Uni-Sélect Inc.
TSX : UNS

Uni-Sélect Inc.

March 13, 2008 12:44 ET

Uni-Select Reported an Increase in Sales of 3.9% for 2007, in Spite of the Increase of the Canadian Dollar and the Slowdown in the US Economy

BOUCHERVILLE, QUEBEC--(Marketwire - March 13, 2008) - Uni-Select Inc. (TSX:UNS) - For the year ended December 31, 2007, sales were $1,168,289,000, an increase of $44,386,000 or 3.9% compared to the previous period. Net earnings, for their part, were recorded at $40,841,000 or $2.07 per share, a 3.4% decrease compared to net earnings of $42,264,000 or $2.15 per share in 2006. The results for the 2007 period include the contribution to earnings resulting from recent acquisitions significantly reduced by the unfavorable US exchange rate compared to the Canadian dollar. Excluding the impact of the exchange rate, sales for the Company would have increased by 6.9% to reach $1,201,000,000 and net earnings would have been $43,367,000 or $2.20 per share, an increase of 2.3%.

Sales for Automotive Group USA increased by 7.0% in 2007 to reach $607,173,000 compared to $567,402,000 in 2006. Acquisitions completed in recent quarters contributed to an increase in sales of $74,853,000 in the period. Excluding the impact of the exchange rate, sales for Automotive Group USA would have increased by 12.5%. The operating margin of Automotive Group USA was 6.2% compared to 6.5% in 2006.

Automotive Group Canada reported an increase in sales of 1.7% in 2007 to reach $497,955,000 compared to $489,573,000 during the corresponding period last year. This increase stems from the impact of acquisitions completed during the course of the period. The operating margin went from 9.6% in 2006 to 8.5% in 2007.

Sales for the Heavy Duty Group decreased by 5.6% compared to 2006 to reach $63,166,000. This decrease is attributable to the transfer in 2006 of some distribution activities to Automotive Group Canada. This transfer represents a 4.3% decrease in sales for this division. The efforts made by employees and Management to improve both inventory management and the margin have borne fruit, while the operating loss of the Heavy Duty Group was reduced by almost $2,000,000 to reach a break-even point.

"These results are irrefutably below our expectations. In fact, we have already set in motion the initial phases of our triennial plan which targets, amongst other things, the improvement of profitability. The performance of our corporate stores, the optimization of our distribution network, the integration of acquisitions and the usage of technology in the management of our assets are at the heart of the initiatives we are forging ahead with." said Mr. Richard G. Roy, President and Chief Executive Officer of Uni-Select Inc.

"Several expansion projects were completed and three acquisitions were announced during the period. The integration into our existing operations of the acquisitions will redesign our distribution network in Eastern United Stated and allow us to benefit from savings as of this year. Economic conditions in the US, which contribute to the decrease in our organic growth, should provide us with acquisition opportunities. In addition, the results of our US operations will benefit, for a full year in 2008, from the contribution of Consumer Auto Parts and Parts Distributors, respectively acquired in August and September. Our Canadian operations will benefit from the contribution of Replacement Parts Depot Limited, an Ontario distributor acquired in January and from the execution of national distribution agreements, among which that of Canadian Tire Corporation" continued Mr. Roy.

Financial Highlights of the Fourth Quarter

For the quarter ended December 31, 2007, sales were $283,111,000, an increase of $3,284,000 or 1.2% compared to the same period in 2006. Net earnings, for their part, were $13,080,000 or $0.66 per share, a decrease of 21.6% compared to net earnings of $16,677,000 or $0.85 per share in 2006. Furthermore, the results of the 2007 quarter include the contribution to earnings resulting from recent acquisitions partly offset by the unfavorable US exchange rate compared to the Canadian dollar. Excluding the impact of the exchange rate, sales for the Company would have increased by 8.9% to reach $304,699,000 and net earnings would have been $15,323,000 or $0.78 per share.

Automotive Group USA enjoyed an increase in sales of 6.2% in the last quarter of 2007 to reach $149,740,000 compared to $141,012,000 during the corresponding quarter last year. Acquisitions completed during the last quarters contributed $28,702,000 to the increase in sales for the quarter. Excluding the impact of the exchange rate, sales for Automotive Group USA would have increased by 20.2%. The operating margin of Automotive Group USA was 6.7% compared to 7.8% in 2006.

Automotive Group Canada reported a 6.0% negative organic growth in sales. Sales reached $114,167,000 in the fourth quarter while they were $120,479,000 during the corresponding quarter last year. This decrease in sales is as a consequence of a slowdown in activities resulting from a perceived deflation in the value of certain products. The Ontario region was even more so affected as merchants decreased their inventory levels and by weak sales to certain national account clients. The downward pressure on prices as a result of deflation on certain product lines caused by the stronger Canadian dollar, reduced earnings for the quarter by $1,800,000. The operating margin of the Group went from 16.3% in 2006 to 10.4% in 2007 and excluding the impact of the exchange rate, the margin would have been 12.0% for the quarter.

Sales for the Heavy Duty Group increased by 4.7% compared to 2006 to reach $19,204,000 compared to $18,336,000. As a result of efforts made since the start of the quarter, the operating margin of the Heavy Duty Group went from (0.9%) in 2006 to 8.0% in 2007, an improvement of close to $1,700,000.

The Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.1075 per common share payable on April 21, 2008 to shareholders of record as at March 31, 2008.

Uni-Select is Canada's second largest distributor of automotive replacement parts, equipment, tools and accessories and, through Uni-Select USA, Inc., the company also provides services to customers in the United States where it is the 8th largest distributor. Its subsidiary, Palmar Inc., sells replacement parts, tools and accessories for heavy-duty vehicles and wheels in Canada. The Uni-Select Network includes over 2,000 independent jobbers and services over 3,100 points of sale in Canada and the United States. Uni-Select is headquartered in Montreal. Uni-Select shares (UNS) are traded on the TSX.

Certain statements in this press release contain forward-looking statements which, by their very nature, include risks and uncertainties, such that actual results could differ from those indicated in these forward-looking statements. For further information on the risks and uncertainties, please refer to the annual report filed by Uni-Select with the Canadian securities commissions. Unless required to do so pursuant to applicable securities legislation, management assumes no obligation as to the updating or revision of the forward-looking statements as a result of new information, future events or other changes.



Uni-Select Inc.
Consolidated Interim Financial Statements
December 31, 2007 and 2006

Notice related to the review of interim financial statements

The consolidated interim financial statements for the period
ended December 31, 2007 have not been reviewed by the auditors
of the Company.


CONSOLIDATED EARNINGS
THREE-MONTH AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2007 AND 2006
(in thousands of dollars, except earnings per share, unaudited)

4TH QUARTER 12 MONTHS
2007 2006 2007 2006
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$ $ $ $

SALES 283,111 279,827 1,168,289 1,123,903
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Earnings before the
following items 23,505 30,479 80,010 81,824
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Interests (Note 4) 1,910 1,380 6,255 3,905
Amortization (Note 4) 2,209 2,058 9,181 8,045
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4,119 3,438 15,436 11,950
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Earnings before income
taxes and non-controlling
interest 19,386 27,041 64,574 69,874
Income taxes
Current 10,352 12,481 26,226 27,658
Future (4,808) (2,941) (5,344) (3,028)
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5,544 9,540 20,882 24,630
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Earnings before
non-controlling
interest 13,842 17,501 43,692 45,244
Non-controlling interest 762 824 2,851 2,980
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Net earnings 13,080 16,677 40,841 42,264
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Basic earnings
per share (Note 5) 0.66 0.85 2.07 2.15
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Diluted earnings per
share (Note 5) 0.66 0.84 2.07 2.14
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Number of issued
and outstanding
shares 19,736,558 19,699,334 19,736,558 19,699,334
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CONSOLIDATED RETAINED EARNINGS
TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2007 AND 2006
(in thousands of dollars, unaudited)

12 MONTHS
2007 2006
$ $
--------------------------------------------------------------------
Balance, beginning of period 255,355 220,966
Net earnings 40,841 42,264
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296,196 263,230
Dividends 8,484 7,875
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Balance, end of period 287,712 255,355
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CONSOLIDATED COMPREHENSIVE INCOME
THREE-MONTH AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2007 AND 2006
(in thousands of dollars, unaudited)

4TH QUARTER 12 MONTHS
2007 2006 2007 2006
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $ $ $
Net earnings 13,080 16,677 40,841 42,264
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Other comprehensive
income:

Gain on a derivative
financial instrument
designated as cash flow
hedges prior to
January 1, 2007,
transferred to net
earnings in the current
period (net of income
taxes of $19 and $81 for
the three-month and the
twelve-month periods
respectively) (39) - (173) -

Unrealized gains (losses)
on translating financial
statements of self-
sustaining foreign
operations (1,366) 33 (20,245) 639
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Other comprehensive
income (1,405) 33 (20,418) 639
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Comprehensive income for
the period 11,675 16,710 20,423 42,903
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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, 2007 AND 2006
(in thousands of dollars, except dividends paid per share, unaudited)


4TH QUARTER 12 MONTHS
2007 2006 2007 2006
--------------------------------------------------------------------
--------------------------------------------------------------------
$ $ $ $

OPERATING ACTIVITIES
Net earnings 13,080 16,677 40,841 42,264
Non-cash items
Amortization 2,209 2,058 9,181 8,045
Amortization of deferred
gain on a sale-
leaseback arrangement (54) - (176) -
Future income taxes (4,808) (2,941) (5,344) (3,028)
Non-controlling interest 762 824 2,851 2,980
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11,189 16,618 47,353 50,261
Changes in working
capital items (10,557) (12,903) (21,104) (6)
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CASH FLOWS FROM
OPERATING ACTIVITIES 632 3,715 26,249 50,255
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INVESTING ACTIVITIES
Temporary investments - (6,897) 6,897 (1,955)
Business acquisitions
(Note 6) (9,350) (14,869) (80,685) (76,218)
Non-controlling interest (50) - (228) -
Advances to merchant
members (2,218) (601) (3,753) (4,737)
Receipts on advances
to merchant members 1,035 948 3,830 7,061
Fixed assets (3,528) (4,714) (10,171) (9,510)
Disposal of fixed assets 102 371 7,685 633
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CASH FLOWS FROM INVESTING
ACTIVITIES (14,009) (25,762) (76,425) (84,726)
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FINANCING ACTIVITIES
Bank indebtedness 8,716 25,930 11,741 24,914
Balance of purchase price 429 - (577) -
Non-controlling interest
contribution 7,008 - 7,008 -
Long-term debt 991 486 42,699 2,002
Repayment of long-
term debt (1,078) (1,644) (2,885) (4,033)
Merchant members'
deposits in guarantee
fund (203) (71) (536) (205)
Issuance of shares - - 528 1,288
Dividends paid (2,122) (1,970) (8,333) (7,473)
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CASH FLOWS FROM FINANCING
ACTIVITIES 13,741 22,731 49,645 16,493
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Increase (decrease) in
cash and cash
equivalents 364 684 (531) (17,978)
Cash and cash
equivalents, beginning
of period 235 446 1,130 19,108
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Cash and cash equivalents,
end of period 599 1,130 599 1,130
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Dividends paid per share 0.108 0.100 0.424 0.380
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The accompanying notes are an integral part of the interim
consolidated financial statements.



CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
(in thousands of dollars, unaudited)

DEC. 31, 2007 DEC. 31, 2006
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--------------------------------------------------------------------
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 599 1,130
Temporary investment - 6,897
Accounts receivable 141,043 136,834
Income taxes receivable 1,370 7,398
Inventory 341,545 313,384
Prepaid expenses 4,959 4,737
Future income taxes 8,671 6,332
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498,187 476,712
Investments and volume discounts
receivable 7,406 6,575
Fixed assets 41,526 41,714
Financing costs 488 893
Covenants not to compete 330 578
Goodwill 64,858 44,257
Future income taxes 2,778 1,806
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615,573 572,535
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--------------------------------------------------------------------

LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 35,887 27,860
Accounts payable 132,660 136,197
Income taxes payable - 8,268
Dividends payable 2,122 1,970
Instalments on long-term debt
and on merchant members'
deposits in guarantee fund 577 529
Future income taxes - 19
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171,246 174,843

Deferred gain on a sale-leaseback
arrangement (Note 3) 2,338 -
Long-term debt 91,786 63,275
Merchant members' deposits in
guarantee fund 7,294 7,814
Future income taxes 3,838 5,082
Non-controlling interest 34,498 29,588
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311,000 280,602
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SHAREHOLDERS' EQUITY
Capital stock 49,872 49,344
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Retained earnings 287,712 255,355
Accumulated other comprehensive
income (Note 7) (33,011) (12,766)
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254,701 242,589
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304,573 291,933
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615,573 572,535
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The accompanying notes are an integral part of the interim
consolidated financial statements.


UNI-SELECT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
(in thousands of dollars, except for per share amounts, unaudited)


1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements are in accordance with Canadian generally accepted accounting principles for interim financial statements and do not include all the information required for complete financial statements. They are also consistent with the accounting policies outlined in the Company's audited financial statements for the year ended December 31, 2007. The interim financial statements and related notes should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2007. When necessary, the financial statements include amounts based on informed estimates and management's best judgements. The operating results for the interim periods reported are not necessarily indicative of results to be expected for the year.

2. CHANGES IN ACCOUNTING POLICIES

Financial instruments, hedges, comprehensive income and equity

On January 1, 2007, in accordance with the applicable transitional provisions, the Company retroactively adopted, without restatement of prior periods, the new recommandations of CICA Handbook included in Section 3855 Financial Instruments - Recognition and Measurement, 3865 Hedges, 1530 Comprehensive Income, 3861 Financial Instruments - Disclosure and Presentation and 3251 Equity. Sections 3855 and 3861 establish standards for the classification, recognition, measurement and identification of information that should be disclosed about financial instruments (including derivatives) and non-financial derivatives in financial statements. Section 3865 describes when and how hedge accounting may be applied. Section 1530 establishes standards for reporting and display of comprehensive income and its components including net income and accumulated other comprehensive income and Section 3251 establishes standards for the presentation of equity and changes in equity during the reporting period.

The adoption of these new standards translated into the following changes on classification and measurement of financial instruments of the Company which were previously recorded at cost.

- Cash and cash equivalents are classified as assets held for trading. They are measured at fair value and fair value variations are accounted for in net income.

- The temporary investment is classified as held-to-maturity investment. It is measured at cost, which upon its initial measurement is equal to its fair value. Subsequent measurements are recorded at amortized cost using the effective interest method less impairment.

- Accounts receivable, investments and volume discounts receivable are classified as loans and receivables. Accounts receivable are recorded at cost, which upon their initial measurement is equal to their fair value. Subsequent measurements are recorded at amortized cost, which is generally equal to the initial measurement less allowance for doubtful accounts. Investments and volume discounts receivable are recorded at cost, which upon their initial measurement is equal to its fair value. Subsequent measurements are recorded at amortized cost using the effective interest method less impairment.

- Bank indebtedness, accounts payable, dividends payable, long-term debt and merchant members' deposits in guarantee fund are classified as other financial liabilities. They are initially measured at their fair value. Subsequent measurements are recorded at amortized cost using effective interest method.

- As stipulated in Section 3855 Financial Instruments - Recognition and Measurement, the Company elected to apply hedge accounting on an interest rate swap as cash flow hedge. This derivative is measured at fair value at the end of each period and the gains or losses resulting from remeasurement are recognized in other comprehensive income when the hedge is deemed effective. Any ineffective portion is recognized in net income.

The adjustments related to the adoption of the new standards described above translated into an increase of balance sheet accounts as of January 1, 2007 as follows:



Derivative financial instrument $254
Current future income taxes 81
Accumulated other comprehensive income 173


The adjustments related to the adoption of the new standards described
above translated into an increase of the following elements for the
period ended December 31, 2007:


Earnings before the following items $254
Future income taxes 81
Net earnings 173
Earnings per share 0.01
Diluted earnings per share 0.01


Cumulative translation adjustments which were presented in retained earnings are now presented in the accumulated other comprehensive income.

Accounting changes (Note 11)

On January 1, 2007, in accordance with the applicable transitional provisions, the Company adopted the new recommandations of CICA Handbook included in Section 1506, Accounting Changes, which establishes standards for disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors and the accounting methods to be applied. Furthermore, the new standard requires the communication of the modifications of GAAP that are issued but not yet effective or not yet adopted by the Company. The new standard has no impact on the Company's financial results.

3. ACCOUNTING POLICIES

Deferred gain on a sale-leaseback arrangement

This gain is amortized on a straight-line basis over the lease term.

Comparative figures

Certain comparative figures have been reclassified to conform with the presentation adopted in the current year.

4. INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF EARNINGS



4TH QUARTER 12 MONTHS
Interests 2007 2006 2007 2006
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--------------------------------------------------------------------
$ $ $ $
Interest on bank
indebtedness 613 585 2,626 1,250
Interest on
long-term debt 1,359 1,018 4,401 3,809
Interest on merchant
members' deposits in
guarantee fund 95 119 393 360
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2,067 1,722 7,420 5,419
Interest income on cash
and cash equivalents (28) (203) (631) (991)
Interest income from
merchant members (129) (139) (534) (523)
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1,910 1,380 6,255 3,905
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Amortization
--------------------------------------------------------------------
Amortization of
fixed assets 2,102 1,792 8,674 7,459
Amortization of
other assets 107 266 507 586
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2,209 2,058 9,181 8,045
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5. EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted
earnings per share:


4TH QUARTER
--------------------------------------------------------------------
2007
--------------------------------------------------------------------
Weighted Earnings
Net average number per
earnings of shares share
--------------------------------------------------------------------
$ $

Basic earnings per share 13,080 19,736,558 0.66

Impact of stock options exercised 25,958
--------------------------------------------------------------------

--------------------------------------------------------------------
Diluted earnings per share 13,080 19,762,516 0.66
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--------------------------------------------------------------------
2006
--------------------------------------------------------------------
Weighted Earnings
Net average number per
earnings of shares share
--------------------------------------------------------------------
$ $

Basic earnings per share 16,677 19,699,334 0.85

Impact of stock options exercised 44,924
--------------------------------------------------------------------

--------------------------------------------------------------------
Diluted earnings per share 16,677 19,744,258 0.84
--------------------------------------------------------------------
--------------------------------------------------------------------


12 MONTHS
--------------------------------------------------------------------
2007
--------------------------------------------------------------------
Weighted Earnings
Net average number per
earnings of shares share
--------------------------------------------------------------------
$ $

Basic earnings per share 40,841 19,727,720 2.07

Impact of stock options exercised 31,590
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--------------------------------------------------------------------
Diluted earnings per share 40,841 19,759,310 2.07
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--------------------------------------------------------------------

--------------------------------------------------------------------
2006
--------------------------------------------------------------------
Weighted Earnings
Net average number per
earnings of shares share
--------------------------------------------------------------------
$ $

Basic earnings per share 42,264 19,674,768 2.15

Impact of stock options exercised 60,899
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Diluted earnings per share 42,264 19,735,667 2.14
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6. BUSINESS ACQUISITIONS

In 2007, the Company acquired the shares of three companies in the Automotive Canada segment as well as the assets and a portion of the liabilities of four companies operating in the Automotive Canada segment and eleven companies in the Automotive USA segment.

In addition, the Company increased its interest by 1.92 % in its joint venture, Uni-Select Pacific, Inc.. Following this transaction, the Company's interest in the joint venture increased from 63.46% to 65.38%. This transaction was carried out at the acrrying amount.

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

Taking into account acquisition costs of $460, the preliminary purchase price is allocated as follows:



Total
----------------------------------------------------------
$
Current assets 61,597
Fixed assets 5,432
Other long-term assets 111
Goodwill 24,842
Current liabilities (9,060)
Long-term liabilities (575)
----------------------------------------------------------
82,347

Settlement of accounts receivable
of companies acquired (1,738)
Cash of companies acquired (56)
Total consideration paid less cash acquired 80,685
----------------------------------------------------------
Balance of purchase price receivable (132)
----------------------------------------------------------
----------------------------------------------------------


Uni-Select USA Inc.

The Company acquired a non-controlling interest for a cash consideration of $228. Following this transaction, the Company's interest in its U.S. subsidiary increased by 0.09%, from 85.86% to 85.95%. Also, shares of the subsidiary have been issued for the financing of some business acquisitions, which have diluted the non-controlling interest. Following these transactions, the Company's interest in its U.S. subsidiary increased by 0.99% from 85.95% to 86.94%.

7. ACCUMULATED OTHER COMPREHENSIVE INCOME



DEC. 31, 2007 DEC. 31, 2006
--------------------------------------------------------------------
$ $
Balance, beginning of period - -
Unrealized losses on translation of
financial statements of self-sustaining
foreign operations (12,766) (13,405)
Cumulative impact of accounting
changes relating to financial
instruments (net of income taxes
of $81) (Note 2) 173 -
--------------------------------------------------------------------
Adjusted balance, beginning of period (12,593) (13,405)
Other comprehensive income
for the period (20,418) 639
--------------------------------------------------------------------
Balance, end of period (33,011) (12,766)
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8. EMPLOYEE FUTURE BENEFITS

As at December 31, 2007, the Company's pension plans are defined benefit and defined contributions plans.

For the three-month period ended December 31, 2007, the total expense for the defined contribution pension plans was $228 (($61) in 2006) and $51 ($346 in 2006) for the defined benefit pension plans.

For the twelve-month period ended December 31, 2007, the total expense for the defined contribution pension plans was $1,107 ($898 in 2006) and $1,831 ($1,913 in 2006) for the defined benefit pension plans.


9. GUARANTEES

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 value of cost of the inventories for a maximum amount of $61,870 ($68,286 as at December 31, 2006). In the event of proceedings, the inventories would be liquidated in the normal course of the Company's business. These agreements are for an undetermined period of time. In management's opinion, the likelihood of major payments being made and losses being incurred is low, since the value of the assets held in guarantee is significantly higher than the Company's commitments.

As at December 31, 2007, the Company was contingently liable for letters of credit issued in the aggregate amount of $5,010 ($5,118 in 2006).

10. SEGMENTED INFORMATION



--------------------------------------------------------------------
4TH QUARTER
--------------------------------------------------------------------
Automotive Canada Automotive USA
2007 2006 2007 2006
$ $ $ $
--------------------------------------------------------------------
Sales 114,167 120,479 149,740 141,012
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Earnings before
interests,
amortization, income
taxes and non-
controlling interest 11,904 19,600 10,073 11,039
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Assets 228,930 226,837 353,122 307,390

Acquisition of
fixed assets 1,954 3,065 1,740 2,154

Acquisition of goodwill 2,313 1,237 3,749 6,330
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--------------------------------------------------------------------
Heavy Duty Consolidated
2007 2006 2007 2006
$ $ $ $
--------------------------------------------------------------------
Sales 19,204 18,336 283,111 279,827
--------------------------------------------------------------------

Earnings before
interests,
amortization, income
taxes and non-
controlling interest 1,528 (160) 23,505 30,479
--------------------------------------------------------------------
Assets 33,521 38,308 615,573 572,535

Acquisition of
fixed assets 38 22 3,732 5,241

Acquisition of goodwill - - 6,062 7,567
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--------------------------------------------------------------------
12 MONTHS
--------------------------------------------------------------------
Automotive Canada Automotive USA
2007 2006 2007 2006
$ $ $ $
--------------------------------------------------------------------
Sales 497,955 489,573 607,168 567,402
--------------------------------------------------------------------

Earnings before
interest,
amortization, income
taxes and non-
controlling interest 42,322 46,954 37,867 36,833
--------------------------------------------------------------------
Assets 228,930 226,837 353,122 307,390

Acquisition of
fixed assets 5,602 6,883 9,882 6,542

Acquisition of covenants
not to compete - - - 707

Acquisition of goodwill 3,777 17,477 21,065 11,239
--------------------------------------------------------------------


--------------------------------------------------------------------
Heavy Duty Consolidated
2007 2006 2007 2006
$ $ $ $
--------------------------------------------------------------------
Sales 63,166 66,928 1,168,289 1,123,903

Earnings before
interest,
amortization, income
taxes and non-
controlling interest (179) (1,963) 80,010 81,824
--------------------------------------------------------------------
Assets 33,521 38,308 615,573 572,535

Acquisition of
fixed assets 119 193 15,603 13,618

Acquisition of covenants
not to compete - - - (707)

Acquisition of goodwill - (2,890) 24,842 25,826
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The Automotive USA segment includes fixed assets for an amount of $16,591 ($17,599 as at December 31, 2006) and goodwill for an amount of $34,709 ($17,885 as at December 31, 2006).

11. FUTURE ACCOUNTING CHANGES

Financial Instruments - Disclosures

In December 2006, CICA issued Section 3862, Financial Instruments - Disclosures. This Section, combined with section 3863, replaces section 3861. It applies to fiscal years beginning on or after October 1, 2007. It describes the required disclosures related to the significance of financial instruments on the entity's financial position and performance and the nature and extent of risks arising for financial instruments to which the entity is exposed and how the entity manages those risks. This Section complements the principles of recognition, measurement and presentation of financial instruments of Sections 3855 Financial Instruments - Recognition and Measurement, 3863 Financial instruments - Presentation and 3865 Hedges. The Company is currently evaluating the impact of the adoption of this new Section on the consolidated financial statements.

Financial Instruments - Presentation

In December 2006, CICA issued Section 3863 Financial Instruments - Presentation. This Section applies to fiscal years beginning on or after October 1, 2007. It establishes standards for presentation of financial instruments and non-financial derivatives. It replaces standards of Section 3861 Financial Instruments - Disclosure and Presentation. The Company is currently evaluating the impact of the adoption of this new Section on the consolidated financial statements.

Capital Disclosures

In December 2006, CICA issued Section 1535 Capital Disclosures. This Section applies to fiscal years beginning on or after October 1, 2007. It establishes standards for disclosing information about an entity's capital and how it is managed to enable users of financial statements to evaluate the entity's objectives, policies and procedures for managing capital. The Company is currently evaluating the impact of the adoption of this new Section on the consolidated financial statements.

Inventory

In June 2007, CICA issued Section 3031 Inventories which will replace Section 3030 with the same title. This Section applies to fiscal years beginning on or after January 1, 2008. It is providing new guidance on the determination of cost and its subsequent recognition as an expense, including any write-downs to the net realizable value as well as on the cost formulas that are used to assign costs to inventories. Additionnal disclosure will also be required under this standard. The Company is currently evaluating the impact of the adoption of this new Section on the consolidated financial statements.

12. SUBSEQUENT EVENTS

On January 3, 2008, the Company acquired the assets and a portion of the liabilities of Replacement Parts Depot Limited for a purchase price of $13,917. This company operates one distribution center in the Automotive Canada segment, totalling sales of $25,000.

On January 8, 2008, the Company entered into an interest rate swap agreement for a nominal amount of $60,000 in order to reduce interest risk. It bears interest at a rate of 3.94% and it expires in three instalments in 2011, 2012 and 2013.

On February 29, 2008, the credit facility of the Company was amended. The amount of the new credit facility is of $325,000, which represents an increase of the revolving credit of $70,000 and an increase of the operating credit of $30,000. The financial ratios of the new credit facility are less restrictive. The renegociated rate for the revolving credit represents an average improvement of 0.15% and an average improvement of 0.10% for the operating credit compared with the previous agreement.

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