The Jean Coutu Group (PJC) Inc.
TSX : PJC.A

The Jean Coutu Group (PJC) Inc.

January 09, 2007 07:01 ET

The Jean Coutu Group/Second Quarter Results Reflect Stronger Canadian and US Sales Trends and Elements of the Announced Rite Aid-Jean Coutu Group Transaction

LONGUEUIL, QUEBEC--(CCNMatthews - Jan. 9, 2007) - The Jean Coutu Group (PJC) Inc. (TSX:PJC.A) (the "Company" or the "Jean Coutu Group") today reported its financial results for the second quarter and first half of fiscal 2007 ended November 25, 2006.



SUMMARY OF RESULTS
(Unaudited, in millions of US dollars except per share amounts)
---------------------------------------------------------------------
First half First half
Q2/2007 Q1/2007 Q2/2006 2007 2006
---------------------------------------------------------------------
Revenues 2,833.4 2,786.2 2,709.3 5,619.6 5,392.4
Operating
income before
amortization
("OIBA") 121.3 100.2 125.1 221.5 229.5
OIBA before
restructuring
charges 131.0 110.8 125.1 241.8 229.5
Net earnings
(loss) 72.5 (108.8) 30.8 (36.3) 41.9
Per share $0.28 $(0.42) $0.12 $(0.14) $0.16
Earnings before
specific items 60.8 17.8 29.0 78.6 41.3
Per share $0.23 $0.07 $0.11 $0.30 $0.16
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HIGHLIGHTS

- Both the Canadian and US networks improved their sales performance,
driven by strong pharmacy sales. Canadian network sales increased
7.5% and US sales increased 2.8% during the second quarter of
fiscal 2007. Canadian distribution center sales increased 12.1%
during the quarter (excluding the impact of US dollar currency
fluctuations).

- The Company recorded certain components of the announced Rite Aid-
Jean Coutu Group transaction during the second quarter of fiscal
2007, recording a $12.0 million reversal of the after-tax
impairment loss recorded last quarter as well as further
restructuring charges of $9.7 million ($5.8 million after-tax).

- As a result of the announced disposal transaction, the Company no
longer amortizes the assets related to its US operations since they
are classified as assets held for sale.


"The Jean Coutu Group's second quarter results were positively impacted by stronger sales performance in both the Canadian and US networks," said Jean Coutu, President and Chief Executive Officer. "We are seeing the results of our focus on sales growth and efficient operations in both networks. In addition, we recognized various components of the Rite Aid-Jean Coutu Group transaction during the quarter. We now expect the Rite Aid-Jean Coutu Group transaction to close shortly after the end of the third quarter, which ends on March 3, 2007."

Net earnings

For the second quarter of fiscal 2007, net earnings were $72.5 million ($0.28 per share) compared with $30.8 million ($0.12 per share) for the second quarter of the previous fiscal year.

Canadian and US network sales performance continues to improve, driven by strong pharmacy sales. US network front-end sales showed improvement in all categories, but continue to be impacted by the decline in the photo category.

On August 23, 2006, the Company entered into a definitive agreement with Rite Aid Corporation ("Rite Aid") whereby the Company would dispose of its network in the United States. The Company expects to close this transaction, subject to certain usual conditions, shortly after the end of the third quarter, which ends on March 3, 2007. However, Generally Accepted Accounting Principles ("GAAP") require that the Company recognizes certain components of this transaction earlier. The after-tax impairment loss recognized during the first quarter of fiscal 2007 amounted to $120.0 million. During the second quarter of fiscal 2007, the Company reversed a $12.0 million portion of the original loss due principally to an increase in the value of Rite Aid shares to be received as consideration. The year-to-date after tax impairment loss amounts to $108.0 million. As a result of the disposal transaction announced on August 24, 2006, the Company no longer amortizes the assets related to its US operations since they are classified as assets held for sale. There were no US operations amortization charges recorded during the second quarter of fiscal 2007 compared with $54.2 million ($32.5 million after-tax) for the first quarter of fiscal 2007.

Earnings before specific items were $60.8 million ($0.23 per share) compared with $29.0 million ($0.11 per share) for the second quarter of the previous fiscal year.

The first half net loss was $36.3 million ($0.14 per share) compared with net earnings of $41.9 million ($0.16 per share) for the corresponding period last year. First half earnings before specific items were $78.6 million ($0.30 per share) compared with $41.3 million ($0.16 per share) for the corresponding period last year due to the fact that there were no US operations amortization charges recorded during the second quarter of fiscal 2007.

The specific items are as follows:



SPECIFIC ITEMS
(Unaudited, in millions of US dollars except per share amounts, net
of income taxes)
---------------------------------------------------------------------
First half First half
Q2/2007 Q1/2007 Q2/2006 2007 2006
---------------------------------------------------------------------
Impairment loss
(reversal)
on assets held
for sale (12.0) 120.0 - 108.0 -
Restructuring
charges 5.8 6.4 - 12.2 -
Unrealized (gains)
losses on
monetary items
and derivative
financial
instruments (5.5) 0.2 (1.8) (5.3) (0.6)
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Specific items
- Total (11.7) 126.6 (1.8) 114.9 (0.6)
Per share $(0.05) $0.49 $(0.01) $0.44 -
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Revenues

Total revenues of the Company's Canadian operations for the second quarter reached $478.4 million compared with $413.4 million for the second quarter of fiscal 2006, an increase of $65.0 million or 15.7%. Second quarter Canadian revenues increased by 10.4% year-over-year, excluding the impact of currency exchange rate fluctuations. The 26-week revenue figure reached $913.9 million, an increase of $135.8 million or 17.5% year-over-year (or 9.8% in local currency).

The Company's US operations generated total revenues of $2.355 billion, up 2.6% from the second quarter of fiscal 2006, due principally to improving pharmacy and front-end sales. Pharmacy sales were impacted by the conversion of branded drugs to generics, which generally have a lower selling price, but higher gross margins for the drugstore retailer. The 26-week revenue figure increased to $4.706 billion for the period ended November 25, 2006, up $91.4 million or 2.0% from last year.

Total revenues for the second quarter of fiscal 2007 increased by $124.1 million or 4.6% to $2.833 billion, from $2.709 billion for the same quarter during fiscal 2006. Year-to-date revenues increased by $227.2 million or 4.2% to $5.620 billion for the 26-week period ended November 25, 2006 compared with $5.392 billion for the corresponding period in fiscal 2006.

Retail sales

Retail sales growth percentages quoted herein are calculated in local currency in order to exclude the impact of currency rate fluctuations. As of August 1, 2005, the Company began to report same-store sales for the Eckerd drugstores acquired on July 31, 2004, and publishes this information for both the Canadian and US networks on a monthly basis.

For the second quarter of fiscal 2007, both of the Company's networks showed an increase in sales.

During the second quarter, the Company's Canadian franchise network were up 6.9%, pharmacy sales gained 8.3% and front-end sales increased 5.4% year-over-year in terms of comparable stores. The network showed a 7.5% increase in retail sales compared with the same period of fiscal 2006. Retail sales for the quarter were $673.7 million.

The US corporate pharmacy network retail sales increased 2.7%, pharmacy sales increased 2.9% and front-end sales increased 1.9% compared with the same quarter of fiscal 2006 in terms of comparable stores. The impact of generic drugs replacing branded drugs on US pharmacy sales growth was 356 basis points for the period. Front-end sales growth was negatively impacted by the decline in the photo category. The network posted a 2.8% increase in retail sales when compared with the same quarter of fiscal 2006. Retail sales for the quarter were $2.352 billion.



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RETAIL SALES GROWTH 13 weeks ended 13 weeks ended
(Unaudited) November 25, November 26,
2006 2005
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CANADA(1)
Same store sales growth
Total 6.9% 4.8%
Pharmacy 8.3% 6.9%
Front-end 5.4% 1.2%
Total sales growth
Total 7.5% 4.9%
Pharmacy 8.9% 7.0%
Front-end 6.3% 1.2%

UNITED STATES
Same store sales growth
Total 2.7% (0.4)%
Pharmacy 2.9% 0.4%
Front-end 1.9% (2.8)%
Total sales growth
Total 2.8% (1.4)%
Pharmacy 3.0% (0.4)%
Front-end 2.3% (4.2)%

(1) Franchised outlets' retail sales are not included in the
Company's consolidated financial statements.
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OIBA

OIBA decreased for the second quarter of fiscal 2007 to $121.3 million from $125.1 million for the corresponding period of fiscal 2006. OIBA decreased by $3.8 million compared to the corresponding period of fiscal 2006 and, as a percentage of revenues, ended the quarter at 4.3% compared with 4.6% for the same period of 2006.

Fiscal 2007 second quarter OIBA was impacted by certain restructuring charges principally related to the transition pay program associated with the announced transaction. OIBA before restructuring charges amounted to $131.0 million during the second quarter of fiscal 2007 and ended the second quarter at 4.6%, the same level as the second quarter of fiscal 2006.

OIBA as a percentage of revenues ended the 26-week period at 3.9% compared with 4.3% for the same period in fiscal 2006. OIBA before restructuring charges as a percentage of revenues ended the first half at 4.3%, the same level as the first half of fiscal 2006.

Store network development

During the second quarter of fiscal 2007, 4 drugstores were opened, of which 1 store was a relocation, 1 store was acquired and 4 were closed. On November 25, 2006, there were 2,186 stores in the system, comprised of 327 Canadian PJC stores, and 1,859 Brooks and Eckerd drugstores in the United States.

Outlook

With the announcement of the Rite Aid-Jean Coutu Group transaction, the Company will be well positioned to capitalize on the growth in the North American drugstore retailing industry. Demographic trends in Canada and the United States are expected to contribute to growth in the consumption of prescription drugs, and to the increased use of pharmaceuticals as the primary intervention in individual healthcare. Management believes that these trends will continue and that the Company will achieve sales growth through differentiation and quality of offering and service levels in its drugstore networks.

The Company operates its Canadian and US networks with a focus on sales growth, its real estate program and operating efficiency. Management expects that the announced transaction with Rite Aid, which is expected to close shortly after the end of the third quarter, which ends on March 3, 2007, will help create shareholder value. The Jean Coutu Group will optimize its US presence by transforming its investment in a regional drugstore chain into the leading ownership position of a major national chain with enhanced scale to better compete in the US drugstore industry. The Company's 32.0% equity interest in the expanded Rite Aid will allow shareholders to participate in the economic benefits of expected synergies. The cash proceeds from the transaction will be used to retire debt, enhancing financial flexibility.

Dividend

The Board of Directors of The Jean Coutu Group declared a quarterly dividend of $C 0.03 per share. This dividend is payable on February 8, 2007 to all holders of Class A subordinate voting shares and holders of Class B shares listed in the Company's shareholder ledger as of January 25, 2007.

Conference call

Financial analysts are invited to attend the first quarter results conference call to be held on January 9, 2007, at 9:00 AM (ET). The toll free call-in number is 1-866-696-5895. Media and other interested individuals are invited to listen to the live or deferred broadcast on The Jean Coutu Group corporate website at www.jeancoutu.com. A full replay will also be available by dialing 1-800-408-3053 code 3206457 (pound sign) until February 9, 2007.

Supporting documentation (additional information and investor presentation) is available at www.jeancoutu.com using the investors link. Readers may also access additional information and filings related to the Company using the following links to the www.sedar.com (Canada) and www.sec.gov (United States) websites.

About The Jean Coutu Group

The Jean Coutu Group (PJC) Inc. is the fourth largest drugstore chain in North America and the second largest in both the eastern United States and Canada. The Company and its combined network of 2,186 corporate and franchised drugstores (under the banners of Brooks and Eckerd Pharmacy, PJC Jean Coutu, PJC Clinique and PJC Sante Beaute) employ more than 61,000 people.

The Jean Coutu Group's US operations employ 46,000 people and comprise 1,859 corporate-owned stores located in 18 states of the northeastern, mid-Atlantic and southeastern United States. The Jean Coutu Group's Canadian operations and franchised drugstores in its network employ over 15,000 people and comprise 327 PJC Jean Coutu franchised stores in Quebec, New Brunswick and Ontario.

Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995. The words "looking forward," "looking ahead," "believe(s)," "should," "may," "expect(s)," "anticipate(s)," "likely," "opportunity," and similar expressions, among others, identify forward-looking statements. Such statements are not guarantees of the future performance of the Company or its segments, and involve known and unknown risks and uncertainties that may cause the outlook, the actual results or performance of the Company or of its reportable segments to be materially different from any future results or performance expressed or implied by such statements depending on, among others, such factors as changes in the regulatory environment as it relates to the sale of prescription drugs, competition, exposure to interest rate fluctuations, foreign currency risks, certain property and casualty risks, the ability to attract and retain pharmacists, risks in connection with third party service providers, seasonality risks, changes in federal, provincial and state laws, rules and regulations relating to the Company's business and environmental matters, changes in tax regulations and accounting pronouncements, the success of the Company's business model, supplier and brand reputations, and the accuracy of management's assumptions. In addition, there is a risk that the Rite-Aid-Jean Coutu Group transaction does not close due to the failure of any one of the closing conditions to occur, such as the failure to achieve regulatory approval or the requisite vote of the Rite Aid stockholders, and the risk that the companies may be required to modify aspects of the transaction to achieve regulatory approval, which modifications could adversely impact the benefits of the transaction to The Jean Coutu Group. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. For further information, readers are referred to the section on Risks and uncertainties contained in the Company's MD&A as well as in other filings. The Company disclaims any intention or obligation to update or revise any forward-looking information contained in its communications, whether as a result of new information, future events or otherwise.

This press release also contains certain non-GAAP financial measures. Such information is reconciled to the most directly comparable financial measures, as set forth in the "additional information" section, which is attached to the Company's financial statements.




THE JEAN COUTU GROUP (PJC) INC.
Consolidated statements of earnings
Periods ended
November 25, 2006 13 weeks 26 weeks
and November 26, 2005 2006 2005 2006 2005
---------------------------------------------------------------------
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(unaudited, in millions
of US dollars, unless
otherwise noted) $ $ $ $

Sales 2,783.3 2,663.3 5,521.1 5,301.1
Other revenues 50.1 46.0 98.5 91.3
---------------------------------------------------------------------
2,833.4 2,709.3 5,619.6 5,392.4
Operating expenses
Cost of goods sold 2,143.5 2,037.8 4,263.8 4,059.0
General and operating
expenses 559.9 547.3 1,115.9 1,105.7
Restructuring charges 9.7 - 20.3 -
Amortization 3.1 61.3 60.4 122.0
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2,716.2 2,646.4 5,460.4 5,286.7
---------------------------------------------------------------------
Operating income 117.2 62.9 159.2 105.7
Financing expenses 44.9 48.7 95.8 99.4
Impairment loss
(reversal) on assets
held for sale (12.0) - 108.0 -
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Earnings (loss) before
income taxes 84.3 14.2 (44.6) 6.3
Income taxes (recovery) 11.8 (16.6) (8.3) (35.6)
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Net earnings (loss) 72.5 30.8 (36.3) 41.9
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Earnings (loss) per
share, in dollars
Basic 0.28 0.12 (0.14) 0.16
Diluted 0.28 0.12 (0.14) 0.16
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Consolidated statement
of retained earnings
Periods ended
November 25, 2006 13 weeks 26 weeks
and November 26, 2005 2006 2005 2006 2005
---------------------------------------------------------------------
---------------------------------------------------------------------
(unaudited, in millions
of US dollars) $ $ $ $

Balance, beginning of
period 748.6 792.2 864.4 787.6
Net earnings (loss) 72.5 30.8 (36.3) 41.9
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821.1 823.0 828.1 829.5
Dividends 6.9 6.6 13.9 13.1
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Balance, end of period 814.2 816.4 814.2 816.4
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THE JEAN COUTU GROUP (PJC) INC.

Consolidated balance sheets As at As at
November 25, May 27,
2006 2006
---------------------------------------------------------------------
---------------------------------------------------------------------
(in millions of US dollars) $ $
(unaudited) (audited)

Assets
Current assets
Cash and cash equivalents 37.3 135.8
Accounts receivable 137.5 555.5
Income taxes receivable 9.3 16.5
Inventories 116.7 1,744.9
Prepaid expenses and other 7.9 47.3
Current assets held for sale 2,270.9 -
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2,579.6 2,500.0
Investments 27.6 25.4
Capital assets 271.0 1,385.8
Intangible assets - 689.4
Goodwill 17.6 876.8
Other long-term assets 100.2 113.6
Long-term assets held for sale 2,696.3 -
---------------------------------------------------------------------
5,692.3 5,591.0
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Liabilities
Current liabilities
Accounts payable and accrued liabilities 205.7 1,079.6
Future income taxes - 147.8
Current portion of long-term debt 78.8 78.8
Current liabilities related to assets held
for sale 1,146.4 -
---------------------------------------------------------------------
1,430.9 1,306.2
Long-term debt 2,273.4 2,312.0
Other long-term liabilities 25.0 407.1
Long-term liabilities related to assets held
for sale 354.7 -
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4,084.0 4,025.3
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Shareholders' equity
Capital stock 577.9 577.9
Contributed surplus 3.1 2.4
Retained earnings 814.2 864.4
Foreign currency translation adjustments 213.1 121.0
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1,608.3 1,565.7
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5,692.3 5,591.0
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THE JEAN COUTU GROUP (PJC) INC.
Consolidated statements of cash flows
Periods ended November 25, 2006 13 weeks 26 weeks
and November 26, 2005 2006 2005 2006 2005
---------------------------------------------------------------------
---------------------------------------------------------------------
(unaudited, in millions
of US dollars) $ $ $ $

Operating activities
Net earnings (loss) 72.5 30.8 (36.3) 41.9
Items not affecting cash
Amortization 7.4 65.2 68.9 129.8
Impairment loss
(reversal) on assets
held for sale (12.0) - 108.0 -
Future income taxes 10.3 (20.7) (11.2) (39.0)
Other (6.4) (1.7) (7.2) (6.7)
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71.8 73.6 122.2 126.0
Net changes in non-cash
asset and liability
items (6.6) (29.2) (47.6) (175.8)
---------------------------------------------------------------------
Cash flow provided by
(used in) operating
activities 65.2 44.4 74.6 (49.8)
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Investing activities
Investments and
temporary investments (1.2) 80.2 (0.3) 79.6
Purchase of capital
assets (48.0) (39.1) (90.3) (76.9)
Proceeds from the
disposal of capital
assets 0.5 94.0 0.7 94.8
Purchase of intangible
assets (0.4) (2.0) (2.1) (7.5)
Proceeds from the
disposal of intangible
assets 0.5 - 0.6 7.8
Other long-term assets (0.7) 0.3 (1.5) -
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Cash flow provided by
(used in) investing
activities (49.3) 133.4 (92.9) 97.8
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Financing activities
Change in revolving
credit facilities - (100.0) - -
Issuance of long-term
debt, net of expenses - - 2.6 (0.4)
Repayment of long-term
debt (18.9) (57.4) (31.8) (69.6)
Issuance of capital
stock - - - 0.4
Dividends (13.9) (13.1) (13.9) (13.1)
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Cash flow used in
financing activities (32.8) (170.5) (43.1) (82.7)
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Effect of foreign exchange
rate changes on cash
and cash equivalents (4.1) 6.6 (3.6) 13.4
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Increase (decrease)
in cash and cash
equivalents (21.0) 13.9 (65.0) (21.3)
Cash and cash
equivalents, beginning
of period 91.8 97.0 135.8 132.2
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Cash and cash
equivalents, end
of period (1) 70.8 110.9 70.8 110.9
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(1) Includes $33.5 million of cash and cash equivalents grouped
with current assets held for sale as of November 25, 2006.



THE JEAN COUTU GROUP (PJC) INC.
Consolidated segmented information
Periods ended November 25, 2006 and November 26, 2005
(unaudited, in millions of US dollars)
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---------------------------------------------------------------------

The Company has two reportable segments: franchising and retail
sales. Within the franchising segment, the Company carries on the
franchising activity of the "PJC Jean Coutu" banner, operates two
distribution centers and coordinates several other services for the
benefit of its franchisees. The Company operates retail sales outlets
selling pharmaceutical and other products under the "Brooks" and
"Eckerd" banners.

The Company analyzes the performance of its operating segments based
on their operating income before amortization, which is not a measure
of performance under Canadian generally accepted accounting
principles ("GAAP"); however, management uses this performance
measure for assessing the operating performance of its reportable
segments.

Segmented information is summarized as follows:

13 weeks 26 weeks
2006 2005 2006 2005
---------------------------------------------------------------------
$ $ $ $

Revenues (1)
Franchising 478.4 413.4 913.9 778.1
Retail sales 2,355.0 2,295.9 4,705.7 4,614.3
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2,833.4 2,709.3 5,619.6 5,392.4
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Operating income
before amortization
Franchising 46.8 43.0 91.5 80.9
Retail sales 74.5 82.1 130.0 148.6
---------------------------------------------------------------------
121.3 125.1 221.5 229.5
---------------------------------------------------------------------
---------------------------------------------------------------------

Amortization
Franchising (2) 4.1 3.7 8.1 7.7
Retail sales - 58.5 54.2 116.1
---------------------------------------------------------------------
4.1 62.2 62.3 123.8
---------------------------------------------------------------------
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Operating income
Franchising 42.7 39.3 83.4 73.2
Retail sales 74.5 23.6 75.8 32.5
---------------------------------------------------------------------
117.2 62.9 159.2 105.7
---------------------------------------------------------------------
---------------------------------------------------------------------

Acquisition of capital
assets and intangible
assets
Franchising 10.8 14.4 17.5 19.4
Retail sales 37.6 26.7 74.9 65.0
---------------------------------------------------------------------
48.4 41.1 92.4 84.4
---------------------------------------------------------------------
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As at As at
November 25, May 27,
2006 2006
---------------------------------------------------------------------
$ $

Capital assets, intangible assets and goodwill
Franchising 288.6 286.9
Retail sales 2,690.3 2,665.1
---------------------------------------------------------------------
2,978.9 2,952.0
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Total assets
Franchising 725.1 729.5
Retail sales 4,967.2 4,861.5
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5,692.3 5,591.0
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(1) Revenues include sales and other revenues.
(2) Including amortization of incentives paid to franchisees.

The Company's revenues, capital assets, intangible assets and
goodwill as well as total assets for the geographic areas of Canada
and the United States correspond respectively, to the franchising and
retail sales segments.



THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
Periods ended November 25, 2006 and November 26, 2005
(In millions of US dollars except for margins)
---------------------------------------------------------------------
---------------------------------------------------------------------

13 weeks 26 weeks
2006 2005 2006 2005
---------------------------------------------------------------------
$ $ $ $
Canada
Sales 431.3 369.9 820.8 692.7
Cost of goods sold 394.3 335.3 749.2 629.4
---------------------------------------------------------------------
Gross profit 37.0 34.6 71.6 63.3
As a % of sales 8.6% 9.4% 8.7% 9.1%

Other revenues (1) 48.1 44.4 95.0 87.2

General and operating
expenses 38.3 36.0 75.1 69.6
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Operating income before
amortization 46.8 43.0 91.5 80.9
Amortization (1) 4.1 3.7 8.1 7.7
---------------------------------------------------------------------
Operating income 42.7 39.3 83.4 73.2
---------------------------------------------------------------------
---------------------------------------------------------------------

United States
Sales 2,352.0 2,293.4 4,700.3 4,608.4
Cost of goods sold 1,749.2 1,702.5 3,514.6 3,429.6
---------------------------------------------------------------------
Gross profit 602.8 590.9 1,185.7 1,178.8
As a % of sales 25.6% 25.8% 25.2% 25.6%

Other revenues 3.0 2.5 5.4 5.9

General and operating
expenses 521.6 511.3 1,040.8 1,036.1
Restructuring charges 9.7 - 20.3 -
---------------------------------------------------------------------
Operating income
before amortization 74.5 82.1 130.0 148.6
Amortization - 58.5 54.2 116.1
---------------------------------------------------------------------
Operating income 74.5 23.6 75.8 32.5
---------------------------------------------------------------------
---------------------------------------------------------------------

Consolidated
Sales 2,783.3 2,663.3 5,521.1 5,301.1
Cost of goods sold 2,143.5 2,037.8 4,263.8 4,059.0
---------------------------------------------------------------------
Gross profit 639.8 625.5 1,257.3 1,242.1
As a % of sales 23.0% 23.5% 22.8% 23.4%

Other revenues (1) 51.1 46.9 100.4 93.1

General and operating
expenses 559.9 547.3 1,115.9 1,105.7
Restructuring charges 9.7 - 20.3 -
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Operating income
before amortization 121.3 125.1 221.5 229.5
Amortization (1) 4.1 62.2 62.3 123.8
---------------------------------------------------------------------
Operating income 117.2 62.9 159.2 105.7
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(1) Amortization of incentives paid to franchisees are presented in
the amortization instead of other revenues.



THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
Periods ended November 25, 2006 and November 26, 2005
---------------------------------------------------------------------
---------------------------------------------------------------------

13 weeks 26 weeks
2006 2005 2006 2005
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Number of outlets
Beginning of period 2,186 2,172 2,185 2,243
Openings 4 12 11 25
Acquisitions 1 - 4 1
Relocations (1) (4) (5) (11)
Closings (4) (5) (9) (83)
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End of period 2,186 2,175 2,186 2,175
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Network performance
- Retail sales
(In millions of
US dollars)
Canada (1) 673.7 602.7 1,326.5 1,158.3
United States 2,352.0 2,293.4 4,700.3 4,608.4
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3,025.7 2,896.1 6,026.8 5,766.7
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Network performance
- Retail sales
Canada (1)
Pharmacy 61% 60% 60% 59%
Front-end 39% 40% 40% 41%

United States
Pharmacy 74% 74% 74% 74%
Front-end 26% 26% 26% 26%

(1) Franchised's outlet retail sales are not included in the
Company's consolidated financial statements.



THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
Periods ended November 25, 2006 and November 26, 2005
---------------------------------------------------------------------
---------------------------------------------------------------------

13 weeks 26 weeks
2006 2005 2006 2005
---------------------------------------------------------------------

Retail sales growth (1)
Canada (2)
Total 7.5% 4.9% 7.2% 4.3%
Pharmacy 8.9% 7.0% 9.0% 6.3%
Front-end 6.3% 1.2% 4.9% 1.3%

United States
Total 2.8% (1.4)% 2.0% 37.6%
Pharmacy 3.0% (0.4)% 2.6% 39.1%
Front-end 2.3% (4.2)% 0.5% 33.4%


Retail sales growth
- same store (1)
Canada (2)
Total 6.9% 4.8% 6.5% 4.2%
Pharmacy 8.3% 6.9% 8.5% 6.2%
Front-end 5.4% 1.2% 4.0% 1.3%

United States (3)
Total 2.7% (0.4)% 2.5% (0.2)%
Pharmacy 2.9% 0.4% 3.1% 0.7%
Front-end 1.9% (2.8)% 0.8% (2.6)%


(1) Growth is calculated in local currency and is based on comparable
periods.
(2) Franchised's outlet retail sales are not included in the
Company's consolidated financial statements.
(3) This measure includes same-store sales for the acquired Eckerd
corporate outlets as of August 1, 2005.



THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
Periods ended November 25, 2006 and November 26, 2005
(In millions of US dollars)
---------------------------------------------------------------------
---------------------------------------------------------------------

Non GAAP measures - Operating income before amortization ("OIBA") and
OIBA before restructuring charges

OIBA and OIBA before restructuring charges are not measures of
performance under Canadian generally accepted accounting principles
("GAAP"); however management uses those performance measures in
assessing the operating and financial performance of its reportable
segments. Besides, we believe that OIBA and OIBA before restructuring
charges are additional measures used by investors to evaluate
operating performance and capacity of a company to meet its financial
obligations.

However, OIBA and OIBA before restructuring charges are not and must
not be used as alternatives to net earnings (loss) or cash flow
generated by operating activities as defined by Canadian GAAP. OIBA
and OIBA before restructuring charges are not necessarily indications
that cash flow will be sufficient to meet our financial obligations.
Furthermore, our definitions of OIBA and OIBA before restructuring
charges may not be necessarily comparative to similar measures
reported by other companies.

Net earnings (loss), which is a performance measure defined by
Canadian GAAP, is reconciled below with OIBA and OIBA before
restructuring charges.

13 weeks 26 weeks
2006 2005 2006 2005
---------------------------------------------------------------------
$ $ $ $

Net earnings (loss) 72.5 30.8 (36.3) 41.9
Financing expenses 44.9 48.7 95.8 99.4
Impairment loss (reversal)
on assets held for sale (12.0) - 108.0 -
Income taxes (recovery) 11.8 (16.6) (8.3) (35.6)
---------------------------------------------------------------------
Operating income 117.2 62.9 159.2 105.7
Amortization per
financial statements 3.1 61.3 60.4 122.0
Amortization of
incentives paid to
franchisees (1) 1.0 0.9 1.9 1.8
---------------------------------------------------------------------
Operating income before
amortization ("OIBA") 121.3 125.1 221.5 229.5
---------------------------------------------------------------------
---------------------------------------------------------------------
Restructuring charges 9.7 - 20.3 -
---------------------------------------------------------------------
OIBA before restructuring
charges 131.0 125.1 241.8 229.5
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Amortization of incentives paid to franchisees is grouped with
other revenues in the financial statements.



THE JEAN COUTU GROUP (PJC) INC.
Unaudited additional information
Periods ended November 25, 2006 and November 26, 2005
(Tabular amounts are in millions of US dollars except per share
amounts)
---------------------------------------------------------------------
---------------------------------------------------------------------

Non GAAP measures - Earnings before specific items

Earnings before specific items and earnings per share before specific
items are non-GAAP measures. The Company believes that it is useful
for investors to be aware of significant items of an unusual or non-
recurring nature that have adversely or positively affected its GAAP
measures, and that the above mentioned non-GAAP measures provide
investors with a measure of performance with which to compare its
results between periods without regard to these items. The Company's
measures excluding certain items have no standardized meaning
prescribed by GAAP and are not necessarily comparable to similar
measures presented by other companies and therefore should not be
considered in isolation.

Net earnings (loss) and earnings (loss) per share are reconciled
hereunder to earnings before specific items and earnings per share
before specific items. All amounts are net of income taxes when
applicable.

13 weeks 26 weeks
2006 2005 2006 2005
---------------------------------------------------------------------
$ $ $ $

Net earnings (loss) 72.5 30.8 (36.3) 41.9
Restructuring charges 5.8 - 12.2 -
Unrealized foreign
exchange gains on
monetary items (2.5) (1.8) (2.3) (0.6)
Unrealized gains on
derivative financial
instruments (3.0) - (3.0) -
Impairment loss
(reversal) on assets
held for sale (12.0) - 108.0 -
---------------------------------------------------------------------
Earnings before specific
items 60.8 29.0 78.6 41.3
---------------------------------------------------------------------
---------------------------------------------------------------------

Earnings (loss) per
share 0.28 0.12 (0.14) 0.16
Restructuring charges 0.02 - 0.05 -
Unrealized foreign
exchange gains on
monetary items (0.01) (0.01) (0.01) -
Unrealized gains on
derivative financial
instruments (0.01) - (0.01) -
Impairment loss
(reversal) on assets
held for sale (0.05) - 0.41 -
---------------------------------------------------------------------
Earnings per share
before specific items 0.23 0.11 0.30 0.16
---------------------------------------------------------------------
---------------------------------------------------------------------

Contact Information

  • The Jean Coutu Group (PJC) Inc.
    Andre Belzile
    Senior Vice-President, Finance and Corporate Affairs
    450-646-9760
    or
    The Jean Coutu Group (PJC) Inc.
    Michael Murray
    Director, Investor Relations
    450-646-9611, Ext. 1068
    or
    The Jean Coutu Group (PJC) Inc.
    Helene Bisson
    Director, Public Relations
    450-646-9611, Ext. 1165
    Toll free: 1-866-878-5206