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Reitmans (Canada) Limited Announces Year-End Results

Mar 28, 2007
12:24pm

    Financial statements are attached.

    MONTREAL, March 28 /CNW Telbec/ - Sales for the year ended February 3,
2007 (53 weeks) increased 7.6% to $1,042,509,000 as compared with $969,258,000
for the year ended January 28, 2006 (52 weeks). Comparable store sales for the
53 weeks increased 2.9%. Operating earnings before depreciation and
amortization (EBITDA(1)) increased 20.1% to $186,812,000 as compared with
$155,610,000 last year. Net earnings and diluted EPS, after recording a charge
for retroactive Québec income tax assessments, including interest, of
$20,054,000 or $0.28 per share decreased to $82,469,000 or $1.15 per share as
compared with $84,889,000 or $1.19 per share last year. Excluding the
retroactive Québec income tax assessments, net earnings and diluted EPS for
the year would have increased 20.8% to $102,523,000 or $1.43 per share.
    Sales for the fourth quarter ended February 3, 2007 (14 weeks) increased
10.6% to $282,110,000 as compared with $255,128,000 for the fourth quarter
ended January 28, 2006 (13 weeks). Comparable store sales for the fourteen
weeks increased 1.1% in the period. Operating earnings before depreciation and
amortization (EBITDA(1)) for the period increased 27.9% to $41,921,000 as
compared with $32,778,000 last year. Net earnings and diluted EPS, after
recording an additional interest charge for retroactive Québec income tax
assessments of $476,000 or $0.01 per share increased to $22,957,000 or $0.32
per share as compared to $16,760,000 or $0.23 per share for the period last
year. Excluding the effect of the retroactive Québec income tax assessments,
net earnings and diluted EPS for the period would have increased 39.8% to
$23,433,000 or $0.33 per share.
    During the year, the Company opened 74 new stores and closed 41.
Accordingly, at year-end, there were 920 stores in operation, consisting of
355 Reitmans, 158 Smart Set, 45 RW & CO., 69 Thyme Maternity, 158 Penningtons,
125 Addition Elle and 10 Cassis as compared with a total of 887 stores last
year.
    At the Board of Directors meeting held on March 28, 2007, a quarterly
cash dividend (constituting eligible dividends) of $0.16 per share on all
outstanding Class A non-voting and Common shares of the Company was declared,
payable April 26, 2007 to shareholders of record on April 16, 2007.

    Montreal, March 28, 2007

    Jeremy H. Reitman, President

    Telephone: (514) 385-2630
    Corporate Website: www.reitmans.ca

    All of the statements contained herein, other than statements of fact
that are independently verifiable at the date hereof, are forward-looking
statements. Such statements, based as they are on the current expectations of
management, inherently involve numerous risks and uncertainties, known and
unknown, many of which are beyond the Company's control. Such risks include
but are not limited to: the impact of general economic conditions, general
conditions in the retail industry, seasonality, weather and other risks
included in public filings of the Company. Consequently, actual future results
may differ materially from the anticipated results expressed in
forward-looking statements. The reader should not place undue reliance on the
forward-looking statements included herein. These statements speak only as of
the date made and the Company is under no obligation and disavows any
intention to update or revise such statements as a result of any event,
circumstances or otherwise, except to the extent required under applicable
securities law.

    (1) This release includes reference to certain Non-GAAP Financial
Measures such as operating earnings before depreciation and amortization and
EBITDA, which are defined as earnings before interest, taxes, depreciation and
amortization and investment income. The Company believes such measures provide
meaningful information on the Company's performance and operating results.
However, readers should know that such Non-GAAP Financial Measures have no
standardized meaning as prescribed by GAAP and may not be comparable to
similar measures presented by other companies. Accordingly, they should not be
considered in isolation.

    CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
    (in thousands except per share amounts)

                                         For the                     For the
                             twelve months ended          three months ended
                        February 3,   January 28,   February 3,   January 28,
                              2007          2006          2007          2006

    Sales              $ 1,042,509   $   969,258   $   282,110   $   255,128
    Cost of goods
     sold and selling,
     general and
     administrative
     expenses              855,697       813,648       240,189       222,350
                       ------------  ------------  ------------  ------------
                           186,812       155,610        41,921        32,778
    Depreciation and
     amortization           44,946        38,564        12,448        10,012
                       ------------  ------------  ------------  ------------
    Operating earnings
     before the
     undernoted            141,866       117,046        29,473        22,766
    Investment income       12,556         9,097         3,178         1,647
    Interest on
     long-term debt          1,056         1,132           258           281
                       ------------  ------------  ------------  ------------
    Earnings before
     income taxes          153,366       125,011        32,393        24,132
    Income taxes
      Current               52,693        40,830         8,911         7,664
      Future                (1,850)         (708)           49          (292)
                       ------------  ------------  ------------  ------------
                            50,843        40,122         8,960         7,372
      Québec tax
       assessments -
       current              20,054             -           476             -
                       ------------  ------------  ------------  ------------
                            70,897        40,122         9,436         7,372
                       ------------  ------------  ------------  ------------
    Net earnings        $   82,469   $    84,889   $    22,957   $    16,760
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

    Earnings per share:
      Basic             $     1.17   $      1.22   $      0.32   $      0.24
      Diluted                 1.15          1.19          0.32          0.23


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
    (in thousands)
                                         For the                     For the
                             twelve months ended          three months ended
                        February 3,   January 28,   February 3,   January 28,
                              2007          2006          2007          2006

    Balance at
     beginning of
     the period        $   370,360   $   316,191   $   399,597   $   363,371
    Net earnings            82,469        84,889        22,957        16,760
                       ------------  ------------  ------------  ------------
                           452,829       401,080       422,554       380,131
    Deduct:
      Dividends             40,893        29,345        11,341         8,396
      Premium on
       purchase of
       Class A
       non-voting
       shares                  723         1,375             -         1,375
                       ------------  ------------  ------------  ------------

    Balance at end
     of the period     $   411,213   $   370,360   $   411,213   $   370,360
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
    (in thousands)
                                         For the                     For the
                             twelve months ended          three months ended
                        February 3,   January 28,   February 3,   January 28,
                              2007          2006          2007          2006

    CASH FLOWS FROM
     OPERATING
     ACTIVITIES
      Net earnings     $    82,469   $    84,889   $    22,957   $    16,760
      Adjustments for:
        Depreciation
         and
         amortization       44,946        38,564        12,448        10,012
        Future
         income taxes       (1,850)         (708)           49          (292)
        Stock-based
         compensation        1,314         2,100           330           437
        Amortization
         of deferred
         licensing
         revenue                 -          (167)            -           (17)
        Amortization
         of deferred
         lease credits      (4,042)       (3,652)       (1,071)         (958)
        Deferred lease
         credits             5,875         4,941         1,638         1,566
        Pension expense      1,800           997           792           997
        Pension
         contribution            -          (133)            -          (133)
        (Gain) loss
         on sale of
         marketable
         securities         (2,289)       (2,287)           (9)          371
    Changes in non-cash
     working capital        17,206       (11,385)        8,036        24,582
                       ------------  ------------  ------------  ------------
                           145,429       113,159        45,170        53,325

    CASH FLOWS USED
     IN INVESTING
     ACTIVITIES
      Purchases of
       marketable
       securities           (4,170)      (12,632)         (188)       (5,506)
      Proceeds on
       sale of
       marketable
       securities           13,916        20,982           146         1,993
      Additions to
       capital assets      (63,152)      (58,669)      (16,200)      (17,946)
                       ------------  ------------  ------------  ------------
                           (53,406)      (50,319)      (16,242)      (21,459)

    CASH FLOWS USED
     IN FINANCING
     ACTIVITIES
      Dividends paid       (40,893)      (29,345)      (11,341)       (8,396)
      Purchase of
       Class A
       non-voting
       shares for
       cancellation           (735)       (1,401)             -       (1,401)
      Repayment of
       long-term debt       (1,010)       (1,124)         (258)         (270)
      Issue of
       share capital         3,707         2,490         2,708         1,147
                       ------------  ------------  ------------   -----------
                           (38,931)      (29,380)       (8,891)       (8,920)

    NET INCREASE IN
     CASH AND CASH
     EQUIVALENTS            53,092        33,460        20,037        22,946

    CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF
     THE PERIOD            135,399       101,939       168,454       112,453
                       ------------  ------------  ------------  ------------

    CASH AND CASH
     EQUIVALENTS,
     END OF
     THE PERIOD        $   188,491   $   135,399   $   188,491   $   135,399
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

    Cash and cash equivalents consist of cash balances with banks and
    investments in short-term deposits.


    CONSOLIDATED BALANCE SHEETS (Unaudited)
    (in thousands)
                                                    February 3,   January 28,
                                                          2007          2006
                                   ASSETS

    CURRENT ASSETS
      Cash and cash equivalents                    $   188,491   $   135,399
      Accounts receivable                                3,439         3,135
      Merchandise inventories                           61,834        66,445
      Prepaid expenses                                  21,405         7,471
                                                   ------------   -----------
        Total Current Assets                           275,169       212,450

    INVESTMENTS                                         52,675        60,132

    CAPITAL ASSETS                                     226,734       206,184

    GOODWILL                                            42,426        42,426

    FUTURE INCOME TAXES                                  3,407         1,536

    ACCRUED PENSION ASSET                                    -           505
                                                   ------------  ------------

                                                   $   600,411   $   523,233
                                                   ------------  ------------
                                                   ------------  ------------

                     LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES
      Accounts payable and accrued items           $    85,317   $    81,784
      Income taxes payable                              40,289        14,645
      Future income taxes                                  248             -
      Current portion of long-term debt                  1,076         1,010
                                                   ------------  ------------
        Total Current Liabilities                      126,930        97,439

    DEFERRED LEASE CREDITS                              20,858        19,025

    LONG-TERM DEBT                                      15,097        16,173

    FUTURE INCOME TAXES                                    112           339

    ACCRUED PENSION LIABILITY                            1,295             -

    SHAREHOLDERS' EQUITY
      Share capital                                     21,323        17,374
      Contributed surplus                                3,583         2,523
      Retained earnings                                411,213       370,360
                                                   ------------  ------------
        Total Shareholders' Equity                     436,119       390,257
                                                   ------------  ------------

                                                   $   600,411   $   523,233
                                                   ------------  ------------
                                                   ------------  ------------

    %SEDAR: 00002316EF
For further information: Jeremy H. Reitman, President, (514) 385-2630;
www.reitmans.ca