First National AlarmCap Income Fund
TSX : FNA.UN

First National AlarmCap Income Fund

November 08, 2010 15:49 ET

First National AlarmCap Income Fund Presents Its Results for the Third Quarter of 2010

EDMONTON, ALBERTA--(Marketwire - Nov. 8, 2010) - The Management and Trustees of First National AlarmCap Income Fund (TSX:FNA.UN) are pleased to report results for the third quarter (Q3) of 2010.

Total revenues for the third quarter were $7.1 million compared to $7.2 million for the second quarter. The Fund experienced a small drop in the number of customers from the second quarter which resulted in this 1.9% decrease in revenues. The Fund expects its customer base and revenues to remain stable for the remainder of 2010 and is positioning its business units for growth in 2011.

For the three months ended September 30, 2010, the Fund realized EBITDA of $3.5 million, up slightly from the previous quarter due to an improvement in operating expenses. On a year to date basis, the Fund has realized EBITDA of $10.4 million for both the current and prior year. The Fund continues to implement its business plan of improving customer service and delivering new services such as text notification, while focusing on strategies to reduce customer attrition and to recruit new customers.

In June 2010 the Fund repaid $2.0 million of its subordinated debt using cash on hand. The remaining $3.0 million of subordinated debt was repaid October 27, 2010. The subordinated debt carried interest at 9% so the repayment of this debt will eliminate interest costs of approximately $450 thousand per year going forward.

Net income before income taxes for the nine months ended September 30, 2010 was $2.64 million, up slightly from $2.47 million from 2009. This increase is partly attributable to the decreased interest expense on the subordinated debt. Income tax expense for the nine months was $675 thousand. However, this is not a cash expense as the Fund has tax pools from prior years to shelter this year's taxable income. The Fund projects these tax pools will shelter taxable income for at least the next three fiscal years. As a result, the Fund has decided to remain as an income trust for 2011 rather than convert into a corporation. The Fund will review this decision in 2011.

The Trustees are pleased to announce a distribution for the month of November in the amount of $0.025 per unit. With regards to future distributions, the Trustees will continue to monitor, on a monthly basis, a number of relevant factors including compliance with all of the debt covenants of its Bank Credit Agreement, the projected profitability of the Fund, and the level of cash resources required to implement its business plan.

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 90,400 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 September 30, 2010, related MD&A, 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: 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 26, 2010, 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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