North West Company Fund Reports 2004 Fourth Quarter Earnings And Declares A Distribution.WINNIPEG Winnipeg, city, Canada Winnipeg (wĭn`ĭpĕg), city (1991 pop. 616,790), provincial capital, SE Man., Canada, at the confluence of the Red and Assiniboine rivers. , Manitoba Manitoba (mănĭtō`bə), province (2001 pop. 1,119,583), 250,934 sq mi (650,930 sq km), including 39,215 sq mi (101,580 sq km) of water surface, W central Canada. -- North West Company Fund (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :NWF NWF National Wildlife Federation NWF National Wrestling Federation (Lake Villa, Illinois) NWF Nonsense Word Fluency NWF Numerical Weather Forecasting NWF Native Warez Forum .UN) (the "Fund") today reported 2004 fourth quarter earnings for the period ended January January: see month. 29, 2005 and declared a quarterly cash distribution of $0.47 per unit to unitholders of record on March 31, 2005, distributable by April 15, 2005. Report to Unitholders The North West Company Fund reports fourth quarter earnings to January 29, 2005 of $10.6 million, consistent with last year's fourth quarter earnings of $10.6 million. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per unit are $0.66 which is consistent with last year. Sales decreased 3.3% to $209.9 million on a non-comparable basis and were down 1.7% excluding the foreign exchange impact of a 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 compared to the fourth quarter last year. The quarter had 13 weeks compared to 14 weeks last year. On an equivalent 13-week basis, sales increased 4.5% and on a same store basis were up 4.1% excluding the foreign exchange impact. Strong general merchandise sales in northern Canada Northern Canada is the vast northernmost region of Canada variously defined by geography and politics. Definitions and usage Also referred to as the Canadian North or (locally) as the North stores were a major positive factor in the quarter. "The quarter was a mixed finish to the year," commented President & 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. Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide Kennedy. "On a comparable basis, same stores sales increased 4% and this momentum has carried into 2005. Higher one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs in Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States , a stronger dollar and one less selling week cut into our bottom line but results were still up for the sixth consecutive year. Our people continue to work hard at making us the best local store to shop at and their effort continues to earn more loyalty from our customers." Management's Discussion & Analysis CONSOLIDATED RESULTS Fourth quarter consolidated sales decreased 3.3% to $209.9 million compared to $217.0 million in 2003. On an equivalent 13-week basis, sales increased 4.5% (up 4.1% on a same store basis excluding the foreign exchange impact). The stronger Canadian dollar had the result of reducing sales by $2.7 million and net earnings by $48,000.
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Sales and Sales Growth on
an Equivalent Week Basis
($ in thousands except Fourth Quarter Full Year
where otherwise 2004 2003 2004 2003
indicated) (13 weeks) (14 weeks) (52 weeks) (53 weeks)
---------------------------------------------------------------------
Sales $ 209,857 $ 216,950 $ 788,693 $ 782,720
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Sales growth -3.3% 5.8% 0.8% 4.4%
Less: (negative)/positive
impact on sales growth
of additional week
in 2003 -7.8% 6.3% -1.8% 1.7%
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Sales growth on an equivalent
13 week and 52 week basis 4.5% -0.5% 2.6% 2.7%
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Trading profit Trading profit The profit earned on short-term trades of securities held for less than one year, subject to tax at normal income tax rates. trading profit (1) or net earnings before interest, income taxes, depreciation and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) increased 2.3% to $21.5 million compared to $21.0 million in the fourth quarter last year. Lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the northern Canada stores contributed to this improvement. Interest expense decreased 9.1% to $1.4 million due to the repayment of 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. in Alaska early in the fourth quarter. Income taxes increased 6.2% due to higher earnings in 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 withholding taxes The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. incurred on dividends received by the Company as part of a recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. of its U.S. operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Alaska Commercial Company The Alaska Commercial Company was a company that operated retail stores in Alaska during the early period of Alaska's ownership by the United States. It began when businessmen from San Francisco, California, using the name Hutchinson, Kohl & Company, bought the commercial interests . Withholding taxes paid on this dividend income totalled Cdn $815,000 reducing earnings per unit by $0.05. Excluding the tax impact of the dividend, fourth quarter earnings would have been $11.4 million or an increase of 7.2% over 2003. One less week in the quarter compared to last year also had a negative impact on earnings. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. sales of $788.7 million increased 0.8%, up 2.6% on an equivalent 52-week basis and up 1.4% on a same store basis excluding foreign exchange impact. Trading profit increased 5.2% to $76.6 million from $72.8 million last year. Trading profit was up 8.1% excluding an unusual $2.0 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta insurance gain in 2003. Consolidated earnings increased 4.3% to $37.3 million or $2.32 per unit on a diluted basis, compared to $35.7 million or $2.22 per unit on a diluted basis in 2003. Consolidated earnings in 2004 increased 10.2% excluding the withholding taxes of $815,000 paid in the 2004 fourth quarter and the $1.2 million after tax insurance gain realized in 2003. The appreciation in the Canadian dollar during 2004 further reduced the converted earnings from Alaska by 6.4% or $0.02 per unit on a diluted basis. 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. OPERATIONS Canadian sales for the quarter decreased 1.1% to $174.2 million but were up 6.3% on an equivalent 13-week basis and up 4.4% on a same store basis. Trading profit increased 9.0% to $19.5 million from $17.9 million last year. Canadian food sales decreased 2.4% in the fourth quarter comparing 13 weeks sales to 14 weeks last year, but increased 5.6% on an equivalent week basis. Northern/NorthMart banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. and Giant Tiger Giant Tiger Stores Limited is a Canadian discount store in Canada (and one in the United States) founded on May 13, 1961, by Gordon Reid, who served as the Chairman and CEO. Reid opened his first store in Ottawa, the capital of Canada. same store food sales were up 2.9% and 13.2% respectively on an equivalent week basis. Northern/NorthMart sales finished below expectations. This is being addressed through more aggressive store pricing programs. Giant Tiger's strong food sales continued to reflect a very positive market response to low prices matched with the convenience of neighbourhood shopping. Canadian general merchandise sales were up 1.0% in the quarter, comparing 13 weeks this year to 14 weeks in last year's fourth quarter. On an equivalent 13-week basis, general merchandise sales were up 7.4%. Northern/NorthMart banner same store general merchandise sales were up 6.2% on an equivalent week basis while Giant Tiger same store general merchandise sales were down 0.9%. Northern/NorthMart sales were led by children's and ladies' apparel which increased 19.7% and 9.4% respectively. Hardlines results were mixed with housewares house·wares pl.n. Cooking utensils, dishes, and other small articles used in a household, especially in the kitchen. and toy categories up by 6.6% and 1.7% respectively and other, bigger ticket categories were either flat in sales or down slightly. Giant Tiger general merchandise sales were softer than expected in part because of the impact of a decision to de-emphasize de-em·pha·size tr.v. de-em·pha·sized, de-em·pha·siz·ing, de-em·pha·siz·es To decrease the emphasis on; minimize the importance of. de-em less profitable hardlines categories. Gross profit rates were improved in the quarter with the exception of Northern/NorthMart general merchandise which decreased slightly due to higher fuel-related freight expenses In accounting, the concept of a freight expense account can be generalized as a payment for sending out a product to a customer. It falls under the umbrella category of Expenses and is treated like other expense accounts in relation to the accounting equation. . Best practice training, new in-store systems, streamlined work processes and the maturing of the Giant Tiger store base helped lower our payroll and operating expenses, offsetting higher fuel-related occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal in northern Canada. In the fourth quarter, expenses as a percentage of sales decreased by 168 basis points. ALASKAN OPERATIONS (stated in U.S. dollars) Alaska Commercial Company (AC) sales for the quarter decreased 5.6% to $29.5 million on a non-comparable week basis. On an equivalent 13-week basis, sales were up 3.8%, including a 2.4% increase in same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of . AC's retail food sales decreased 3.8% on a non-comparable week basis. Sales were up 4.9% on a comparable week, same store basis. A major large store renovation and market share gains across most of AC's locations accounted for the comparable food sales growth in the quarter. General merchandise sales in the retail stores were down 18.1% and fell by 6.2% on a comparable week, same store basis. Sales were negatively impacted by higher fuel-related living costs, a 16.9% decrease in the Alaska Permanent Fund Dividend The Alaska Permanent Fund Dividend program of the U.S. state of Alaska, popularly known as the PFD, was created by state legislation in 1980 to share the wealth of the Alaska Permanent Fund with the people of Alaska. (PFD PFD abbr. personal flotation device ), and the timing of PFD payments falling into the third quarter this year compared to some payments received in the early part of the fourth quarter last year. Big-ticket big-tick·et adj. Informal Having a high price or cost: big-ticket items such as cars and stereos; a big-ticket government program. Adj. 1. sales from home furnishing and electronic categories were most affected by these factors. Quarterly sales at Frontier Expeditors (FE), AC's wholesale business, increased 4.5% over last year and were up 13.8% on an equivalent 13-week basis. Food sales were flat but general merchandise sales were up due an expanded seasonal product line. Trading profit decreased $675,000 to $1.7 million in the fourth quarter compared to last year due to asset write downs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the replacement of the legacy point of sale system with the new in-store systems, an increase in occupancy costs due to rising utility expenses, higher percentage rent payments and one less week of operations in this quarter versus 2003. FINANCIAL CONDITION Financial Ratios The Fund continues to improve its financial position. The Company's debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. at the end of the quarter was .51:1 compared to .56:1 last year. Working capital increased $6.5 million compared to the same period in 2003. The increase in working capital is due in part to higher inventory levels and 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 , partially offset by an increase in bank advances and short term notes, accounts and taxes payable. Outstanding Units The weighted average units outstanding for the quarter were 15,937,000 compared to 15,929,000 last year. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities for the quarter decreased to $19.5 million from $38.4 million. The decrease is due to higher receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and an increase in inventory. New accounts receivable programs offered in the fourth quarter were well received by our customers resulting in an increase in the year end balance. The increase in inventories is due in part to the timing of food inventory store shipments as more merchandise was shipped to stores by sealift sea·lift tr.v. sea·lift·ed, sea·lift·ing, sea·lifts To transport (troops or supplies) by sea, as when ground or air routes are blocked. n. A system or an instance of such transport. and over winter roads than last year. Another factor was a change towards direct buying of fresh meat in Canada and increased direct importing of general merchandise. Both initiatives should improve sales and margins but will require more working capital to fund earlier purchasing compared to buying through distributors and importers. Warehouse inventories also increased to supply new Giant Tiger store openings. On a year-to-date basis, cash flow from operating activities has decreased by $17.9 million. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses in 2005 is expected to fund all distributions and capital expenditures for the year. Cash flow used in investing activities was lower than last year's fourth quarter as costs associated with the development and rollout of the new in-store system was completed in the third quarter. For the year, capital expenditures were $22.3 million versus $33.3 million in 2003. The decrease in capital expenditures in 2004 is due to a replacement store project that has been deferred and energy conservation initiatives that were completed in the first quarter of 2005. Cash use from financing activities in the quarter was $16.9 million compared to a use of cash of $19.7 million last year. The decrease in distributions of $4.4 million is due to the additional distribution made in 2003. OTHER HIGHLIGHTS - A new Giant Tiger store is scheduled to open in Winnipeg, Manitoba on March 19, 2005. This will be the fifth Giant Tiger store in Winnipeg. - A NorthMart in The Pas, Manitoba was closed at the end of January and will be converted to a Giant Tiger store. The store is scheduled to open in May 2005. - A major renovation of a large AC Value Center store in Kotzebue, Alaska “Kotzebue” redirects here. For other uses, see Kotzebue (disambiguation). Kotzebue is a city in Northwest Arctic Borough in the U.S. state of Alaska. According to 2005 Census Bureau estimates, the population of the city is 3,237. was completed in November November: see month. 2004. Store sales since the renovation have exceeded expectations. OUTLOOK Sales momentum improved through the fourth quarter and this trend has continued in the first quarter of 2005. An investment in Northern/Northmart food pricing will depress de·press v. 1. To lower in spirits; deject. 2. To cause to drop or sink; lower. 3. To press down. 4. To lessen the activity or force of something. food margin rates but is expected to improve market share in road-accessible locations. General merchandise sales will benefit from direct import programs and increased ordering taking place at store level, tailored to local market opportunities. Cost streamlining and productivity initiatives will continue to be major work efforts in 2005 and are expected to deliver lower total operating expenses despite higher utility and freight costs tied to the price of fuel. QUARTERLY RESULTS OF OPERATIONS The following is a summary of selected quarterly financial information. Each quarter represents a 13-week period except the fourth quarter in 2003 which had 14-weeks.
Operating Results-Consolidated
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Fourth Third Second First
Quarter Quarter Quarter Quarter
($ in millions) 2004 2003 2004 2003 2004 2003 2004 2003
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Sales $209.9 $217.0 $197.0 $194.0 $197.5 $192.4 $184.4 $179.4
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Trading profit 21.5 21.0 21.2 20.6 19.3 18.0 14.6 13.2
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Net earnings 10.6 10.6 11.0 10.6 9.3 8.9 6.4 5.5
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Net earnings
per unit:
Basic 0.66 0.66 0.69 0.67 0.59 0.56 0.40 0.35
Diluted 0.66 0.66 0.68 0.66 0.58 0.55 0.40 0.35
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The sales decline is due to the fourth quarter last year having 14-weeks compared to 13-weeks this year. Sales growth was also negatively impacted by the strengthening Canadian dollar. ACCOUNTING STANDARDS IMPLEMENTED IN 2004 Effective February February: see month. 1, 2004, the Company implemented the following accounting standards issued by 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. : Hedging Relationships 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. 13, "Hedging Relationships" (AcG 13), addresses the identification, designation DESIGNATION, wills. The expression used by a testator, instead of the name of the person or the thing he is desirous to name; for example, a legacy to. the eldest son of such a person, would be a designation of the legatee. Vide 1 Rop. Leg. ch. 2. 2. , documentation and effectiveness of hedging transactions for the purposes of applying hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). . It also establishes conditions for applying or discontinuing hedge accounting. Under the new guideline, the Company is required to document its hedging transactions and explicitly demonstrate that the hedges are sufficiently effective in order to continue accrual accounting Accrual Accounting An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions happen. Notes: for positions hedged with derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. . The adoption of AcG 13 had no impact on the Company's financial position or results of operations. Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. Section 3110, "Asset Retirement Obligations" (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) 3110), provides guidance for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. A liability associated with the retirement of long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets is recorded in the period in which the legal obligation is incurred at its estimated fair value and a corresponding asset is capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. as part of the related asset and depreciated Depreciated may refer to:
Accordingly, the Company has recognized a discounted liability associated with obligations arising from the operation of gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by dispensing dispensing provision of drugs or medicines as set out properly on a lawful prescription. A prescription can only be filled, the drugs supplied, by a registered pharmacist, veterinarian, dentist or member of the medical profession. units and specific provisions in certain lease agreements regarding the exiting of leased properties at the end of the respective lease terms. This standard was implemented retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin with restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the prior year's 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 . The cumulative effect of implementation was a decrease to opening 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. for 2003 of $287,000 (net of future income taxes recoverable of $165,000), an increase in fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → of $586,000, an increase in other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. of $1,033,000 and an increase in the cumulative translation adjustment of $5,000. The impact on net earnings for each of 2003 and 2004 was not material. Accounting by a Customer (Including a Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. ) for Certain Consideration Received from a Vendor (EIC EIC Editor-In-Chief EIC Euro Info Centre (DIN) EIC Earned Income Credit EIC Excellence in Cities (UK) EIC Enterprise Interaction Center (Interactive Intelligence) Abstract 144) EIC 144 provides guidance on accounting for cash consideration received from a vendor. EIC 144 requires a customer to record cash consideration received from a vendor as a reduction in the price of the vendor's products and reflect it as a reduction of cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold and related inventory when recognized in the income statement and balance sheet. Certain exceptions apply if the cash consideration received is a payment for assets or services delivered to the vendor or for reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. of selling costs incurred to promote the vendor's products. EIC 144 must be applied retroactively to all financial statements for annual and interim periods ending after August 15, 2004. Accordingly, in the fourth quarter of 2004, the Company has implemented EIC 144 retroactively with restatement of the consolidated financial statements. The Company receives allowances from certain of its merchandise vendors which it records as a reduction of cost of goods sold. EIC 144 has changed the timing of recognition of some vendor allowances. As a result of the retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a application of EIC 144, the Company recorded a decrease to opening retained earnings for 2003 of $857,000 (net of current future income taxes recoverable of $487,000), a decrease to inventory of $1,324,000 and an increase of $20,000 to the cumulative translation adjustment. The impact on net earnings for each of 2003 and 2004 was not material. UNITHOLDER DISTRIBUTIONS The Trustees declared a quarterly cash distribution of $0.47 per unit, which consists of $0.39 in interest income and $0.08 in dividend income to unitholders of record on March 31, 2005, distributable by April 15, 2005. NON-GAAP MEASURES (1) Trading Profit (EBITDA) is not a recognized measure under Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Management believes that in addition to net earnings (loss), trading profit is a useful supplemental measure as it provides investors with an indication of the Company's ability to generate cash flows to fund its cash requirements, including distributions and capital investment. Investors should be cautioned, however, that trading profit should not be construed as an alternative to net earnings (loss) determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP as an indicator of NWF's performance. NWF's method of calculating trading profit may differ from other companies and, accordingly, trading profit may not be comparable to measures used by other companies. A reconciliation of net earnings, the closest comparable GAAP measure, to trading profit or EBITDA for consolidated operations is provided below.
Reconciliation of net earnings to trading profit:
Fourth Quarter Year-To-Date
($ in thousands) 2004 2003 2004 2003
----- ----- ----- -----
Net earnings $ 10,564 $ 10,614 $ 37,265 $ 35,730
Add: Amortization 6,065 5,588 23,905 22,401
Interest expense 1,398 1,538 5,761 6,299
Income taxes 3,487 3,282 9,675 8,396
----- ----- ----- -----
Trading profit $ 21,514 $ 21,022 $ 76,606 $ 72,826
-------- -------- -------- --------
For trading profit information by business segment, see note 5 Segmented Information in the notes to the unaudited interim period consolidated financial statements. 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. This Quarterly Report for North West Company Fund, including Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial (MD&A), contains certain forward-looking statements. Such statements relate to, among other things, sales growth, expansion and growth of the Company's business, future capital expenditures and the Company's business strategy. Forward-looking statements are subject to inherent uncertainties and risks including but not limited to: general industry and economic conditions, changes in the Company's relationship within the communities its serves and with its suppliers, pricing pressure and other competitive factors, the availability and costs of merchandise, fuels and utilities, the results of the Company's ongoing efforts to improve cost effectiveness, the rates of return on the Company's pension plan assets, changes in regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. affecting the Company's business and the availability and terms of financing. Other risks are outlined in the Risk Management section of the MD&A included in the Fund's 2003 Annual Report. Consequently, actual results and events may vary significantly from those included in, contemplated or implied by such statements. In evaluating forward-looking statements, readers should specifically consider the various factors, which could cause actual events or results to differ materially from such forward-looking statements. The North West Company Inc. (NWC NWC Network Computing (Magazine) NWC Northwest College (Powell, Wyoming) NWC Northwestern College (Orange City, IA, USA) NWC Northwestern College (St. ) is the leading retailer of food and everyday products and services to northern communities across Canada Across Canada was an afternoon program that formerly aired on The Weather Network. The segment ran from early 1999 until mid 2002. The show ran from 3:00PM ET until 7:00 PM ET. and Alaska. NWC operates 183 stores under a number of trading names, including Northern, NorthMart, Giant Tiger and AC Value Center, and provides catalogue shopping services through its Selections catalogue in northern Canada. The units of the Fund trade on the TSX Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol "NWF.UN". (1) See Non GAAP Measures Section of Management's Discussion & Analysis
CONSOLIDATED BALANCE SHEETS
January 29 January 31
2005 2004
(unaudited, $ in thousands) (Restated Note 1)
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ASSETS
Current assets
Cash $ 11,438 $ 16,627
Accounts receivable 69,040 59,414
Inventories 122,034 114,790
Prepaid expenses 2,663 3,083
Future income taxes 2,467 2,916
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Total Current Assets 207,642 196,830
Property and equipment 186,104 192,395
Other assets 11,959 12,153
Future income taxes 7,932 8,222
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Total Assets $ 413,637 $ 409,600
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LIABILITIES
Current liabilities
Bank advances and short-term notes $ 32,023 $ 30,313
Accounts payable and accrued
liabilities 51,776 50,306
Income taxes payable 3,539 1,881
Current portion of long-term debt 106 640
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Total Current Liabilities 87,444 83,140
Long-term debt 88,803 96,949
Asset retirement obligations 1,105 1,033
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Total Liabilities 177,352 181,122
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EQUITY
Capital 165,205 165,205
Unit purchase loan plan (Note 2) (4,429) (3,650)
Retained earnings 70,560 61,679
Cumulative currency translation
adjustments 4,949 5,244
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Total Equity 236,285 228,478
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Total Liabilities and Equity $ 413,637 $ 409,600
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See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
13 Weeks 14 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
January 29 January 31 January 29 January 31
2005 2004 2005 2004
(unaudited, (Restated (Restated
in thousands) Note 1) Note 1)
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SALES $ 209,857 $ 216,950 $ 788,693 $ 782,720
Cost of sales,
selling and
administrative
expenses (188,343) (195,928) (712,087) (709,894)
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Net earnings before
amortization,
interest and
income taxes 21,514 21,022 76,606 72,826
Amortization (6,065) (5,588) (23,905) (22,401)
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15,449 15,434 52,701 50,425
Interest (1,398) (1,538) (5,761) (6,299)
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14,051 13,896 46,940 44,126
Provision for
income taxes
(Note 3) (3,487) (3,282) (9,675) (8,396)
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NET EARNINGS
FOR THE PERIOD 10,564 10,614 37,265 35,730
Retained earnings,
beginning of period
as previously
reported 66,610 63,559 61,679 52,165
Accounting
changes (Note 1) - - - (1,144)
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as restated 77,174 74,173 98,944 86,751
Distributions (6,614) (12,494) (28,384) (25,072)
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RETAINED EARNINGS,
END OF PERIOD $ 70,560 $ 61,679 $ 70,560 $ 61,679
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NET EARNINGS PER
UNIT
Basic $ 0.66 $ 0.66 $ 2.34 $ 2.24
Diluted $ 0.66 $ 0.66 $ 2.32 $ 2.22
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Weighted Average
Number of Units
Outstanding
(000's)
Basic 15,937 15,929 15,918 15,940
Diluted 16,126 16,126 16,126 16,126
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See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
13 Weeks 14 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
January January January January
29 2005 31 2004 29 2005 31 2004
(Restated (Restated
(unaudited, $ in thousands) Note 1) Note 1)
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CASH PROVIDED BY (USED IN)
Operating Activities
Net earnings for the period $ 10,564 $ 10,614 $ 37,265 $ 35,730
Non-cash items
Amortization 6,065 5,588 23,905 22,401
Future income taxes 394 2,115 636 2,789
Pension (credit) expense (352) (637) (352) (637)
Amortization of deferred
financing costs 46 46 186 186
(Gain)loss on disposal of
property and equipment 413 418 1,158 (1,583)
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Cash flow from operations 17,130 18,144 62,798 58,886
Change in other non-cash
items 2,408 20,282 (13,873) 7,894
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Operating activities 19,538 38,426 48,925 66,780
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Investing Activities
Purchase of property and
equipment (5,013) (11,772) (22,323) (33,273)
Proceeds from disposal of
property and equipment 81 234 694 3,070
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Investing activities (4,932) (11,538) (21,629) (30,203)
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Financing Activities
Change in bank advances
and short-term notes (6,905) (6,970) 1,885 2,475
Net purchase of units for
unit purchase loan plan (140) 458 (779) (285)
Repayment of long-term
debt (2,542) (1,442) (4,486) (1,952)
Distributions (7,335) (11,772) (29,105) (30,639)
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Financing activities (16,922) (19,726) (32,485) (30,401)
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NET CHANGE IN CASH (2,316) 7,162 (5,189) 6,176
Cash, beginning of period 13,754 9,465 16,627 10,451
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CASH, END OF PERIOD $ 11,438 $ 16,627 $ 11,438 $ 16,627
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Supplemental disclosure
of cash paid for:
Interest expense $ 2,823 $ 2,764 $ 6,076 $ 6,410
Income taxes 2,484 1,228 7,453 4,513
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See accompanying notes to consolidated financial statements.
North West Company Fund 2004 Fourth Quarter Report NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Accounting Presentations and Disclosures The unaudited interim period consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). These interim financial statements follow the same accounting policies and their methods of application as the 2003 annual financial statements, except as described below. Not all disclosures required by generally accepted accounting principles for annual financial statements are presented, and accordingly, the interim financial statements should be read in conjunction with the 2003 Annual Report. Effective February 1, 2004, the Company implemented the following new accounting standards issued by the Canadian Institute of Chartered Accountants (CICA): Hedging Relationships Accounting Guideline 13 "Hedging Relationships" (AcG 13), addresses the identification, designation, documentation and effectiveness of hedging transactions for the purposes of applying hedge accounting. It also establishes conditions for applying or discontinuing hedge accounting. Under the new guideline, the Company is required to document its hedging transactions and explicitly demonstrate that the hedges are sufficiently effective in order to continue accrual accounting for positions hedged with derivatives. The adoption of AcG 13 had no impact on the Company's financial position or results of operations. Asset Retirement Obligations Section 3110, "Asset Retirement Obligations" (CICA 3110), provides guidance for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. A liability associated with the retirement of long-lived assets is recorded in the period in which the legal obligation is incurred at its estimated fair value and a corresponding asset is capitalized as part of the related asset and depreciated over its useful life. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted to reflect the passage of time and changes in the estimated future costs underlying the obligation. Accordingly, the Company has recognized a discounted liability associated with obligations arising from the operation of gasoline dispensing units and specific provisions in certain lease agreements regarding the exiting of leased properties at the end of the respective lease terms. This standard was implemented retroactively with restatement of the prior year's consolidated financial statements. The cumulative effect of implementation was a decrease to opening retained earnings for 2003 of $287,000 (net of future income taxes recoverable of $165,000), an increase in fixed assets of $586,000, an increase in other liabilities of $1,033,000 and an increase in the cumulative translation adjustment of $5,000. The impact on net earnings for each of 2003 and 2004 was not material. Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor (EIC Abstract 144) EIC 144 provides guidance on accounting for cash consideration received from a vendor. EIC 144 requires a customer to record cash consideration received from a vendor as a reduction in the price of the vendor's products and reflect it as a reduction of cost of goods sold and related inventory when recognized in the income statement and balance sheet. Certain exceptions apply if the cash consideration received is a payment for assets or services delivered to the vendor or for reimbursement of selling costs incurred to promote the vendor's products. EIC 144 must be applied retroactively to all financial statements for annual and interim periods ending after August 15, 2004. Accordingly, in the third quarter of 2004, the Company has implemented EIC 144 retroactively with restatement of the consolidated financial statements. The Company receives allowances from certain of its merchandise vendors which it records as a reduction of cost of goods sold. EIC 144 has changed the timing of recognition of some vendor allowances. As a result of the retroactive application of EIC 144, the Company recorded a decrease to opening retained earnings for 2003 of $857,000 (net of current future income taxes recoverable of $487,000), a decrease to inventory of $1,324,000 and an increase of $20,000 to the cumulative currency translation adjustment. The impact on net earnings for each of 2003 and 2004 was not material. 2. Unit Purchase Loan Plan Loans issued to officers to purchase units under the unit purchase loan plan are treated as a reduction of equity. These loans are non-interest bearing and repayable from the after tax distributions or if the officer sells the units or leaves the Company. The loans are secured by a pledge A Bailment or delivery of Personal Property to a creditor as security for a debt or for the performance of an act. Sometimes called bailment, pledges are a form of security to assure that a person will repay a debt or perform an act under contract. of 225,998 units of the Company with a quoted value at January 29, 2005 of $7,006,000. Loans receivable at January 29, 2005 of $4,429,000 are recorded as a reduction of equity. The loans have a term of five years. The maximum value of the loans under the plan will not exceed $7,500,000. 3. Income Taxes Certain interest amounts deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. by The North West Company Inc. are included as taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. to unitholders of North West Company Fund upon distribution. The income tax benefit of loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: to the Company has been recorded in these financial statements as a future income tax asset. 4. Employee Future Benefits The Company's expense for employee future benefits is included in cost of sales, selling and administrative expenses. The expense for the defined benefit pension plan and the defined contribution pension plan for the thirteen weeks ended January 29, 2005 was $498,000 (2004 - $307,000) and for the fifty two weeks ended January 29, 2005 $1,872,000 (2003 - $1,555,000). The Company maintains an employee savings plan Noun 1. employee savings plan - a plan that allows employees to contribute to an investment pool managed the employer plan, program, programme - a series of steps to be carried out or goals to be accomplished; "they drew up a six-step plan"; "they discussed plans for substantially all of its U.S. employees and recorded an expense for the thirteen weeks ended January 29, 2005 of US$16,000 (2003 - US$16,000) and for the fifty two weeks ended January 29, 2005 US$131,000 (2004 - US$127,000). 5. Segmented Information ($ in thousands) The Company operates predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. within the retail industry in northern Canada and Alaska. The following information is presented for the two business segments:
13 Weeks 14 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
January 29 January 31 January 29 January 31
2005 2004 2005 2004
Sales
Canada $ 174,186 $ 176,056 $ 629,822 $ 615,661
Alaska 35,671 40,894 158,871 167,059
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Total $ 209,857 $ 216,950 $ 788,693 $ 782,720
Net earnings before
amortization,
interest
and income taxes
Canada $ 19,499 $ 17,893 $ 62,629 $ 57,663
Alaska 2,015 3,129 13,977 15,163
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Total $ 21,514 $ 21,022 $ 76,606 $ 72,826
Net earnings before
interest and
income taxes
Canada $ 14,373 $ 13,248 $ 42,652 $ 39,250
Alaska 1,076 2,186 10,049 11,175
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Total $ 15,449 $ 15,434 $ 52,701 $ 50,425
Identifiable Assets
Canada $ 293,254 $ 289,825 $ 293,254 $ 289,825
Alaska 63,963 66,555 63,963 66,555
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Total $ 357,217 $ 356,380 $ 357,217 $ 356,380
6. Comparative Amounts The comparative amounts have been reclassified to conform with the current year's presentation. North West Company Fund (TSX:NWF.UN) |
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