BOUCHERVILLE, QUEBEC--(CCNMatthews - Aug. 3, 2006) - Uni-Select Inc. (TSX:UNS) announces its results for the second quarter of 2006 and for the six-month period ended June 30, 2006. Net profits for the second quarter increased by 2.6% to reach $10,539,000 or $0.53 per share (per share earnings are reported on a fully diluted basis), compared to $10,267,000 or $0.52 per share for the second quarter of 2005. Net profits for the first six months of the year were $16,185,000 or $0.82 per share compared to $15,661,000 or $0.80 per share in 2005. Unfavourable Canadian/US exchange rates reduced net profits by $0.02 per share for the quarter and by $0.03 for the first six-month period of the year.
Sales reached $294,494,000 for the second quarter of the year, a decrease of 5.9% over sales of $312,828,000 realized during the second quarter of 2005. For the first six months of 2006, sales were $557,008,000, a 3.7% decrease compared to $578,372,000 for the same period in 2005. The negative impact of the exchange rate on sales in the second quarter was (4.9%) compared to (4.0%) in the first six months of the year.
Automotive Group USA decreased its sales by 6.3% in the second quarter of 2006 as a result of the negative impact of exchange rates. Sales went from $155,758,000 during the second quarter of 2005 to $145,990,000 during the second quarter of 2006. Excluding the impact of exchange rates, sales for Automotive Group USA would have increased by 3.5% as a result of acquisitions. For the first six months of 2006, sales for the Group decreased by 3.1% going from $290,999,000 in 2005 to $282,015,000 in 2006; excluding the impact of exchange rates, sales for the Group for the period would have increased by 4.8%. The operating margin for the Group during the course of the first six months of the year improved to 6.6% compared to 6.3% in the first six months of 2005. This progression is attributable to the implementation of programs in 2005 and the beginning of 2006. For the year, the operating margin of the Group increased to 5.9% compared to 5.5% in 2005.
Automotive Group Canada decreased its sales by 4.5% during the second quarter of 2006. Sales for the second quarter was $133,123,000 compared to $139,354,000 during the same quarter in 2005. This variation is essentially organic in nature and reflects the impact on consumer's budgets of the increases of both fuel prices and interest rates. Furthermore, sales in exhaust and paint products were weakened by the changeover in product lines for certain national accounts and the closure of certain accounts specializing in collision repair products. For the initial six-month period of 2006, the Group's sales were $244,128,000 compared to $254,488,000 for 2005, a decrease of 4.1%. During the second quarter, the operating margin of the Group was 8.5%, a strong increase compared to the same quarter of 2005 when the operating margin was 7.2%. Approximately 0.8% of this quarterly increase is non-recurring in nature. Year-to-date, the operating margin of Automotive Group Canada increased from 6.2% in 2005 to 7.1% in 2006. Approximately 0.5% of this increase is non-recurring in nature.
Sales for the Heavy Duty Group decreased by 13.2% during the second quarter to $15,381,000 compared to $17,716,000 during the same quarter in 2005. This decrease is mainly due to significant returns in the wheel division and a delay in purchase orders from customers that should be reflected in the third quarter. For the first six months of 2006, the Group's sales decreased by 6.1% from $32,885,000 to $30,865,000. During the second quarter, the operating margin of the Group was (5.2%) compared to 2.1% for the same quarter in 2005. For the year, the operating margin of the Group was (4.8%) and nil in 2005.
"Despite the fact that we are concerned by the impact that the increase in fuel prices is having on the budget of consumers and the maintenance of their automobiles, we are of the belief that this situation will only transiently affect our industry" declared Mr. Jacques Landreville, President and Chief Executive Officer of Uni-Select. "The evolution of the exchange rate between Canadian and American currencies has also affected our sales and our US profits which we report in Canadian dollars. This impact is accounting in nature and we are pleased to be able to count on a solid presence in the USA. Finally, we are confident that with the recently completed acquisitions in both Canada and the US as well as with the programs put in place, growth will be sustained in the second half of 2006."
Finally, the Board of Directors of Uni-Select Inc. declared a quarterly dividend of $0.10 per common share payable on October 23, 2006 to shareholders of record as at September 30, 2006.
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 service 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 2,100 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 Toronto Stock Exchange (TSX).
Non GAAP performance measure and forward-looking information Operating margin represents operating earnings before interests, amortization, income taxes and non-controlling interest (EBITDA) on sales. EBITDA is presented as it is a widely accepted financial indicator of a company's ability to service and incur debt. EBITDA should not be considered by an investor as an alternative to operating income or net earnings, an indicator of operating performance or of cash flows, or as a measure of liquidity. Because EBITDA is not a measurement determined in accordance with Canadian generally accepted accounting principles ("GAAP"), it may not be comparable to the EBITDA of other companies. In the statement of earnings of the Company, EBITDA is reported under the item "Earnings before the following".
Certain sections of this press release contain forward-looking statement within the meaning of securities legislation concerning the Company's objectives, projections, estimates, expectations or forecasts. These forward-looking statements are subject to a number of risks and uncertainties, such that actual results could differ materially from those indicated or underlying these forward-looking statements. The major factors that may lead to a material difference between the Company's actual results and the projections or expectations expressed in these forward-looking statements are described in the "Risk Management" section of the Company's 2005 Annual Report.
CONSOLIDATED EARNINGS THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2006 AND 2005 (in thousands of dollars, except earnings per share, unaudited)
2nd QUARTER 6 MONTHS
2006 2005 2006 2005
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$ $ $ $
SALES 294,494 312,828 557,008 578,372
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Earnings before the
following items 20,111 20,217 32,545 32,004
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Interest on bank
indebtedness 202 118 334 207
Interest on
long-term debt 932 769 1,811 1,384
Interest on merchant
members' deposits
in guarantee funds 79 66 156 131
Interest income
from cash and
cash equivalent (339) (53) (608) (64)
Interest income from
merchant members (108) (94) (209) (186)
Amortization (Note 2) 1,773 2,090 3,914 4,188
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2,539 2,896 5,398 5,660
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Earnings before income
taxes and non-
controlling interest 17,572 17,321 27,147 26,344
Income taxes
Current 6,626 5,097 9,419 8,331
Future (412) 1,115 133 987
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6,214 6,212 9,552 9,318
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Earnings before non-
controlling interest 11,358 11,109 17,595 17,026
Non-controlling interest 819 842 1,410 1,365
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Net earnings 10,539 10,267 16,185 15,661
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Basic earnings
per share (Note 3) 0.54 0.53 0.82 0.80
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Diluted earnings
per share (Note 3) 0.53 0.52 0.82 0.80
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Weighted average number
of outstanding shares 19,667,649 19,498,411 19,649,813 19,479,763
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Number of issued
and outstanding
common shares 19,699,016 19,519,900 19,699,016 19,519,900
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The accompanying notes are an integral part of the interim
consolidated financial statements.
CONSOLIDATED RETAINED EARNINGS
SIX-MONTH PERIODS ENDED JUNE 30, 2006 AND 2005
(in thousands of dollars, unaudited)
6 MONTHS
2006 2005
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$ $
Balance, beginning of period 220,966 188,159
Net earnings 16,185 15,661
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237,151 203,820
Dividends 3,935 3,121
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Balance, end of period 233,216 200,699
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The accompanying notes are an integral part of the interim
consolidated financial statements.
CONSOLIDATED CASH FLOWS
THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2006 AND 2005
(in thousands of dollars, except dividends paid on common shares,
unaudited)
2nd QUARTER 6 MONTHS
2006 2005 2006 2005
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$ $ $ $
OPERATING ACTIVITIES
Net earnings 10,539 10,267 16,185 15,661
Non-cash items
Amortization 1,773 2,090 3,914 4,188
Future income taxes (412) 1,115 133 987
Non-controlling interest 819 842 1,410 1,365
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12,719 14,314 21,642 22,201
Changes in working
capital items 15,941 17,721 10,861 6,284
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CASH FLOWS FROM
OPERATING ACTIVITIES 28,660 32,035 32,503 28,485
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INVESTING ACTIVITIES
Temporary investment 4,942 -- 4,942 --
Business acquisitions (55,983) (4,645) (56,378) (5,708)
Advances to merchant
members (2,323) (1,103) (3,157) (1,584)
Receipts on advances
to merchant members 2,336 1,197 4,306 2,294
Company shares -- 20 -- 20
Property, plant
and equipment (1,530) (2,694) (2,879) (4,626)
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CASH FLOWS FROM
INVESTING ACTIVITIES (52,558) (7,225) (53,166) (9,604)
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FINANCING ACTIVITIES
Bank indebtedness 12,367 (7,382) 12,270 (1,804)
Due to a joint venturer -- (2,500) -- (2,500)
Balance of purchase price -- -- -- (4,104)
Long-term debt 328 247 900 3,634
Repayment of long-term debt (698) (561) (1,576) (666)
Merchant members' deposits
in guarantee fund (64) (44) (67) (106)
Issuance of shares 612 384 1,278 1,304
Dividends paid (1,965) (1,559) (3,533) (2,987)
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CASH FLOWS FROM
FINANCING ACTIVITIES 10,580 (11,415) 9,272 (7,229)
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Net increase (decrease) in
cash and cash equivalents (13,318) 13,395 (11,391) 11,652
Cash and cash equivalents,
beginning of period 21,035 8,178 19,108 9,921
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Cash and cash equivalents,
end of period 7,717 21,573 7,717 21,573
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Cash and cash equivalents
include cash and temporary
investments maturing in less
than three months.
Dividends paid
on common shares 0.100 0.080 0.180 0.154
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The accompanying notes are an integral part of the interim
consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2006, JUNE 30, 2005 AND DECEMBER 31, 2005
(in thousands of dollars)
JUNE 30, JUNE 30, DECEMBER 31,
2006 2005 2005
(unaudited) (unaudited) (audited)
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$ $ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 7,717 21,573 19,108
Temporary investment - - 4,942
Accounts receivable 148,220 162,066 133,903
Income taxes receivable 6,874 6,703 5,352
Inventory 285,780 266,015 260,156
Prepaid expenses 6,124 6,328 3,885
Future income taxes 2,742 4,548 3,093
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457,457 467,233 430,439
Investments and volume
discounts receivable, at cost 8,189 9,766 7,798
Property, plant and equipment 37,293 34,645 36,246
Financing costs 1,064 1,245 1,321
Goodwill 35,917 18,314 17,996
Future income taxes 1,956 3,167 1,876
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541,876 534,370 495,676
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LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 14,789 1,390 1,932
Accounts payable 158,440 177,664 132,339
Income taxes payable - 8,023 -
Dividends payable 1,970 1,562 1,568
Instalments on long-term debt
and on merchant members'
deposits in guarantee fund 166 298 373
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175,365 188,937 136,212
Deferred government grants 371 422 395
Long-term debt 61,027 67,363 64,349
Merchant members' deposits
in guarantee funds 8,333 7,527 7,334
Future income taxes 4,678 4,046 4,837
Non-controlling interest 27,183 26,616 26,932
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276,957 294,911 240,059
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SHAREHOLDERS' EQUITY
Capital stock (Note 4) 49,334 46,905 48,056
Retained earnings 233,216 200,699 220,966
Cumulative translation
adjustments (17,631) (8,145) (13,405)
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264,919 239,459 255,617
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541,876 534,370 495,676
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The accompanying notes are an integral part of the interim
consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2006 AND 2005
(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 not include all the information required for complete financial statements. They are also consistent with the accounting for the year ended December 31, 2005. The interim financial statements and related notes should be read in conjunction ended December 31, 2005. When necessary, the financial statements include amounts based on informed estimates and interim periods reported are not necessarily indicative of results to be expected for the year.
Certain comparative figures have been reclassified to conform with the presentation adopted in the current year.
2. INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF EARNINGS
2nd QUARTER 6 MONTHS
2006 2005 2006 2005
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Amortization of property,
plant and equipment 1,674 2,009 3,694 4,029
Amortization of financing costs 99 81 220 159
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1,773 2,090 3,914 4,188
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3. EARNINGS PER SHARE
The following table presents a reconciliation of basic and diluted
earnings per share:
2nd QUARTER
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2006
---------------------------------------------------------------------
Weighted
Net average number Earnings per
earnings of shares share
---------------------------------------------------------------------
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$ $
Basic earnings per share 10,539 19,667,649 0.54
Impact of stock options exercised 68,976
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Diluted earnings per share 10,539 19,736,625 0.53
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2nd QUARTER
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2005
---------------------------------------------------------------------
Weighted
Net average number Earnings per
earnings of shares share
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $
Basic earnings per share 10,267 19,498,411 0.53
Impact of stock options exercised 147,464
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Diluted earnings per share 10,267 19,645,875 0.52
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6 MONTHS
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2006
---------------------------------------------------------------------
Weighted
Net average number Earnings per
earnings of shares share
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $
Basic earnings per share 16,185 19,649,813 0.82
Impact of stock options exercised 76,798
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Diluted earnings per share 16,185 19,726,611 0.82
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6 MONTHS
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2005
---------------------------------------------------------------------
Weighted
Net average number Earnings per
earnings of shares share
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $
Basic earnings per share 15,661 19,479,763 0.80
Impact of stock options exercised 159,823
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Diluted earnings per share 15,661 19,639,586 0.80
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4. CAPITAL STOCK
Authorized
Unlimited number of shares
Preferred shares, issuable in series
Common shares
JUNE 30, 2006 DECEMBER 31, 2005
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(unaudited) (audited)
Issued and fully paid
Balance, beginning of year:
19,599,716 common shares
(19,423,289 in 2005) 48,056 45,601
Issue of 985 common shares forcash
(1,717 in 2005) 30 50
Issue of 98,315 common shares
on the exercise of stock options
(174,710 in 2005) 1,248 2,405
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Balance, end of period:
19,699,016 common shares
(19,599,716 in 2005) 49,334 48,056
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5. BUSINESS ACQUISITIONS
USI-AGI Prairies Inc. (USI-AGI):
On May 31, 2006, the Company acquired the shares held by its partners
in the USI-AGI joint venture and now owns 100% of the shares. This
company operates distribution centres and stores in the Automotive
Canada segment.
Auto Craft Automotive Products, LLC (Auto Craft):
On June 1, 2006, the Company acquired the assets and assumed a
portion of the liabilities of Auto Craft. This company operates
distribution centres and stores in the Automotive USA segment.
Moreover, the Company acquired shares of a company growing in the
Automotive Canada segment and the assets and a portion of the
liabilities of five companies operating in the Automotive USA
segment.
The operating results are consolidated in the statement of earnings
since the respective acquisition dates.
The preliminary purchase prices are allocated as follows:
USI-AGI Auto Craft Other Total
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Current assets 28,978 15,252 8,479 52,709
Property, plant
and equipement 1,166 773 528 2,467
Other long-term assets 318 -- -- 318
Goodwill 11,351 4,403 2,381 18,135
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Total assets acquired 41,813 20,428 11,388 73,629
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Current liabilities (9,801) (133) (3,221) (13,155)
Long-term liabilities (1,049) -- -- (1,049)
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Total liabilities assumed (10,850) (133) (3,221) (14,204)
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Net assets acquired 30,963 20,295 8,167 59,425
Cash of company acquired (2,047) -- (15) (2,062)
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Net acquisition 28,916 20,295 8,152 57,363
Total consideration paid
cash less cash
acquired 28,290 20,295 7,793 56,378
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Balance of
purchase price payable 626 -- 359 985
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6. EMPLOYEE FUTURE BENEFITS
As at June 30, 2006, the Company's pension plans are defined benefit
and defined contributions plans.
For the three-month period ended June 30, 2006, the total expense for
the defined contribution pension plans was of $331 ($283 in 2005) and
of $518 ($418 in 2005) for the defined benefit pension plans.
For the six-month period ended June 30, 2006, the total expense for
the defined contribution pension plans was of $629 ($513 in 2005) and
of $1,023 ($835 in 2005) for the defined benefit pension plans.
7. SEGMENTED INFORMATION
2nd QUARTER
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Automotive Canada Automotive USA
2006 2005 2006 2005
$ $ $ $
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SALES 133,123 139,354 145,990 155,758
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Earnings before interest,
amortization,income
taxes and non-
controlling interest 11,322 9,968 9,591 9,877
Assets 233,690 212,958 266,544 282,560
Acquisition of property,
plant and equipment 1,679 989 2,247 1,344
Acquisition of goodwill 13,426 173 4,709 --
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Heavy Duty Consolidated
2006 2005 2006 2005
$ $ $ $
---------------------------------------------------------------------
SALES 15,381 17,716 294,494 312,828
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Earnings before interest,
amortization,income
taxes and non-
controlling interest (802) 372 20,111 20,217
Assets 41,642 38,652 541,876 534,170
Acquisition of property,
plant and equipment 48 372 3,974 2,705
Acquisition of goodwill -- -- 18,135 173
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6 MONTHS
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Automotive Canada Automotive USA
2006 2005 2006 2005
$ $ $ $
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SALES 244,128 254,488 282,015 290,999
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Earnings before interest,
amortization,income
taxes and non-
controlling interest 17,366 15,896 16,649 16,105
Assets 233,690 212,958 266,544 282,560
Acquisition of property,
plant and equipment 2,303 1,956 2,937 2,355
Acquisition of goodwill 13,426 173 4,709 --
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Heavy Duty Consolidated
2006 2005 2006 2005
$ $ $ $
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SALES 30,865 32,885 557,008 578,372
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Earnings before interest,
amortization,income
taxes and non-
controlling interest (1,470) 3 32,545 32,004
Assets 41,642 38,652 541,876 534,170
Acquisition of property,
plant and equipment 106 498 5,346 4,809
Acquisition of goodwill -- -- 18,135 173
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The Automotive USA segment includes property, plant and equipment for an amount of $15,623 ($14,668 as at December 31, 2005) and goodwill for an amount of $10,706 ($6,211 as at December 31, 2005).
8. SUBSEQUENT EVENT
On July 31, 2006, the Company entered into a partnership agreement by the means of its Uni-Select Pacific Inc. joint venture with the objective of creating a joint venture in the name of Colwood-Langford Auto Supply Ltd. This joint venture operates stores in the Automotive Canada segment.
On August 1, 2006, the Company acquired the assets of Markauto Parts Inc. and Fuld & Fuld Inc., two companies operating stores in the Automotive USA segment.
FOR FURTHER INFORMATION PLEASE CONTACT:
UNI-SELECT INC.
Jacques Landreville
President and Chief Executive Officer
(450) 641-2440
UNI-SELECT INC.
Richard G. Roy
Vice President, Administration and Chief Financial Officer
(450) 641-2440
www.uni-select.com
