BFI Canada Ltd.
TSX : BFC

BFI Canada Ltd.

November 10, 2008 16:48 ET

BFI Canada Ltd. Announces Results for the Three and Nine Months Ended September 30, 2008

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2008) - BFI Canada Ltd. (the "Corporation") (TSX:BFC) reported the financial results of its predecessor, BFI Canada Income Fund (the "Fund"), for the three and nine months ended September 30, 2008. All amounts are in thousands of Canadian dollars, unless otherwise stated.

Management Commentary

"Our fundamentals remained strong in the third quarter despite the slowing economic environment, with continued growth in revenues, earnings and free cash flow, as a result of organic growth, contributions from acquisitions and overall productivity improvements," said Keith Carrigan, Vice Chairman and Chief Executive Officer. "Consolidated revenues in the third quarter and year to date grew 23.1% and 22.8% respectively, excluding the impact of foreign currency translation. Our organic revenues, which exclude acquisitions, fuel and environmental surcharges, and foreign currency translation, grew by 11.0%, in both periods, in Canada, and 3.5% and 5.2% in the U.S. EBITDA(A) increased 8.3% in the quarter and 15.4% year to date, resulting in an increase in free cash flow available for distribution(B) of 3.6% in the quarter and 8.8% year to date."

"With our free cash flow profile, stable balance sheet, and the recession-resistant characteristics of the solid waste business, we are well-positioned to withstand the current economic conditions. We also anticipate the declining cost of diesel fuel will benefit those segments of our business in which higher fuel costs were difficult to recover. However, we expect this benefit to be offset in the fourth quarter by the recent significant pricing decline in commodities prices. We are introducing measures to mitigate the sudden impact to our recycled commodities business that will take effect by the end of this year. We remain committed to identifying and acting upon opportunities for continuous improvement throughout our business."

Conversion

On September 25, 2008, unitholders of the Fund voted in favour of the Fund's conversion from an income trust to a corporation. The conversion received approval from the Ontario Superior Court of Justice on September 30, 2008 and is effective October 1, 2008. Common shares of the Corporation commenced trading on the Toronto Stock Exchange ("TSX"), under the symbol "BFC", on October 2, 2008. Concurrently, trust units of the Fund have been delisted from the TSX. Our future plans include a listing of our common shares on the New York Stock Exchange to facilitate access to the U.S. capital markets. The listing has been delayed until financial market fundamentals return to stability.

Financial Highlights for the Three and Nine months Ended September 30, 2008

- Total consolidated revenues increased 23.1% and 22.8% to $293.5 million and $818.2 million.

- Total consolidated revenue growth, excluding the impact of foreign currency translation, was 23.7% and 29.5%.

- Total EBITDA(A) increased 7.7% and 10.1% to $81.9 million and $227.0 million.

- Total EBITDA(A) growth, excluding the impact of foreign currency translation, was 8.3% and 15.4%.

- Free cash flow available for distribution(B) increased to $49.7 million and $131.5 million or 3.6% and 8.8%.

- The Fund's payout ratio was 62.8% and 71.2%.

- The Fund's payout ratio excluding the effects of the foreign currency hedge was 62.8% and 71.7%.

Other Highlights for the Three and Nine months Ended September 30, 2008

- Effective October 1, 2008, the Fund received approval to convert from an income trust to a corporation. Discussions of financial condition and operations through September 30, 2008 are those of the Fund and future-oriented discussions relate to the Corporation.

- Effective August 18, 2008, the Fund reduced its distribution per trust unit from $1.818 to $0.50 per annum. commencing with the distributions payable to holders of record on December 31, 2008.

- Effective September 25, 2008, the Fund announced a special quarterly dividend payable in four equal amounts of $0.125 per share commencing on March 31, 2009.

- Effective October 1, 2008, the Fund amended its Canadian and U.S. long-term debt facilities to reflect its change in organizational structure.

- Effective July 30, 2008, the Fund increased and amended its Canadian long-term debt facility.

- Effective August 6, 2008, the Fund extended and amended its U.S. long-term debt facility.

- Effective August 1, 2008, the Fund fixed the interest rate on U.S. $45,000 of variable rate demand solid waste disposal revenue bonds ("IRBs").

- For the nine months ended, the Fund completed six acquisitions comprised of five "tuck-in's" and one new market.

- Effective November 1, 2008, the Company renewed its two Brooklyn transfer contracts with the City of New York for a three year term.



Summarized Financial Highlights
Three months Nine months
ended ended
September 30, September 30,
2008 2008
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Revenues September 30, 2007 $ 238,513 $ 666,328
Organic growth and acquisitions
(includes fuel and environmental surcharges) 56,636 196,371
Foreign currency exchange impact (1,602) (44,543)
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Revenues September 30, 2008 $ 293,547 $ 818,156
% Revenue growth before foreign currency
exchange impact 23.7% 29.5%
Total revenue growth % 23.1% 22.8%

EBITDA(A) September 30, 2007 $ 76,068 $ 206,174
Organic growth and acquisitions 6,277 31,735
Foreign currency exchange impact (401) (10,682)
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EBITDA(A) September 30, 2008 $ 81,944 $ 227,047
% EBITDA(A) growth before foreign currency
exchange impact 8.3% 15.4%
Total EBITDA(A) growth % 7.7% 10.1%

Free cash flow available for distribution(B)
September 30, 2007 $ 48,001 $ 120,858
Organic growth and acquisitions 2,219 15,916
Foreign currency exchange impact (492) (5,281)
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Free cash flow available for distribution(B)
September 30, 2008 $ 49,728 $ 131,493
% Free cash flow available for distribution(B)
growth before foreign currency
exchange impact 4.6% 12.2%
Total free cash flow available for distribution(B)
growth % 3.6% 8.8%

Free cash flow available for distribution(B)
without hedge $ 49,728 $ 130,690
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Distributions and dividends declared $ 31,226 $ 93,680
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Payout ratio with foreign currency hedge 62.8% 71.2%
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Payout ratio without foreign currency hedge 62.8% 71.7%
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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.



Financial Highlights
(in thousands, except per weighted average trust unit and
participating preferred share ("PPS"))

Three months ended Nine months ended
September 30 September 30
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2008 2007 2008 2007
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(unaudited)(unaudited)(unaudited)(unaudited)
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Operating results
Revenues $ 293,547 $ 238,513 $ 818,156 $ 666,328
Operating expenses 176,026 135,740 493,525 380,258
Selling, general and
administration expenses
("SG&A") 35,577 26,705 97,584 79,896
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Income before the following
("EBITDA(A)") 81,944 76,068 227,047 206,174
Amortization 48,402 41,490 136,715 120,780
Interest on long-term debt 13,729 10,775 39,798 29,140
Financing costs 2,262 6,328 3,192 7,192
Net gain on sale of
capital assets (271) (109) (358) (1,343)
Net loss on financial
instruments 140 2,924 3,690 1,718
Net foreign exchange (gain)
loss (4) (302) (628) 14,802
Conversion costs 2,257 - 2,257 -
Other expenses 33 - 90 5
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Income before income taxes
and non-controlling interest 15,396 14,962 42,291 33,880
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Net income tax expense
(recovery) 1,100 2,378 (439) 1,747
Non-controlling interest 2,317 2,044 6,926 5,368
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Net income $ 11,979 $ 10,540 $ 35,804 $ 26,765
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Net income per weighted
average trust unit,
basic & diluted $ 0.21 $ 0.18 $ 0.62 $ 0.48

Trust units and
PPSs outstanding
Weighted average number of
trust units outstanding 57,504 57,545 57,546 56,227
Weighted average number of
PPSs outstanding 11,138 11,161 11,138 11,272
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Weighted average number of
trust units and
PPSs outstanding 68,642 68,706 68,684 67,499
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Aggregate number of trust
units and PPSs outstanding 68,706 68,706 68,706 68,706
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Maintenance and growth
expenditures
Maintenance expenditures $ 14,863 $ 14,475 $ 44,405 $ 44,886
Growth expenditures 33,402 25,210 61,689 58,726
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Total maintenance and growth
expenditures $ 48,265 $ 39,685 $ 106,094 $ 103,612
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Operating and free cash flow
Cash generated from operating
activities $ 69,380 $ 56,360 $ 167,315 $ 138,621
Free cash flow available for
distribution(B) $ 49,728 $ 48,001 $ 131,493 $ 120,858
Free cash flow available for
distribution(B) per weighted
average trust unit and PPS $ 0.72 $ 0.70 $ 1.91 $ 1.79

Distributions and dividends
Distributions declared,
trust units $ 26,165 $ 26,154 $ 78,494 $ 76,723
Dividends declared, PPSs 5,061 5,073 15,186 15,376
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Total distributions and
dividends declared $ 31,226 $ 31,227 $ 93,680 $ 92,099
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Management's Discussion

(all amounts are in thousands, except per trust unit, PPS, and foreign currency exchange rate amounts, unless otherwise stated)

Foreign Currency Exchange Rates

The Fund reports its financial results in Canadian dollars. 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:



2008 2007
----------------------------------------------------------------
Consolidated Consolidated
Statement of Statement of
Consolidated Operations and Consolidated Operations and
Balance Comprehensive Balance Comprehensive
Sheet Income (Loss) Sheet Income (Loss)
----------------------------------------------------------------

Cumulative Cumulative
Current Average average Current Average average
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December 31 $0.988 $1.074
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March 31 $1.028 $1.004 $1.004 $1.153 $1.172 $1.172
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June 30 $1.019 $1.010 $1.007 $1.063 $1.098 $1.135
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September 30 $1.060 $1.041 $1.018 $0.996 $1.045 $1.105
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Readers are reminded that a significant portion of the Fund's financial results originate in the U.S. The impact of foreign currency exchange on the Fund's consolidated results is included in the Fund's MD&A for the three and nine months ended September 30, 2008.



Operating Highlights
Three months Nine months
ended September 30 ended September 30
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2008 2007 Change 2008 2007 Change
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Revenues $ 293,547 $ 238,513 $ 55,034 $ 818,156 $ 666,328 $ 151,828
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----------------------------------------------------------------------------
Canada $ 104,999 $ 87,735 $ 17,264 $ 291,521 $ 247,109 $ 44,412
U.S. south $ 91,384 $ 82,278 $ 9,106 $ 259,434 $ 237,211 $ 22,223
U.S. northeast $ 97,164 $ 68,500 $ 28,664 $ 267,201 $ 182,008 $ 85,193

Operating
expenses $ 176,026 $ 135,740 $ 40,286 $ 493,525 $ 380,258 $ 113,267
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Canada $ 56,112 $ 46,022 $ 10,090 $ 157,396 $ 128,743 $ 28,653
U.S. south $ 58,426 $ 51,737 $ 6,689 $ 166,165 $ 152,518 $ 13,647
U.S. northeast $ 61,488 $ 37,981 $ 23,507 $ 169,964 $ 98,997 $ 70,967

SG&A $ 35,577 $ 26,705 $ 8,872 $ 97,584 $ 79,896 $ 17,688
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Canada $ 13,000 $ 9,826 $ 3,174 $ 35,498 $ 29,616 $ 5,882
U.S. south $ 11,605 $ 10,487 $ 1,118 $ 33,020 $ 30,960 $ 2,060
U.S. northeast $ 10,972 $ 6,392 $ 4,580 $ 29,066 $ 19,320 $ 9,746

EBITDA(A) $ 81,944 $ 76,068 $ 5,876 $ 227,047 $ 206,174 $ 20,873
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Canada $ 35,887 $ 31,887 $ 4,000 $ 98,627 $ 88,750 $ 9,877
U.S. south $ 21,353 $ 20,054 $ 1,299 $ 60,249 $ 53,733 $ 6,516
U.S. northeast $ 24,704 $ 24,127 $ 577 $ 68,171 $ 63,691 $ 4,480


The discussions to follow are in addition to the impact of foreign currency exchange fluctuations which are detailed in the Fund's MD&A for the three and nine months ended September 30, 2008.

Revenues - Three and nine months ended September 30

The increase in consolidated revenues for the three and nine month periods ended is due in part to organic Canadian and U.S. segment growth. Organic growth excludes the impact of fuel and environmental surcharges, acquisitions, and foreign currency translation. Acquisitions and fuel and environmental surcharges were the primary contributors to the balance of the change. The Fund's U.S. northeast segment continued to experience the impact of an overall economic slowdown, which in combination with increasing fuel costs, is affecting both volumes and pricing.

Operating expenses - Three and nine months ended September 30

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 for the three and nine months ended. The balance of the change for both periods is due principally to higher vehicle operating costs, including but not limited to fuel and lubricants. The impact of increasing fuel prices is most pronounced for the Seneca Meadows landfill. Fuel and lubricants consumed to operate the landfill, together with fuel price increases charged by third party carriers of waste to the landfill, are being absorbed by the Fund, which is a direct result of current market operating conditions.

Selling, general and administration expenses - Three and nine months ended September 30

Higher salary expense, due principally to acquisition and organic growth, and restricted trust unit expense recognized in the Canadian segment, is the primary reason for the comparative increases. Higher facility, office, and travel expenditures, as a result of acquisition and organic growth, coupled with higher professional fees, are the primary reasons for the balance of the changes.

Free Cash Flow Available for Distribution(B)

Free cash flow available for distribution(B) totalled $49,728 and $131,439 for the three and nine months ended September 30, 2008 versus $48,001 and $120,858 for the comparative periods, respectively.

Free cash flow available for distribution(B) per weighted average trust unit and PPS for the three and nine months ended September 30, 2008 amounted to $0.72 and $1.91 and is $0.02 and $0.12 higher than the comparative periods, respectively.



Free Cash Flow Available for Distribution(B) - Cash Flow Approach

Three Months Ended Nine months ended
September 30 September 30
2008 2007 Change 2008 2007 Change
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Cash generated
from operating
activities (per
statement
of cash flows) $69,380 $56,360 $13,020 $167,315 $138,621 $28,694
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Operating
Write-off of
deferred costs (33) (31) (2) (952) (99) (853)
Changes in
non-cash
working capital
items (5,909) (6,182) 273 11,815 18,356 (6,541)
Net change in
landfill
closure and
post-closure
costs (2,446) (2,336) (110) (7,100) (7,505) 405
Maintenance
expenditures (14,863) (14,475) (388) (44,405) (44,886) 481

Financing
Trust unit
based
compensation (972) - (972) (972) - (972)
Amortization of
gain on
settlement of
bond forward
contracts 56 56 - 168 168 -
Financing costs 2,262 6,328 (4,066) 3,192 7,192 (4,000)
Conversion
costs 2,257 - 2,257 2,257 - 2,257
Effect of
foreign
currency hedges
to support
Canadian
dollar
distributions - 1,962 (1,962) 803 3,892 (3,089)
Realized
foreign
exchange gain (4) (1,374) 1,370 (628) (2,574) 1,946
Realized
foreign
exchange loss
on U.S. notes - 7,693 (7,693) - 7,693 (7,693)
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Free cash flow
available for
distribution(B) $49,728 $48,001 $1,727 $131,493 $120,858 $10,635
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Free Cash Flow Available for Distribution(B) - Operations Approach

Three months ended Nine months ended
September 30 September 30
2008 2007 Change 2008 2007 Change
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EBITDA(A) $81,944 $76,068 $5,876 $227,047 $206,174 $20,873
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Amortization
of capitalized
landfill asset
closure and
post-closure
costs, including
revisions to
estimated
cash flows not
recorded
to operating
expense (2,145) (2,942) 797 (5,860) (7,845) 1,985
Interest on
long-term debt (13,729) (10,775) (2,954) (39,798) (29,140) (10,658)
Management
transaction
bonuses (other
expenses) (33) - (33) (90) (5) (85)
Current income
taxes (1,502) (1,893) 391 (6,372) (7,500) 1,128
Maintenance
expenditures (14,863) (14,475) (388) (44,405) (44,886) 481
Effect of
foreign
currency hedges
to support
Canadian
dollar
distributions - 1,962 (1,962) 803 3,892 (3,089)
Amortization of
gain on
settlement of
bond forward
contracts 56 56 - 168 168 -
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Free cash flow
available for
distribution(B) $49,728 $48,001 $1,727 $131,493 $120,858 $10,635
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Maintenance and Growth Expenditures

Three months ended Nine months ended
September 30 September 30
2008 2007 Change 2008 2007 Change
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Total $ 48,265 $ 39,685 $ 8,580 $ 106,094 $ 103,612 $ 2,482
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Maintenance:
Canada $ 6,082 $ 4,111 $ 1,971 $ 15,813 $ 14,147 $ 1,666
U.S. 8,781 10,364 (1,583) 28,592 30,739 (2,147)
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Total
maintenance $ 14,863 $ 14,475 $ 388 $ 44,405 $ 44,886 $ (481)
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Growth:
Canada $ 5,736 $ 4,498 $ 1,238 $ 16,541 $ 16,236 $ 305
U.S. 27,666 20,712 6,954 45,148 42,490 2,658
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Total growth $ 33,402 $ 25,210 $ 8,192 $ 61,689 $ 58,726 $ 2,963
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Maintenance and growth expenditures include amounts accrued for capital and landfill assets received but for which payment remains outstanding.

Maintenance Expenditures

Three and nine months ended September 30, 2008

For the three months ended, the Canadian segment increase is largely attributable to the timing of vehicle purchases. The timing of vehicle purchases is the primary cause of the Canadian segment decline for the nine months ended, partially offset by investments in computer equipment. For the three months ended, the U.S. segment decline is due to largely to the receipt of lower landfill volumes in the northeast. The consumption of less airspace results in a lower charge to maintenance expenditures. For the nine months ended, lower landfill volumes in the northeast have been offset by higher vehicle and equipment expenditures to support a larger business base. The balance of the U.S. segment change is on account of foreign currency fluctuations.

Growth Expenditures

Three and nine months ended September 30, 2008

The increase in Canadian segment growth expenditures for the three month period ended is due principally to the purchase of land to support growth on account of new contract wins, partially offset by a reduction in landfill cell development due principally to timing. For the nine months ended, the purchase of land was partially offset by lower vehicle and equipment purchases due largely to residential contract wins which commenced in 2007 and which exceeded those commencing in 2008. For the three and nine months ended, higher growth expenditures in respect of the Seneca Meadows landfill is the primary reason for the increases in U.S. segment growth expenditures. Foreign currency fluctuations partially offset the increase.

Distributions

The following table summarizes various details of the Fund's 2008 and 2007 distributions and dividends:



Nine months ended September 30
---------------------------------------------------------------------------
Total
trust
Monthly Annual unit Percentage
distri- distri- distri- increase
bution per bution per bution in total
trust unit trust unit and PPS distri-
and PPS and PPS dividends bution and
Period dividend dividend declared PPS dividends
---------------------------------------------------------------------------

2008 January-September $ 0.1515 $ 1.8180 $ 93,680 1.7%
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2007 January-September $ 0.1515 $ 1.8180 $ 92,099 8.9%
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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 on the
Facility drawn Consolidated Current
Available at September Balance available
lending 30, 2008 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 $305,000 $126,000 $ 24,722 $154,278

U.S. long-term debt
facilities - stated
in U.S. dollars
Term loan $195,000 $195,000 $ - $ -
Revolving credit
facility $588,500 $374,500 $ 123,725 $90,275
IRBs $104,000 $104,000 $ - $ -


Effective October 1, 2008, the Company entered into a Fourth Amending Agreement to its Fourth Amended and Restated Credit Agreement and a Sixth Amending Agreement to its Amended and Restated Revolving Credit and Term Loan Agreement. The amending agreements simply recognize the Fund's structural change and had no impact on committed amounts, maturity dates or pricing.

Effective July 30, 2008, the Fund entered into a Third Amending Agreement to its Fourth Amended and Restated Credit Agreement. The Third Amending Agreement increases the Canadian revolving credit facility commitment from $150,000 to $305,000 and decreases the accordion feature from $50,000 to $45,000. In addition, the Third Amending Agreement increases the pricing grid by one quarter of one percent and modifies one financial covenant. All other significant terms remain unchanged.

Effective August 6, 2008, the Fund entered into a Fifth Amendment to its Amended and Restated Revolving Credit and Term Loan Agreement. The Fifth Amendment extends the maturity of the U.S. revolving credit facility to January 21, 2012, increases the U.S. revolving credit facility commitment to U.S. $588,500 from U.S. $575,000, and decreases the accordion feature from U.S. $50,000 to U.S. $36,500. In addition, the Fifth Amendment increases the applicable margin on the pricing grid by one quarter of one percent throughout. All other significant terms remain unchanged.

Effective August 1, 2008, the Fund remarketed $45,000 of IRBs. The amended and restated IRBs, which originally bore interest at LIBOR less an applicable discount, bear interest at 6.625% for a term of 5 years. In conjunction with the remarketing, S&P reaffirmed IESI's BB long term corporate rating, with an outlook of stable, and issued a new B+ rating on the remarketed IRBs.

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 (loss). "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, conversion 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, conversion costs, other expenses, current income taxes, and non-controlling interest). EBITDA is a useful financial and operating metric for management, the Fund's Trustees, and its lenders, 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 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 proceeds from the sale were either reinvested in other capital or landfill 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).

Conversion costs - Conversion costs represent professional fees incurred on the Fund's conversion from an income trust to a corporation. Conversion costs represent a different class of expense than those included in EBITDA.

Other expenses - other expenses represent amounts paid to management of the Fund on account of certain acquisitions 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 PPS holdings. Accordingly, non-controlling interest represents a different class of expense than those included in EBITDA.

EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between EBITDA and net income (loss) are detailed in the consolidated statement of operations and comprehensive income (loss) beginning with "income before the following" and ending with "net income (loss)".

(B) The Fund has adopted a measurement called "free cash flow available for distribution" to supplement net income (loss) 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 unitholders and non-controlling interest. PPS holdings are presented as non-controlling interest in the consolidated financial statements; however, management of the Fund has elected to include the shareholdings of the non-controlling interest in the calculation of free cash flow available for distribution as PPSs are entitled to dividends that are economically equivalent to the distributions received by unitholders and PPSs 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.

(C) Excess free cash flow available for distribution represents the result of free cash flow available for distribution(B) less distributions and dividends declared.

Forward-looking statements

This document may contain forward-looking statements relating to the operations of the Corporation or to the environment in which it operates, which are based on estimates, forecasts and projections. Forward-looking information is not a guarantee of future performance and involves risks and uncertainties that are difficult to predict, or are beyond management's control. A number of factors could cause actual outcomes and results to differ materially from those estimated, forecast or projected. These factors include those set forth in the Fund's Annual Information Form ("AIF") for the year ended December 31, 2007 and the Fund's Management Information Circular dated August 26, 2008. 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 information contained herein is based on what management believes to be reasonable assumptions, users are cautioned that actual results may differ. Management disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

The Corporation, through its operating subsidiaries, is one of North America's largest full-service waste management companies, providing non-hazardous solid waste ("waste") collection and disposal services to commercial, industrial, municipal and residential customers in five Canadian provinces and ten states in the United States ("U.S."). The Corporation provides service to over 1.8 million customers with vertically integrated collection and disposal assets. The Corporation's Canadian segment operates under the BFI Canada brand and is Canada's second largest full-service waste management company providing vertically integrated waste collection and disposal services in the provinces of British Columbia, Alberta, Manitoba, Ontario, and Quebec. This segment provides service to 20 Canadian markets and operates five landfills, four transfer collection stations, seven material recovery facilities ("MRFs"), and one landfill gas to energy facility. The Corporation's U.S. south and northeast segments, collectively the U.S. segment or U.S. segments, operate under the IESI brand and provide vertically integrated waste collection and disposal services in two geographic regions: the south, consisting of various service areas in Texas, Louisiana, Oklahoma, Arkansas, Mississippi, and Missouri, and the northeast, consisting of various service areas in New York, New Jersey, Pennsylvania, and Maryland. This segment provides service to 39 U.S. markets and operates 17 landfills, 31 transfer collection stations, 10 MRFs, and one transportation operation. The Corporation's shares are listed on the Toronto Stock Exchange under the symbol BFC. For more information on BFI Canada Ltd., visit www.bficanada.com.

Management will hold a conference call on November 11, 2008 at 8:30 am (EDT) to discuss results for the three and nine months ended September 30, 2008. To access the call, participants should dial 416-644-3419 or 1-800-732-6179 at approximately 8:20 am (EDT). 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 November 25, 2008. To access the rebroadcast, dial 416-640-1917 or 1-877-289-8525 and quote the reservation number 21286878#.



BFI CANADA INCOME FUND
Consolidated Balance Sheets
September 30, 2008 (unaudited) and December 31, 2007
(in thousands of dollars)
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September December 31,
30, 2008 2007
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ASSETS

CURRENT
Cash and cash equivalents $ 13,796 $ 13,359
Accounts receivable 138,538 115,851
Other receivables 288 457
Income taxes recoverable 1,704 -
Prepaid expenses 18,998 15,001
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173,324 144,668

OTHER RECEIVABLES 552 761

FUNDED LANDFILL POST-CLOSURE COSTS 7,327 5,976

INTANGIBLES 134,953 144,686

GOODWILL 668,494 616,534

DEFERRED COSTS 12,082 7,306

CAPITAL ASSETS 450,130 404,900

LANDFILL ASSETS 670,271 644,711

OTHER ASSETS - 1,670

FUTURE INCOME TAX ASSETS 2,754 -
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$ 2,119,887 $ 1,971,212
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LIABILITIES

CURRENT
Accounts payable $ 70,234 $ 66,815
Accrued charges 71,221 75,355
Distribution and dividend payable 10,409 10,409
Income taxes payable 1,339 2,515
Deferred revenues 13,116 12,018
Current portion of long-term debt 47,000 -
Landfill closure and post-closure costs 9,282 2,900
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222,601 170,012

LONG-TERM DEBT 897,843 801,973

LANDFILL CLOSURE AND POST-CLOSURE COSTS 60,492 55,943

OTHER LIABILITIES 7,248 5,056

FUTURE INCOME TAX LIABILITIES 59,664 57,668
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1,247,848 1,090,652
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NON-CONTROLLING INTEREST 243,087 251,371

UNITHOLDERS' EQUITY 628,952 629,189
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$ 2,119,887 $ 1,971,212
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BFI CANADA INCOME FUND
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the periods ended September 30, 2008 and September 30, 2007
(unaudited - in thousands of dollars, except net income per trust
unit amounts)

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Three months ended Nine months ended
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2008 2007 2008 2007
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REVENUES $ 293,547 $ 238,513 $ 818,156 $ 666,328

EXPENSES

OPERATING 176,026 135,740 493,525 380,258

SELLING, GENERAL AND
ADMINISTRATION 35,577 26,705 97,584 79,896
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INCOME BEFORE THE FOLLOWING 81,944 76,068 227,047 206,174

AMORTIZATION 48,402 41,490 136,715 120,780

INTEREST ON LONG-TERM DEBT 13,729 10,775 39,798 29,140

FINANCING COSTS 2,262 6,328 3,192 7,192

NET GAIN ON SALE OF CAPITAL
ASSETS (271) (109) (358) (1,343)

NET LOSS ON FINANCIAL
INSTRUMENTS 140 2,924 3,690 1,718

NET FOREIGN EXCHANGE (GAIN)
LOSS (4) (302) (628) 14,802

CONVERSION COSTS 2,257 - 2,257 -

OTHER EXPENSES 33 - 90 5
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INCOME BEFORE INCOME TAXES AND
NON-CONTROLLING INTEREST 15,396 14,962 42,291 33,880
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INCOME TAX EXPENSE (RECOVERY)
Current 1,502 1,893 6,372 7,500
Future (402) 485 (6,811) (5,753)
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1,100 2,378 (439) 1,747
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INCOME BEFORE NON-CONTROLLING
INTEREST 14,296 12,584 42,730 32,133

NON-CONTROLLING INTEREST 2,317 2,044 6,926 5,368
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NET INCOME 11,979 10,540 35,804 26,765

OTHER COMPREHENSIVE INCOME
(LOSS)
Foreign currency translation
adjustment 25,404 (41,959) 45,445 (92,452)
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COMPREHENSIVE INCOME (LOSS) $ 37,383 $ (31,419) $ 81,249 $ (65,687)
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Net income per weighted
average trust unit, basic
and diluted $ 0.21 $ 0.18 $ 0.62 $ 0.48

Weighted average number of
trust units outstanding
(thousands), basic 57,504 57,545 57,546 56,227

Weighted average number of
trust units outstanding
(thousands), diluted 68,642 68,706 68,684 67,499



BFI CANADA INCOME FUND
Consolidated Statements of Cash Flows
For the periods ended September 30, 2008 and September 30, 2007
(unaudited - in thousands of dollars)

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Three months ended Nine months ended
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2008 2007 2008 2007
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NET INFLOW (OUTFLOW) OF
CASH RELATED TO
THE FOLLOWING ACTIVITIES
OPERATING
Net income $ 11,979 $ 10,540 $ 35,804 $ 26,765
Items not affecting cash
Trust unit based compensation 972 - 972 -
Write-off of deferred costs 33 31 952 99
Accretion of landfill closure
and post-closure costs 803 806 2,369 2,367
Amortization of intangibles 8,461 6,260 24,687 16,594
Amortization of capital assets 20,618 16,555 59,182 47,996
Amortization of landfill
assets 19,323 18,675 52,846 56,190
Net gain on sale of capital
assets (271) (109) (358) (1,343)
Net loss on financial
instruments 140 2,924 3,690 1,718
Net unrealized foreign
Exchange (gain) loss - (6,621) - 9,683
Future income taxes (402) 485 (6,811) (5,753)
Non-controlling interest 2,317 2,044 6,926 5,368
Landfill closure and
post-closure expenditures (502) (1,412) (1,129) (2,707)
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63,471 50,178 179,130 156,977
Changes in non-cash working
capital items 5,909 6,182 (11,815) (18,356)
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Cash generated from operating
activities 69,380 56,360 167,315 138,621
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INVESTING
Acquisitions (2,694) (326,083) (57,563) (363,536)
Investment in other
receivables - - - (400)
Proceeds from other
receivables 77 308 378 2,164
Funded landfill post-closure
costs (568) (438) (1,158) (1,080)
Purchase of capital assets (24,953) (25,244) (62,542) (65,641)
Purchase of landfill assets (18,424) (16,510) (39,628) (42,457)
Proceeds from the sale of
capital assets 828 274 1,373 1,852
Investment in deferred costs (3,555) (3,058) (5,299) (4,623)
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Cash utilized in investing
activities (49,289) (370,751) (164,439) (473,721)
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FINANCING
Proceeds from long-term debt 58,221 367,880 203,421 513,636
Repayment of long-term debt (43,287) (22,209) (107,658) (171,460)
Trust units issued, net of
issue costs - - (3) 87,579
Purchase of restricted trust
units (3,985) - (3,985) -
Distributions and dividends
paid to trust unitholders and
participating preferred
shareholders (31,226) (31,228) (93,680) (91,597)
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Cash (utilized in) generated
from financing activities (20,277) 314,443 (1,905) 338,158
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Effect of foreign exchange
changes on foreign cash and
cash equivalents (260) 208 (534) 936
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NET CASH (OUTFLOW) INFLOW (446) 260 437 3,994
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD OR YEAR 14,242 13,009 13,359 9,275
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CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 13,796 $ 13,269 $ 13,796 $ 13,269
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BFI CANADA INCOME FUND
Consolidated Statements of Unitholders' Equity, Deficit and Accumulated
Other Comprehensive Loss
For the periods ended September 30, 2008 and September 30, 2007
(unaudited - in thousands of dollars)

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Three months ended Nine months ended
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2008 2007 2008 2007
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CONTRIBUTED EQUITY
Trust units, beginning of
period or year $1,006,772 $1,006,269 $1,006,751 $ 908,221
Issuance of trust units,
net of issue costs
and related tax effect,
during the period - - (3) 89,431
Trust units issued on
exchange of PPSs, during
the period - - 24 8,617
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Trust units, end of
period 1,006,772 1,006,269 1,006,772 1,006,269
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Class A units, beginning
of period or year - - - -
Class A units issued,
during the period - - - -
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Class A units, end of
period - - - -
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Restricted trust units,
beginning of period
or year - - - -
Restricted trust units
purchased, during the
period (3,985) - (3,985) -
Restricted trust units
vested, during the period 569 - 569 -
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Restricted trust units,
end of the period (3,416) - (3,416) -
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Treasury units, beginning
of period or year - - - -
Trust units acquired by
the U.S. LTIP, during
the period - - (2,004) (1,698)
Deferred compensation
obligation, during
the period - - 2,004 1,698
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Treasury units, end of
period - - - -
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Contributed surplus,
beginning of period
or year - - - -
Restricted trust units
expensed, during
the period 972 - 972 -
Restricted trust units
vested, during the period (569) - (569) -
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Contributed surplus, end
of period 403 - 403 -
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TOTAL CONTRIBUTED EQUITY 1,003,759 1,006,269 1,003,759 1,006,269
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DEFICIT
Accumulated net income,
beginning of period
or year 138,889 99,602 115,064 83,377
Accumulated
distributions, beginning
of period or year (416,208) (311,560) (363,879) (260,991)
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Deficit, beginning of
period or year 277,319 (211,958) 248,815 (177,614)
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Net income, during the
period 11,979 10,540 35,804 26,765
Distributions declared,
during the period (26,165) (26,154) (78,494) (76,723)
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Accumulated net income,
end of period 150,868 110,142 150,868 110,142
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Accumulated
distributions, end of
period (442,373) (337,714) (442,373) (337,714)
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DEFICIT, END OF PERIOD (291,505) (227,572) (291,505) (227,572)
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ACCUMULATED OTHER
COMPREHENSIVE LOSS
Accumulated other
comprehensive loss,
beginning
of period or year (108,706) (83,381) (128,747) (32,888)
Foreign currency
translation adjustment,
during the period 25,404 (41,959) 45,445 (92,452)
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ACCUMULATED OTHER
COMPREHENSIVE LOSS, END
OF PERIOD (83,302) (125,340) (83,302) (125,340)
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DEFICIT AND ACCUMULATED
OTHER COMPREHENSIVE LOSS,
END OF PERIOD (374,807) (352,912) (374,807) (352,912)
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UNITHOLDERS' EQUITY $ 628,952 $ 653,357 $ 628,952 $ 653,357
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