BFI Canada Income Fund Announces Second Quarter Results And An 8.1% Increase In Future Distributions.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- BFI Canada BFI Canada is a waste services company founded in 2000 presently active in five Canadian provinces and nine US states that started as a Canadian licensee of Browning-Ferris Industries. In the United States they have done business as "IESI Corporation" from 2005. Income Fund (the "Fund") (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :BFC BFC Buffalo Field Campaign (West Yellowstone, Montana) BFC Betty Ford Center BFC British Fashion Council BFC Bicycle Friendly Community BFC Bible Fellowship Church BFC Boavista Futebol Clube .UN) today announced its financial results for the three and six months ended June June: see month. 30, 2005 and an 8.1% increase in future monthly distributions. Financial highlights for the three and six months ended (in thousands of Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents , unless otherwise stated) - Based on IESI's results from operations for the three and six months ended June 30, 2005, management is confident that IESI IESI Integrated Electronic Standby Instrument (Thales Avionics) IESI Independent Environmental Services Incorporated (Haltom City, TX) is on track to deliver the 12.0% accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the to free cash flow available for distribution(B) per weighted average trust unit and participating preferred share announced during the marketing of the Fund's subscription receipts offering that closed into escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. on January January: see month. 5, 2005. - Revenues and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (A) increased 266.0% and 250.5%, respectively, over the comparative three months ended June 30, 2004, primarily on account of the Ridge ridge (rij) a linear projection or projecting structure; a crest. dental ridge any linear elevation on the crown of a tooth. dermal ridges cristae cutis. landfill and IESI acquisitions completed in January 2005, and the Complete Disposal Services Ltd. ("CDS") acquisition completed in November November: see month. 2004. - Revenues and EBITDA(A) increased 244.2% and 220.2%, respectively, over the comparative six months ended June 30, 2004, primarily on account of the acquisitions identified above for the three months ended June 30, 2005, coupled with the Twin Oaks Twin Oaks may refer to any of the following:
- Excluding acquisitions, revenues and EBITDA(A) increased 7.6% and 11.1% and 8.2% and 10.5%, respectively, over the comparative three and six months ended June 30, 2004. Volume and price growth were the primary reasons for the increases over the comparative three and six months ended June 30, 2004. - IESI's revenues and U.S.-EBITDA(A), excluding the effect of foreign currency translation, for the three and six months ended June 30, 2005 increased 8.3% and 7.1% and 7.7% and 6.1%, respectively, over the comparative three and six months ended June 30, 2004. Acquisitions, new contracts, volume and price growth, partially offset by higher fuel and insurance costs, were the primary reasons for the increases over the comparative three and six months ended June 30, 2004. IESI experienced 7.5% and 5.7% organic revenue growth for the three and six months ended June 30, 2005, respectively. - Free cash flow available for distribution(B) for the three and six months ended June 30, 2005 totalled $33,176 and $57,359, and is $24,639 and $37,908 higher than the comparative three and six month periods ended June 30, 2004, respectively. The principal reasons for the increase are acquisitions completed during the last twelve months which contributed to a 250.5% and 220.2% increases in EBITDA(A), respectively, partially offset by higher interest expense attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to higher debt outstanding, higher maintenance capital expenditures to sustain a larger business base, and withholding taxes The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. on interest and dividends paid from IESI to 4264126 Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of Limited, a subsidiary of the Fund. - Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share for the three and six months ended June 30, 2005 amounted to $0.51 and $0.94 and is $0.19 and $0.21 higher than the comparative three and six month periods ended June 30, 2004, respectively. - Aggregate distributions declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. on weighted average trust units and participating preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. outstanding, but excluding distributions on weighted average subscription receipts, totalled $25,702 and $47,700 for the three and six months ended June 30, 2005, representing a payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. of 77.5% and 83.2% of free cash flow available for distribution(B), respectively. Including distributions paid on weighted average subscription receipts outstanding, amounting to $1,175 for the period from January 1 to 20, 2005 while offering proceeds were held in escrow, aggregate distributions declared totalled $25,702 and $48,875 representing a payout ratio of 77.5% and 85.2 % for the three and six months ended June 30, 2005, respectively. Other highlights - The Fund completed the acquisitions of the Ridge landfill near Chatham Chatham, city, Canada Chatham, city (1991 pop. 43,557), S Ont., Canada, E of Detroit, Mich., on the Thames River. It is an industrial center in a rich mixed farming and fruit-raising region. , Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. and IESI of Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. in January 2005. Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with the closing of the IESI acquisition, the Fund completed a $374,000 offering of trust units to finance a portion of these acquisitions, and entered into an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated $80,000 revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility through BFI Canada Holdings Inc. ("Holdings") and a U.S. $385,000 credit facility through IESI. - The Ridge landfill has been successfully integrated with the Fund's operations and the Fund has been internalizing waste from its southwestern Ontario Southwestern Ontario is a region of the Canadian province of Ontario, centred on the city of London. It extends north to south from the Bruce Peninsula on Lake Huron to the Lake Erie shoreline, and east to south-west roughly from Kitchener to Windsor. operations into the Ridge landfill since January 4, 2005. - IESI completed three "tuck-in" acquisitions for the period January 21, 2005 to June 30, 2005 (the "IESI stub A small software routine placed into a program that provides a common function. Stubs are used for a variety of purposes. For example, a stub might be installed in a client machine, and a counterpart installed in a server, where both are required to resolve some protocol, remote procedure period"). - Annual per unit distributions were increased 12.0% from $1.4025 to $1.5708 effective February February: see month. 2005 in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of IESI's financial performance post-acquisition by the Fund consistent with management's expectations. - Based on the strong year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. performance by the Fund, and an expected continuation continuation - continuation passing style of this performance, the trustees of the Fund have approved an 8.1% increase to future distributions from an annual rate of $1.5708 per trust unit to $1.698 per trust unit annually effective for the distribution payable on September September: see month. 15, 2005 to unitholders of record on August 31, 2005. Accordingly, future distributions payable to holders of participating preferred shares will increase by an amount equal to the future increase in per unit distributions payable to trust unitholders of the Fund. Management Commentary "Financial and operating results were strong for the first and second quarters of 2005," said Keith Keith may refer to: People with the given name Keith:
Contraction of we have. we've have been able to achieve solid growth in our business segments. While contributions made by IESI, the Ridge landfill, and CDS have had a significant impact on our comparative financial and operating results year to date, organic growth in the Fund's base business have also contributed to our period over period improvements. Our organic improvement is the result of hard work and disciplined performance by our employees who continue to drive results and set new benchmarks. In total, our strong performance and generation of free cash flow available for distribution(B) supports the trustees' decision to increase our future distributions to trust unit holders, and accordingly participating preferred shareholders, 8.1% annually resulting in a new monthly distribution rate of $0.1415 per trust unit and participating preferred share." Mr. Carrigan said he was particularly pleased with the speed with which "newly acquired businesses have contributed to the overall results of the Fund. Strong results posted by the Fund is a positive indication of how well our business model works across our expanded platform. And even though our geography geography, the science of place, i.e., the study of the surface of the earth, the location and distribution of its physical and cultural features, the areal patterns or places that they form, and the interrelation of these features as they affect humans. has expanded, there is unity of purpose across our platforms and this is something we intend to sustain and build on. In total, the exchange of best business practices is delivering exactly the kind of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. benefits we had envisioned." Looking Forward The Fund's outlook has not changed since its report for the three months ended March 31, 2005. The Fund expects revenue and cash flows to advance on the strength of the contributions made by newly acquired businesses, complemented by organic growth through its market-focused strategies. It also anticipates maintaining a payout ratio below 90% for 2005. "Our operating agenda for the second half of the year is aggressive and focused on sustained improvement," said Mr. Carrigan. "Beyond our primary financial objective of growing free cash flow, we're we're Contraction of we are. we're we are also committed to our traditional goals of improving return on capital and achieving operational efficiencies. We believe that by continuing to pay attention to the basics of our business, we will realize the full benefits of our position as one of North America's largest non-hazardous solid waste management companies."
Three months ended Six months ended
June 30 June 30
(in thousands, except per ------------------------------------------
weighted average trust ------------------------------------------
unit and participating 2005 2004(1) 2005 2004(1)
preferred share and ------------------------------------------
subscription receipt (un- (un- (un- (un-
amounts) audited) audited) audited) audited)
Revenues $ 180,775 $ 49,386 $ 315,193 $ 91,561
Operating expenses 99,376 25,306 175,487 46,758
Selling, general and
administration expenses 21,881 7,026 40,113 13,615
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Income before the following 59,518 17,054 99,593 31,188
Amortization 39,984 11,564 69,992 22,130
Interest on long-term debt 7,031 1,280 12,306 2,456
Financing costs - 748 36,710 748
Net gain on sale of
capital assets - - - (24)
Loss (gain) on derivative
financial instruments 3,580 (1,550) (1,113) (1,550)
Foreign exchange (gain)
loss (2,351) - 974 -
Other expenses 537 - 1,611 -
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Income (loss) before
income taxes and
non-controlling interest 10,737 5,012 (20,887) 7,428
Income tax expense (recovery) 99 (796) (19,852) (1,742)
Non-controlling interest 2,882 - (329) -
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Net income (loss) $ 7,756 $ 5,808 $ (706) $ 9,170
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Net income (loss) per
weighted average trust
unit, basic & diluted $ 0.16 $ 0.22 $ (0.02) $ 0.35
Weighted average number
of trust units outstanding 47,675 26,500 44,425 26,500
Weighted average number
of participating preferred
shares outstanding 17,716 - 16,668 -
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Weighted average number
of trust units and
participating preferred
shares outstanding 65,391 26,500 61,093 26,500
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Aggregate number of trust
units and participating
preferred shares
outstanding 65,391 26,500 65,391 26,500
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Maintenance capital and
landfill expenditures $ 15,835 $ 6,260 $ 24,135 $ 7,365
Growth capital and
landfill expenditures 17,162 2,276 25,825 3,627
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Total capital and
landfill expenditures $ 32,997 $ 8,536 $ 49,960 $ 10,992
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Free cash flow available
for distribution(B) $ 33,176 $ 8,537 $ 57,359 $ 19,450
Free cash flow available
for distribution(B) per
weighted average trust
unit and participating
preferred share $ 0.51 $ 0.32 $ 0.94 $ 0.73
Aggregate distributions
declared on weighted
average trust units $ 18,739 $ 8,446 $ 34,363 $ 16,892
Aggregate distributions
declared on weighted
average subscription
receipts - - 1,175 -
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Aggregate distributions
declared on weighted
average trust units and
subscription receipts 18,739 8,446 35,538 16,892
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Distributions
attributable to
participating preferred
shareholders 6,963 - 13,337 -
---------------------------------------------------------------------
Aggregate distributions
declared $ 25,702 $ 8,446 $ 48,875 $ 16,892
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Aggregate distributions
declared per weighted
average trust units and
participating preferred
shares $ 0.39 $ 0.32 $ 0.78 $ 0.64
Aggregate distributions
declared per weighted
average trust units,
participating preferred
shares, and subscription
receipts $ 0.39 $ 0.32 $ 0.80 $ 0.64
Notes: (1) The Fund acquired IESI effective January 21, 2005. Accordingly, the operating results for the three and six months ended June 30, 2004 do not include the results of operations for IESI. Operating highlights (all amounts are in thousands of Canadian dollars, except per trust unit and participating preferred share amounts) Revenues of $180,755 were $131,389 or 266.0% higher than the comparative three months ended June 30, 2004. The Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. segment contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $14,700 to the period-over-period increase, including approximately $11,000 from the CDS and Ridge landfill acquisitions completed during the year ended December December: see month. 31, 2004 and January 2005, respectively. The balance of the Canadian segment increase relates to price increases and organic growth, including higher volumes of accepted waste entering BFI BFI - brute force and ignorance Canada-owned landfills. The acquisition of IESI added an additional approximately $116,700 for the three months ended June 30, 2005 comprised of contributions from the U.S. south and U.S. northeast “Northeastern” redirects here. For the Boston college, see Northeastern University, Boston. Northeast or north east is the ordinal direction halfway between north and east. It is the opposite of southwest. See boxing the compass. segments totalling approximately $62,800 and $53,900, respectively. Revenues of $315,193 were $223,632 or 244.2% higher than the comparative six months ended June 30, 2004. The Canadian segment contributed approximately $26,800 to the period-over-period increase, including approximately $19,400 from the Twin Oaks acquisition completed in April 2004, and the CDS and Ridge landfill acquisitions completed during the year ended December 31, 2004 and January 2005, respectively. The balance of the Canadian segment increase relates to price increases and organic growth, including higher volumes of accepted waste entering BFI Canada-owned landfills. The acquisition of IESI added an additional approximately $196,800 for the IESI stub period comprised of contributions from the U.S. south and U.S. northeast segments totalling approximately $107,900 and $88,900, respectively. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of $99,376 were $74,070 higher than the comparative three months ended June 30, 2004. Strategic acquisitions in the Canadian segment, identified above, contributed approximately $5,000 to the total Canadian segment increase of approximately $6,200. The balance of the increase in Canadian segment operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. is a function of higher disposal and labour expenditures, related principally to the collection and acceptance of additional volumes of waste, landfill royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. costs related to the Lachenaie north expansion, and higher costs to service new and existing customers. Year-to-date fuel surcharges in the Canadian segment have offset increasing fuel costs at levels commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with 2004. The balance of the operating expense increase for the three months ended June 30, 2005 of approximately $67,900 relates to the consolidation of IESI's operations with those of the Fund, comprised of operating expenses for the U.S. south and U.S. northeast segments totalling approximately $42,800 and $25,100, respectively. Operating expenses of $175,487 were $128,729 higher than the comparative six months ended June 30, 2004. Strategic acquisitions in the Canadian segment, identified above, coupled with the Fund's acquisition of Twin Oaks in April 2004, contributed approximately $9,300 to the total Canadian segment increase of approximately $12,200. The balance of the increase in Canadian segment operating expense is a function of higher disposal and labour expenditures, related principally to the collection and acceptance of additional volumes of waste, landfill royalty costs related to the Lachenaie north expansion, and higher costs to service new and existing customers. Year-to-date fuel surcharges in the Canadian segment have offset increasing fuel costs at levels commensurate with 2004. The balance of the second quarter operating expense increase of approximately $116,500 relates to the consolidation of IESI's operations with those of the Fund for the IESI stub period, comprised of operating expenses for the U.S. south and U.S. northeast segments totalling approximately $73,900 and $42,600, respectively. Selling, general and administration ("SG&A") expenses of $21,881 were $14,855 higher than the comparative three months ended June 30, 2004. The Canadian segment increase of approximately $1,400 is principally attributable to the CDS and Ridge landfill acquisitions. The balance of the increase totalling approximately $13,500 is attributable to the consolidation of IESI for the three months ended June 30, 2005 comprised of SG&A expenses for the U.S. south and U.S. northeast segments totalling approximately $7,600 and $5,900, respectively. Selling, general and administration ("SG&A") expenses of $40,113 were $26,498 higher than the comparative six month period ended June 30, 2004. The Canadian segment increase of approximately $2,700 is attributable to the Twin Oaks, CDS and Ridge landfill acquisitions. The balance of the increase totalling approximately $23,800 is attributable to the consolidation of IESI for the IESI stub period comprised of SG&A expenses for the U.S. south and U.S. northeast segments totalling approximately $13,700 and $10,100, respectively. EBITDA(A) of $59,518 was $42,464 or 249.0% higher than the comparative three months ended June 30, 2004. The Canadian segment contributed approximately $7,100 to the increase on account of contributions from strategic acquisitions, price and volume growth, including an increase in accepted waste at BFI Canada-owned landfills, partially offset by higher disposal and labour expenditures and landfill royalty costs related to the Lachenaie north expansion. The remainder of the variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality relates to IESI's operating results for the three months ended June 30, 2005, which contributed approximately $35,300 to the increase comprised of EBITDA(A) for the U.S. south and U.S. northeast segments totalling approximately $12,200 and $23,100, respectively. EBITDA(A) of $99,593 was $68,405 or 219.3% higher than the comparative six months ended June 30, 2004. The Canadian segment contributed approximately $11,900 to the increase on account of contributions from strategic acquisitions, and price and volume growth, including an increase in accepted waste at BFI Canada-owned landfills, partially offset by higher disposal and labour expenditures and landfill royalty costs related to the Lachenaie north expansion. The remainder of the variance relates to IESI's operating results for the IESI stub period, which contributed approximately $56,500 to the increase comprised of EBITDA(A) for the U.S. south and U.S. northeast segments totalling approximately $20,200 and $36,300, respectively. Free cash flow available for distribution(B) totalled $33,176 and $57,359 for the three and six months ended June 30, 2005, respectively, versus $8,537 and $19,450 for the comparative periods ended June 30, 2004. The approximately $24,600 and $37,900 increases are due in large part to EBITDA(A) contributions from the Fund's acquisitions of IESI and the Ridge landfill effective January 2005 and CDS effective November 2004, for the three months ended June 30, 2005, and the Fund's acquisitions as explained for the three months ended June 30, 2005, plus the Fund's acquisition of Twin Oaks in April 2004, for the six months ended June 30, 2005, respectively. EBITDA(A) contributions from the Fund's acquisitions for the three and six months ended June 30, 2005 have been partially offset by higher interest on long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. attributable to higher outstanding indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , higher maintenance capital expenditures to sustain a larger business base, and withholdings taxes on interest and dividends paid by IESI to 4264126 Canada Limited. Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share for the three and six months ended June 30, 2005 amounted to $0.51 and $0.94 and is $0.19 and $0.21 higher, respectively, than the comparative three and six months ended June 30, 2004. Contributions to free cash flow available for distribution(B) from strategic acquisitions and base business growth are the primary contributors to the increases over the comparative three and six months ended June 30, 2004. The Fund paid cash distributions to trust unitholders and participating preferred shareholders for the three months ending and IESI stub period, totalling $0.39 and $0.78, respectively, per weighted average trust unit and participating preferred share. The Fund declared a distribution payable to unitholders of record on June 30, 2005, payable July July: see month. 15, 2005, of $0.1309 per trust unit and accordingly participating preferred share. In January 2005, the Fund increased its current distribution rate by 12.0% to an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of $1.5708 per trust unit and participating preferred share beginning with the distribution payable on March 15, 2005 to trust unitholders and participating preferred shareholders of record on February 28, 2005. (A) All references to "EBITDA" in this press release are to "income before the following" on the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statement of operations See Income statement. . "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, net (gain) loss on sale of capital and landfill assets, loss (gain) on derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments, foreign exchange (gain) loss, write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of deferred financing costs, gain on settlement of bond forward contracts, other expenses, income taxes, and non-controlling interest". EBITDA is a term used by the Fund that does not have a standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meaning prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") and is therefore unlikely to be comparable to similar measures used by other issuers. EBITDA is a measure of the Fund's operating profitability, and by definition, excludes certain items as detailed above. These items are viewed by management as either non-cash (in the case of amortization, certain financing costs, write-off of deferred financing costs, loss (gain) on derivative financial instruments, foreign exchange (gain) loss, and future income taxes) or non-operating (in the case of interest on long-term debt, net (gain) loss on sale of capital and landfill assets, certain financing costs, other expenses, gain on settlement of bond forward contracts, current income taxes, and non-controlling interest). EBITDA is a useful financial and operating metric for investors as it represents a starting point Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the in the determination of free cash flow available for distribution(B). The underlying reasons for exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of each item are as follows: Amortization - as a non-cash item amortization has no impact on the determination of free cash flow available for distribution(B). Interest on long-term debt - interest on long-term debt is a function of the Fund's debt/equity mix and interest rates; as such, it reflects the treasury/financing activities of the Fund and represents a different class of expense than those included in EBITDA. Financing costs - financing costs is a function of the Fund's treasury/financing activities and represents a different class of expense than those included in EBITDA. Net (gain) loss on sale of capital and landfill assets - the net (gain) loss on sale of capital and landfill assets has no impact on the determination of free cash flow available for distribution(B), because the proceeds were either reinvested in other capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) or used to repay the Fund's revolving credit facility. Loss (gain) on derivative financial instruments - as non-cash items, losses or gains on derivative financial instruments have no impact on the determination of free cash flow available for distribution(B). Foreign exchange (gain) loss - as a non-cash item, foreign exchange gains or losses have no impact on the determination of free cash flow available for distribution(B). Write-off of deferred financing costs - as a non-cash item write-off of deferred financing costs has no impact on the determination of free cash flow available for distribution(B). Gain on settlement of bond forward contracts - the gain on settlement of bond forward contracts is a treasury/financing activity and represents a different class of revenue than the components of EBITDA. Other expenses - other expenses represent amounts paid to management of the Fund on the closing the IESI acquisition and are not considered an expense indicative indicative: see mood. of continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . Accordingly, other expenses represent a different class of expense than those included in EBITDA. Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from the daily operations of the Fund. Non-controlling interest - non-controlling interest represents a direct non-controlling equity interest in IESI through participating preferred share holdings. Accordingly, non-controlling interest represents a different class of expense than those included in EBITDA. All references to "U.S.-EBITDA" in this press release are to "income before the following" on the consolidated statements of operations for IESI. "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, loss (gain) on derivative financial instruments, transaction expenses, other expenses, and income taxes". U.S.-EBITDA is a term that does not have a standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and is therefore unlikely to be comparable to similar measures used by other issuers. U.S.-EBITDA is a measure of operating profitability, and by definition, excludes certain items as detailed above. These items are viewed by management as either non-cash (in the case of amortization, certain financing costs, loss (gain) on derivative financial instruments, and future income taxes) or non-operating (in the case of interest on long-term debt, certain financing costs, transaction expenses, other expenses, and current income taxes). U.S.-EBITDA is a useful financial and operating metric for investors as it permits investors to compare operating performance across periods. The underlying reasons for exclusion of each item are as follows: Amortization - amortization includes various fair value adjustments occurring on acquisition. Amortization is therefore not comparative between periods. Interest on long-term debt - interest on long-term debt is a function of the debt/equity mix and interest rates. On the closing of the Fund's acquisition of IESI, IESI's underlying debt structure has changed and results in interest on long-term debt not being comparable. Financing costs - financing costs is a function of treasury/financing activities. On closing of the Fund's acquisition of IESI, IESI incurred fees in connection with the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of long-term debt and results in financing costs not being comparable. Loss (gain) on derivative financial instruments - losses or gains on derivative financial instruments are a function of treasury/financing activities. On the closing of the Fund's acquisition of IESI, IESI entered into various foreign currency exchange derivative financial instruments to hedge its Canadian dollar obligations and as such (gains) losses on derivative financial instruments are not a function of operations. Transaction expenses - transaction expenses represent amounts paid to various advisors in respect of the Fund's acquisition of IESI and are not considered an expense indicative of continuing operations. Accordingly, transaction expenses represent a different class of expense than those included in U.S.-EBITDA. Other expenses - other expenses represent amounts paid to management on the closing the IESI acquisition and are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in U.S.-EBITDA. Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from daily operations. EBITDA and U.S.-EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between EBITDA and net income (loss) are detailed in the consolidated statements of operations beginning with "income before the following" and ending with "net income". US-EBITDA is presented herein for information purposes only and is not presented in the consolidated statements of operations. (B) The Fund has adopted a measurement called free cash flow available for distribution to supplement net income as a measure of operating performance. Free cash flow available for distribution is a term which does not have a standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures used by other issuers. The objective of presenting this non-GAAP measure is to calculate the amount which is available for distribution to trust unitholders and participating preferred shareholders. Participating preferred share holdings are presented as non-controlling interest in the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge of the Fund, however management of the Fund have elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to include the shareholdings of the participating preferred shareholders in the calculation of free cash flow available for distribution as participating preferred shares receive distributions that are economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: equivalent to those received by trust unitholders and participating preferred shares are exchangeable on a one-to-one one-to-one adj. 1. Allowing the pairing of each member of a class uniquely with a member of another class. 2. Mathematics basis for trust units of the Fund. Free cash flow available for distribution is calculated as EBITDA(A) less amortization of capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. landfill asset closure and post-closure costs, interest on long-term debt, current income taxes, other expenses, maintenance capital expenditures and the effect of the foreign currency hedge Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). to support current period Canadian dollar distributions. Additionally, the Fund's gain on settlement of two bond forward contracts on June 25, 2004 will be amortized to free cash flow available for distribution over the underlying terms of the senior secured debentures. Free cash flow available for distribution is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to cash flow as a measure of liquidity. All references in this press release to "free cash flow available for distribution" have the meaning set out in this note. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This document may contain forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Fund's operations or to the environment in which it operates, which are based on the Fund's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond the Fund's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in the Fund's Annual Information Form for the period ended December 31, 2004. Consequently, readers should not rely on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Fund cannot assure unitholders that actual results will be consistent with these forward looking statements, and the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Fund, through its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , is one of North America's largest full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. waste management companies, providing non-hazardous solid waste collection and disposal services for municipal, commercial, industrial and residential customers in five provinces and nine states in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ("U.S."). The Fund serves approximately one million customers with vertically integrated collection and disposal assets. The Fund's Canadian segment operates under the BFI Canada brand and is one of Canada's largest full-service waste management companies providing integrated non-hazardous solid waste collection and landfill disposal services in the provinces of British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography , Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. , Manitoba Manitoba (mănĭtō`bə), province (2001 pop. 1,119,583), 250,934 sq mi (650,930 sq km), including 39,215 sq mi (101,580 sq km) of water surface, W central Canada. , Ontario and Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. . The Canadian segment operates one and owns and operates four landfills, carries on solid waste collection operations in 19 markets and operates four transfer collection stations, seven material recovery facilities ("MRFs") and one landfill gas to energy facility. The Fund's U.S. operations provide integrated non-hazardous solid waste collection and landfill disposal services in two geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. regions as follows: the south, consisting of various service areas in Texas, Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. , Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , Arkansas Arkansas, river, United StatesArkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo. and Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. , and the northeast,
consisting of various service areas in New York New York, state, United StatesNew York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , New Jersey, Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York and Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). . The U.S. south and northeast segments operate in 35 markets, and include 41 collection operations, 23 transfer stations, 17 landfills and seven recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. facilities. The Fund's units are listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol BFC.UN. For more information on the Fund, visit www.bficanada.com. Management will hold a conference call on Thursday Thursday: see week. , August 4, 2005 at 4:30 pm (ET) to discuss results for the three and six months ended June 30, 2005. To access the call, participants should dial 800-814-4859, at approximately 4:20 pm (ET). The conference call will also be Webcast live at www.bficanada.com or www.ccnmatthews.com and subsequently archived on the BFI Canada site. A rebroadcast of the call will be available until midnight on Thursday, August 11, 2005. To access the rebroadcast, dial 877-289-8525 and quote the reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 21132584#.
BFI CANADA INCOME FUND
Consolidated Balance Sheets
June 30, 2005 (unaudited) and December 31, 2004
(in thousands of dollars)
---------------------------------------------------------------------
June 30, December 31,
2005 2004
-------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 13,994 $ 13,282
Accounts receivable 88,650 33,348
Other receivables 1,433 1,403
Prepaid expenses 10,406 2,568
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114,483 50,601
OTHER RECEIVABLES 2,258 3,028
FUNDED LANDFILL POST-CLOSURE COSTS 1,040 570
INTANGIBLES 95,101 72,856
GOODWILL 492,543 50,889
DEFERRED COSTS 5,299 12,159
DEFERRED FINANCING COSTS 6,126 1,860
CAPITAL ASSETS 297,225 95,325
LANDFILL ASSETS 771,682 110,382
FUTURE INCOME TAX ASSETS 850 -
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$ 1,786,607 $ 397,670
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---------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable $ 45,970 $ 23,206
Accrued charges 36,308 7,501
Distribution payable 8,560 3,097
Income taxes payable 1,096 636
Deferred revenues 15,519 6,623
Current portion of long-term debt 35,711 22,224
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143,164 63,287
LONG-TERM DEBT 395,830 105,240
LANDFILL CLOSURE AND POST-CLOSURE COSTS 76,315 6,143
OTHER LIABILITIES 1,043 -
FUTURE INCOME TAX LIABILITIES 42,039 13,907
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658,391 188,577
---------------------------------------------------------------------
NON-CONTROLLING INTEREST 398,103 -
UNITHOLDERS' EQUITY 730,113 209,093
---------------------------------------------------------------------
$ 1,786,607 $ 397,670
---------------------------------------------------------------------
---------------------------------------------------------------------
BFI CANADA INCOME FUND
Consolidated Statements of Operations
For the period ended June 30, 2005 (unaudited - in thousands of
dollars, except net income(loss) per trust unit amounts)
---------------------------------------------------------------------
Three months ended Six months ended
----------------------------------------
2005 2004 2005 2004
----------------------------------------
REVENUES $ 180,775 $ 49,386 $ 315,193 $ 91,561
---------------------------------------------------------------------
EXPENSES
OPERATING 99,376 25,306 175,487 46,758
SELLING, GENERAL AND
ADMINISTRATION 21,881 7,026 40,113 13,615
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INCOME BEFORE THE FOLLOWING 59,518 17,054 99,593 31,188
AMORTIZATION 39,984 11,564 69,992 22,130
INTEREST ON LONG-TERM DEBT 7,031 1,280 12,306 2,456
FINANCING COSTS - 748 36,710 748
NET GAIN ON SALE OF CAPITAL
ASSETS - - - (24)
LOSS (GAIN) ON DERIVATIVE
FINANCIAL INSTRUMENTS 3,580 (1,550) (1,113) (1,550)
FOREIGN EXCHANGE (GAIN) LOSS (2,351) - 974 -
OTHER EXPENSES 537 - 1,611 -
---------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES AND
NON-CONTROLLING INTEREST 10,737 5,012 (20,887) 7,428
INCOME TAX EXPENSE (RECOVERY)
Current 1,321 105 1,695 210
Future (1,222) (901) (21,547) (1,952)
---------------------------------------------------------------------
99 (796) (19,852) (1,742)
---------------------------------------------------------------------
INCOME (LOSS) BEFORE
NON-CONTROLLING INTEREST 10,638 5,808 (1,035) 9,170
NON-CONTROLLING INTEREST 2,882 - (329) -
---------------------------------------------------------------------
NET INCOME (LOSS) $ 7,756 $ 5,808 $ (706) $ 9,170
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income (loss) per trust
unit, basic and fully diluted $ 0.16 $ 0.22 $ (0.02) $ 0.35
Weighted average number of
trust units outstanding
(thousands), basic 47,675 26,500 44,425 26,500
Weighted average number of
trust units outstanding
(thousands), fully diluted 65,391 26,500 61,093 26,500
BFI CANADA INCOME FUND
Consolidated Statements of Cash Flows
For the period ended June 30, 2005
(unaudited - in thousands of dollars)
---------------------------------------------------------------------
Three months ended Six months ended
---------------------------------------
2005 2004 2005 2004
---------------------------------------
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING
ACTIVITIES
OPERATING
Net income (loss) $ 7,756 $ 5,808 $ (706) $ 9,170
Items not affecting cash
Amortization of intangibles 5,174 3,240 10,157 6,337
Amortization of deferred
financing costs 374 220 670 440
Amortization of capital assets 15,692 3,930 27,885 7,730
Amortization of landfill assets 18,744 4,174 31,280 7,623
Gain on disposal of capital
assets - - - (24)
Deferred costs 37 287 826 287
Write-off of deferred
financing costs - 748 367 748
Accretion of landfill closure
and post-closure costs 740 51 1,343 100
Unrealized foreign exchange
(gain) loss (2,475) - 850 -
Future income taxes (1,222) (901) (21,547) (1,952)
Loss (gain) on derivative
financial instruments 3,580 - (1,113) -
Non-controlling interest 2,882 - (329) -
Landfill closure and
post-closure expenditures (2,583) (682) (3,706) (758)
---------------------------------------------------------------------
48,699 16,875 45,977 29,701
Changes in non-cash working
capital items 3,480 919 (10,106) (1,494)
---------------------------------------------------------------------
Cash generated from operating
activities 52,179 17,794 35,871 28,207
---------------------------------------------------------------------
INVESTING
Acquisitions - (4,627) (128,475) (4,627)
Investment in other receivables - - - (262)
Proceeds from other receivables 384 247 605 480
Funded landfill post-closure
costs (194) - (410) -
Purchase of capital assets (16,435) (6,266) (24,892) (7,900)
Purchase of landfill assets (16,562) (2,270) (25,068) (3,092)
Proceeds on disposal of
capital assets - 2 - 32
Deferred costs (229) (283) (475) (708)
---------------------------------------------------------------------
Cash utilized in investing
activities (33,036) (13,197) (178,715) (16,077)
---------------------------------------------------------------------
FINANCING
Deferred costs - (164) - (282)
Payment of deferred financing
costs - (1,648) (4,033) (1,648)
Proceeds from term and
revolving loan - 5,800 404,823 5,800
Proceeds from senior secured
debentures - 105,000 - 105,000
Repayment of revolving loan
and acquired long-term debt (2,000) (87,494) (565,493) (87,494)
Issuance of trust units net of
issuance costs - - 351,717 -
Distributions paid to
unitholders and participating
preferred shareholders (25,679) (8,446) (43,433) (16,892)
---------------------------------------------------------------------
Cash (utilized in) generated
from financing activities (27,679) 13,048 143,581 4,484
---------------------------------------------------------------------
Effect of foreign exchange
changes on foreign cash and
cash equivalents (84) - (25) -
---------------------------------------------------------------------
NET CASH (OUTFLOW) INFLOW (8,620) 17,645 712 16,614
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 22,614 5,673 13,282 6,704
---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 13,994 $ 23,318 $ 13,994 $ 23,318
---------------------------------------------------------------------
---------------------------------------------------------------------
BFI CANADA INCOME FUND
Consolidated Statements of Unitholders' Equity
For the period ended June 30, 2005
(unaudited - in thousands of dollars)
---------------------------------------------------------------------
Three months ended Six months ended
-----------------------------------------
2005 2004 2005 2004
-----------------------------------------
BALANCE, BEGINNING OF
PERIOD OR YEAR $ 648,600 $ 219,242 $ 209,093 $224,326
Net income (loss) 7,756 5,808 (706) 9,170
Issuance of trust units,
net of issuance costs and
related tax effect - - 385,719 -
Issuance of trust units
on exchange of
participating preferred
shares 84,073 - 174,079 -
Distributions (18,739) (8,446) (35,538) (16,892)
Cumulative foreign
currency translation
adjustment 8,423 - (2,534) -
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BALANCE, END OF PERIOD $ 730,113 $ 216,604 $ 730,113 $216,604
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BFI Canada Income Fund (TSX:BFC.UN) |
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