ARBOR ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS

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TORONTO, Dec. 21 /CNW/ - Arbor Memorial Services Inc. announced today its results for the 14 and 53 weeks ended October 31, 2010 compared to the 13 and 52 weeks ended October 25, 2009.

  Fourth Quarter Year-End

(In $Millions)
2010 2009(1) 2010 2009(1)
Revenue 68.9 64.6 281.8 244.7
Earnings before interest expense and income 8.0 6.9 34.4 30.4
taxes ("EBIT" - a non-GAAP measure)
Net earnings from continuing operations 5.5 4.6 23.0 20.0
Net earnings 5.3 4.5 22.8 19.9
Basic and diluted earnings per share
from continuing operations ($) 0.52 0.43 2.17 1.86
Basic and diluted earnings per share ($) 0.50 0.42 2.15 1.86

(1) Restated to conform with the current year's presentation.


Revenue in the fourth quarter of 2010 increased by $4.3 million or 6.6% over 2009 due to an extra week in 2010. Excluding the impact of the extra week, revenue declined by $1.2 million or 1.8%. Sales in the cemetery division excluding the additional week decreased by $1.7 million or 5.7%, which was the result of a strong third quarter due to the implementation of a harmonized sales tax ("HST") in Ontario and British Columbia ("B.C.") on July 1, 2010 that caused many customers to make their pre-arrangements in advance of the transition date. Sales in the funeral division excluding the extra week increased by $0.7 million or 2.3% due to a higher number of services performed at existing operations of 1.5%, a higher average sale per funeral service of 0.6% and a $0.1 million increase in sales from new operations. Investment income excluding the extra week decreased by $0.1 million or 2.6% due mainly to lower funeral annuity fees, which was also the result of the strong third quarter that was driven by the implementation of HST in Ontario and B.C.

EBIT (a non-GAAP measure) in the fourth quarter of 2010 increased by $1.0 million or 15.0% over 2009 to $8.0 million due to the extra week in 2010. Excluding the impact of the extra week, EBIT decreased by $0.1 million or 1.3% due to a higher loss in the corporate division of $0.2 million and lower EBIT in the funeral division of $0.1 million or 1.6%, which were partially offset by higher EBIT in the cemetery division.

Net earnings in the fourth quarter of 2010 increased by $0.8 million or 18.4% from 2009 to $5.3 million due primarily to the extra week in 2010. Excluding the impact of the extra week, net earnings increased by less than $0.1 million or 0.5%.

Revenue for fiscal 2010 increased by $37.1 million or 15.2% over 2009. Sales in the cemetery division increased by $25.2 million or 23.7% due primarily to higher sales of pre-need burial spaces and higher deliveries of pre-need and at-need upright monuments and bronze memorials. A significant factor in the higher sales of pre-need burial spaces was the implementation of the HST in Ontario and B.C. in the third quarter that caused many customers to make their pre-arrangements in advance of the transition date. Sales in the funeral division increased by $5.4 million or 4.5% due to a higher average sale per service for existing operations of 2.6%, higher sales from new operations of $1.2 million and an increase in the number of services for existing operations of 0.9%. The increase in the number of services resulted from the extra week in 2010. Excluding the impact of the extra week, the number of services declined by 1.1%. Investment and other income in 2010 increased by $6.5 million or 34.1% over 2009 due to an increase of $5.9 million or 122.7% in funeral annuity fees and $0.6 million or 7.0% in care fund interest and dividends. The increase in funeral annuity fees was significantly affected by the implementation of HST in Ontario and B.C. in 2010.

EBIT (a non-GAAP measure) for fiscal 2010 increased by $4.0 million or 13.2% over 2009 to $34.4 million. The increase in EBIT was the result of higher EBIT in the cemetery division of $6.2 million or 58.8% due to higher sales and higher EBIT of $0.3 million or 0.9% in the funeral division, which were partially offset by an increase in the loss of the corporate division of $2.5 million or 16.7%. The favourable earnings in the funeral division resulted from the extra week in 2010. Excluding the extra week, funeral EBIT declined by $0.5 million or 1.4%. The larger variances in the corporate division included an increase of $0.6 million in employee costs, including an increase in expected bonus payments of $0.2 million, a decrease in the tax contingency provision of less than $0.1 million compared to a decrease of $0.4 million in the prior year, higher depreciation of $0.3 million, which was primarily related to the implementation of new sales presentation software, and the impact of the extra week of $0.3 million. Excluding the impact of the extra week in 2010 and other income (expenses), EBIT increased by $2.6 million or 8.5%.

Net earnings for 2010 increased by $2.9 million or 14.5% from 2009 to $22.8 million and $2.5 million or 12.3% excluding the impact of the extra week and unusual items. The improvement excluding the extra week and unusual items was primarily due to an increase in EBIT of $2.6 million or 8.5%, which was driven by higher sales in the cemetery division, and lower interest expense of $0.6 million or 28.5%. These positive variances were partially offset by higher income taxes of $0.8 million or 10.1%. Unusual items included provisions for impairment, net gains on the disposal of assets, net earnings from discontinued operations and the impact of tax rate changes on future income taxes.

In addition to the GAAP results provided in this press release, some of the discussion of operating performance is based on EBIT. EBIT excludes the impact of interest expense and income taxes as disclosed in the statements of earnings. EBIT is a non-GAAP financial measure that does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. This non-GAAP financial measure is more fully defined and discussed in the management discussion and analysis of Arbor Memorial Services Inc. for the year ended October 25, 2009, available on the SEDAR website at www.sedar.com.

Arbor Memorial Services Inc. owns 41 cemeteries, 26 crematoria, 6 reception centres located on cemetery premises and 82 funeral homes in eight provinces of Canada.

SOURCE Arbor Memorial Services Inc.

For further information: For further information:

Brian D. Snowdon, President and Chief Executive Officer
Laurel L. Ancheta, Vice-President and Chief Financial Officer
Telephone: (416) 763-4531

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