The Jean Coutu Group-Third Quarter Results
Reports Third Quarter Earnings Before Specific Items and Share of Rite Aid's Loss of $0.15 per share
- Press Release
- Source: The Jean Coutu Group (PJC) Inc.
- On 7:00 am EST, Thursday January 8, 2009
LONGUEUIL, QUEBEC--(MARKET WIRE)--Jan 8, 2009 -- The Jean Coutu Group (PJC) Inc. (Toronto:PJC-A.TO - News) (the "Company" or the "Jean Coutu Group") today reported its financial results for the third quarter and fiscal period ended November 29, 2008.
SUMMARY OF RESULTS
(Unaudited, in millions of Canadian dollars except per share amounts)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Comparable
Year-to-date period
Q3-2009 Q2-2008 (1) Fiscal 2009 2007-2008 (2)
-------------------------------------------------------------------------
Revenues
Canada 620.3 583.0 1,762.1 1,671.7
United States - - - 2,708.9
-------------------------------------------------------------------------
620.3 583.0 1,762.1 4,380.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating income
before amortization
("OIBA")
Canada 60.1 59.0 171.3 168.8
United States - - - 63.4
-------------------------------------------------------------------------
60.1 59.0 171.3 232.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Share of loss of Rite
Aid Corporation 73.9 31.6 200.4 61.2
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
Per share (1.66) 0.04 (1.87) 0.04
Earnings before
specific items and
share of Rite
Aid's loss 36.7 41.5 104.1 99.8
Per share 0.15 0.16 0.43 0.38
(1) The comparative figures used for the third quarter fiscal 2009 results
for the period ended November 29, 2008 are from the comparable 13-week
period ended December 1, 2007, which represented the second quarter of
fiscal 2008.
(2) The comparative figures used for the fiscal period results ended
November 29, 2008 are from the comparable 39-week period ended
December 1, 2007, which included the fourth quarter of fiscal 2007
and the first and second quarters of fiscal 2008.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Related Quotes
| |||||||||
HIGHLIGHTS
- Revenues of the Canadian operations increased by 6.4% to $620.3 million over the comparable 13-week period, which was the second quarter of fiscal 2008 due to the change in the fiscal year-end date.
- OIBA amounted to $60.1 million, an increase of almost 2% despite generic drug price reductions and the decrease in the average wholesaler margin for prescription drug distribution from 6.33% in the second quarter of fiscal 2008 to 6% in the current quarter.
- The Company recorded its share of Rite Aid's loss during the third quarter of fiscal 2009, which amounted to $73.9 million ($0.30 per Jean Coutu Group share). The Company has also recorded a preliminary provision of $357.8 million against the carrying value of its investment in Rite Aid ($1.49 per Jean Coutu Group share).
- During the third quarter of fiscal 2009, the Company purchased 6.1 million Class A subordinate voting shares at an average price of $7.32 per share for a total amount of $44.7 million under a Normal Course Issuer Bid. These shares were cancelled as of November 29, 2008.
Financial results
"Our Canadian network performance during the third quarter was satisfactory. We pursued our growth objective and continued to invest in the PJC drugstore network. We are on our way to achieving significant growth in network selling square footage in fiscal 2009 and increase our leadership in our markets" said Francois J. Coutu, President and Chief Executive Officer. "As required by accounting standards, the Company has recorded in the third quarter a preliminary provision against the carrying value of its investment in Rite Aid following the decline in the trading value of its common share for an extended period. Rite Aid's recently published financial results indicate however an increase of its adjusted EBITDA as well as improved cost controls."
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 third quarter fiscal 2009 ("Q3-2009") results for the period ended November 29, 2008 are from the comparable 13-week period ended December 1, 2007, which was the second quarter of fiscal 2008 ("Q2-2008"). The comparable 39-week period is composed of figures from the fourth quarter of fiscal 2007 and the first and second quarters of fiscal 2008.
Net loss
For the third quarter of fiscal 2009, the net loss amounted to $399.2 million ($1.66 per share) compared with net earnings of $9.5 million ($0.04 per share) for the second quarter of fiscal 2008. The 39-week period net loss amounted to $458.5 million ($1.87 per share) compared with net earnings of $11.4 million ($0.04 per share) for the comparable period. The third quarter's net loss is primarily due to the preliminary provision of $357.8 million related to the investment in Rite Aid. As mentioned in previous interim financial reports, the Company reassessed its position regarding the possible impairment of its Rite Aid investment as required by accounting standards. As a result of the deterioration of the economic environment in the United States, combined with the severity of the decline in the trading value of Rite Aid common shares for an extended period, the Company anticipates performing, during the fourth quarter, a comprehensive analysis related to its investment in Rite Aid. During this third quarter, the Company has recorded a preliminary provision of $357.8 million ($1.49 per share) against the carrying value of its investment. The Company used the discounted future cash flow method in order to estimate the preliminary fair value of its investment. The determination of the ultimate impairment charge, which could be materially different from the provision described above, and the adjustment to the preliminary provision, will be done in the fourth quarter.
Operating income slightly decreased by 0.6% to $53.9 million compared with $54.2 million during the comparable 13-week period. Some elements had an impact on the operating income as opposed to last year's comparable period. The increase in sales and the operations of the Company's subsidiary Pro Doc Ltd had a favourable impact on the operating income. On the other hand, the generic drug price reductions and the decrease in the average wholesaler margin for prescription drug distribution from 6.33% in the second quarter of fiscal 2008 to 6% in the current quarter had a negative impact on the operating income. In addition, there has been an increase in the amortization on incentives paid to franchisees following higher incentive payments that occurred during the 39-week period ended November 29, 2008.
In fiscal 2009, the Company changed its method of invoicing certain vendor revenues from a method mainly based on expense reimbursement to one based on volumes purchased 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 allocated to the cost of goods sold account.
The Company recorded its share of Rite Aid's results during the third quarter of fiscal 2009. The share of Rite Aid's loss in the Company's third quarter fiscal 2009 earnings amounted to $73.9 million ($73.9 million or $0.30 after-tax per Jean Coutu Group share) compared with $31.6 million ($26.1 million or $0.10 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 $36.7 million ($0.15 per share) during the third quarter of fiscal 2009 compared with $41.5 million ($0.16 per share) for the fiscal quarter ended December 1, 2007. Earnings before specific items and the share of Rite Aid's loss amounted to $104.1 million ($0.43 per share) during the first nine months of fiscal 2009 compared with $99.8 million ($0.38 per share) for the comparable period.
Canadian Operations
Retail sales
Retail sales growth percentages quoted herein are based on comparable periods.
During the third quarter, the Company's Canadian franchise network showed a 5.0% increase in total retail sales compared with last year's comparable period. Network retail sales were up 3.2%, pharmacy sales gained 4.5% and front-end sales increased 1.6% year-over-year in terms of comparable stores. Retail sales for the period amounted to $850.0 million.
For the 39-week period, on a same-store basis, total PJC network retail sales increased 3.7%, pharmaceutical sales gained 5.6% and front-end sales increased 0.5% compared with last year.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
RETAIL SALES GROWTH Comparable
Year-to-date period
(Unaudited) Q3-2009 Q2-2008 Fiscal 2009 2007-2008
-------------------------------------------------------------------------
CANADA (1)
Total sales growth
Total 5.0% 6.8% 5.0% 7.0%
Pharmacy 6.5% 9.8% 6.9% 9.2%
Front-end 3.1% 1.1% 1.8% 3.4%
Same store sales growth
Total 3.2% 6.1% 3.7% 6.5%
Pharmacy 4.5% 9.5% 5.6% 8.9%
Front-end 1.6% 0.0% 0.5% 2.5%
(1) Franchised outlets' retail sales are not included in the Company's
consolidated financial statements.
-------------------------------------------------------------------------
-------------------------------------------------------------------------Distribution center sales
Canadian operations distribution center sales amounted to $562.1 million in the third quarter of fiscal 2009 compared with $526.6 million for the fiscal quarter ended December 1, 2007, an increase of 6.7%.
OIBA
OIBA for Canadian operations amounted to $60.1 million in the third quarter of fiscal 2009 compared with $59.0 million for the second quarter of fiscal 2008, an increase of almost 2% despite generic drug price reductions and the decrease in the average wholesaler margin for prescription drug distribution from 6.33% in the second quarter of fiscal 2008 to 6% in the current quarter. The increase in OIBA is mostly attributable to the increase in revenues. OIBA as a percentage of revenues for Canadian operations ended the third quarter at 9.7% compared to 10.1% during the second quarter of fiscal 2008.
OIBA as a percentage of revenues for Canadian operations ended the 39-week period at 9.7% compared with 10.1% for the comparable period.
Store network development
During the third quarter of fiscal 2009, there were 11 store openings including one new store, 4 acquisitions and 6 relocations. As of November 29, 2008, there were 348 stores in the PJC Jean Coutu drugstore network.
Asset Backed Commercial Paper ("ABCP")
In light of the updated information available during the three month period ended November 29, 2008, changes in the credit market conditions and a review of the valuation assumptions taking into account new information, the Company reassessed the fair value of its investments in ABCP.
The discounted cash flows resulted in an estimated fair value of the investment in ABCP of $25.2 million as at November 29, 2008, resulting in an additional loss in value of $3.6 million ($3.7 million for comparable periods) for the 13- and 39-week periods ended on that date. The total loss in value with respect to ABCP recorded is $10.7 million (of which $7.1 million was recorded during the fiscal year ended March 1, 2008), representing approximately 30% of the nominal amount.
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 third quarter of fiscal 2009, the Company purchased 6,099,044 Class A subordinate voting shares at an average price of $7.32 per share for a total amount of $44.7 million. For the 39-week period ended November 29, 2008, the Company purchased 12,311,000 Class A subordinate voting shares at an average price of $7.42 per share for a total amount of $91.4 million and therefore completed the purchase planned for the 12 month period ending July 10, 2009. These shares were cancelled as of November 29, 2008. During fiscal 2008, the Company purchased 13,672,800 Class A subordinate voting shares at an 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.
Dividend
The Board of Directors declared a quarterly dividend of $0.04 per share payable on February 6, 2009 to all holders of Class A shares and holders of Class B shares listed in the Company's shareholder ledger as at January 23, 2009.
Outlook
With operations in Canada and financial flexibility, the Company is well positioned to capitalize on the growth in the drugstore retailing industry. Demographic trends 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 despite the current economic slowdown, 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 third quarter results conference call to be held on January 8, 2009, at 9:00 AM (ET). The toll free call-in number is 1-888-789-9572 - access code 3273575 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 dialling 1-800-408-3053 - access code 3273575 followed by pound sign (#) until February 8, 2009.
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 348 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 more than 4,900 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 Third Quarter Report to Shareholders.
THE JEAN COUTU GROUP (PJC) INC.
Consolidated statements
of earnings 13 weeks 39 weeks
For the periods ended
November 29, 2008 and
December 1, 2007 2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited, in millions
of Canadian dollars,
unless otherwise noted) $ $ $ $
Sales 562.1 526.6 1,588.7 4,210.7
Other revenues 58.2 56.4 173.4 169.9
-------------------------------------------------------------------------
620.3 583.0 1,762.1 4,380.6
Operating expenses
Cost of goods sold 512.5 477.7 1449.4 3,377.0
General and operating
expenses 50.0 47.2 146.4 745.1
Restructuring charges - - - 29.3
Amortization 3.9 3.9 11.9 11.5
-------------------------------------------------------------------------
566.4 528.8 1,607.7 4,162.9
-------------------------------------------------------------------------
Operating income 53.9 54.2 154.4 217.7
Financing expenses 5.1 0.3 7.9 75.9
Adjustment to gain
(gain) on sale of the
retail sales segment - 3.5 - (140.4)
Loss on early debt
retirement - - - 178.9
-------------------------------------------------------------------------
Earnings before the
following items 48.8 50.4 146.5 103.3
Share of loss from
investments subject
to significant
influence 73.9 31.6 200.4 61.2
Allowance for loss
in value of an
investment
subject to
significant influence 357.8 - 357.8 -
Income taxes 16.3 9.3 46.8 30.7
-------------------------------------------------------------------------
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per
share, in dollars
Basic (1.66) 0.04 (1.87) 0.04
Diluted (1.66) 0.04 (1.87) 0.04
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated
statements of
comprehensive income
13 weeks 39 weeks
For the periods ended
November 29, 2008 and
December 1, 2007 2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited, in millions
of Canadian dollars) $ $ $ $
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
Other comprehensive
income (loss)
Foreign currency
translation
adjustments 173.9 (80.9) 258.2 (3.6)
Income taxes on
the above item - 14.1 - 15.1
-------------------------------------------------------------------------
173.9 (66.8) 258.2 11.5
-------------------------------------------------------------------------
Comprehensive income
(loss) (225.3) (57.3) (200.3) 22.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE JEAN COUTU GROUP (PJC) INC.
Consolidated statements
of changes in
shareholders' equity
13 weeks 39 weeks
For the periods ended
November 29, 2008 and
December 1, 2007 2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited, in millions
of Canadian dollars) $ $ $ $
Capital stock,
beginning of period 681.5 789.6 715.4 789.5
Redemption of capital
stock (33.4) (59.4) (67.3) (59.6)
Options exercised - 0.3 - 0.6
-------------------------------------------------------------------------
Capital stock, end
of period 648.1 730.5 648.1 730.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus,
beginning of period 22.3 6.7 16.7 4.5
Stock-based
compensation cost 0.3 - 0.8 2.2
Stock-based
compensation from
investment subject
to significant
influence - Rite Aid 3.6 8.6 8.7 8.6
-------------------------------------------------------------------------
Contributed surplus,
end of period 26.2 15.3 26.2 15.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings,
beginning of period 839.1 1,312.6 930.8 1,333.9
Impact of the adoption
of new accounting
standards - - - (4.5)
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
-------------------------------------------------------------------------
439.9 1,322.1 472.3 1,340.8
Dividends (9.7) (10.3) (29.3) (28.5)
Excess of purchase
price over carrying
value of Class A
subordinate voting
shares acquired (11.3) (86.2) (24.1) (86.7)
-------------------------------------------------------------------------
Retained earnings,
end of period 418.9 1,225.6 418.9 1,225.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive income
(loss), beginning of
period (94.5) (99.4) (178.8) (177.7)
Foreign currency
translation
adjustments, net of
income taxes 173.9 (66.8) 258.2 11.5
-------------------------------------------------------------------------
Accumulated other
comprehensive income
(loss), end of period 79.4 (166.2) 79.4 (166.2)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total shareholders'
equity 1,172.6 1,805.2 1,172.6 1,805.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE JEAN COUTU GROUP (PJC) INC.
As at As at
November 29, March 1,
Consolidated balance sheets 2008 2008
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in millions of Canadian dollars) $ $
(unaudited) (audited)
Assets
Current assets
Accounts receivable 201.0 167.9
Inventories 165.4 154.7
Prepaid expenses 5.4 5.2
-------------------------------------------------------------------------
371.8 327.8
Investments 856.6 1,143.2
Capital assets 361.6 329.3
Goodwill 35.7 35.3
Other long-term assets 142.2 113.7
-------------------------------------------------------------------------
1,767.9 1,949.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 233.9 201.7
Income taxes payable 39.2 62.9
Current portion of long-term debt 3.2 2.0
-------------------------------------------------------------------------
276.3 266.6
Long-term debt 290.2 169.5
Other long-term liabilities 28.8 29.1
-------------------------------------------------------------------------
595.3 465.2
-------------------------------------------------------------------------
Shareholders' equity
Capital stock 648.1 715.4
Contributed surplus 26.2 16.7
Retained earnings 418.9 930.8
Accumulated other comprehensive income (loss) 79.4 (178.8)
-------------------------------------------------------------------------
498.3 752.0
-------------------------------------------------------------------------
1,172.6 1,484.1
-------------------------------------------------------------------------
1,767.9 1,949.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE JEAN COUTU GROUP (PJC) INC.
Consolidated statements
of cash flows 13 weeks 39 weeks
For the periods ended
November 29, 2008 and
December 1, 2007 2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited, in millions
of Canadian dollars) $ $ $ $
Operating activities
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
Items not affecting
cash
Amortization 6.2 4.8 16.9 18.1
Adjustment to gain
(gain) on sale of
the retail sales
segment - 3.5 - (140.4)
Write-off of
deferred financing
fees - - - 67.9
Change in fair value
of third party
asset-backed
commercial paper 3.6 3.7 3.6 3.7
Share of loss from
investments subject
to significant
influence 73.9 31.6 200.4 61.2
Allowance for loss
in value of an
investment subject
to significant
influence 357.8 - 357.8 -
Future income taxes 2.5 (0.2) 7.2 (37.2)
Other 0.9 (3.2) 0.6 12.6
-------------------------------------------------------------------------
45.7 49.7 128.0 (2.7)
Net changes in
non-cash asset and
liability items 22.8 4.9 (35.8) 48.1
-------------------------------------------------------------------------
Cash flow provided by
operating activities 68.5 54.6 92.2 45.4
-------------------------------------------------------------------------
Investing activities
Proceeds of disposal
from the retail
sales segment - (46.1) - 2,404.0
Investments (2.8) (5.6) (3.6) (41.0)
Purchase of capital
assets (19.6) (7.1) (41.0) (32.7)
Proceeds from
disposal of capital
assets 0.5 - 0.8 6.7
Other long-term
assets (13.5) (2.1) (48.8) (2.5)
-------------------------------------------------------------------------
Cash flow provided by
(used in) investing
activities (35.4) (60.9) (92.6) 2,334.5
-------------------------------------------------------------------------
Financing activities
Net change in
revolving credit
facility, net of
costs 21.4 154.2 121.4 154.1
Repayment of
long-term debt (0.1) (0.1) (0.3) (2,381.1)
Issuance of capital
stock - 0.3 - 0.7
Redemption of
capital stock (44.7) (146.3) (91.4) (146.3)
Dividends (9.7) (10.3) (29.3) (28.5)
-------------------------------------------------------------------------
Cash flow provided by
(used in) financing
activities (33.1) (2.2) 0.4 (2,401.1)
-------------------------------------------------------------------------
Effect of foreign
exchange rate changes
on cash and cash
equivalents - (0.1) - (114.6)
-------------------------------------------------------------------------
Decrease in cash and
cash equivalents - (8.6) - (135.8)
Cash and cash
equivalents, beginning
of period - 8.6 - 135.8
-------------------------------------------------------------------------
Cash and cash
equivalents, end of
period - - - -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
THE JEAN COUTU GROUP (PJC) INC.
Consolidated segmented information
For the periods ended November 29, 2008 and December 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 39 weeks
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Revenues (1)
Franchising 620.3 583.0 1,762.1 1,671.7
Retail sales - - - 2,708.9
-------------------------------------------------------------------------
620.3 583.0 1,762.1 4,380.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating income
before amortization
Franchising 60.1 59.0 171.3 168.8
Retail sales - - - 63.4
-------------------------------------------------------------------------
60.1 59.0 171.3 232.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Amortization
Franchising (2) 6.2 4.8 16.9 14.5
Retail sales - - - 82.2
Reversal of
amortization of the
retail sales segment
in consolidation (3) - - - (82.2)
-------------------------------------------------------------------------
6.2 4.8 16.9 14.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating income
Franchising 53.9 54.2 154.4 154.3
Retail sales - - - (18.8)
Reversal of
amortization of the
retail sales segment
in consolidation (3) - - - 82.2
-------------------------------------------------------------------------
53.9 54.2 154.4 217.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(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 39 weeks
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Share of loss from
investments subject to
significant influence
Retail sales (1) 73.9 31.6 200.4 61.2
-------------------------------------------------------------------------
73.9 31.6 200.4 61.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Allowance for loss in
value of an investment
subject to significant
influence
Retail sales (1) 357.8 - 357.8 -
-------------------------------------------------------------------------
357.8 - 357.8 -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital assets paid
Franchising 19.6 7.1 41.0 20.5
Retail sales - - - 12.2
-------------------------------------------------------------------------
19.6 7.1 41.0 32.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at As at
November 29, March 1,
2008 2008
-------------------------------------------------------------------------
$ $
Capital assets and goodwill
Franchising 397.3 364.6
-------------------------------------------------------------------------
397.3 364.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total assets
Franchising 966.9 860.0
Retail sales (1) 801.0 1,089.3
-------------------------------------------------------------------------
1,767.9 1,949.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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.
THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
For the periods ended November 29, 2008 and December 1, 2007
(In millions of Canadian dollars except for margins)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
13 weeks 39 weeks
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Canada
Sales 562.1 526.6 1,588.7 1,505.4
Cost of goods sold 512.5 477.7 1,449.4 1,369.2
-------------------------------------------------------------------------
Gross profit 49.6 48.9 139.3 136.2
As a % of sales 8.8% 9.3% 8.8% 9.0%
Other revenues (1) 60.5 57.3 178.4 169.3
General and operating
expenses 50.0 47.2 146.4 136.7
-------------------------------------------------------------------------
Operating income
before amortization 60.1 59.0 171.3 168.8
Amortization (1) 6.2 4.8 16.9 14.5
-------------------------------------------------------------------------
Operating income 53.9 54.2 154.4 154.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Amortization of incentives paid to franchisees is presented in
amortization instead of being applied against other revenues as in the
consolidated financial statements.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 39 weeks
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
Financing expenses 5.1 0.3 7.9 75.9
Adjustment to gain
(gain) on sale of
the retail sales
segment - 3.5 - (140.4)
Loss on early debt
retirement - - - 178.9
Share of loss from
investments subject
to significant
influence 73.9 31.6 200.4 61.2
Allowance for loss
in value of an
investment subject
to significant
influence 357.8 - 357.8 -
Income taxes 16.3 9.3 46.8 30.7
-------------------------------------------------------------------------
Operating income 53.9 54.2 154.4 217.7
Amortization per
financial statements 3.9 3.9 11.9 11.5
Amortization of
incentives paid to
franchisees (1) 2.3 0.9 5.0 3.0
-------------------------------------------------------------------------
Operating income
before amortization
("OIBA") 60.1 59.0 171.3 232.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Restructuring charges - - - 29.3
-------------------------------------------------------------------------
OIBA before
restructuring charges 60.1 59.0 171.3 261.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Amortization of incentives paid to franchisees is applied against other
revenues in the consolidated financial statements.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) are reconciled hereunder to earnings (loss) before specific items. All amounts are net of income taxes when applicable.
13 weeks 39 weeks
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Net earnings (loss) (399.2) 9.5 (458.5) 11.4
Restructuring charges - - - 17.1
Reversal of
amortization of the
retail sales segment
in consolidation - - - (47.9)
Unrealized foreign
exchange losses on
monetary items 0.6 - 0.8 10.3
Unrealized losses on
derivative financial
instruments - - - 3.1
Adjustment to gain
(gain) on sale of the
retail sales segment - 2.9 - (73.1)
Loss on early debt
retirement - - - 125.0
Change in fair value
of third party
asset-backed
commercial paper 3.6 3.0 3.6 3.0
Allowance for loss
in value of an
investment subject
to significant
influence 357.8 - 357.8 -
-------------------------------------------------------------------------
Earnings (loss)
before specific items (37.2) 15.4 (96.3) 48.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings (loss) per share are reconciled hereunder to earnings (loss)
per share before specific items. All amounts are net of income taxes when
applicable.
13 weeks 39 weeks
2008 2007 2008 2007
-------------------------------------------------------------------------
$ $ $ $
Earnings (loss) per
share (1.66) 0.04 (1.87) 0.04
Restructuring charges - - - 0.07
Reversal of
amortization of the
retail sales
segment in
consolidation - - - (0.18)
Unrealized foreign
exchange losses on
monetary items - - - 0.04
Unrealized losses on
derivative financial
instruments - - - 0.01
Adjustment to gain
(gain) on sale of
the retail sales
segment - 0.01 - (0.28)
Loss on early debt
retirement - - - 0.48
Change in fair value
of third party
asset-backed
commercial paper 0.02 0.01 0.02 0.01
Allowance for loss
in value of an
investment subject
to significant
influence 1.49 - 1.46 -
-------------------------------------------------------------------------
Earnings (loss) per
share before
specific items (0.15) 0.06 (0.39) 0.19
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contact:
Contacts:
Source:
The Jean Coutu Group (PJC) Inc.
Andre Belzile
Senior Vice-President, Finance and Corporate Affairs
450-646-9760
Information:
Helene Bisson
Senior Director, Communication
450-646-9611, Ext. 1165
Related Headlines
- Q2 2010 Jean Coutu Group (PJC) Earnings Release - 07:00 am ET - CCBN
- The Jean Coutu Group-Second Quarter Fiscal Year 2010 Results - Marketwire
- The Jean Coutu Group to Hold Second Quarter 2010 Results Conference Call - Marketwire
- The Jean Coutu Group: First Quarter Fiscal Year 2010 Results - Marketwire
- REMINDER/The Jean Coutu Group (PJC) Inc. Annual General Meeting of Shareholders - Marketwire
Sponsored Links
-
Trade Stocks? Try Currency Trading
Trade in a highly trending market 24-hrs a day, 5.5 days a week. GFT. -
Earn From 1.90% to 2.20% Apply Online
With GE Capital Corporation. Not An Offer Of Securities For Sale.
-
Buy Stocks for $4
No account or investment minimums. No inactivity fees. Start Today. -
Refinance Now at 4.25% Fixed
No hidden fees-4.4% APR! No obligation. Get 4 free quotes. No SSN req.
Tech Ticker Recent Posts
- Billionaire John Paulson's Next Big Bet: Gold - Peter Gorenstein
- "The Greatest Trade Ever": Lessons of John Paulson's $20B Windfall - Aaron Task
- Filling Driver's Seat at GM Won't Be Easy, Just Ask Bank of America - Peter Gorenstein
Add Alert Copyright © 2009 Marketwire. All rights reserved. All the news releases provided by Marketwire are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.