BFI Canada Income Fund
TSX : BFC.UN

BFI Canada Income Fund

May 12, 2005 11:23 ET

BFI Canada Income Fund Announces First Quarter Results for the Three Months Ended March 31, 2005

TORONTO, ONTARIO--(CCNMatthews - May 12, 2005) - BFI Canada Income Fund (the "Fund") (TSX:BFC.UN) today announced its financial results for the three months ended March 31, 2005.

Financial highlights for the three months ended

(in thousands of Canadian dollars, unless otherwise stated)

- Based on IESI's results from operations for the three months ended March 31, 2005, management is confident that IESI is on track to deliver the 12% accretion to free cash flow available for distribution(B) per weighted average trust unit and participating preferred share announced during the marketing of the Fund's subscription receipts offering that closed into escrow on January 5, 2005.

- Revenues and EBITDA(A) increased 218.7% and 183.5%, respectively, over the comparative three months ended March 31, 2004, primarily on account of the Ridge landfill and IESI Corporation ("IESI") acquisitions completed in January 2005, and the Twin Oaks Environmental Ltd. ("Twin Oaks") and Complete Disposal Services Ltd. ("CDS") acquisitions completed in April and November 2004, respectively.

- Excluding acquisitions, revenues and EBITDA(A) increased 8.8% and 9.4%, respectively, over the comparative three months ended March 31, 2004. Volume and price growth were the primary reasons for the increase over the comparative three months ended March 31, 2004.

- IESI's revenues and U.S.-EBITDA(A), excluding the effect of foreign currency translation, for the three months ended March 31, 2005 increased 7.1% and 4.8%, respectively, over the comparative three month period ended March 31, 2004. Acquisitions, new contracts, volume and price growth, partially offset by higher fuel and insurance costs, were the primary reasons for the increase over the comparative three months ended March 31, 2004.

- Excluding acquisitions, the Fund and IESI experienced a combined 5.4% organic revenue growth rate for the three months ended March 31, 2005.

- Free cash flow available for distribution(B) for the three months ended March 31, 2005 totalled $24,183 and is $13,270 higher than the comparative three month period ended March 31, 2004. The principal reason for the increase is acquisitions completed during the last twelve months which contributed to a 183.5% increase in EBITDA(A), partially offset by higher interest expense attributable to higher debt outstanding, higher maintenance capital expenditures to sustain a larger business base, and accrued withholding taxes on interest and dividends paid from IESI to 4264126 Canada Limited, a subsidiary of the Fund.

- Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share for the three months ended March 31, 2005 amounted to $0.43 and is $0.02 higher than the comparative three month period ended March 31, 2004. The timing of maintenance capital expenditures are not consistent for the three months ended March 31, 2005 as compared to the three months ended March 31, 2004. Maintenance capital expenditures for the three months ended March 31, 2005, as a percentage of EBITDA(A), equals 20.7% versus 7.8% for the comparable three months ended March 31, 2004. Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share, excluding maintenance capital expenditures, amounted to $0.57 for the three months ended March 31, 2005 versus $0.45 for the comparative three months ended March 31, 2004.

- Aggregate distributions declared on weighted average trust units and participating preferred shares totalled $21,998 for the three months ended March 31, 2005, representing a payout ratio of 91.0% of free cash flow available for distribution(B) on weighted average trust units and participating preferred shares outstanding. Including distributions made on weighted average subscription receipts outstanding equal to $1,175 for the period from January 1 to 20, 2005 while offering proceeds were held in escrow, aggregate distributions declared totalled $23,173 for the three months ended March 31, 2005.

Other highlights

- Fund completed the acquisition of the Ridge landfill near Chatham, Ontario and IESI of Fort Worth, Texas in January 2005. Concurrent with the closing of the IESI acquisition, Fund completed a $374,000 offering of trust units to finance a portion of these acquisitions, and entered into an amended and restated $80,000 revolving credit facility through BFI Canada Holdings Inc. ("Holdings") and a United States ("U.S.") $385,000 credit facility through IESI.

- The Ridge landfill has been successfully integrated with the Fund's operations and the Fund has been internalizing waste from its south-western Ontario operations into the Ridge landfill since January 4, 2005.

- IESI completed three "tuck-in" acquisitions for the period January 21, 2005 to March 31, 2005 (the "IESI stub period").

Management Commentary

"Based on the revenue and cash flow contributions delivered by IESI and the Ridge landfill and organic price and volume increases, we're off to a good start this year," said Keith Carrigan, President and Chief Executive Officer of BFI Canada. "Revenue growth in Canada was a full 29%, due primarily to new contributions from the Ridge landfill as well as acquisitions made last year in the Toronto and Hamilton markets. Organic price and volume growth in our base Canadian business also contributed to revenue growth in the Fund's Canadian segment. In the U.S., our IESI south and northeast business segments delivered a 7.1% period-over-period increase in revenue and a 4.8% increase in EBITDA(A), largely on the strength of market-focused pricing and volume strategies and "tuck-in" acquisitions. There is room for improvement in all of our segments and we will continue to employ local, market-focused strategies, and our acquisition strategy to grow the business and the success of all business segments."

Mr. Carrigan said the integration of IESI and the Ridge landfill is progressing well and the exchange of best business practices is "delivering exactly the kind of incremental benefits we had envisioned. This is a period of significant development for our business and we are making the most of our opportunities as one of North America's largest non-hazardous solid waste management companies."

Looking Forward

The Fund's outlook has not changed since its last quarterly report. The Fund expects revenue and cash flows to advance on the strength of the contributions made by newly acquired businesses, complemented by organic growth through its market-focused strategies. It also anticipates achieving a payout ratio below 90% for 2005.

"We intend to make the most of our new platforms while also driving continuous improvement across all operations," said Mr. Carrigan. "Our operating agenda for 2005 will allow us to capitalize on the expertise, capabilities and best practices of our expanded team. We are well positioned to achieve our vision and aggressive goals for the year."



Three months
ended March 31
(in thousands, except per trust unit, -----------------------
subscription receipt, and participating March 31
preferred share amounts) 2005 2004(1)
---------- ----------
(unaudited) (unaudited)

Revenues $ 134,418 $ 42,175
Operating expenses 76,111 21,452
Selling, general and administration expenses 18,232 6,589
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Income before the following 40,075 14,134
Amortization 30,008 10,566
Interest on long-term debt 5,275 1,176
Financing costs 36,710 -
Net gain on sale of capital assets - (24)
Gains on derivative financial instruments (4,693) -
Foreign exchange loss 3,325 -
Other expenses 1,074 -
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(Loss) income before income taxes and
non-controlling interest (31,624) 2,416
Income tax recovery (19,951) (946)
Non-controlling interest (3,211) -
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Net (loss) income $ (8,462) $ 3,362
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Net (loss) income per weighted average trust
unit, basic & diluted $ (0.21) $ 0.13

Weighted average number of trust
units outstanding 41,139 26,500
Weighted average number of participating
preferred shares outstanding 15,609 -
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Weighted average number of trust units and
participating preferred shares outstanding 56,748 26,500
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Maintenance capital and landfill expenditures $ 8,300 $ 1,105
Growth capital and landfill expenditures 8,663 1,351
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Total capital and landfill expenditures $ 16,963 $ 2,456
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Free cash flow available for distribution(B) $ 24,183 $ 10,913

Free cash flow available for distribution(B)
per weighted average trust unit and
participating preferred share $ 0.43 $ 0.41

Aggregate distributions declared on
weighted average trust units $ 15,624 $ 8,446
Aggregate distributions declared on weighted
average subscription receipts 1,175 -
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Aggregate distributions declared on weighted
average trust units and subscription receipts 16,799 8,446
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Distributions attributable to participating
preferred shareholders 6,374 -
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Aggregate distributions declared $ 23,173 $ 8,446
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Aggregate distributions declared per
weighted average trust units and
participating preferred shares $ 0.39 $ 0.32
Aggregate distributions declared per
weighted average subscription receipt $ 0.08 $ -
Aggregate distributions declared per
weighted average trust units,
participating preferred $ 0.41 $ 0.32
shares, and subscription receipts

Notes:
(1) The Fund acquired IESI effective January 21, 2005. Accordingly,
the operating results for the three months ended March 31, 2004
do not include the results of operations for IESI.


Operating highlights

(all amounts are in thousands of Canadian dollars, except per trust unit and participating preferred shares amounts)

Revenues of $134,418 were $92,243 or 218.7% higher than the comparative three month period ended March 31, 2004. Acquisitions of Twin Oaks and CDS completed during the year ended December 31, 2004, and the Ridge landfill completed on January 4, 2005, contributed to the Canadian segment increase, with the balance due to price increases, organic growth, including higher volumes of accepted non-hazardous solid waste entering the Lachenaie landfill, and favourable commodity prices. The acquisition of IESI added an additional approximately $80,100 of revenue for the IESI stub period.

Operating expenses of $76,111 were $54,659 higher than the comparative three months ended March 31, 2004. Strategic acquisitions in the Canadian segment, identified above, are the primary contributor's to this segments increase with the balance due to higher disposal and labour expenditures, related principally to the collection and acceptance of additional volumes of waste, landfill royalty costs related to the Lachenaie north expansion, and higher costs to service new and existing customers. Year-to-date fuel surcharges in the Canadian segment have offset increasing 2005 fuel costs at levels commensurate with 2004. The acquisition of IESI added an additional approximately $48,600 of operating expense for the IESI stub period.

Selling, general and administration ("SG&A") expenses of $18,232 were $11,643 higher than the comparative three month period ended March 31, 2004. The Canadian segment increase is attributable to the Twin Oaks, CDS and Ridge landfill acquisitions. The balance of the increase totalling approximately $10,300 is attributable to the consolidation of IESI for the IESI stub period.

EBITDA(A) of $40,075 was $25,941 or 183.5% higher than the comparative three months ended March 31, 2004. Contributions to the increase from the Canadian segment include, strategic acquisitions, and price and volume growth, including an increase in accepted non-hazardous solid waste at BFI Canada-owned landfills, partially offset by landfill royalty costs related to the Lachenaie north expansion. The remainder of the increase is attributable to IESI's operating results for the IESI stub period, which contributed approximately $21,100 to the increase.

Free cash flow available for distribution(B) totalled $24,183 for the three months ended March 31, 2005 versus $10,913 for the comparative period ended March 31, 2004. The increase is due in large part to the Fund's acquisitions of IESI and the Ridge landfill effective January 2005, and CDS and Twin Oaks effective November and April 2004, respectively, partially offset by higher interest expense attributable to higher outstanding long-term debt, higher maintenance capital and landfill expenditures to sustain a larger business base, and withholdings taxes on interest and dividends paid by IESI to 4264126 Canada Limited.

Free cash flow available for distribution(B) per weighted average trust unit and participating preferred share for the three months ended March 31, 2005 amounted to $0.43 and is $0.02 higher than the comparative three months ended March 31, 2004. The timing of maintenance capital expenditures are not consistent period to period and the incurrence of maintenance capital expenditures during the three months ended March 31, 2005 resulted in maintenance capital expenditures as a percentage of EBITDA(A) equal to 20.7% versus 7.8% for the comparable three months ended March 31, 2004. Excluding maintenance capital expenditures from the calculation of free cash flow available for distribution(B) per weighted average trust unit and participating preferred share amounted to $0.57 for the three months ended March 31, 2005 versus $0.45 for the comparative three months ended March 31, 2004.

The Fund paid cash distributions to trust unitholders and subscription receipt holders for the period January 1 to January 20, 2005, and trust unitholders and participating preferred shareholders for the IESI stub period, totalling $0.31 per weighted average trust unit, subscription receipt and participating preferred share for the three months ended March 31, 2005, and declared a distribution payable to unitholders of record on March 31, 2005, payable April 15, 2005, of $0.13 per trust unit and participating preferred share. In January 2005, the Fund increased its current distribution rate by 12.0% to an annualized rate of $1.5708 per trust unit and participating preferred share beginning with the distribution payable on March 15, 2005 to trust unitholders and participating preferred shareholders of record on February 28, 2005.

(A) All references to "EBITDA" in this press release are to "income before the following" on the consolidated statements of operations. "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, net gain on sale of capital and landfill assets or net (gain) loss on sale of capital and landfill assets, gains on derivative financial instruments, foreign exchange loss, write-off of deferred financing costs, gain on settlement of bond forward contracts, 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, gains on derivative financial instruments, foreign exchange loss, and future income taxes) or non-operating (in the case of interest on long-term debt, net gain on sale of capital and landfill assets or net (gain) loss on sale of capital and landfill assets, certain financing costs, other expenses, gain on settlement of bond forward contracts, 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 is a function of the Fund's treasury/financing activities and represents a different class of expense than those included in EBITDA.

Net gain on sale of capital and landfill assets - the net gain 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 reinvested in other capital assets.

Net (gain) loss on sale of capital and landfill assets - the net (gain) 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.

Gains on derivative financial instruments - as non-cash items, gains on derivative financial instruments have no impact on the determination of free cash flow available for distribution(B).

Foreign exchange loss - as a non-cash item, foreign exchange 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).

Gain on settlement of bond forward contracts - the gain on settlement of bond forward contracts is a treasury/financing activity and represents a different class of revenue than the components of EBITDA.

Other expenses - other expenses represent amounts paid to management of the Fund on the closing 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.

All references to "U.S.-EBITDA" in this press release are to "income before the following" on the consolidated statements of operations for IESI. "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, (gains) losses on derivative financial instruments, transaction expenses, other expenses, and income taxes". U.S.-EBITDA is a term 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. U.S.-EBITDA is a measure of 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, (gains) losses on derivative financial instruments, and future income taxes) or non-operating (in the case of interest on long-term debt, certain financing costs, transaction expenses, other expenses, and current income taxes). U.S.-EBITDA is a useful financial and operating metric for investors as it permits investors to compare operating performance across periods. The underlying reasons for exclusion of each item are as follows:

Amortization - amortization includes various fair value adjustments occurring on acquisition. Amortization is therefore not comparative between periods.

Interest on long-term debt - interest on long-term debt is a function of the debt/equity mix and interest rates. On the closing of the Fund's acquisition of IESI, IESI's underlying debt structure has changed and results in interest on long-term debt not being comparable.

Financing costs - financing costs is a function of treasury/financing activities. On closing of the Fund's acquisition of IESI, IESI incurred fees in connection with the extinguishment of long-term debt and results in financing costs not being comparable.

(Gains) losses on derivative financial instruments - (gains) losses on derivative financial instruments are a function of treasury/financing activities. On the closing of the Fund's acquisition of IESI, IESI entered into various foreign currency exchange derivative financial instruments to hedge its Canadian dollar obligations and as such (gains) losses on derivative financial instruments are not a function of operations.

Transaction expenses - transaction expenses represent amounts paid to various advisors in respect of the Fund's acquisition of IESI and are not considered an expense indicative of continuing operations. Accordingly, transaction expenses represent a different class of expense than those included in U.S.-EBITDA.

Other expenses - other expenses represent amounts paid to management on the closing 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 U.S.-EBITDA.

Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from daily operations.

EBITDA and U.S.-EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between EBITDA and net income are detailed in the consolidated statements of operations beginning with "income before the following" and ending with "net income". US-EBITDA is presented herein for information purposes only and is not presented in the consolidated statements of operations.

(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. Free cash flow available for distribution is calculated as EBITDA(A) less amortization of capitalized landfill asset closure and post-closure costs, interest on long-term debt, current income taxes, other expenses, maintenance capital expenditures and the effect of the foreign currency hedge to support current period Canadian dollar distributions. Additionally, the Fund's gain on settlement of two bond forward contracts on June 25, 2004 will be amortized to free cash flow available for distribution over the underlying terms of the senior secured debentures. Free cash flow available for distribution is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to cash flow as a measure of liquidity. All references in this press release to "free cash flow available for distribution" 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, 2004. 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 provinces and nine states in the United States ("U.S."). The Fund serves approximately 1 million customers with vertically integrated collection and disposal assets. The Fund's Canadian segment operates under the BFI Canada brand and is one of Canada's largest full-service waste management companies 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 37 markets, and include 43 collection operations, 23 transfer stations, 17 landfills and six 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 http://www.bficanada.com.

Management will hold a conference call on Friday, May 13, 2005 at 8:30 am (ET) to discuss results for the three months ended March 31, 2005. To access the call, participants should dial 800-814-4861, at approximately 8:20 am. The conference call will also be Webcast live at http://www.bficanada.com or http://www.ccnmatthews.com and subsequently archived on the BFI Canada site.

A rebroadcast of the call will be available until midnight on Friday, May 20, 2005. To access the rebroadcast, dial 877-289-8525 and quote the reservation number 21123363#.



BFI CANADA INCOME FUND
Consolidated Balance Sheets
March 31, 2005 (unaudited) and December 31, 2004
(in thousands of dollars)
---------------------------------------------------------------------
March 31, December 31,
2005 2004
--------- -------------

ASSETS

CURRENT
Cash and cash equivalents $ 22,614 $ 13,282
Accounts receivable 81,483 33,348
Other receivables 1,385 1,403
Prepaid expenses 11,949 2,568
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117,431 50,601

OTHER RECEIVABLES 2,753 3,028

FUNDED LANDFILL POST-CLOSURE COSTS 765 570

INTANGIBLES 99,845 72,856

GOODWILL 485,905 50,889

DEFERRED COSTS 9,290 12,159

DEFERRED FINANCING COSTS 6,436 1,860

CAPITAL ASSETS 293,768 95,325

LANDFILL ASSETS 765,433 110,382

FUTURE INCOME TAX ASSETS 1,364 -
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$ 1,782,990 $ 397,670
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LIABILITIES

CURRENT
Accounts payable $ 39,193 $ 23,206
Accrued charges 34,046 7,501
Distribution payable 8,510 3,097
Income taxes payable 1,558 636
Deferred revenues 14,743 6,623
Current portion of long-term debt 37,699 22,224
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135,749 63,287

LONG-TERM DEBT 392,110 105,240

LANDFILL CLOSURE AND POST-CLOSURE COSTS 75,717 6,143

OTHER LIABILITIES 1,459 -

FUTURE INCOME TAX LIABILITIES 43,098 13,907
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648,133 188,577
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NON-CONTROLLING INTEREST 486,257 -

UNITHOLDERS' EQUITY 648,600 209,093
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$ 1,782,990 $ 397,670
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BFI CANADA INCOME FUND
Consolidated Statements of Operations
For the period ended March 31, 2005 (unaudited -
in thousands of dollars, except net income
per trust unit amounts)
---------------------------------------------------------------------

Three months ended
--------------------------
2005 2004
------------ -----------

REVENUES $ 134,418 $ 42,175
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EXPENSES

OPERATING 76,111 21,452

SELLING, GENERAL AND ADMINISTRATION 18,232 6,589
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INCOME BEFORE THE FOLLOWING 40,075 14,134

AMORTIZATION 30,008 10,566

INTEREST ON LONG-TERM DEBT 5,275 1,176

FINANCING COSTS 36,710 -

NET GAIN ON SALE OF CAPITAL ASSETS - (24)

GAINS ON DERIVATIVE FINANCIAL INSTRUMENTS (4,693) -

FOREIGN EXCHANGE LOSS 3,325 -

OTHER EXPENSES 1,074 -
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(LOSS) INCOME BEFORE INCOME TAXES AND
NON-CONTROLLING INTEREST (31,624) 2,416

INCOME TAX EXPENSE (RECOVERY)
Current 374 105
Future (20,325) (1,051)
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(19,951) (946)
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(LOSS) INCOME BEFORE NON-CONTROLLING INTEREST (11,673) 3,362

NON-CONTROLLING INTEREST (3,211) -

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NET (LOSS) INCOME $ (8,462) $ 3,362
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Net (loss) income per trust unit,
basic and diluted $ (0.21) $ 0.13

Weighted average number of trust
units outstanding
(thousands), basic 41,139 26,500

Weighted average number of trust
units outstanding
(thousands), fully diluted 56,748 26,500



BFI CANADA INCOME FUND
Consolidated Statements of Cash Flows
For the period ended March 31, 2005 (unaudited -
in thousands of dollars)

Three months ended
--------------------------
2005 2004
------------ -----------

NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Net (loss) income $ (8,462) $ 3,362
Items not affecting cash
Amortization of intangibles 4,983 3,097
Amortization of deferred financing costs 296 220
Amortization of capital assets 12,193 3,800
Amortization of landfill assets 12,536 3,449
Gain on disposal of capital assets - (24)
Deferred costs 789 -
Write-off of deferred financing costs 367 -
Accretion of landfill closure and
post-closure costs 603 49
Foreign exchange loss 3,325 -
Future income taxes (20,325) (1,051)
Gains on derivative financial instruments (4,693) -
Non-controlling interest (3,211) -
Landfill closure and post-closure
expenditures (1,123) (76)
---------------------------------------------------------------------
(2,722) 12,826
Changes in non-cash working capital items (13,586) (2,413)
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Cash (utilized in) generated from
operating activities (16,308) 10,413
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INVESTING
Acquisitions (128,475) -
Investment in other receivables - (262)
Proceeds from other receivables 221 233
Funded landfill post-closure costs (216) -
Purchase of capital assets (8,457) (1,634)
Purchase of landfill assets (8,506) (822)
Proceeds on disposal of capital assets - 30
Deferred costs (246) (543)
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Cash utilized in investing activities (145,679) (2,998)
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FINANCING
Payment of deferred financing costs (4,033) -
Proceeds from term and revolving loan 404,823 -
Repayment of revolving loan and
acquired long-term debt (563,493) -
Issuance of trust units net
of issuance costs 351,717 -
Distributions paid to trust and
exchange unitholders (17,754) (8,446)
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Cash generated from (utilized in)
financing activities 171,260 (8,446)
---------------------------------------------------------------------
Effect of foreign exchange changes on foreign
cash and cash equivalents 59 -
---------------------------------------------------------------------
NET CASH INFLOW (OUTFLOW) 9,332 (1,031)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 13,282 6,704
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 22,614 $ 5,673
---------------------------------------------------------------------
---------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash and cash equivalents are
comprised of:
Cash $ 14,391 $ 2,846
Cash equivalents 8,223 2,827
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$ 22,614 $ 5,673
---------------------------------------------------------------------
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BFI CANADA INCOME FUND
Consolidated Statements of Unitholders' Equity
For the period ended March 31, 2005 (unaudited -
in thousands of dollars)
---------------------------------------------------------------------

Three months ended
--------------------------
2005 2004
------------ -----------

BALANCE, BEGINNING OF PERIOD $ 209,093 $ 224,326
Net (loss) income (8,462) 3,362
Issuance of trust units, net of issuance
costs and related tax effect 385,719 -
Issuance of trust units on exchange of
participating preferred shares 90,006 -
Distributions (16,799) (8,446)
Cumulative foreign currency translation
adjustment (10,957) -
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BALANCE, END OF PERIOD $ 648,600 $ 219,242
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