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BFI Canada Posts Strong First Quarter Results

Date: May 15, 2007

Source: BFI Canada

BFI Canada Income Fund Announces Results for the Three Months Ended March 31, 2007

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
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenues March 31, 2006                                          $ 178,864
Organic growth and acquisitions (includes fuel
 and environmental surcharges)                                      21,554
Foreign currency exchange impact                                     1,882
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------

Aggregate distributions declared                                 $  29,645
---------------------------------------------------------------------------

Payout ratio with foreign currency hedge                              89.5%
---------------------------------------------------------------------------

Payout ratio without foreign currency hedge                           91.0%
---------------------------------------------------------------------------

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
---------------------------------------------------------------------------
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 (recovery) expense                         (5,643)        1,537
Non-controlling interest                               2,195         1,083
---------------------------------------------------------------------------
Net income                                         $  10,586     $   4,928
---------------------------------------------------------------------------
---------------------------------------------------------------------------

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
---------------------------------------------------------------------------
Weighted average number of trust units and
 PPSs outstanding                                     65,241        65,391
---------------------------------------------------------------------------
Aggregate number of trust units and PPSs
 outstanding                                          65,141        65,391
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Maintenance expenditures                           $  12,326     $   9,699
Growth capital and landfill expenditures
 ("growth expenditures")                              10,184        15,441
---------------------------------------------------------------------------
Total maintenance and growth expenditures          $  22,510     $  25,140
---------------------------------------------------------------------------
---------------------------------------------------------------------------

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
---------------------------------------------------------------------------
Aggregate distributions declared                   $  29,645     $  27,777
---------------------------------------------------------------------------
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Free cash flow available for
 distribution (B)                           $ 33,119  $ 30,592     $ 2,527
---------------------------------------------------------------------------
---------------------------------------------------------------------------



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
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
---------------------------------------------------------------------------



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
---------------------------------------------------------------------------
U.S.                                           7,259     6,260         999
---------------------------------------------------------------------------
Total maintenance                           $ 12,326  $  9,699    $  2,627
---------------------------------------------------------------------------
---------------------------------------------------------------------------


---------------------------------------------------------------------------
Growth:
---------------------------------------------------------------------------
Canada                                      $  3,279  $  7,697    $ (4,418)
---------------------------------------------------------------------------
U.S.                                           6,905     7,744        (839)
---------------------------------------------------------------------------
Total growth                                $ 10,184  $ 15,441    $ (5,257)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

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%
---------------------------------------------------------------------------
---------------------------------------------------------------------------

2006 January-March     $ 0.1415     $ 1.6980      $ 27,777
---------------------------------------------------------------------------
---------------------------------------------------------------------------



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)
---------------------------------------------------------------------------
Cash generated from (utilized in) financing
 activities                                             9,425       (5,968)
---------------------------------------------------------------------------
Effect of foreign exchange changes on foreign
 cash and cash equivalents                                138           31
---------------------------------------------------------------------------
NET CASH INFLOW(OUTFLOW)                                5,881      (10,188)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR            9,275       14,142
---------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD             $ 15,156      $ 3,954
---------------------------------------------------------------------------
---------------------------------------------------------------------------


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)
---------------------------------------------------------------------------
                                                         2007         2006
---------------------------------------------------------------------------
---------------------------------------------------------------------------

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
---------------------------------------------------------------------------
 Trust units, end of period                         $ 916,828    $ 908,209
---------------------------------------------------------------------------

 Class A units, beginning of year                   $       -    $       -
 Class A units issued, during the period                    -            -
---------------------------------------------------------------------------
 Class A units, end of period                       $       -    $       -
---------------------------------------------------------------------------

 Treasury units, beginning of year                  $       -    $       -
 Trust units acquired by the U.S. LTIP, during
  the period                                                -       (1,281)
 Deferred compensation obligation                           -        1,281
---------------------------------------------------------------------------
 Treasury units, end of period                      $       -    $       -
---------------------------------------------------------------------------
TOTAL CONTRIBUTED EQUITY                            $ 916,828    $ 908,209
---------------------------------------------------------------------------

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)           -
---------------------------------------------------------------------------
 ACCUMULATED NET INCOME, END OF PERIOD              $  87,870    $  59,132
---------------------------------------------------------------------------

ACCUMULATED DISTRIBUTIONS
 Accumulated distributions, beginning of year       $(260,991)   $(167,270)
 Distributions, during the period                     (24,553)     (22,775)
---------------------------------------------------------------------------
ACCUMULATED DISTRIBUTIONS, END OF PERIOD            $(285,544)   $(190,045)
---------------------------------------------------------------------------
DEFICIT                                             $(197,674)   $(130,913)
---------------------------------------------------------------------------

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
---------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME,
 END OF PERIOD                                      $ (37,946)   $ (31,841)
---------------------------------------------------------------------------
UNITHOLDERS' EQUITY                                 $ 681,208    $ 745,455
---------------------------------------------------------------------------
---------------------------------------------------------------------------

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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