Arriscraft International Income Fund
TSX : AIN.UN

Arriscraft International Income Fund

July 27, 2005 10:10 ET

Arriscraft International Announces Preliminary Second Quarter 2005 Results

CAMBRIDGE, ONTARIO--(CCNMatthews - July 27, 2005) - Arriscraft International Income Fund (TSX:AIN.UN) Arriscraft International Income Fund ("Arriscraft" or the "Fund") commented today on its results for the second quarter ended June 30, 2005. On a preliminary basis, sales during the quarter for the Fund were approximately $17.7 million, down from $21.6 million in the comparable period last year. As a result of the sales shortfall, adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") for the period are estimated to have declined to $1.4 million from approximately $3.3 million for the comparable period last year. Based on these preliminary results, the Fund estimates that Distributable Cash was approximately $750,000 in the quarter, resulting in a shortfall of $1.4 million as the Fund paid cash distributions to Unitholders of $2.1 million during the period.

The financial results for the second quarter of 2005 reflect an increase in sales in the United States and a decline in sales in Eastern Canada which, when combined with the carryover of large dealer inventories from Arriscraft's 2005 Canadian winter-booking program, resulted in a 18% reduction in consolidated sales in the period compared with last year's second quarter.

Following a review of preliminary financial results for the second quarter and the first six months of 2005, the Fund has determined that it will not meet certain financial covenants under its bank credit facilities. Under those facilities, the Fund must maintain a total funded debt to EBITDA ratio, calculated on a rolling four-quarter basis at the end of a fiscal quarter, of less than or equal to 2.5 to 1, and a current ratio (being current assets to current liabilities) at all times of 1.20 to 1 or higher. The review shows that, based on preliminary results, the total funded debt to EBITDA ratio was 2.9 to 1 and its current ratio was 1.09 to 1 as at June 30, 2005.

Accordingly, the Fund is in discussions with its banks for consent to make all or part of the previously announced August 15 distribution and any future distributions to Unitholders that might be restricted by the terms of the credit facilities. The Fund can provide no assurances that such consent will be obtained. As a result, the August 15 distribution has been suspended. If the banks consent to all or part of the previously announced August 15 distribution, the Fund will set a new record and payment date for such distribution. Accordingly, the units of the Fund will not start trading "ex distribution" today in connection with the previously announced July 29 record date.

Further, the Fund has elected to suspend payments to the President and Chief Executive Officer and certain other members of senior management under the discretionary payment plan for management and to suspend distributions on the subordinated exchangeable LP units of Arriscraft International Limited Partnership held by the vendor of the Arriscraft business sold to the Fund at it's initial public offering.

Arriscraft International Income Fund

The Fund owns the Arriscraft International manufactured stone, brick and natural stone masonry products business conducted through Arriscraft International LP, Arriscraft International LLC and certain affiliates in Canada and the United States. Arriscraft is the leading producer of manufactured stone masonry products in Canada and the United States. These products are produced using the Company's proprietary The Natural Edge® manufacturing process and offer the aesthetic and physical benefits of natural stone combined with the strength, simplicity of construction and cost-effectiveness of traditional masonry. Arriscraft also produces brick and natural stone masonry products and distributes its masonry products across Canada and most of the United States.

Certain statements in the press release may constitute "forward-looking" statements which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund or Arriscraft, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties are more fully discussed in the Fund's regulatory filings available at www.sedar.com.

The Fund uses earnings before interest, taxes, depreciation and amortization ("EBITDA") to measure its financial performance. "Adjusted EBITDA" is determined by making adjustments to EBITDA for certain items that Management believes will not affect the Company's cash flow. EBITDA and Adjusted EBITDA are not recognized measures under Canadian generally accepted accounting principles ("GAAP"); however, Management believes EBITDA and Adjusted EBITDA are useful supplemental measures to net earnings as they provide investors with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Distributable Cash is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP. Management believes Distributable Cash is a relevant measure of the ability of the Fund to earn and distribute cash returns to Unitholders.

Contact Information

  • Arriscraft International Limited Partnership
    Randy White
    President and CEO
    (519) 653-3275