Resolve Business Outsourcing Income Fund
TSX : RBO.UN

Resolve Business Outsourcing Income Fund

March 02, 2009 16:30 ET

Resolve Business Outsourcing Income Fund Reports Year-End Financial Results

TORONTO, ONTARIO--(Marketwire - March 2, 2009) -

Attention Business and Financial Editors:

(all numbers are in thousands) - Resolve Business Outsourcing Income Fund (the "Fund") (TSX:RBO.UN) today announced financial results for its fourth quarter and the results for the year ended December 31, 2008.

Revenue for fiscal 2008 grew 11% to $369,584. 2008 revenues increased primarily due to revenue from long-term contracts signed or assumed on acquisition in 2007. Adjusted EBITDA was $44,090, an increase of 1% over the previous year. Net loss was $99,348 compared to net earnings of $7,310 in 2007. Cash provided by operating activities was $43,047, down $13,297 from 2007. The decrease in cash provided by operating activities was primarily due to lower cash generated by changes in working capital. 2007 saw very high levels of cash flows from working capital which were not repeatable in 2008.

4th quarter results included:

- A decrease in revenue of 1% to $90,601 compared to $92,170 in the previous year. The decrease was due to lower PPSA revenue, a price reduction to a major student loan client and lower marketing related revenue in the supply chain division, offset by increased revenue from US operations due to exchange rate differences.

- Adjusted EBITDA of $10,043 compared to $9,825 in 2007. The increase was due to increased efficiencies in the business.

- Net loss of $99,463 due to the write down of goodwill after minority interest of $97,997.

- Cash provided by operations decreased by $22,532.

Adjusted EBITDA is not a recognized financial measure under Canadian GAAP. EBITDA adjusted for the change in deferred revenue is referred to as adjusted EBITDA and is used by management to evaluate performance, to measure compliance with debt covenants and to make decisions relating to distributions to unitholders.

The Fund also announced that Mr. Gerry McDonald has been appointed CFO on a non-interim basis. Mr. McDonald had been interim CFO since December 1, 2008.

Detailed financial statements and management's discussion and analysis are available at www.resolve.com.

About Resolve

Resolve works with businesses as an outsourced resource taking on critical processes and managing them better, faster and more cost-effectively. We have over 35 years experience managing processes for Fortune 500 clients in the financial services, retail, government, consumer goods and communications industries. Headquartered in Toronto, Canada, Resolve employs more than 4,700 people in 29 locations and is listed on the Toronto Stock Exchange as Resolve Business Outsourcing Income Fund, symbol RBO.UN. For more information, visit www.resolve.com.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This press release may include certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking information may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Resolve, or industry results, to be materially different from any future results, performance, achievements or opportunities expressed or implied by such forward-looking information. This forward-looking information includes estimates, forecasts and statements as to management's and others' expectations with respect to, among other things, growth strategies and the outlook for Resolve and the business process outsourcing industry and may use words such as ''may'', ''will'', ''estimate'', ''expect'', ''anticipate'', ''believe'', ''intend'', ''plan'', ''could'', "continue" and other similar terminology. This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this press release. Forward-looking information involves significant risks and uncertainties and should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, but not limited to, loss of key customer contracts or reduction of services purchased by key customers, foreign exchange rates, increases in costs to Resolve that cannot be passed on to customers, disputes with key customers, competition, the ability of Resolve to manage operations and execute growth strategies, stability of internal and government information systems and technology, technological changes, the ability to maintain software licenses, changes in privacy laws, and risks inherent in bidding on government contracts. Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, Resolve cannot assure that actual results will be consistent with this forward-looking information. This forward-looking information is made as of the date of this press release, and Resolve assumes no obligation to update or revise it to reflect new events or circumstances.



RESOLVE BUSINESS OUTSOURCING INCOME FUND
CONDENSED CONSOLIDATED BALANCE SHEETS

As at December 31 2008 2007
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(in thousand of dollars) $ $

ASSETS
Current
Cash and cash equivalents 28,861 24,852
Accounts receivable 72,113 67,220
Inventories 2,240 2,508
Prepaid expenses and other assets 4,979 4,538
Income taxes recoverable 413 18
Future income taxes 1,183 490
Fair value of derivatives - 2,272
Assets related to settlement 1,444 600
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Total current assets 111,233 102,498
Capital assets 31,069 28,560
Future income taxes 24,266 21,217
Intangible assets and deferred charges 177,784 202,346
Goodwill 55,626 182,214
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Total assets 399,978 536,835
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LIABILITIES AND UNITHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 51,252 42,566
Customer deposits 22,510 18,125
Distributions payable - 2,714
Future income taxes - 1,536
Deferred revenue 18,344 14,064
Fair value of derivatives 3,129 413
Liabilities related to settlement 1,444 600
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Total current liabilities 96,679 80,018
Long-term debt 99,397 99,378
Deferred revenue - non-current 34,897 28,997
Future income taxes 59,284 61,408
Accrued post-retirement benefit liability 4,043 3,825
Other non-current liabilities 3,538 3,426
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Total liabilities 297,838 277,052
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Non-controlling interest 32,744 76,273
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Unitholders' equity
Fund units 219,464 218,464
Accumulated distributions (62,039) (42,156)
Accumulated earnings (deficit) (87,404) 11,944
Accumulated other comprehensive loss (625) (4,742)
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Total unitholders' equity 69,396 183,510
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Total liabilities, non-controlling interest and
unitholders' equity 399,978 536,835
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RESOLVE BUSINESS OUTSOURCING INCOME FUND
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

For the years ended December 31 2008 2007
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(in thousands of dollars, except per unit amounts) $ $

Revenues 369,584 331,473
Direct costs 257,823 235,582
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Gross profit 111,761 95,091
Operating expenses 77,851 69,107
Depreciation 9,761 8,161
Amortization 25,078 23,617
Interest expense - short-term 455 585
Interest expense - long-term 6,498 5,719
Strategic review costs 2,912 173
Mark-to-market on derivative instruments 2,584 (2,946)
Impairment of goodwill 135,000 -
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Loss before income taxes, non-controlling interest,
discontinued operations and extraordinary item (148,378) (8,525)
Recovery of income taxes (12,165) (16,170)
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Earnings (loss) before non-controlling interest,
discontinued operations and extraordinary item (136,213) 7,645
Non-controlling interest (36,865) 1,768
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Earnings (loss) before discontinued operations and
extraordinary item (99,348) 5,877
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Earnings from discontinued operations, net of income
taxes and non-controlling interest - 101
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Net earnings before extraordinary item (99,348) 5,978
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Extraordinary items, net of income taxes and non-
controlling interest - 1,332
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Net earnings (loss) (99,348) 7,310
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Basic earnings per unit
Continuing operations (4.21) 0.25
Extraordinary item - 0.06
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Basic earnings per unit (4.21) 0.31
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Diluted earnings per unit
Continuing operations (4.21) 0.24
Extraordinary item - 0.06
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Diluted earnings per unit (4.21) 0.30
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RESOLVE BUSINESS OUTSOURCING INCOME FUND
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31 2008 2007
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(in thousands of dollars) $ $

OPERATING ACTIVITIES
Net earnings (loss) before discontinued operations
and extraordinary item (99,348) 5,877
Items not affecting cash:
Depreciation 9,761 8,161
Amortization 25,078 23,617
Amortized financing costs 347 281
Impairment of goodwill 135,000 -
Future income taxes (12,123) (16,796)
Non-controlling interest (36,865) 1,768
Mark-to-market on derivative instruments 2,584 (2,946)
Changes in operating assets and liabilities:
Accounts receivable (4,893) 18,740
Inventories 267 (470)
Prepaid expenses and other assets (472) 3,021
Accounts payable and accrued liabilities 13,531 (1,763)
Deferred revenues 10,180 16,854
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Cash provided by operating activities 43,047 56,344
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INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired - (5,182)
Addition to deferred charges (516) (2,486)
Purchase of capital assets (11,677) (14,526)
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Cash used in investing activities (12,193) (22,194)
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FINANCING ACTIVITIES
Increase in bank indebtedness - 14,000
Increase (decrease) in capital lease obligation (81) 73
Distributions paid to unitholders (21,674) (23,545)
Distributions paid to non-controlling interest (8,183) (9,026)
Payment of bank financing fees (328) -
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Cash used in financing activities (30,266) (18,498)
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Cash provided by discontinued operations - 1,377
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Effect of exchange rate changes 3,421 (515)
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Increase (decrease) in cash and cash equivalents
during the period 4,009 16,514
Cash and cash equivalents, beginning of period 24,852 8,338
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Cash and cash equivalents, end of year 28,861 24,852
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Interest (received) paid - short-term (108) 727
Interest paid - long-term 6,171 4,977
Income taxes paid (recovered) 83 3,690


Contact Information

  • Resolve Corporation
    Gerry McDonald
    Chief Financial Officer
    (905) 306-2196
    Website: www.resolve.com