Boardwalk Equities Reports Strong Second Quarter Results; Record Results From Rental Operations.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--Aug. 21, 2001 Boardwalk Equities Inc. (NYSE NYSE See: New York Stock Exchange :BEI Bei (pā, bā), river, c.200 mi (320 km) long, formed by the union of two headstreams in the Nanling Mts., N Guangdong prov., S China. It flows S into the Xi River, E of Guangzhou, to form the Pearl River delta. )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :BEI.) is pleased to report another strong quarter of financial results for the second quarter of 2001, representing a record quarter for the Company's core rental operations. The Company had strong financial results for the quarter ended June 30, 2001, with Total Revenues of $50.3 million, Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO FFO See: Funds from operations ") of $12.5 million and FFO per share of $0.25. For the six months ended June 30, 2001, Total Revenues were $118.3 million, FFO was $31.0 million and FFO per share was $0.62. Effective December 31, 2000, the Company changed its fiscal period end to December 31 from May 31. Due to this change, an identical period for comparative purposes is not available. For illustrative il·lus·tra·tive adj. Acting or serving as an illustration. il·lus  tra·tive·ly adv.Adj. 1. purposes only, where applicable, we have presented the Company's results for the three-month and six-month periods ended May 31, 2000. Readers are cautioned that these results are not for identical comparable periods and that the real estate industry is subject to seasonal fluctuations that will affect straight comparisons of these amounts. Highlights of the Company's second quarter 2001 financial results include: Rental revenues of $50.3 million, which compares to $46.8 million for the three-month period ended May 31, 2000. Total revenues of $50.3 million, compared to $66.0 million for the three-month period ended May 31, 2000. Net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $34.1 million, which compares to $29.8 million for the three-month period ended May 31, 2000. Funds from operations (FFO) of $12.5 million, compared to $13.7 million for the three-month period ended May 31, 2000. FFO per share of $0.25, compared to $0.27 for the three-month period ended May 31, 2000. FFO per share prior to gains was $0.25, compared to $0.19 for the three-month period ended May 31, 2000. Net earnings of $2.9 million, compared to $1.2 million for the three-month period ended May 31, 2000. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.06, compared to $0.02 for the three-month period ended May 31, 2000. Commenting on the Company's second quarter results, Sam Kolias Sam Kolias is the CEO of Boardwalk REIT (TSX: BEI.UN).[1] He and his brother Van Kolias, Senior VP of Quality Control of Boardwalk, are at #81 of the top 100 richest people in Canada as compiled by Canadian Business magazine for 2006. , President and C.E.O., said: "The Company's core real estate operations are showing continued improved results and will remain the key driver of growth. Fundamentals for the multi-family rental sector remain healthy and we continue to see strength in our major markets." "The second quarter is usually the weakest seasonal period for occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) in our largest markets. Despite the typical seasonal weakness in the Spring, the Company has seen very strong results, which lay a good foundation for the second half," said Mr. Kolias. "We are pleased with our financial performance in the first half of the year and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we can continue to demonstrate solid performance for the balance of the year." Boardwalk's core rental operations posted record quarterly results, driven by continued improvement in its portfolio performance. The average vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. rate across the Company's portfolio for the second quarter of 2001 was 6.17%, up from 4.85% in the first quarter reflecting normal seasonal trends. As of July, 2001, the vacancy rate has shown a decline to 5.39%. Average monthly rents realized in the second quarter of 2001 were $662 per unit, up $46, or 7.5%, from the $616 per unit for the three months ended May 31, 2000. Management estimates that market rents for its properties at the end of June, 2001 averaged $749, which compares to an average in-place rent per occupied unit of $703. This indicates a current "loss-to-lease" on the portfolio of approximately $12.5-$13 million on 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. basis. The second quarter 2001 results do not include any operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. from asset sales. In the comparable three-month period ended May 31, 2000, operating profits on asset sales totaled $4.0 million on sales of $19.1 million. These sales contributed $0.08 to FFO per share in three-month period ended May 31, 2000. The six month results for 2001 include the sale of a property in the first quarter of the year, which resulted in $18.0 million of revenues and $7.5 million of pre-tax operating profit. The sale provided a $0.15 contribution to FFO in the period. For the comparable six-month period ended May 31, 2000, operating profits on asset sales totaled $4.2 million on sales of $21.0 million. These sales contributed $0.08 to FFO per share in the six-month period ended May 31, 2000. Boardwalk's administrative expenses continued to show a decline in the current year both as a percentage of total rental revenues and on an absolute basis. The recorded amount of $7.8 million for the six months ended June 30, 2001 and $3.9 million for the second quarter of the year represented a 9% and 2% reduction over the comparable six and three months reported for the period ended May 31, 2000. The decrease in administration expenses is the result of increased efficiencies now being recognized by the deployment of the Company's on-site, real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. property management systems and the streamlining of on-site operations. With the continued strength in employment, the Company's major markets and its ongoing pursuit of remaining competitive in terms of compensation to attract and retain talented associates, management expects to begin seeing some increases in wage costs in the quarters ahead. In addition, some executives have already opted for salary and or combination of salary plus bonus compensation versus pure option compensation as has been the practice in the past. It is anticipated that more executives will opt for cash or a blend of cash and options which could have an impact of about 2 to 3 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. on an annualized basis. These additional costs are expected to be offset by the anticipated continued strength in the Company's rental operations. Same-Store Results Boardwalk continued to show solid improvement in its stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. properties (defined as properties owned for over 24 months). A total of 21,309 units were classified as stabilized for the second quarter, representing 84% of Boardwalk's total portfolio. Again, due to the change in the Company's fiscal year end, for illustrative purposes, the prior period comparison to the six months ended May 31, 2000. On this basis, "same-store" results for the Company's stabilized portfolio for the six month period continued to show improved results with rental revenue growth of 6.52% and NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics growth of 10.32% versus the comparable period last year.
-----------------------------------------------------------------
Rental Rental % of Stabilized
Revenues Expenses NOI NOI
-----------------------------------------------------------------
Edmonton +9.15% -0.68% +14.48% 47
Calgary +4.15% -5.37% +7.90% 29
Other Alberta +9.72% -8.71% +18.57% 7
Ontario +15.47% +6.53% +28.19% 2
Saskatoon -0.67% +0.30% -1.26% 6
Regina +.1.51% +7.68% -2.27% 9
Total Stabilized +6.52% -0.71% +10.32% 100
Acquisition and Disposition Activity The Company remains active in pursuing acquisition opportunities, but continues to be disciplined with respect to its underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. criteria. In addition to the purchase of 711 units that was previously announced and which closed in the first quarter of 2001, subsequent to the end of the second quarter Boardwalk acquired or contracted to acquire two additional properties totaling 531 units - a 359-unit property located in London, Ontario which closed in mid-August, 2001, and a 172-unit property located in Edmonton which is scheduled to close by the end of August 2001. The total cost of these two acquisitions is just over $23 million before closing costs Closing Costs The numerous expenses (over and above the price of the property) that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, , or approximately $43,600 per unit. This will bring the total acquired to over 1,240 units on a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis. This is within the range of the previous guidance the Company provided on anticipated total acquisitions for the year of between 1,000 and 2,000 units. During the six month period ended June 30, 2001, the Company completed the sale of a project in Edmonton totaling 236 units which closed in the first quarter of the year. The project was sold for $18.0 million, or approximately $76,300 per unit, with a pre-tax profit of $7.5 million, or $0.15 per share. Continued Balance Sheet Strength The Company maintained its strong financial position in the quarter. Boardwalk's mortgage debt totalled $1.05 billion as at June 30, 2001, up marginally from $1.03 billion at December 31, 2000. The weighted average interest rate of 6.25% as of June 30, 2001 is down slightly from 6.27% at December 31, 2001. The Company's liquidity remained strong, with cash and undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities totaling $46 million at the end of the second quarter. In addition, an anticipated $30 million is expected to be available in the form of pre-committed financing, mortgage hold-back releases and vendor receivable maturities. The Company's coverage ratios also remain strong, with an interest coverage ratio of 1.97 times in the second quarter of 2001. Update on Suite Systems Inc. and Other Technology Initiatives Boardwalk's 100%-owned subsidiary, Suite Systems Inc., continues to make advances on a number of fronts. In the first quarter of this year, Suite Systems started a trial roll-out of digital TV and high-speed internet See broadband. services to two Boardwalk buildings in Calgary, and penetration rates to date have been very favourable, with approximately 140 customers in the trial. On the telecom side, Suite Systems recently had all technical issues approved regarding achieving its CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) status and it is anticipated that it will be issued its CLEC license over the near term. Dramatic declines in certain hardware prices are enabling Suite Systems to look at different network routes to delivering its services, which in the past were not economically feasible. Upon receipt of its CRTC CRTC Canadian Radio-Television & Telecommunications Commission CRTC Combat Readiness Training Center CRTC Cathode Ray Tube Controller CRTC China Railway Telecommunications Center CRTC Cold Region Test Center CRTC Continuously Regenerated Trap Column license, Suite Systems will be preceding with a trial for phone service in one of Boardwalk's buildings, O'Neil Towers in Calgary, via T-1 lines. Upon successful completion of the trial, it expects to proceed to connect all of Boardwalk's Calgary properties. As stated in previous releases, Suite Systems' negotiations with MEU's and other owners of rights of way and dark fiber have taken longer than originally expected due to a variety of factors, but are continuing and, in addition, with recent downward pressure on technology costs in particuliar telecom costs, alternatives which were not economically attractive just 12 months ago now show promise and are actively being pursued. It is anticipated that Suite Systems will be able to conclude such an agreement, or achieve alternative access, over the next several quarters. Suite Systems has made a formal application to the CRTC for access to utility poles A utility pole, telegraph pole, telephone pole, power pole, or telegraph post is a post or pole upon which telecommunication network equipment is situated. in Calgary and is continuing to work through that process. It is anticipated that the net result will more accurately reflect current market conditions for pricing and therefore be a more long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. and scaleable business model. "As the telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. and technology markets continue to be extremely volatile we want to stress that since the inception of Boardwalk, we have used the latest and most advanced tools and technology and believe we must continue doing so to succeed," stated Mr. Kolias. "Over the years, our team has developed systems that are unique in the industry and continue to provide us with controls and efficiencies that allow us to deliver a better industry level of service to our customers while making us more efficient. Our investment in technology has helped us develop a very unique brand allowing us to create significant value for both our customers and shareholders alike. "With the cost of capital for developing technology at record highs, the prices of equipment plummeting, a glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. of dark fiber in the market place for which the pricing has yet to be reflected, and the regulatory environment changing, risks remain very high. We believe a continued, deliberate, more protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. and much smaller scale strategy is best. Given the broad market sentiment Market Sentiment The feeling or tone of a market (i.e. crowd psychology). It is shown by the activity and price movement of the securities. Notes: For example, rising prices would indicate a bullish market sentiment. of write-offs and write-downs, we continue to evaluate our technology assets to ensure there is a realistic reflection of appropriate values on the balance sheet. We have been developing technology systems for the Company for 17 years now with wages and salaries virtually all historically expensed. The proprietary industry-specific systems that we have developed over the past many years to date remain unique in our industry. We are not aware of any other operators in our sector with the same level of technology implementation as Boardwalk. Therefore, it has always been our intention to prove the viability of this technology in our own portfolio first, and, conditions being appropriate, allowing other operators to have access. "We believe we continue to readily recover our investment in technology through increased efficiencies and added value Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. that we believe has significant value and already saves us millions every year in operating efficiencies." Boardwalk continues to develop additional features on an ongoing basis as part of its turnkey apartment "operating system." One such example is a smart card system which was recently developed in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. . The initial application for this smart card technology is a networked laundry Laundry can be:
Before industrialization system. It is currently up and running and being trialed in one of Boardwalk's properties, Chateau Apartments in Calgary. The Company will be able to offer discount pricing in off-peak times to better spread out utilization of the machines for all residents. From its customer's perspective, it will increase convenience and eliminate the burden to carry change and increase accessibility to the machines. The smart card technology eliminates the need for manual coin collection and will reduce maintenance due to coin jams and security issues. As a result of this new system, Boardwalk will move to eventually eliminate all of its lease contracts and take the laundry operations across its portfolio fully in-house. The Company currently spends approximately $95,000 per month on third-party coin collection, maintenance and lease services. Another future application will be for vending machines vending machine, coin-operated, automatic device for selling goods. Many vending machines are capable of making change, and some of the more sophisticated ones accept paper money or credit cards. in its properties. Boardwalk continues to roll out individual electrical submetering technology as part of its energy savings program and strategy to reduce its exposure to energy prices going forward. It has just completed the submetering at Patrician patrician (pətrĭsh`ən), member of the privileged class of ancient Rome. Two distinct classes appear to have come into being at the beginning of the republic. Only the patricians held public office, whether civil or religious. Village, a 392-unit Boardwalk community in Calgary. The Company is also moving to complete a submetering program at Boardwalk Centre, a 596-unit twin high-rise property in Edmonton. It is anticipated that this will be completed by year-end, with a further 2000 additional units expected to be submetered in 2002. Outlook and Summary Commenting on the outlook for the Company, Mr. Kolias said, "The Company remains well positioned to show improved results over the balance of the year and going forward. Economic forecasts continue to show Alberta leading the country in economic growth through 2002. With our portfolio over two-thirds weighted in the Alberta market, we are very well positioned geographically to deliver solid results driven by strong internal growth over the next several years. "We continue to see the largest opportunity for the Company being harvesting the significant inherent upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside that exists in our portfolio over time as rents continue to rise towards replacement cost rents in our markets, a trend we have already witnessed over the past five-to-seven years in many U.S. cities," said Sam Kolias. "We will supplement this with both external growth opportunities and through an expanded array of value add services to our residents and others in the multi-family sector." With respect to current "street" estimates, Rob Geremia, Vice President, Finance and Chief Financial Officer, said: "We are comfortable with current street estimates with the range of analyst forecasts for FFO for 2001 of between $0.92 and $0.96 per share excluding profits on asset sales, and we would guide to total FFO for the year is expected to be between $1.06 and $1.11 per share for the current year, which would factor in no additional bulk sales in the balance of the year." Teleconference on Fiscal 2001 Second Quarter Financial Results We invite you to participate in the teleconference that will be held to discuss the fiscal 2001 second quarter financial results this morning at 11:15am EST EST electroshock therapy. EST abbr. electroshock therapy . Sam Kolias, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , George Reti RETI - RTI , Executive Vice President, Rob Geremia, Vice President, Finance and CFO See Chief Financial Officer. , and Mike Hough Michael Lloyd Hough (born February 6, 1963 in Montreal, Quebec, Canada) is a former professional ice hockey player who played thirteen seasons in the National Hockey League from 1986-87 until 1998-99. , Executive Vice President, will speak to the results. Presentation materials will be made available on the INVESTOR section of our website (www.bwalk.com) prior to the call. Participation & Registration: Please RSVP (ReSerVation Protocol) A communications protocol that signals a router to reserve bandwidth for real time transmission. RSVP is designed to clear a path for audio and video traffic, eliminating annoying skips and hesitations. to Paul Moon Paul Moon (born 1968) is a New Zealand historian and a professor at the Auckland University of Technology. He is a prolific writer of New Zealand history and biography, specialising in the Treaty of Waitangi and the early period of Crown rule. 403-508-6208 or by email to investor@bwalk.com. Teleconference: The telephone numbers for the conference are: 416-641-6446 (within Toronto) or 1-877-871-1828 (outside Toronto). Webcast: Investors will be able to listen to the call and view our slide presentation over the Internet by visiting http://investor.bwalk.com at least 15 min. prior to the start of the call. An information page will be provided for software needed and system requirements To be used efficiently, all computer software needs certain hardware components or other software resources to be present on a computer system. These pre-requisites are known as (computer) system requirements and are often used as a guideline as opposed to an absolute rule. . The live audiocast will also be available at: http://www.newswire.ca/webcast/pages/BoardwalkEquities20010821/. Replay: An audio recording of the teleconference will be available approximately one hour after the call until 11:59pm EST on August 28th. You can access it by dialing (416) 626-4100 and using the following reservation number, 19424700. An audio archive will also be available on our Investor site (http://investor.bwalk.com) two hours after the conference call until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 19, 2001. Certain statements in this report may constitute 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. . Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Corporate Profile Boardwalk Equities Inc. is Canada's largest owner/operator of multi-family rental properties. Boardwalk currently owns and operates in excess of 200 properties with over 25,000 units totaling 21 million net rentable square feet. The company's portfolio is concentrated in the provinces of Alberta, Saskatchewan and Ontario. Through its subsidiary, Suite Systems Inc., it provides a wide range of services to the multiple-dwelling unit (MDU (1) (Multiple Dwelling Unit) A commercial or residential building with multiple offices or apartments. See BLEC. (2) (Multiply-Divide Unit) A high-speed circuit that performs multiplication and division within the CPU. ) market including an integrated state-of-the-art property management system together with a broad range of communication, information and e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. services. Boardwalk is headquartered in Calgary and its shares are listed on both the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and trade under the symbol BEI. The company has a total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. of $1.6 billion. Additional information is available at Boardwalk's web site at www.bwalk.com. Sam Kolias, President and CEO; George Reti, Executive Vice President; Roberto Geremia, Vice-President, Finance and Chief Financial Officer; Mike Hough, Executive Vice President; or Paul Moon, Director of Investor Relations Investor relations The process by which the corporation communicates with its investors. . Recent investor information can be found on the Internet at http://investor.bwalk.com/.
Consolidated Balance Sheets - As at
(Thousands of dollars) June 30, December 31,
2001 2000
(Unaudited) (Audited)
Assets
Revenue producing properties $ 1,354,699 $ 1,325,715
Properties held for development and resale 6,489 6,692
Mortgages & accounts receivable 18,778 17,230
Other assets 15,791 14,637
Deferred financing costs 32,508 31,460
Technology initiative 33,721 27,045
Cash and short-term investments 7,568 21,055
--------------------------
$ 1,469,554 $ 1,443,834
--------------------------
--------------------------
Liabilities
Mortgages payable $ 1,048,815 $ 1,034,444
Accounts payable and accrued liabilities 16,940 24,795
Refundable security deposits and other 9,936 9,953
Capital lease obligations 9,292 8,404
Future income taxes 69,357 64,864
--------------------------
$ 1,154,340 $ 1,142,460
--------------------------
--------------------------
Shareholders' equity
Share capital $ 262,151 $ 253,586
Retained earnings 53,063 47,788
--------------------------
315,214 301,374
--------------------------
$ 1,469,554 $ 1,443,834
--------------------------
--------------------------
Consolidated Statement of Earnings - For the three and six months
ended
(Thousands of dollars, except per share amounts) (Unaudited)
June May June May
2001 2000 2001 2000
(6 Months) (6 Months) (3 Months)(3 Months)
Revenue
Rental income 100,314 93,038 50,347 46,808
Sales - properties held
for development and
resale 18,012 21,044 - 19,146
-----------------------------------------
118,326 114,082 50,347 65,954
-----------------------------------------
Expenses
Revenue producing properties
Operating expenses 12,088 11,291 6,097 5,916
Utilities 15,811 12,389 5,719 6,152
Utility rebate (3,733) - (468) -
Property taxes 9,678 9,325 4,868 4,947
Cost of sales - properties
held for development and
resale 10,501 16,827 - 15,109
Administration 7,829 8,603 3,945 4,017
Financing costs 33,538 30,538 16,851 15,143
Amortization (Note 3) 25,282 18,029 12,828 15,349
-----------------------------------------
110,994 107,002 49,840 66,633
-----------------------------------------
Operating earnings before
income taxes 7,332 7,080 507 (679)
-----------------------------------------
Large corporations taxes 1,578 1,611 824 997
Future income taxes (Note 6) (2,017) 892 (3,211) (2,895)
-----------------------------------------
Net earnings 7,771 4,577 2,894 1,219
-----------------------------------------
-----------------------------------------
Earnings per share - Basic $ 0.16 $ 0.09 $ 0.06 $ 0.02
Diluted $ 0.15 $ 0.09 $ 0.06 $ 0.02
Consolidated Statement of Retained Earnings
(Thousands of dollars, except per share amounts) (Unaudited)
June May
2001 2000
(6 Months) (6 months)
Retained earnings, as previously stated $47,788 $32,726
Adjustment for retroactive adoption of
future income taxes - (1,500)
--------------------------
Retained earnings, beginning of period as
restated 47,788 31,226
Net earnings 7,771 4,577
Dividends paid (2,496) -
Premium on share repurchases - (3,462)
--------------------------
Retained earnings, end of period $53,063 $32,341
--------------------------
--------------------------
Consolidated Statement of Cash Flows - For the three and six months
ended
(Thousands of dollars, except per share amounts) (Unaudited)
June 30, May 31, June 30, May 31,
2001 2000 2001 2000
(6 months) (6 months) (3 months)(3 months)
(restated
Note 2)
Cash flow obtained from (applied to):
Operating activities
Net income $ 7,771 $ 4,577 $ 2,894 $ 1,219
Future income taxes (2,017) 892 (3,211) (2,895)
Amortization 25,282 18,029 12,828 15,349
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Funds from operations 31,036 23,498 12,511 13,673
Net change in operating
working capital (10,573) 19,073 (3,757) 15,194
Net change in property held
for development 9,583 3,487 (111) 3,486
------------------------------------------
Total operating cash flows 30,046 46,058 8,643 32,353
------------------------------------------
Financing activities
Issue of common shares
(net of issue costs) 1,455 3,016 1,416 6,442
Stock repurchase program (5) (6,885) - (6,885)
Dividends paid (2,496) - - -
Financing of revenue
producing properties 71,437 70,958 38,799 34,837
Repayment of debt on revenue
producing properties (71,122) (39,285) (46,368) (31,660)
Capital lease payments (944) - (658) -
Deferred financing costs (1,637) (273) (574) 299
------------------------------------------
(3,312) 27,531 (7,385) 3,033
------------------------------------------
Investing activities
Purchases of revenue
producing properties net
of debt on acquisitions of
$14,055 (2000 - $32,032)
and shares issued of
$7,116 (2000 - $nil) (6,738) (26,523) - (8,466)
Project improvements to
revenue producing
properties (28,639) (35,760) (12,876) (14,400)
Technology initiative (4,844) (7,441) 403 (7,441)
------------------------------------------
(40,221) (69,724) (12,473) (30,307)
------------------------------------------
(Decrease) increase in cash
balance during the period (13,487) 3,865 (11,215) 5,079
Cash and cash equivalents
(indebtedness), beginning
of period 21,055 (2,730) 18,783 (3,944)
------------------------------------------
Cash and cash equivalents,
end of period $ 7,568 $ 1,135 $ 7,568 $ 1,135
------------------------------------------
------------------------------------------
Funds from operations per
share, basic and
diluted $ 0.62 $ 0.47 $ 0.25 $ 0.27
------------------------------------------
------------------------------------------
Taxes Paid $ 1,760 $ 1,228 $ 882 $ 819
------------------------------------------
------------------------------------------
Interest Paid $ 32,293 $ 30,176 $ 16,246 $ 15,259
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Notes to 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 For the Three Months and Six Months Ended June 30, 2001 Note 1 - Basis of Presentation These unaudited interim consolidated financial statements have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with 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. 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 are consistent with those used in the audited consolidated financial statements as at and for the seven months ended December 31, 2000, except for the adoption of a new Canadian New Canadian Noun Canad a recent immigrant to Canada Institute of Public Real Estate Companies ("CIPREC CIPREC Conversational & Interactive Project Evaluation & Control ") requirement. The new standard requires the use of a funds from operations ("FFO") calculation, versus the traditional cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses calculation. As a result of this change, the Corporation will now calculate funds from operations per share instead of cash flow per share. Prior period figures have been restated. The interim financial statements should be read in conjunction with the audited financial statements. As a result of the Corporation changing its year end from May 31 to December 31, comparative figures for the quarter are May 31, 2000. Due to seasonality, the operating results for the three months and six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2001. Note 2 - Changes in Accounting Policy Effective June 1, 2000, the Corporation retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adopted the new CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
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An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of and funds from operations per share are calculated using the "treasury stock" method, replacing the previous method of "imputed Attributed vicariously. In the legal sense, the term imputed is used to describe an action, fact, or quality, the knowledge of which is charged to an individual based upon the actions of another for whom the individual is responsible rather than on the individual's earnings per share". There was no effect on diluted earnings per share and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. funds from operations per share for the three months and six months ended May 31, 2000. Note 3 - Amortization of Capital Items During the six month comparative period ending May 31, 2000, Boardwalk revised the amortization of project improvements to more closely reflect their estimated remaining useful lives. The revision was applied for the entire 2000 fiscal year and as such a period reconciliation was required for the six months ended May 31, 2000. This resulted in the reduced amortization charge of $18 million for the six months ended May 31, 2000 versus the $25 million for the present period.
Note 4 - Share Capital June 30, 2001 December 31, 2000
Number Amount Number Amount
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Common Shares outstanding
(thousands) 50,155 $262,151 49,259 $253,586
Note 5 - Per Share Calculation The following table sets forth the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of basic and diluted earnings per share with respect to income from 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 (thousands except per share amounts).
June 30, May 31, June 30, May 31,
2001 2000 2001 2000
(6 months) (6 months) (3 months)(3 months)
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Net income $ 7,771 $ 4,577 $ 2,894 $ 1,219
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Denominator for basic
earnings per share -
weighted average shares 49,954 49,804 49,992 49,798
Effect of dilutive stock
options 222 417 223 579
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Denominator for diluted
earnings per share adjusted
for weighted average shares
and assumed conversion 50,176 50,221 50,215 50,377
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Basic earnings per share $ 0.16 $ 0.09 $ 0.06 $ 0.02
Diluted earnings per share $ 0.15 $ 0.09 $ 0.06 $ 0.02
Note 6 - Income Tax Rate reduction Effective April 1, 2001, the Alberta and Ontario governments passed legislation that reduced the provincial income tax rates. The future tax balances for the company have been revalued at the new rates resulting in a cumulative future tax recovery of $2 million for the six months ended June 30, 2001. The new rates are reflected in the tax provisions for the current period. Note 7 - Commitments As disclosed in the March 31, 2001 quarterly report, the Corporation has entered into a one year supply arrangement with a gas utility company to supply the Corporation with 80% of its natural gas needs in Alberta for the 12 month period ending April 30, 2002. The agreement provides that the gas utility company supplies the commodity at $7.90 per gigajoule. The remaining 20% supply for November 2001 to March 2002 has been contracted at $6.60 per gigajoule. As disclosed in the December 31, 2000 annual report, the Corporation has entered into long-term supply arrangements with two utility companies to supply the Corporation with its electrical power needs for Alberta for the next three to five years at a blended rate of approximately $0.07/kwh. These agreements provide that the Corporation purchase its power for all properties under contract for the upcoming years based on an approximation approximation /ap·prox·i·ma·tion/ (ah-prok?si-ma´shun) 1. the act or process of bringing into proximity or apposition. 2. a numerical value of limited accuracy. of the current year's demand levels. In regards to the Corporation's technology initiative, at June 30, 2001 the Corporation had remaining commitments totalling $900,000 (December 31, 2000 - $ 4.0 million) with various suppliers with an average weighted interest rate of 10.3% (December 31, 2000 - 10.8%). Note 8 - Comparative Figures Certain comparative figures have been reclassified to conform with the current year's presentation. Note 9 - Subsequent Events Property Acquisitions Subsequent to June 30, 2001, the Corporation has contracted to acquire 531 units for an aggregate puchase price of $23.3 million. The acquisitions were financed through cash of $6.7 million and the assumption of $16.6 million in existing mortgages. |
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