First National AlarmCap Income Fund
TSX : FNA.UN

First National AlarmCap Income Fund

August 15, 2011 17:17 ET

First National AlarmCap Income Fund Presents Its Results for the Second Quarter of 2011

EDMONTON, ALBERTA--(Marketwire - Aug. 15, 2011) - The Management and Trustees of First National AlarmCap Income Fund (TSX:FNA.UN) are pleased to report the results for the second quarter ("Q2") of 2011 and, more importantly, to inform you of a milestone event in the history of the Fund.

On July 27, 2011 the Fund entered into an agreement (the "Agreement") to sell substantially all of its assets (the "Sale") to Stanley Canada Corporation ("Stanley"), a subsidiary of Stanley Black & Decker Inc. for cash consideration of approximately $59.7 million. Stanley Black & Decker, (NYSE:SWK), an S&P 500 company, is a global industrial company with an approximately $800 million Convergent/Electronic Security Solutions business.

The Agreement provides for the sale to Stanley of 100% of the issued shares of Microtec Enterprises Inc. ("Microtec") which contains the operations and business assets of the Fund. The Trustees of the Fund unanimously support the Sale. Trustees and officers holding 13% of the units of the Fund have entered into a voting and support agreement in support of the Sale. A termination fee of $1.75 million will be payable by the Fund to Stanley in certain circumstances, such as if the Sale is not completed in the event of an alternative transaction.

The Sale is subject to normal course regulatory approvals and Fund unitholder approval, along with other customary conditions. An annual and special meeting has been be scheduled for September 15, 2011 to approve the sale and to approve a wind up of the Fund. An Information circular relating to the unitholder meeting to approve the Sale will be sent to unitholders shortly. Assuming these two items are approved, the Trustees intend to wind up the Fund in an orderly fashion and to distribute the net cash proceeds to the unitholders. The net cash proceeds to be distributed on wind up, after repayment of bank debt, transaction costs, and wind up costs, is estimated to be between $5.25 and $5.50 per Class A unit. In terms of the distribution to unitholders, an advance distribution of approximately $5.00 will be made shortly after the closing of the proposed Sale. The balance will be paid upon the final wind up of the Fund.

With regards to the Q2 results, please note that they have been prepared in accordance with International Financial Reporting standards ("IFRS") and, as a result, are not directly comparable to those figures contained within historical financial statements of the Fund that were prepared in accordance with generally accepted accounting principles ("GAAP") before the adoption of IFRS.

The three months ended June 30, 2011 is the first complete quarter based solely on results of the Microtec division and without any contribution from the Securex division which was sold February 28, 2011. Revenues from Microtec in Q2 were $6.0 million, down $0.1 million from the previous quarter and the same as Q2-2010. Operating expenses were $3.5 million, up from $3.3 million in the previous quarter. There were two major reasons for this increase. Firstly, there was an increase in marketing expenses of $70 thousand as the Fund conducted a brand awareness campaign in Q2. Secondly, the G&A expenses include a one-time expense of $150 thousand related to a negotiated settlement of a legal claim. As a result of the above factors, the Fund earned EBITDA from continuing operations in Q2 of 2011 of $2.53 million, down from $2.74 million in the previous quarter. Until the Sale is completed, the Fund will continue to implement its business plan of improving customer service and delivering new services such as text notification, while focusing on new marketing initiatives and business strategies to recruit new customers and reduce attrition.

The Trustees are pleased to report that the distribution announced on July 20, 2011 in the amount of $0.025 per unit will be paid August 31, 2011 and that it will be suspending any further distributions pending completion of the Sale.

The Fund is an unincorporated, open-ended, limited purpose trust and its Class A trust units are listed on the Toronto Stock Exchange under the ticker symbol 'FNA.UN'. It is one of the leading Canadian-owned security alarm service providers in Canada, serving more than 79,600 residential and commercial customers. It offers customers a full suite of security and related monitoring products and services, including intrusion, smoke detection, and environmental services. Monitoring services are provided 24 hours per day, 365 days per year from our state-of-the-art monitoring centres.

A copy of the consolidated financial statements for the quarter ended March 31, 2011, related Management Discussion and Analysis, and additional information concerning the Fund is available on SEDAR at www.sedar.com or at www.alarmcap.ca.

Cautionary statement regarding forward-looking information and statements

Certain statements contained in this news release, which relate to matters that are not historical facts, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information and statements in this news release include but are not limited to: the Fund will, subject to unitholder approval, complete the Sale to Stanley and wind up the Fund in an orderly fashion, customer base and revenues will remain stable in 2011, confidence that its alarm monitoring business will remain in demand and that the Fund has the capacity and ability to execute its business plan. These statements are based on certain assumptions and analysis made by the Fund in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Fund's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Fund's expectations. Such risks and uncertainties include, but are not limited to: fluctuations in the demand for monitoring and installation of security systems, general economic, market or business conditions; changes in laws or regulations, including taxation and environmental; the lack of availability of qualified personnel or management; and other unforeseen conditions which could impact the use of services supplied by the Fund. See also the Fund's Annual Information Form dated March 24, 2011, available on the Fund's website (www.alarmcap.ca) and on SEDAR at www.sedar.com for a comprehensive set of risk factors related to the Fund. Consequently, all of the forward-looking information and statements made in this report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Fund will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Fund or its business or operations. Except as may be required by law, the Fund assumes no obligation to update publicly any such forward-looking information and statements, whether as a result of new information, future events or otherwise.

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