Goodfellow Inc.
TSX : GDL

Goodfellow Inc.

March 20, 2008 16:13 ET

Goodfellow Reports its Results for Q2-2008

DELSON, QUEBEC--(Marketwire - March 20, 2008) - Goodfellow Inc. (TSX:GDL) announced today its financial results for the second quarter ended February 29, 2008. Consolidated sales for the second quarter reached $99.2 million compared to $106.6 million a year ago. Net income decreased to $38 thousand or $0.00 per share compared to $0.5 million or $0.06 per share for the same period last year. The impact of the extreme weather conditions in Eastern Canada, recession in the US and the Canadian dollar trading at par had repercussions on the second quarter's results. The foreign currency conversion effect on our US denominated sales resulted in a reduction of some $2.9 million in sales compared to last year. General expenses, selling and administrative costs for the second quarter ended February 29, 2008 increased from $18.5 million last year to $19.4 million. The increase reflects higher snow removal operations in our yards, higher energy costs and increased labor costs due to the added production capacity in Trois-Rivieres, Tremblant, and Calgary.

For the first six months of fiscal 2008, consolidated sales were $217.3 million compared to $225.7 million for the same period a year ago. The overall conversion effect on our US denominated sales represents some $5.6 million in sales reduction. For the six months ended February 29, 2008, net income decreased to $1.9 million or $0.22 per share from $2.5 million or $0.29 per share before the final reimbursement of $3.5 million CAD (net after tax or $5.4 million before tax) related to the Softwood Lumber Agreement in 2006. Last year's total net income was $6.0 million or $0.70 per share when the non recurring item is included.

"The harsh winter in the east has played havoc with logistics and has been a costly one for snow removal, repairs and maintenance, and tough on morale overall." said Richard Goodfellow, President and Chief Executive Officer. "Our overall gross margin remained strong and most parts of the business, product and territory-wise, continue to look positive for the coming spring."

Goodfellow Inc. is one of eastern Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.




CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars, Six Months Three Months
except earnings Ended February 29 Ended February 29
per share) 2008 2007 2008 2007
(unaudited) $ $ $ $
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Sales 217,254 225,727 99,209 106,577
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Expenses
Cost of goods sold,
selling,
administrative and
general expenses 212,226 214,300 98,068 104,587
Depreciation and
amortization 1,121 1,028 569 530
Financial 1,047 1,227 513 630
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214,394 216,555 99,150 105,747
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Income before income
taxes 2,859 9,172 58 829
Income taxes 958 3,164 20 286
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Net income 1,901 6,008 38 543
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Earnings per share
(note 2) 0.22 0.70 0.00 0.06
Earnings per share
diluted 0.22 0.70 0.00 0.06


CONSOLIDATED BALANCE SHEETS As at As at As at
(in thousand of dollars) February 29, February 28, August 31,
2008 2007 2007
(unaudited) (unaudited) (audited)
$ $ $
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Assets
Current assets
Cash 1,308 899 1,139
Accounts receivable 57,370 60,687 82,849
Income taxes 2,350 60 -
Inventories 74,710 77,514 52,284
Prepaid expenses 5,825 5,965 4,834
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141,563 145,125 141,106

Fixed assets 26,534 25,620 26,607
Future charges related to pension
plan 3,524 3,379 3,054
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171,621 174,124 170,767
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Liabilities
Current liabilities
Bank indebtedness 46,457 43,130 36,691
Accounts payable and accrued
liabilities 23,854 32,869 31,351
Income Taxes - - 192
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70,311 75,999 68,234

Deferred income taxes 1,678 1,807 1,678

Shareholders' equity
Capital stock 9,238 8,996 9,238
Retained earnings 90,697 87,337 91,801
Foreign currency translation
adjustments (303) (15) (184)
-------------------------------------------------------------------------
99,632 96,318 100,855
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171,621 174,124 170,767
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands of dollars) Six months
(unaudited) Ended February 29
2008 2007
$ $
-------------------------------------------------------------------------
Balance at beginning 91,801 84,746
Net income for the period 1,901 6,008
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93,702 90,754
Dividends 3,005 3,417
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Balance at end 90,697 87,337
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CONSOLIDATED CASH FLOWS
(in thousands of dollars) Six Months Three Months
(unaudited) Ended February 29 Ended February 29
2008 2007 2008 2007
$ $ $ $
-------------------------------------------------------------------------
Operating activities
Net income 1,901 6,008 38 543
Items not affecting
cash
Amortization 1,121 1,028 569 530
Excess of expense
over pension plan
funding (pension
plan funding over
expense) (470) (224) (255) (53)
Gain on disposal
of assets - - - -
Future income taxes - - - -
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2,552 6,811 352 1,021

Changes in non-cash
operating working
capital balances
Decrease (increase)
in accounts
receivable 25,480 14,747 1,045 1,003
Decrease (increase)
in inventories (22,426) (26,518) (3,591) (4,841)
Decrease (increase)
in prepaid expenses (992) (773) (2,253) (829)
Increase (decrease)
in accounts payable (7,500) 5,033 (5,924) 3,790
Increase (decrease)
in income taxes (2,542) (1,402) (1,800) (1,634)
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(5,428) (2,102) (12,171) (1,490)
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Financing activities
Dividends (3,005) (3,417) - -
Issuance of common
shares - - - -
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(3,005) (3,417) - -

Investing activities
Acquisition of fixed
assets (1,044) (1,945) (456) (468)
Disposal of fixed
assets - - - -
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(1,044) (1,945) (456) (468)

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Foreign currency
translation
adjustment (119) 92 - (11)
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Net cash inflow
(outflow) (9,596) (7,372) (12,627) (1,969)
Cash and cash
equivalents,
beginning of period (35,553) (34,859) (32,522) (40,262)
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Cash and cash
equivalents, end of
period (45,149) (42,231) (45,149) (42,231)
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of dollars,
except earnings per share) Six months Three months
(unaudited) Ended February 29 Ended February 29
2008 2007 2008 2007
$ $ $ $
-------------------------------------------------------------------------

Net income 1,901 6,008 38 543

Other comprehensive
income
Cumulative
translation
adjustment (note 8) - - - -
Net investments
in self-sustaining
foreign operations (119) 92 - (11)
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Total Other
comprehensive income (119) 92 - (11)
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Total comprehensive
income 1,782 6,100 38 532
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