LONGUEUIL, QUEBEC -- 10/06/08 --
The Jean Coutu Group (PJC) Inc. (the "Company" or the "Jean Coutu Group") (TSX: PJC.A) today reported its financial results for the second quarter and fiscal period ended August 30, 2008.
SUMMARY OF RESULTS
(Unaudited, in millions of Canadian dollars except per share amounts)
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Q2-2009 Q1-2008 (1) Year-to-date Comparable period
2009 2007-2008 (2)
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Revenues
Canada 567.5 540.3 1,141.8 1,088.7
United States - - - 2,708.9
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567.5 540.3 1,141.8 3,797.6
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Operating income
before
amortization
("OIBA")
Canada 56.8 54.1 111.2 109.8
United States - - - 63.4
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56.8 54.1 111.2 173.2
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Share of loss of
Rite Aid
Corporation 73.1 29.6 126.5 29.6
Net earnings
(loss) (39.1) 8.3 (59.3) 1.9
Per share (0.16) 0.03 (0.24) 0.01
Earnings before
specific items
and share of
Rite Aid's
loss 34.2 33.2 67.4 58.3
Per share 0.14 0.12 0.27 0.22
(1) The comparative figures used for the second quarter fiscal 2009 results
for the period ended August 30, 2008 are from the comparable 13-week
period ended September 1, 2007, which represented the first quarter of
fiscal 2008.
(2) The comparative figures used for the fiscal period results ended August
30, 2008 are from the comparable 26-week period ended September 1,
2007, which included the fourth quarter of fiscal 2007 and the first
quarter of fiscal 2008.
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HIGHLIGHTS
- Revenues of the Canadian operations increased by 5.0% to $567.5 million over the comparable 13-week period, which was the first quarter of fiscal 2008 due to the change in the fiscal year-end date.
- The Company recorded its share of Rite Aid's results during the second quarter of fiscal 2009, which amounted to a loss of $73.1 million ($0.30 after-tax per Jean Coutu Group share). Earnings before specific items and share of Rite Aid's loss amounted to $0.14 per share in the second quarter of fiscal 2009 compared with $0.12 per share in the first quarter of fiscal 2008.
- During the second quarter of fiscal 2009, the Company purchased 6.2 million Class A subordinate voting shares at an average price of $7.51 per share for a total amount of $46.7 million under a Normal Course Issuer Bid. These shares were cancelled as of August 30, 2008.
Financial results
"During the second quarter we continued to pursue our growth objective and stepped up the pace of development of the PJC drugstore network, completing a number of initiatives. The Company is well on its way to achieving significant growth in its network selling square footage in fiscal 2009 as we continue to build upon The Jean Coutu Group's position as a leader in pharmacy," said Francois J. Coutu, President and Chief Executive Officer. "Rite Aid took steps to increase its financial flexibility, has largely completed the integration of Brooks Eckerd and announced key appointments to strengthen its senior leadership team."
Presentation of financial statements
The fiscal year ended March 1, 2008 exceptionally contained 38 weeks and 5 days due to the Company's change in fiscal year end. The discussion that follows provides an analysis of the consolidated operating results based on periods in order to provide meaningful analysis for readers. The comparative figures used for discussion and analysis of the Company's second quarter fiscal 2009 ("Q2-2009") results for the period ended August 30, 2008 are from the comparable 13-week period ended September 1, 2007, which was the first quarter of fiscal 2008 ("Q1-2008"). The comparable 26-week period is composed of figures from the fourth quarter of fiscal 2007 and the first quarter of fiscal 2008.
Net loss
For the second quarter of fiscal 2009, the net loss amounted to $39.1 million ($0.16 per share) compared with net earnings of $8.3 million ($0.03 per share) for the first quarter of fiscal 2008. The first six months net loss was $59.3 million ($0.24 per share) compared with net earnings of $1.9 million ($0.01 per share) for the comparable period.
Canadian network sales increased year-over-year and operating income increased by 4.1% to $51.3 million compared with $49.3 million during the comparable 13-week period. Pharmacy script count growth was robust while pharmacy sales growth was impacted by the recent reduction in the prices of generic drugs implemented last fiscal quarter. Operating results were impacted by a change in sales mix and generic drug price reductions.
In fiscal 2009, the Company changed its method of invoicing certain vendor revenues to one based on purchase volumes from the one based principally on expense reimbursement used previously. Consequently, these revenues are now recorded as a reduction of the cost of goods sold account. In fiscal 2008, vendor revenues and expenses related thereto were recorded on a net basis in general and operating expenses, with the excess, if any, in the cost of goods sold account.
As Pro-Doc continues to expand its product offering and grow its sales, the Company expects to reduce the impact of the reduction of the maximum wholesaler margin for prescription drug distribution which was fixed at 6% in February 2008. Increasing revenues and managing expenses as the Company continues its growth under current market conditions is the top priority.
The Company recorded its share of Rite Aid's results during the second quarter of fiscal 2009. The share of Rite Aid's loss in the Company's second quarter fiscal 2009 earnings amounted to $73.1 million ($0.30 after-tax per Jean Coutu Group share) compared with $29.6 million ($24.8 million or $0.09 after tax per Jean Coutu Group share) during the comparable period last fiscal year.
Earnings before specific items and the share of Rite Aid's loss amounted to $34.2 million ($0.14 per share) during the second quarter of fiscal 2009 compared with $33.2 million ($0.12 per share) for the fiscal quarter ended September 1, 2007. Earnings before specific items and the share of Rite Aid's loss amounted to $67.4 million ($0.27 per share) during the first six months of fiscal 2009 compared with $58.3 million ($0.22 per share) for the comparable period.
Canadian Operations
Retail sales
Retail sales growth percentages quoted herein are based on comparable periods.
During the second quarter, the Company's Canadian franchise network showed a 4.9% increase in total retail sales compared with the comparable period. Network retail sales were up 3.6%, pharmacy sales gained 5.7% and front-end sales decreased 0.5% year-over-year in terms of comparable stores. This quarter's front-end sales growth was impacted by inclement weather and a slowdown in consumer spending. Retail sales for the period were $823.6 million.
For the 26-week period, on a same-store basis, total PJC network retail sales advanced 4.0%, pharmaceutical sales gained 6.2% and front-end sales remained level with last year.
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RETAIL SALES GROWTH Q2-2009 Q1-2008 Year-to-date Comparable period
(Unaudited) 2008 2007-2008
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CANADA (1)
Total sales growth
Total 4.9% 7.4% 5.0% 7.2%
Pharmacy 6.9% 9.3% 7.1% 8.9%
Front-end 0.8% 4.5% 1.1% 4.5%
Same store sales
growth
Total 3.6% 7.0% 4.0% 6.7%
Pharmacy 5.7% 9.1% 6.2% 8.7%
Front-end -0.5% 3.7% 0.0% 3.7%
(1) Franchised outlets' retail sales are not included in the Company's
consolidated financial statements.
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Distribution center sales
Canadian operations distribution center sales amounted to $509.9 million in the second quarter of fiscal 2009 compared with $486.1 million for the fiscal quarter ended September 1, 2007, an increase of 4.9%.
OIBA
OIBA for Canadian operations amounted to $56.8 million in the second quarter of fiscal 2009 compared with $54.1 million for the first quarter of fiscal 2008, an increase of 5.0%. The increase in OIBA is attributable to an increase in revenues, a change in sales mix and generic drug price reductions which were offset the increase in the wholesaler margin for prescription drug distribution from 5% in the first quarter of fiscal 2008 to 6% in the current quarter. OIBA as a percentage of revenues for Canadian operations ended the fiscal quarter at 10.0%, the same level as in the first quarter of fiscal 2008.
OIBA as a percentage of revenues for Canadian operations ended the 26-week period at 9.7% compared with 10.1% for the comparable period.
Store network development
During the second quarter of fiscal 2009, there were 8 store openings including five acquisitions and one relocation. On August 30, 2008, there were 343 stores in the PJC Jean Coutu drugstore network.
Rite Aid investment
The Company held a 29.9% equity interest in Rite Aid as of August 30, 2008 and this investment is accounted for under the equity method. Rite Aid reported a net loss for the quarter ended August 30, 2008 of US$222.0 million (US$0.27 per Rite Aid share) compared with US$69.6 million (US$0.10 per Rite Aid share) for the same period the previous fiscal year.
The share of Rite Aid's loss in The Jean Coutu Group's second quarter 2009 earnings amounted to $73.1 million ($0.30 after-tax per Jean Coutu Group share) compared with $29.6 million ($24.8 million or $0.09 after-tax per Jean Coutu Group share) during the first quarter of fiscal 2008.
Normal Course Issuer Bid
On July 8, 2008, the Company announced its intention to purchase for cancellation up to 12,311,000 of its outstanding Class A subordinate voting shares, representing approximately 10% of the current public float of such shares, over a 12-month period ending no later than July 10, 2009.
During the second quarter of fiscal 2009, the Company purchased 6,211,956 Class A subordinate voting shares at an average price of $7.51 per share for a total amount of $46.7 million. These shares were cancelled as of August 30, 2008. During the fiscal 2008, the Company purchased 13,672,800 Class A subordinate voting shares at a weighted average price of $12.93 per share pursuant to a Normal Course Issuer Bid.
The Company has determined that the purchase of its Class A shares allows it to optimize its capital structure and create long-term value for shareholders.
Board of Directors
In late July 2008, M. Erik Peladeau, Vice-Chairman of the Board of Quebecor Inc., announced that he was leaving the Board of Directors of The Jean Coutu Group after 15 years of service. M. Peladeau was a long-serving director, having joined the Board of the Company in 1993. The shareholders and directors are grateful for his contribution to our success.
Dividend
The Board of Directors declared a quarterly dividend of $0.04 per share payable on October 31, 2008 to all holders of Class A shares and holders of Class B shares listed in the Company's shareholder ledger as at October 17, 2008.
Outlook
With operations in Canada, financial flexibility and a significant interest in a United States' drugstore leader, the Company is well positioned to capitalize on the growth in the North American drugstore retailing industry. Demographic trends in Canada and the United States are expected to contribute to growth in the consumption of prescription drugs, and to the increased use of pharmaceuticals as the primary intervention in individual healthcare. Management believes that these trends will continue and that the Company will grow its revenues through differentiation and quality of offering and service levels in its Canadian drugstore network, which it operates with a focus on sales growth, its real estate program and operating efficiency.
Conference call
Financial analysts are invited to attend the second quarter results conference call to be held on October 6, 2008, at 9:00 AM (ET). The toll free call-in number is 1-888-789-9572 - access code 3268761 followed by pound sign (#). Media and other interested individuals are invited to listen to the live or deferred broadcast on The Jean Coutu Group corporate website at www.jeancoutu.com. A full replay will also be available by dialing 1-800-408-3053 - access code 3268761 followed by pound sign (#) until November 7, 2008.
Supporting documentation (Management's discussion and analysis and investor presentation) is available at www.jeancoutu.com using the investors' link. Readers may also access additional information and filings related to the Company using the following link to the www.sedar.com website.
About The Jean Coutu Group
The Jean Coutu Group (PJC) Inc. operates a network of 343 franchised drugstores in Canada located in the provinces of Quebec, New Brunswick and Ontario (under the banners of PJC Jean Coutu, PJC Clinique and PJC Sante Beaute) and employs more than 16,000 people. The Jean Coutu Group is one of the most trusted names in Canadian pharmacy retailing. The Company holds a significant interest in Rite Aid Corporation, one of the United States' leading drugstore chains with approximately 5,000 drugstores in 31 states and the District of Columbia.
This press release contains forward-looking statements, that involve risks and uncertainties, and which are based on the Company's current expectations, estimates, projections and assumptions and were made by The Jean Coutu Group in light of its experience and its perception of historical trends. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, costs, operating or financial results, are forward-looking statements. All statements other than statements of historical facts included in this press release, including, statements regarding the prospects of the Company's industry and the Company's prospects, plans, financial position and business strategy, may constitute forward-looking statements within the meaning of the Canadian securities legislation and regulations. Some of the forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "project", "could", "anticipate," "plan," "foresee," "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although The Jean Coutu Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. These statements do not reflect the potential impact of any non-recurring items or of any mergers, acquisitions, dispositions, asset write-downs or other transactions or charges that may be announced or that may occur after the date hereof. While the below list of cautionary statements is not exhaustive, some important factors that could affect our future operating results, financial position and cash flows and could cause our actual results to differ materially from those expressed in these forward-looking statements are the investment in Rite Aid, general economic, financial or market conditions, the investment in ABCP, the cyclical and seasonal variations in the industry in which we operate, the changes in the regulatory environment as it relates to the sale of prescription drug, the ability to attract and retain pharmacists, the intensity of competitive activity in the industry in which we operate, certain property and casualty risks, risks in connection with third party service providers, technological changes that affect demand for our products and services, labour disruptions, including possibly strikes and labour protests, changes in laws and regulations, or in their interpretations, changes in tax regulations and accounting pronouncements, the success of the Company's business model, the supplier and brand reputations and the accuracy of management's assumptions and other factors that are beyond our control.
These and other factors could cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. Investors and others are cautioned that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that would cause the Company's actual results to differ from current expectations, please also refer to the Company's public filings available at www.sedar.com and www.jeancoutu.com. In particular, further details and descriptions of these and other factors are disclosed in the Company's Annual Information Form under "Risk Factors" and in the "Risks and Uncertainties" section of the Management's Discussion & Analysis. We expressly disclaim any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.
This press release also contains certain non-GAAP financial measures. Such information is reconciled to the most directly comparable financial measures, as set forth in the Management's Discussion & Analysis, included in the Company's Second Quarter Report to Shareholders.
Consolidated statements of earnings
13 weeks 26 weeks
For the periods ended August 30,
2008 and September 1, 2007 2008 2007 2008 2007
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(unaudited, in millions of
Canadian dollars, unless
otherwise noted) $ $ $ $
Sales 509.9 486.1 1,026.6 3,684.1
Other revenues 57.6 54.2 115.2 113.5
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567.5 540.3 1,141.8 3,797.6
Operating expenses
Cost of goods sold 465.1 443.0 936.9 2,899.3
General and operating
expenses 47.0 44.2 96.4 697.9
Restructuring charges - - - 29.3
Amortization 4.1 3.8 8.0 7.6
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516.2 491.0 1,041.3 3,634.1
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Operating income 51.3 49.3 100.5 163.5
Financing expenses 1.5 0.3 2.8 75.6
Adjustment to gain (gain) on
sale of the retail sales
segment - 0.2 - (143.9)
Loss on early debt retirement - - - 178.9
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Earnings before the following
items 49.8 48.8 97.7 52.9
Share of loss from investments
subject to significant
influence 73.1 29.6 126.5 29.6
Income taxes 15.8 10.9 30.5 21.4
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Net earnings (loss) (39.1) 8.3 (59.3) 1.9
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Earnings (loss) per share,
in dollars
Basic (0.16) 0.03 (0.24) 0.01
Diluted (0.16) 0.03 (0.24) 0.01
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Consolidated statements of comprehensive income
13 weeks 26 weeks
For the periods ended August
30, 2008 and September 1, 2007 2008 2007 2008 2007
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(unaudited, in millions of
Canadian dollars) $ $ $ $
Net earnings (loss) (39.1) 8.3 (59.3) 1.9
Other comprehensive income
(loss)
Foreign currency translation
adjustments 72.8 (3.2) 84.3 77.3
Income taxes on the above item - 0.4 - 1.0
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72.8 (2.8) 84.3 78.3
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Comprehensive income 33.7 5.5 25.0 80.2
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The segmented information are an integral part of these unaudited interim
consolidated financial statements.
Consolidated statements of changes in shareholders' equity
13 weeks 26 weeks
For the periods ended August 30,
2008 and September 1, 2007 2008 2007 2008 2007
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(unaudited, in millions of
Canadian dollars) $ $ $ $
Capital stock, beginning
of period 715.4 789.6 715.4 789.5
Redemption of stock (33.9) (0.2) (33.9) (0.2)
Options exercised - 0.2 - 0.3
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Capital stock, end of period 681.5 789.6 681.5 789.6
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Contributed surplus,
beginning of period 19.7 4.8 16.7 4.5
Stock-based compensation cost 0.2 1.9 0.5 2.2
Stock-based compensation from
investment subject to
significant influence -
Rite Aid 2.4 - 5.1 -
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Contributed surplus, end
of period 22.3 6.7 22.3 6.7
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Retained earnings, beginning
of period 900.6 1,319.7 930.8 1,333.9
Impact of the adoption of
new accounting standards - (4.5) - (4.5)
Net earnings (loss) (39.1) 8.3 (59.3) 1.9
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861.5 1,323.5 871.5 1,331.3
Dividends (9.6) (10.4) (19.6) (18.2)
Excess of purchase price over
carrying value of Class A
subordinate voting shares
acquired (12.8) (0.5) (12.8) (0.5)
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Retained earnings, end of
period 839.1 1,312.6 839.1 1,312.6
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Accumulated other
comprehensive income (loss),
beginning of period (167.3) (96.6) (178.8) (177.7)
Foreign currency translation
adjustments, net of income
taxes 72.8 (2.8) 84.3 78.3
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Accumulated other comprehensive
income (loss), end of period (94.5) (99.4) (94.5) (99.4)
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Total shareholders' equity 1,448.4 2,009.5 1,448.4 2,009.5
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The segmented information are an integral part of these unaudited interim
consolidated financial statements.
Consolidated balance sheets As at As at
August 30, March 1,
2008 2008
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(in millions of Canadian dollars) $ $
(unaudited) (audited)
Assets
Current assets
Accounts receivable 173.0 167.9
Inventories 141.2 154.7
Prepaid expenses 6.4 5.2
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320.6 327.8
Investments 1,108.8 1,143.2
Capital assets 343.0 329.3
Goodwill 34.5 35.3
Other long-term assets 145.6 113.7
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1,952.5 1,949.3
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 168.5 201.7
Income taxes payable 35.2 62.9
Current portion of long-term debt 3.4 2.0
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207.1 266.6
Long-term debt 268.2 169.5
Other long-term liabilities 28.8 29.1
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504.1 465.2
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Shareholders' equity
Capital stock 681.5 715.4
Contributed surplus 22.3 16.7
Retained earnings 839.1 930.8
Accumulated other comprehensive income (loss) (94.5) (178.8)
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744.6 752.0
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1,448.4 1,484.1
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1,952.5 1,949.3
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The segmented information are an integral part of these unaudited interim
consolidated financial statements.
Consolidated statements of cash flows
13 weeks 26 weeks
For the periods ended August 30,
2008 and September 1, 2007 2008 2007 2008 2007
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(unaudited, in millions of
Canadian dollars) $ $ $ $
Operating activities
Net earnings (loss) (39.1) 8.3 (59.3) 1.9
Items not affecting cash
Amortization 5.5 4.8 10.7 13.3
Adjustment to gain (gain)
on sale of the retail sales
segment - 0.2 - (143.9)
Write-off of deferred
financing fees - - - 67.9
Share of loss from investments
subject to significant
influence 73.1 29.6 126.5 29.6
Future income taxes 2.6 (1.5) 4.7 (37.0)
Other (0.3) 0.4 (0.3) 15.8
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41.8 41.8 82.3 (52.4)
Net changes in non-cash asset
and liability items (6.4) (23.7) (58.6) 43.2
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Cash flow provided by (used in)
operating activities 35.4 18.1 23.7 (9.2)
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Investing activities
Proceeds of disposal from the
retail sales segment - - - 2,450.1
Investments 0.4 (35.2) (0.8) (35.4)
Purchase of capital assets (7.1) (5.8) (21.4) (25.6)
Proceeds from disposal of
capital assets 0.1 1.3 0.3 6.7
Other long-term assets (24.5) - (35.3) (0.4)
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Cash flow provided by
(used in) investing
activities (31.1) (39.7) (57.2) 2,395.4
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Financing activities
Net change in revolving
credit facility, net of
costs 52.0 (0.1) 100.0 (0.1)
Repayment of long-term debt - (0.2) (0.2) (2,381.0)
Issuance of capital stock - 0.2 - 0.4
Redemption of capital stock (46.7) - (46.7) -
Dividends (9.6) (10.4) (19.6) (18.2)
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Cash flow provided by (used in)
financing activities (4.3) (10.5) 33.5 (2,398.9)
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Effect of foreign exchange
rate changes on cash
and cash equivalents - - - (114.5)
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Decrease in cash and cash
equivalents - (32.1) - (127.2)
Cash and cash equivalents,
beginning of period - 40.7 - 135.8
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Cash and cash equivalents,
end of period - 8.6 - 8.6
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The segmented information are an integral part of these unaudited interim
consolidated financial statements.
Consolidated segmented information
For the periods ended August 30, 2008 and September 1, 2007
(unaudited, in millions of Canadian dollars)
The Company has two reportable segments: franchising and retail sales. Within the franchising segment, the Company carries on the franchising activity of the "PJC Jean Coutu" banner, operates two distribution centres and coordinates several other services for the benefit of its franchisees. During the fiscal year 2007, the Company also operated in the retail sales segment through outlets selling pharmaceutical and other products under the "Brooks" and "Eckerd" banners. On June 4, 2007, the Company sold its interest in the "Brooks" and "Eckerd" outlets for cash and an equity interest in Rite Aid Corporation ("Rite Aid"). As a result, the Company's retail sales segment is represented by the investment in Rite Aid.
The Company analyzes the performance of its operating segments based on their operating income before amortization, which is not a measure of performance under Canadian generally accepted accounting principles ("GAAP"). However, management uses this performance measure for assessing the operating performance of its reportable segments.
Segmented information is
summarized as follows: 13 weeks 26 weeks
2008 2007 2008 2007
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$ $ $ $
Revenues (1)
Franchising 567.5 540.3 1,141.8 1,088.7
Retail sales - - - 2,708.9
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567.5 540.3 1,141.8 3,797.6
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Operating income before
amortization
Franchising 56.8 54.1 111.2 109.8
Retail sales - - - 63.4
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56.8 54.1 111.2 173.2
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Amortization
Franchising (2) 5.5 4.8 10.7 9.7
Retail sales - - - 82.2
Reversal of amortization
of the retail sales segment
in consolidation (3) - - - (82.2)
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5.5 4.8 10.7 9.7
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Operating income
Franchising 51.3 49.3 100.5 100.1
Retail sales - - - (18.8)
Reversal of amortization
of the retail sales segment
in consolidation (3) - - - 82.2
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51.3 49.3 100.5 163.5
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(1) Revenues include sales and other revenues.
(2) Including amortization of incentives paid to franchisees.
(3) For the period from August 23, 2006 to June 4, 2007, the Company ceased
amortizing the assets related to its US operations since they were
classified as assets held for sale.
13 weeks 26 weeks
2008 2007 2008 2007
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$ $ $ $
Share of loss from investments
subject to significant
influence
Retail sales (1) 73.1 29.6 126.5 29.6
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73.1 29.6 126.5 29.6
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Capital assets paid
Franchising 7.1 5.8 21.4 13.4
Retail sales - - - 12.2
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7.1 5.8 21.4 25.6
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As at As at
August 30, March 1,
2008 2008
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$ $
Capital assets and goodwill
Franchising 377.5 364.6
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377.5 364.6
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Total assets
Franchising 900.3 860.0
Retail sales (1) 1,052.2 1,089.3
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1,952.5 1,949.3
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The Company's revenues, capital assets and goodwill as well as total assets
for the geographic areas of Canada and the United States correspond to the
franchising and retail sales segments respectively.
(1) Represents the Company's equity investment in Rite Aid.
Unaudited additional information
For the periods ended August 30, 2008 and September 1, 2007
(In millions of Canadian dollars except for margins)
13 weeks 26 weeks
2008 2007 2008 2007
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$ $ $ $
Canada
Sales 509.9 486.1 1,026.6 978.8
Cost of goods sold 465.1 443.0 936.9 891.5
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Gross profit 44.8 43.1 89.7 87.3
As a % of sales 8.8% 8.9% 8.7% 8.9%
Other revenues (1) 59.0 55.2 117.9 112.0
General and operating
expenses 47.0 44.2 96.4 89.5
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Operating income before
amortization 56.8 54.1 111.2 109.8
Amortization (1) 5.5 4.8 10.7 9.7
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Operating income 51.3 49.3 100.5 100.1
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(1) Amortization of incentives paid to franchisees is presented in
amortization instead of being applied against other revenues as in the
consolidated financial statements.
THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
For the periods ended August 30, 2008 and September 1, 2007
(In millions of Canadian dollars)
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Non-GAAP measures - Operating income before amortization ("OIBA") and OIBA before restructuring charges
OIBA and OIBA before restructuring charges are not measures of performance under Canadian generally accepted accounting principles ("GAAP"); however, management uses those performance measures in assessing the operating and financial performance of its reportable segments. Besides, we believe that OIBA and OIBA before restructuring charges are additional measures used by investors to evaluate operating performance and capacity of a company to meet its financial obligations.
However, OIBA and OIBA before restructuring charges are not and must not be used as alternatives to net earnings or cash flow generated by operating activities as defined by GAAP. OIBA and OIBA before restructuring charges are not necessarily indications that cash flow will be sufficient to meet our financial obligations. Furthermore, our definitions of OIBA and OIBA before restructuring charges may not be necessarily comparative to similar measures reported by other companies.
Net earnings (loss), which is a performance measure defined by GAAP, is reconciled hereunder with OIBA and OIBA before restructuring charges.
13 weeks 26 weeks
2008 2007 2008 2007
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$ $ $ $
Net earnings (loss) (39.1) 8.3 (59.3) 1.9
Financing expenses 1.5 0.3 2.8 75.6
Adjustment to gain (gain)
on sale of the retail sales
segment - 0.2 - (143.9)
Loss on early debt retirement - - - 178.9
Share of loss from investments
subject to significant
influence 73.1 29.6 126.5 29.6
Income taxes 15.8 10.9 30.5 21.4
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Operating income 51.3 49.3 100.5 163.5
Amortization per financial
statements 4.1 3.8 8.0 7.6
Amortization of incentives
paid to franchisees (1) 1.4 1.0 2.7 2.1
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Operating income before
amortization ("OIBA") 56.8 54.1 111.2 173.2
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Restructuring charges - - - 29.3
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OIBA before restructuring
charges 56.8 54.1 111.2 202.5
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(1) Amortization of incentives paid to franchisees is applied against other
revenues in the consolidated financial statements.
Unaudited additional information
For the periods ended August 30, 2008 and September 1, 2007
(In millions of Canadian dollars except per share amounts)
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Non-GAAP measures - Earnings (loss) before specific items or earnings (loss) per share before specific items
Earnings (loss) before specific items and earnings (loss) per share before specific items are non-GAAP measures. The Company believes that it is useful for investors to be aware of significant items of an unusual or non-recurring nature that have adversely or positively affected its GAAP measures, and that the above-mentioned non-GAAP measures provide investors with a measure of performance with which to compare its results between periods without regard to these items. The Company's measures excluding certain items have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation.
Net earnings (loss) and earnings (loss) per share are reconciled hereunder to earnings (loss) before specific items and earnings (loss) per share before specific items. All amounts are net of income taxes when applicable.
13 weeks 26 weeks
2008 2007 2008 2007
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$ $ $ $
Net earnings (loss) (39.1) 8.3 (59.3) 1.9
Restructuring charges - - - 17.1
Reversal of amortization
of the retail sales segment
in consolidation - - - (47.9)
Unrealized foreign exchange
losses (gains) on monetary
items 0.2 (0.1) 0.2 10.3
Unrealized losses on
derivative financial
instruments - - - 3.1
Adjustment to gain (gain)
on sale of the retail sales
segment - 0.2 - (76.0)
Loss on early debt retirement - - - 125.0
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Earnings (loss) before specific
items (38.9) 8.4 (59.1) 33.5
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Earnings (loss) per share (0.16) 0.03 (0.24) 0.01
Restructuring charges - - - 0.06
Reversal of amortization of
the retail sales segment
in consolidation - - - (0.18)
Unrealized foreign exchange
losses (gains) on monetary
items - - - 0.04
Unrealized losses on
derivative financial
instruments - - - 0.01
Adjustment to gain (gain)
on sale of the retail sales
segment - - - (0.29)
Loss on early debt retirement - - - 0.48
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Earnings (loss) per share
before specific items (0.16) 0.03 (0.24) 0.13
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Contacts:
Source: The Jean Coutu Group (PJC) Inc.
Andre Belzile
Senior Vice-President, Finance and Corporate Affairs
450-646-9760
Information:
Michael Murray
Director, Investor Relations
450-646-9611, Ext. 1068
Helene Bisson
Director, Public Relations
450-646-9611, Ext. 1165
