Uni-Sélect Inc.
TSX : UNS

Uni-Sélect Inc.

March 30, 2010 14:34 ET

Uni-Select Increases its Sales by 13% in 2009

BOUCHERVILLE, QUÉBEC--(Marketwire - March 30, 2010) - Uni-Select Inc. (TSX:UNS) - For the period ended December 31, 2009, Uni-Select's sales were $1.4 billion, an increase of $162.3 million or 13% compared to the preceding period. Net earnings reached $38.6 million or $1.96 per share, a decrease of 16% compared to net earnings of $45.9 million or $2.33 per share recorded in 2008. The 2009 year-end results take into account the loss from discontinued operations in the amount of $4.8 million and non-recurring expenses of $4.3 million incurred during the course of the period. Excluding the impact from these two items, net earnings would have been $47.7 million or $2.42 per share, for an increase of 1.0%.

  4th QUARTER 12-MONTH PERIOD
(in millions, except net earnings per share) 2009 2008 2009 2008
Sales 315.6 353.0 1 409.9 1 247.6
Adjusted EBITDA from continuing operations 14.5 29.1 95.8 93.2
EBITDA from continuing operations 9.2 27.8 88.8 91.7
 
Adjusted earnings from continuing operations 8.5 15.2 47.7 47.3
Earnings from continuing operations 5.3 14.4 43.4 46.4
 
Earnings per share from continuing operations 0.27 0.73 2.20 2.35
Adjusted earnings per share from continuing operations 0.44 0.77 2.42 2.39

Sales for Automotive Group USA increased by 23.1% in 2009 to reach $884.2 million, compared to $718.1 million in 2008. Acquisitions completed during the course of recent quarters contributed $144.7 million to the increase in sales for the period. Excluding the impact from foreign exchange rate fluctuations, sales for Automotive Group USA would have increased by 17.2%. The operating margin of Automotive Group USA, adjusted to account for non-recurring items, was 5.3% compared to 6.6% in 2008. This decrease is essentially due to pricing pressures and a change in the mix of products sold, combined with inventory losses which were more significant than those of the preceding period.

Automotive Group Canada recorded a slight decrease in sales in 2009 to total $525.7 million compared to $529.4 million during the course of the previous period. Organic sales grew 2%, but were offset by the effect from the disposition of 14 corporate stores in 2009. The Group's operating margin, adjusted to account for non-recurring items, increased from 8.6% in 2008 to 9.3% in 2009.

"While these results include various non-recurring items, including the disposal of the Heavy Duty division and costs related to the closure and sale of corporate stores, they are, nevertheless, below expectations. Significant efforts were made in 2009 to reduce our excess asset base and to redistribute funds towards more profitable investments, such as the repurchase of the minority shareholders of Uni-Select USA and the development of an integrated management system which will be gradually launched during the course of the year. Improvement in store performance, distribution optimalisation and the use of technology in asset management are at the heart of our 2010 initiatives" said Mr. Richard G. Roy, President and Chief Executive Officer of Uni-Select.

"The results of the US operations are not indicative of the coming quarters and combined with the positive performance of the Canadian operations, we are confident that 2010 will return to a level of profitability that our shareholders have become accustomed to" added Mr. Roy.

Financial highlights of the fourth quarter

During the quarter ended December 31, 2009, sales totalled $315.6 million, a decrease of 10.6% over the same period in 2008. The decrease in sales is mainly attributable to the rise in the Canadian dollar vis-à-vis its US counterpart and to the effect of the disposition and closure of corporate stores. Net earnings were $7.2 million or $0.37 per share compared to $14.8 million or $0.75 per share in 2008. Fourth quarter results took into account non-recurring expenses in the amount of $3.3 million incurred during the quarter and a partial reversal of a loss from discontinued operations recorded in the third quarter to the tune of $1.9 million. Excluding the impact of these two items, net earnings would have been $8.6 million or $0.44 per share, a decrease of 43.4% over to the same period of the previous year. This decrease stems mainly from the US operations which suffered inventory losses in 2009 higher than those in the preceding year. The special rebates in both Canada and the USA in the fourth quarter of 2008 added to this variation.

Sales for Automotive Group USA reached $189.6 million during the course of the quarter, compared to $227.8 million during the course of the same period in 2008. This decrease stems mainly from the rise of the Canadian dollar vis-à-vis its US counterpart and from the effect of corporate store closures. The adjusted operating margin of Automotive Group USA was 0.8% compared to 6.2% in 2008. This decrease results from inventory losses being more significant this year and special rebates recorded in the fourth quarter of 2008.

Excluding the effect on sales from the disposition of corporate stores, Automotive Group Canada would have recorded organic sales growth of 4.7%. Sales totalled $126.1 million in the fourth quarter compared to $125.1 million in the fourth quarter of the preceding year. The adjusted operating margin of the Group was 11.9% in 2008 compared to 10.5% in 2009. This decrease stems essentially from special rebates recorded in the fourth quarter of 2008 relating mainly to currency fluctuations.

In closing, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.1165 per common share payable on April 21, 2010, to shareholders of record as at March 31, 2010.

Unless indicated otherwise, all figures in this release are in Canadian dollars.

Uni-Select is a Canadian leader in the distribution of automotive replacement parts, equipment, tools and accessories. Uni-Select USA, Inc., a subsidiary of the Company, provides services to customers in the United States where it is the 7th largest distributor. The Uni-Select Network™includes over 2,500 independent jobbers and services 3,500 points of sale in North America. Uni-Select is headquartered in Montreal. Uni-Select shares (UNS) are traded on the TSX.

Notice related to the review of interim financial statements

The consolidated interim financial statements for the period ended December 31, 2009 have not been reviewed by the auditors of the Company.

               
CONSOLIDATED EARNINGS              
THREE-MONTH AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2009 AND 2008        
(in thousands of dollars, except earnings per share, unaudited)              
   
  4th QUARTER 12 MONTHS  
  2009   2008 2009   2008  
  $   $ $   $  
SALES 315,634   353,021 1,409,875   1,247,552  
   
Earnings before the following items 9,170   27,808 88,806   91,665  
   
  Interest (Note 3) 1,921   2,074 8,293   6,875  
  Amortization (Note 3) 3,277   3,579 13,988   11,326  
  5,198   5,653 22,281   18,201  
   
Earnings before income taxes and non-controlling interest 3,972   22,155 66,525   73,464  
Income taxes              
  Current (7,678 ) 1,208 12,141   13,092  
  Future 6,345   5,621 7,731   10,488  
  (1,333 ) 6,829 19,872   23,580  
   
Earnings before non-controlling interest 5,305   15,326 46,653   49,884  
Non-controlling interest (4 ) 936 3,303   3,502  
   
Earnings from continuing operations 5,309   14,390 43,350   46,382  
Earnings (loss) from discontinued operations (Note 7) 1,939   426 (4,780 ) (462 )
   
Net earnings 7,248   14,816 38,570   45,920  
   
Basic earnings and diluted earnings per share (Note 4)              
  From continuing operations 0.27   0.73 2.20   2.35  
  From discontinued operations 0.10   0.02 0.24   (0.02 )
  Net income 0.37   0.75 1.96   2.33  
   
Weighted average number of outstanding shares 19,714,911   19,701,596 19,709,642   19,724,417  
Number of issued and outstanding shares 19,716,357   19,694,358 19,716,357   19,694,358  

The accompanying notes are an integral part of the interim consolidated financial statements.

           
CONSOLIDATED COMPREHENSIVE INCOME          
THREE-MONTH AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2009 AND 2008          
(in thousands of dollars, unaudited)          
  4th QUARTER   12 MONTHS  
  2009   2008   2009   2008  
  $   $   $   $  
Net earnings 7,248   14,816   38,570   45,920  
Other comprehensive income:                
   
Unrealized gains (losses) on derivative financial instruments designated as cash flow hedges (net of income taxes of ($87) and $61 for the three- month and the twelve-month periods respectively ($2,677 and $2,900 in 2008))                
               
               
179   (5,741 ) (109 ) (6,221 )
Reclassification of realized losses to net earnings on derivative financial instruments designated as cash flow hedges (net of income taxes of ($243) and ($1,300) for the three-month and the twelve-month periods respectively (($40) and ($159) in 2008))                
               
               
554   85   2,308   342  
Unrealized exchange gains (losses) on translation of long-term debt designated as a hedge of net investments in self-sustaining foreign subsidiairies                
               
5,103   (1,723 ) 7,626   (2,717 )
Unrealized exchange gains (losses) on translating financial statements of self-sustaining foreign subsdiaries                
(9,644 ) 28,802   (39,434 ) 40,002  
Other comprehensive income (3,808 ) 21,423   (29,609 ) 31,406  
Comprehensive income 3,440   36,239   8,961   77,326  

 

 
CONSOLIDATED RETAINED EARNINGS        
TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2009 AND 2008        
(in thousands of dollars, unaudited)        
 
      12 MONTHS
      2009 2008
      $ $
Balance, beginning of period     324,241 287,712
Net earnings     38,570 45,920
      362,811 333,632
Share redemption premium (a)     - 903
Dividends     9,186 8,488
Balance, end of period     353,625 324,241

(a) In 2008, the Company redeemed 48,200 common shares for a cash consideration of $1,025 including a share redemption premium of $903.

The accompanying notes are an integral part of the interim consolidated financial statements.

               
CONSOLIDATED CASH FLOWS              
THREE-MONTH AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2009 AND 2008          
(in thousands of dollars, except dividends paid per share, unaudited)              
  4th QUARTER   12 MONTHS  
  2009   2008   2009   2008  
  $   $   $   $  
OPERATING ACTIVITIES                
Earnings from continuing operations 5,309   14,390   43,350   46,382  
Non-cash items                
  Amortization 3,277   3,579   13,988   11,326  
  Amortization of deferred gain on a sale-leaseback arrangement (52 ) (88 ) (221 ) (258 )
  Future income taxes 6,345   5,621   7,731   10,488  
  Compensation cost relating to stock options plans 32   227   128   227  
  Pension expense in excess of contributions 197   56   787   226  
  Non-controlling interest (4 ) 936   3,303   3,502  
  15,104   24,721   69,066   71,893  
  Changes in working capital items 8,351   30,201   851   32,943  
  Cash flow from continuing operating activities 23,455   54,922   69,917   104,836  
  Cash flow from discontinued operating activities (921 ) 7,486   (7,578 ) 569  
  CASH FLOWS FROM OPERATING ACTIVITIES 22,534   62,408   62,339   105,405  
INVESTING ACTIVITIES                
  Business acquisitions (Note 5) (476 ) (2,409 ) (1,143 ) (119,878 )
  Disposal of assets (Note 6) 3,101   -   4,162   -  
  Balance of purchase price (25 ) (578 ) (716 ) 259  
  Buy-back of non-controlling interest (Note 5) (46,013 ) -   (46,209 ) -  
  Investments 23   (443 ) 356   (1,787 )
  Advance to merchant members (1,153 ) (2,130 ) (8,585 ) (4,822 )
  Receipts on advances to merchant members 802   1,494   4,232   4,715  
  Fixed assets (4,193 ) (3,936 ) (10,345 ) (10,533 )
  Disposal of fixed assets 624   377   1,245   671  
  Intangible assets (1,240 ) (1,180 ) (8,818 ) (3,766 )
  Cash flow from continuing investing activities (48,550 ) (8,805 ) (65,821 ) (135,141 )
  Cash flow from discontinued investing activities 13,446   454   27,317   562  
  CASH FLOWS FROM INVESTING ACTIVITIES (35,104 ) (8,351 ) (38,504 ) (134,579 )
FINANCING ACTIVITIES                
  Bank indebtedness (2,493 ) (36,486 ) (2,891 ) (37,035 )
  Financing costs (110 ) -   (110 ) (414 )
  Long-term debt 16   137   1,117   85,114  
  Repayment of long-term debt (94 ) (354 ) (1,672 ) (2,016 )
  Merchant members' deposits in guarantee fund 81   32   (465 ) 174  
  Issuance of shares 112   88   314   88  
  Share redemption -   (828 ) -   (1,025 )
  Dividends paid (2,296 ) (2,128 ) (9,006 ) (8,492 )
  Cash flow from continuing financing activities (4,784 ) (39,539 ) (12,713 ) 36,394  
  Cash flow from discontinued financing activities (4,243 ) (6,640 ) -   -  
  CASH FLOWS FROM FINANCING ACTIVITIES (9,027 ) (46,179 ) (12,713 ) 36,394  
  EFFECT OF EXCHANGE RATE CHANGES ON CASH (653 ) 1,335   (4,954 ) 1,863  
  Increase (decrease) in cash (22,250 ) 9,213   6,168   9,083  
  Cash, beginning of period 38,100   469   9,682   599  
  Cash, end of period 15,850   9,682   15,850   9,682  
   
Dividends paid per share 0.116   0.108   0.457   0.431  

The accompanying notes are an integral part of the interim consolidated financial statements.

         
CONSOLIDATED BALANCE SHEETS        
DECEMBER 31, 2009 AND 2008        
(in thousands of dollars, unaudited)        
  DECEMBER 31   DECEMBER 31  
  2009   2008  
      (audited)  
  $   $  
ASSETS        
CURRENT ASSETS        
  Cash 15,850   9,682  
  Accounts receivable 150,440   180,308  
  Income taxes receivable 3,859   9,051  
  Inventory (Note 8) 402,550   482,340  
  Prepaid expenses 6,914   6,742  
  Future income taxes 10,065   10,172  
  Assets from discontinued operations (Note 7) 3,777   -  
  593,455   698,295  
Investments and volume discounts receivable, at cost 16,831   8,710  
Fixed assets 39,660   45,963  
Financing costs 555   785  
Intangible assets 27,836   17,123  
Goodwill 93,961   99,501  
Future income taxes 3,359   3,707  
  775,657   874,084  
   
LIABILITIES        
CURRENT LIABILITIES        
  Bank indebtedness (Note 9) 44   -  
  Accounts payable 181,773   212,581  
  Dividends payable 2,298   2,118  
  Instalments on long-term debt and on merchant members' deposits in        
  guarantee fund 402   327  
  Future income taxes 11,192   5,676  
  Liabilities from discontinued operations (Note 7) 2,384   -  
  198,093   220,702  
Deferred gain on a sale-leaseback arrangement 2,036   2,641  
Long-term debt 178,866   209,907  
Merchant members' deposits in guarantee fund 7,288   7,724  
Derivative financial instruments 5,182   8,620  
Future income taxes 7,821   5,013  
Non-controlling interest 3,453   46,776  
  402,739   501,383  
   
SHAREHOLDERS' EQUITY        
Capital stock 50,152   49,838  
Contributed surplus 355   227  
Retained earnings 353,625   324,241  
Accumulated other comprehensive income (Note 10) (31,214 ) (1,605 )
  372,918   372,701  
  775,657   874,084  

The accompanying notes are an integral part of the interim consolidated financial statements.

 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(in thousands of dollars, except for per share amounts, unaudited)
  1. BASIS OF PRESENTATION

    The accompanying unaudited interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles for interim financial statements and do not include all disclosures required for complete financial statements. They are also consistent with the accounting policies outlined in the audited financial statements of the Company for the year ended December 31, 2009. The interim financial statements and related notes should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2009. When necessary, the financial statements include amounts based on informed estimates and the best judgment of management. The operating results for the interim periods reported are not necessarily indicative of results to be expected for the year.

  2. ACCOUNTING CHANGES

    ACCOUNTING CHANGES FOR 2009

    Goodwill and intangibles assets

    On January 1, 2009, in accordance with the applicable transitional provisions, the Company adopted the new recommendations of the CICA Handbook included in Section 3064, "Goodwill and intangible assets". This Section establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets, after the initial recognition. The adoption of these recommendations resulted in the reclassification of the software from fixed assets to intangible assets. As at December 31, 2008, the impact of the reclassification on net carrying amounts is an increase in intangible assets and a corresponding decrease in fixed assets of $8,976 and a reclassification of the acquisitions of fixed assets and the development of intangible assets in the consolidated cash flow.

    Credit risk and fair value of financial assets and financial liabilities

    On January 1, 2009, the Company adopted the recommendations of EIC-173 of the CICA Handbook, Credit risk and fair value of financial assets and financial liabilities. This abstract notes that the credit risk specific to the entity and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivatives.

    The adoption of these recommendations is applied retrospectively without restatement of consolidated financial statements of prior periods. On January 1, 2009, taking into account credit risk in the evaluation of derivative financial instruments did not have significant effect on consolidated results.

    Financial instruments - Disclosures

    In June 2009, the Accounting Standard Board issued changes in CICA Handbook Section 3862, "Financial instruments - Disclosures" in order to align with International Financial Reporting Standard IFRS 7, "Financial instruments - Disclosures". This Section has been amended to include additional disclosure requirements about fair value measurements of financial instruments and to enhance liquidity risk disclosure . The amendments establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The amended Section relates to disclosure only and did not impact the consolidated results.

    FUTURE ACCOUNTING CHANGES

    Business combinations

    In January 2009, the CICA issued Section 1582, Business Combinations, which supersedes the like-named Section 1581. This Section applies prospectively to business combinations for which the date of acquisition is in fiscal years beginning on or after January 1, 2011. The Section establishes standards for the recognition of a business combination. The Company will analyze the effects of the adoption of this Section together with the analysis of the International Financial Reporting Standards.

    Consolidated financial statements

    In January 2009, the CICA issued Section 1601, Consolidated Financial Statements, which supersedes the like-named Section 1600. This Section applies to interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Section establishes standards for the preparation of consolidated financial statements. The Company will analyze the effects of the adoption of this Section together with the analysis of the International Financial Reporting Standards.

    Non-controlling interests

    In January 2009, the CICA issued Section 1602, Non-controlling Interests, which supersedes Section 1600, Consolidated financial statements. This Section applies to interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Section establishes standards for the accounting of non-controlling interests in a subsidiary in the consolidated financial statements subsequent to a business combination. The Company will analyze the effects of the adoption of this Section together with the analysis of the International Financial Reporting Standards.

  1. INFORMATION INCLUDED IN CONSOLIDATED EARNINGS 
  4th QUARTER 12 MONTHS
Other financial liabilities 2009 2008 2009 2008
  $ $ $ $
Interest on bank indebtedness 189 142 844 1,548
Interest on long-term debt 1,769 2,010 7,658 5,582
Interest on merchant members' deposits in guarantee fund (19) 37 118 305
  1,939 2,189 8,620 7,435
Held-for-trading financial assets        
Interest income on cash - (36) (6) (68)
Loans and receivables        
Interest income from merchant members (18) (79) (321) (492)
  (18) (115) (327) (560)
  1,921 2,074 8,293 6,875
Amortization        
Amortization of fixed assets 2,030 1,758 11,125 9,078
Amortization of intangible assets and other assets 1,247 1,821 2,863 2,248
  3,277 3,579 13,988 11,326
  1. EARNINGS PER SHARE

    Weighted average number of shares for the calculation of basic earnings per share is 19,714,911 for the three-month period ended December 31, 2009 (19,701,596 in 2008) and 19,709,642 for the twelve-month period ended December 31, 2009 (19,724,417 in 2008). Impact of stock options exercised is 11,730 shares for the three-month period ended December 31, 2009 (16,076 in 2008) and 13,215 for the twelve-month period ended December 31, 2009 (19,268 in 2008) which total a weighted average number of shares of 19,726,641 for the three-month period ended December 31, 2009 (19,717,671 in 2008) and 19,722,857 for the twelve-month period ended December 31, 2009 (19,743,685 in 2008) for calculation of diluted earnings per share.

  2. BUSINESS ACQUISITIONS

    The Company acquired a portion of the assets and liabilities of two companies operating in the Automotive USA segment for cash consideration of $352.

    In addition, the Company increased its interest by 5.77% in its joint venture, Uni-Select Pacific Inc. for a cash consideration of $791. Following this transaction, the Company's interest in the entity increased from 69.23% to 75% changing the joint venture interest into an investment in a subsidiary. The consideration paid for this transaction was based on the carrying amount as stated in the shareholders' agreement.

    The operating results are consolidated in the statement of earnings since the acquisition date.

    The Company completed the purchase price allocation ot one of its 2008 acquisition in the Automotive Canada segment, resulting in a goodwill increase of $1,467 as well as corresponding liabilities.

    In addition, the Company acquired the entire non-controlling interest in its main U.S. subsidiary for a cash consideration of $46,209, including a goodwill of $1,975.

  3. DISPOSAL OF ASSETS

    In 2009, the Company sold in several transactions some of the assets and liabilities of thirteen stores and the shares of one store in the Automotive Canada segment. The assets have been sold for an amount of $9,901 for a cash consideration of $6,294 from which $2,132 is receivable and a non-cash consideration of $3,607.

  4. DISCONTINUED OPERATIONS

    The Company has proceeded to the disposal of certain assets and liabilities of its Palmar Inc. subsidiary, which constituted all of the Heavy Duty Canada segment.

    Pursuant to Section 3475 of CICA Handbook, titled Disposal of Long-Lived Assets and Discontinued Operations, the group's operating results and loss from discontinued operations have been reclassified and presented in the consolidated statement of earnings under "Loss related to discontinued operations" for the 2009 and 2008 periods while the assets and liabilities of Palmar Inc. as of December 31, 2009 have been reclassified and presented in the consolidated balance sheet under "Assets or liabilities from discontinued operations".

    The selling price was allocated as follows:  

     
  Total  
  $  
Current assets 27,200  
Fixed assets 328  
Current liabilities (390 )
Net assets sold 27,138  
Cash disposed (5 )
Consideration received 27,143  

The following table provides the discontinued operations results for the three-month and twelve-month periods ended December 31, 2009 and 2008:

       
  4th QUARTER 12 MONTHS  
  2009   2008 2009   2008  
  $   $ $   $  
Sales (28 ) 20,852 30,985   69,378  
   
Earnings (loss) before the following items 147   1,537 (2,684 ) 824  
   
Interests -   771 128   1,132  
Amortization -   74 171   289  
  -   845 299   1,421  
Earnings (loss) before non-recurring items and income taxes 147   692 (2,983 ) (597 )
Non-recurring items (1) 2,229   - (4,231 ) -  
Earnings (loss) before income taxes 2,376   692 (7,214 ) (597 )
Income taxes 437   266 (2,434 ) (135 )
Earnings (loss) from discontinued operations 1,939   426 (4,780 ) (462 )
   
The following table provides the assets and liabilities from discontinued operations as of December 31, 2009:              
            $  
Assets              
Cash           671  
Accounts receivable           646  
Income taxes receivable           68  
Future income taxes           2,392  
Assets from discontinued operations           3,777  
   
Liabilities              
Accounts payable (1)           2,384  
Liabilities from discontinued operations           2,384  

Non-recurring items and accounts payable are essentially related to severances and future rent for closed locations.

  1. INVENTORY

    The cost of inventory recognized as an expense for the three-month period ended December 31, 2009 is $234,107 ($242,220 in 2008) and $1,007,726 for the twelve-month period ended December 31, 2009 ($877,849 in 2008).

  2. CREDIT FACILITY

    Parent company and certain of its subsdiaries

    The Company has two credit facilities for a total amount of $337,000. The first credit facility, for an amount of $325,000 ($325,000 in 2008), is held by the parent company and the second, for an amount of $12,000, is held by a subsidiary originaly considered a joint venture. The first credit facility is composed of a revolving credit of $235,000 ($235,000 in 2008) renewable annually until maturity in October 2011. This credit facility also includes a $90,000 ($90,000 in 2008) operating credit maturing in October 2010 which is also used for the issuance of letters of guarantee. As at December 31, 2009, the issued letters of guarantee totalled $7,399 ($6,515 in 2008). This $325,000 credit facility can be drawn either in Canadian dollars or in U.S. dollars. The second facility of $12,000 is an operating credit redeemable on demand. It is secured by the assets of the subsidiary with a book value of $31,478. This second facility can only be drawn in Canadian dollars.

    The interest rates vary according to the type of loan and the financial ratios achieved by the Company and are set each quarter. As at December 31, 2009, interest rates vary between 1.2% and 5.25% (1.4% and 3.75% in 2008).

    Joint ventures

    The authorized lines of credit amount to $1,200 ($11,238 in 2008). The bank indebtedness bears interest at variable rates and is renewable on various dates annually. As at December 31, 2009, the interest rates vary between 2.5% and 2.75% (1.4% and 3.5% in 2008)

  3. ACCUMULATED OTHER COMPREHENSIVE INCOME

    2009   2008  
    $   $  
  Balance, beginning of period (1,605 ) (33,011 )
  Other comprehensive income for the period (29,609 ) 31,406  
  Balance, end of period (31,214 ) (1,605 )
   
  The components of other accumulated comprehensive income as at December 31, are as follows:        
    2009   2008  
    $   $  
  Accumulated currency translation adjustments (27,535 ) 4,274  
  Cumulative changes in fair value of derivatives used as hedge (net of future income taxes of $1,503 ($2,741 in 2008)) (3,679 ) (5,879 )
    (31,214 ) (1,605 )
  1. EMPLOYEE FUTURE BENEFITS 

    As at December 31, 2009, the Company's pension plans are defined benefit and contribution plans.

    For the three-month period ended December 31, 2009, the total expense for the defined contribution pension plans was $489 ($551 in 2008) and $434 ($645 in 2008) for the defined benefit pension plans.

    For the twelve-month period ended December 31, 2009, the total expense for the defined contribution pension plans was $1,438 ($1,359 in 2008) and $2,354 ($2,447 in 2008) for the defined benefit pension plans.

  2. GUARANTEES

    Under inventory repurchase agreements, the Company has made a commitment to financial institutions to repurchase inventories from some of its customers at a rate of 60% to 75% of the cost of the inventories for a maximum amount of $64,269 ($65,525 in 2008). In the event of legal proceedings, the inventories would be liquidated in the normal course of the Company's operations. These agreements are for an undetermined period of time. In management's opinion, the likelihood of major payments being made and losses being absorbed is low, since the value of the assets held in guarantee is significantly greater than the Company's commitments.

  3. CAPITAL MANAGEMENT

    Guided by its low-asset-base-high-utilization philosophy, the Company's objectives when managing capital are:

    • Maintain a maximum total net (of cash) debt on total net debt plus equity ratio less than 45%;

    • Maintain a long-term debt on equity ratio less than 125 %;

    • Provide shareholders with growth in the value of their shares by maintaining a return on shareholders' equity of 15% on a long-term basis and paying an annual dividend representing about 20% of the net earnings of the previous year;

    • Maintain a maximum funded debt on earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of 3.5.

In the management of capital, the Company includes shareholders' equity, long-term debt, merchant members' deposits in guarantee fund and bank indebtedness net of cash.

The Company manages its capital structure and makes adjustments to it in light of the changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company has several tools, notably a share repurchase-for-cancellation program pursuant to normal course issuer bids and a flexible credit facility allowing it to react quickly to business opportunities. Also, the Company constantly analyzes working capital levels, notably inventory, to ensure that the optimal level is maintained and regularly adjusts quantities to satisfy demand as well as the level of diversification required by customers. In addition, the Company has put in place a vendor financing program under which payments to certain suppliers are deferred.

The Company assesses its capital management on a number of bases, including: total net debt on total net debt plus equity, long-term debt on equity ratio, return on shareholders' equity ratio and funded debt on EBITDA ratio.

  2009   2008  
Total net debt on total net debt plus equity ratio (1) 31.4 % 35.8 %
Long-term debt on equity ratio (1) 50.0 % 58.4 %
Return on shareholders' equity ratio (2) 10.3 % 13.6 %
Funded debt on EBITDA ratio (1) (3) 1.92   2.27  
  1. The decrease in debt ratios comes mainly from the fluctuation of foreign exchange rates.
  2. Excluding loss from discontinued operations, the ratio would have been 11.6% (13.7% in 2008) for return on shareholders' equity.
  3. Considering EBITDA from discontinued operations, the ratio would have been of 2.09 (2.25 in 2008)

Regarding its $325,000 credit facility, the Company is required to comply with certain financial ratios such as funded debt on EBITDA and total net debt on total net debt plus equity which it has done as at December 31, 2009 and December 31, 2008.

14. SEGMENTED INFORMATION                
        4th QUARTER    
  Automotive USA Automotive Canada Consolidated
  2009   2008 2009   2008 2009 2008
  $   $ $   $ $ $
Sales 189,574   227,940 126,060   125,081 315,634 353,021
 
Earnings before interests, amortization, income taxes and non-controlling interest                
(3,240 ) 13,333 12,410   14,475 9,170 27,808
Assets (1) 474,261   598,629 297,619   243,257 771,880 841,886
Acquisition of fixed assets 3,622   3,664 571   598 4,193 4,262
Acquisition of intangible assets 4,569   5,561 (3,329 ) 2,780 1,240 8,341
 
Acquisition of goodwill 1,974   2,865 49   1,710 2,023 4,575
 
 
        12 MONTHS    
  Automotive USA Automotive Canada Consolidated
  2009   2008 2009   2008 2009 2008
  $   $ $   $ $ $
Sales 884,182   718,132 525,693   529,420 1,409,875 1,247,552
 
Earnings before interest, amortization, income taxes and non-                
controlling interest 41,275   46,671 47,531   44,994 88,806 91,665
Assets (1) 474,261   598,629 297,619   243,257 771,880 841,886
Acquisition of fixed assets 8,591   13,873 1,939   2,452 10,530 16,325
Acquisition of intangible assets 4,569   5,561 4,249   5,366 8,818 10,927
 
Acquisition of goodwill 1,998   14,754 1,670   9,461 3,668 24,215
  1. Assets presented on the consolidated balance sheet include an amount of $3,777 ($32,198 in 2008) from discontinued operations.

    The Automotive USA segment includes fixed assets for an amount of $24,261 ($28,658 in 2008) intangible assets for an amount of $12,78 ($6,712 in 2008) and goodwill for an amount of $53,126 ($59,891 in 2008).

    In the fourth quarter 2009, intangible assets for an amount of $3,882 were transfered from Automotive Canada segment to Automotive USA segment.

Contact Information

  • UNI-SELECT INC.
    Mr. Richard G. Roy
    President and Chief Executive Officer
    450-641-2440
    or
    UNI-SELECT INC.
    Mr. Denis Mathieu
    Vice President and Chief Financial Officer
    450-641-2440
    www.uni-select.com