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BOUCHERVILLE, QUEBEC--(Marketwire - March 15, 2011) - During the fourth quarter ended on December 31, 2010, Uni-Select UNS doubled its earnings from continuing operations and increased its earnings by more than 9% in 2010. Sales reached 309.4 million dollars compared to 315.6 million dollars in 2009. The strength of the Canadian dollar and the sale of some corporate stores in Canada have generated a decline in revenue for the fourth quarter. However, when excluding these elements, Uni-Select's revenue shows a positive organic growth of 2.6 % for the fourth quarter of 2010.
The earnings from continuing operations reached 11.8 million dollars or $0.60 per share compared to 5.3 million dollars or $0.27 per share in 2009. The results from the fourth quarter take into account the non-recurring items of 1.0 million dollars related to the sale of the operations of the Heavy Duty Group in 2009. The net earnings for this period reached 10.8 million dollars, an increase of 50% compared to the fourth quarter of 2009.
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4th QUARTER 12-month Period
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(in millions of $, except
earnings per share) 2010 2009 2010 2009
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Sales 309.4 315.6 1 323.8 1 409.9
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Adjusted EBITDA from
continuing operations 18.4 14.5 86.1 95.8
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EBITDA from continuing
operations 17.3 9.2 80.4 88.8
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Adjusted earnings from
continuing operations 12.4 8.6 50.9 47.7
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Earnings from continuing
operations 11.8 5.3 47.3 43.3
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Net earnings 10.8 7.2 46.4 38.6
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Adjusted Earnings per share
from continuing operations 0.63 0.44 2.58 2.42
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Earnings per share from
continuing operations 0.60 0.27 2.40 2.20
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Net earnings per share 0.55 0.37 2.35 1.96
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Adjusted earnings per share
from continuing operations,
but excluding the effects
caused by the fluctuation
in the exchange rate 0.63 0.44 2.72 2.42
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US sales reached 183.2 million dollars compared to 189.6 million dollars in 2009. Excluding the fluctuation effect of the exchange rate, the operations generated an organic growth of 3.6% during the fourth quarter.
The Canadian operations recorded an organic growth of 1.1% during the fourth quarter and totalled 126.2 million dollars, a performance comparable to 2009. It is worth to note that total revenues of the Corporation have been impacted by sale of corporate stores concluded during preceding quarters.
"We are happy to report that for two consecutive quarters the US operations have registered an organic growth of more than 3.5%. This growth reflects efforts put in place to improve loyalty amongst our wholesalers, level of service offered to our installers, sales to national accounts, and the increase of sales via our new distributions channels. We shall pursue continuously these efforts to improve our operations. In the next few weeks, we will gradually start implementation of our operation modules to our integrated enterprise resource planning (ERP) software" declared Mr. Richard G. Roy, President and CEO of Uni-Select.
"We are excited about the potential benefit which will be offered by the acquisition of FinishMaster. Many synergies will arise through the complementarity of the business models, the networks of distribution and clients. On January 11, 2011, Uni-Select and FinishMaster combined their respective teams into one single team grouping more than 6,100 employees, 64 warehouses and 424 corporate stores throughout Canada and 35 states of the USA" added Mr. Roy.
Financial highlights from the fiscal year ending on December 31, 2010
For the fiscal year ended on December 31, 2010, Uni-Select's sales totalled 1,324 million dollars compared to 1,410 million dollars in 2009. Organic growth was 1.8% during the course of the fiscal year even though overall revenue declined. Due to the strength of the Canadian dollar, converting the results of the US operations to Canadian dollars caused the sales to decline by approximately by 90 million dollars. Additionally, the closure of corporate stores during preceding quarters reduced the sales by 21 million dollars.
The adjusted earnings related to the continuing operations reached 50.9 million dollars or $2.58 per share, for a 7% increase from 47.7 million dollars or $2.42 per share realised in 2009. Fluctuation in the US currency had an adverse effect of more than 2.8 million dollars or $0.14 per share on the year end results. Excluding these elements, the results for the fiscal year would have been $2.72 per share and would have demonstrated a growth of 12% over 2009.
The sales of the US operations totalled 805.4 million dollars compared to 884.2 million dollars in 2009. Excluding the impact from foreign exchange rate fluctuations, the US operations generated an organic growth of 2.7% during the fiscal year.
The Canadian operations had an organic growth of 0.4%. Sales totalled 518.3 million dollars compared to 525.7 million dollars in 2009. This slight decline results exclusively from the sale and the closing of certain corporate stores during the preceding quarters.
The Board of Directors of Uni-Select Inc. declared a quarterly dividend of $ 0.12 per common share payable on April 21, 2011 to the shareholders of record as of March 31, 2011.
Founded in 1968, Uni-Select(TM) is a Canadian leader in the distribution of automotive replacement parts, equipment, tools and accessories. Uni-Select USA, Inc., a subsidiary of the Uni-Select, provides services to customers in the United States, where it is the 6th largest distributor. The Uni-Select network includes over 2,500 independent jobbers and services more than 3,500 points of sale in North America. Uni-Select is headquartered in Montreal. Uni-Select shares (UNS) are traded on the TSX.
Unless otherwise indicated, all the amounts hereby listed in this press release are in Canadian dollars.
The following terms do not have any standardised meaning according to the Generally Accepted Accounting Principles. As a result, it is therefore unlikely to be comparable to similar measures presented by other companies.
1. "EBITDA": This measurement represents operating income before
depreciation, amortization, interest, income taxes, non-controlling
interest and loss from discontinued operations. This measurement is a
widely accepted financial indicator of a company's ability to service
and incur debt. It should not be considered by an investor as an
alternative to operating income or net earnings, as an indicator of
operating performance or cash flows, or as a measurement of liquidity,
but as additional information. Because EBITDA is not a measurement
defined by GAAP, it may not be comparable to the EBITDA of other
companies. In the Corporation's statement of earnings, EBITDA
corresponds to "Earnings before the following items."
2. "Adjusted EBITDA": This measurement corresponds to EBITDA plus non-
recurring costs. According to management, adjusted EBITDA is more
representative of the Corporation's operational performance and more
appropriate in providing additional information to investors because it
gives an indication of the Corporation's ability to repay its debts.
Since adjusted EBITDA is not a measurement defined by GAAP, it may not
be comparable to other corporations' adjusted EBITDA.
3. "Non-recurring items": These are unusual incurred costs that management
regards as not being characteristic or representative of the
Corporation's regular operations. They include the following costs:
those incurred when disposing of or closing stores, non-capitalizable
costs related to the implementation of the enterprise management
software suite, costs of integrating recently acquired companies, and
changes in estimates of provisions for obsolescence of inventory. This
document presents analyses of variations in EBITDA, adjusted to earnings
from continuing operations and earnings per share from continuing
activities, excluding non-recurring costs. Although these measurements
are not standardized in GAAP, Corporation management regards them as
good indicators for comparing operational performance.
The information provided in this press release includes some forward-looking information which includes certain risks and uncertainties, which may cause the final results to be significantly different from those listed or implied within this new release. For additional information with respect to risks and uncertainties, refer to the Annual Report filed by Uni-Select with the Canadian securities commissions. The forward-looking information contained herein is made as of the date of this press release, and Uni-Select does not undertake to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws.
2
Uni-Select Inc.
Consolidated Earnings
Three-month and twelve-month periods ended December
31, 2010 and 2009
(In thousands of dollars,
except earnings per share,
unaudited)
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4th quarter 12 months
------------------------------------------------
2010 2009 2010 2009
------------------------------------------------
$ $ $ $
Sales 309 436 315 634 1 323 755 1 409 875
------------------------------------------------
------------------------------------------------
Earnings before the
following items: 17 254 9 170 80 382 88 806
------------------------------------------------
Interest (Note 3) 2 475 1 921 7 994 8 293
Amortization (Note 3) 3 006 3 277 12 846 13 988
------------------------------------------------
5 481 5 198 20 840 22 281
------------------------------------------------
Earnings before income taxes
and non-controlling 11 773 3 972 59 542 66 525
interest
------------------------------------------------
Income taxes
Current (2 414) (7 678) 14 280 12 141
Future 2 547 6 345 (1 761) 7 731
------------------------------------------------
133 (1 333) 12 519 19 872
------------------------------------------------
Earnings before non-
controlling interest 11 640 5 305 47 023 46 653
Non-controlling interest (126) (4) (285) 3 303
------------------------------------------------
Earnings from continuing
operations 11 766 5 309 47 308 43 350
Earnings (Loss) from
discontinued operations (922) 1 939 (922) (4 780)
(Note 7)
------------------------------------------------
Net earnings 10 844 7 248 46 386 38 570
------------------------------------------------
------------------------------------------------
Basic and diluted earnings
per share (Note 4)
From continuing operations 0,60 0,27 2,40 2,20
From discontinued
operations (0,05) 0,10 (0,05) (0,24)
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Net income 0,55 0,37 2,35 1,96
------------------------------------------------
------------------------------------------------
Weighted average number of
outstanding shares 19 708 124 19 714 911 19 716 731 19 709 642
Number of issued and
outstanding shares 19 707 637 19 716 357 19 707 637 19 716 357
------------------------------------------------
------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements.
Uni-Select Inc.
Consolidated Comprehensive Income
Consolidated Retained Earnings
Three-month and twelve-month periods
ended December 31, 2010 and 2009
(In thousands of dollars, except for per
share amounts, unaudited)
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4th quarter 12 months
------------------------------------------------
2010 2009 2010 2009
------------------------------------------------
$ $ $ $
CONSOLIDATED COMPREHENSIVE
INCOME
Net earnings 10 844 7 248 46 386 38 570
------------------------------------------------
Other comprehensive income
Unrealized gains (losses)
on derivative financial
instruments designated as
cash flow hedges (net of
income taxes of ($57) and
$875 respectively for the
three-month and twelve-
month periods (($87) and
$61 in 2009) 154 179 (2 823) (109)
Reclassification to net
earnings of realized
losses on derivative
financial instruments
designated as cash flow
hedges (net of income
taxes of $268 and $1,076
respectively for the
three-month and twelve-
month periods (($243) and
($1,300) in 2009) 724 554 2 984 2 308
Unrealized exchange gain
on translation of long-
term debt designated as a
hedge of net investments
in self-sustaining
foreign subsidiairies 5 005 5 103 7 840 7 626
Unrealized exchange losses
on translation of
financial statements of
self-sustaining foreign
subsdiaries (11 083) (9 644) (16 563) (39 434)
------------------------------------------------
Other comprehensive income (5 200) (3 808) (8 562) (29 609)
------------------------------------------------
Comprehensive income 5 644 3 440 37 824 8 961
------------------------------------------------
------------------------------------------------
CONSOLIDATED RETAINED
EARNINGS
Balance, beginning of year 353 625 324 241
Net earnings 46 386 38 570
------------------------
400 011 362 811
Share redemption premium (a) 342 -
Dividends 9 189 9 186
------------------------
Balance, end of year 390 480 353 625
------------------------
------------------------
a.The Corporation redeemed 14,700 common shares for a cash consideration of
$380. A share redemption premium of $342 is presented in reduction of the
retained earnings.
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The accompanying notes are an integral part of the consolidated financial statements.
Uni-Select Inc.
Consolidated Cash Flows
Three-month and twelve-month periods
ended December 31, 2010 and 2009
(In thousands of dollars, except
dividends paid per share, unaudited)
4th quarter 12 months
--------------------------------------------
2010 2009 2010 2009
--------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net earnings 11 766 5 309 47 308 43 350
Non-cash items
Amortization 3 006 3 277 12 846 13 988
Amortization of deferred
gain on a sale-leaseback
arrangement (48) (52) (211) (221)
Future income taxes 2 547 6 345 (1 761) 7 731
Compensation cost relating
to stock option plans 20 32 79 128
Pension expense in excess of
contributions 214 197 760 787
Non-controlling interest (126) (4) (285) 3 303
--------------------------------------------
17 379 15 104 58 736 69 066
Changes in working capital
items (21 348) 8 351 (34 637) 851
--------------------------------------------
Cash flows from continuing
operating activities (3 969) 23 455 24 099 69 917
Cash flows from discontinued
operating activities (985) (921) (2 078) (7 578)
--------------------------------------------
Cash flows from operating
activities (4 954) 22 534 22 021 62 339
--------------------------------------------
INVESTING ACTIVITIES
Business acquisitions (Note 5) - (476) (1 074) (1 143)
Business and asset disposals
(Note 6) 764 3 101 3 022 4 162
Balance of sale (purchase)
price 358 (25) 1 572 (716)
Buy-back of non-controlling
interest (255) (46 013) (255) (46 209)
Investments and advances to
merchant members (818) (1 130) (2 694) (8 229)
Receipts on advances to
merchant members 640 802 3 496 4 232
Fixed assets (2 131) (4 193) (8 580) (10 345)
Disposal of fixed assets 484 624 1 609 1 245
Intangible assets (8 069) (1 240) (36 984) (8 818)
--------------------------------------------
Cash flows from continuing
investing activities (9 027) (48 550) (39 888) (65 821)
Cash flows from discontinued
investing activities - 13 446 - 27 317
--------------------------------------------
Cash flows from investing
activities (9 027) (35 104) (39 888) (38 504)
--------------------------------------------
FINANCING ACTIVITIES
Bank indebtedness 10 971 (2 493) 11 571 (2 891)
Financing costs - (110) - (110)
Long-term debt - 16 25 1 117
Repayment of long-term debt (18) (94) (93) (1 672)
Merchant members' deposits in
guarantee fund (61) 81 330 (465)
Issuance of shares - 112 90 314
Share redemption (95) - (340) -
Dividends paid (2 298) (2 296) (9 191) (9 006)
--------------------------------------------
Cash flows from continuing
financing activities 8 499 (4 784) 2 392 (12 713)
Cash flows from discontinued
financing activities - (4 243) - -
--------------------------------------------
Cash flows from financing
activities 8 499 (9 027) 2 392 (12 713)
Effect of exchange rate
changes on cash (68) (653) 4 (4 954)
--------------------------------------------
Increase (Decrease) in cash (5 550) (22 250) (15 471) 6 168
Cash, beginning of period 5 929 38 100 15 850 9 682
--------------------------------------------
Cash, end of period 379 15 850 379 15 850
--------------------------------------------
--------------------------------------------
Dividends paid per share 0,117 0,116 0,466 0,457
--------------------------------------------
--------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements.
Uni-Select Inc.
Consolidated Balance Sheets
December 31, 2010 and 2009
(In thousands of dollars, audited)
December 31 December 31
2010 2009
------------------------
$ $
ASSETS
Current assets
Cash 379 15 850
Accounts receivable 159 729 150 440
Income taxes receivable 7 000 3 859
Inventory (Note 8) 414 426 402 550
Prepaid expenses 8 027 6 914
Future income taxes 12 867 10 065
Assets from discontinued operations (Note 7) - 3 777
------------------------
602 428 593 455
Investments and advances to merchant members 16 866 16 831
Fixed assets 34 414 38 819
Financing costs 250 555
Intangible assets 58 180 28 677
Goodwill 92 389 93 961
Future income taxes 3 019 3 359
------------------------
807 546 775 657
------------------------
------------------------
LIABILITIES
Current liabilities
Bank indebtedness 11 463 44
Accounts payable and accrued liabilities 186 818 181 773
Dividends payable 2 296 2 298
Instalments on long-term debt and on merchant
members' deposits in
guarantee fund 269 402
Future income taxes 8 658 11 192
Liabilities from discontinued operations (Note 7) - 2 384
------------------------
209 504 198 093
Deferred gain on a sale-leaseback arrangement 1 736 2 036
Long-term debt 170 980 178 866
Merchant members' deposits in guarantee fund 7 729 7 288
Derivative financial instruments 4 820 5 182
Future income taxes 8 777 7 821
Non-controlling interest 2 658 3 453
------------------------
406 204 402 739
------------------------
SHAREHOLDERS' EQUITY
Capital stock 50 204 50 152
Contributed surplus 434 355
Retained earnings 390 480 353 625
Accumulated other comprehensive income (Note 9) (39 776) (31 214)
------------------------
401 342 372 918
------------------------
807 546 775 657
------------------------
------------------------
The accompanying notes are an integral part of the consolidated financial statements.
Uni-Select Inc.
Notes to Consolidated Financial Statements
December 31, 2010 and 2009
(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 (GAAP) 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 Corporation for the year ended December 31, 2010. The interim financial statements and related notes should be read in conjunction with the audited financial statements of the Corporation for the year ended December 31, 2010. 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.
These interim financial statements follow the same accounting policies as 2009. Certain comparative figures of 2009 have been reclassified to conform with the presentation adopted in 2010.
2 - FUTURE ACCOUNTING CHANGES
International financial reporting standards
In March 2006, the AcSB of the CICA released its new strategic plan, which proposed to abandon Canadian generally accepted accounting principles (GAAP) and effect a complete convergence to International Financial Reporting Standards (IFRS) for Canadian publicly accountable profit-oriented enterprises. This plan was confirmed in subsequent exposure drafts issued in April 2008, March 2009 and October 2009. The changeover will occur no later than fiscal years beginning on or after January 1, 2011. Accordingly, the Corporation's first interim consolidated financial statements presented in accordance with IFRS will be for the three-month period ending March 31, 2011, and its first annual consolidated financing statements presented in accordance with IFRS will be for the year ending December 31, 2011.
IFRS use a conceptual framework similar to Canadian GAAP, but differences exist with respect to recognition, measurement and disclosure requirements.
The Corporation's project for the transition from Canadian GAAP to IFRS is progressing according to the established plan and the Corporation expects to meet its target date for migration.
3 - SUPPLEMENTARY INFORMATION INCLUDED IN CONSOLIDATED EARNINGS
4th quarter 12 months
------------------------------------------------
2010 2009 2010 2009
------------------------------------------------
$ $ $ $
Interest from
Other financial liabilities
Interest on bank
indebtedness 834 189 1 317 844
Interest on long-term debt 1 681 1 769 6 795 7 658
Interest on merchant
members' deposits in
guarantee fund 37 (19) 123 118
------------------------------------------------
2 552 1 939 8 235 8 620
Loans and receivables
Interest income from
merchant members (77) (18) (241) (327)
------------------------------------------------
(77) (18) (241) (327)
------------------------------------------------
2 475 1 921 7 994 8 293
------------------------------------------------
------------------------------------------------
Amortization
Amortization of fixed
assets 2 461 2 030 9 708 11 125
Amortization of intangible
assets and other assets 545 1 247 3 138 2 863
------------------------------------------------
3 006 3 277 12 846 13 988
------------------------------------------------
------------------------------------------------
4 - EARNINGS PER SHARE
The weighted average number of shares for the calculation of basic earnings per share is 19,708,124 for the three-month period ended December 31, 2010 (19,714,911 in 2009) and 19,716,731 for the twelve-month period ended December 31, 2010 (19,709,642 in 2009). The impact of stock options exercised is 7,761 shares for the three-month period ended December 31, 2010 (11,730 in 2009) and 8,694 for the twelve-month period ended December 31, 2010 (13,215 in 2009) for a weighted average number of shares of 19,715,885 for the three-month period ended December 31, 2010 (19,726,641 in 2009) and 19,725,425 for the twelve-month period ended December 31, 2010 (19,722,857 in 2009) for the calculation of diluted earnings per share.
5 - BUSINESS ACQUISITIONS
During the year, the Corporation acquired the shares of a Corporation for a cash consideration of $1,074 and a contingent consideration payable to the sellers based on the achievement of specific performance objectives. The excess of the purchase price over the net assets has been allocated to goodwill. The initial purchase price allocation will be reviewed to consider the contingent consideration when it can be determined by the Corporation that the objectives will be achieved.
During the year, in connection with two separate transactions, the Corporation increased its interest by 3.85% in its subsidiary, Uni-Select Pacific Inc., for a total cash consideration of $510, for which $255 is payable on December 31, 2010. The consideration paid for these transactions was based on the carrying amount as stated in the shareholders' agreement. Following these transactions, the Corporation's interest in its subsidiary increased from 75.0% to 78.85%
6 - BUSINESS AND ASSET DISPOSALS
During 2010, in connection with separate transactions, the Corporation sold some of the assets and liabilities of four stores and the shares of four stores. The net assets have been sold for a cash consideration of $3,369, of which $404 is receivable. The shares have been sold for a cash consideration of $57.
7 - DISCONTINUED OPERATIONS
In 2009, the Corporation proceeded to dispose of certain assets and liabilities of its subsidiary, Palmar Inc., which constituted all of the Heavy Duty Canada operating segment for a cash consideration of $27,143.
Pursuant to Section 3475 of the CICA Handbook, entitled "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 from discontinued operations" for 2010 and 2009 while the assets and liabilities of Palmar Inc. as at December 31, 2009 have been reclassified and presented in the consolidated balance sheet under "Assets or liabilities from discontinued operations".
As at December 31, 2010, Palmar Inc. was wound-up in its parent company Uni-Select Inc. As a result, the assets and liabilities were reclassified in their respective categories in the balance sheet as at December 31, 2010.
The following table provides the discontinued operations results for the periods ended December 31, 2010 and 2009:
4th quarter 12 months
------------------------------------------------
2010 2009 2010 2009
------------------------------------------------
$ $ $ $
Sales - (28) - 30 985
------------------------------------------------
Earnings (Loss) before the
following items: - 147 - (2 684)
------------------------------------------------
Interests - - - 128
Amortization - - - 171
------------------------------------------------
- - - 299
------------------------------------------------
Earnings (Loss) before non-
recurring items and income
taxes - 147 - (2 983)
Non-recurring items (1) (1 031) 2 229 (1 031) (4 231)
------------------------------------------------
Earnings (Loss) before
income taxes (1 031) 2 376 (1 031) (7 214)
Income taxes (109) 437 (109) (2 434)
------------------------------------------------
Earnings (Loss) from
discontinued operations (922) 1 939 (922) (4 780)
------------------------------------------------
------------------------------------------------
The following table provides the assets and liabilities from discontinued operations as at December 31, 2010 and 2009:
December 31 December 31
2010 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
------------------------
------------------------
1. Non-recurring items and accounts payable are essentially related to
severances and future rent for closed locations. In 2010, they are
primarily related to a loss resulting from a change in the subleasing
revenues estimation.
8 - INVENTORY
The cost of inventory recognized as an expense is $220,315 for the three-month period ended December 31, 2010 ($234,107 in 2009) and $945,397 for the twelve-month period ended December 31, 2010 ($1,007,726 In 2009).
9 - ACCUMULATED OTHER COMPREHENSIVE INCOME
December 31 December 31
2010 2009
------------------------
$ $
Balance, beginning of year (31 214) (1 605)
Other comprehensive income for the years (8 562) (29 609)
------------------------
Balance, end of year (39 776) (31 214)
------------------------
------------------------
The components of other accumulated comprehensive income as at December 31, 2010 and 2009, are as follows:
December 31 December 31
2010 2009
------------------------
$ $
Accumulated currency translation adjustments (36 258) (27 535)
Cumulative changes in fair value of derivatives used
as a hedge (net of future income
taxes of $1,301 ($1,503 in 2009)) (3 518) (3 679)
------------------------
(39 776) (31 214)
------------------------
------------------------
10 - EMPLOYEE FUTURE BENEFITS
As at December 31, 2010, the Corporation's pension plans are defined benefit and contribution plans.
For the three-month period ended December 31, 2010, the total expense for the defined contribution pension plans was $285 ($489 in 2009) and $424 ($434 in 2009) for the defined benefit pension plans.
For the twelve-month period ended December 31, 2010, the total expense for the defined contribution pension plans was $1,206 ($1,438 in 2009) and $2,715 ($2,354 in 2009) for the defined benefit pension plans.
11 - GUARANTEES
Under inventory repurchase agreements, the Corporation 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 $64,920 ($64,269 in 2009). In the event of legal proceedings, the inventories would be liquidated in the normal course of the Corporation'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 Corporation's commitments.
12 - GEOGRAPHICAL INFORMATION
Since January 1, 2010, the Corporation considers its distribution and commercial activity of automotive replacement parts as only one operating segment. This decision is a result of the new organizational structure that eliminates the boundaries between Canada and the United States and that is based on growth platforms aimed to integrate the activities of the Jobbers and Major Accounts divisions. The Corporation operates in Canada and the USA. The primary financial information per geographical location is as follows:
4th quarter 12 months
------------------------------------------------
2010 2009 2010 2009
------------------------------------------------
$ $ $ $
Sales in Canada 126 224 126 060 518 317 525 693
Sales in the United States 183 212 189 574 805 438 884 182
------------------------------------------------
309 436 315 634 1 323 755 1 409 875
------------------------------------------------
------------------------------------------------
December 31, 2010
------------------------------------
United
Canada States Total
------------------------------------
$ $ $
Fixed assets 15 997 18 417 34 414
Intangible assets 18 411 39 769 58 180
Goodwill 40 584 51 805 92 389
December 31, 2009
------------------------------------
United
Canada States Total
------------------------------------
$ $ $
Fixed assets 14 558 24 261 38 819
Intangible assets 15 897 12 780 28 677
Goodwill 40 834 53 127 93 961
13 - RELATED PARTY TRANSACTIONS
The Corporation incurred rental expenses of $856 for the three-month period ended December 31, 2010 ($864 in 2009) and $3,405 for the twelve-month period ended December 31, 2010 ($3,704 in 2009) from Clarit Realty Ltd, a corporation controlled by a member of the Board of Directors. These agreements are concluded in the Corporation's normal course of business, are recorded at the exchange amount, and consist of 3-to-5-year term periods.
14 - SUBSEQUENT EVENTS
On January 11, 2011, the Corporation completed the purchase of all the outstanding shares of FinishMaster, Inc., the largest independent distributor of automotive paints, coatings and accessories in the USA (PBE). The purchase price amounted to approximately US$222,000, including the assumption of an estimated net debt of approximately US$56,000. For the year ended December 31, 2010, the sales and assets of this corporation amounted to US$421,385 and US$274,261, respectively.
The Corporation has financed this acquisition with a new unsecured financing agreement of US$400,000 with a 5-year term. This financing agreement consists of two components. The first component is a credit of US$200,000 repayable by increasing quarterly instalments, and the second one is a US$200,000 revolving long-term credit facility. These new credit facilities replace the Corporation's existing facilities. The Corporation also completed an offering of 1,983,750 common shares and convertible unsecured subordinated debentures for a nominal amount of $51,750 maturing January 31, 2016, for net proceeds of $49,446 and $49,680, respectively. The debentures will bear interest at a rate of 5.9% and are convertible into 1,239,224 shares, equivalent to an exercise price of $41.76 per share.
At the completion date of the consolidated financial statements, the Corporation has not yet completed the purchase price allocation. The preliminary amounts allocated to the intangible assets and goodwill are $48,800 and $117,600, respectively. The Corporation estimates that the intangible assets will be amortized on a straight-line basis over a period of 18 years. The final purchase price allocation will be completed during the fiscal year 2011.
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