Interest expense has declined in fiscal 2013 compared to the prior year due to a decrease in short and long-term interest rates partially offset by higher debt levels.
The Company recorded a non-cash gain in the first nine months of fiscal 2013 related to mark-to-market adjustments on an interest rate swap and foreign exchange contracts aggregating approximately $1.1 million compared to a loss of $0.3 million in the prior year. The Company has elected not to apply hedge accounting and accordingly these financial instruments are reflected in the Company's financial statements at fair value each reporting period. These instruments are considered to be effective economic hedges and have enabled management to mitigate the volatility of changing costs and interest rates.
Other income received in fiscal 2013 related to $0.5 million recorded upon expropriation of a small part of the property that surrounds the Company's Port Moody facility. The property is being temporarily used while construction of a rapid transit project takes place. Payments amounting to $2.0 million for the use of the property were received in advance and were recorded as deferred income. The amount received is being reported as other income over the five-year term of the expropriation, which started on July 1, 2012. Other expenses in fiscal 2013 include a $0.3 million fair value adjustment to vines. Other expenses in fiscal 2012 included a $0.6 million fair value adjustment to vines and $0.1 million in maintenance costs for the Company's Port Moody facility.
Net earnings excluding gains (losses) on derivative financial instruments, other expenses, and the related income tax effect of these items for the three and nine months ended December 31, 2012 were $6.3 million and $14.7 million, respectively compared to $6.3 million and $14.3 million in the same periods last year. Net earnings for the third quarter of fiscal 2013 were $6.6 million or $0.47 per Class A Share compared to $6.3 million or $0.46 per Class A Share in the prior year. For the nine months ended December 31, 2012 net earnings were $15.6 million or $1.12 per Class A Share compared to $13.6 million or $0.98 per Class A Share last year. The third quarter of the Company's fiscal year is historically the strongest due to seasonal sales during the period.
Strong Financial Position
Working capital at December 31, 2012 increased to $45.0 million compared to $34.9 million at March 31, 2012. The change related to a larger harvest of grapes due to warmer summer temperatures, higher accounts receivable due to the seasonality of sales, and a reduction in accounts payable and accrued charges. These amounts were partially offset by an increase in bank indebtedness. The Company's debt to equity ratio was 0.85:1 at December 31, 2012 compared to 0.87:1 at March 31, 2012. Shareholders' equity as at December 31, 2012 was $131.0 million or $9.16 per common share compared to $120.6 million or $8.43 per common share as at March 31, 2012. The increase in shareholders' equity is primarily due to higher net earnings for the year partially offset by the payment of dividends.
In the first nine months of fiscal 2013 the Company generated cash from operating activities, after changes in non-cash working capital items, of $6.7 million compared to $0.7 million in the prior year. Cash flow from operating activities has increased in fiscal 2013 due to strong earnings performance, the advance payments received for the use of the Port Moody property, lower income tax installments and a smaller increase in working capital than in the prior year.
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