BFI Canada Income Fund Announces Third Quarter Results.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 nine months ended September September: see month. 30, 2005. Management Commentary "This was another solid quarter for the Fund as we benefited from strong organic growth in both our 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. and U.S. markets," said Keith Keith may refer to: People with the given name Keith:
IESI Independent Environmental Services Incorporated (Haltom City, TX) is making to our business and the progress we have made as a result of sharing best practices and intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our focus, business-wide, on operational improvement. Our Canadian operations, inclusive of inclusive of prep. Taking into consideration or account; including. acquisitions, have contributed more 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) in the first nine months of 2005 than they did in all of 2004. The acquisitions 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 CDS played a major role in this growth, but so too has the successful application of our market focused volume and pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. . In total, the asset combinations we've we've Contraction of we have. we've have acquired and developed over the past several years are delivering. This is underscored by the fact that the Fund has maintained 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 84.1% for the nine months ended September 30, 2005, while increasing 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. per trust unit distributions to $1.698 versus $1.4025 as at September 30, 2004." Looking Forward The Fund's outlook has not changed since its report for the six months ended June June: see month. 30, 2005. The Fund expects revenue and cash flows to advance on the strength of contributions made by newly acquired businesses, complemented by organic growth. It also anticipates maintaining a payout ratio of less than 90% for year ended December December: see month. 31, 2005 and meeting its maintenance capital expenditure targets established for its Canadian and U.S. operations. "Its business as usual for us, which in the fourth quarter means an ongoing commitment to business improvement in each of our 56 markets," said Mr. Carrigan. "Going forward, new market and landfill development will be a continued focus of the Fund as it looks for ways to expand the business, increase customer density in strategic markets, and increase internalization Internalization A decision by a brokerage to fill an order with the firm's own inventory of stock. Notes: When a brokerage receives an order they have numerous choices as to how it should be filled. . On balance, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our opportunities and prospects for the future and our ability to meet our primary objective of increasing free cash flow available for distribution(B)." Financial highlights for the three and nine 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 , except per trust unit and participating preferred share amounts, unless otherwise stated) - Revenues and EBITDA(A) increased 273.6% and 240.8%, respectively, over the comparative three months ended September 30, 2004, primarily on account of the Ridge landfill and IESI corporation ("IESI") acquisitions completed in January January: see month. 2005, and the Complete Disposal Services Ltd. ("CDS") acquisition completed in November November: see month. 2004. - Revenues and EBITDA(A) increased 254.6% and 226.8%, respectively, over the comparative nine months ended September 30, 2004, primarily on account of the acquisitions identified above for the three months ended September 30, 2005. - Excluding acquisitions, revenues and EBITDA(A) increased 15.2% and 13.4% and 12.3% and 12.0%, respectively, over the comparative three and nine months ended September 30, 2004. Volume and price growth were the primary reasons for the increases over the comparative three and nine months ended September 30, 2004. - IESI's revenues and U.S.-EBITDA(A), excluding the effect of foreign currency translation, for the three and nine months ended September 30, 2005 increased 9.3% and 7.0% and 8.3% and 6.7%, respectively, over the comparative three and nine months ended September 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 nine months ended September 30, 2004. IESI experienced 6.8% and 6.2% organic revenue growth for the three and nine months ended September 30, 2005, respectively. - Free cash flow available for distribution(B) for the three and nine months ended September 30, 2005 totalled $32,951 and $90,310, and is $21,270 and $59,179 higher than the comparative three and nine month periods ended September 30, 2004, respectively. The principal reasons for the increase are acquisitions completed during the last twelve months which contributed to 240.8% and 226.8% 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 and landfill 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. - Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share for the three and nine months ended September 30, 2005 amounted to $0.50 and $1.44 and is $0.06 and $0.27 higher than the comparative three and nine month periods ended September 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, including distributions on weighted average subscription receipts, totalled $27,101 and $75,976 for the three and nine months ended September 30, 2005, representing a payout ratio of 82.2% and 84.1% of free cash flow available for distribution(B), respectively. Distributions paid on weighted average subscription receipts outstanding amounted to $1,175 for the period from January 1 to 20, 2005 while offering proceeds were held in 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. . - Based on IESI's results from operations for the three and nine months ended September 30, 2005, management is confident that IESI 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 on January 5, 2005. Other highlights - The Fund completed the acquisition 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. - Annual per trust unit distributions were increased 12% 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 and increased an additional 8.1% to $1.698 per trust unit annually effective for the distribution payable on September 15, 2005 to unitholders of record on August 31, 2005. Distributions payable to holders of participating preferred shares increased by an amount equal to the increase in per trust unit distributions payable to unitholders of the Fund. - IESI completed five "tuck-in" acquisitions, for aggregate consideration totalling $13,701, for the period January 21, 2005 to September 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"). - On October October: see month. 20, 2005, IESI entered into an agreement for variable rate demand solid waste disposal revenue bonds ("IRB IRB See: Industrial Revenue Bond "). The IRB's are made available, to a maximum of U.S. $45,000, to fund a portion of the Seneca Seneca, the elder, c.60 B.C.–c.A.D. 37, Roman rhetorician and writer Seneca, the elder (Lucius, or Marcus, Annaeus Seneca) (l Meadows landfill construction, and equipment expenditures. The IRB's bear interest at a discount to LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). . A portion of IESI's U.S. $20,000 IRB's drawings on October 20, 2005 have been used to repay its revolving credit facility. - Holdings series A and B senior secured debentures received a reaffirmed rating of "BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. " low stable from Dominion Bond Rating Service Dominion Bond Rating Service is a credit rating agency based in Toronto, Ontario. Founded in 1976, it is one of the largest credit rating agencies in Canada. It is one of five Nationally Recognized Statistical Rating Organizations in the United States, though significantly smaller
(in thousands, except Three months ended Nine months ended
per weighted average September 30 September 30
trust unit and ---------------------- -----------------------
participating 2005 2004(1)(2) 2005 2004(1)(2)
preferred share ---------- ---------- ----------- -----------
amounts) (unaudited)(unaudited) (unaudited) (unaudited)
---------- ---------- ----------- -----------
Revenues $ 182,716 $ 48,913 $ 499,537 $ 140,875
Operating expenses 103,911 25,722 281,026 72,881
Selling, general and
administration expenses 21,811 6,465 61,924 20,080
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Income before the
following 56,994 16,726 156,587 47,914
Amortization 38,753 11,159 108,745 33,289
Interest on
long-term debt 7,204 1,772 19,510 4,228
Financing costs - - 36,710 748
Net gain on sale of
capital assets (30) (2) (30) (26)
Gain on derivative
financial instruments (9,610) - (10,723) (1,550)
Foreign exchange loss 10,199 - 11,173 -
Other expenses 461 - 2,072 -
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Income (loss) before
income taxes and
non-controlling interest 10,017 3,797 (10,870) 11,225
Income tax expense
(recovery) 1,763 (1,362) (18,089) (3,104)
Non-controlling interest 1,958 - 1,629 -
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Net income $ 6,296 $ 5,159 $ 5,590 $ 14,329
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Net income per weighted
average trust unit,
basic & diluted $ 0.13 $ 0.19 $ 0.12 $ 0.54
Weighted average number
of trust units
outstanding 49,879 26,500 46,263 26,500
Weighted average
number of
participating
preferred shares
outstanding 15,512 - 16,278 -
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Weighted average number
of trust units and
participating
preferred shares
outstanding 65,391 26,500 62,541 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 $ 13,227 $ 2,677 $ 37,362 $ 10,042
Growth capital and
landfill expenditures 12,011 2,021 37,836 5,648
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Total capital and
landfill expenditures $ 25,238 $ 4,698 $ 75,198 $ 15,690
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Free cash flow
available for
distribution(B) $ 32,951 $ 11,681 $ 90,310 $ 31,131
Free cash flow
available for
distribution(B) per
weighted average trust
unit and participating
preferred share $ 0.50 $ 0.44 $ 1.44 $ 1.17
Aggregate distributions
declared on weighted
average trust units $ 20,672 $ 9,011 $ 55,035 $ 25,903
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 20,672 9,011 56,210 25,903
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Distributions
attributable to
participating
preferred shareholders 6,429 - 19,766 -
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Aggregate
distributions declared $ 27,101 $ 9,011 $ 75,976 $ 25,903
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Aggregate distributions
declared per weighted
average trust units
and participating
preferred shares $ 0.41 $ 0.34 $ 1.20 $ 0.98
Aggregate distributions
declared per weighted
average trust units,
participating
preferred shares, and
subscription receipts $ 0.41 $ 0.34 $ 1.21 $ 0.98
Notes:
(1) The Fund acquired IESI effective January 21, 2005.
Accordingly, the operating results for the three and nine
months ended September 30, 2004 do not include the results
of operations for IESI.
(2) Revenues and operating expenses have been reclassified to
conform to the current period's presentation.
Operating highlights (all amounts are in thousands of Canadian dollars, except per trust unit and participating preferred share amounts) Revenues of $182,716 were $133,803 or 273.6% higher than the comparative three months ended September 30, 2004. The Canadian segment contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $16,700 to the period-over-period increase, including approximately $9,200 of revenues generated from the CDS and Ridge landfill acquisitions completed in November 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 $117,100 for the three months ended September 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 $62,700 and $54,400, respectively. Revenues of $499,537 were $358,662 or 254.6% higher than the comparative nine months ended September 30, 2004. The Canadian segment contributed approximately $44,800 to the period-over-period increase, including approximately $27,400 of revenues generated from the aggregate results of the Twin Oaks Twin Oaks may refer to any of the following:
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 $103,911 were $78,189 higher than the comparative three months ended September 30, 2004. Strategic acquisitions in the Canadian segment, identified above, contributed approximately $4,000 to the total Canadian segment increase of approximately $7,500. 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. The balance of the third quarter operating expense increase of approximately $70,700 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 $44,200 and $26,500, respectively. Operating expenses of $281,026 were $208,145 higher than the comparative nine months ended September 30, 2004. Strategic acquisitions in the Canadian segment, identified above, coupled with the Fund's acquisition of Twin Oaks in April 2004, contributed approximately $12,500 to the total Canadian segment increase of approximately $21,000. 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. The balance of the operating expense increase for the nine months ended September 30, 2005 of approximately $187,100 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 $118,000 and $69,100, respectively. Selling, general and administration ("SG&A") expenses of $21,811 were $15,346 higher than the comparative three months ended September 30, 2004. The CDS and Ridge landfill acquisitions coupled with higher corporate employee remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. is the primary reason for the Canadian segment increase of approximately $2,100. The balance of the increase totalling approximately $13,200 is attributable to the consolidation of IESI for the three months ended September 30, 2005 comprised of SG&A expenses for the U.S. south and U.S. northeast segments totalling approximately $7,400 and $5,800, respectively. Selling, general and administration ("SG&A") expenses of $61,924 were $41,844 higher than the comparative nine month period ended September 30, 2004. Acquisitions and higher corporate employee remuneration described above coupled with the acquisition of Twin Oaks is the primary reason for the Canadian segment increase of approximately $4,800. The balance of the increase totalling approximately $37,100 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 $21,200 and $15,900, respectively. EBITDA(A) of $56,994 was $40,268 or 240.8% higher than the comparative three months ended September 30, 2004. 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, landfill royalty costs related to the Lachenaie north expansion, and higher corporate employee remuneration is the principle reason for the Canadian segment increase of approximately $7,100. 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 September 30, 2005, which contributed approximately $33,200 to the increase comprised of EBITDA(A) for the U.S. south and U.S. northeast segments totalling approximately $11,200 and $22,000, respectively. EBITDA(A) of $156,587 was $108,673 or 226.8% higher than the comparative nine months ended September 30, 2004. The Canadian segment contributed approximately $19,000 to the increase for the same reasons explained above for the three months ended September 30. The remainder of the variance relates to IESI's operating results for the IESI stub period, which contributed approximately $89,700 to the increase comprised of EBITDA(A) for the U.S. south and U.S. northeast segments totalling approximately $31,400 and $58,300, respectively. Free cash flow available for distribution(B) totalled $32,951 and $90,310 for the three and nine months ended September 30, 2005, respectively, versus $11,681 and $31,131 for the comparative periods ended September 30, 2004. The approximately $21,300 and $59,200 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 September 30, 2005, plus the Fund's acquisition of Twin Oaks in April 2004, for the nine months ended September 30, 2005, respectively. EBITDA(A) contributions from the Fund's acquisitions for the three and nine months ended September 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 and landfill expenditures to sustain a larger business base, and withholding taxes on interest and dividends paid from IESI. Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share for the three and nine months ended September 30, 2005 amounted to $0.50 and $1.44 and is $0.06 and $0.27 higher, respectively, than the comparative three and nine months ended September 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 nine months ended September 30, 2004. The Fund declared cash distributions to trust unitholders and participating preferred shareholders for the three and nine months ending September 30, 2005, totalling $0.41 and $1.20, respectively, per weighted average trust unit and participating preferred share. The Fund declared a distribution payable to unitholders of record on September 30, 2005, payable October 17, 2005, of $0.1415 per trust unit and participating preferred share. In August 2005, the Fund increased its current distribution rate by 8.1% to an annualized rate of $1.698 per trust unit and participating preferred share beginning with the distribution payable on September 15, 2005 to trust unitholders and participating preferred shareholders of record on August 31, 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 non-cash items, 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 the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial are to "income before the following" on the consolidated statement of operations for IESI. "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, (gain) loss on derivative financial instruments, transaction expenses, other expenses (income), 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, (gain) loss 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 (income), 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 - 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 IESI's debt/equity mix and interest rates; as such, it reflects the treasury/financing activities of IESI and represents a different class of expense than those included in EBITDA. Financing costs - financing costs are a function of IESI's treasury/financing activities and represents a different class of expense than those included in EBITDA. 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 (income) - other expenses (income) principally represent amounts paid to management on the closing the IESI acquisition and are not considered an expense indicative of continuing operations. Accordingly, other expenses (income) 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 Canadian provinces Noun 1. Canadian province - Canada is divided into 12 provinces for administrative purposes province, state - the territory occupied by one of the constituent administrative districts of a nation; "his state is in the deep south" 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 Canada's second largest full-service waste management company 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 37 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 Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November 11th, 2005 at 8:30 am (ET) to discuss results for the three and nine months ended September 30, 2005. To access the call, participants should dial 1-866-250-4909, at approximately 8:20 am (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 Friday, November 18th, 2005. To access the rebroadcast, dial 1-877-289-8525 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 21160092#.
BFI CANADA INCOME FUND
Consolidated Balance Sheets
September 30, 2005 (unaudited) and
December 31, 2004
(in thousands of dollars)
---------------------------------------------------------------------
September 30, December 31,
2005 2004
------------- ------------
ASSETS
CURRENT
Cash and cash equivalents $ 14,080 $ 13,282
Accounts receivable 93,751 33,348
Other receivables 1,442 1,403
Prepaid expenses 13,699 2,568
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122,972 50,601
OTHER RECEIVABLES 1,976 3,028
FUNDED LANDFILL POST-CLOSURE COSTS 1,270 570
INTANGIBLES 89,351 72,856
GOODWILL 477,955 50,889
DEFERRED COSTS 14,763 12,159
DEFERRED FINANCING COSTS 5,528 1,860
CAPITAL ASSETS 286,990 95,325
LANDFILL ASSETS 739,160 110,382
FUTURE INCOME TAX ASSETS 3,360 -
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$ 1,743,325 $ 397,670
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---------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable $ 45,694 $ 23,206
Accrued charges 39,787 7,501
Distribution payable 9,253 3,097
Income taxes payable 2,116 636
Deferred revenues 15,567 6,623
Current portion of long-term debt 35,715 22,224
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148,132 63,287
LONG-TERM DEBT 404,286 105,240
LANDFILL CLOSURE AND POST-CLOSURE COSTS 70,981 6,143
OTHER LIABILITIES 892 -
FUTURE INCOME TAX LIABILITIES 42,550 13,907
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666,841 188,577
---------------------------------------------------------------------
NON-CONTROLLING INTEREST 393,468 -
UNITHOLDERS' EQUITY 683,016 209,093
---------------------------------------------------------------------
$ 1,743,325 $ 397,670
---------------------------------------------------------------------
---------------------------------------------------------------------
BFI CANADA INCOME FUND
Consolidated Statements of Operations
For the period ended September 30, 2005
(unaudited - in thousands of dollars,
except net income per trust unit amounts)
---------------------------------------------------------------------
Three months ended Nine months ended
------------------ --------------------
2005 2004 2005 2004
--------- -------- --------- ----------
REVENUES $ 182,716 $ 48,913 $ 499,537 $ 140,875
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EXPENSES
OPERATING 103,911 25,722 281,026 72,881
SELLING, GENERAL AND
ADMINISTRATION 21,811 6,465 61,924 20,080
---------------------------------------------------------------------
INCOME BEFORE THE FOLLOWING 56,994 16,726 156,587 47,914
AMORTIZATION 38,753 11,159 108,745 33,289
INTEREST ON LONG-TERM DEBT 7,204 1,772 19,510 4,228
FINANCING COSTS - - 36,710 748
NET GAIN ON SALE OF CAPITAL
ASSETS (30) (2) (30) (26)
GAIN ON DERIVATIVE
FINANCIAL INSTRUMENTS (9,610) - (10,723) (1,550)
FOREIGN EXCHANGE LOSS 10,199 - 11,173 -
OTHER EXPENSES 461 - 2,072 -
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INCOME (LOSS) BEFORE INCOME
TAXES AND
NON-CONTROLLING INTEREST 10,017 3,797 (10,870) 11,225
INCOME TAX EXPENSE (RECOVERY)
Current 1,253 105 2,948 315
Future 510 (1,467) (21,037) (3,419)
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1,763 (1,362) (18,089) (3,104)
---------------------------------------------------------------------
INCOME BEFORE
NON-CONTROLLING INTEREST 8,254 5,159 7,219 14,329
NON-CONTROLLING INTEREST 1,958 - 1,629 -
---------------------------------------------------------------------
NET INCOME $ 6,296 $ 5,159 $ 5,590 $ 14,329
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per trust unit,
basic and fully diluted $ 0.13 $ 0.19 $ 0.12 $ 0.54
Weighted average number of
trust units outstanding
(thousands), basic 49,879 26,500 46,263 26,500
Weighted average number of
trust units outstanding
(thousands), fully diluted 65,391 26,500 62,541 26,500
BFI CANADA INCOME FUND
Consolidated Statements of Cash Flows
For the period ended September 30, 2005
(unaudited - in thousands of dollars)
---------------------------------------------------------------------
Three months ended Nine months ended
------------------ ------------------
2005 2004 2005 2004
NET INFLOW (OUTFLOW) OF CASH
RELATED TO THE FOLLOWING
ACTIVITIES
OPERATING
Net income $ 6,296 $ 5,159 $ 5,590 $ 14,329
Items not affecting cash
Amortization of intangibles 5,090 3,213 15,247 9,550
Amortization of deferred
financing costs 367 219 1,037 659
Amortization of capital
assets 14,223 3,975 42,108 11,705
Amortization of landfill
assets 19,073 3,752 50,353 11,375
Gain on disposal of
capital assets (30) (2) (30) (26)
Deferred costs 36 - 862 -
Write-off of deferred
financing costs - - 367 748
Accretion of landfill
closure and post-closure
costs 724 51 2,067 151
Unrealized foreign
exchange loss 10,235 - 11,085 -
Future income taxes 510 (1,467) (21,037) (3,419)
Gain on derivative
financial instruments (9,610) - (10,723) -
Non-controlling interest 1,958 - 1,629 -
Landfill closure and
post-closure expenditures (4,572) (234) (8,278) (992)
---------------------------------------------------------------------
44,300 14,666 90,277 44,080
Changes in non-cash working
capital items (4,726) 1,133 (14,832) (361)
---------------------------------------------------------------------
Cash generated from
operating activities 39,574 15,799 75,445 43,719
---------------------------------------------------------------------
INVESTING
Acquisitions (11,857) - (140,332) (4,627)
Investment in other
receivables - (876) - (1,138)
Proceeds from other
receivables 230 221 835 701
Funded landfill
post-closure costs (276) - (686) -
Purchase of capital assets (11,339) (2,790) (36,231) (10,690)
Purchase of landfill assets (13,899) (1,908) (38,967) (5,000)
Proceeds on disposal of
capital assets 243 11 243 43
Deferred costs (1,092) (1,905) (1,567) (2,608)
---------------------------------------------------------------------
Cash utilized in investing
activities (37,990) (7,247) (216,705) (23,319)
---------------------------------------------------------------------
FINANCING
Payment of deferred
financing costs - (242) (4,033) (1,890)
Proceeds from term and
revolving loan 61,171 - 465,994 5,800
Proceeds from senior
secured debentures - - - 105,000
Repayment of revolving loan
and acquired long-term debt (36,114) - (601,607) (87,494)
Issuance of trust units net
of issuance costs - - 351,717 -
Distributions paid to
unitholders and
participating preferred
shareholders (26,417) (8,730) (69,850) (25,622)
---------------------------------------------------------------------
Cash (utilized in)
generated from financing
activities (1,360) (8,972) 142,221 (4,206)
---------------------------------------------------------------------
Effect of foreign exchange
changes on foreign cash and
cash equivalents (138) - (163) -
---------------------------------------------------------------------
NET CASH INFLOW (OUTFLOW) 86 (420) 798 16,194
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 13,994 23,318 13,282 6,704
---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 14,080 $ 22,898 $ 14,080 $ 22,898
---------------------------------------------------------------------
---------------------------------------------------------------------
BFI CANADA INCOME FUND
Consolidated Statements of
Unitholders' Equity
For the period ended September 30, 2005
(unaudited - in thousands of dollars)
---------------------------------------------------------------------
Three months ended Nine months ended
------------------ ------------------
2005 2004 2005 2004
--------- -------- -------- --------
BALANCE, BEGINNING OF
PERIOD OR YEAR $730,113 $216,604 $209,093 $224,326
Net income 6,296 5,159 5,590 14,329
Issuance of trust units,
net of issuance costs and
related tax effect - - 385,719 -
Issuance of trust units on
exchange of participating
preferred shares 164 - 174,243 -
Distributions (20,672) (9,011) (56,210) (25,903)
Cumulative foreign currency
translation adjustment (32,885) - (35,419) -
---------------------------------------------------------------------
BALANCE, END OF PERIOD $683,016 $212,752 $683,016 $212,752
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BFI Canada Income Fund (TSX:BFC.UN) |
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