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| Sears Canada Reports First Quarter Earnings |
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TORONTO, Apr 21, 2005 (Canada NewsWire via COMTEX) -- Sears Canada Inc. (TSX: SCC) today announced its unaudited first quarter results. Total revenues for the 13 week period ended April 2, 2005 were $1.321 billion compared to $1.331 billion for the 13 weeks ended April 3, 2004, a decrease of 0.8%. Same store sales decreased 2.5%. Net earnings for the quarter, including non-comparable items, were $13.9 million or 13 cents per share compared to $16.6 million or 16 cents per share in the quarter last year. Net earnings for the quarter, excluding non-comparable items, were a loss of $3.8 million or 4 cents per share compared to a profit of $7.7 million or 8 cents per share in the quarter last year. Commenting on the quarter, Brent Hollister, President and Chief Executive Officer stated, "Despite lower earnings which we attribute to an unseasonably long winter in much of the country and a shift of Easter into March from April, there were positive indicators about the health of our business. Our Home Furnishings, Fitness and Luggage categories performed well, key businesses that are not so impacted by weather as others. Women's sportswear and footwear combined was flat to last year, yet showed an improvement in gross margin. Our transactions were up single-digits over last year, a favourable sign of shopping frequency. In addition, our customer loyalty index is at an all time high. Also of note is our positive sales increase in western Canada, where the weather was what we would describe as more seasonable." Gross margin declined by 120 basis points due mainly to an overall higher balance-of-sale in out-of-season clearance. Inventory levels at the end of the quarter were 4.5% higher than last year which was a result of slow spring season sales. Total expenses were 2.0% higher than last year. "The first quarter did not meet our expectations," continued Mr. Hollister. "However, we are confident in our strategies and are encouraged by customer behaviour which indicates we are on the right track. The organization can deliver better results than we are reporting today, and we are looking forward to positive results over the balance of the year." This release contains discussion of forward-looking information and potential future circumstances and developments. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future expectations generally, and may materially differ from the Company's actual experience. Sears Canada is a multi-channel retailer with a network of 122 full-line department stores, 219 off-mall stores, 64 home improvement showrooms, over 2,200 catalogue merchandise pick-up locations, 113 Sears Travel offices and a nationwide home maintenance, repair, and installation network. The Company also publishes Canada's most extensive general merchandise catalogue and offers shopping online at www.sears.ca. SEARS CANADA INC.
Reconciliation of earnings/(loss) before non-comparable items to
net earnings
(in millions, except per share amounts)
Unaudited
13 Week Period Ended April 2, 2005 and April 3, 2004 ----------------------------------------------------------
Earnings (loss)
Before Tax After tax per share
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2005 2004 2005 2004 2005 2004
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Earnings/(loss)
before non-
comparable
items $ (5.3) $ 13.9 $ (3.8) $ 7.7 $ (0.04) $ 0.08
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Effect from
sale of
receivables 8.4 12.0 5.4 7.7 0.05 0.07
Restructuring
activities - (6.0) - (3.9) - (0.04)
Sale of real
estate joint
venture 15.5 14.6 12.3 11.7 0.12 0.11
Auto centre
operations - (10.1) - (6.6) - (0.06)
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Net earnings $ 18.6 $ 24.4 $ 13.9 $ 16.6 $ 0.13 $ 0.16
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SEARS CANADA INC.
Consolidated Statements of Financial Position
As at As at As at
April 2, April 3, January 1,
2005 2004 2005
(Restated -
(in millions) Note 16)
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(unaudited) (unaudited) (audited)
ASSETS
Current assets
Cash and short-term investments $ 64.1 $ 392.1 $ 78.0
Accounts receivable
(Notes 3 and 4) 1,304.2 913.6 1,526.3
Income taxes recoverable 5.8 9.6 0.3
Inventories 870.3 833.2 789.8
Prepaid expenses and other assets 140.3 128.1 132.4
Future income tax assets 102.5 153.2 98.9
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2,487.2 2,429.8 2,625.7
Investments and other assets
(Note 5) 85.3 88.7 83.9
Capital assets 1,036.0 1,054.5 1,065.8
Deferred charges 265.6 286.1 270.4
Future income tax assets 87.0 42.2 82.4
Other long term assets 93.5 63.4 134.2
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$ 4,054.6 $ 3,964.7 $ 4,262.4
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LIABILITIES Current liabilities
Accounts payable $ 612.6 $ 609.2 $ 735.2
Accrued liabilities 391.0 411.8 434.7
Income and other taxes payable 45.8 51.4 101.9
Principal payments on long-term
obligations due within one year
(Note 6) 221.3 6.9 21.3
Future income tax liabilities 13.4 13.1 14.4
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1,284.1 1,092.4 1,307.5
Long-term obligations (Note 6) 534.0 751.6 734.6
Accrued benefit liability 186.3 179.4 180.5
Other long term liabilities 163.6 150.2 162.4
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2,168.0 2,173.6 2,385.0
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SHAREHOLDERS' EQUITY
Capital stock (Note 11) 461.2 459.2 459.5
Retained earnings 1,425.4 1,331.9 1,417.9
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1,886.6 1,791.1 1,877.4
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$ 4,054.6 $ 3,964.7 $ 4,262.4
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SEARS CANADA INC.
CONSOLIDATED STATEMENTS OF EARNINGS
For the 13 week periods ended April 2, 2005 and April 3, 2004
Unaudited
2005 2004
(Restated -
(in millions, except per share amounts) Note 16)
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Total revenues $ 1,320.6 $ 1,330.7
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Cost of merchandise sold, operating,
administrative and selling expenses 1,260.3 1,249.0
Depreciation and amortization 43.0 42.4
Interest expense, net 14.2 13.4
Unusual items (income)/loss (Note 7) (15.5) 1.5
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Earnings before income taxes 18.6 24.4
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Income taxes
Current 13.6 3.7
Future (8.9) 4.1
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4.7 7.8
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Net earnings $ 13.9 $ 16.6
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Earnings per share (Note 8) $ 0.13 $ 0.16
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Diluted earnings per share (Note 8) $ 0.13 $ 0.16
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the 13 week periods ended April 2, 2005 and April 3, 2004
Unaudited
2005 2004
(Restated -
(in millions) Note 16)
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Opening balance $ 1,417.9 $ 1,321.7
Net earnings 13.9 16.6
Dividends declared and paid (6.4) (6.4)
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Closing balance $ 1,425.4 $ 1,331.9
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CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 13 week periods ended April 2, 2005 and April 3, 2004
Unaudited
2005 2004
(Restated -
(in millions) Note 16)
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CASH FLOWS GENERATED FROM (USED FOR)
OPERATING ACTIVITIES
Net earnings $ 13.9 $ 16.6
Non-cash items included in net earnings,
principally depreciation, pension expense,
future income taxes, and gain on sale of
real estate joint venture 27.9 31.5
Changes in non-cash working capital balances
and other items (302.0) (245.9)
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(260.2) (197.8)
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CASH FLOWS GENERATED FROM (USED FOR)
INVESTING ACTIVITIES
Purchases of capital assets (17.6) (18.9)
Proceeds from sale of capital assets 21.1 33.6
Charge account receivables 252.7 522.8
Deferred charges (2.8) -
Investments and other assets (1.5) (11.9)
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251.9 525.6
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CASH FLOWS GENERATED FROM (USED FOR)
FINANCING ACTIVITIES
Repayment of long-term obligations (0.5) (11.9)
Net proceeds from issue of capital stock 1.3 -
Dividends paid (6.4) (6.4)
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(5.6) (18.3)
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INCREASE/(DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS (13.9) 309.5
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 78.0 82.6
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CASH AND SHORT-TERM INVESTMENTS AT
END OF PERIOD $ 64.1 $ 392.1
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Sears Canada Inc.
Notes to the Interim Consolidated Financial Statements
April 2, 2005
Unaudited 1. DISCLOSURE These interim consolidated financial statements (the "financial
statements") do not contain all disclosures required by Canadian
generally accepted accounting principles for annual financial statements
and, accordingly, the financial statements should be read in conjunction
with the most recently prepared annual financial statements for the
52 week period ended January 1, 2005. Figures for the 13 week periods
ended April 2, 2005 and April 3, 2004 and the balances at those dates are
unaudited.
The Company's business follows a seasonal pattern, with merchandise sales
traditionally being higher in the fourth quarter than in other quarterly
periods due to consumer holiday buying patterns. As a result, a
disproportionate amount of total revenues is typically earned in the
fourth quarter.
2. ACCOUNTING POLICIES These financial statements follow the same accounting policies and
methods of their application as the most recent annual financial
statements for the 52 week period ended January 1, 2005, except as
follows:
a) Accounting for Consideration From a Vendor In January 2005, the Emerging Issues Committee (EIC) of the
Canadian Institute of Chartered Accountants (CICA) amended EIC-144
"Accounting by a Customer for Certain Consideration Received from
a Vendor". The Company adopted this new guidance retroactively as
at January 2, 2005. The guidance distinguishes between
discretionary rebates and binding agreements. The EIC requires
companies to recognize discretionary rebates when paid by the
vendor or when the vendor becomes obligated to pay. For binding
agreements, the rebates should be recognized as a reduction of
purchases for the period, provided the rebate is probable and
reasonably estimable.
This new guidance impacts the timing of recognition of the rebates
between the quarters, but does not impact the annual financial
statements. The impact on the Company's net income for the 13 week
period ended April 3, 2004 is an increase of approximately
$0.8 million.
b) Consolidation of Variable Interest Entities Effective January 2, 2005, the Company adopted CICA Accounting
Guideline 15 (AcG-15) "Variable Interest Entities". A variable
interest entity is defined as any type of legal entity that is not
economically controlled by traditional voting equity, but rather
by contractual or other financial arrangements. The guideline
requires consolidation of a variable interest entity by the party
with the majority of expected losses or expected residual returns
or both.
Certain financing and related transactions undertaken by the
Company are with entities which may meet the definition of
variable interest entities. The Company evaluated its involvement
with the trusts utilized for securitizations, more specifically
SCRT-1992 and SCORE Trust. The Company determined that since
January 2, 2005, these entities, which are considered variable
interest entities, meet the requirements for Qualifying
Special-Purpose Entities (QSPE's) and are therefore exempt from
consolidation under AcG-15. The Company has also evaluated the
impact of this guideline on other legal structures and economic
interests. The adoption of this new guideline had no significant
impact on the Company's financial statements.
c) Determining Whether an Arrangement Contains a Lease Effective January 2, 2005, the Company adopted the new
recommendations of the CICA regarding whether an arrangement
contains a lease. EIC-150 requires companies to analyze
arrangements that do not take the legal form of a lease but convey
a right to use a tangible asset. Such arrangements may include,
but are not limited to, outsourcing arrangements and contracts in
which a company must make a payment regardless of whether they
take delivery of a contracted product or service. The assessment
as to whether an arrangement contains a lease should be made at
the inception of the arrangement. Reassessments are required when
there is a change in the contractual terms, a renewal or extension
is exercised or there are other specified changes. The adoption of
the new pronouncement has had no material impact on the Company's
financial statements.
3. ACCOUNTS RECEIVABLE Details of accounts receivable are as follows: As at As at As at
April 2, April 3, January 1,
(in millions) 2005 2004 2005
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Customer accounts receivable
- current $ 1,806.6 $ 1,760.9 $ 2,050.3
Customer accounts receivable
- deferred 723.4 730.4 791.7
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Managed accounts 2,530.0 2,491.3 2,842.0
Less: Co-ownership held by
third parties (1,186.7) (1,583.5) (1,248.5)
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Co-ownership retained by the
Company 1,343.3 907.8 1,593.5
Less: long term portion of deferred
customer accounts receivable (57.9) (42.7) (98.6)
Interest-only strip receivable
(Note 4) 36.7 35.2 30.2
Miscellaneous receivables (17.9) 13.3 1.2
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Total $ 1,304.2 $ 913.6 $ 1,526.3
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The total credit losses on managed accounts, net of recoveries, for the
13 week period ended April 2, 2005 were $22.3 million
(2004 - $23.6 million).
Miscellaneous receivables includes the reduction to Customer accounts
receivable, related to sales transacted for which the merchandise has yet
to be delivered.
4. TRANSFERS OF RECEIVABLES Securitization is an important financial vehicle which provides the
Company with access to funds at a low cost. The Company sells undivided
co-ownership interests in its portfolio of current and deferred charge
accounts receivable to two separate trusts and retains the right to
receive the income generated by the undivided co-ownership interests sold
to the trusts in excess of the trusts' stipulated share of service charge
revenues. The trusts are QSPE's and, therefore, these financial
statements do not include the assets, liabilities, and results of
operations of the trusts. The trusts have financed the purchase of the
co-ownership interests primarily through the issuance of debt to
independent third party investors totalling $1,186.7 million
(2004 - $1,583.5 million).
The undivided co-ownership interest is sold on a fully serviced basis and
the Company receives no fee for ongoing servicing responsibilities. The
Company receives proceeds equal to fair value for the assets sold and
retained rights to future cash flows arising after the investors in the
securitization trusts have received the return for which they contracted.
The co-owners have no recourse to the Company's retained interest in the
receivables sold other than in respect of amounts in the cash reserve
account (Note 5) and the interest-only strip receivable. The co-owners
have no recourse to the Company's other assets.
The Company recognized a pre-tax gain in revenue of $8.4 million for the
13 week period ended April 2, 2005 (2004 - $12.0 million), related to the
timing of recognition of income on the sale of charge accounts
receivable. As at April 2, 2005, the interest-only strip receivable was
recorded at $36.7 million (2004 - $35.2 million). The following table
shows the key economic assumptions used in measuring the interest-only
strip receivable. The table also displays the sensitivity of the current
fair value of residual cash flows to immediate 10% and 20% adverse
changes in yield, payment rate, net charge-off rate and discount rate
assumptions:
Effects of Adverse Changes (in millions) Assumptions 10% 20%
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Yield (annual rate) 24.43% $ 5.9 $ 11.8
Principal payment rate (monthly) 24.29% 4.6 8.5
Net charge-off rate (annual rate) 4.30% 1.1 2.1
Discount rate (annual rate) 12.00% - -
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The table below summarizes certain cash flows related to the transfer of
receivables:
13 Week 13 Week
Period Ended Period Ended
(in millions) April 2, 2005 April 3, 2004
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Proceeds from new securitizations $ 119.7 $ 387.0
Proceeds from collections reinvested 465.1 262.8
Other cash flows relating to retained interests 1.6 10.0
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5. INVESTMENTS AND OTHER ASSETS As at As at As at
April 2, April 3, January 1,
(in millions) 2005 2004 2005
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Unsecured debentures $ 37.8 $ 41.8 $ 37.8
Subordinated loans 2.7 4.1 3.0
Other term investments 4.5 3.9 4.4
Retained interest in transferred
receivables - cash reserve account 40.3 38.9 38.7
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Total $ 85.3 $ 88.7 $ 83.9
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The cash reserve account, which is invested in short-term investments
with a maturity date of less than 90 days, is a structural requirement of
the securitization trusts and thus the Company's access to the funds is
restricted.
6. LONG-TERM OBLIGATIONS The Company's net cash interest payments in the 13 week period ended
April 2, 2005 were $13.1 million (2004 - $12.2 million). Interest expense
on long-term debt for the 13 week period ended April 2, 2005 amounted to
$14.7 million (2004 - $14.8 million).
7. UNUSUAL ITEMS The Company recorded a pre-tax gain of $15.5 million in the 13 week
period ended April 2, 2005 (2004 - pre-tax expense of $1.5 million)
comprised of the following items:
13 Week 13 Week
Period Ended Period Ended
(in millions) April 2, 2005 April 3, 2004
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Sale of real estate joint venture $ (15.5) $ (14.6)
Restructuring activities - 6.0
Auto centre operations - 10.1
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Total unusual items - (gain)/expense $ (15.5) $ 1.5
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Sale of Real Estate Joint Venture During the first quarter of 2005, a $15.5 million pre-tax gain was
recognized on the sale of the Company's interest in a real estate joint
venture. During the first quarter of 2004, a $14.6 million pre-tax gain
was recognized on the sale of the Company's interest in a real estate
joint venture.
Restructuring Activities A non-operating, pre-tax charge of $6.0 million was recorded in the
13 week period ended April 3, 2004. The charge related to severance
payments as a result of restructuring certain departments and positions,
to better align the organization to the Company's strategic and
productivity initiatives.
Details of the accrued liability related to these activities are outlined
below:
Restructuring
(in millions) Liability
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Accrued liability January 3, 2004 $ -
Cash expense 14.1
Cash payments (10.6)
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Accrued liability January 1, 2005 $ 3.5
Cash payments (1.7)
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Accrued liability April 2, 2005 $ 1.8
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Auto Centre Operations In 2004, Sears entered into three separate licensing and asset sale
agreements with third parties to assume the operation of 39 of the
Company's 52 auto centres. Pursuant to these agreements, the licensees
purchased the inventory and certain equipment related to the auto centre
operations, and now occupy and operate the premises. The Company has
converted three of the other centres into Hardware stores and has closed
or converted for use in its other merchandise operations the remaining
10 locations. Total expenses for the 13-week period ended April 3, 2004
were $10.1 million. The charge included severance expenses, a non-cash
impairment loss on long-lived assets, and other closure-related costs,
net of liabilities assumed by licensees.
Details of the accrued liability related to this transaction are outlined
below:
Facility
Severance Closure & Accrued
(in millions) Expense Other Costs Liability
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Accrued liability January 3, 2004 $ - $ - $ -
Cash expense 9.0 3.6 12.6
Cash payments (8.4) (1.7) (10.1)
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Accrued liability January 1, 2005 $ 0.6 $ 1.9 $ 2.5
Cash payments (0.6) (0.4) (1.0)
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Accrual liability April 2, 2005 $ - $ 1.5 $ 1.5
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8. EARNINGS PER SHARE A reconciliation of the number of shares used in the earnings per share
calculation is as follows:
13 Week 13 Week
Period Ended Period Ended
April 2, 2005 April 3, 2004
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Number of Number of
shares shares
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Average number of shares per basic earnings
per share calculation 106,329,613 106,809,489
Effect of dilutive options outstanding 544,079 410,913
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Average number of shares per diluted earnings
per share calculation 106,873,692 107,220,402
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9. SEGMENTED INFORMATION Segmented Statement of Earnings
13 Week
Period Ended
13 Week April 3, 2004
Period Ended (Restated -
(in millions) April 2, 2005 Note 16)
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Total revenues
Credit
Operating $ 118.5 $ 113.0
Securitization gain 8.4 12.0
Securitization funding cost (15.5) (20.4)
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111.4 104.6
Merchandising 1,196.0 1,212.9
Real Estate Joint Ventures 13.2 13.2
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Total revenues $ 1,320.6 $ 1,330.7
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Earnings before interest and taxes
Credit
Operating $ 51.0 $ 47.8
Securitization gain 8.4 12.0
Securitization funding cost (15.5) (20.4)
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43.9 39.4
Merchandising (30.5) (7.0)
Real Estate Joint Ventures 3.9 6.9
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Earnings before interest, unusual items and taxes 17.3 39.3
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Interest expense, net 14.2 13.4
Unusual items - (gain)/expense (15.5) 1.5
Income tax expense 4.7 7.8
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Net earnings $ 13.9 $ 16.6
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Segmented Statement of Capital Employed(x) As at
April 3,
As at 2004 As at
April 2, (Restated - January 1,
(in millions) 2005 Note 16) 2005
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Merchandising $ 1,090.0 $ 1,241.1 $ 822.7
Credit 1,407.8 1,154.3 1,660.0
Real Estate Joint Ventures 144.1 154.2 150.6
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Total $ 2,641.9 $ 2,549.6 $ 2,633.3
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(x) Capital Employed represents the total of long-term obligations,
including principal payments on long-term obligations due within one
year, and shareholders' equity.
Segmented Statement of Total Assets As at
April 3,
As at 2004 As at
April 2, (Restated - January 1,
(in millions) 2005 Note 16) 2005
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Merchandising $ 2,427.0 $ 2,612.9 $ 2,383.6
Credit 1,469.2 1,187.0 1,713.1
Real Estate Joint Ventures 158.4 164.8 165.7
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Total $ 4,054.6 $ 3,964.7 $ 4,262.4
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10. INCOME TAXES The Company's total net cash payments of income taxes in the 13 week
period ended April 2, 2005 were $20.8 million (2004 - a net cash recovery
of $1.1 million).
11. CAPITAL STOCK 106,462,211 common shares were issued and outstanding as at
April 2, 2005. A total of 192,217 shares were issued during the 13 week
period ended April 2, 2005, 89,319 on the exercise of options and 102,898
on the vesting of special incentive shares. Cash received on the exercise
of options amounted to $1.3 million. A total of 17,149 shares were issued
in the quarter ended April 3, 2004.
On March 4, 2005, the Company renewed its Normal Course Issuer Bid. Under
the renewed Normal Course Issuer Bid, the Company may purchase for
cancellation up to 5% of its issued and outstanding common shares,
representing up to 5,316,081 of the issued and outstanding common shares.
The purchases were eligible to commence on March 4, 2005 and must
terminate by March 3, 2006, pursuant to the Notice of Intention filed
with the Toronto Stock Exchange. The price that the Company will pay for
any such common shares will be the open market price at the time of
acquisition.
The Company has renewed its agreement with Sears, Roebuck and Co.
("Sears Roebuck") pursuant to which Sears Roebuck may elect to sell to
the Company up to the number of common shares sufficient to ensure that
Sears Roebuck's percentage interest in the Company does not increase as a
result of the Company's purchases pursuant to the Normal Course Issuer
Bid. The price for such common share purchases from Sears Roebuck will be
the weighted average price at which the Company bought back shares during
the relevant quarter.
By purchasing common shares under the Normal Course Issuer Bid, the
Company intends to offset the dilutive effect of common shares issued as
equity-based compensation to associates and directors. The Company may
purchase additional common shares up to the maximum stated if, in the
opinion of management, the additional purchases can be made on terms that
enhance the value of the remaining common shares.
During the 13 week periods ended April 2, 2005 and April 3, 2004, the
Company did not purchase any shares for cancellation.
12. STOCK-BASED COMPENSATION During the 13 week period ended April 2, 2005, no tandem award options
were granted under the Employees Stock Plan. A total of 572,050 tandem
award options were granted in the 13 week period ended April 3, 2004.
The Company records a liability equal to the amount by which the market
price of its shares at the end of the period exceeds the exercise price
of the vested tandem awards. Compensation expense is recorded to adjust
the liability for changes in the number of vested tandem award options,
changes in the market price of the Company's shares and for options
exercised in the period. As certain of the Company's options were granted
prior to the effective date of CICA Section 3870 - Stock-Based
Compensation and Other Stock-Based Payments, the Company continues to
apply settlement accounting upon their exercise and no compensation
expense is recognized. Compensation expense of $4.3 million was recorded
in the 13 week period ended April 2, 2005 (2004 - $0.1 million) related
to tandem awards issued after the new standard was implemented.
During the 13 week period ended April 2, 2005, no Special Incentive
shares were awarded under the Employees Stock Plan. A total of 190,000
Special Incentive shares were awarded in the 13 week period ended
April 3, 2004. Awards of shares under the Plan are measured at fair value
on grant date and expensed over the vesting period. Compensation cost of
$0.4 million has been recognized as an expense and credited to capital
stock for the 13 week period ended April 2, 2005 (2004 - $0.3 million).
13. GUARANTEES The Company has provided the following significant guarantees to third
parties:
Sub-leases agreements The Company has entered into a number of agreements to sub-lease premises
to third parties. The Company retains ultimate responsibility to the
landlord for payment of amounts under the lease agreements should the
sub-lessee fail to pay. The total future lease payments under such
agreements are $18.2 million.
Other indemnification agreements In the ordinary course of business, the Company provides indemnification
commitments to counterparties in transactions such as leasing
transactions, royalty agreements, service arrangements, investment
banking agreements, securitization agreements and indemnification of
trustees under indentures for outstanding public debt. These
indemnification agreements require the Company to compensate the
counterparties for costs incurred as a result of change in laws and
regulations or as a result of litigation claims or statutory claims or
statutory sanctions that may be suffered by a counterparty as a
consequence of the transaction. The terms of these indemnification
agreements will vary based on the contract and typically do not provide
for any limit on the maximum potential liability. Historically, the
Company has not made any significant payments under such indemnifications
and no amount has been accrued in the financial statements with respect
to these indemnification commitments.
14. ASSOCIATE FUTURE BENEFITS Information about the Company's defined benefit plans is contained in
Note 8 of the financial statements for the 52 week period ended
January 1, 2005. The net benefit plan expense for the 13 week period
ended April 2, 2005 was $12.8 million (2004 - $11.3 million).
15. COMMITMENTS AND CONTINGENCIES As discussed in Note 14 of the Company's financial statements for the
52 week period ended January 1, 2005, the Company was previously named in
a Quebec class action relating to the required 21-day grace period for
credit cardholders to pay their obligations without attracting credit
charges. The parties have reached a settlement which was approved by the
Court in early April 2005 without admission of any kind by the
defendants. This settlement requires Sears to repay interest and lost
opportunity costs to cardholders in Quebec in a total amount which is not
material.
16. COMPARATIVE FIGURES Certain comparative figures have been restated as a result of correcting
the Company's prior accounting for lease incentives and other allowances
and for the adoption of the amendment to EIC-144. The impact on net
income and earnings per share for the 13 week period ended April 3, 2004,
as a result of the lease restatement is a reduction of approximately
$2.6 million and 2 cents respectively. The impact from the adoption of
EIC-144 is discussed in Note 2, Accounting Policies. Additional
information on the lease restatement is contained in Note 1 of the
Company's financial statements for the 52 week period ended
January 1, 2005. Certain comparative figures have also been reclassified
to conform to the current period's presentation.
VIEW ADDITIONAL COMPANY-SPECIFIC INFORMATION: http://www.newswire.ca/en/releases/orgDisplay.cgi?okey=58312 For further information: Media Relations Contact: News release via Canada NewsWire, Toronto 416-863-9350 |
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