBITDA⁽¹⁾in the first quarter of 2015 was $59 million, a decrease of $18 million compared to the same period in 2014, primarily due to the year-over-year unfavourable impact of the fair value adjustment of commodity derivatives which is described in the "Non-GAAP Financial Measures" section of this News Release. In addition, the decrease was due to the decline in adjusted EBITDA⁽¹⁾ as described below.

Adjusted EBITDA⁽¹⁾in the first quarter of 2015 was $63 million, a decrease of $5 million compared to the same period in 2014. Despite an increase in volumes, adjusted EBITDA⁽¹⁾ declined primarily due to higher input costs, new plant costs, and investments in capabilities and innovation.

Operating Income Weston Foods operating income in the first quarter of 2015 was $41 million, a decrease of $20 million compared to the same period in 2014 and was negatively impacted by a number of items as described above in EBITDA⁽¹⁾. For a complete list of items that impacted operating income but that are excluded from adjusted operating income⁽¹⁾, see the "Non-GAAP Financial Measures" section of this News Release.

Adjusted operating income⁽¹⁾ in the first quarter of 2015 was $45 million, a decrease of $7 million compared to the same period in 2014. The decrease was driven by the decline in adjusted EBITDA⁽¹⁾ as described above and an increase in depreciation and amortization of $2 million in the first quarter of 2015 due to investments in capital.

Loblaw
(unaudited)	12 Weeks Ended
($ millions except where otherwise indicated)
For the periods ended as indicated	Mar. 28, 2015			Mar. 22, 2014⁽³⁾		Change
Sales		$	10,048	$	7,292	37.8%
Retail gross profit		$	2,624	$	1,603	63.7%
EBITDA⁽¹⁾		$	782	$	469	66.7%
Adjusted EBITDA⁽¹⁾		$	787	$	480	64.0%
Adjusted EBITDA margin⁽¹⁾			7.8%		6.6%
Operating income		$	412	$	274	50.4%
Adjusted operating income⁽¹⁾		$	541	$	285	89.8%
Adjusted operating margin⁽¹⁾			5.4%		3.9%

Sales Loblaw sales in the first quarter of 2015 were $10,048 million, an increase of $2,756 million compared to the same period in 2014, primarily driven by the Retail segment. Retail sales increased by $2,735 million, including $2,596 million in sales contributed by Shoppers Drug Mart. Food retail same-store sales growth was 2.0% and the food retail average quarterly internal food price index was higher than the average quarterly national food price inflation of 4.6% as measured by the Consumer Price Index for Food Purchased from Stores. Shoppers Drug Mart same-store sales growth was 3.1%, including same-store pharmacy sales growth of 3.5% and same-store front store sales growth of 2.7%. Total Retail same-store sales growth was 2.3% for the first quarter of 2015.

In the last twelve months, grocery and drug store net square footage increased by 0.1 million square feet, or 0.1%. Excluding the divestitures required pursuant to a Consent Agreement with the Competition Bureau ("Consent Agreement"), net square footage increased by 0.3 million square feet, or 0.5%.

Gross Profit Loblaw Retail gross profit in the first quarter of 2015 was $2,624 million, an increase of $1,021 million compared to the same period in 2014. The increase included $1,024 million of gross profit contributed by Shoppers Drug Mart. Excluding Shoppers Drug Mart, food retail gross profit percentage was 22.1% compared to 22.6% in the same period in 2014. Retail gross profit percentage was negatively impacted by the restructuring of certain franchise fee arrangements as described below. Excluding this impact, gross profit percentage was flat, as reductions in transportation costs and synergies related to the acquisition of Shoppers Drug Mart were offset by higher shrink.

In 2014, Loblaw restructured its fee arrangements with the franchisees of certain franchise banners. These revised arrangements are expected to result in an annual reduction of Retail sales and gross profit of approximately $150 million with a corresponding decrease in selling, general and administrative expenses ("SG&A"). In the first quarter of 2015, this restructuring had a negative impact of $33 million to gross profit with an offsetting positive impact to SG&A.

EBITDA⁽¹⁾ Loblaw EBITDA⁽¹⁾ in the first quarter of 2015 was $782 million, an increase of $313 million compared to the same period in 2014, primarily driven by the contribution from Shoppers Drug Mart and included the impact of a number of items that are excluded from adjusted EBITDA⁽¹⁾. For a complete list of items that impacted EBITDA⁽¹⁾ but that are excluded from adjusted EBITDA⁽¹⁾,see the "Non-GAAP Financial Measures" section of this News Release.

Loblaw adjusted EBITDA⁽¹⁾ in the first quarter of 2015 was $787 million, an increase of $307 million compared to the same period in 2014, driven by the increase in Retail gross profit of $1,021 million described above, partially offset by an increase in SG&A of $722 million. The increase in SG&A was primarily driven by the acquisition of Shoppers Drug Mart. Food retail SG&A was positively impacted by the restructuring of certain franchise fee arrangements. Excluding this positive impact, food retail expenses were relatively flat, as lower charges related to the transition of certain grocery stores to more cost effective and efficient operating terms under collective agreements and efficiencies achieved in supply chain and administration were offset by higher foreign exchange losses and higher investments in Loblaw's franchise business. Adjusted EBITDA⁽¹⁾ was positively impacted by net synergies of $44 million.

Operating Income Loblaw operating income in the first quarter of 2015 was $412 million, an increase of $138 million compared to the same period in 2014, and included the negative impact of the amortization of intangible assets acquired with Shoppers Drug Mart as well as a number of other items that are excluded from adjusted operating income⁽¹⁾. For a complete list of items that impacted operating income but that are excluded from adjusted operating income⁽¹⁾, see the "Non-GAAP Financial Measures" section of this News Release.

Loblaw adjusted operating income⁽¹⁾ in the first quarter of 2015 was $541 million, an increase of $256 million compared to the same period in 2014, and was positively impacted by the increase in adjusted EBITDA⁽¹⁾ as described above, partially offset by an increase in depreciation and amortization of $51 million.

NET INTEREST EXPENSE AND OTHER FINANCING CHARGES
In the first quarter of 2015, net interest expense and other financing charges increased by $9 million to $177 million compared to the same period in 2014 and included the favourable year-over-year impact of the fair value adjustment of the forward sale agreement for 9.6 million Loblaw common shares, as well as a number of other items. For a complete list of the items that impacted net interest expense and other financing charges but that are excluded from adjusted net interest expense and other financing charges⁽¹⁾, see the "Non-GAAP Financial Measures" section of this News Release.

Adjusted net interest expense and other financing charges⁽¹⁾were $138 million, an increase of $42 million compared to the same period in 2014, driven by higher interest on long term debt, primarily as a result of debt incurred by Loblaw to finance the acquisition of Shoppers Drug Mart and debt issuances by Choice Properties Real Estate Investment Trust ("Choice Properties") to third parties.

INCOME TAXES
Income tax expense for the first quarter of 2015 was $96 million and the effective tax rate was 28.1%. Income tax expense for the first quarter of 2014 was $46 million and the effective tax rate was 21.9%. The increase in the effective tax rate was primarily attributable to income tax expense of $9 million recorded in the first quarter of 2015 related to unrealized foreign currency translation gains and a decrease in certain non-taxable amounts. Adjusted income tax expense⁽¹⁾ for the first quarter of 2015 was $122 million and the adjusted income tax rate⁽¹⁾ was 27.2%. Adjusted income tax expense⁽¹⁾ for the first quarter of 2014 was $61 million and the adjusted income tax rate⁽¹⁾ was 25.3%. The increase in the adjusted income tax rate⁽¹⁾ was primarily attributable to a decrease in certain non-taxable amounts.

ADJUSTED DEBT⁽¹⁾
During the first quarter of 2015, adjusted debt⁽¹⁾ increased by $42 million, primarily driven by normal seasonal working capital requirements.

On closing of the acquisition of Shoppers Drug Mart, adjusted debt⁽¹⁾ was $12.1 billion. Loblaw has made progress and remains on track to meeting its debt reduction target. The Company has decreased adjusted debt⁽¹⁾ by approximately $676 million since the closing of the acquisition, resulting in an adjusted debt⁽¹⁾ balance of $11.4 billion as at the end of the first quarter of 2015.

FREE CASH FLOW⁽¹⁾
The Company's year-over-year free cash flow⁽¹⁾increased by $357 million to $81 million in the first quarter of 2015. The increase was primarily due to higher cash flows from operating activities, including the contribution from Shoppers Drug Mart, partially offset by higher investments in capital.

ACQUISITION OF SHOPPERS DRUG MART CORPORATION
In the first quarter of 2015, Loblaw realized net synergies of approximately $44 million generated primarily from improved cost of inventories sold and from purchasing efficiencies in goods not for resale. Since the closing of the acquisition, total net synergies achieved as at the end of the first quarter of 2015 were $145 million. Loblaw continues to expect to achieve annualized synergies of $300 million in the third full year following the close of the acquisition of Shoppers Drug Mart (net of related costs).

Pursuant to the Consent Agreement, the final three Shoppers Drug Mart stores were sold, resulting in a divestitures loss of $2 million in the first quarter of 2015. Loblaw has recorded a net cumulative loss of $14 million from the required store divestitures.

As a result of the acquisition of Shoppers Drug Mart, GWL's ownership interest in Loblaw decreased from approximately 63% to approximately 46%. The Company remains the controlling shareholder of and continues to consolidate Loblaw.

OUTLOOK⁽²⁾
The outlook reflects the underlying operating performance of the Company's operating segments as discussed below.

For full year 2015, Weston Foods expects a decline in adjusted operating income⁽¹⁾ due to the costs associated with capital investments, incremental investments in innovation and capabilities and higher input costs. This decline will be partially offset by the positive impact of pricing, volume growth and productivity improvements. On an equivalent 52-week basis, management continues to expect the decline in adjusted operating income⁽¹⁾ to be greater in the first half of the year than in the second half.

Loblaw's strategic framework is focused on delivering the best in food, best in health and beauty, operational excellence and growth. This strategic framework is supported by a financial strategy of maintaining a stable trading environment that targets positive same-store sales and stable gross margin; surfacing efficiencies; delivering synergies as a result of its acquisition of Shoppers Drug Mart; and deleveraging the balance sheet.

Consistent with Loblaw's previous outlook, on a full year comparative basis, reflecting 2014 financial results for Loblaw and Shoppers Drug Mart, in 2015 Loblaw expects to:

maintain positive same-store sales and stable gross margin (excluding synergies) in its Retail segment;
achieve net synergies as a result of the acquisition of Shoppers Drug Mart approaching $200 million;
continue to drive net efficiencies across the food retail business by achieving reductions in supply chain, administrative functions and information technology ("IT"), while still investing in key areas, like eCommerce;
grow adjusted operating income⁽¹⁾ in its food retail business, excluding synergies;
experience a decline in adjusted operating income⁽¹⁾ in its retail pharmacy business, excluding synergies, as a result of investments in key projects and other factors;
grow consolidated adjusted net earnings⁽¹⁾ (including synergies) relative to 2014, however not at the same level achieved in the first quarter of 2015;
invest approximately $1.2 billion in capital expenditure programs; and
remain on track with its deleveraging target, expecting to meet its target in the first quarter of 2016.

Loblaw's expectations for 2015 also include the following:

competitive intensity expected to remain high, but relatively stable as industry square footage growth in supermarket-type merchandise moderates; and
continued pressure in its retail pharmacy business from the ongoing impact of healthcare reform.

DECLARATION OF QUARTERLY DIVIDENDS
Subsequent to the end of the first quarter of 2015, the Company's Board of Directors declared a quarterly dividend on GWL Common Shares, Preferred Shares, Series I, Preferred Shares, Series III, Preferred Shares, Series IV and Preferred Shares, Series V payable as follows:

	Common Shares			$0.425 per share payable July 1, 2015, to shareholders of record June 15, 2015;

	Preferred Shares, Series I			$0.3625 per share payable June 15, 2015, to shareholders of record May 31, 2015;

	Preferred Shares, Series III			$0.3250 per share payable July 1, 2015, to shareholders of record June 15, 2015;

	Preferred Shares, Series IV			$0.3250 per share payable July 1, 2015, to shareholders of record June 15, 2015; and

	Preferred Shares, Series V			$0.296875 per share payable July 1, 2015, to shareholders of record June 15, 2015.

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. Specific forward-looking statements in this News Release include, but are not limited to, statements with respect to the Company's anticipated future results, events and plans, synergies and other benefits associated with the acquisition of Shoppers Drug Mart, future liquidity and debt reduction targets, and planned capital investments. These specific forward-looking statements are contained throughout this News Release including, without limitation, in the "Outlook" section of this News Release. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may", "on-track", "maintain", "achieve", "grow", and "should" and similar expressions, as they relate to the Company and its management.

Forward-looking statements reflect the Company's current estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company's expectation of operating and financial performance in 2015 is based on certain assumptions including assumptions about sales and volume growth, anticipated cost savings, operating efficiencies, and continued growth from current initiatives. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct.

Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in the "Enterprise Risks and Risk Management" section of the Management's Discussion and Analysis ("MD&A") in the Company's 2014 Annual Report, the "Enterprise Risks and Risk Management" section of the MD&A included in the Company's 2015 First Quarter Report to Shareholders and the Company's Annual Information Form ("AIF") for the year ended December 31, 2014. Such risks and uncertainties include:

failure by Loblaw to realize the anticipated strategic benefits or operational, competitive and cost synergies following the acquisition of Shoppers Drug Mart;
failure by Loblaw to reduce indebtedness associated with the acquisition of Shoppers Drug Mart to bring leverage ratios to a level consistent with investment grade ratings;
failure to realize benefits from investments in the Company's IT systems, including the Company's IT systems implementation, or unanticipated results from these initiatives;
failure to realize anticipated results, including revenue growth, anticipated cost savings or operating efficiencies from the Company's major initiatives, including those from restructuring;
the inability of the Company's IT infrastructure to support the requirements of the Company's business;
changes in Loblaw's estimate of inventory cost as a result of its IT system upgrade;
changes to the regulation of generic prescription drug prices and the reduction of reimbursements under public drug benefit plans and the elimination or reduction of professional allowances paid by drug manufacturers;
failure to achieve desired results in labour negotiations, including the terms of future collective bargaining agreements which could lead to work stoppages;
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 currency exchange rates and derivative and commodity prices;
changes in the Company's income, capital, commodity, property and other tax and regulatory liabilities including changes in tax laws, regulations or future assessments;
the risk that the Company will be unsuccessful in any material litigation, class action, or regulatory proceeding;
the inability of the Company to manage inventory to minimize the impact of obsolete or excess inventory and to control shrink;
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 Loblaw to collect on and fund 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 without limitation, the section entitled "Operating and Financial Risks and Risk Management" in the Company's AIF for the year ended December 31, 2014. 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. Except as required by law, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NON-GAAP FINANCIAL MEASURES
The Company uses the following non-GAAP financial measures: EBITDA, adjusted EBITDA and adjusted EBITDA margin, adjusted operating income and adjusted operating margin, adjusted basic net earnings per common share, adjusted debt and free cash flow. In addition to these items, the following measures are used by management in calculating adjusted basic net earnings per common share: adjusted net interest expense and other financing charges, adjusted income taxes, adjusted income tax rate and adjusted net earnings available to common shareholders of the Company. 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.

Management uses these and other non-GAAP financial measures to exclude the impact of certain expenses and income that must be recognized under GAAP when analyzing consolidated and segment underlying operating performance. The excluded items are not necessarily reflective of the Company's underlying operating performance and make comparisons of underlying financial performance between periods difficult. 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 certain items does not imply that they are non-recurring.

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.

EBITDA, Adjusted EBITDA and Adjusted Operating Income The Company believes adjusted EBITDA is 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 investments program and debt reduction objectives. The Company believes adjusted operating income is also useful in assessing the Company's underlying operating performance and in making decisions regarding the ongoing operations of its business.

The following table reconciles EBITDA, adjusted EBITDA and adjusted operating income to operating income, which is reconciled to GAAP net earnings attributable to shareholders of the Company reported for the periods ended as indicated.

			12 Weeks Ended

							Mar. 28, 2015								Mar. 22, 2014⁽ⁱ⁾
(unaudited) ($ millions)			Weston Foods		Loblaw		Other⁽ⁱⁱ⁾		Consolidated		Weston Foods		Loblaw			Other⁽ⁱⁱ⁾		Consolidated
Net earnings attributable to shareholders
	of the Company								$	167								$	120
Add impact of the following:
	Non-controlling interests									79									44
	Income taxes									96									46
	Net interest expense and other
		financing charges								177									168
Operating income			$	41	$	412	$	66	$	519	$	61	$	274		$	43	$	378
Depreciation and amortization				18		370				388		16		195					211
EBITDA			$	59	$	782	$	66	$	907	$	77	$	469		$	43	$	589

Operating income			$	41	$	412	$	66	$	519	$	61	$	274		$	43	$	378
Add (deduct) impact of the following:
	Amortization of intangible assets acquired
		with Shoppers Drug Mart				124				124
	Restructuring and other charges			4		12				16
	Fair value adjustment of derivatives			(1)		(12)				(13)		(9)							(9)
	Fixed asset and other related impairments,
		net of recoveries				3				3				3					3
	Shoppers Drug Mart divestitures loss
		and acquisition costs				2				2				8					8
	Inventory loss			1						1
	Foreign currency translation gain							(66)		(66)							(43)		(43)
Adjusted operating income			$	45	$	541			$	586	$	52	$	285				$	337
Depreciation and amortization excluding the
	impact of the above adjustments⁽ⁱⁱⁱ⁾			18		246				264		16		195					211
Adjusted EBITDA			$	63	$	787			$	850	$	68	$	480				$	548

(i)	Certain 2014 figures have been restated. See note 2 of the Company's unaudited interim period condensed consolidated financial statements included in the 2015 First Quarter Report to Shareholders.
(ii)	Represents the effect of foreign currency translation on a portion of the United States ("U.S.") dollar denominated cash and cash equivalents and short term investments held by foreign operations.
(iii)	Depreciation and amortization for the calculation of adjusted EBITDA at Loblaw excludes $124 million (2014 - nil) of amortization of intangible assets acquired with Shoppers Drug Mart.

The following items impacted operating income in the first quarters of 2015 and 2014:

Amortization of intangible assets acquired with Shoppers Drug Mart The acquisition of Shoppers Drug Mart in the second quarter of 2014 included approximately $6 billion of definite life intangible assets, which are being amortized over their estimated useful lives. In the first quarter of 2015, $124 million of amortization was recognized in operating income. Loblaw expects to recognize annual amortization of approximately $550 million associated with the acquired intangible assets over the next nine years and decreasing thereafter.

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. In the first quarter of 2015, Loblaw recorded $12 million (2014 - nil) of restructuring and reorganization costs primarily associated with the administrative restructuring activities in the Joe Fresh and Shoppers Home Health Care businesses.

Fair value adjustment of derivatives The Company is exposed to commodity price and U.S. dollar exchange rate fluctuations primarily as a result of purchases of certain raw materials, fuels and utilities. In accordance with the Company's commodity risk management policy, the Company enters into commodity and foreign currency derivatives to reduce the impact of price fluctuations in forecasted raw material and fuel purchases over a specified period of time. These derivatives are not acquired for trading or speculative purposes. Pursuant to the Company's derivative instruments accounting policy, certain changes in fair value, which include realized and unrealized gains and losses related to future purchases of raw materials and fuel, are recorded in operating income. In the first quarter of 2015, Weston Foods recorded income of $1 million (2014 - $9 million) and Loblaw recorded income of $12 million (2014 - nil), related to the fair value adjustment of commodity and foreign currency derivatives. Despite the impact of accounting for these commodity and foreign currency derivatives on the Company's reported results, the derivatives have the economic impact of largely mitigating the associated risks arising from price and exchange rate fluctuations in the underlying commodities.

Fixed asset and other related impairments, net of recoveries At each balance sheet date, the Company assesses and, when required, records impairments and recoveries of previous impairments related to the carrying value of its fixed assets, investment properties and intangible assets. In the first quarter of 2015, Loblaw recorded a net charge of $3 million (2014 - $3 million) related to fixed assets and other related impairments.

Shoppers Drug Mart divestitures loss and acquisition costs In the first quarter of 2015, Loblaw recorded a loss of $2 million related to divestitures completed in the quarter. During the first quarter of 2014, Loblaw incurred $8 million of acquisition-related costs.

Inventory loss On August 31, 2014, a weather event in the U.S. caused significant damage to Weston Foods inventories stored at a third-party warehouse. In the first quarter of 2015, a charge of $1 million (approximately U.S. $1 million) was recorded in SG&A.

Foreign currency translation gain The Company's consolidated financial statements are expressed in Canadian dollars. 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 cash equivalents and short term investments held by foreign operations, is recorded in operating income and the associated tax, if any, is recorded in income taxes. In the first quarter of 2015, a foreign currency translation gain of $66 million (2014 - $43 million) was recorded in operating income as a result of the appreciation of the U.S. dollar relative to the Canadian dollar. Income tax expense of $9 million (2014 - nil) was also recorded associated with this foreign currency translation gain.

Adjusted Net Interest Expense and Other Financing Charges The Company believes adjusted net interest expense and other financing charges is useful in assessing the ongoing net financing costs of the Company.

The following table reconciles adjusted net interest expense and other financing charges to GAAP net interest expense and other financing charges reported for the periods ended as indicated.

(unaudited)			12 Weeks Ended

($ millions)			Mar. 28, 2015		Mar. 22, 2014
Net interest expense and other financing charges			$	177	$	168
Less:	Fair value adjustment of the Trust Unit liability		39		8
	Fair value adjustment of the forward sale agreement for 9.6 million Loblaw
		common shares	(3)		49
	Accelerated amortization of deferred financing costs		3
	Shoppers Drug Mart net financing charges				15
Adjusted net interest expense and other financing charges			$	138	$	96

In addition to certain items described in the "EBITDA, Adjusted EBITDA and Adjusted Operating Income" section above, the following items impacted net interest expense and other financing charges in the first quarters of 2015 and 2014:

Fair value adjustment of the Trust Unit liability The Company is exposed to market price fluctuations as a result of the Choice Properties Trust Units held by unitholders other than the Company. These Trust Units are presented as a liability on the Company's consolidated balance sheets as they are redeemable for cash at the option of the holder, subject to certain restrictions. This liability is recorded at fair value at each reporting period based on the market price of Trust Units at the end of each period. In the first quarter of 2015, the Company recorded a loss of $39 million (2014 - $8 million) in net interest expense and other financing charges related to the fair value adjustment of the Trust Unit liability as a result of an increase in the market price of Trust Units. An increase (decrease) in the market price of Trust Units results in a charge (income) to net interest expense and other financing charges.

Fair value adjustment of the forward sale agreement for 9.6 million Loblaw common shares The fair value adjustment of the forward sale agreement for 9.6 million Loblaw common shares is non-cash and is included in net interest expense and other financing charges. The adjustment is determined by changes in the value of the underlying Loblaw common shares. In the first quarter of 2015, income of $3 million (2014 - a charge of $49 million) was recorded in net interest expense and other financing charges as a result of the changes in the market price of Loblaw common shares. An increase (decrease) in the market price of Loblaw common shares results in a charge (income) to net interest expense and other financing charges.

Accelerated amortization of deferred financing costs In the first quarter of 2015, Loblaw recorded a charge of $3 million related to the accelerated amortization of deferred financing costs due to the repayment of $207 million of its unsecured term loan facility.

Shoppers Drug Mart net financing charges In addition to the divestitures loss and acquisition costs as described in the "EBITDA, Adjusted EBITDA and Adjusted Operating Income" section above, in the first quarter of 2014, net charges of $15 million were incurred in connection with financing related to the acquisition of Shoppers Drug Mart.

Adjusted Income Taxes and Adjusted Income Tax Rate The Company believes the adjusted income tax rate applicable to adjusted earnings before taxes is useful in assessing the underlying operating performance of its business.

The following table reconciles the effective income tax rate applicable to adjusted earnings before taxes to the GAAP effective income tax rate applicable to earnings before taxes as reported for the periods ended as indicated.

(unaudited)	12 Weeks Ended

($ millions except where otherwise indicated)	Mar. 28, 2015		Mar. 22, 2014⁽ⁱ⁾
Adjusted operating income⁽ⁱⁱ⁾	$	586	$	337
Adjusted net interest expense and other financing charges⁽ⁱⁱ⁾	138		96
Adjusted earnings before taxes	$	448	$	241
Income taxes	$	96	$	46
Less: Tax impact of items excluded from adjusted earnings before taxes⁽ⁱⁱⁱ⁾	(26)		(15)
Adjusted income taxes	$	122	$	61
Effective income tax rate applicable to earnings before taxes		28.1%	21.9%
Adjusted income tax rate applicable to adjusted earnings before taxes		27.2%	25.3%

(i)	Certain 2014 figures have been restated. See note 2 of the Company's unaudited interim period condensed consolidated financial statements included in the 2015 First Quarter Report to Shareholders.
(ii)	See reconciliations of adjusted operating income and adjusted net interest expense and other financing charges above.
(iii)	See the EBITDA, adjusted EBITDA and adjusted operating income table and the adjusted net interest expense and other financing charges table above for a complete list of items excluded from adjusted earnings before taxes.

Adjusted Basic Net Earnings per Common Share and Adjusted Net Earnings The Company believes adjusted basic net earnings per common share and adjusted net earnings are useful in assessing the Company's underlying operating performance and in making decisions regarding the ongoing operations of its business.

The following table reconciles adjusted basic net earnings per common share and adjusted net earnings to GAAP basic net earnings per common share reported for the periods ended as indicated.

(unaudited)		12 Weeks Ended

($ except where otherwise indicated)		Mar. 28, 2015		Mar. 22, 2014⁽ⁱ⁾
Basic net earnings per common share		$	1.23	$	0.86
(Deduct) Add impact of the following⁽ⁱⁱ⁾:
	Fair value adjustment of the forward sale agreement for 9.6 million Loblaw common shares		(0.02)		0.29
	Amortization of intangible assets acquired with Shoppers Drug Mart		0.32
	Restructuring and other charges		0.06
	Fair value adjustment of the Trust Unit liability		0.05		0.03
	Fair value adjustment of derivatives		(0.04)		(0.05)
	Inventory loss		0.01
	Fixed asset and other related impairments, net of recoveries		0.01		0.01
	Accelerated amortization of deferred financing costs		0.01
	Shoppers Drug Mart divestitures loss and acquisition costs		0.01		0.09
	Foreign currency translation gain		(0.45)		(0.34)
Adjusted basic net earnings per common share		$	1.19	$	0.89
Weighted average common shares outstanding (millions)			127.6		127.7
Adjusted net earnings attributable to shareholders of the Company ($ millions)		$	162	$	124
Prescribed dividends on preferred shares in share capital ($ millions)			10		10
Adjusted net earnings available to common shareholders of the
	Company ($ millions)	$	152	$	114

(i)	Certain 2014 figures have been restated. See note 2 of the Company's unaudited interim period condensed consolidated financial statements included in the 2015 First Quarter Report to Shareholders.
(ii)	Net of income taxes and non-controlling interests, as applicable.

Adjusted Debt The Company believes adjusted debt is useful in assessing the amount of financial leverage employed by the Company. In the table below, the Company has presented adjusted debt as at March 28, 2014, the date of acquisition of Shoppers Drug Mart, as this is the baseline for the Company's debt reduction target.

The following table reconciles adjusted debt to GAAP measures reported as at the periods ended as indicated.

(unaudited)		As at

($ millions)		Mar. 28, 2015		Dec. 31, 2014			Mar. 28, 2014			Mar. 22, 2014
Bank indebtedness		$	299		$	162		$	295
Short term debt		1,011			1,101			1,070			$	1,070
Long term debt due within one year		445			420			902			902
Long term debt		12,187			12,306			12,327			8,220
Trust Unit liability		534			494			487			487
Capital securities		225			225			224			224
Certain other liabilities		28			28			39			39
Fair value of financial derivatives related to the above debt		(379)			(367)			(484)			(484)
Total debt		$	14,350		$	14,369		$	14,860		$	10,458
Less:	Independent securitization trusts	$	1,255		$	1,355		$	1,355		$	1,355
	Trust Unit liability	534			494			487			487
	Independent funding trusts	496			498			469			469
	Guaranteed Investment Certificates	635			634			443			443
Adjusted debt		$	11,430		$	11,388		$	12,106		$	7,704

Free Cash Flow The Company believes free cash flow is useful in assessing the Company's cash available for additional financing and investing activities.

The following table reconciles free cash flow to GAAP measures reported for the periods ended as indicated.

(unaudited)		12 Weeks Ended

($ millions)		Mar. 28, 2015		Mar. 22, 2014
Cash flows from operating activities		$	517		$	2
Less:	Interest paid	165			148
	Fixed asset purchases	244			117
	Intangible asset additions	27			13
Free cash flow		$	81		$	(276)

SELECTED FINANCIAL INFORMATION
The following includes selected quarterly financial information which is prepared by management in accordance with International Financial Reporting Standards ("IFRS") and is based on the Company's 2015 First Quarter Report to Shareholders. 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 2014 Annual Report and 2015 First Quarter Report to Shareholders available in the Investor Centre section of the Company's website at www.weston.ca.

Condensed Consolidated Statements of Earnings

(unaudited)		12 Weeks Ended

(millions of Canadian dollars except where otherwise indicated)		Mar. 28, 2015		Mar. 22, 2014⁽³⁾
Revenue		$	10,409	$	7,612
Operating Expenses
	Cost of inventories sold		7,421		5,668
	Selling, general and administrative expenses		2,469		1,566
			9,890		7,234
Operating Income			519		378
Net Interest Expense and Other Financing Charges			177		168
Earnings Before Income Taxes			342		210
Income Taxes			96		46
Net Earnings			246		164
Attributable to:
	Shareholders of the Company		167		120
	Non-Controlling Interests		79		44
Net Earnings		$	246	$	164
Net Earnings per Common Share ($)
	Basic	$	1.23	$	0.86
	Diluted	$	1.23	$	0.85

Condensed Consolidated Balance Sheets

(unaudited)		As at

(millions of Canadian dollars)			Mar. 28, 2015		Mar. 22, 2014⁽³⁾		Dec. 31, 2014⁽³⁾⁽⁴⁾
ASSETS
Current Assets
	Cash and cash equivalents		$	1,393	$	3,321	$	1,333
	Short term investments			1,050		909		1,072
	Accounts receivable			1,376		749		1,318
	Credit card receivables			2,478		2,399		2,630
	Inventories			4,554		2,208		4,463
	Income taxes recoverable			105		27		30
	Prepaid expenses and other assets			221		133		223
	Assets held for sale			14		23		23
Total Current Assets				11,191		9,769		11,092
Fixed Assets				10,985		9,045		10,938
Investment Properties				186		115		185
Intangible Assets				9,658		764		9,786
Goodwill				3,782		1,372		3,756
Deferred Income Taxes				177		332		215
Security Deposits				94		1,790		92
Franchise Loans Receivable				388		363		399
Other Assets				728		760		683
Total Assets			$	37,189	$	24,310	$	37,146
LIABILITIES
Current Liabilities
	Bank indebtedness		$	299			$	162
	Trade payables and other liabilities			4,817	$	3,436		4,934
	Provisions			128		111		130
	Short term debt			1,011		1,070		1,101
	Long term debt due within one year			445		902		420
	Associate interest			187				193
	Capital securities			225				225
Total Current Liabilities				7,112		5,519		7,165
Provisions				106		78		103
Long Term Debt				12,187		8,220		12,306
Trust Unit Liability				534		487		494
Deferred Income Taxes				1,967		177		1,980
Other Liabilities				876		645		849
Capital Securities						224
Total Liabilities				22,782		15,350		22,897
EQUITY
Share Capital				998		972		997
Contributed Surplus				71		71		80
Retained Earnings				6,224		5,269		6,125
Accumulated Other Comprehensive Income				140		51		87
Total Equity Attributable to Shareholders of the Company				7,433		6,363		7,289
Non-Controlling Interests				6,974		2,597		6,960
Total Equity				14,407		8,960		14,249
Total Liabilities and Equity			$	37,189	$	24,310	$	37,146

Condensed Consolidated Statements of Cash Flows

(unaudited)

12 Weeks Ended

(millions of Canadian dollars)

Mar. 28, 2015

Mar. 22, 2014⁽³⁾

Operating Activities

Net earnings

246

164

Income taxes

Net interest expense and other financing charges

177

168

Depreciation and amortization

388

211

Foreign currency translation gain

(66)

(43)

Change in credit card receivables

152

139

Change in non-cash working capital

(361)

(620)

Income taxes paid

(137)

(83)

Interest received

Other

Cash Flows from Operating Activities

517

Investing Activities

Fixed asset purchases

(244)

(117)

Change in short term investments

620

Change in franchise investments and other receivables

Intangible asset additions

(27)

(13)

Investment in joint venture

(1)

Other

(43)

Cash Flows (used in) from Investing Activities

(217)

510

Financing Activities

Change in bank indebtedness

137

Change in Associate interest

(6)

Change in short term debt

(90)

Long term debt

- Issued, net of financing charges

255

469

- Retired

(356)

(326)

Share capital

- Retired

(1)

Loblaw share capital

- Issued

- Purchased and held in trust

(24)

- Retired

(17)

Interest paid

(165)

(148)

Dividends

- To common shareholders

(53)

- To preferred shareholders

(3)

(11)

- To minority shareholders

(25)

Cash Flows used in Financing Activities

(256)

(74)

Effect of foreign currency exchange rate changes on cash and cash equivalents

Change in Cash and Cash Equivalents

452

Cash and Cash Equivalents, Beginning of Period

1,333

2,869

Cash and Cash Equivalents, End of Period

1,393

3,321

2015 FIRST QUARTER REPORT TO SHAREHOLDERS
The Company's 2014 Annual Report and 2015 First Quarter Report to Shareholders are available in the Investor Centre section of the Company's website at www.weston.ca and have been filed with SEDAR and are available online at www.sedar.com.

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

Additional financial information has been filed electronically with various securities regulators in Canada through SEDAR. This News Release includes selected information on Loblaw Companies Limited, a public company with shares trading on the Toronto Stock Exchange. For information regarding Loblaw, readers should also refer to the materials filed by Loblaw with SEDAR 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 Tuesday, May 12, 2015 at 9:00 a.m. (EST). To access via tele-conference, please dial (647) 427-7450. The playback will be available two hours after the event at (416) 849-0833, passcode: 24755058#. To access via audio webcast, please visit the Investor Centre section of www.weston.ca. Pre-registration will be available.

ANNUAL MEETING
The George Weston Limited Annual Meeting of Shareholders will be held on Tuesday, May 12, 2015 at 11:00 a.m. (EST) at The Royal Conservatory, TELUS Centre for Performance and Learning, Koerner Hall, 273 Bloor Street West, Toronto, Ontario, Canada. To access via tele-conference, please dial (647) 427-7450. The playback will be available two hours after the event at (416) 849-0833, passcode: 24792389#. To access via audio webcast, please visit the Investor Centre section of www.weston.ca. Pre-registration will be available.


Endnotes

(1)	See "Non-GAAP Financial Measures" section of this News Release.
(2)	This News Release contains forward-looking information. See Forward-Looking Statements of this News Release for a discussion of material factors that could cause actual results to differ materially from the forecasts and projections herein and of the material factors, estimates, beliefs and assumptions that were applied in presenting the conclusions, forecasts and projections presented herein. This News Release must be read in conjunction with GWL's filings with securities regulators made from time to time, all of which can be found at www.weston.ca and www.sedar.com.
(3)	Certain 2014 figures have been restated. See note 2, "Changes to Significant Accounting Policies" of the Company's unaudited interim period condensed consolidated financial statements, included in the 2015 First Quarter Report to Shareholders.
(4)	Certain 2014 figures have been restated. See note 3, "Acquisition of Shoppers Drug Mart Corporation" of the Company's unaudited interim period condensed consolidated financial statements, included in the 2015 First Quarter Report to Shareholders.

SOURCE George Weston Limited

Geoffrey H. Wilson,
Senior Vice President, Investor Relations,
Business Intelligence and Communications
(416) 922-2500

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