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Livingston International Income Fund announces results for the third quarter 2009

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  Published in Business and Finance on Wednesday, November 4th 2009 at 15:51 GMT by Market Wire
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 Highlights Three months Nine months (in millions of dollars except per ended Sept. 30, ended Sept. 30, unit amounts, unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net revenues $61.4 $80.6 182.5 249.0 ------------------------------------------------------------------------- Net income (loss) 3.5 10.4 (14.7) 30.8 ------------------------------------------------------------------------- Cash flow from operations 11.9 50.3 46.2 41.3 ------------------------------------------------------------------------- EBITDA(1) 13.6 18.2 26.0 55.7 ------------------------------------------------------------------------- 

 Recent Developments Proposed Acquisition of Livingston 

 Results of Operations Three months ended September 30, 2009 

 Table 1 provides quarterly financial information for the quarters ended December 31, 2008 to September 30, 2009. ------------------------------------------------------------------------- Table 1 Quarterly Consolidated Statements of Income For the quarters ended December 31, 2008 to September 30, 2009 (in thousands of dollars, except per Fund unit amounts and Fund units outstanding, unaudited) ------------------------------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Quarter ended 2009 2009 2009 2008 ------------------------------------------------------------------------- Net revenues 61,323 61,778 59,257 73,559 Interest income 52 12 123 312 ------------------------------------------------------------------------- 61,375 61,790 59,380 73,871 Cost of services 34,656 35,884 39,979 43,298 ------------------------------------------------------------------------- Contribution margin 26,719 25,906 19,401 30,573 Selling, general and administrative expenses 13,080 13,708 16,191 14,726 Restructuring costs - 2,154 867 1,865 ------------------------------------------------------------------------- EBITDA(1) 13,639 10,044 2,343 13,982 Depreciation 1,431 1,302 1,660 1,913 Amortization 3,832 3,862 4,030 4,210 Impairment of goodwill and other assets - - 16,458 143,741 ------------------------------------------------------------------------- Income (loss) before the undernoted 8,376 4,880 (19,805) (135,882) ------------------------------------------------------------------------- Other expense (income) 1,375 3,210 (1,232) (5,048) ------------------------------------------------------------------------- Interest expense Long-term debt 2,210 1,941 1,611 1,886 Other 747 597 448 686 ------------------------------------------------------------------------- 2,957 2,538 2,059 2,572 ------------------------------------------------------------------------- Income (loss) before income taxes 4,044 (868) (20,632) (133,406) Provision for (recovery of) income taxes Current 649 (96) 91 268 Future (103) 118 (3,378) (13,892) ------------------------------------------------------------------------- 546 22 (3,287) (13,624) ------------------------------------------------------------------------- Net income (loss) for the period 3,498 (890) (17,345) (119,782) ------------------------------------------------------------------------- Net income (loss) per Fund unit, undiluted and diluted 0.10 (0.03) (0.64) (4.39) ------------------------------------------------------------------------- Weighted-average Fund units outstanding, undiluted and diluted 34,147,667 28,157,557 27,247,667 27,247,667 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Table 2 provides quarterly financial information for the quarters ended December 31, 2007 to September 30, 2008. ------------------------------------------------------------------------- Table 2 Quarterly Consolidated Statements of Income For the quarters ended December 31, 2007 to September 30, 2008 (in thousands of dollars, except per Fund unit amounts and Fund units outstanding, unaudited) ------------------------------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Quarter ended 2008 2008 2008 2007 ------------------------------------------------------------------------- Net revenues 80,249 87,811 79,779 83,512 Interest income 350 290 517 604 ------------------------------------------------------------------------- 80,599 88,101 80,296 84,116 Cost of services 44,969 47,687 46,978 45,878 ------------------------------------------------------------------------- Contribution margin 35,630 40,414 33,318 38,238 Selling, general and administrative expenses 17,390 19,113 17,137 16,778 Costs related to the integration of PBB - - - 328 ------------------------------------------------------------------------- EBITDA(1) 18,240 21,301 16,181 21,132 Depreciation 1,976 1,866 1,729 1,862 Amortization 4,177 4,178 4,379 6,029 Impairment of goodwill and other assets - - - 37,803 ------------------------------------------------------------------------- Income (loss) before the undernoted 12,087 15,257 10,073 (24,562) ------------------------------------------------------------------------- Other (income) expense (1,436) 295 (881) 420 ------------------------------------------------------------------------- Interest expense Long-term debt 1,813 1,918 2,043 2,096 Other 754 739 989 1,067 ------------------------------------------------------------------------- 2,567 2,657 3,032 3,163 ------------------------------------------------------------------------- Income (loss) before income taxes 10,956 12,305 7,922 (28,145) Provision for (recovery of) income taxes Current 952 1,167 491 2,526 Future (413) (993) (855) (5,934) ------------------------------------------------------------------------- 539 174 (364) (3,408) ------------------------------------------------------------------------- Net income (loss) for the period 10,417 12,131 8,286 (24,737) ------------------------------------------------------------------------- Net income (loss) per Fund unit, undiluted and diluted 0.38 0.45 0.30 (0.91) ------------------------------------------------------------------------- Weighted-average Fund units outstanding, undiluted and diluted 27,247,667 27,247,667 27,247,667 27,247,667 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Table 3 Summary of Cash Flows For the periods ended September 30, 2009 and 2008 and the year ended December 31, 2008 (in thousands of dollars, except per Fund unit amounts and Fund units outstanding, unaudited) ------------------------------------------------------------------------- Nine Nine Quarter Quarter months months Year ended ended ended ended ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, Dec. 31, 2009 2008 2009 2008 2008 ------------------------------------------------------------------------- Cash flows provided by operating activities 11,891 50,276 46,159 41,255 45,472 (Deduct) add: Net change in current assets and liabilities* (1,211) (34,990) (28,444) 4,037 10,351 ------------------------------------------------------------------------- 10,680 15,286 17,715 45,292 55,823 Maintenance capital expenditures(xx) (210) (1,343) (1,287) (2,945) (4,415) ------------------------------------------------------------------------- Adjusted operating cash flows after maintenance capital expenditures(2) 10,470 13,943 16,428 42,347 51,408 ------------------------------------------------------------------------- Distributions to unitholders+ - 11,608 5,722 34,822 46,429 ------------------------------------------------------------------------- Payout ratio based on adjusted operating cash flows after maintenance capital expenditures(2)++ 0.0% 83.3% 34.8% 82.2% 90.3% ------------------------------------------------------------------------- Per Fund unit in dollars Adjusted operating cash flows after maintenance capital expenditures(2) 0.307 0.512 0.550 1.554 1.887 ------------------------------------------------------------------------- Distributions to unitholders+ 0.000 0.426 0.210 1.278 1.704 ------------------------------------------------------------------------- Weighted-average Fund units outstanding 34,147,667 27,247,667 29,876,238 27,247,667 27,247,667 ------------------------------------------------------------------------- ------------------------------------------------------------------------- * The net change in current assets and liabilities has been excluded as these are non-cash in nature. These items also tend to fluctuate from quarter to quarter primarily as a result of the timing of billings and the payment of government remittances around the end of the period. (xx) Maintenance capital expenditures are additions, including additions classified as intangibles, replacements or improvements to property, plant and equipment to maintain Livingston's business operations. These expenditures involve the replacement of information technology equipment and software as well as certain improvements to facilities. + Distributions are the amounts declared in the period, not what was actually paid. ++ The payout ratio is calculated by dividing the distributions to unitholders by the adjusted operating cash flows after maintenance capital expenditures(2), consistent with the CSA guidelines for the calculation of the payout ratio. ------------------------------------------------------------------------- Table 4 Analysis of Cash Flows from Operating Activities, Net Income and Cash Distributions For the periods ended September 30, 2009 and 2008 and the year ended December 31, 2008 (in thousands of dollars, unaudited) ------------------------------------------------------------------------- Nine Nine Quarter Quarter months months Year ended ended ended ended ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, Dec. 31, 2009 2008 2009 2008 2008 ------------------------------------------------------------------------- Cash flows provided by operating activities 11,891 50,276 46,159 41,255 45,472 ------------------------------------------------------------------------- Net income (loss) 3,498 10,417 (14,739) 30,834 (88,948) ------------------------------------------------------------------------- Distributions to unitholders - 11,608 9,591 34,822 46,429 ------------------------------------------------------------------------- Excess (shortfall) of cash flows from operating activities over (to) cash distributions paid 11,891 38,668 36,568 6,433 (957) ------------------------------------------------------------------------- Excess (shortfall) of net income (loss) over (to) cash distributions paid 3,498 (1,191) (24,330) (3,988) (135,377) ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Table 5 Reconciliation of Net Income to EBITDA(1) For the periods ended September 30, 2009 and 2008 and the year ended December 31, 2008 (in thousands of dollars, unaudited) ------------------------------------------------------------------------- Nine Nine Quarter Quarter months months Year ended ended ended ended ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, Dec. 31, 2009 2008 2009 2008 2008 ------------------------------------------------------------------------- Net income (loss) 3,498 10,417 (14,739) 30,834 (88,948) Add (deduct): Income taxes 546 539 (2,719) 349 (13,275) Interest expense 2,957 2,567 7,554 8,256 10,828 Other expense (income) 1,375 (1,436) 3,353 (2,022) (7,070) Depreciation 1,431 1,976 4,394 5,571 7,484 Amortization 3,832 4,177 11,724 12,734 16,944 Impairment of goodwill and other assets - - 16,458 - 143,741 ------------------------------------------------------------------------- EBITDA(1) 13,639 18,240 26,025 55,722 69,704 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Table 6 Net Operating Facility As at September 30, 2009, December 31, 2008 and September 30, 2008 (in thousands of dollars, unaudited) ------------------------------------------------------------------------- Sept. 30, December 31, Sept. 30, 2009 2008 2008 ------------------------------------------------------------------------- Operating facility for government remittances 46,943 95,957 82,322 Cash and cash equivalents 5,974 28,245 21,371 ------------------------------------------------------------------------- Net operating facility 40,969 67,712 60,951 ------------------------------------------------------------------------- 

 This plan covered the following: - accounting policies (initial selection among policies permitted under IFRS); - information technology and data systems required for the implementation of IFRS; - internal control over financial reporting; - disclosure controls and procedures, including investor relations and external communication plans; - financial reporting expertise and training required; and - business activities, such as foreign currency and hedging activities, as well as matters that may be influenced by financial or GAAP measures, such as debt covenants, capital requirements and compensation arrangements. 

 Livingston has substantially completed reviews of the key areas that may have an impact on the Fund: - property, plant and equipment; - revenue recognition; - foreign exchange; - provisions and contingencies; - earnings per unit; - leases; - financial instruments; - employee benefits; and - impairments. 

 Certain risks associated with an investment in units of the Fund are set out below. - The payment of distributions is subject to the terms of the recently amended credit facility, is at the discretion of the Fund's trustees and further depends on numerous factors; see the Fund's Short-Form Prospectus dated June 12, 2009 for more complete information on these factors. - There can be no assurance that the Fund will reinstate distributions nor, were they to be reinstated, any assurance regarding the amount or level of such distributions. 

 ----------------- (1) EBITDA (earnings before interest, taxes, other (income) expense, depreciation, amortization and impairment of goodwill, intangibles and fixed assets) is a non-GAAP financial measure. Refer to "EBITDA" under Non-GAAP Financial Measures and Table 5 above for a reconciliation of net income to EBITDA. (2) Adjusted operating cash flows after maintenance capital expenditures is a non-GAAP financial measure. Refer to "Adjusted Operating Cash Flows" under Non-GAAP Financial Measures and Table 3 above for further information. CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2009 As at As at September 30, December 31, (in thousands of dollars, unaudited) 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents 5,974 28,245 Accounts receivable 167,173 231,236 Prepaid expenses 6,588 3,487 Future income taxes 1,594 2,103 ------------------------------------------------------------------------- 181,329 265,071 Property, plant and equipment 12,555 16,029 Goodwill 146,986 163,235 Intangible assets 67,534 78,675 Future income taxes 28,902 30,869 Employee future benefits - pension 8,033 7,634 ------------------------------------------------------------------------- 445,339 561,513 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current liabilities Operating facility for government remittances 46,943 95,957 Government remittances payable 80,338 83,866 Unitholder distributions payable - 3,869 Accounts payable and accrued liabilities 43,508 70,912 Income taxes payable 3,430 2,698 Client deposits and advances 4,888 5,097 Future income taxes 1,147 3,255 Current portion of long-term debt 9,616 121 ------------------------------------------------------------------------- 189,870 265,775 Long-term debt 64,690 110,031 Other liabilities 3,837 4,956 Future income taxes 19,513 21,988 Employee future benefits 9,741 9,504 ------------------------------------------------------------------------- 287,651 412,254 ------------------------------------------------------------------------- Unitholders' Equity ------------------------------------------------------------------------- Units 436,439 408,350 ------------------------------------------------------------------------- Accumulated loss (54,959) (40,220) Distributions to unitholders (222,241) (216,519) ------------------------------------------------------------------------- Deficit (277,200) (256,739) ------------------------------------------------------------------------- Accumulated other comprehensive loss (1,551) (2,352) ------------------------------------------------------------------------- 157,688 149,259 ------------------------------------------------------------------------- 445,339 561,513 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND DEFICIT FOR THE PERIOD ENDED SEPTEMBER 30, 2009 Three Three Nine Nine months months months months (in thousands of dollars, ended ended ended ended except per unit amounts, Sept. 30, Sept. 30, Sept. 30, Sept. 30, unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net revenues 61,323 80,249 182,358 247,839 Interest income 52 350 187 1,157 ------------------------------------------------------------------------- 61,375 80,599 182,545 248,996 Cost of services 34,656 44,969 110,518 139,634 Selling, general and administrative expenses 13,080 17,390 42,981 53,640 Restructuring costs - - 3,021 - Depreciation 1,431 1,976 4,394 5,571 Amortization 3,832 4,177 11,724 12,734 Impairment of goodwill and other assets - - 16,458 - ------------------------------------------------------------------------- Income (loss) before the undernoted 8,376 12,087 (6,551) 37,417 ------------------------------------------------------------------------- Other expense (income) 1,375 (1,436) 3,353 (2,022) ------------------------------------------------------------------------- Interest expense Long-term debt 2,210 1,813 5,700 5,774 Other 747 754 1,854 2,482 ------------------------------------------------------------------------- 2,957 2,567 7,554 8,256 ------------------------------------------------------------------------- Income (loss) before income taxes 4,044 10,956 (17,458) 31,183 ------------------------------------------------------------------------- Provision for (recovery of) income taxes Current 649 952 646 2,610 Future (103) (413) (3,365) (2,261) ------------------------------------------------------------------------- 546 539 (2,719) 349 ------------------------------------------------------------------------- Net income (loss) for the period 3,498 10,417 (14,739) 30,834 Deficit - beginning of period (280,698) (124,159) (256,739) (121,362) Distributions to unitholders - (11,608) (5,722) (34,822) ------------------------------------------------------------------------- Deficit - end of period (277,200) (125,350) (277,200) (125,350) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net income (loss) per unit 0.10 0.38 (0.49) 1.13 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD ENDED SEPTEMBER 30, 2009 Three Three Nine Nine months months months months ended ended ended ended (in thoursands of dollars, Sept. 30, Sept. 30, Sept. 30, Sept. 30, unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net income (loss) for the period 3,498 10,417 (14,739) 30,834 Other comprehensive income (loss), net of tax: Change in fair value of interest-rate swaps (net of tax for the three-month period: $160 (2008: nil); for the nine-month period: $162 (2008: tax of nil) 314 (542) 679 (1,446) Amortization of deferred loss on settlement of interest-rate swaps (net of tax for the three-month period: $20 (2008: tax of $21); for the nine-month period: $63 (2008: tax of $80) 42 41 123 106 ------------------------------------------------------------------------- 356 (501) 802 (1,340) ------------------------------------------------------------------------- Comprehensive income (loss) for the period 3,854 9,916 (13,937) 29,494 ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIOD ENDED SEPTEMBER 30, 2009 Three Three Nine Nine months months months months ended ended ended ended (in thousands of dollars, Sept. 30, Sept. 30, Sept. 30, Sept. 30, unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Cash provided by Operating activities Net income (loss) for the period 3,498 10,417 (14,739) 30,834 Adjustment for non-cash items Depreciation and amortization 5,263 6,153 16,118 18,305 Future income taxes (103) (413) (3,365) (2,261) Other liabilities (109) (97) (627) (201) Non-cash interest and other expense 466 225 1,064 710 Employee future benefits (46) (213) (162) (638) Impairment of goodwill and other assets - - 16,458 - Unrealized foreign-exchange loss (gain) 1,711 (786) 2,968 (1,457) ------------------------------------------------------------------------- 10,680 15,286 17,715 45,292 Net change in current assets and liabilities 1,211 34,990 28,444 (4,037) ------------------------------------------------------------------------- 11,891 50,276 46,159 41,255 ------------------------------------------------------------------------- Investing activities Payment of contingent consideration as part of a business acquisition - - - (137) Property, plant and equipment, net of disposals (424) (2,084) (1,721) (4,883) ------------------------------------------------------------------------- (424) (2,084) (1,721) (5,020) ------------------------------------------------------------------------- Financing activities Distributions to unitholders - (11,608) (9,591) (34,822) Repayment of long-term debt (32,049) (43) (33,706) (445) Increase in deferred financing fees - - (1,274) - Increase (decrease) in operating facility 17,950 (35,087) (49,172) (7,798) Issuance of units, net of issuance costs - - 28,089 - ------------------------------------------------------------------------- (14,099) (46,738) (65,654) (43,065) ------------------------------------------------------------------------- Foreign-exchange (loss) gain on cash held in foreign currency (597) 644 (1,055) 915 ------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (3,229) 2,098 (22,271) (5,915) Cash and cash equivalents - beginning of period 9,203 19,273 28,245 27,286 ------------------------------------------------------------------------- Cash and cash equivalents - end of period 5,974 21,371 5,974 21,371 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash disbursements made for: Income taxes 142 1,935 908 4,675 Interest 2,524 2,345 6,523 7,569 ------------------------------------------------------------------------- -------------------------------------------------------------------------