Danier Leather Reports Fiscal 2005 Fourth Quarter And Year-End Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Danier Leather Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :DL.SV) today announced its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial results for the fourth quarter and 52 weeks ended June June: see month. 25, 2005.
Highlights ($000s, expert per share data):
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13 Weeks Ended 52 Weeks Ended
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June 25, June 26, June 25, June 26,
2005 2004 2005 2004
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Sales $25,455 $28,918 $166,350 $175,270
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Net Earnings (Loss) ($3,160) ($12,504) ($185) ($7,097)
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Adjusted Net Earnings
(Loss)(1) ($916) ($757) $4,849 $5,466
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Litigation Provision and
Related Expenses $3,098 $15,450 $3,098 $15,450
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Loss (Profit) from
Discontinued Operations ($22) $371 $2,768 $1,187
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EPS Basic (loss) ($0.48) ($1.81) ($0.03) ($1.03)
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Weighted Average Number
of Shares Outstanding
(Basic) 6,545,055 6,923,125 6,726,658 6,920,447
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Number of Stores(a) 95 95 95 95
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Square Footage(a) 371,954 372,156 371,954 372,156
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(a)At fiscal year-end
HIGHLIGHTS - Results impacted by additional litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. provision - Results also impacted by costs related to discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of U.S. operations - Cash of $21.2 million and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. and working capital of $44.3 million "The results from our most recent quarter and fiscal 2005 were under plan," said Jeffrey Wortsman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Danier Leather. "We have, however, already begun to implement a number of operational changes that we believe will improve Danier's performance. The Company's operating and marketing plans for next fall will focus on elevating the Danier brand, better differentiate differentiate /dif·fer·en·ti·ate/ (dif?er-en´she-at) 1. to distinguish, on the basis of differences. 2. to develop specialized form, character, or function differing from that surrounding it or from the original. power centre stores from shopping mall shopping mall or shopping centre Collection of independent retail stores, services, and parking areas constructed and maintained by a management firm as a unit. It is a 20th-century adaptation of the historical marketplace. In the U.S. stores, place less reliance on price promotions and further strengthen relationships with existing customers through relationship marketing." A number of factors can be cited as affecting Danier's results over the past quarter and fiscal year. Among them are weaker consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. on leather outerwear, shifting consumer tastes to non-leather materials like microfibre and denim, unseasonably warm temperatures in the run-up run-up or run·up n. An often sudden increase: a run-up in interest rates; a run-up in food prices; a run-up in house values. Noun 1. to Christmas Christmas [Christ's Mass], in the Christian calendar, feast of the nativity of Jesus, celebrated in Roman Catholic and Protestant Churches on Dec. 25. In liturgical importance it ranks after Easter, Pentecost, and Epiphany (Jan. 6). and Boxing Day, which are the most crucial sales periods of the year for the Company and weaker than expected response to the Company's promotions. During March 2005, Danier announced that it would discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: its U.S. operations which consisted of 3 stores. Financial results have been restated to reflect the discontinuance of the U.S. operations. Revenues in the fourth quarter decreased by $3.5 million, or 12%, to $25.5 million. Comparable store sales decreased by 13% with both mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. stores and power centre locations experiencing a 13% comparable store sales decrease. Results for the quarter were impacted by an increase in the litigation provision in connection with the class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax . The Company appealed the Trial Court's decision and the appeal was heard by the Ontario Court of Appeal The Court of Appeal for Ontario (frequently referred to as Ontario Court of Appeal) is headquartered in downtown Toronto, in historic Osgoode Hall. The Court is composed of 22 judges who hear over 1 500 appeals each year, on issues of private law, constitutional during June 2005. The Court reserved its decision and it is not anticipated that the Court's determination will be made before the fall of 2005. The payment of any damages and costs awarded by the trial judge is stayed pending the determination of the appeal. Adjusted net loss for the fourth quarter of 2005 (before litigation provision and related expenses and loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ) was $0.9 million ($0.14 per share) compared with $0.8 million ($0.11 per share) during the fourth quarter of 2004. Revenues for fiscal 2005 decreased by 5%, or $8.9 million, to $166.4 million. Comparable stores sales decreased by 6%. Mall stores comparable store sales decreased 4% and power centre location comparable store sales decreased 8%. Adjusted net earnings for fiscal 2005 (before litigation provision and related expense and loss from discontinued operations) were $4.8 million ($0.72 per share) compared with $5.5 million ($0.79 per share) during fiscal 2004. Net loss including discontinued operations and litigation provision and related expenses for fiscal 2005 was $0.2 million ($0.03 per share) compared with a net loss of $7.1 million ($1.03 per share) in fiscal 2004. Gross profit as a percentage of revenue increased to 50.2% in 2005, compared with 49.4% in 2004, an increase due to the stronger Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents , which reduced the landed cost of merchandize imported from Asia. Danier maintained a strong financial position at year-end with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $21.2 million in cash, compared with $22.6 in 2004, no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. and a working capital balance of $44.3 million, compared with $44.2 million at the end of last year. Inventory of $29.0 million was similar to last year's level of $29.5 million. Quarterly Dividend and Share Buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may Danier continues to focus on creating shareholder value. During 2005, Danier initiated a quarterly cash dividend of 6-cents per share. Danier also used its strong cash position to purchase for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. 402,400 subordinate voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. for cash consideration of approximately $4.6 million. About Danier Danier Leather Inc. is a leading integrated designer, manufacturer, and retailer of high-quality leather and suede clothing Noun 1. suede cloth - a fabric made to resemble suede leather suede cloth, fabric, textile, material - artifact made by weaving or felting or knitting or crocheting natural or synthetic fibers; "the fabric in the curtains was light and semitransparent"; and accessories. The Company's merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain is marketed exclusively under the well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. Danier brand name and is available only at its 95 shopping mall, street-front, and power centre stores, or through its corporate sales division and online through its website, www.danier.com. Note: This press release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks, estimates, and uncertainties. Therefore, actual results may differ materially. Examples of such risks and uncertainties include those associated with product sales, demand for Danier's products, availability of raw materials, foreign sourcing and manufacturing, estimates of damages, costs and interest associated with the class action lawsuit, continued growth of the leather apparel industry, and competition and other associated risks with Danier's business. For an expanded discussion of risks and uncertainties, please see the documents filed by Danier Leather Inc. with the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. . Danier disclaims any responsibility to update or revise such forward-looking statements whether as a result of new information, future events or otherwise. (1) Adjusted net earnings (loss) is net earnings (loss) before discontinued operations, litigation provision and related expenses and income tax recovery related to the litigation provision and related expenses and is calculated as outlined in the following table.
13 weeks ended Year Ended
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Jun 25, Jun 26, Jun 25, Jun 26,
2005 2004 2005 2004
Net loss ($3,160) ($12,504) ($185) ($7,097)
Add: Loss from
discontinued operations (22) 371 2,768 1,187
Add: Litigation provision
and related expenses 3,098 15,450 3,098 15,450
Less: Income tax recovery
on litigation provision
and related expenses (832) (4,074) (832) (4,074)
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Adjusted net earnings (loss) ($916) ($757) $4,849 $5,466
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Investors, analysts and the media are invited to participate in a conference call today at 4:30 PM Eastern Time to discuss the results. Please dial 416-695-7896 in the Toronto area or 1-877-323-2093 (rest of Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and the U.S.) and quote the Danier Leather Inc. conference call with chairperson chairperson Chairman The head of an academic department. See 'Chair.', Cf Chief. Jeffrey Wortsman at least five minutes prior to the call. The call will also be webcast at www.danier.com or at www.ccnmatthews.com.
DANIER LEATHER INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND RETAINED EARNINGS
(thousands of dollars, except per share amounts)
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For the 13 Weeks Ended For the Year Ended
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June 25, June 26, June 25, June 26,
2005 2004 2005 2004
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(unaudited)(unaudited)
Revenue $ 25,455 $ 28,918 $ 166,350 $ 175,270
Cost of sales (Note 8) 12,833 14,321 82,863 88,742
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Gross profit 12,622 14,597 83,487 86,528
Selling general and
administrative expenses
(Note 8) 15,313 15,963 77,215 77,812
Interest (income) (131) (120) (340) (18)
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Earnings (loss) before
income taxes and
undernoted item (2,560) (1,246) 6,612 8,734
Litigation provision and
related expenses (Note 10) 3,098 15,450 3,098 15,450
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Earnings (loss) before
discontinued operations
and income taxes (5,658) (16,696) 3,514 (6,716)
Provision for income
taxes (Note 9) (2,476) (4,563) 931 (806)
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Net earnings (loss)
before discontinued
operations $ (3,182) $ (12,133) $ 2,583 $ (5,910)
Income (loss) from
discontinued operations
(Note 2) 22 (371) (2,768) (1,187)
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Net loss $ (3,160) $ (12,504) $ (185) $ (7,097)
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Retained earnings,
beginning of period $ 35,767 $ 49,406 $ 36,902 $ 43,999
Share purchases (Note 7(c)) - - (2,883) -
Dividends (393) - (1,620) -
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Retained earnings, end of
period $ 32,214 $ 36,902 $ 32,214 $ 36,902
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Net earnings (loss) per
share before discontinued
operations:
Basic ($0.49) ($1.75) $0.38 ($0.85)
Diluted n/a n/a $0.38 n/a
Net earnings (loss) per
share:
Basic ($0.48) ($1.81) ($0.03) ($1.03)
Diluted n/a n/a n/a n/a
Weighted average number
of shares outstanding:
Basic 6,545,055 6,923,125 6,726,658 6,920,447
Diluted 6,590,567 6,971,507 6,790,056 6,978,904
DANIER LEATHER INC.
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
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June 25, June 26,
2005 2004
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ASSETS
Current Assets
Cash $ 21,193 $ 22,576
Accounts receivable 594 626
Income taxes recoverable 939 -
Inventories (Note 3) 29,031 29,483
Prepaid expenses 516 903
Assets of discontinued operations
(Note 2) 23 884
Future income tax asset (Note 9) 159 107
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52,455 54,579
Other Assets
Capital assets (Note 4) 25,314 28,891
Goodwill (Note 5) 342 342
Assets of discontinued operations
(Note 2) - 1,321
Future income tax asset (Note 9) 5,254 4,736
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$ 83,365 $ 89,869
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LIABILITIES
Current Liabilities
Accounts payable and accrued
liabilities $ 8,170 $ 9,355
Income taxes payable - 952
Liabilities of discontinued operations
(Note 2) - 70
---------- -------------
8,170 10,377
Accrued litigation provision
and related expenses (Note 10) 18,000 15,450
Deferred lease inducements 1,838 2,283
Future income tax liability (Note 9) 420 472
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28,428 28,582
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SHAREHOLDERS' EQUITY
Share capital (Note 7) 22,493 24,166
Contributed surplus 230 219
Retained earnings 32,214 36,902
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54,937 61,287
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$ 83,365 $ 89,869
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DANIER LEATHER INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(thousands of dollars)
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For the 13 Weeks Ended For the Year Ended
June 25, June 26, June 25, June 26,
2005 2004 2005 2004
----------------------- -------------------
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss $ (3,160) $ (12,504) $ (185) $ (7,097)
Items not affecting cash:
-------------------------
Amortization - continuing
operations (Note 8) 1,323 767 6,216 5,771
Amortization - discontinued
Operations (Note 8) - 61 1,330 316
Amortization of deferred
lease inducements (150) (124) (445) (404)
Loss on disposal of
capital assets - 696 - 696
Stock based compensation 11 219 11 219
Accrued litigation
provision and
related expenses 2,777 15,271 2,550 14,241
Future income taxes (788) (3,998) (622) (4,023)
Net change in non-cash
working capital items
(Note 11) 962 835 (2,205) 8,285
Discontinued operations
(Note 2) 146 188 791 (380)
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Cash flows from operating
activities 1,121 1,411 7,441 17,624
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FINANCING ACTIVITIES
Subordinate voting shares
issued 13 171 27 171
Subordinate voting shares
repurchased (Note 7) - - (4,583) -
Dividends (393) - (1,620) -
Proceeds from lease
inducements - 85 - 449
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Cash flows from financing
activities (380) 256 (6,176) 620
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INVESTING ACTIVITIES
Acquisition of capital
assets (213) (460) (2,648) (2,749)
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Cash flows from investing
activities (213) (460) (2,648) (2,749)
----------------------- -------------------
Increase/(decrease)
in cash 528 1,207 (1,383) 15,495
Cash, beginning of period 20,665 21,369 22,576 7,081
----------------------- -------------------
Cash, end of period $ 21,193 $ 22,576 $21,193 $ 22,576
----------------------- -------------------
----------------------- -------------------
Supplementary cash flow
information:
Interest paid - - 3 223
Income taxes paid 826 333 3,846 2,376
DANIER LEATHER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 25, 2005 and June 26, 2004
1. Significant Accounting Policies: The consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). (a) Basis of consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. companies. On consolidation, all intercompany transactions Intercompany transaction Transaction carried out between two units of the same corporation. and balances have been eliminated. (b) Year-end: The fiscal year end of the Company consists of a 52 or 53 week period ending on the last Saturday Saturday: see week; Sabbath. in June each year. The fiscal year for the financial statements presented is the 52-week period ended June 25, 2005, and comparably the 52-week period ended June 26, 2004. (c) Revenue recognition: Revenue includes sales to customers through stores operated by the Company and sales to corporate customers through the Company's direct sales division. Sales to customers through stores operated by the Company are recognized at the time the transaction is entered into the point-of-sale point of sale n. pl. points of sale A business or place where a product or service can be purchased. Also called point of purchase. point register net of returns. Sales to corporate customers are recognized at the time of shipment. (d) Cash: Cash consists of cash on hand, bank balances, and money market investments with maturities of three months or less. (e) Inventories: Inventories are valued at the lower of cost or market lower of cost or market A method for determining an asset's value such that either the original cost or the current replacement cost, whichever is lowest, is used for financial reporting purposes. . Cost is determined using the weighted average cost method. For finished goods and work-in-process, market is defined as net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. ; for raw materials, market is defined as replacement cost. (f) Capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) : Capital assets are recorded at cost and annual amortization is provided using the declining balance method Declining Balance Method A common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in as follows: Building 4% Furniture and equipment 20% Computer hardware and software 30% Leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. are amortized on a straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis over the term of the lease, unless the Company has decided to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. the lease, at which time the unamortized balance is written off. (g) Goodwill: Goodwill represents the excess of the cost of acquisition over the fair market value of the identifiable assets acquired. Goodwill is not amortized, but is tested for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. at least annually at year-end. If required, any impairment in the value of goodwill would be written off against earnings. (h) Deferred lease inducements: Deferred lease inducements represent cash benefits received from landlords pursuant to store lease agreements. These lease inducements are amortized against rent expense over the term of the lease, not exceeding 10.5 years. (i) Store opening costs: Expenditures associated with the opening of new stores, other than furniture and fixtures, equipment, and leasehold improvements are expensed as incurred. (j) Income taxes: Income taxes are determined using the asset and liability method of accounting. This method recognizes future tax assets and liabilities that arise from differences between the accounting basis of the Company's assets and liabilities and their corresponding tax basis. Future taxes are measured using tax rates expected to apply when the asset is realized or the liability settled. (k) Earnings per share: Earnings per share are calculated using the weighted average number of shares outstanding during the year (see Note 7). The treasury stock method is used to calculate diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . The treasury stock method computes the number of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. shares by assuming the outstanding stock options exercisable at exercise prices below the average monthly market price are exercised during the fiscal year and then that number of incremental shares is reduced by the number of shares that could have been repurchased from the issuance proceeds, using the average monthly market price of the Company's shares during the fiscal year. (l) Translation of foreign currencies: Subsidiary accounts and accounts in foreign currencies are translated into Canadian dollars. Monetary balance sheet items are translated at the rates of exchange in effect at year-end and non-monetary items are translated at historical exchange rates. Revenues and expenses (other than amortization, which is translated at the same average rate as the capital assets) are translated at the rates in effect on the transaction dates or at the average rates of exchange for the reporting period. The resulting net gain or loss is included in the statement of earnings. (m) Financial instruments: From time-to-time the Company utilizes derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments in the management of its foreign currency exposure. Derivative financial instruments are not used for trading purposes. Accounting guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. (AcG 13) was implemented June 29, 2003 on a prospective basis. There was no impact on the current year. (n) Stock option plan: The Company has a Stock Option Plan which is described in Note 7 where options to purchase Subordinate Voting Shares are issued to directors, officers and employees. In the year ended June 26, 2004 the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. (CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) ) amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. Handbook
This article is about reference works. For the subnotebook computer, see .
A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on and is recognized as an expense over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period of the stock option. The Company continues to use settlement accounting to account for stock options granted prior to June 29, 2003. In accordance with the prospective method of adoption of the new standard, no compensation expense is recognized for options granted prior to fiscal 2004. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma disclosures relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc net earnings per share figures, as if the fair value method had been used for awards granted during fiscal 2003, are presented in Note 7(d). (o) Restricted Share Units and Deferred Share Units: The Company has restricted share unit ("RSU RSU Restricted Stock Unit RSU Rogers State University (Claremore, Oklahoma) RSU Rifiuti Solidi Urbani (Italiano) RSU Rappresentanza Sindacale Unitaria (Italian Group of Unions) ") and deferred share unit ("DSU 1. (communications) DSU - Data Service Unit. 2. DSU - Disk Subsystem Unit (Artecon). 3. (humour) DSU - Dwarf Storage Unit. ") Plans, which are described in Note 7. RSU and DSU Plans are settled in cash and are recorded as liabilities. The measurement of the liability and compensation expense for these awards is based on the fair value of the award, and is recorded as a charge to selling, general and administrative ("SG&A") expenses over the vesting period of the award. Changes in the Company's payment obligation subsequent to vesting of the award and prior to the settlement date are recorded as a charge to SG&A expenses in the period incurred. (p) Use of estimates: The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets Contingent Asset An asset in which the possibility of ownership depends solely upon future events uncontrollable by the company. Notes: An example might be a settlement from a lawsuit. See also: Asset, Balance Sheet, Contingent Liability, Liability and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on management's best knowledge of current events and actions that the Company may undertake in the future. Significant areas requiring the use of management estimates relate to the determination of litigation award reserves, inventory valuation, realizable value of capital assets, future tax assets, and income tax provisions. By their nature, these estimates are subject to measurement uncertainty and the impact on the consolidated financial statements of future periods could differ materially from those estimated. (q) Comparative figures: Certain amounts included in the June 26, 2004 comparative figures were reclassified to conform with the current year's financial statement presentation. Reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of these amounts had no effect on previously reported shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. or net earnings. 2. Discontinued Operations (thousands of dollars): In March 2005 the Company announced that it would discontinue its U.S. operations, which consisted of 3 shopping mall stores. On March 31, 2005, two of the U.S. shopping mall locations located on Long Island, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of were closed. The third store located in Paramus, New Jersey Paramus (IPA: /pəˈræməs/) is a borough in Bergen County, New Jersey, United States. As of the United States 2000 Census, the borough population was 25,737. was closed in April 2005. Financial results for the periods presented were restated to reflect the discontinuance of the U.S. operations. The results of discontinued operations were as follows:
13 weeks ended Year Ended
------------------- -------------------
Jun 25, Jun 26, Jun 25, Jun 26,
2005 2004 2005 2004
------------------- -------------------
Sales ($3,160) $429 $2,347 $2,845
------------------- -------------------
Operating profit (loss) 39 (371) (1,288) (1,187)
Write-down of capital assets - - (1,075) -
Lease and employee
termination costs (17) - (405) -
------------------- -------------------
Profit (loss) from
discontinued operations $22 ($371) ($2,768) ($1,187)
------------------- -------------------
------------------- -------------------
The net assets of discontinued operations are summarized as follows:
June 25, 2005 June 26, 2004
-------------- --------------
Current assets $ 23 $ 884
Capital assets - 1,321
-------------- --------------
23 2,205
Current liabilities - 70
-------------- --------------
Net assets from discontinued
operations $ 23 $ 2,135
-------------- --------------
-------------- --------------
Changes in operating working capital items of discontinued operations
are summarized as follows:
13 weeks ended Year Ended
-------------------- ------------------
Jun 25, Jun 26, Jun 25, Jun 26,
2005 2004 2005 2004
-------------------- ------------------
Current assets $505 $271 $861 ($312)
Current liabilities (359) (83) (70) (68)
-------------------- ------------------
$146 $188 $791 ($380)
-------------------- ------------------
-------------------- ------------------
3. Inventories (thousands of dollars):
June 25, 2005 June 26, 2004
-------------- --------------
Raw materials $ 3,456 $ 4,043
Work-in-process 634 1,363
Finished goods 24,941 24,077
-------------- --------------
$ 29,031 $ 29,483
-------------- --------------
-------------- --------------
4. Capital Assets (thousands of dollars):
June 25, 2005 June 26, 2004
---------------------------- -------------------------
Accumul- Accumul-
ated Net ated Net
Cost Amortiza- Book Amortiza- Book
tion Value Cost tion Value
---------------------------- --------------------------
Land $ 1,000 $ - $1,000 $ 1,000 $ - $ 1,000
Building 7,064 1,319 5,745 7,066 1,080 5,986
Leasehold
improvements 25,566 13,710 11,856 25,174 11,887 13,287
Furniture and
equipment 9,966 5,880 4,086 12,070 7,017 5,053
Computer
hardware and
software 8,985 6,358 2,627 8,883 5,318 3,565
---------------------------- -------------------------
$52,581 $27,267 $25,314 $54,193 $ 25,302 $28,891
---------------------------- -------------------------
---------------------------- -------------------------
5. Goodwill (thousands of dollars): Goodwill of $342 (June 26, 2004 - $342) is stated at cost less accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. amortization of $205 (June 26, 2004 - $205). 6. Bank Overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers : As at June 25, 2005, the Company had credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities available to a maximum amount of $69.0 million. The credit facilities consist of an operating facility for working capital and for general corporate purposes to a maximum amount of $65 million, bearing interest at prime plus 0.25% and a $4.0 million revolving capital expenditure loan facility bearing interest at prime plus 0.75%. The maximum amount available under the revolving capital expenditure loan facility reduces by $1.0 million on each of June 30, 2005 and June 30, 2006 and by $2.0 million on June 30, 2007. The operating facility is committed until July July: see month. 28, 2006 and the revolving capital expenditure loan facility matures on June 30, 2007. The Company is required to comply with covenants regarding financial performance. Security provided includes a security interest over all personal property of the business and a mortgage over the land and building, comprising the Company's head office/distribution facility.
7. Share Capital (thousands of dollars, except per share amounts):
(a) Authorized
1,224,329 Multiple Voting Shares
Unlimited Subordinate Voting Shares
Unlimited Class A and B Preference Shares
(b) Issued
Multiple Voting Shares
----------------------
Number Consideration
-------------------------------
Balance June 28, 2003 1,224,329 Nominal
Balance June 26, 2004 1,224,329 Nominal
Balance June 25, 2005 1,224,329 Nominal
Subordinate Voting Shares
-------------------------
Number Consideration
-------------------------------
Balance June 28, 2003 5,695,225 $23,995
Shares issued upon exercising
of stock options 25,000 171
-------------------------------
Balance, June 26, 2004 5,720,225 $24,166
Shares repurchased (402,400) (1,700)
Shares issued upon exercising
of stock options 4,000 27
-------------------------------
Balance, June 25, 2005 5,321,825 $22,493
-------------------------------
-------------------------------
The Multiple Voting Noun 1. multiple voting - the act of voting in more than one place by the same person at the same election (illegal in U.S.) balloting, vote, voting, ballot - a choice that is made by counting the number of people in favor of each alternative; "there were only 17 Shares and Subordinate Voting Shares have identical attributes except that the Multiple Voting Shares entitle en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: the holder to ten votes per share and the Subordinate Voting Shares entitle the holder to one vote per share. Each Multiple Voting Share is convertible at any time, at the holder's option, into one fully paid and non-assessable Subordinate Voting Share. The Multiple Voting Shares are subject to provisions whereby, if a triggering event Triggering Event A certain milestone or event that a participant in a qualified plan must experience in order to be eligible to receive a distribution from a qualified plan. occurs then each Multiple Voting Share is converted into one fully paid and non-assessable Subordinate Voting Share. A triggering event may occur if Mr. Jeffrey Wortsman: (i) dies; (ii) ceases to be a Senior Officer of the Company; (iii) ceases to own 5% or more of the aggregate number of Multiple Voting Shares and Subordinate Voting Shares outstanding; or (iv) owns less than 918,247 Multiple Voting Shares and Subordinate Voting Shares combined. (c) Normal course issuer bid On February February: see month. 2, 2005, the Company received approval from the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. to renew its Normal Course Issuer Bid. The bid permits the Company to acquire up to 421,061 Subordinate Voting Shares, representing approximately 10% of the public float of the Subordinate Voting Shares, during the period from February 7, 2005 to February 6, 2006. During the year ended June 25, 2005, 402,400 Subordinate Voting Shares were purchased for cancellation at prevailing market prices for cash consideration of $4,583. The excess of $2,883 over the average paid-in value of the shares was charged to retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . During the year ended June 26, 2004 no shares were repurchased under the Normal Course Issuer Bid. (d) Stock option plan The Company maintains a Stock Option Plan for the benefit of directors, officers and employees. As at June 25, 2005, the Company has reserved 911,275 Subordinate Voting Shares for issuance under its Stock Option Plan. The granting of options and the related vesting periods are at the discretion of the Board of Directors at exercise prices determined as the weighted average of the trading prices Trading price The price at which a security is currently selling. of the Company's Subordinate Voting Shares on The Toronto Stock Exchange for the five trading days In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. preceding the effective date of the grant. In general, options granted under the Stock Option Plan vest over a period of one year from the grant date for options issued to directors and four years from the grant date for options issued to officers and employees and expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. no later than the tenth Tenth can mean: In mathematics:
June 25, 2005 June 26, 2004
-------------------------- -----------------------
Weighted- Weighted-
average average
exercise exercise
Stock Options Shares price Shares price
---------------------------------------------------------------------
Outstanding at
beginning of
year 649,400 $11.21 730,400 $11.16
Granted 25,000 $10.10 44,000 $10.96
Exercised (4,000) $6.85 (25,000) $6.85
Forfeited (25,000) $12.92 (100,000) $11.80
-----------------------------------------------------
Outstanding at
end of year 645,400 $11.13 649,400 $11.21
-----------------------------------------------------
Options
exercisable at
end of year 573,150 $10.80 523,650 $10.53
-----------------------------------------------------
The following table summarizes the distribution of these options and
the remaining contractual life as at June 25, 2005:
Options Outstanding Options Exercisable
------------------------------------ ---------------------
Exercise # Weighted Weighted Weighted
Prices Outstanding Average Average # of Average
Remaining Exercise Shares Exercise
Contractual Price Exercisable Price
Life
---------------------------------------------------------------------
$6.02 18,500 4.2 years $6.02 18,500 $6.02
$6.85 114,400 3.0 years $6.85 114,400 $6.85
$10.10 25,000 9.8 years $10.10 - -
$10.40 33,250 5.1 years $10.40 33,250 $10.40
$10.50 15,000 5.3 years $10.50 15,000 $10.50
$10.96 29,000 8.1 years $10.96 25,250 $10.96
$11.20 24,000 6.1 years $11.20 24,000 $11.20
$11.25 265,250 2.9 years $11.25 265,250 $11.25
$15.85 101,000 7.1 years $15.85 62,500 $15.85
$17.94 20,000 6.8 years $17.94 15,000 $17.94
------------------------------------ ---------------------
645,400 4.5 years $11.13 573,150 $10.80
------------------------------------ ---------------------
------------------------------------ ---------------------
The weighted average estimated fair values at the date of grant for options granted during the year ended June 25, 2005 was $7.18 per share (June 26, 2004 - $7.54 per share). The fair value of each option granted was estimated on the date of grant using the Black-Scholes Option Pricing Model with the following assumptions:
June 25, 2005 June 26, 2004
-----------------------------------
Risk-free interest rate 4.11% 5.25%
Dividend yield 2.4% 0.0%
Expected volatility 58% 54%
Expected life of options 10 years 10 years
The Black-Scholes Option Pricing Model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, the Black-Scholes Option Pricing Model requires the use of subjective subjective /sub·jec·tive/ (sub-jek´tiv) pertaining to or perceived only by the affected individual; not perceptible to the senses of another person. sub·jec·tive adj. 1. assumptions including the expected stock price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the . As a result, the Company's Stock Option Plan having characteristics different from those of traded options, and because changes in the subjective assumptions can have a material effect on the fair value estimate, the Black-Scholes Option Pricing Model does not necessarily provide a reliable single measure of the fair value of options granted. Prior to fiscal 2004, the Company used settlement accounting to account for its Stock Option Plan. No compensation cost was recorded when stock options were granted. When options were exercised, consideration paid by employees and directors was recorded in the financial statements as an increase of share capital based on the exercise price of the options. In accordance with the transitional provisions of CICA Handbook Section 3870, the Company applied the fair value based method to account for stock options on a prospective basis. Therefore, stock options granted during the year ended June 28, 2003 continue to be accounted for using the settlement accounting method and the pro-forma effect on net earnings and earnings per share are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). below. Had compensation cost been determined using the fair value-based method at the grant date of the stock options awarded to employees and directors during fiscal 2003, the net earnings and earnings per share for the years ended June 25, 2005 and June 26, 2004 would have been reduced to the pro forma amounts indicated in the following table:
Year Ended Year Ended
June 25, 2005 June 26, 2004
------------------------- -------------------------
As Reported Pro-forma As Reported Pro-forma
------------------------- -------------------------
Net loss ($185) ($427) ($7,097) ($7,339)
Basic loss
per share ($0.03) ($0.06) ($1.03) ($1.06)
Diluted loss
per share n/a n/a n/a n/a
13 Weeks Ended 13 Weeks Ended
June 25, 2005 June 26, 2004
------------------------- -------------------------
As Reported Pro-forma As Reported Pro-forma
------------------------- -------------------------
Net loss ($3,160) ($3,220) ($12,504) ($12,564)
Basic loss
per share ($0.48) ($0.49) ($1.81) ($1.82)
Diluted loss
per share n/a n/a n/a n/a
The pro forma effect on net earnings of the period is not representative of the pro forma effect on net earnings of future periods because it does not take into consideration the pro forma compensation cost related to options awarded prior to June 29, 2002. (e) Deferred Share Unit Plan Effective October October: see month. 19, 2004, the Company established a Deferred Share Unit ("DSU") Plan for non-management directors. The DSU Plan is administered by the Board of Directors, with the advice of the Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. and Governance Governance makes decisions that define expectations, grant power, or verify performance. It consists either of a separate process or of a specific part of management or leadership processes. Sometimes people set up a government to administer these processes and systems. Committee. Under this plan, non-management directors of the Company receive an annual grant of DSU's and can also elect to receive their annual retainers and meeting fees in DSU's. A DSU is a unit equivalent in value to one Subordinate Voting Share of the Company based on the five-day average trading price of the Company's Subordinate Voting Shares on The Toronto Stock Exchange immediately prior to the date on which the value of the DSU is determined. When dividends are paid by the Company, an equivalent number of DSU's are added to the DSU account of the non-management director based on the number of DSU's in their account and the market value of the Subordinate Voting Shares on the date the dividend is paid. After retirement from the board, a participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. in the DSU Plan receives a cash payment equal to the market value of the accumulated DSU's in their account. During the year ended June 25, 2005, each non-management director was issued 1,200 DSU's. A total of 7,317 DSU's were outstanding as at June 25, 2005 and compensation cost of $74 was included in selling, general and administrative expenses and a corresponding liability on the Company's consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. has been recorded. The value of the DSU liability is adjusted to reflect changes in the market value of the Company's Subordinate Voting Shares. (f) Restricted Share Unit Plan Effective April 20, 2005, the Company established a Restricted Share Unit ("RSU") Plan as part of its overall executive compensation plan. The RSU Plan is administered by the Board of Directors, with the advice of the Human Resources and Governance Committee. Under this plan, Senior Officers of the Company are eligible to receive a grant of RSU's that vest on each anniversary of the grant in equal one-third instalments over a vesting period of three years. A RSU is a unit equivalent in value to one Subordinate Voting Share of the Company. When dividends are paid by the Company, an equivalent number of RSU's are added to the RSU account of the Senior Officer based on the number of RSU's in their account, the dividend paid per Subordinate Voting Share and the market value of the Subordinate Voting Shares on the date the dividend is paid. Upon the exercise of the vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) RSU's, a cash payment equal to the market value of the exercised vested RSU's will be paid to the senior officer. During year ended June 25, 2005, 5,030 RSU's were awarded and outstanding of which none were vested. 8. Amortization (thousands of dollars): Amortization included in cost of sales and selling, general and administrative expenses ("SG&A") is summarized as follows:
13 weeks ended Year Ended
-------------------------- -----------------------
Jun 25, Jun 26, Jun 25, Jun 26,
2005 2004 2005 2004
--------------------------------------------------
(unaudited) (unaudited)
Cost of sales $257 $219 $842 $773
SG&A of continuing
operations 1,066 548 5,374 4,998
-------------------------- -----------------------
Continuing
operations 1,323 767 6,216 5,771
SG&A of discontinued
operations - 61 1,330 316
-------------------------- -----------------------
$1,323 $828 $7,546 $6,087
-------------------------- -----------------------
-------------------------- -----------------------
9. Income taxes (thousands of dollars):
Future income tax asset (liability) is summarized as follows:
June 25, 2005 June 26, 2004
------------------ -----------------
Amortization $ (420) $ (505)
Deferred lease inducements 645 803
Litigation provision and
related expenses 4,738 4,074
Other 30 (1)
------------------ -----------------
$ 4,993 $ 4,371
Future income tax asset 5,413 4,843
------------------ -----------------
Future income tax liability $ (420) $ (472)
------------------ -----------------
------------------ -----------------
Furthermore, the U.S. subsidiary has unutilized non-capital loss carry forwards available to reduce future year's income taxes, the potential benefit of which have not been recognized in these financial statements. These losses can be utilized in future years up to 2020.
The Company's effective income tax rate consists of the following:
June 25, 2005 June 26, 2004
------------------ -----------------
Combined basic federal and
provincial average
statutory rate 35.4% (36.1%)
Litigation provision and related
expenses, manufacturing and
processing credit and other 21.7% 20.5%
Effect of foreign
operating losses 67.6% 5.4%
------------------ -----------------
124.7% (10.2%)
------------------ -----------------
------------------ -----------------
10. Litigation provision and related expenses:
June 25, 2005 June 26, 2004
------------------ -----------------
Provision for damages,
costs and interest $ 18,000 $ 15,000
Legal and professional fees - 450
------------------ -----------------
Accrued litigation provision
and related expenses $ 18,000 $ 15,450
------------------ -----------------
------------------ -----------------
In fiscal 1999, the Company and certain of its directors and officers were served with a Statement of Claim under the Class Proceedings Act (Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. ) concerning the accuracy and disclosure of certain information contained in a financial forecast issued by the Company during its initial public offering ("IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ") in 1998. The suit sought damages be paid equal to the alleged diminution in value diminution in value n. in the event of a breach of contract, the decrease in value of property due to the failure to construct something exactly as specified in the contract. of the shares. In October 2001, a motion to certify cer·ti·fy v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies v.tr. 1. a. To confirm formally as true, accurate, or genuine. b. the action as a class action was granted. The trial commenced in the Superior Court of Justice (Ontario) during May 2003 and was completed in January January: see month. 2004. On May 7, 2004 the Judge issued a judgment in favour Favor or favour (see spelling differences) may be
For those shareholders who sold their shares between June 4 and 9, 1998, the Court awarded them the difference between the IPO price and the price at which they sold their shares. For those shareholders who sold or still hold those shares after June 9, 1998, the Court awarded $2.35 per share. A hearing to determine the awarding of costs was held in April 2005. In May 2005, the Court awarded a portion of the costs claimed by the plaintiffs but referred the matter for assessment to determine the amount of costs to be paid. The quantum quantum In physics, a discrete natural unit, or packet, of energy, charge, angular momentum, or other physical property. Light, for example, which appears in some respects as a continuous electromagnetic wave, on the submicroscopic level is emitted and absorbed in discrete of the costs award will not be known until the final assessment ordered by the Court has been conducted. Based solely on the information available as of year-end, the Company estimates that this award, if unchanged on appeal, would amount to approximately $3 million to $4 million. Based solely on the information available at year-end, if the damages award, costs and interest had been paid at the fiscal 2005 year-end, the Company estimates this amount to be about $18 million. During the fourth quarter of 2004, the Company recorded an expense and set up a provision of $15 million pursuant to this judgment. This provision was subsequently increased by $3 million to $18 million during the fourth quarter of 2005. The judgment is a joint and several responsibility of the Company and two of its Senior Officers. The Company carries directors and officers insurance and it expects that the insurance will cover the two Senior Officers' portion of the total award but the amount of insurance is not reasonably determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. at this time. The provision for recovery of income taxes related to the award is based on the entire $18 million provision and does not take account of the potential results of the appeal discussed in the next paragraph, any possible insurance recoveries or future tax adjustments. The damages award and income tax recovery is based on management's best estimate and is subject to adjustment when all facts are known and all issues are resolved. The possible adjustment could be significant. In June 2004, a Notice of Appeal was filed by the Company and two of its Senior Officers. The appeal was heard by the Ontario Court of Appeal during June 2005. The Court reserved its decision and it is not anticipated that the Court's determination will be made before the fall of 2005. The payment of any damages and costs awarded by the trial judge is stayed pending the determination of the appeal.
11. Changes in non-cash operating working capital items
(thousands of dollars):
June 25, 2005 June 26, 2004
------------------ -----------------
Accounts receivable $ 32 $ (33)
Inventories 452 7,155
Prepaid expenses 387 (15)
Accounts payable and accrued
Liabilities (1,185) 143
Income taxes recoverable/payable (1,891) 1,035
------------------ -----------------
$ (2,205) $ 8,285
------------------ -----------------
------------------ -----------------
12. Contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. & Guarantees - (thousands of dollars): (a) Legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. In addition to the class action matter discussed in Note 10, in the course of its business, the Company from time to time becomes involved in various claims and legal proceedings. In the opinion of management, all such claims and suits are adequately covered by insurance, or if not so covered, the results are not expected to materially affect the Company's financial position. (b) Guarantees The Company has provided the following guarantees to third parties and no amounts have been accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. in the financial statements for these guarantees: (i) In the ordinary course of business, the Company has agreed to indemnify To compensate for loss or damage; to provide security for financial reimbursement to an individual in case of a specified loss incurred by the person. Insurance companies indemnify their policyholders against damage caused by such things as fire, theft, and flooding, which its lenders under its credit facility against certain costs or losses resulting from changes in laws and regulations or from a default in repaying a borrowing. These indemnifications extend for the term of the credit facility and do not provide any limit on the maximum potential liability. Historically, the Company has not made any indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from payments under such agreements. (ii) In the ordinary course of business, the Company has provided indemnification commitments to certain counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. in matters such as real estate leasing transactions, director and officer indemnification agreements and certain purchases of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → such as computer software. These indemnification agreements generally require the Company to compensate the counterparties for costs or losses resulting from legal action brought against the counterparties related to the actions of the Company. The terms of these indemnification agreements will vary based on the contract and generally do not provide any limit on the maximum potential liability. (iii) The Company sublet sub·let tr.v. sub·let, sub·let·ting, sub·lets 1. To rent (property one holds by lease) to another. 2. To subcontract (work). n. one location during fiscal 2004 and has provided the landlord with a guarantee in the event the sub-tenant SUB-TENANT. The same as under-tenant. See Under-leaser; Under-tenant, and 1 Bell's Com. 76. defaults on its obligation to pay rent. The term of the guarantee is approximately 3.5 years and the Company's maximum exposure is $140. 13. Commitments - (thousands of dollars): (a) Operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. Minimum rentals for the next five fiscal years and thereafter, excluding rentals based upon revenue are as follows: 2006 $ 11,234 2007 $ 10,627 2008 $ 9,226 2009 $ 7,630 2010 $ 5,432 Thereafter $ 10,579 (b) Letters of credit The Company had outstanding letters of credit in the amount of $4,839 (June 26, 2004 - $6,804) for imports of finished goods inventories to be received. 14. Related Party Transaction - (thousands of dollars): During fiscal 2005, the Company expensed and paid fees of $28 to a corporation related to a director and officer of the Company. This transaction was measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. 15. Financial Instruments (thousands of dollars): The carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the Company's accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. approximates their fair value. The Company is exposed to credit risk on its accounts receivable from corporate customers through sales made by the direct sales division. Accounts receivable are net of applicable allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. , which is established based on the specific credit risks associated with each corporate customer and other relevant information. The Company purchases a significant portion of its leather and finished goods inventory from foreign vendors with payment terms in U.S. dollars. From time-to-time the Company may enter into foreign exchange forward contracts to manage foreign exchange risk associated with these purchases. As at June 25, 2005, and as at June 26, 2004 the Company did not have any outstanding foreign exchange forward contracts to purchase U.S. dollars. The Company is exposed to interest rate risk based on the use of the credit facilities, which bears interest at floating rates. For fiscal 2005, a +/-1% change in interest rates would change interest expense by +/- $NIL NIL - /nil/ 1. New Implementation of Lisp. A language intended to be the successor of MacLisp. A large Lisp, implemented mostly in VAX assembly language. A forerunner of Common LISP. ["NIL: A Perspective", Jon L. White, MACSYMA Users' Conf Proc, 1979]. 2. (June 26, 2004 +/-$52) since the Company only incurred approximately $3 of interest expense. 16. Segmented information: Management has determined that the Company operates in one dominant industry and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. segment, which involves the design, manufacture and retail of fashion leather and suede apparel in Canada. Danier Leather Inc. (TSX:DL.SV) |
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