2010 Annual Report - Dorel Industries

Management’s Discussion and AnalysisThis Management’s Discussion and Analysis of financial conditions and results of operations (“MD&A”) should be read inconjunction with the consolidated financial statements for Dorel Industries Inc. (“Dorel” or “the Company”) for the fiscal yearsended December 30, 2010 and 2009 (“the Consolidated Financial Statements”), as well as with the notes to the ConsolidatedFinancial Statements. All financial information contained in this MD&A and in the Company’s Consolidated FinancialStatements are in US dollars, unless indicated otherwise, and have been prepared in accordance with Canadian generallyaccepted accounting principles (“GAAP”), using the US dollar as the reporting currency. Certain non-GAAP financial measuresare included in the MD&A which do not have a standardized meaning prescribed by GAAP and therefore may be unlikely tobe comparable to similar measures presented by other issuers. Contained within this MD&A are reconciliations of thesenon-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP. ThisMD&A is current as at March 10, 2011.Forward-looking statements are included in this MD&A. See the “Caution Regarding Forward Looking Information” includedat the end of this MD&A for a discussion of risks, uncertainties and assumptions relating to these statements. For a descriptionof the risks relating to the Company, see the “Market Risks and Uncertainties” section of this MD&A. Further information onDorel’s public disclosures, including the Company’s Annual Information Form (“AIF”), are available on-line at www.sedar.comand Dorel’s website at www.dorel.com.Corporate OverviewThe Company’s head office is based in Montreal, Quebec, Canada. Established in 1962, the Company operates in nineteencountries with sales made throughout the world and employs approximately 4,700 people. Dorel’s ultimate goal is to produceinnovative, quality products and satisfy consumer needs while achieving maximum financial results for its shareholders. It operates inthree distinct reporting segments; Juvenile, Recreational / Leisure and Home Furnishings. The Company’s growth over the yearshas resulted from both increasing sales of existing businesses and by acquiring businesses that management believes add value tothe Company.StrategyDorel is a world class juvenile products and bicycle company, as well as a North American furniture distributor that markets a wideassortment of furniture products. The Company’s products are domestically produced and imported. New product development,innovation and branding allow the Company to compete successfully in the three segments in which it operates. In the Juvenilesegment, Dorel’s powerfully branded products such as Quinny, Maxi-Cosi, Safety 1st, Bébé Confort and HOPPOP have shown theway to safety, originality and fashion. Similarly, its highly popular brands such as Cannondale, Schwinn, GT, Mongoose and IronHorse as well as SUGOI Apparel have made Dorel a principal player in the bicycle marketplace.Within each of the three segments, there are several operating divisions or subsidiaries. Each segment has its own President and isoperated independently by a separate group of managers. Senior management of the Company coordinates the businesses of allsegments and maximizes cross-selling, cross-marketing, procurement and other complementary business opportunities.Dorel conducts its business through a variety of sales and distribution arrangements. These consist of salaried employees; individualagents who carry the Company’s products on either an exclusive or non-exclusive basis; individual specialized agents who sellproducts, including Dorel’s, exclusively to one customer such as a major discount chain; and sales agencies which themselvesemploy their own sales force. While retailers carry out the bulk of the advertising of Dorel’s products, all of the segments market,advertise and promote their products through the use of advertisements in specific magazines, multi-product brochures, on-lineand other media outlets.In the case of Recreational / Leisure, event and team sponsorships are also an important marketing tool. As an example in 2010,the Company announced that as of January 1st, 2011, it would become a Co-Sponsor of the Liquigas Pro Cycling team. The newlynamed Liquigas-Cannondale team name will appear prominently on team jerseys and there will be logo placement for Cannondaleon the Liquigas-Cannondale team vehicles, website and team clothing. This allows for significant marketing integration betweenCannondale and the team in order to showcase team riders and wins as well as capitalize on consumers’ interests in pro-cycling.Annual Report 2010 3