COLABOR INCOME FUND
TSX : CLB.UN

COLABOR INCOME FUND

March 02, 2007 09:00 ET

Colabor Announces an Increase in Net Earnings in the Order of 5.2%

BOUCHERVILLE, QUEBEC--(CCNMatthews - March 2, 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 fiscal year ended December 31, 2006 and the fourth quarter ended on that date.

Colabor Income Fund continued its earnings growth, declaring net earnings of $4,811,000, up 5.2% compared to the previous year.

Highlights of the fiscal year ended December 31, 2006

- Increase in gross sales in the order of 2.5%;

- Increase in earnings before financial expenses and amortization (EBITDA) of 3.6% compared to last year;

- Distributable cash: $19,642,000; distributed cash: $11,461,000; (see Distributable Cash)

- Net earnings up 5.2% from 2005;

- Basic and diluted earnings per unit up from $0.79 to $0.83.

Highlights of 114-day Period (4th Quarter) Ended December 31, 2006
(Compared to a 113-day period in 2005)

- Increase in gross sales in the order of 0.9%;

- Slight decrease in earnings before financial expenses and amortization (EBITDA) of 1.8%, considering the fact that in 2005, Colabor accounted for a significant portion of rebates from suppliers during the 4th quarter of its financial year, whereas in 2006, it divided these rebates over its financial year based on purchases made;

- Distributable cash: $8,348,000; distributed cash: $3,897,000; (see Distributable Cash);

- Slight decrease in net earnings of 0.7%;

- Basic and diluted earnings per unit stable at $0.39.



Results of Operations

Colabor Income Fund
Consolidated Earnings
('000) Quarter ended
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December 31, 2006 December 31, 2005 Change
(114 days) (113 days) %
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Sales 141,308 100.0% 140,109 100.0% 0.9%
Rebates 4,189 3.0% 4,163 3.0% 0.6%
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Net sales 137,119 97.0% 135,946 97.0% 0.9%
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Cost of sales 138,867 98.3% 137,047 97.8% 1.3%
Rebates from
suppliers 10,976 7.8% 10,736 7.7% 2.2%
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127,891 90.5% 126,311 90.1% 1.3%
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Gross profit 9,228 6.5% 9,635 6.9% -4.2%

Selling,
distribution and
administration
expenses 3,429 2.4% 3,729 2.7% -8.0%
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Earnings before
financial
expenses and
amortization 5,799 4.1% 5,906 4.2% -1.8%
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Financial expenses 269 0.2% 266 0.2% 1.1%
Amortization of
property, plant
and equipment 291 0.2% 306 0.2% -4.9%
Amortization of
intangible assets 993 0.7% 993 0.7% 0.0%
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1,553 1.1% 1,565 1.1% 2.4%
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Earnings before
non-controlling
interest 4,246 3.0% 4,341 3.1% -2.2%
Non-controlling
interest 1,989 1.4% 2,069 1.5% -3.9%
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Net earnings 2,257 1.6% 2,272 1.6% -0.7%
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Basic and diluted
net earnings
per unit $0.39 $0.39
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Colabor Income Fund
Consolidated Earnings
('000) Period ended
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December 31, 2006 December 31, 2005 Change
(365 days) (365 days) %
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Sales 412,621 100.0% 402,548 100.0% 2.5%
Rebates 12,223 3.0% 11,898 3.0% 2.7%
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Net sales 400,398 97.0% 390,650 97.0% 2.5%
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Cost of sales 404,146 97.9% 393,961 97.9% 2.6%
Rebates from
suppliers 29,921 7.3% 28,668 7.1% 4.4%
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374,225 90.6% 365,293 90.8% 2.4%
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Gross profit 26,173 6.4% 25,357 6.2% 3.2%

Selling,
distribution
and
administration
expenses 12,112 2.9% 11,782 2.9% 2.8%
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Earnings before
financial
expenses and
amortization 14,061 3.5% 13,575 3.3% 3.6%
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Financial expenses 843 0.2% 666 0.2% 26.6%
Amortization of
property, plant
and equipment 927 0.2% 988 0.2% -6.2%
Amortization of
intangible assets 3,225 0.8% 3,225 0.8% 0.0%
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4,995 1.2% 4,879 1.2% 2.4%
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Earnings before
non-controlling
interest 9,066 2.3% 8,696 2.1% 4.3%

Non-controlling
interest 4,255 1.0% 4,121 1.0% 3.3%
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Net earnings 4,811 1.3% 4,575 1.1% 5.2%
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Basic and diluted
net earnings
per unit $0.83 $0.79
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Colabor Income Fund's fiscal year comprises thirteen 28-day periods. Three quarters comprise three 28-day periods each, and the fourth quarter includes four 28-day periods. The Fund's year-end is December 31.

Since the Fund does not have financial statements for the period prior to formation of the Fund, that is, as at June 28, 2005, to help readers compare, the Fund's results have been compared with the results of the Vendor for the periods prior to June 28, 2005 by correcting them to reflect special aspects of the Fund's activities, in particular customer rebates, the costs of a listed company and amortization of intangible assets. Accordingly, the comparative figures differ from those reported in the Fund's financial statements as at December 31, 2006.

Distributable Cash

The Fund declares monthly distributions to unitholders of record on the last day of each month and pays the distributions on or around the 15th of the following month. The annual distribution per unit that was $1.0248 increased to $1.076 in July 2006, for an increase to the order of 5%.

The following table shows the calculation of distributable cash for the 4th quarter of 2006 and of 2005 and for the fiscal years ended December 31, 2006 and 2005.

The Canadian Securities Administrators has concluded that distributable cash is in all cases a measure of cash flows of which we many present a fair picture only if we match it with the cash flows related to the operating activities presented in the issuer's financial statements.



2006-12-31 2005-12-31 2006-12-31 2005-12-31
(114 days) (113 days) (365 days) (187 days)
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$ $ $ $
Cash flows related
to operating
activities 8,785 7,795 21,322 20,394
Acquisition of
property, plant
and equipment (1) (281) (236) (744) (322)
Repayment of
long-term debt (156) (156) (468) (187)
Repayment of security
deposits (468)
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Distributable cash 8,348 7,403 19,642 19,885
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Distributed cash 3,897 3,710 11,461 4,728
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(1) Acquisition of property, plant and equipment:

Maintenance assets 80 90 249 42
(Recurring)
Distribution software 201 146 495 280
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(Non-recurring) 281 236 744 322
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The excess distributable cash over distributed cash, for the above-mentioned periods, is primarily attributable to the variation in operating liabilities relating to rebates the Fund must pay to affiliated wholesalers under the terms of the 3% agreement negotiated with them.

Outlook

On January 8, 2007, Colabor acquired Summit Food Service Distributors Inc., an Ontario-based distributor that is one of the largest in the food service industry in Canada. This transaction will make it possible to double Colabor Income Fund's sales for the fiscal year ending December 31, 2007.

Following the acquisition of Summit, the Fund's management is consolidating its role in food distribution services in Canada for future years.

Firstly, Colabor will continue to benefit from its loyal and entrepreneurial affiliated-wholesalers network in Quebec and the Atlantic provinces, its customer-driven distribution network, recent investments in information technology and low operating costs.

Secondly, the acquisition of Summit will help to:

- create a major player in the food services industry that has a foothold in Ontario, one of the most important food services market in Canada;

- significantly increase its purchasing power and ability to generate cost savings;

- increase its distributable cash per unit through the growth of its operating revenue.

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 of food and non-food products that it purchases and supplies to wholesale distributors who, in turn, sell them to their retail (grocery stores, convenience stores, etc.) and food-service customers (cafeterias, restaurants, hotels, restaurant chains, etc.). Excluding the Summit acquisition, Colabor is one of the largest wholesalers in Canada and the largest in Quebec, with gross sales of $412.6 million for the year ended December 31, 2006.

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
    www.colabor.com