North West Company Fund Reports 2005 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 (the "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) today reported 2005 fourth quarter earnings for the period ended January January: see month. 28, 2006 and declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a quarterly cash distribution of $0.54 per unit to unitholders of record on March 31, 2006, distributable by April 15, 2006. Report to Unitholders The North West Company Fund reports fourth quarter earnings to January 28, 2006 of $12.2 million, an increase of 15.4% to 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 improved to $0.77 compared to $0.66 last year. Sales increased 8.2% to $227.0 million and were up 8.8% 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. On a same store basis, sales increased 4.1% and were up 4.6% excluding the foreign exchange impact. Sustained food sales growth in all of our banners and strong general 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 sales in our 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. stores and 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 operations were the leading positive factors, offsetting weaker 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 . "The fourth quarter contributed to excellent overall results in 2005," said Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide Kennedy, The North West Company's 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. . "We achieved our goal of accelerated growth in food, more of our new stores matured and started to reach their potential and we continued to get new sales by pursuing local market opportunities." Management's Discussion & Analysis 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: RESULTS Fourth quarter consolidated sales increased 8.2% (4.6% on a same store basis excluding the foreign exchange impact) to $227.0 million compared to $209.9 million in 2004. The stronger Canadian dollar had the result of reducing sales by $4.2 million. Diluted earnings per unit improved to $0.77 compared to $0.66 last year. 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 12.0% to $24.1 million compared to $21.5 million in the fourth quarter last year. Sales gains and lower operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. rates in both 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 Alaska contributed to this improvement. Interest expense increased 12.5% to $1.6 million due to higher interest rates compared to the fourth quarter last year. Income taxes increased 14.6% to $4.0 million due to higher earnings in Canada. Income tax deductions Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. on interest paid to the Fund from 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 have been maximized therefore earnings increases are currently fully taxable. (1) See Non GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Measures Section of Management's Discussion & Analysis On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, sales were up 7.7% to $849.7 million and were up 9.3% excluding the foreign exchange impact of a stronger Canadian dollar compared to last year. 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 increased 4.0%, up 5.4% excluding the foreign exchange impact. Continued food market share growth from all store banners and general merchandise sales gains from Giant Tiger stores contributed to this performance. Trading profit increased 11.6% to $85.5 million compared to $76.6 million last year and increased 35 basis points to 10.1% of sales due to operating efficiencies. Consolidated net earnings increased 15.1% to $42.9 million from $37.3 million. Earnings per unit were $2.68 compared to $2.32 in 2004 on a fully diluted basis. The stronger Canadian dollar negatively impacted the conversion of Alaska earnings by $0.03 per unit. CANADIAN OPERATIONS Canadian sales for the quarter increased 8.5% (4.2% on a same store basis) to $189.0 million compared to $174.2 million last year. Food sales increased 10.3% in the quarter compared to last year (7.8% on a same store basis). Northern Canada and Giant Tiger sales exceeded targets due to a successful focus on more aggressive key item pricing, expanded special buy programs and new product introductions. Leading categories were beverages, produce, food service, and paper, health and beauty. General merchandise sales were up 3.2% over last year but were down 2.7% on a same store basis. Transportation saw the largest decrease in sales compared to last year. Northern Canada's general merchandise performance was expected to be softer at the revenue line as inventory and credit strategies focussed on higher quality sales in the face of higher energy related living costs and more limited discretionary spending. In the South, Giant Tiger general merchandise sales increased as consumer awareness and strong interest in these stores' fashion mix continued to grow. Gross profit dollars increased 8.9%. Higher food sales, lower general merchandise markdowns in northern Canada stores and an improved sales mix sales mix See product mix. of higher margin general merchandise in Giant Tiger stores were the main factors. 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. decreased by 42 basis points due to improved work processes and staff productivity, and the maturing of more Giant Tiger stores. These gains offset higher expenses related to debt loss, energy costs and performance incentive payments. Overall Canadian trading profit increased 8.6% to $21.2 million or 11.2% of sales. ALASKAN OPERATIONS (stated in U.S. dollars) 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 (AC) sales for the quarter increased 10.5% (7.5% on a same store basis) to $32.6 million compared to $29.5 million last year. Retail food sales increased 11.0% (7.7% on a same store basis) reflecting market share growth. Sales were strong in all categories with confection con·fec·tion n. A sweetened medicinal compound. Also called electuary. , beverages, snack foods A list of snack foods is shown below. For more information, see snack foods. List of snack foods Chips (Crisps)
Retail general merchandise sales increased 9.8% (6.9% on a same store basis). Sales rebounded sharply from a very weak third quarter due to the late disbursement DISBURSEMENT. Literally, to take money out of a purse. Figuratively, to pay out money; to expend money; and sometimes it signifies to advance money. 2. of the State of Alaska's Permanent Fund Dividend payment to many of our customers. Most payments were received in late October October: see month. and early November November: see month. pushing sales into the fourth quarter, which resulted in an 18.7% same store sales increase in the month of November. Sales were up in most categories led by transportation, ladies apparel and sporting goods Noun 1. sporting goods - sports equipment sold as a commodity commodity, trade good, good - articles of commerce sports equipment - equipment needed to participate in a particular sport . Quarterly sales at Frontier frontier, in U.S. history, the border area of settlement of Europeans and their descendants; it was vital in the conquest of the land between the Atlantic and the Pacific. Expeditors, AC's wholesale business, increased 8.1% over last year. Food sales were up 3.7%. General merchandise sales were up 37.3% due to expanded general merchandise programs and the timing of the Permanent Fund Dividend payment. Trading profit increased $776,000 or 44.5% to $2.5 million reflecting AC's sales performance and a 134 basis point drop in expenses led by staff productivity gains. FINANCIAL CONDITION Financial Ratios The Fund'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 .46:1 compared to .51:1 last year. This reflects an increase in cash generated from operating activities which lowered bank advances outstanding at 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. . Working capital increased $5.2 million from the third quarter and is $3.4 million higher compared to the 2004 year-end. The increase in cash and inventories compared to the 2004 year-end was offset by an increase in accounts payable. The increase in cash is due to the timing of deposits in-transit and higher cash balances in our stores to support our financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. activities. 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 decreased compared to last year reflecting lower credit sales in the fourth quarter. The increase in inventories is due to new stores opened in Canada and Alaska and higher freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or costs included in closing inventories. Outstanding Units The weighted average units outstanding for the quarter were 15,781,000 compared to 15,937,000 last year. In the third quarter, the Board of Trustees board of trustees Politics The posse of thugs who oversee an institution's administration. See Board of directors. authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: additional units under the Company's Unit Purchase Loan Plan most of which were purchased during the latter half of October. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities for the quarter increased to $39.8 million from $19.5 million last year. Inventories were down $17.2 million from the third quarter as better balanced inventory purchases and targeted markdowns on excess inventories helped reduce levels by year-end. Accounts payable increased $5.9 million from the third quarter resulting from extended terms with our suppliers. 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 funded sustaining and growth-related capital expenditures as well as all distributions for the year. Cash flow used in investing activities in the quarter increased to $6.2 million from $4.9 million last year. In 2005, capital expenditures totalled $24.8 million compared to an expected $27.2 million. Capital expenditures were $22.3 million in 2004. The increase in 2005 total capital expenditures over 2004 reflects the opening of more Giant Tiger stores, major store replacements and renovations in northern Canada, and the addition of new stores in Alaska. Cash used in financing activities in the quarter was $34.9 million compared to $16.9 million last year resulting from a decrease in bank advances and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. notes as inventories were reduced and payables Payables Related: Accounts payable increased. OTHER HIGHLIGHTS - The Company's strategy to expand health-related products and services moved forward with the acquisition of Northern Pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. , a business based in Moosonee, Ontario Moosonee is a town in Ontario, Canada, on the Moose River approximately 19 kilometres south of James Bay. which includes retail pharmacy, telepharmacy and contract hospital pharmacy A hospital pharmacy is concerned with pharmacy service to all types of hospital and differs considerably from a community pharmacy. Some pharmacists in hospital pharmacies may have more complex clinical medication management issues whereas pharmacists in community services. - AC has entered into an agreement to acquire five stores on Prince of Wales Island Prince of Wales Island, Canada Prince of Wales Island, c.12,800 sq mi (33,150 sq km), Nunavut Territory, Canada, between Victoria and Somerset islands. in southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: adj. 1. Almost exact or correct: the approximate time of the accident. 2. $13 million to AC's sales base and is expected to be completed by May 1, 2006. - A new 20,000 square foot Giant Tiger store opened in Yorkton Yorkton, city (1991 pop. 15,315), SE Sask., Canada, NE of Regina. It is a railroad center and has large stockyards, warehouses, a flour mill, brick and cement plants, and a farm-implement plant. , Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. on February February: see month. 25, 2006. Five more Giant Tiger stores are planned for opening in 2006 with Grande Prairie Grande Prairie (Fr. gräNd prâ'rē`), city (1991 pop. 28,271), W Alta., Canada, NW of Edmonton. It is the chief business center for the Peace River valley farming area. and Calgary Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial openings scheduled for April and June June: see month. 2006. - As announced in the third quarter report to unitholders, the Company is proceeding with an internal reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. whereby the majority of its Canadian operations will be placed into a limited partnership. This is expected to be mostly completed by the end of April 2006. A second phase restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan, as indicated in the third quarter report, is also proceeding. The completion of the restructuring plan is subject to receiving a satisfactory tax ruling and lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. and unitholder approvals. OUTLOOK This past year's food sales momentum has carried forward into the first quarter of 2006. In the North, general merchandise sales will continue to emphasize merchandise assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. and targeted margin enhancement. Giant Tiger stores are expected to deliver higher general merchandise sales blends as stores mature, possibly offset by slower comparable store sales increases as more stores reach their second and third year of operation. New business growth, people development programs and technology to enable improved store level merchandise ordering are priorities for 2006. Energy production and development activity is expected to spur the economy in Alaska and the Mackenzie Mackenzie, river, c.1,120 mi (1,800 km) long, issuing from Great Slave Lake, Northwest Territories, Canada, and flowing generally NW to the Arctic Ocean through a great delta. Between Great Slave Lake and Lake Athabasca it is known as the Slave River. region of the Northwest Territories Northwest Territories, territory (2001 pop. 37,360), 532,643 sq mi (1,379,028 sq km), NW Canada. The Northwest Territories lie W of Nunavut, N of lat. 60°N, and E of Yukon. . Capital expenditures in 2006 are expected to be in the range of $35 to $40 million due to larger store replacements and more new market opportunities. The average capital expenditures for 2006 and the past two years should approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $28 million. QUARTERLY RESULTS OF OPERATIONS The following is a summary of selected quarterly financial information. Each quarter represents a 13-week period. Operating Results-Consolidated
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Fourth Quarter Third Quarter Second Quarter First Quarter
($ in
millions) 2005 2004 2005 2004 2005 2004 2005 2004
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Sales $227.0 $209.9 $211.3 $197.0 $215.1 $197.5 $196.2 $184.4
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Trading
profit 24.1 21.5 22.7 21.2 21.9 19.3 16.8 14.6
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Net earnings 12.2 10.6 12.2 11.0 10.8 9.3 7.7 6.4
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Net earnings
per unit:
Basic 0.77 0.66 0.77 0.69 0.67 0.59 0.49 0.40
Diluted 0.77 0.66 0.76 0.68 0.67 0.58 0.48 0.40
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ACCOUNTING STANDARDS IMPLEMENTED IN 2005 There were no new accounting standards implemented in this quarter. UNITHOLDER DISTRIBUTIONS The Trustees declared a quarterly cash distribution of $0.54 per unit to unitholders of record on March 31, 2006 and distributable by April 15, 2006. NON-GAAP MEASURES (1) Trading Profit (EBITDA) is not a recognized measure under Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP). Management believes that in addition to net earnings (loss), trading profit is a useful supplemental measure as it provides investors with an indication of the Company's ability to generate cash flows to fund its cash requirements, including distributions and capital investment. Investors should be cautioned, however, that trading profit should not be construed as an alternative to net earnings (loss) determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of NWF's performance. NWF's method of calculating trading profit may differ from other companies and, accordingly, trading profit may not be comparable to measures used by other companies. A reconciliation of net earnings, the closest comparable GAAP measure, to trading profit or EBITDA for consolidated operations is provided below. Reconciliation of net earnings to trading profit:
Fourth Quarter Year to Date
($ in thousands) 2005 2004 2005 2004
---- ---- ---- ----
Net earnings $ 12,189 $ 10,564 $ 42,890 $ 37,265
Add: Amortization 6,339 6,065 25,013 23,905
Interest expense 1,573 1,398 6,120 5,761
Income taxes 3,995 3,487 11,479 9,675
-------- -------- -------- --------
Trading profit $ 24,096 $ 21,514 $ 85,502 $ 76,606
-------- -------- -------- --------
-------- -------- -------- --------
For trading profit information by business segment, see note 5 Segmented Information in the notes to the unaudited interim period 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 . 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 2004 Management's Discussion & Analysis and Consolidated Financial Statements report. Consequently, actual results and events may vary significantly from those included in, contemplated or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 a leading retailer of food and everyday products and services to rural communities and urban neighborhoods 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 193 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".
CONSOLIDATED BALANCE SHEETS
January 28 January 29
2006 2005
(unaudited, $ in thousands)
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ASSETS
Current assets
Cash $ 21,888 $ 11,438
Accounts receivable 67,498 69,040
Inventories 124,551 122,580
Prepaid expenses 2,981 2,663
Future income taxes 1,824 2,467
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Total Current Assets 218,742 208,188
Property and equipment 182,108 186,104
Other assets 17,306 12,253
Future income taxes 5,693 7,932
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Total Assets $ 423,849 $ 414,477
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LIABILITIES
Current liabilities
Bank advances and short-term notes $ 27,041 $ 32,023
Accounts payable and accrued liabilities 65,016 52,616
Income taxes payable 3,302 3,539
Current portion of long-term debt 108 106
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Total Current Liabilities 95,467 88,284
Long-term debt 84,524 88,803
Asset retirement obligations 1,285 1,105
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Total Liabilities 181,276 178,192
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EQUITY
Capital 165,205 165,205
Unit purchase loan plan (Note 2) (9,965) (4,429)
Retained earnings 83,133 70,560
Cumulative currency translation adjustments 4,200 4,949
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Total Equity 242,573 236,285
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Total Liabilities and Equity $ 423,849 $ 414,477
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See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
13 Weeks 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
January 28 January 29 January 28 January 29
2006 2005 2006 2005
(unaudited, $ in thousands)
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SALES $ 226,997 $ 209,857 $ 849,653 $ 788,693
Cost of sales, selling
and administrative
expenses (202,901) (188,343) (764,151) (712,087)
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Net earnings before
amortization, interest
and income taxes 24,096 21,514 85,502 76,606
Amortization (6,339) (6,065) (25,013) (23,905)
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17,757 15,449 60,489 52,701
Interest (1,573) (1,398) (6,120) (5,761)
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16,184 14,051 54,369 46,940
Provision for income
taxes (Note 3) (3,995) (3,487) (11,479) (9,675)
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NET EARNINGS FOR THE
PERIOD 12,189 10,564 42,890 37,265
Retained earnings,
beginning of period 78,524 66,610 70,560 61,679
Distributions (7,580) (6,614) (30,317) (28,384)
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RETAINED EARNINGS,
END OF PERIOD $ 83,133 $ 70,560 $ 83,133 $ 70,560
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NET EARNINGS PER UNIT
Basic $ 0.77 $ 0.66 $ 2.70 $ 2.34
Diluted $ 0.77 $ 0.66 $ 2.68 $ 2.32
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Weighted Average Number
of Units Outstanding
(000's)
Basic 15,781 15,937 15,898 15,918
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 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
January 28 January 29 January 28 January 29
2006 2005 2006 2005
(unaudited, $ in thousands)
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CASH PROVIDED BY (USED IN)
Operating Activities
Net earnings for the
period $ 12,189 $ 10,564 $ 42,890 $ 37,265
Non-cash items
Amortization 6,339 6,065 25,013 23,905
Future income taxes 819 394 2,780 636
Amortization of
deferred financing
costs 46 46 186 186
(Gain)loss on
disposal of property
and equipment (37) 413 (13) 1,158
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19,356 17,482 70,856 63,150
Change in non-cash
working capital 20,693 2,437 9,865 (13,698)
Change in other
non-cash items (203) (381) (5,432) (527)
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Operating activities 39,846 19,538 75,289 48,925
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Investing Activities
Purchase of property
and equipment (6,318) (5,013) (24,833) (22,323)
Proceeds from disposal
of property and
equipment 84 81 848 694
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Investing activities (6,234) (4,932) (23,985) (21,629)
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Financing Activities
Change in bank advances
and short-term notes (27,937) (6,905) (4,899) 1,885
Net purchase of units
for unit purchase loan
plan 668 (140) (5,536) (779)
Repayment of long-term
debt (39) (2,542) (102) (4,486)
Distributions (7,580) (7,335) (30,317) (29,105)
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Financing activities (34,888) (16,922) (40,854) (32,485)
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NET CHANGE IN CASH (1,276) (2,316) 10,450 (5,189)
Cash, beginning of
period 23,164 13,754 11,438 16,627
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CASH, END OF PERIOD $ 21,888 $ 11,438 $ 21,888 $ 11,438
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Supplemental disclosure
of cash paid for:
Interest expense $ 2,977 $ 2,823 $ 6,166 $ 6,076
Income taxes 1,928 2,484 9,260 7,453
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See accompanying notes to consolidated financial statements.
North West Company Fund 2005 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 2004 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 conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the audited annual consolidated financial statements and the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes included in the North West Company Fund's 2004 Management's Discussion & Analysis and Consolidated Financial Statements report. 2. Unit Purchase Loan Plan Loans issued to officers and senior management to purchase units under the unit purchase loan plan are treated as a reduction of equity. These loans are non-interest bearing and repayable re·pay v. re·paid , re·pay·ing, re·pays v.tr. 1. To pay back: repaid a debt. 2. from the after tax distributions or if the person 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 305,456 units of the Company with a quoted value at January 28, 2006 of $10,996,000. Loans receivable at January 28, 2006 of $9,965,000 (2004 - $4,429,000) are recorded as a reduction of equity. The loans have terms of three to five years. The maximum value of the loans under the plan is currently limited to $15,000,000. 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 28, 2006 is $407,000 (2004 - $498,000) and for the fifty two weeks ended January 28, 2006 $2,410,000 (2004 - $1,872,000). 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 28, 2006 of US$21,000 (2004 - US$16,000) and for the fifty two weeks ended January 28, 2006 of US$138,000 (2004 - US$131,000). In the thirteen weeks ended January 28, 2006, the Company made a $2,000,000 cash contribution to the defined benefit pension plans to reduce the deficit in the pension plans. The payment is included in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. on the Company's consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . NOTES TO THE UNAUDITED INTERIM PERIOD CONSOLIDATED FINANCIAL STATEMENTS 5. Segmented Information ($ 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 Canada and Alaska. The following information is presented for the two business segments:
13 Weeks 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
January 28 January 29 January 28 January 29
2006 2005 2006 2005
Sales
Canada $ 188,978 $ 174,186 $ 689,340 $ 629,822
Alaska 38,019 35,671 160,313 158,871
--------------------------------------------
Total $ 226,997 $ 209,857 $ 849,653 $ 788,693
Net earnings before
amortization, interest
and income taxes
Canada $ 21,184 $ 19,499 $ 70,561 $ 62,629
Alaska 2,912 2,015 14,941 13,977
--------------------------------------------
Total $ 24,096 $ 21,514 $ 85,502 $ 76,606
Net earnings before
interest and income
taxes
Canada $ 15,811 $ 14,373 $ 49,458 $ 42,652
Alaska 1,946 1,076 11,031 10,049
--------------------------------------------
Total $ 17,757 $ 15,449 $ 60,489 $ 52,701
Identifiable Assets
Canada $ 293,606 $ 293,254 $ 293,606 $ 293,254
Alaska 60,640 63,963 60,640 63,963
--------------------------------------------
Total $ 354,246 $ 357,217 $ 354,246 $ 357,217
6. Comparative Amounts The comparative amounts have been reclassified to conform with the current year's presentation. 2005 FOURTH QUARTER REPORT TO UNITHOLDERS Report to Unitholders The North West Company Fund reports fourth quarter earnings to January 28, 2006 of $12.2 million, an increase of 15.4% to last year's fourth quarter earnings of $10.6 million. Diluted earnings per unit improved to $0.77 compared to $0.66 last year. Sales increased 8.2% to $227.0 million and were up 8.8% excluding the foreign exchange impact of a stronger Canadian dollar compared to the fourth quarter last year. On a same store basis, sales increased 4.1% and were up 4.6% excluding the foreign exchange impact. Sustained food sales growth in all of our banners and strong general merchandise sales in our Giant Tiger stores and Alaska operations were the leading positive factors, offsetting weaker general merchandise sales in Northern Canada. On behalf of the Trustees and the Board of Directors: Ian Sutherland Edward S. Kennedy Chairman President and Chief Executive Officer Management's Discussion & Analysis CONSOLIDATED RESULTS Fourth quarter consolidated sales increased 8.2% (4.6% on a same store basis excluding the foreign exchange impact) to $227.0 million compared to $209.9 million in 2004. The stronger Canadian dollar had the result of reducing sales by $4.2 million. Diluted earnings per unit improved to $0.77 compared to $0.66 last year. Trading profit(1) or net earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 12.0% to $24.1 million compared to $21.5 million in the fourth quarter last year. Sales gains and lower operating expense rates in both Canada and Alaska contributed to this improvement. Interest expense increased 12.5% to $1.6 million due to higher interest rates compared to the fourth quarter last year. Income taxes increased 14.6% to $4.0 million due to higher earnings in Canada. Income tax deductions on interest paid to the Fund from Canadian operations have been maximized therefore earnings increases are currently fully taxable. (1) See Non GAAP Measures Section of Management's Discussion & Analysis On a year-to-date basis, sales were up 7.7% to $849.7 million and were up 9.3% excluding the foreign exchange impact of a stronger Canadian dollar compared to last year. Same store sales increased 4.0%, up 5.4% excluding the foreign exchange impact. Continued food market share growth from all store banners and general merchandise sales gains from Giant Tiger stores contributed to this performance. Trading profit increased 11.6% to $85.5 million compared to $76.6 million last year and increased 35 basis points to 10.1% of sales due to operating efficiencies. Consolidated net earnings increased 15.1% to $42.9 million from $37.3 million. Earnings per unit were $2.68 compared to $2.32 in 2004 on a fully diluted basis. The stronger Canadian dollar negatively impacted the conversion of Alaska earnings by $0.03 per unit. CANADIAN OPERATIONS Canadian sales for the quarter increased 8.5% (4.2% on a same store basis) to $189.0 million compared to $174.2 million last year. Food sales increased 10.3% in the quarter compared to last year (7.8% on a same store basis). Northern Canada and Giant Tiger sales exceeded targets due to a successful focus on more aggressive key item pricing, expanded special buy programs and new product introductions. Leading categories were beverages, produce, food service, and paper, health and beauty. General merchandise sales were up 3.2% over last year but were down 2.7% on a same store basis. Transportation saw the largest decrease in sales compared to last year. Northern Canada's general merchandise performance was expected to be softer at the revenue line as inventory and credit strategies focussed on higher quality sales in the face of higher energy related living costs and more limited discretionary spending. In the South, Giant Tiger general merchandise sales increased as consumer awareness and strong interest in these stores' fashion mix continued to grow. Gross profit dollars increased 8.9%. Higher food sales, lower general merchandise markdowns in northern Canada stores and an improved sales mix of higher margin general merchandise in Giant Tiger stores were the main factors. Operating expenses decreased by 42 basis points due to improved work processes and staff productivity, and the maturing of more Giant Tiger stores. These gains offset higher expenses related to debt loss, energy costs and performance incentive payments. Overall Canadian trading profit increased 8.6% to $21.2 million or 11.2% of sales. ALASKAN OPERATIONS (stated in U.S. dollars) Alaska Commercial Company (AC) sales for the quarter increased 10.5% (7.5% on a same store basis) to $32.6 million compared to $29.5 million last year. Retail food sales increased 11.0% (7.7% on a same store basis) reflecting market share growth. Sales were strong in all categories with confection, beverages, snack foods, produce and tobacco having the largest increase over last year. A state tobacco tax increase continues to contribute to tobacco sales dollar growth. Retail general merchandise sales increased 9.8% (6.9% on a same store basis). Sales rebounded sharply from a very weak third quarter due to the late disbursement of the State of Alaska's Permanent Fund Dividend payment to many of our customers. Most payments were received in late October and early November pushing sales into the fourth quarter, which resulted in an 18.7% same store sales increase in the month of November. Sales were up in most categories led by transportation, ladies apparel and sporting goods. Quarterly sales at Frontier Expeditors, AC's wholesale business, increased 8.1% over last year. Food sales were up 3.7%. General merchandise sales were up 37.3% due to expanded general merchandise programs and the timing of the Permanent Fund Dividend payment. Trading profit increased $776,000 or 44.5% to $2.5 million reflecting AC's sales performance and a 134 basis point drop in expenses led by staff productivity gains. FINANCIAL CONDITION Financial Ratios The Fund's debt-to-equity ratio at the end of the quarter was .46:1 compared to .51:1 last year. This reflects an increase in cash generated from operating activities which lowered bank advances outstanding at year-end. Working capital increased $5.2 million from the third quarter and is $3.4 million higher compared to the 2004 year-end. The increase in cash and inventories compared to the 2004 year-end was offset by an increase in accounts payable. The increase in cash is due to the timing of deposits in-transit and higher cash balances in our stores to support our financial services activities. Receivables decreased compared to last year reflecting lower credit sales in the fourth quarter. The increase in inventories is due to new stores opened in Canada and Alaska and higher freight costs included in closing inventories. Outstanding Units The weighted average units outstanding for the quarter were 15,781,000 compared to 15,937,000 last year. In the third quarter, the Board of Trustees authorized additional units under the Company's Unit Purchase Loan Plan most of which were purchased during the latter half of October. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities for the quarter increased to $39.8 million from $19.5 million last year. Inventories were down $17.2 million from the third quarter as better balanced inventory purchases and targeted markdowns on excess inventories helped reduce levels by year-end. Accounts payable increased $5.9 million from the third quarter resulting from extended terms with our suppliers. Cash flow from operations in 2005 funded sustaining and growth-related capital expenditures as well as all distributions for the year. Cash flow used in investing activities in the quarter increased to $6.2 million from $4.9 million last year. In 2005, capital expenditures totalled $24.8 million compared to an expected $27.2 million. Capital expenditures were $22.3 million in 2004. The increase in 2005 total capital expenditures over 2004 reflects the opening of more Giant Tiger stores, major store replacements and renovations in northern Canada, and the addition of new stores in Alaska. Cash used in financing activities in the quarter was $34.9 million compared to $16.9 million last year resulting from a decrease in bank advances and short-term notes as inventories were reduced and payables increased. OTHER HIGHLIGHTS - The Company's strategy to expand health-related products and services moved forward with the acquisition of Northern Pharmacy, a business based in Moosonee, Ontario which includes retail pharmacy, telepharmacy and contract hospital pharmacy services. - AC has entered into an agreement to acquire five stores on Prince of Wales Island in southeast Alaska. This acquisition will add approximately $13 million to AC's sales base and is expected to be completed by May 1, 2006. - A new 20,000 square foot Giant Tiger store opened in Yorkton, Saskatchewan on February 25, 2006. Five more Giant Tiger stores are planned for opening in 2006 with Grande Prairie and Calgary openings scheduled for April and June 2006. - As announced in the third quarter report to unitholders, the Company is proceeding with an internal reorganization whereby the majority of its Canadian operations will be placed into a limited partnership. This is expected to be mostly completed by the end of April 2006. A second phase restructuring plan, as indicated in the third quarter report, is also proceeding. The completion of the restructuring plan is subject to receiving a satisfactory tax ruling and lender and unitholder approvals. OUTLOOK This past year's food sales momentum has carried forward into the first quarter of 2006. In the North, general merchandise sales will continue to emphasize merchandise assortment and targeted margin enhancement. Giant Tiger stores are expected to deliver higher general merchandise sales blends as stores mature, possibly offset by slower comparable store sales increases as more stores reach their second and third year of operation. New business growth, people development programs and technology to enable improved store level merchandise ordering are priorities for 2006. Energy production and development activity is expected to spur the economy in Alaska and the Mackenzie region of the Northwest Territories. Capital expenditures in 2006 are expected to be in the range of $35 to $40 million due to larger store replacements and more new market opportunities. The average capital expenditures for 2006 and the past two years should approximate $28 million. QUARTERLY RESULTS OF OPERATIONS The following is a summary of selected quarterly financial information. Each quarter represents a 13-week period. Operating Results-Consolidated
---------------------------------------------------------------------
Fourth Quarter Third Quarter Second Quarter First Quarter
($ in
millions) 2005 2004 2005 2004 2005 2004 2005 2004
---------------------------------------------------------------------
Sales $227.0 $209.9 $211.3 $197.0 $215.1 $197.5 $196.2 $184.4
---------------------------------------------------------------------
Trading
profit 24.1 21.5 22.7 21.2 21.9 19.3 16.8 14.6
---------------------------------------------------------------------
Net earnings 12.2 10.6 12.2 11.0 10.8 9.3 7.7 6.4
---------------------------------------------------------------------
Net earnings
per unit:
Basic 0.77 0.66 0.77 0.69 0.67 0.59 0.49 0.40
Diluted 0.77 0.66 0.76 0.68 0.67 0.58 0.48 0.40
---------------------------------------------------------------------
ACCOUNTING STANDARDS IMPLEMENTED IN 2005 There were no new accounting standards implemented in this quarter. UNITHOLDER DISTRIBUTIONS The Trustees declared a quarterly cash distribution of $0.54 per unit to unitholders of record on March 31, 2006 and distributable by April 15, 2006. NON-GAAP MEASURES (1) Trading Profit (EBITDA) is not a recognized measure under Canadian generally accepted accounting principles (GAAP). Management believes that in addition to net earnings (loss), trading profit is a useful supplemental measure as it provides investors with an indication of the Company's ability to generate cash flows to fund its cash requirements, including distributions and capital investment. Investors should be cautioned, however, that trading profit should not be construed as an alternative to net earnings (loss) determined in accordance with GAAP as an indicator of NWF's performance. NWF's method of calculating trading profit may differ from other companies and, accordingly, trading profit may not be comparable to measures used by other companies. A reconciliation of net earnings, the closest comparable GAAP measure, to trading profit or EBITDA for consolidated operations is provided below. Reconciliation of net earnings to trading profit:
Fourth Quarter Year to Date
($ in thousands) 2005 2004 2005 2004
---- ---- ---- ----
Net earnings $ 12,189 $ 10,564 $ 42,890 $ 37,265
Add: Amortization 6,339 6,065 25,013 23,905
Interest expense 1,573 1,398 6,120 5,761
Income taxes 3,995 3,487 11,479 9,675
-------- -------- -------- --------
Trading profit $ 24,096 $ 21,514 $ 85,502 $ 76,606
-------- -------- -------- --------
-------- -------- -------- --------
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 This Quarterly Report for North West Company Fund, including Management's Discussion and Analysis (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 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 2004 Management's Discussion & Analysis and Consolidated Financial Statements 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.
CONSOLIDATED BALANCE SHEETS
January 28 January 29
2006 2005
(unaudited, $ in thousands)
---------------------------------------------------------------------
ASSETS
Current assets
Cash $ 21,888 $ 11,438
Accounts receivable 67,498 69,040
Inventories 124,551 122,580
Prepaid expenses 2,981 2,663
Future income taxes 1,824 2,467
---------------------------------------------------------------------
Total Current Assets 218,742 208,188
Property and equipment 182,108 186,104
Other assets 17,306 12,253
Future income taxes 5,693 7,932
---------------------------------------------------------------------
Total Assets $ 423,849 $ 414,477
---------------------------------------------------------------------
---------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank advances and short-term notes $ 27,041 $ 32,023
Accounts payable and accrued liabilities 65,016 52,616
Income taxes payable 3,302 3,539
Current portion of long-term debt 108 106
---------------------------------------------------------------------
Total Current Liabilities 95,467 88,284
Long-term debt 84,524 88,803
Asset retirement obligations 1,285 1,105
---------------------------------------------------------------------
Total Liabilities 181,276 178,192
---------------------------------------------------------------------
EQUITY
Capital 165,205 165,205
Unit purchase loan plan (Note 2) (9,965) (4,429)
Retained earnings 83,133 70,560
Cumulative currency translation adjustments 4,200 4,949
---------------------------------------------------------------------
Total Equity 242,573 236,285
---------------------------------------------------------------------
Total Liabilities and Equity $ 423,849 $ 414,477
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
13 Weeks 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
January 28 January 29 January 28 January 29
2006 2005 2006 2005
(unaudited, $ in thousands)
---------------------------------------------------------------------
SALES $ 226,997 $ 209,857 $ 849,653 $ 788,693
Cost of sales, selling
and administrative
expenses (202,901) (188,343) (764,151) (712,087)
---------------------------------------------------------------------
Net earnings before
amortization, interest
and income taxes 24,096 21,514 85,502 76,606
Amortization (6,339) (6,065) (25,013) (23,905)
---------------------------------------------------------------------
17,757 15,449 60,489 52,701
Interest (1,573) (1,398) (6,120) (5,761)
---------------------------------------------------------------------
16,184 14,051 54,369 46,940
Provision for income
taxes (Note 3) (3,995) (3,487) (11,479) (9,675)
---------------------------------------------------------------------
NET EARNINGS FOR THE
PERIOD 12,189 10,564 42,890 37,265
Retained earnings,
beginning of period 78,524 66,610 70,560 61,679
Distributions (7,580) (6,614) (30,317) (28,384)
---------------------------------------------------------------------
RETAINED EARNINGS,
END OF PERIOD $ 83,133 $ 70,560 $ 83,133 $ 70,560
---------------------------------------------------------------------
---------------------------------------------------------------------
NET EARNINGS PER UNIT
Basic $ 0.77 $ 0.66 $ 2.70 $ 2.34
Diluted $ 0.77 $ 0.66 $ 2.68 $ 2.32
---------------------------------------------------------------------
Weighted Average Number
of Units Outstanding
(000's)
Basic 15,781 15,937 15,898 15,918
Diluted 16,126 16,126 16,126 16,126
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
13 Weeks 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
January 28 January 29 January 28 January 29
2006 2005 2006 2005
(unaudited, $ in thousands)
---------------------------------------------------------------------
CASH PROVIDED BY (USED IN)
Operating Activities
Net earnings for the
period $ 12,189 $ 10,564 $ 42,890 $ 37,265
Non-cash items
Amortization 6,339 6,065 25,013 23,905
Future income taxes 819 394 2,780 636
Amortization of
deferred financing
costs 46 46 186 186
(Gain)loss on
disposal of property
and equipment (37) 413 (13) 1,158
---------------------------------------------------------------------
19,356 17,482 70,856 63,150
Change in non-cash
working capital 20,693 2,437 9,865 (13,698)
Change in other
non-cash items (203) (381) (5,432) (527)
---------------------------------------------------------------------
Operating activities 39,846 19,538 75,289 48,925
---------------------------------------------------------------------
Investing Activities
Purchase of property
and equipment (6,318) (5,013) (24,833) (22,323)
Proceeds from disposal
of property and
equipment 84 81 848 694
---------------------------------------------------------------------
Investing activities (6,234) (4,932) (23,985) (21,629)
---------------------------------------------------------------------
Financing Activities
Change in bank advances
and short-term notes (27,937) (6,905) (4,899) 1,885
Net purchase of units
for unit purchase loan
plan 668 (140) (5,536) (779)
Repayment of long-term
debt (39) (2,542) (102) (4,486)
Distributions (7,580) (7,335) (30,317) (29,105)
---------------------------------------------------------------------
Financing activities (34,888) (16,922) (40,854) (32,485)
---------------------------------------------------------------------
NET CHANGE IN CASH (1,276) (2,316) 10,450 (5,189)
Cash, beginning of
period 23,164 13,754 11,438 16,627
---------------------------------------------------------------------
CASH, END OF PERIOD $ 21,888 $ 11,438 $ 21,888 $ 11,438
---------------------------------------------------------------------
---------------------------------------------------------------------
Supplemental disclosure
of cash paid for:
Interest expense $ 2,977 $ 2,823 $ 6,166 $ 6,076
Income taxes 1,928 2,484 9,260 7,453
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
North West Company Fund 2005 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 2004 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 audited annual consolidated financial statements and the accompanying notes included in the North West Company Fund's 2004 Management's Discussion & Analysis and Consolidated Financial Statements report. 2. Unit Purchase Loan Plan Loans issued to officers and senior management 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 person sells the units or leaves the Company. The loans are secured by a pledge of 305,456 units of the Company with a quoted value at January 28, 2006 of $10,996,000. Loans receivable at January 28, 2006 of $9,965,000 (2004 - $4,429,000) are recorded as a reduction of equity. The loans have terms of three to five years. The maximum value of the loans under the plan is currently limited to $15,000,000. 3. Income Taxes Certain interest amounts deducted by The North West Company Inc. are included as taxable income to unitholders of North West Company Fund upon distribution. The income tax benefit of loss carryforwards 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 28, 2006 is $407,000 (2004 - $498,000) and for the fifty two weeks ended January 28, 2006 $2,410,000 (2004 - $1,872,000). The Company maintains an employee savings plan for substantially all of its U.S. employees and recorded an expense for the thirteen weeks ended January 28, 2006 of US$21,000 (2004 - US$16,000) and for the fifty two weeks ended January 28, 2006 of US$138,000 (2004 - US$131,000). In the thirteen weeks ended January 28, 2006, the Company made a $2,000,000 cash contribution to the defined benefit pension plans to reduce the deficit in the pension plans. The payment is included in other assets on the Company's consolidated balance sheet. NOTES TO THE UNAUDITED INTERIM PERIOD CONSOLIDATED FINANCIAL STATEMENTS 5. Segmented Information ($ in thousands) The Company operates predominantly within the retail industry in Canada and Alaska. The following information is presented for the two business segments:
13 Weeks 13 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
January 28 January 29 January 28 January 29
2006 2005 2006 2005
Sales
Canada $ 188,978 $ 174,186 $ 689,340 $ 629,822
Alaska 38,019 35,671 160,313 158,871
--------------------------------------------
Total $ 226,997 $ 209,857 $ 849,653 $ 788,693
Net earnings before
amortization, interest
and income taxes
Canada $ 21,184 $ 19,499 $ 70,561 $ 62,629
Alaska 2,912 2,015 14,941 13,977
--------------------------------------------
Total $ 24,096 $ 21,514 $ 85,502 $ 76,606
Net earnings before
interest and income
taxes
Canada $ 15,811 $ 14,373 $ 49,458 $ 42,652
Alaska 1,946 1,076 11,031 10,049
--------------------------------------------
Total $ 17,757 $ 15,449 $ 60,489 $ 52,701
Identifiable Assets
Canada $ 293,606 $ 293,254 $ 293,606 $ 293,254
Alaska 60,640 63,963 60,640 63,963
--------------------------------------------
Total $ 354,246 $ 357,217 $ 354,246 $ 357,217
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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