Date: May 15, 2007
Source: BFI Canada
BFI Canada Income Fund (TSX:BFC.UN) today reported strong financial results for the three months ended March 31, 2007. All amounts are in thousands of Canadian dollars, unless otherwise stated.
Management Commentary
"We achieved a strong start to 2007 with a financial performance that reflects our continued commitment to growth," said Keith Carrigan, Vice Chairman and Chief Executive Officer. "The Fund delivered a 13.1% increase in consolidated revenues, a 16.1% increase in EBITDA(A), and a 8.3% increase in free cash flow available for distribution(B) compared to the same period a year ago."
"The Fund's growth can be attributed to the same factors that have driven our past results - a broadening of our customer base and increasing route density that enhanced productivity throughout our operations. We achieved this through a combination of acquisitions and organic business improvement. Organic Canadian and U.S. segment revenue growth, which excludes acquisitions, fuel and environmental surcharges, and foreign currency translation, was 9.9% and 4.4%, quarter over quarter, respectively, and 7.4% on a consolidated basis."
Mr. Carrigan added, "Our financial performance was strong despite the impact of what we consider to be more normalized winter conditions during the three months ended March 31, 2007, compared to the unusually mild winter months we experienced for the same period last year. While our collection operations delivered solid double digit growth in the first three months of 2007, the poorer winter weather conditions impacted waste volumes at certain landfills and transfer stations. We expect these waste volumes to return during the balance of the year and we remain confident that the business and industry fundamentals are in place to achieve a year of solid results. We continue to be well positioned in our markets and remain focused on employing our bottom-up strategies."
Financial Highlights for the Three Months Ended March 31, 2007
- Total consolidated revenues increased 13.1% to $202.3 million.
- Total revenue growth, excluding the impact of foreign currency translation, was 12.1%.
- Total EBITDA growth, excluding the impact of foreign currency translation, was 15.1%.
- Free cash flow available for distribution(B) increased to $33.1 million or 8.3%.
- The Fund's payout ratio was 89.5%.
- The Fund's payout ratio excluding the effects of the foreign currency hedge was 91.0%.
Other Highlights for the Three Months Ended March 31, 2007
- Effective April 5, 2007, the Fund closed a 3,100 trust unit offering. In addition, the underwriters exercised their over-allotment option to acquire an additional 465 trust units. The Fund has subsequently applied the net proceeds from the offering, approximately $87,600, against advances from its U.S. revolving credit facility.
- Effective March 21, 2007, the Fund entered into a Second Amending Agreement to its Fourth Amended and Restated Credit Agreement. The second amendment increases the total committed Canadian segment credit to $150,000 from $80,000 and the total available credit from this facility, subject to lender consent, to $200,000 from $120,000. The maturity date was extended to May 30, 2011 from June 30, 2010, and the maturity date remains subject to one year extensions.
- Effective March 28, 2007, the Fund entered into a new 15 year agreement for variable rate demand solid waste disposal revenue bonds ("IRBs") in the state of Texas. The IRBs are made available, to a maximum of U.S. $24,000 and are available to fund a portion of landfill construction activities, and equipment, vehicle, and container expenditures in the Fund's Texas operations. The IRBs bear interest at a discount to LIBOR. A portion of the Fund's drawings under this facility was used to repay the Fund's U.S. revolving credit facility with the balance used to finance landfill construction activities, and equipment, vehicle, and container expenditures. At March 31, 2007, approximately U.S. $6,000 was restricted for the purpose of financing future activities and expenditures.
- The Fund completed four "tuck-in" acquisitions in 2007 for aggregate cash consideration of approximately $4,300.
Summarized Financial Highlights
Three months ended
March 31, 2007
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Revenues March 31, 2006 $ 178,864
Organic growth and acquisitions (includes fuel
and environmental surcharges) 21,554
Foreign currency exchange impact 1,882
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Revenues March 31, 2007 $ 202,300
% Revenue growth before foreign currency exchange impact 12.1%
Total revenue growth % 13.1%
EBITDA (A) March 31, 2006 $ 50,551
Organic growth and acquisitions 7,632
Foreign currency exchange impact 489
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EBITDA (A) March 31, 2007 $ 58,672
%EBITDA (A) growth before foreign currency exchange
impact 15.1%
Total EBITDA (A) growth % 16.1%
Free cash flow available for distribution (B)
March 31, 2006 $ 30,592
Organic growth and acquisitions 2,293
Foreign currency exchange impact 234
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Free cash flow available for distribution (B) March
31, 2007 $ 33,119
% Free cash flow available for distribution (B) growth
before foreign currency exchange impact 7.5%
Total free cash flow available for distribution (B) growth % 8.3%
Free cash flow available for distribution (B) without hedge $ 32,560
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Aggregate distributions declared $ 29,645
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Payout ratio with foreign currency hedge 89.5%
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Payout ratio without foreign currency hedge 91.0%
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Foreign Currency Hedge
A significant portion of the Fund's operating results, maintenance capital and landfill expenditures ("maintenance expenditures"), interest on long-term debt, and cash income taxes reported in Canadian dollars, originate in the U.S. Operating expenses, maintenance expenditures, interest on long-term debt, and cash income taxes originating in the U.S. are settled in U.S. dollars generated from U.S. operations which results in a natural cash flow hedge. A portion of the resultant free cash flow available for distribution(B) is hedged by three, three year single rate hedge agreements through February 2008 to purchase 4,500 Canadian dollars monthly at an average foreign currency exchange rate of approximately $1.222.
Financial Highlights
(in thousands, except per weighted average trust unit and participating
preferred share ("PPS"))
Three months ended
March 31
2007 2006
---------------------------------------------------------------------------
(unaudited) (unaudited)
---------------------------------------------------------------------------
Revenues $ 202,300 $ 178,864
Operating expenses 116,630 103,681
Selling, general and administration expenses 26,998 24,632
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Income before the following 58,672 50,551
Amortization 37,918 35,273
Interest on long-term debt 9,894 8,026
Financing costs 864 79
Net gain on sale of capital assets (208) (54)
Net loss on financial instruments 1,440 311
Net foreign exchange loss (gain) 1,621 (739)
Other expenses 5 107
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Income before income taxes and non-controlling
interest 7,138 7,548
Income tax (recovery) expense (5,643) 1,537
Non-controlling interest 2,195 1,083
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Net income $ 10,586 $ 4,928
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Net income per weighted average trust unit,
basic & diluted $ 0.20 $ 0.09
Weighted average number of trust units outstanding 53,744 53,168
Weighted average number of PPSs outstanding 11,497 12,223
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Weighted average number of trust units and
PPSs outstanding 65,241 65,391
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Aggregate number of trust units and PPSs
outstanding 65,141 65,391
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Maintenance expenditures $ 12,326 $ 9,699
Growth capital and landfill expenditures
("growth expenditures") 10,184 15,441
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Total maintenance and growth expenditures $ 22,510 $ 25,140
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Free cash flow available for distribution(B) $ 33,119 $ 30,592
Free cash flow available for distribution(B)
per weighted average trust unit and PPS $ 0.51 $ 0.47
Aggregate distributions declared on weighted
average trust units $ 24,553 $ 22,775
Distributions attributable to non-controlling
interest 5,092 5,002
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Aggregate distributions declared $ 29,645 $ 27,777
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Aggregate distributions declared per weighted
average trust unit and PPS $ 0.45 $ 0.42
Management's Discussion
(all amounts are in thousands of Canadian dollars, except per trust unit, PPS, and foreign currency exchange rate amounts)
Foreign Currency Exchange Rates
The Fund reports its financial results in Canadian dollars, and consequently changes in the foreign currency exchange rate between Canada and the U.S. impacts the translated value of the Fund's U.S. operating results to Canadian dollars. The U.S. segments financial position and operating results have been translated to Canadian dollars applying the following U.S. to Canadian dollar foreign exchange rates:
2007 2006
---------------------------------- ----------------------------------
Current Average Cumulative average Current Average Cumulative average
---------------------------------- ----------------------------------
March
31 $ 1.153 $ 1.172 $ 1.172 $ 1.167 $ 1.155 $ 1.155
The impact of changes in the foreign currency exchange rate on the Fund's consolidated financial results is included in the Fund's MD&A for the three months ended March 31, 2007.
Operating Highlights
(in thousands) Three months ended March 31
---------------------------------------------------------------------------
2007 2006 $ Change
---------------------------------------------------------------------------
(unaudited) (unaudited)
---------------------------------------------------------------------------
Revenues $ 202,300 $ 178,864 $ 23,436
---------------------------------------------------------------------------
Canada $ 73,355 $ 64,477 $ 8,878
U.S. south $ 74,535 $ 63,820 $ 10,715
U.S. northeast $ 54,410 $ 50,567 $ 3,843
Operating expenses $ 116,630 $ 103,681 $ 12,949
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Canada $ 37,667 $ 32,882 $ 4,785
U.S. south $ 48,555 $ 43,339 $ 5,216
U.S. northeast $ 30,408 $ 27,460 $ 2,948
Selling, general and administration
expenses $ 26,998 $ 24,632 $ 2,366
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Canada $ 10,482 $ 9,401 $ 1,081
U.S. south $ 10,079 $ 9,065 $ 1,014
U.S. northeast $ 6,437 $ 6,166 $ 271
EBITDA (A) $ 58,672 $ 50,551 $ 8,121
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Canada $ 25,206 $ 22,194 $ 3,012
U.S. south $ 15,901 $ 11,416 $ 4,485
U.S. northeast $ 17,565 $ 16,941 $ 624
The discussions to follow are in addition to the impact of foreign currency exchange fluctuations as detailed in the Fund's MD&A for the three months ended March 31, 2007.
Revenues - Three months ended March 31
The increase in consolidated revenues is due in part to solid organic Canadian and U.S. segment growth, where organic growth excludes the impact of fuel and environmental surcharges, acquisitions, and foreign currency translation, coupled with growth through acquisition. The unusually mild winter experienced in the prior comparative period returned to more normalized winter conditions in the current period. On a comparative basis, waste volumes declined at certain landfills and transfer stations, however management remains confident that the comparative softening of volumes period over period will be recovered over the balance of the year. Higher commodity prices in the current period served to partially offset the impact of less favourable comparative operating conditions.
Operating expenses - Three months ended March 31
Higher total disposal and labour costs are attributable to higher internally collected waste volumes and higher costs to service new and existing customers, contracts, and acquisitions, despite the less favourable comparative operating conditions. The balance of the change is due principally to higher vehicle operating costs and repairs and maintenance expense for the same reasons outlined above.
Selling, general and administration expenses - Three months ended March 31
Higher total salaries, including long-term incentive plan ("LTIP") expenses, are the primary cause of the period over period increase. Organic and acquisition growth, coupled with additional sales efforts are the primary reasons for the increase in total salaries.
Free Cash Flow Available for Distribution(B)
Free cash flow available for distribution(B) totalled $33,119 for the three months ended March 31, 2007 versus $30,592 for the comparative period.
Free cash flow available for distribution(B) per weighted average trust unit and PPS for the three months ended March 31, 2007 amounted to $0.51 and is $0.04 higher than the comparative period.
Free Cash Flow Available for Distribution(B) - Cash Flow Approach
---------------------------------------------------------------------------
Three months ended March 31
---------------------------------------------------------------------------
2007 2006 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Cash generated from operating activities
(per statement of cash flows) $ 28,455 $ 23,941 $ 4,514
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Operating
---------------------------------------------------------------------------
Changes in non-cash working capital items 18,464 15,052 3,412
---------------------------------------------------------------------------
Net change in landfill closure and
post-closure costs (2,555) 1,076 (3,631)
---------------------------------------------------------------------------
Maintenance expenditures (12,326) (9,699) (2,627)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Financing
---------------------------------------------------------------------------
Amortization of gain, or gain, on
settlement of bond forward contracts 56 56 -
---------------------------------------------------------------------------
Financing and deferred costs (net of
non-cash portion) 829 (35) 864
---------------------------------------------------------------------------
Effect of foreign currency hedges to
support Canadian dollar distributions 559 748 (189)
---------------------------------------------------------------------------
Realized foreign exchange gain (363) (547) 184
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Free cash flow available for
distribution (B) $ 33,119 $ 30,592 $ 2,527
---------------------------------------------------------------------------
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Free Cash Flow Available for Distribution(B) - Operations Approach
---------------------------------------------------------------------------
Three months ended March 31
---------------------------------------------------------------------------
2007 2006 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EBITDA (A) $ 58,672 $ 50,551 $ 8,121
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Amortization of capitalized landfill asset
closure and post-closure costs, net of
revisions to estimated cash flows (2,280) (1,472) (808)
---------------------------------------------------------------------------
Interest on long-term debt (9,894) (8,026) (1,868)
---------------------------------------------------------------------------
Management transaction bonuses (other
expenses) (5) (107) 102
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Current income taxes (1,663) (1,459) (204)
---------------------------------------------------------------------------
Maintenance expenditures (12,326) (9,699) (2,627)
---------------------------------------------------------------------------
Effect of foreign currency hedges to
support Canadian dollar distributions 559 748 (189)
---------------------------------------------------------------------------
Amortization of gain on settlement of
bond forward contracts 56 56 -
---------------------------------------------------------------------------
Free cash flow available for
distribution (B) $ 33,119 $ 30,592 $ 2,527
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---------------------------------------------------------------------------
Maintenance and Growth Expenditures
---------------------------------------------------------------------------
Three months ended March 31
---------------------------------------------------------------------------
2007 2006 Change
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total $ 22,510 $ 25,140 $ (2,630)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Maintenance:
---------------------------------------------------------------------------
Canada $ 5,067 $ 3,439 $ 1,628
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U.S. 7,259 6,260 999
---------------------------------------------------------------------------
Total maintenance $ 12,326 $ 9,699 $ 2,627
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Growth:
---------------------------------------------------------------------------
Canada $ 3,279 $ 7,697 $ (4,418)
---------------------------------------------------------------------------
U.S. 6,905 7,744 (839)
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Total growth $ 10,184 $ 15,441 $ (5,257)
---------------------------------------------------------------------------
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Maintenance and growth expenditures include amounts accrued in respect of capital and landfill assets received for which payment of such amounts remains outstanding at the end of any period or year.
Maintenance Expenditures
The Canadian and U.S. segment increases are due principally to a larger business base, which is the result of solid organic and acquisition growth, and increasing costs to purchase maintenance capital, including but not limited to vehicles, equipment, and landfill cell construction.
Maintenance expenditures are generally concentrated in the first three quarters of each year, which may result in the declaration and payment of distributions that are in excess of free cash flow available for distribution(B) for these quarters. For fiscal 2007, the Fund is again targeting an annual payout ratio which is less than 90.0%, consistent with the Fund's historical cumulative payout ratio of 84.7% from its inception to March 31, 2007.
Growth Expenditures
Growth expenditures for the Fund's Canadian and U.S. segments are principally on account of vehicles, equipment and containers to service organic revenue growth, including new contracts, and landfill cell development which benefits a future period or periods. Canadian segment residential contract wins which commenced in the three months ended March 31, 2006 were not replicated in 2007 resulting in a decline in period over period growth expenditures.
Growth expenditures represent capital and landfill assets additions required to meet the demands of acquired or organic growth or expenditures that specifically benefits a future period or periods. For 2007, management expects to incur growth expenditures to develop landfill airspace capacity that will benefit a future period or periods and to grow the Fund's collection operations.
Distributions
The following table summarizes various details of the Fund's 2007 and 2006 distributions:
---------------------------------------------------------------------------
Three months ended March 31
---------------------------------------------------------------------------
Monthly Annual Total Percentage
distribution distribution distributions increase in
per trust per trust declared per distributions
unit and unit and trust unit per trust unit
Period PPS PPS and PPS and PPS
---------------------------------------------------------------------------
2007 January-March $ 0.1515 $ 1.8180 $ 29,645 6.7%
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---------------------------------------------------------------------------
2006 January-March $ 0.1415 $ 1.6980 $ 27,777
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Long-term debt
Summarized details of the Fund's long-term debt facilities are as follows:
Letters of credit
(not reported as
long-term debt
Facility drawn at on the
Available March 31, Consolidated Current available
lending 2007 Balance Sheets) capacity
---------------------------------------------------------------------------
Canadian
long-term
debt
facilities
- stated
in Canadian
dollars
Senior
secured
debentures,
series A $ 47,000 $ 47,000 $ - $ -
Senior
secured
debentures,
series B $ 58,000 $ 58,000 $ - $ -
Revolving
credit
facility $ 150,000 $ 55,000 $ 22,467 $ 72,533
U.S.
long-term
debt
facilities
- stated
in U.S.
dollars
Term loan $ 195,000 $ 195,000 $ - $ -
Revolving
credit
facility $ 255,000 $ 76,000 $ 153,827 $ 25,173
IRBs $ 104,000 $ 91,500 $ - $ 12,500
Both the Canadian and U.S. long-term debt facilities have an accordion feature which can increase the available capacity of the Canadian revolving credit facility from $150,000 to $200,000 and can increase the available capacity of the U.S term loan and revolving credit facility from U.S. $385,000, in aggregate, to U.S. $550,000, in aggregate, subject to certain restrictions. In 2006, the Fund exercised a portion of its U.S. accordion feature which increased the available lending to U.S. $450,000, in aggregate.
Definitions of EBITDA and free cash flow available for distribution
(A) All references to "EBITDA" in this press release are to "income before the following" on the consolidated statement of operations and comprehensive income. "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, net gain or loss on sale of capital and landfill assets, net gain or loss on financial instruments, net foreign exchange gain or loss, write-off of deferred financing costs, other expenses, income taxes, and non-controlling interest". EBITDA is a term used by the Fund 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. 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, net gain or loss on financial instruments, net foreign exchange gain or loss, and future income taxes) or non-operating (in the case of interest on long-term debt, net gain or loss on sale of capital and landfill assets, certain financing costs, other expenses, current income taxes, and non-controlling interest). EBITDA is a useful financial and operating metric for investors as it represents a starting point in the determination of free cash flow available for distribution(B). 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 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 are a function of the Fund's treasury/financing activities and represents a different class of expense than those included in EBITDA.
Net gain or loss on sale of capital and landfill assets - the net gain or 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 or used to repay the Fund's revolving credit facility.
Net gain or loss on financial instruments - as non-cash items, gains or losses on financial instruments have no impact on the determination of free cash flow available for distribution(B).
Net foreign exchange gain or 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).
Other expenses - other expenses represent amounts paid to management of the Fund on the closing of the IESI acquisition and are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in 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.
(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 of the Fund; however, management of the Fund have elected 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 equivalent to those received by trust unitholders and participating preferred shares are exchangeable on a one-to-one basis for trust units of the Fund. Details of the calculation are included in the "Other Performance Measures - Free cash flow available for distribution(B)" section of the Fund's MD&A. Free cash flow available for distribution is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flow as a measure of liquidity. All references to "free cash flow available for distribution" in this press release have the meaning set out in this note.
Forward-looking statements
This document may contain forward-looking statements relating to 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, 2006. 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, is one of North America's largest full-service waste management companies, providing non-hazardous solid waste collection and disposal services for municipal, commercial, industrial and residential customers in five Canadian provinces and nine states in the United States. The Fund serves over 1.2 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, Alberta, Manitoba, Ontario and Quebec. 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 regions as follows: the south, consisting of various service areas in Texas, Louisiana, Oklahoma, Arkansas and Missouri, and the northeast, consisting of various service areas in New York, New Jersey, Pennsylvania and Maryland. The U.S. south and northeast segments operate in 36 markets, and include 42 collection operations, 23 transfer stations, 17 landfills and five material recycling facilities. The Fund's units are listed on the Toronto Stock Exchange under the symbol BFC.UN. For more information on the Fund, visit www.bficanada.com.
Management will hold a conference call on May 16, 2007 at 8:30 am (EST) to discuss results for the three months ended March 31, 2007. To access the call, participants should dial 416-644-3420 or 1-800-595-8550 at approximately 8:20 am (EST). The conference call will also be webcast live at www.bficanada.com and subsequently archived on the BFI Canada website.
A rebroadcast of the call will be available until midnight on May 30, 2007. To access the rebroadcast, dial 416-640-1917 or 1-877-289-8525 and quote the reservation number 21231116#.
BFI CANADA INCOME FUND
Consolidated Balance Sheets
March 31, 2007 (unaudited) and December 31, 2006 (in thousands of dollars)
---------------------------------------------------------------------------
March 31, December 31,
2007 2006
---------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 15,156 $ 9,275
Accounts receivable 94,254 102,350
Due from non-controlling interest - 6,638
Other receivables 1,492 1,737
Prepaid expenses 13,707 11,665
---------------------------------------------------------------------------
124,609 131,665
OTHER RECEIVABLES 1,758 1,517
FUNDED LANDFILL POST-CLOSURE COSTS 4,581 4,142
INTANGIBLES 73,215 77,204
GOODWILL 477,857 481,334
DEFERRED COSTS 5,040 4,051
DEFERRED FINANCING COSTS - 7,015
CAPITAL ASSETS 322,773 322,372
LANDFILL ASSETS 716,360 730,290
OTHER ASSETS 5,825 7,070
FUTURE INCOME TAX ASSETS 1,854 -
---------------------------------------------------------------------------
$ 1,733,872 $ 1,766,660
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable $ 39,906 $ 64,284
Accrued charges 52,313 57,318
Distribution payable 9,869 9,907
Income taxes payable 1,883 1,280
Deferred revenues 10,738 10,212
Current portion of long-term debt - 50
Landfill closure and post-closure costs 5,410 5,824
---------------------------------------------------------------------------
120,119 148,875
LONG-TERM DEBT 577,926 543,454
LANDFILL CLOSURE AND POST-CLOSURE COSTS 61,070 58,711
OTHER LIABILITIES 11,422 383
FUTURE INCOME TAX LIABILITIES 20,375 31,922
---------------------------------------------------------------------------
790,912 783,345
---------------------------------------------------------------------------
NON-CONTROLLING INTEREST 261,752 282,026
UNITHOLDERS' EQUITY 681,208 701,289
---------------------------------------------------------------------------
$ 1,733,872 $ 1,766,660
---------------------------------------------------------------------------
---------------------------------------------------------------------------
BFI CANADA INCOME FUND
Consolidated Statements of Operations and Comprehensive Income
For the three months ended March 31, 2007 and March 31, 2006 (unaudited -
in thousands of dollars, except net income per trust unit amounts)
---------------------------------------------------------------------------
Three months ended
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2007 2006
---------------------------------------------------------------------------
REVENUES $ 202,300 $ 178,864
---------------------------------------------------------------------------
EXPENSES
OPERATING 116,630 103,681
SELLING, GENERAL AND ADMINISTRATION 26,998 24,632
---------------------------------------------------------------------------
INCOME BEFORE THE FOLLOWING 58,672 50,551
AMORTIZATION 37,918 35,273
INTEREST ON LONG-TERM DEBT 9,894 8,026
FINANCING COSTS 864 79
NET GAIN ON SALE OF CAPITAL ASSETS (208) (54)
NET LOSS ON FINANCIAL INSTRUMENTS 1,440 311
NET FOREIGN EXCHANGE LOSS(GAIN) 1,621 (739)
OTHER EXPENSES 5 107
---------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND NON-CONTROLLING
INTEREST 7,138 7,548
INCOME TAX EXPENSE(RECOVERY)
Current 1,663 1,459
Future (7,306) 78
---------------------------------------------------------------------------
(5,643) 1,537
---------------------------------------------------------------------------
INCOME BEFORE NON-CONTROLLING INTEREST 12,781 6,011
NON-CONTROLLING INTEREST 2,195 1,083
---------------------------------------------------------------------------
NET INCOME 10,586 4,928
---------------------------------------------------------------------------
---------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment (5,058) 626
---------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 5,528 $ 5,554
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net income per trust unit, basic and diluted $ 0.20 $ 0.09
Weighted average number of trust units
outstanding (thousands), basic 53,744 53,168
Weighted average number of trust units
outstanding (thousands), diluted 65,241 65,391
BFI CANADA INCOME FUND
Consolidated Statements of Cash Flows
For the three months ended March 31, 2007 and March 31, 2006
(unaudited - in thousands of dollars)
---------------------------------------------------------------------------
Three months ended
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2007 2006
---------------------------------------------------------------------------
NET INFLOW(OUTFLOW) OF CASH RELATED TO THE
FOLLOWING ACTIVITIES
OPERATING
Net income $ 10,586 $ 4,928
Items not affecting cash
Amortization of intangibles 5,196 4,922
Amortization of deferred financing costs - 338
Amortization of capital assets 15,739 13,721
Amortization of landfill assets 16,983 16,292
Net gain on sale of capital assets (208) (54)
Deferred costs 35 35
Write-off of deferred financing costs - 79
Accretion of landfill closure and post-closure
costs 802 731
Unrealized foreign exchange loss (gain) 1,984 (192)
Future income taxes (7,306) 78
Net loss on financial instruments 1,440 311
Non-controlling interest 2,195 1,083
Landfill closure and post-closure expenditures (527) (3,279)
---------------------------------------------------------------------------
46,919 38,993
Changes in non-cash working capital items (18,464) (15,052)
---------------------------------------------------------------------------
Cash generated from operating activities 28,455 23,941
---------------------------------------------------------------------------
INVESTING
Acquisitions (4,305) (2,358)
Investment in other receivables (400) -
Proceeds from other receivables 354 233
Funded landfill post-closure costs (348) (982)
Purchase of capital assets (16,846) (17,361)
Purchase of landfill assets (9,874) (7,779)
Proceeds on sale of capital assets 262 336
Investment in deferred costs (980) (281)
---------------------------------------------------------------------------
Cash utilized in investing activities (32,137) (28,192)
---------------------------------------------------------------------------
FINANCING
Payment of deferred financing costs - (699)
Proceeds from term and revolving loan 80,352 35,249
Repayment of revolving loan and acquired long-term
debt (41,234) (12,700)
Issuance of trust units net of issuance costs (10) (41)
Distributions paid to unitholders and
participating preferred shareholders (29,683) (27,777)
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Cash generated from (utilized in) financing
activities 9,425 (5,968)
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Effect of foreign exchange changes on foreign
cash and cash equivalents 138 31
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NET CASH INFLOW(OUTFLOW) 5,881 (10,188)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 9,275 14,142
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,156 $ 3,954
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BFI CANADA INCOME FUND
Consolidated Statements of Unitholders' Equity
For the three months ended March 31, 2007 and March 31, 2006
(unaudited - in thousands of dollars)
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2007 2006
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CONTRIBUTED EQUITY
Trust units, beginning of year $ 908,221 $ 891,070
Equity issue costs net of related tax effect,
during the period (10) (41)
Trust units issued on exchange of PPSs, during
the period 8,617 17,180
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Trust units, end of period $ 916,828 $ 908,209
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Class A units, beginning of year $ - $ -
Class A units issued, during the period - -
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Class A units, end of period $ - $ -
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Treasury units, beginning of year $ - $ -
Trust units acquired by the U.S. LTIP, during
the period - (1,281)
Deferred compensation obligation - 1,281
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Treasury units, end of period $ - $ -
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TOTAL CONTRIBUTED EQUITY $ 916,828 $ 908,209
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ACCUMULATED NET INCOME
Accumulated net income, beginning of year $ 86,947 $ 54,204
Net income, during the period 10,586 4,928
Transition adjustment (Note 4) (9,663) -
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ACCUMULATED NET INCOME, END OF PERIOD $ 87,870 $ 59,132
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ACCUMULATED DISTRIBUTIONS
Accumulated distributions, beginning of year $(260,991) $(167,270)
Distributions, during the period (24,553) (22,775)
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ACCUMULATED DISTRIBUTIONS, END OF PERIOD $(285,544) $(190,045)
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DEFICIT $(197,674) $(130,913)
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ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income,
beginning of year $ (32,888) $ (32,467)
Foreign currency translation adjustment,
during the period (5,058) 626
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ACCUMULATED OTHER COMPREHENSIVE INCOME,
END OF PERIOD $ (37,946) $ (31,841)
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UNITHOLDERS' EQUITY $ 681,208 $ 745,455
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For more information, contact:
Chaya Cooperberg
Director, Investor Relations and Corporate Communications
BFI Canada Income Fund
(416) 401-7729
chaya.cooperberg@bficanada.com.
www.bficanada.com.
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