Solid Waste & Recycling


BFI 2005 Q4 and year end results

BFI Canada Income Fund (the "Fund") (TSX:BFC.UN) has announced its financial results for the three months and year ...

BFI Canada Income Fund (the “Fund”) (TSX:BFC.UN) has announced its financial results for the three months and year ended December 31, 2005.

Management’s Commentary

“2005 was a milestone year for BFI Canada Income Fund as we completed the acquisition and integration of IESI Corporation (“IESI”) and the Ridge landfill and continued to drive organic growth from the Fund’s base Canadian operations” said Keith Carrigan, Vice Chairman and Chief Executive Officer. “Our strong year over year financial performance allowed us to deliver a 22.4% increase in free cash flow available for distribution(B) and a 21.8% increase in aggregate distributions declared, per weighted average trust unit and participating preferred share, respectively, while maintaining a payout ratio of 85.8%. Our performance for the three months ended December 31, 2005 reflected similar results to those posted year over year, represented by an increase of 20.5% and 20.0% in free cash flow available for distribution(B) and aggregate distributions declared per weighted average trust unit and participating preferred share, respectively, and a payout ratio of 90.7%. All told, I believe our corporate development activities have been successful and our operations group has delivered value for unitholders this past year.”

“Our successful year over year and quarter over quarter financial performance resulted in an increase in consolidated year over year revenues and EBITDA(A) of 250.3% and 219.1%, respectively, and an increase in consolidated quarter over quarter revenues and EBITDA(A) of 238.7% and 196.8%, respectively, and is clearly a function of significant revenue and EBITDA(A) contributions from the IESI and Ridge landfill acquisitions. If we exclude what management believes are one-time or non-recurring selling, general and administrative expenses, year over year and quarter over quarter EBITDA(A) growth increased 224.3% and 211.1%, respectively. Revenue and EBITDA(A) contributions from the Fund’s acquisition of IESI and Ridge landfill were complemented by organic Canadian and aggregate U.S. segment revenue growth of 9.9% and 6.4% year over year, respectively, and 6.1% and 11.2% quarter over quarter, respectively. Organic revenue growth excludes acquisitions and fuel surcharges.”

Operationally, Mr. Carrigan said “the Fund added many new customers and we gained tangible results from the disciplined exchange of best practices between our Canadian and U.S. business platforms and ultimately met our knowledge transfer objectives for 2005. We’ve now implemented our process of continuous improvement and our market-focused strategies across all of our North American operations and this gives us a great deal of confidence for our future operating results.”

Looking Forward

“Our focus for 2006 continues to be growing our free cash flow available for distribution(B),” said Mr. Carrigan. “We believe we have never been better positioned to meet this objective. Our platform assets are strong and well managed, and our market-focused strategies are proven and well understood. In support of our goal, we will keep these strategies finely tuned to the needs and dynamics of each of our 54 markets, carefully manage our businesses to achieve continuous improvement in our operations, and continue to seek growth both organically and by way of accretive acquisitions, including new market entries.”

“Although 2005 is a benchmark year, quite clearly, we believe the opportunity exists for us to surpass these financial milestones in 2006 by delivering on our potential.”

Senior Management and Board Changes

To better reflect the responsibilities of its senior executive team and Board of Trustees, the Fund also announced the following changes. Keith Carrigan has been named Vice Chairman of the Fund and will continue to serve as Chief Executive Officer of 4264126 Canada Limited (“BFI Canada Newco”). Mr. Carrigan is the Fund’s founder and previously served as President and Chief Executive Officer of BFI Canada Newco. As well, Mickey Flood becomes President of BFI Canada Newco (previously he served as Executive Vice President) and he will retain his duties as President and CEO of IESI. At the Trustee level, Joseph Wright will replace T. Iain Ronald as Non-Executive Chairman of the Fund. Mr. Ronald will continue to serve as a Trustee of the Fund. These changes will be reflected in the Fund’s information circular to be mailed in advance of the May 11, 2006 annual meeting.

Other highlights for the year ended December 31, 2005

(in thousands of Canadian dollars, unless otherwise stated)

– The Fund completed a $374,000 offering of trust units to finance a portion of the Ridge landfill and IESI acquisitions, and entered into a U.S. $385,000 credit facility through IESI

– BFI Canada Holdings Inc. (“Holdings”) entered into a Fourth Amended and Restated Credit Agreement, effective February 10, 2006, which increases the total available credit under the facility, subject to lender consent, from $80,000 to $120,000 and matures, subject to one year extensions, on June 30, 2010. Borrowing rates under the new credit agreement are more favourable than the predecessor credit agreement

– The Fund has hedge agreements to purchase $4,500 Canadian dollars monthly at an average foreign currency exchange rate of approximately one dollar and twenty-two cents through February 2008

– IESI completed seven “tuck-in” acquisitions for aggregate cash consideration, including contingent consideration, totalling $15,893

– IESI entered into a 30-year agreement for variable rate demand solid waste disposal revenue bonds (“IRB’s”) which bear interest at a discount to LIBOR and are available to a maximum of U.S. $45,000

– The Fund reorganized its interest in U.S. $160,000 of notes receivable from IESI which permits the flow through of foreign tax credits to unitholders

– The Fund established the Ridge landfill trust and reorganized its interest in the Ridge landfill. The reorganization results in a more efficient flow through tax structure

– Holdings series A and B senior secured debentures received a reaffirmed credit rating of “BBB” low stable from Dominion Bond Rating Service

– IESI’s term loan received a reaffirmed credit rating of “BB” from Standard & Poor’s Rating Service

For more information, contact:

BFI Canada Income Fund
Thomas J. Cowee
Chief Financial Officer
(416) 741-5221


BFI Canada Income Fund
Anne MacMicken
Manager, Investor and Employee Relations
(416) 401-7729

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