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 fiscal 2013 related to mark-to-market adjustments on an interest rate swap and foreign exchange contracts aggregating approximately $1.3 million compared to a gain 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 during the year.
Other income in fiscal 2013 related primarily to $0.5 million recorded upon expropriation of a small part of the property that surrounds the Company's Port Moody facility. The entire property is being temporarily used, as a staging area, 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 began on July 1, 2012. Other expenses in fiscal 2012 included a $0.4 million fair value adjustment to vines, $0.2 million in maintenance costs for the Company's Port Moody facility, and a one-time charge of approximately $0.4 million related to reassessment of employee payroll taxes from prior periods.
Net earnings excluding the one-time restructuring charge incurred in the fourth quarter of fiscal 2013, gains (losses) on derivative financial instruments, other expenses, and the related income tax effect of these items for the year ended March 31, 2013 were $14.2 million compared to $13.7 million in the prior year.
Net earnings for the year ended March 31, 2013 were $14.8 million or $1.06 per Class A Share compared to $13.0 million or $0.93 per Class A Share in fiscal 2012. Excluding the one-time restructuring charge taken in the fourth quarter of fiscal 2013, net earnings would have been $15.6 million or $1.12 per Class A Share.
Strong Financial Position
Working capital at March 31, 2013 increased to $41.7 million compared to $34.9 million at March 31, 2012. The increase 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 0.83:1 at March 31, 2013 compared to 0.87:1 at March 31, 2012. Shareholders' equity as at March 31, 2013 was $129.4 million or $9.05 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 due to higher net earnings for the year partially offset by the payment of dividends.
In fiscal 2013 the Company generated cash from operating activities, after changes in non-cash working capital items, of $13.3 million compared to $7.0 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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