Dollarama Group L.P. Announces Fourth Quarter and Fiscal 2007 Results

    MONTREAL, May 2 /CNW/ -- Dollarama Group L.P., (the "Company") the
leading operator of dollar discount stores in Canada, today announced its
results for the fourth quarter and fiscal year ended February 4, 2007.  [Note:
all dollar amounts in this press release are in Canadian dollars unless
otherwise indicated.]
    On February 1, 2007, the Company changed its fiscal year end moving it
from January 31 to a floating year end ending on the Sunday before or after
January 31 of each year.  The change was effective beginning with the fiscal
year 2007, which ended on February 4, 2007.  Fiscal year 2008 began February
5, 2007 and will end on February 3, 2008.  There are an additional four days
of transactions included in fiscal year 2007 when compared to fiscal year
2006, which ended January 31, 2006.
    Dollarama Group L.P., reported that sales increased $50.4 million, or
22.3%, to $276.2 million for the three months ended February 4, 2007, compared
to $225.8 million for the three months ended January 31, 2006.  Sales growth
was driven primarily by the opening of 68 new stores, which was offset by the
closure of 3 stores for a net total of 65 stores opened during fiscal year
2007.  Comparable store sales increased 1.3% for the 13 week period ended
January 28, 2007.
    Net earnings increased $14.1 million or 56.9%, from $24.8 million for the
three months ended January 31, 2006, to $38.9 million for the three months
ended February 4, 2007.  In addition, Adjusted EBITDA, as defined below,
increased 34.4%, from $41.6 million for the three months ended January 31,
2006, to $55.9 million for the three months ended February 4, 2007.
    Dollarama Group L.P., reported that sales increased $144.5 million, or
19.4%, to $887.8 million for the fiscal year ended February 4, 2007, compared
to $743.3 million for the fiscal year ended January 31, 2006.  Comparable
store sales increased 2.8% for the 52 week period ended January 28, 2007.
    Net earnings increased $46.7 million or 133.4%, from $35.0 million for
fiscal year 2006, to $81.7 million for fiscal year 2007.  This earnings growth
was attributable to increased sales, better margins, and the absence of a
charge of $9.7 million for the amortization of the inventory step-up and a
$6.6 million write-off of deferred financing costs which existed in the prior
year.  In addition, Adjusted EBITDA increased 20.3%, from $126.3 million for
the fiscal year ended January 31, 2006, to $151.9 million for the fiscal year
ended February 4, 2007.
    "We are pleased to report that Dollarama delivered a meaningful
improvement in fourth quarter and fiscal year financial performance," said
Larry Rossy, Chief Executive Officer of Dollarama.  "We believe these results
were driven by having the right merchandise offering and a strong value
proposition that consumers responded to favorably.  We continued our westward
expansion as well as adding stores in our core markets of Ontario and Quebec.
We see significant opportunities to continue our expansion across the country,
and we plan to make investments in the necessary infrastructure and other
activities to support those markets going forward."

    About Dollarama Group L.P.

    Dollarama is the leading operator of dollar discount stores in Canada.
Currently, the Company operates more than 475 stores, each offering a broad
assortment of quality everyday merchandise sold in individual or multiple
units primarily at a fixed price of $1.00.  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 Quebec.

    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.



    Summary Historical Financial Data

                        Three Months Three Months  Fiscal Year  Fiscal Year
                            Ended        Ended        Ended        Ended
                         January 31,  February 4,  January 31,  February 4,
                             2006         2007         2006         2007

    (dollars in
     thousands)

    Statement of
     Operations Data:

    Sales                 $225,782     $276,226     $743,278     $887,786
    Cost of sales          149,067      174,480      506,838      585,013

    Gross profit            76,715      101,746      236,440      302,773

    Expenses:
    General
     administrative and
     store operating
     expenses               36,469       47,075      125,347      154,457
    Amortization(1)          3,534        5,066       13,222       16,984

    Total expenses          40,003       52,141      138,569      171,441

    Operating income(2)     36,712       49,605       97,871      131,332

    Other expenses:
    Amortization of
     deferred financing
     costs                   1,033        1,026        7,527        4,076
    Write-off of deferred
     financing costs             -            -        6,606            -
    Interest expense        11,428       11,855       45,547       47,192
    Foreign exchange (gain)
     or loss on derivative
     financial instruments
     and long-term debt       (969)      (1,293)       1,508       (1,972)

    Earnings before
     income taxes           25,220       38,017       36,683       82,036
    Income taxes               417         (906)       1,677          358

    Net earnings           $24,803      $38,923      $35,006      $81,678


    Statement of Cash
     Flows Data:

    Cash flows
     provided by
     (used in):
      Operating
       activities          $47,796      $33,804      $46,408      $94,499
      Investing
       activities          (20,966)     (10,083)     (36,006)     (42,517)
      Financing
       activities             (521)      (2,893)     (24,104)     (35,170)

    Other Financial Data:
    Capital expenditures    $8,724      $10,107      $23,946      $42,695
    Rent expense(3)         $9,722      $13,841      $37,706      $47,245
    Gross margin(4)          34.0%        36.8%        31.8%        34.1%
    Number of stores
     (at end of period)        398          463          398          463
    Comparable store
     sales growth(5)          6.9%         1.3%         6.1%         2.8%



                                                      As of          As of
                                                   January 31,    February 4,
                                                       2006           2007
    (dollars in thousands)

    Balance Sheet Data:
    Cash and cash equivalents                        $30,883        $47,695
    Merchandise inventories                          154,047        166,017
    Property and equipment                            54,571         84,665
    Total assets                                   1,098,854      1,169,174
    Long-term debt(6)                                619,796        611,550
    Partners' capital                                401,820        491,284


    (1) Amortization represents amortization of tangible and amortizable
        intangible assets, including amortization of favourable lease rights.

    (2) The operating income for the year ended January 31, 2006 included
        $9.7 million of amortization of step-up in fair value of the
        merchandise inventory as a result of the application of purchase
        accounting following the acquisition.

    (3) Rent expense represents (i) basic rent expense on a straight-line
        basis and (ii) contingent rent expense, net of (a) amortization of
        inducements received from landlords and (b) amortization of
        unfavourable lease rights.

    (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 months
        and that remain open at the end of the reporting period relative to
        the same period in the prior year.  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.

    (6) Includes current portion of long-term debt, but excludes deferred
        financing costs which have been shown as a reduction of long-term debt
        on the balance sheet.


    Adjusted EBITDA

    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.  A
reconciliation of net earnings to EBITDA and to Adjusted EBITDA is included
below:

                        Three Months Three Months  Fiscal Year  Fiscal Year
                            Ended        Ended        Ended        Ended
                         January 31,  February 4,  January 31,  February 4,
                             2006         2007         2006         2007

    (dollars in
     thousands)

    Net earnings           $24,803      $38,923      $35,006      $81,678
    Income taxes               417         (906)       1,677          358
    Interest expense        11,428       11,855       45,547       47,192
    Amortization of
     deferred financing
     costs                   1,033        1,026        7,527        4,076
    Amortization of
     fixed tangible
     and intangible
     assets                  3,534        5,066       13,222       16,984

    EBITDA                  41,215       55,964      102,979      150,288
    Foreign exchange
     (gain) or loss on
     derivative financial
     instruments and
     long-term debt           (969)      (1,293)       1,508       (1,972)
    Write-off of deferred
     financing costs             -            -        6,606            -
    Management fees(a)         897          857        3,554        3,194
    Non-cash straight
     line rent expense(b)      973        1,097        2,427        3,318
    Non-cash stock-based
     compensation
     expense(c)               (239)          74          598          537
    Amortization of
     unfavourable lease
     rights(d)                (820)        (787)      (3,440)      (3,456)
    Transition reserve
     expenses(e)               563            -        2,285            -
    Amortization of
     Inventory step-up(f)        -            -        9,737            -

    Adjusted EBITDA        $41,620      $55,912     $126,254     $151,909


    (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.

    (d) Represents amortization of unfavourable lease rights which has been
        recorded as a reduction of rent expense in the statements of earnings.

    (e) Represents the elimination of certain transition-related expenses
        incurred in connection with the Acquisition which have not been
        capitalized in purchase accounting or as debt issuance costs,
        primarily relating to non-recurring legal and accounting fees.

    (f) Represents the elimination of incremental cost of sales resulting from
        amortization of the step-up in fair value of the merchandise inventory
        balance following the application of purchase accounting to the
        acquisition.

    The Company presents EBITDA and Adjusted EBITDA to provide investors with
a supplemental measure of its operating performance and information about the
calculation of some of the financial covenants that are contained in its
senior secured credit facility. The Company believes EBITDA is an important
supplemental measure of operating performance because it eliminates items that
have less bearing on the Company's operating performance and thus highlights
trends in the Company's core business that may not otherwise be apparent when
relying solely on Canadian GAAP financial measures.  The Company also believes
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 the Company by its senior secured credit facility.  Under
the senior secured credit facility, the Company is subject to financial
covenant ratios that are calculated by reference to Adjusted EBITDA.  The
Company's management also uses EBITDA and Adjusted EBITDA in order to
facilitate operating performance comparisons from period to period, prepare
annual operating budgets and assess the Company's ability to meet future debt
service, capital expenditure and working capital requirements and the
Company's ability to pay dividends on its capital stock.
    EBITDA and Adjusted EBITDA are not presentations made in accordance with
Canadian GAAP.  As discussed above, the Company believes that the presentation
of EBITDA and Adjusted EBITDA 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 the Company's
results as reported under Canadian GAAP. For example, neither EBITDA nor
Adjusted EBITDA reflect (a) the Company's cash expenditures, or future
requirements for capital expenditures or contractual commitments; (b) changes
in, or cash requirements for, the Company's working capital needs; (c) the
significant interest expense, or the cash requirements necessary to service
interest or principal payments, on the Company's debt; and (d) tax payments or
distributions to the Company's parent to make payments with respect to taxes
attributable to the Company that represent a reduction in cash available to
the Company.  Because of these limitations, the Company primarily relies on
its 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 the Company does, EBITDA
may not be, and Adjusted EBITDA is not, comparable to similarly titled
measures reported by other companies.

For further information: Investors, Robert Coallier, Chief Financial 
Officer, Dollarama Group L.P., +1-514-737-7080, ext. 238; or Media, Alex 
Stanton, Stanton Crenshaw Communications, +1-212-780-1900, 
alex@stantoncrenshaw.com