Hartco Income Fund
TSX : HCI.UN

Hartco Income Fund

November 13, 2008 17:09 ET

Hartco Income Fund Announces 2008 Third Quarter Results

MONTREAL, QUEBEC--(Marketwire - Nov. 13, 2008) - Hartco Income Fund (TSX:HCI.UN) today announced financial results for the third quarter and the nine-months ended September 30, 2008.

For the third quarter ended September 30, 2008, the Fund posted consolidated revenues from continuing operations of $102.5 million and net earnings of $0.7 million, or $0.05 per unit, compared to revenues of $110.8 million and earnings of $1.3 million, or $0.10 per unit, for the corresponding quarter last year.

Our third quarter financial results reflect the soft demand we experienced across Canada during the months of July, August and September. said Pat Waid, president and chief operating officer of the Fund. In spite of challenging market conditions, adjustments to our cost base and effective management of our working capital enabled us to operate the business profitably and achieve a debt-free position at the end of the quarter.

The quarterly revenue decline compared to the same period last year is attributable to a decrease in the Fund s Franchising and Distribution segment and a decline in the Commercial segment procurement revenues.

Consolidated EBITDA from continuing operations was $1.5 million for the quarter ended September 30, 2008 compared to $2.7 million for the same quarter the previous year, a decrease of $1.2 million or 44.4% explained mainly by the lower volumes and lower margins offset by lower operating expenses.

Consolidated results for the nine-month period ended September 30, 2008

For the nine-month period ended September 30, 2008, net earnings from continuing operations amounted to $5.6 million, or $0.41 per unit, compared to net earnings of $5.1 million or $0.37 per unit for the same period last year.

Loss from discontinued operations was nil for the nine-month period ended September 30, 2008, compared to a loss of $8.7 million or $0.64 per unit for the same period last year.

Consolidated revenues amounted to $349.4 million for the nine-month period ended September 30, 2008, compared to $374.7 million for the same period last year. Net revenues in the Franchising and Distribution segment decreased by $25.3 million due primarily to the CompuSmart divestiture, while Commercial segment revenues remained the same.

Consolidated EBITDA was at $9.3 million for both the nine-month period ended September 30, 2008 and for the nine-month period ended September 30, 2007. Lower margins and volumes were offset by lower operating expenses.

Cash Distributions

During the nine-month period ended September 30, 2008, the Fund made cash distributions to its unitholders and tracking shareholders totalling $6.0 million or $0.45 per unit. On October 15, 2008, the Fund declared a distribution of $0.05 per unit to unitholders of record on October 31, 2008 to be paid on November 17, 2008.

Hartco Income Fund Outlook

Moving forward, the Fund will continue to ensure an adequate expense base and maintain its focus on process and systems improvements, Pat Waid explained. This will enable us to effectively withstand potentially weaker economic conditions and achieve a solid foundation from which to pursue profitable growth in the future.

Detailed Financial Information

Detailed financial information pertaining to the Fund s third quarter and nine-month period to date results can be accessed at www.sedar.com.

Fund Profile

Hartco Income Fund (TSX:HCI.UN) has been a leader in the Canadian information technology business for more than thirty years. Through its operating divisions, which together include more than 60 locations operating across Canada under the banners of Metafore, MicroAge®, Microserv® and Northwest Digital®, Hartco Income Fund delivers information technology solutions to private and public sector organizations of every size.

Forward-Looking Statements

This news release contains forward-looking information. Except for historical information contained herein, the statements in this document are forward-looking. Forward-looking statements involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. Those risks include, among others, changes in customer demand for information technology products or services, changes in supplier pricing actions or terms, customer orders, pricing actions by competitors, changes in laws and regulations and general changes in economic conditions. Risks that could cause our results to differ materially from our expectations are discussed in our quarterly Management s Discussion & Analysis.



FINANCIAL HIGHLIGHTS
(In thousands of dollars, except per unit amounts)

September 30
Third Quarter Nine-month period
2008 2007 2008 2007
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$ $ $ $
Revenues 102,500 110,807 349,362 374,748
EBITDA (1) 1,517 2,711 9,283 9,336

Net earnings from
continuing operations 659 1,337 5,586 5,074
Loss from discontinued
operations - - - (8,684)
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Net earnings (loss) 659 1,337 5,586 (3,610)
Earnings per unit from
continuing operations 0.05 0.10 0.41 0.37
Loss per unit from
discontinued operations - - - (0.64)
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Earnings (loss) per unit 0.05 0.10 0.41 (0.27)
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Adjusted Standardized
Distributable cash (2) 5,253 2,064 8,892 6,714
Cash distributions 1,999 1,999 5,999 5,999

(1) Earnings from continuing operations before financial expenses, income
taxes, depreciation and amortization, share of results of equity
investments and non-controlling interest. EBITDA is a non-GAAP measure
as defined in the MD&A.

(2) Cash flow from continuing and discontinued operating activities, less
capital expenditures, net of proceeds from disposal of assets, plus
collection of loans receivable. Adjusted Standardized Distributable
cash is a non-GAAP measure as defined in the MD&A.

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