COLABOR INCOME FUND
TSX : CLB.UN

COLABOR INCOME FUND

October 04, 2007 15:33 ET

Colabor Income Fund: Sales and Financial Results Show Solid Performance

BOUCHERVILLE, QUEBEC--(Marketwire - Oct. 4, 2007) - FOR DISTRIBUTION IN CANADA ONLY. NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Colabor Income Fund (TSX:CLB.UN) reports its results for the third quarter of the year ending December 31, 2007.

Highlights of the third quarter ended September 8, 2007 compared with the 2006 third quarter

- Sales up approximately $104.2 million, an increase of 114%;

- Organic growth of sales of 8.4%;

- Earnings before financial expenses and amortization (EBITDA) increase by $3.6 million, an increase of 111%;



Results of Operations

Consolidated Earnings
(unaudited and in thousands of dollars,
except per unit amounts)

2007-09-08 2006-09-08
(84 days) (84 days) Variance
--------------- -------------- -------------
$ $ $ %
Net sales 195,488 100.00% 91,285 100.00% 104,203 114.15%
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Earnings before financial
expenses and amortization 6,798 3.48% 3,215 3.52% 3,583 111.45%
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Financial expenses 1,622 0.83% 259 0.28% 1,363 526.25%
Amortization of property,
plant and equipment 858 0.44% 215 0.24% 643 299.07%
Amortization of intangible
assets 1,634 0.84% 744 0.82% 890 119.62%
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4,114 2.11% 1,218 1.34% 2,896 237.77%
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Earnings before
non-controlling interest 2,684 1.37% 1,997 2.18% 687 34.40%
Non-controlling interest 948 0.48% 935 1.02% 13 1,39%
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Net earnings 1,736 0.89% 1,062 1.16% 674 63.47%
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2007-09-08 2006-09-08
(251 days) (251 days) Variance
-------------- ------------- ---------------
$ $ $ %
Net sales 558,365 100.00% 263,279 100.00% 295,086 112.08%
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Earnings before financial
expenses and amortization 17,772 3.18% 8,262 3.14% 9,510 115.11%
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Financial expenses 4,712 0.84% 574 0.22% 4,138 720.91%
Amortization of property,
plant and equipment 2,301 0.41% 636 0.24% 1,665 261.79%
Amortization of
intangible assets 4,814 0.86% 2,232 0.85% 2,582 115.68%
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11,827 2.11% 3,442 1.31% 8,385 243.1%
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Earnings before
non-controlling interest 5,945 1.07% 4,820 1.83% 1,125 23.34%
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Non-controlling interest 2,140 0.38% 2,266 0.86% (126) -5.56%
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Net earnings 3,805 0.69% 2,554 0.97% 1,251 48.98%
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-----------------------------------------------


Sales
(in thousands of dollars)

2007-09-08 2006-09-08
(84 days) (84 days) Variance
-------------- ------------- ---------------
$ % $ % $ %
Boucherville Division
Retail 29,841 15.3% 27,051 29.6% 2,790 10.3%
Foodservice 69,157 35.4% 64,234 70.4% 4,923 7.7%
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98,998 50.7% 91,285 100.0% 7,713 8.4%

Summit Division
Foodservice 96,490 49.3% 96,490 S/O
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195,488 100.0% 91,285 100.0% 104,203 114.2%
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-----------------------------------------------


2007-09-08 2006-09-08
(251 days) (251 days) Variance
--------------- ------------- ---------------
$ % $ % $ %

Boucherville Division
Retail 81,943 14.7% 79,984 30.4% 1,959 2.4%
Foodservice 196,733 35.2% 183,295 69.6% 13,438 7.3%
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278,676 49.9% 263,279 100.0% 15,397 5.8%

Summit Division
Foodservice 279,689 50.1% 279,689 S/O
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558,365 100.0% 263,279 100.0% 295,086 112.1%
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Boucherville Division

Retail

The growth in sales of the retail division is primarily attributable to the recruitment of two new customers by one of the affiliated wholesalers during the third quarter, which will contribute to improving this sector during the fourth quarter as well.


Foodservice

Organic growth in the affiliated wholesalers' foodservice sales continues to outpace industry levels.

The 7.7% increase in sales for the quarter and 7.3% for the 251-day period ended September 8, 2007, compared with the previous year is more than 3% higher than the 4.1% (including inflation) growth over 2006 anticipated by the Canadian Restaurant and Foodservices Association.

Summit Division

The acquisition of Summit has made it possible to double the Fund's sales and is consistent with management expectations.


Synergies

The Fund's management expects that synergies from the acquisition of Summit will be about $2.2 million. These synergies will primarily result of streamlining and negotiating new supply agreements with suppliers and combining certain programs, such as property insurance, group insurance and others.

At this time, most agreements have been negotiated with suppliers and results reflect a portion of the negotiated synergies. The Company is confident it will achieve the targeted synergies during its fiscal year. Synergies will primarily be realized at the end of September for the Boucherville Division as a result of purchases at the Colabor Exhibition and for the Summit Division as a result of purchases at the Sell-A-Rama.

Information About the Fund's Tax Position

The Fund's public offering of trust units and convertible debentures, concurrently with the Summit acquisition in January 2007 exceeded both the $50 million threshold and the safe harbours based on market capitalization. However, the Fund's management believes that the Summit acquisition was sufficiently advanced that the financing arrangement preceded the Department's guidance and that the type of financing to acquire the Summit assets could have been modified had the Fund been aware of the Department's guidance at the time of signing the underwriting agreement with the underwriters. The Fund has initiated steps with the Department of Finance to clarify Colabor's situation.

When it prepared the 2007 third-quarter financial statements, the Fund's management was still waiting for the Department of Finance's interpretation before considering whether the Fund is taxable and will keep unitholders apprised of any developments in this matter.

If the Fund is considered taxable, the Fund's management intends to maintain its current distribution policy, which represents an annual distribution to unitholders of $1.076 per unit because, in the opinion of the Fund's management, the Fund's activities will make it possible to increase distributable cash available for distributions per unit during the first full year of operation following the Summit acquisition, both on an undiluted and fully diluted basis.




Cash

Consolidated cash flows
(unaudited and in thousands
of dollars) 2007-09-08 2006-09-08 2007-09-08 2006-09-08
(84 days) (84 days) (251 days) (251 days)
----------- ---------- ---------- ----------
$ $ $ $

OPERATING ACTIVITIES
Net earnings 1,736 1,062 3,805 2,554
Non-cash items
Amortization of property,
plant and equipment 858 215 2,301 636
Amortization of intangible
assets 1,634 744 4,814 2,232
Non-controlling interest 948 935 2,140 2,266
Compensation cost from
long-term incentive plan 53 34 144 81

Accretion of difference
between effective and
nominal debenture rate 194 573
-----------------------------------------------
5,423 2,990 13,777 7,769
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Changes in operating assets
and liabilities
Accounts receivable 12,282 2,929 516 (5,145)
Withholding taxes
recoverable (50) (297)
Inventory 1,053 2,763 6,193 (1,453)
Prepaid expenses 389 480 (166) (15)
Deferred financing expenses 19 37
Accounts payable and
accrued liabilities (591) (2,051) 5,854 7,291
Rebates payable (7,666) (1,203) (3,985) 2,786
Deferred revenue 321 657 526 1,304
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5,757 3,575 8,678 4,768
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Cash flows from operating
activities 11,180 6,565 22,455 12,537
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INVESTING ACTIVITIES

Business acquisition (109,048)
Property, plant and equipment (134) (249) (584) (463)
-----------------------------------------------
Cash flows from investing
activities (134) (249) (109,632) (463)
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FINANCING ACTIVITIES
Bank loans (8,658) 1,683 26,919 1,801
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Distributions paid to
unitholders (1,775) (1,011) (6,715) (3,970)
Distributions paid on
exchangeable Colabor
LP units (913) (987) (3,651) (3,594)
Repayment of notes payable (6,087) (6,195)
Repayment of long-term debt (78) (78) (312) (312)
Repayment of security
deposits (468)
Purchase of units held by
the Fund for long
term incentive plan (301) (238) (448)
Issue of debentures 47,186
Issue of trust units 24,171
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Cash flows from financing
activities (11,424) (6,781) 87,360 (13,186)
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Net change in cash (378) (465) 183 (1,112)
Bank overdraft, beginning of
period (2,776) (899) (3,337) (252)
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Bank overdraft, end of period (3,154) (1,364) (3,154) (1,364)
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Standardized Distributable Cash

Standardized Distributable Cash
(unaudited and in thousands of dollars) Since the
creation of
2007-09-08 2006-09-08 2007-09-08 2006-09-08 the Fund
(84 days) (84 days) (251 days) (251 days) (2005-06-28)
---------------------------------------------------------
$ $ $ $ $
Cash flows from
operating
activities 11,180 6,565 22,455 12,537 64,171
Acquisition of
property, plant
and equipment(1) (134) (249) (584) (463) (1,650)
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Standardized
distributable cash 11,046 6,316 21,871 12,074 62,521
---------------------------------------------------------
---------------------------------------------------------

Acquisition of
property, plant
and (1)equipment:
Maintenance assets
(recurring) 134 7 477 168 768
Distribution software
(non-recurring) 242 107 295 882
134 249 584 463 1,650
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Distributions paid
on units 1,775 1,011 6,715 3,970 15,271
Distributions paid
on exchangeable
Colabor LP units 913 987 3,651 3,594 11,284
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Distributed cash 2,688 1,998 10,366 7,564 26,555
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Weighted average
number of units
Units 9,895,793 5,775,000 9,714,557 5,775,000 6,998,884

Exchangeable
Colabor LP
units 5,087,439 5,087,439 5,087,439 5,087,439 5,087,439
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14,983,232 10,862,439 14,801,996 10,862,439 12,086,323
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Standardized
distributable
cash per unit $0.74 $0.58 $1.48 $1.11 $5.17
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Cash distributed
per unit $0.18 $0.18 $0.70 $0.70 $2.20
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Ratio of
distributed
cash to
standardized
distributable cash 24.3% 31.6% 47.4% 62.6% 42.5%
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---------------------------------------------------------


The Fund declares monthly distributions to unitholders of record on the last day of each month and pays the distributions on or around the 15 of the following month. The annual distribution per unit is $1.076.

Outlook

The acquisition of Summit, makes it possible for the Fund's to consolidate its role in food distribution services in Canada for future years and can serve as a springboard for further expansion nationally.

Additional Information

The Fund's MD&A and financial statements will also be available on SEDAR (www.sedar.com) following publication of this News Release. Additional information about Colabor Income Fund may also be found on SEDAR as well as on the Income Fund's Internet site at www.colaborincomefund.com.

Colabor Overview

Colabor is a wholesaler and distributor of food and non-food products serving the retail (grocery stores, convenience stores, etc.) and food-service (cafeterias, restaurants, hotels, restaurant chains, etc.) markets.

Caution

This News Release may contain forward-looking statements reflecting the opinions or present expectations of Colabor Income Fund or Colabor Limited Partnership concerning their performance as well as their respective business activities and future events. These statements are subject to a number of risks, uncertainties and assumptions. Actual results or events may differ.

Contact Information

  • Colabor Income Fund
    Gilles C. Lachance
    President and Chief Executive Officer
    450-449-0026, extension 265
    450-449-2098 (FAX)
    glachance@colabor.com
    or
    Colabor Income Fund
    Michel Loignon CA
    Vice-President, Finance and Administration
    450-449-0026, extension 235
    450-449-2098 (FAX)
    mloignon@colabor.com