Financial Statements of - Shoppers Drug Mart
Financial Statements of - Shoppers Drug Mart
Financial Statements of - Shoppers Drug Mart
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SHOPPERS DRUG MART CORPORATION<br />
Notes to the Consolidated <strong>Financial</strong> <strong>Statements</strong><br />
(unaudited)<br />
(in thousands <strong>of</strong> Canadian dollars, except per share data)<br />
13. EXPLANATION OF TRANSITION TO IFRS (continued)<br />
Net earnings impact<br />
Operating and administrative expenses $<br />
52 weeks ended<br />
January 1,<br />
2011<br />
(2,946) $<br />
12 weeks ended<br />
March 27,<br />
2010<br />
(1,810)<br />
Income tax expense 521 419<br />
Decrease in net earnings $ (2,425) $ (1,391)<br />
As at<br />
Balance sheet impact<br />
Property and equipment $<br />
January 1,<br />
2011<br />
(49,726) $<br />
March 27,<br />
2010<br />
(49,972) $<br />
January 3,<br />
2010<br />
(48,162)<br />
Other long-term liabilities - (1,382) (1,382)<br />
Deferred tax liabilities (12,775) (12,673) (12,254)<br />
Decrease in retained earnings $ (36,951) $ (35,917) $ (34,526)<br />
iv) Financing Lease Classification<br />
Under previous GAAP, leases for which substantially all the benefits and risks <strong>of</strong> ownership were<br />
transferred to the Company based on certain criteria were recorded as capital leases and classified<br />
as property and equipment, accounts payable and accrued liabilities, and other long-term<br />
liabilities. Capital leases are referred to as financing leases under IFRS. Minimum lease<br />
payments were allocated between the land and building elements <strong>of</strong> a lease based on the fair<br />
value <strong>of</strong> the land and building in aggregate. All other leases were classified as operating leases<br />
under which minimum rent, including scheduled escalations, were expensed on a straight-line<br />
basis over the term <strong>of</strong> the lease, including any rent free periods. Under IFRS, minimum lease<br />
payments are allocated between the land and building elements <strong>of</strong> a lease in proportion to the<br />
relative fair values <strong>of</strong> the leasehold interests in the land and building. IFRS also provides<br />
additional indicators <strong>of</strong> a financing lease that were not provided under previous GAAP.<br />
The following is the impact <strong>of</strong> adopting IAS 17, “Leases” (“IAS 17”), on the Company’s earnings<br />
for the 52 weeks ended January 1, 2011 and 12 weeks ended March 27, 2010 and the Company’s<br />
financial position as at January 1, 2011, March 27, 2010 and January 3, 2010 related to the<br />
Company’s lease classification:<br />
Net earnings impact<br />
Operating and administrative expenses $<br />
52 weeks ended<br />
January 1,<br />
2011<br />
3,967 $<br />
12 weeks ended<br />
March 27,<br />
2010<br />
876<br />
Finance expenses (4,597) (999)<br />
Income tax expense (241) (616)<br />
Decrease in net earnings $ (871) $ (739)<br />
64
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