Dorel Industries Inc. saw revenues for the third quarter increase 3.1% to $436.3 million from $423.3 million in the same period last year. Net earnings for the quarter were $25.1 million or 76 cents per diluted share, down 2.0% from adjusted net earnings of $25.6 million or 78 cents per diluted share in the prior year.

Year-to-date revenue was $1.32 billion, relatively flat to last year's revenue of $1.33 billion. Fiscal 2006 nine month net earnings were $67.2 million or $2.04 per diluted share, compared to adjusted net earnings of $74.6 million or $2.27 per diluted share the year before.

The prior year comparative figures are adjusted to exclude restructuring costs recorded in connection with the closure of an Ameriwood ready-to-assemble (RTA) furniture plant that was announced at that time. Restructuring costs incurred in 2006 have not been excluded as these amounts are considered insignificant. The company is including adjusted earnings in this press release, a non-GAAP financial measure, as it believes this permits more meaningful comparisons of its core business performance between the periods presented. A reconciliation of adjusted earnings to GAAP earnings is to be included in the company's third quarter MD & A. Including those restructuring costs, net earnings for last year's third quarter and year-to-date, were $19.8 million or 60 cents per share and $68.8 million or $2.09 per diluted share respectively.

Included in the quarter is a pre-tax recovery of US$5 million, or 10 cents per diluted share after tax, in connection with a business interruption insurance claim made following a major fire at one of the company's primary suppliers of particle board in April 2006. The claim was made as a result of incurring increased costs of production, principally paying higher board prices. Approximately 50% of the amount recovered relates to additional costs incurred during the second quarter of the year. The Company continues to incur additional costs which could result in additional recoveries that would be recorded in the fourth quarter.

“Revenues increased in both the Juvenile and Recreational/Leisure segments and the negative trend in sales was reversed in Home Furnishings during the quarter. In Juvenile, sales in both North America and Europe continued to be strong. Home Furnishings revenues increased by 19% from the second quarter with these increases occurring in all of the segment's operating divisions. Ameriwood continued to focus on the repositioning of its business into three units: Domestic, Global Sourcing and Dorel Home Products. At Pacific Cycle gas-powered motor scooters continue to gain acceptance in the market and bicycle sales were strong in the independent bicycle dealer (IBD) chain,” stated Dorel President and CEO, Martin Schwartz.


Recreational/Leisure Segment

Third quarter Recreational/Leisure revenue increased 7.9% to $76.4 million from $70.8 million last year. Earnings from operations were down 4.8% to $6.0 million from $6.3 million. Gross margins in the third quarter of 2006 were 20.0%, consistent with the 20.6% recorded in 2005. As a result, gross margin dollars earned in the quarter increased by $0.7 million over last year. However, offsetting this were higher selling, general and administration costs in the amount of $9.0 million in 2006 versus $8.0 million in 2005. Higher selling costs to develop the scooter program and higher legal costs were the principal reasons for the increase.

For the nine months, revenue has dropped 4.3% to $253.2 million from $264.5 million. As a result of these decreased revenues and lower gross margins, year-to-date earnings from operations have decreased 34.2% to $18.7 million from $28.4 million. Year-to-date margins were 18.6% in 2006 as compared to 21.5% in 2005. Excluding a second quarter inventory reserve, 2006 year-to-date gross margins would have been 20.0%, with the decline over 2005 levels due to a less favourable product mix. Year-to-date selling, general and administration costs were virtually unchanged at $27.6 million versus $27.7 million in 2005.

The revenue increase in the quarter was prompted by a combination of growing sales of Schwinn gas-powered motor scooters, new customers in the IBD chain as well as sales of other recreational products. The gas motor scooter dealer network continues to increase with further gains anticipated by year end. Shipments of the new 2007 150 cc model began in September and “response has been strong and re-orders are already being placed.” 

CONSOLIDATED STATEMENT OF INCOME
    ALL FIGURES IN THOUSANDS OF US $, EXCEPT PER SHARE AMOUNTS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                             Third Quarter Ended           Nine Months Ended
                          Sept. 30,     Sept. 30,     Sept. 30,     Sept. 30,
                              2006          2005          2006          2005
    -------------------------------------------------------------------------
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Sales              $   431,019   $   418,835   $ 1,305,313   $ 1,314,640
    Licensing and
     commission income       5,281         4,494        17,925        15,967
                       ------------  ------------  ------------  ------------
    TOTAL REVENUE          436,300       423,329     1,323,238     1,330,607
                       ------------  ------------  ------------  ------------

    EXPENSES
      Cost of sales        330,541       327,029     1,022,198     1,027,930
      Selling, general
       and administrative
       expenses             56,017        47,930       166,151       155,722
      Depreciation and
       amortization          9,031         9,905        27,101        28,552
      Research and
       development costs     2,177         1,560         6,710         6,212
      Restructuring costs        -         6,432             -         6,432
      Interest on
       long-term debt        7,563         7,829        22,823        23,378
      Other interest            31           478           234         1,072
                       ------------  ------------  ------------  ------------
                           405,360       401,163     1,245,217     1,249,298
                       ------------  ------------  ------------  ------------

    Income before
     income taxes           30,940        22,166        78,021        81,309

    Income taxes             5,867         2,340        10,831        12,533
                       ------------  ------------  ------------  ------------

    NET INCOME         $    25,073   $    19,826   $    67,190   $    68,776
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

    EARNINGS PER SHARE
      Basic            $      0.76   $      0.60   $      2.04   $      2.09
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------
      Diluted          $      0.76   $      0.60   $      2.04   $      2.09
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

    SHARES OUTSTANDING
    Basic - weighted
     average            32,860,942    32,858,942    32,860,132    32,829,357
    Diluted - weighted
     average            32,861,092    32,923,907    32,860,268    32,946,621