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Dollarama Group L.P., et al. – ‘8-K’ for 4/17/09 – EX-99.2

On:  Friday, 4/17/09, at 4:54pm ET   ·   For:  4/17/09   ·   Accession #:  1193125-9-81768   ·   File #s:  333-134550, 333-143444

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/17/09  Dollarama Group L.P.              8-K:7,9     4/17/09    3:202K                                   RR Donnelley/FA
          Dollarama Group Holdings L.P.

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     21K 
 2: EX-99.1     Press Release Dated March 23, 2009                  HTML      8K 
 3: EX-99.2     Press Release Dated April 17, 2009                  HTML    154K 


EX-99.2   —   Press Release Dated April 17, 2009


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  Press release dated April 17, 2009  

Exhibit 99.2

Dollarama Group L.P. and Dollarama Group Holdings L.P. Announce

Fourth Quarter and Fiscal Year 2009 Results

Group L.P. Highlights for the Fourth Quarter ended February 1, 2009

   

Sales increased 12.1% over prior year period

   

Comparable store sales rose 4.8%

   

Adjusted EBITDA increased 8.4%

Group L.P. Highlights for Fiscal Year 2009 ended February 1, 2009

   

Sales increased 12.0% over prior year period

   

Comparable store sales rose 3.4%

   

Adjusted EBITDA increased 4.2%

MONTREAL, (April 17, 2009) – Dollarama Group L.P. and Dollarama Group Holdings L.P., today announced financial results for the fourth quarter and fiscal year ended February 1, 2009. The results of operations of Dollarama Group Holdings L.P. are almost identical to those of Dollarama Group L.P., with the main exception being interest expense, financing costs and foreign exchange gain or loss associated with Dollarama Group Holdings L.P.’s outstanding balance of senior floating rate deferred interest notes. Note: All dollar amounts in this press release are in Canadian dollars unless otherwise indicated.

Fourth Quarter results

For the 13-week period ended February 1, 2009, Dollarama reported a sales increase of $34.2 million, or 12.1% over the prior year period. Net sales totalled $315.5 million compared to $281.4 million for the 13-week period ended February 3, 2008. Comparable store sales rose 4.8% over the same quarter last year. The increase was partly attributable to a 3.8% increase in the average transaction size, as well as a 1.0% increase in store traffic. The remaining portion of the sales growth was driven primarily by 47 new store openings (offset by the closure of four stores) since the end of the fourth quarter of fiscal year 2008, and by the full 13-week effect of the 16 stores opened during the fourth quarter of last year.

Gross margin for the period was 34.6%, compared to 35.0% for the same period last year, mainly due to higher product, labour, freight, and occupancy costs. These costs were partially offset by a $1.8 million positive effect on the cost of goods sold resulting from the adoption of a new GAAP standard which includes in inventory certain supply chain costs associated with purchasing in bulk and the redistribution of merchandise within the store network. In all prior years, these supply chain costs were treated as period costs.

Adjusted EBITDA (as defined in the tables below) was $48.6 million for the 13-week period ended February 1, 2009, up 8.4% versus the prior year.

Dollarama Group L.P. recorded net earnings of $30.3 million for the fourth quarter of fiscal year 2009, up from $27.7 million for the corresponding quarter in fiscal year 2008. Sales growth and lower interest costs contributed to the increase. Higher cost of goods sold, higher general administration and store expenses, and a foreign exchange loss on derivative financial instruments and long-term debt partially offset the earnings increase.

Dollarama Group Holdings’ net earnings rose to $20.5 million in the fourth fiscal quarter of 2009, up from $10.8 million last year, due to the same factors affecting Dollarama Group L.P.’s net earnings, as well as a smaller foreign exchange loss as compared to the fourth quarter of fiscal 2008.

Fiscal Year 2009 Results

For the fiscal year ended February 1, 2009, Dollarama Group L.P. reported sales of $1.1 billion, a 12.0% increase over the $972.4 million in sales recorded for the fiscal year ended February 3, 2008.

Comparable store sales rose 3.4% over the same period a year ago, driven by a 3.9% increase in the average transaction size per customer that was slightly offset by a 0.5% decrease in store traffic. The remaining portion of the sales growth was driven primarily by the incremental full period impact of the 47 new store openings (offset by the closure of four stores) in the last four quarters ending February 1, 2009, and by the full effect of the 61 stores opened (offset by the closure of three stores) during fiscal year 2008.

 

1


Gross margin was 34.1%, even with the previous fiscal year. Higher transportation, freight, and occupancy costs were offset by a positive effect of $1.8 million on the cost of goods sold resulting from adoption of a new GAAP standard with respect to inventory that better reflects the total costs included in the supply chain, which involve purchasing in bulk and redistribution of the goods within the store network. Without the change in accounting policy, gross margin for fiscal year 2009 would have been 34.0%.

Adjusted EBITDA was $158.4 million, a 4.2% increase versus the previous year.

Dollarama Group L.P.’s net earnings for fiscal year 2009 increased to $90.1 million, from $76.8 million in fiscal year 2008. Sales growth, lower interest costs and a gain on foreign exchange on derivative financial instruments and long-term debt contributed to the increase. Higher general administration and store expenses, and increased amortization of property and equipment – both associated with the growth of the business – partially offset the earnings increase.

For Dollarama Group Holdings, net earnings decreased to $24.0 million for the fiscal year 2009 from $88.9 million in the prior year. This was due to the same factors affecting Dollarama Group L.P.’s net earnings, and was further reduced by the foreign exchange loss on long-term debt on the outstanding senior deferred notes.

The partnership’s efforts to improve its working capital continued to have a favourable impact. Dollarama ended fiscal year 2009 with $66.1 million in cash compared to $26.2 million at the end of fiscal 2008.

“I am very encouraged by Dollarama’s financial and operating performance in fiscal year 2009 during a challenging economic environment,” said Larry Rossy, Chief Executive Officer of Dollarama Group L.P. “We recorded solid sales growth driven by new store openings and healthy comparable store sales growth. Strong operations management including improved store replenishment and in-store execution and completion of our chain-wide debit card roll-out contributed to increased revenue and earnings.

As we embark on a new fiscal year, our priorities and initiatives will continue to focus on growing and improving operations and on enhancing our recently-introduced new product offering at select price points greater than $1.00. In the near term, we will continue to research our customers’ needs and remain proactive in implementing and improving merchandising and in-store processes to support this initiative.”

About Dollarama

Dollarama is the leading operator of discount retail stores in Canada. Currently, the company operates more than 565 stores, each offering a broad assortment of quality everyday merchandise sold in individual or multiple units primarily at fixed prices of $1.00, $1.25, $1.50 and $2.00. All stores are company-operated, and nearly all are located in high traffic areas such as strip malls and shopping centers in various locations, including metropolitan areas, mid-sized cities, and small towns. In 1910, the company was established as a single variety store in Québec.

Safe Harbor for Forward-Looking and Cautionary Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including among others, changes in customer demand for products, changes in raw material and equipment costs and availability, seasonal changes in customer demand, pricing actions by competitors and general changes in economic conditions; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.

 

2


SUMMARY CONSOLIDATED FINANCIAL DATA

 

     Dollarama Group L.P.  
(dollars in thousands)    13-Week
Period
Ended
February 1,
2009
    13-Week
Period
Ended
February 3,

2008
               Year Ended
February 1,
2009
    Year Ended
February 3,

2008
 

Statement of Operations Data:

                

Sales

   $ 315,546     $ 281,367             $ 1,089,011     $ 972,352  

Cost of sales

     206,438       182,772               717,141       640,885  
                                        

Gross profit

     109,108       98,595               371,870       331,467  

Expenses:

                

General administrative and store operating expenses

     62,530       55,257               219,797       186,263  

Amortization(1)

     5,980       5,463               21,818       18,389  
                                        

Total expenses

     68,510       60,720               241,615       204,652  
                                        

Operating income

     40,598       37,875               130,255       126,815  

Other (income)/expense:

                

Amortization of financing costs

     1,040       1,040               4,186       4,275  

Interest expense

     8,616       10,560               36,129       43,299  

Foreign exchange loss (gain) on derivative financial instruments and long-term debt

     670       (1,432 )             (387 )     2,183  
                                        

Earnings before income taxes

     30,272       27,707               90,327       77,058  

Provision for current income taxes

     19       13               218       280  
                                        

Net earnings

   $ 30,253     $ 27,694             $ 90,109     $ 76,778  
                                        
 

Statement of Cash Flows Data:

                

Cash flows provided by (used in):

                

Operating activities

   $ 13,513     $ 57,737             $ 118,008     $ 79,109  

Investing activities

     (14,118 )     (11,469 )             (49,728 )     (45,562 )

Financing activities

     394       (21,897 )             (28,357 )     (55,042 )
 

Other Financial Data:

                

Adjusted EBITDA(2)

   $ 48,568     $ 44,797             $ 158,421     $ 152,075  

Capital expenditures

   $ 14,557     $ 11,671             $ 40,502     $ 45,994  

Rent expenses(3)

   $ 18,520     $ 15,677             $ 68,981     $ 58,765  

Gross margin(4)

     34.6 %     35.0 %             34.1 %     34.1 %

Number of stores (at end of period)

     564       521               564       521  

Comparable store sales growth(5)

     4.8 %     (3.4 %)             3.4 %     (1.5 %)

 

3


     Dollarama Group Holdings L.P.  
(dollars in thousands)    13-Week
Period
Ended
February 1,
2009
    13-Week
Period
Ended
February 3,

2008
               Year Ended
February 1,
2009
    Year Ended
February 3,

2008
 

Statement of Operations Data:

                

Sales

   $ 315,546     $ 281,367             $ 1,089,011     $ 972,352  

Cost of sales

     206,438       182,772               717,141       640,885  
                                        

Gross profit

     109,108       98,595               371,870       331,467  

Expenses:

                

General administrative and store operating expenses

     62,530       55,259               219,823       186,265  

Amortization(1)

     5,980       5,463               21,818       18,389  
                                        

Total expenses

     68,510       60,722               241,641       204,654  
                                        

Operating income

     40,598       37,873               130,229       126,813  

Other (income)/expense:

                

Amortization of financing costs

     1,481       1,270               5,802       6,340  

Interest expense

     13,609       15,754               55,390       65,713  

Foreign exchange loss (gain) on derivative financial instruments and long-term debt

     5,007       10,027               44,793       (34,411 )
                                        

Earnings before income taxes

     20,501       10,882               24,244       89,171  

Provision for current income taxes

     19       12               241       302  
                                        

Net earnings

   $ 20,482     $ 10,810             $ 24,003     $ 88,869  
                                        
 

Statement of Cash Flows Data:

                

Cash flows provided by (used in):

                

Operating activities

   $ 13,513     $ 47,378             $ 118,216     $ 57,258  

Investing activities

     (14,118 )     (11,469 )             (49,728 )     (45,562 )

Financing activities

     395       (11,524 )             (28,561 )     (33,185 )
 

Other Financial Data:

                

Adjusted EBITDA(2)

   $ 48,568     $ 44,795             $ 158,395     $ 152,073  

Capital expenditures

   $ 14,557     $ 11,671             $ 40,502     $ 45,994  

Rent expenses(3)

   $ 18,520     $ 15,677             $ 68,981     $ 58,765  

Gross margin(4)

     34.6 %     35.0 %             34.1 %     34.1 %

Number of stores (at end of period)

     564       521               564       521  

Comparable store sales growth(5)

     4.8 %     (3.4 %)             3.4 %     (1.5 %)

 

4


     Dollarama Group L.P.         Dollarama Group
Holdings L.P.
(dollars in thousands)    As of
February 1,
2009
    As of
February 3,
2008
        As of
February 1,
2009
    As of
February 3,
2008

Balance Sheet Data:

             

Cash and cash equivalents

   $ 66,123     $ 26,200        $ 66,141     $ 26,214

Merchandise inventories

     249,644       198,500          249,644       198,500

Property and equipment

     129,878       111,936          129,878       111,936

Total assets

     1,362,993       1,197,951          1,363,041       1,197,983
                                 

Long-term debt (including current portion less financing costs)

     577,319       500,287          821,686       678,740

Fair value of foreign currency and interest rate swaps

     (33,423 )     89,732          (33,423 )     89,732

Long-term debt less fair value of swaps

     543,896       590,019          788,263       768,472

Partners’ capital

     684,561       513,150          436,470       331,161

 

(1) Amortization represents amortization of tangible and amortizable intangible assets, including amortization of favourable and unfavourable lease rights.
(2) EBITDA represents net income (loss) before net interest expense, income taxes, and depreciation and amortization expense. Adjusted EBITDA represents EBITDA as further adjusted to reflect items set forth in the table below, all of which are required in determining our compliance with financial covenants under our senior secured credit facility. We have included EBITDA and Adjusted EBITDA to provide investors with a supplemental measure of our operating performance and information about the calculation of some of the financial covenants that are contained in the senior secured credit facility. We believe EBITDA is an important supplemental measure of operating performance because it eliminates items that have less bearing on our operating performance and thus highlights trends in our core business that may not otherwise be apparent when relying solely on Canadian GAAP financial measures. We also believe that securities analysts, investors and other interested parties frequently use EBITDA in the evaluation of issuers, many of which present EBITDA when reporting their results. Adjusted EBITDA is a material component of the covenants imposed on us by the senior secured credit facility. Under the senior secured credit facility, we are subject to financial covenant ratios that are calculated by reference to Adjusted EBITDA. Non-compliance with the financial covenants contained in our senior secured credit facility could result in a default, an acceleration in the repayment of amounts outstanding under the senior secured credit facility, and a termination of the lending commitments under the senior secured credit facility. Generally, any default under the senior secured credit facility that results in the acceleration in the repayment of amounts outstanding under the senior secured credit facility would result in a default under the indenture governing the 8.875% senior subordinated notes. While an event of default under the senior secured credit facility or the indenture is continuing, we would be precluded from, among other things, paying dividends on our capital stock or borrowing under the revolving credit facility. Our management also uses EBITDA and Adjusted EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements and our ability to pay dividends on our capital stock.

EBITDA and Adjusted EBITDA are not presentations made in accordance with Canadian GAAP. As discussed above, we believe that the presentation of EBITDA and Adjusted EBITDA in this summary consolidated financial data section is appropriate. However, EBITDA and Adjusted EBITDA have important limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under Canadian GAAP. For example, neither EBITDA nor Adjusted EBITDA reflect (a) our cash expenditures, or future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; and (d) tax payments or distributions to our parent to make payments with respect to taxes attributable to us that represent a reduction in cash available to us. Because of these limitations, we primarily rely on our results as reported in accordance with Canadian GAAP and use EBITDA and Adjusted EBITDA only supplementally. In addition, because other companies may calculate EBITDA and Adjusted EBITDA differently than we do, EBITDA may not be, and Adjusted EBITDA as presented in this summary consolidated financial data section is not, comparable to similarly titled measures reported by other companies.

 

5


A reconciliation of net earnings (loss) to EBITDA and to Adjusted EBITDA is included below

 

     Dollarama Group L.P.
(dollars in thousands)    13-Week
Period Ended
February 1,
2009
   13-Week
Period Ended
February 3,
2008
          Year Ended
February 1,
2009
    Year Ended
February 3,
2008

Net earnings

   $ 30,253    $ 27,694          $ 90,109     $ 76,778

Provision for current income taxes

     19      13            218       280

Interest expense

     8,616      10,560            36,129       43,299

Amortization of financing costs

     1,040      1,040            4,186       4,275

Amortization of fixed assets

     5,980      5,463            21,818       18,389
                                  

EBITDA

     45,908      44,770            152,460       143,021

Foreign exchange loss (gain) on derivative financial instruments and long-term debt

     670      (1,432 )          (387 )     2,183

Management fees(a)

     912      872            3,331       3,247

Deferred lease inducements(b)

     952      354            2,276       2,312

Stock-based compensation expense(c)

     126      233            741       1,312
                                  

Adjusted EBITDA

   $ 48,568    $ 44,797          $ 158,421     $ 152,075
                                  

 

6


     Dollarama Group Holdings L.P.  
(dollars in thousands)    13-Week
Period Ended
February 1,
2009
   13-Week
Period Ended
February 3,
2008
        Year Ended
February 1,
2009
   Year Ended
February 3,
2008
 

Net earnings

   $ 20,482    $ 10,810        $ 24,003    $ 88,869  

Provision for current income taxes

     19      12          241      302  

Interest expense

     13,609      15,754          55,390      65,713  

Amortization of financing costs

     1,481      1,270          5,802      6,340  

Amortization of fixed assets

     5,980      5,463          21,818      18,389  
                                 

EBITDA

     41,571      33,309          107,254      179,613  

Foreign exchange loss (gain) on derivative financial instruments and long-term debt

     5,007      10,027          44,793      (34,411 )

Management fees(a)

     912      872          3,331      3,247  

Deferred lease inducements(b)

     952      354          2,276      2,312  

Stock-based compensation expense(c)

     126      233          741      1,312  
                                 

Adjusted EBITDA

   $ 48,568    $ 44,795        $ 158,395    $ 152,073  
                                 

 

  (a) Reflects the management fees incurred and paid or payable to the company’s majority owners.
  (b) Represents the elimination of non-cash straight-line rent expense.
  (c) Represents the elimination of non-cash stock-based compensation expense.

 

(3) Rent expense represents (i) basic rent expense on a straight-line basis and (ii) contingent rent expense, net of amortization of inducements received from landlords.
(4) Gross margin represents gross profit as a percentage of sales.
(5) Comparable store sales is a measure of the percentage increase or decrease of the sales of stores open for at least 13 complete fiscal months and that remain open at the end of the reporting period relative to the same period in the prior year. We include sales from stores expanded or relocated in the calculation of comparable store sales. To provide more meaningful results, the company measures comparable store sales over periods containing an integral number of weeks beginning on a Monday and ending on a Sunday that best approximate the fiscal period to be analyzed.

 

7


CONTACTS

Investors:

Robert Coallier, Chief Financial Officer

(514) 737-1006 x1238

Media:

Alex Stanton

Stanton Public Relations & Marketing

(212) 366-5300

astanton@stantonprm.com

 

8


Dates Referenced Herein   and   Documents Incorporated by Reference

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