Tree Island Wire Income Fund
TSX : TIL.UN

Tree Island Wire Income Fund

November 14, 2005 16:00 ET

Tree Island Reports Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2005) -

Attention: Business/Financial Editors

Tree Island Wire Income Fund (TSX:TIL.UN) will hold a conference call and webcast to discuss third results on Tuesday, November 15, 2005 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern). The call can be accessed by dialing: 1-800-769-8320 or 416-695-9753. A replay will be available through November 22, 2005 at: 1-888-509-0081 or 416-695-5275.

The live and archived webcast can be accessed at www.investorcalendar.com/IC/CEPage.asp?ID=97819 or on Tree Island's website at www.treeisland.com.

Tree Island Wire Income Fund (the Fund) today announced financial results for the third quarter and first nine months of 2005. For the three months ended September 30, 2005, the Fund generated distributable cash of $0.468 per unit and declared cash distributions of $0.375. This brought year-to-date distributable cash generated to $1.304 per unit, exceeding the $1.125 per unit declared during the first nine months by 16%. The Fund's annual distribution target is $1.50 per unit. As of September 30, 2005, the Fund's year-to-date payout ratio was 86.3%.

The Fund's results are based on the performance of Tree Island Industries Ltd. (Tree Island) - one of North America's largest producers of wire and fabricated wire products.

"Our operating performance, together with gains on foreign exchange conversion activities, contributed to strong distributable cash results this quarter," said Ted Leja, President and CEO of Tree Island and a Trustee of the Fund. "As anticipated these results were not comparable to the exceptional results achieved in 2004, however this is a strong result compared to typical third quarter periods. We are on track to meet our annual distributable cash target for 2005."

The third quarter results were achieved in a mixed set of market conditions. Customer inventory levels came into line during the quarter, and sales of stucco reinforcing products, stainless steel wire, high carbon galvanized wire and concrete reinforcing products were all up from the 2004 comparable period. However, Tree Island continued to face strong competition in the U.S. from import products in the nail, low and high carbon bright wire and low carbon galvanized wire segments. The competitiveness of products manufactured at Tree Island's Canadian operations and sold into the U.S. was further affected by a stronger Canadian dollar. Overall, sales volumes were in line with those achieved in the first and second quarters of 2005, but below the Q3 levels achieved in 2004 and 2003. Product prices were also slightly lower than the peak levels achieved in Q3 2004 as Tree Island has been selectively reducing prices where necessary to maintain market share.

Third quarter 2005 results included a $0.75 million writedown of wire rod inventories. This reflects Tree Island's policy of writing down inventory value when forward prices for rod purchases fall below the current cost of existing inventory.

"It's important to recognize that the impact of the writedown will benefit future periods by lowering cost of goods sold when the rod is consumed," said Ted Leja.

Third quarter results also included $0.35 million in costs related to the consolidation of Tree Island's U.S. facilities. This brought year-to-date costs for the project to $1.03 million. Scheduled for completion in the second quarter of 2006, the consolidation is designed to improve efficiency and generate ongoing savings in rent, electricity and labour.

A highlight of the third quarter was continued improvement in Tree Island's operating efficiency on a company-wide basis. Despite lower volumes, per unit costs held steady during the period, reflecting excellent cost control, greater efficiencies and improved raw material utilization.

Operating Results

For the three months ended September 30, 2005, the Fund generated total distributable cash of $10.2 million or $0.468 per unit, compared to $20.5 million or $0.933 per unit during the third quarter of 2004. Of this, $7.2 million, or $0.327 per unit, was generated by operations. Gains from foreign exchange conversion activities contributed the balance of $3.0 million, or $0.141 per unit, net of taxes. The Fund declared distributions of $0.125 per unit in each of July, August and September, totaling $8.2 million, or $0.375 per unit, over the three-month period.

Third quarter revenue was $85.2 million, compared to $106.5 million in the third quarter of 2004. The change in revenue reflects an 8% decrease in sales volumes, a decrease in average selling prices of 7.5% in Canada and 5.7% in the US and a $6.2 million unfavourable foreign exchange impact on US dollar-based sales. The volume reduction resulted primarily from increased competition in the nail and industrial wire segments, which more than offset volume gains for stucco reinforcing products, stainless steel wire, high carbon galvanized wire and concrete reinforcing products. The exchange impact reflects a 9% quarter-over-quarter increase in the value of the Canadian dollar.

Selling, general and administration expenses were $5.3 million, down 37% from the third quarter of 2004. The improvement reflects the benefit of the stronger Canadian dollar on the conversion of US division costs, and a lower accrual for Tree Island's EBITDA-based variable compensation plan, partially offset by an accrual of $0.25 million for the company's long term incentive plan ("LTIP"). Early gains from Tree Island's U.S. consolidation also contributed to the reduction in SG&A expenses.

Third quarter EBITDA was $7.0 million, compared to $24.0 million in 2004. The change in EBITDA reflects lower sales volumes and product prices, the absence of 2004's one-time inventory gains, and the impact of the $0.75 million inventory writedown, as well as $0.35 million in one-time costs associated with the consolidation of the company's U.S. operations. The lower EBITDA result also reflects the impact of fuel surcharges on shipping costs.

EBITDA, plus gains from foreign exchange conversions, was $11.9 million, compared to $28.5 million in the third quarter of 2004.

Net income for the period was $6.3 million ($0.29 per unit), compared to $14.6 million ($0.72 per unit) generated during the third quarter of 2004. The change in net income reflects the reduced operating profit, partially offset by reduced taxes, a $0.85 million tax recovery resulting from an overaccrual of our 2004 US taxes, increased gains on foreign exchange conversions, and the elimination of the non-controlling interest.



Results from Operations
(In Thousands of Dollars, except for volumes,
per unit and per ton amounts)

-----------------------------------------------------------------------
3 Months Ended Sept 30 9 Months Ended Sept 30
-----------------------------------------------------------------------
2005 2004 2003 2005 2004 2003
-----------------------------------------------------------------------
Sales Volumes
- Tons 68,015 74,249 75,339 206,390 247,776 229,910

Revenue 85,193 106,504 75,371 265,622 310,638 233,142
Cost of
Goods Sold (72,897) (74,027) (64,374) (224,226) (221,437) (196,774)
Depreciation (4,970) (5,077) (7,333) (15,383) (15,454) (22,744)
--------------------------------------------------------
Gross Profit 7,326 27,400 3,664 26,013 73,747 13,624

Gross Profit
- $ per Ton 108 369 49 126 298 59

Selling, General
and Admini-
stration (5,340) (8,428) (4,765) (14,977) (18,688) (14,816)
Expenses
--------------------------------------------------------
Operating
Profit 1,986 18,972 (1,101) 11,036 55,059 (1,192)

Foreign
Exchange Gain 4,898 4,449 2,426 10,166 7,785 11,044
Financing
Expenses (1,101) (1,013) (847) (3,220) (2,282) (2,408)
Recovery of
(Provision
for) Income
Taxes 492 (6,089) 2,267 (50) (17,379) 9,334
Non-
Controlling
Interest - (1,703) (1,862) - (10,719) (7,729)
--------------------------------------------------------
Net Income 6,275 14,616 883 17,932 32,464 9,049
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Operating
Profit 1,986 18,972 (1,101) 11,036 55,059 (1,192)
Add back
Depreciation 4,970 5,077 7,333 15,383 15,454 22,744
--------------------------------------------------------
EBITDA 6,956 24,049 6,232 26,419 70,513 21,552

Foreign
Exchange Gain 4,898 4,449 2,426 10,166 7,785 11,044
--------------------------------------------------------
EBITDA Plus
Foreign
Exchange
Gains 11,854 28,498 8,658 36,585 78,298 32,596

Distributable
Cash
Generated 10,249 20,460 7,500 28,586 55,151 27,620
Distributable
Cash
Generated per
Unit 0.468 0.933 0.342 1.304 2.516 1.260

Distributions
Paid or
Payable per
Unit 0.375 0.338 0.319 1.125 0.975 0.956
Distribution
Payout % 80% 36% 93% 86% 39% 76%
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Year-to-Date Results

For the nine months ended September 30, 2005, the Fund generated total distributable cash of $28.6 million, compared to $55.2 million in the first nine months of 2004. Year-to-date revenue was $265.6 million, compared to $310.6 million during the first nine months of 2004. SG&A expenses were $15.0 million, down from $18.7 million from the same period in 2004. EBITDA was $26.4 million, compared to $70.5 million in 2004. EBITDA plus gains from foreign exchange conversions was $36.6 million, down from $78.3 million in the first nine months of 2004. Net income was $17.9 million ($0.82 per unit), compared to $32.5 million ($0.1.82 per unit) in 2004.

Outlook

Moving into the fourth quarter, demand for wire products remains healthy, but offshore competition is expected to continue exerting pressure on certain product lines. In particular, sales of nails in the U.S. are being affected by the higher availability and lower prices for import products. Sales of carbon wire are also being affected by indirect import competition as customers that purchase wire from us are facing increased import competition for the products they manufacture. Examples include the spring wire sets used in the manufacture of mattresses, as well as finished mattresses. Tree Island is responding to the changing competitive environment with strategies designed to protect its market share, increase value to customers and enhance overall profitability. These include new markets for carbon wire and an increased emphasis on products that are less affected by import competition.

The outlook for Tree Island's stucco reinforcing products and concrete reinforcing products remains positive with industry-wide price increases implemented in mid-October.

After three quarters of stable but historically high wire rod prices, Tree Island has negotiated lower raw material prices for the fourth quarter. On a longer term basis, the cost of metallic inputs for steel making is rising and becoming more volatile, and is expected to result in an increase in raw material costs early in 2006.

Recent increases in natural gas and electricity costs are not expected to have an impact on future financial results, although Tree Island's combined energy costs currently represent less than 2.5% of the company's cost of goods sold.

Operating costs are expected to continue to benefit from Tree Island's focus on efficiencies and profit-improvement projects. In addition to the consolidation of U.S. operations currently underway, Tree Island is nearing completion of a $1.2 million hot dip nail galvanizing facility which will increase galvanizing capacity and nail quality at its Richmond, BC location. The company is also increasing automation at its Richmond-based welded reinforcing mesh facility. These projects are proceeding on time and on budget.

In September 2005, the Department of Finance issued a consultation paper on income trusts and limited partnerships. Subsequently, a moratorium on advanced rulings with respect to income funds was announced. Since then, there has been some uncertainty and loss in unit values across the trust sector, as the Government considers several potential policy options. Until the review of taxation policy is complete, Tree Island Wire Income Fund will continue to monitor developments closely. The Fund supports the ongoing efforts of trust industry representatives to communicate its position to the government and the public, and encourages unitholders to express their concerns to their elected representative. To find your Member of Parliament's contact information by postal code go to www.parl.gc.ca.

Fund Profile

The Fund was launched on November 12, 2002, with the completion of an Initial Public Offering. There are 21,918,400 units of the Fund outstanding, representing a 100% ownership interest in Tree Island.

The Fund's performance depends entirely on the performance of Tree Island.

Tree Island Profile

Tree Island Industries produces nails, bright wire, stainless steel wire, galvanized wire, stucco reinforcing products, fence products and other fabricated wire products primarily for customers in Western Canada and the Western United States. Headquartered in Richmond, British Columbia, the company markets these products under five highly respected brand names: Tree Island, K-Lath, Tree Island Wire, Halsteel, and Industrial Wire Products.

Forward-Looking Statements

This press release contains forward-looking statements based on assumptions considered reasonable at the time they were prepared. Any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements speak only to the conditions in existence as of the date of this press release, and the Fund maintains no obligation to update such statements.

Forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the statements. Such risks and uncertainties include, but are not limited to, risks associated with operations such as competition, dependence on the construction industry, supplies of raw materials, dependence on key personnel, labour relations, regulatory matters, environmental risks, the successful execution of acquisition and integration strategies, foreign exchange fluctuations, the effect of leverage and restrictive covenants in financing arrangements, product liability, the ability to obtain insurance, energy cost increases, the ability to fund necessary future capital investments, and changes in tax legislation.



Interim Consolidated Financial Statements of

TREE ISLAND WIRE INCOME FUND

September 30, 2005


TREE ISLAND WIRE INCOME FUND
Interim Consolidated Balance Sheets (Unaudited)
(In thousands of dollars)

--------------------------------------------------------------------
--------------------------------------------------------------------
As at As at
September 30, December 31,
2005 2004
(Audited)
------------ -----------
Assets

Current
Cash $ 2,444 $ 2,186
Accounts receivable 34,351 27,599
Prepaid expenses 2,708 2,252
Taxes receivable 1,180 -
Inventories 100,123 123,939
------------ -----------
140,806 155,976
Property, plant and equipment 95,481 109,655
Deferred charges 1,194 1,611
Goodwill 43,685 44,405
------------ -----------
$ 281,166 $ 311,647
------------ -----------
------------ -----------

Liabilities

Current
Revolving credit $ 23,540 $ 34,572
Current portion of long-term debt 81 2,245
Accounts payable and accrued liabilities 58,548 58,741
Income and other taxes payable - 2,864
Interest payable 305 361
------------ -----------
82,474 98,783
Long-term debt 206 277
Non-current liabilities 282 571
Future income taxes 18,884 23,141
------------ -----------
101,846 122,772
------------ -----------

Unitholders' Equity 179,320 188,875
------------ -----------
$ 281,166 $ 311,647
------------ -----------
------------ -----------

See accompanying Notes to the Interim Consolidated Financial
Statements.


TREE ISLAND WIRE INCOME FUND
Interim Consolidated Statement of Operations (Unaudited)
For the three month and nine month periods ended
September 30, 2005 and September 30, 2004
(In thousands of dollars, except per unit amounts)

---------------------------------------------------------------------
---------------------------------------------------------------------
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
--------------------- ----------------------
Sales $ 85,193 $ 106,504 $ 265,622 $ 310,638
Cost of goods sold 72,897 74,027 224,226 221,437
Depreciation 4,970 5,077 15,383 15,454
--------------------- ----------------------
Gross profit 7,326 27,400 26,013 73,747
Selling, general
and administrative
expenses 5,340 8,428 14,977 18,688
--------------------- ----------------------
Operating profit 1,986 18,972 11,036 55,059
Foreign exchange gain 4,898 4,449 10,166 7,785
Financing expenses (1,101) (1,013) (3,220) (2,282)
--------------------- ----------------------
Income before
provision for
income taxes 5,783 22,408 17,982 60,562
Recovery of
(provision for)
income taxes (note 4) 492 (6,089) (50) (17,379)
--------------------- ----------------------
Income before
non-controlling
interest 6,275 16,319 17,932 43,183
Non-controlling
interest (note 3) - (1,703) - (10,719)
--------------------- ----------------------

Net income for
the period $ 6,275 $ 14,616 $ 17,932 $ 32,464
--------------------- ----------------------
--------------------- ----------------------

Basic and diluted net
income per unit $ 0.29 $ 0.72 $ 0.82 $ 1.82
--------------------- ----------------------
--------------------- ----------------------

Weighted-average
number of units
(Basic and diluted) 21,918,400 20,315,344 21,918,400 17,805,397
--------------------- ----------------------
--------------------- ----------------------

See accompanying Notes to the Interim Consolidated Financial
Statements.


TREE ISLAND WIRE INCOME FUND
Interim Consolidated Statements of Unitholders' Equity (Unaudited)
For the three month and nine month periods ended
September 30, 2005 and September 30, 2004
(In thousands of dollars)

---------------------------------------------------------------------
---------------------------------------------------------------------
Total for Total for
nine nine
Cumulative months months
Unit- Trans- ended ended
holders' Retained Distri- lation September September
Capital Earnings butions Adjustment 30, 2005 30, 2004
-------- -------- -------- ---------- --------- ---------
Balance,
beginning
of period $209,857 $ 48,215 $(49,369) $ (19,828) $188,875 $ 128,442

Activity for
the three
months ended
March 31 - 6,608 (8,219) 392 (1,219) (441)
-------- -------- -------- ---------- --------- ---------
209,857 54,823 (57,588) (19,436) 187,656 128,001

Activity for
the three
months ended
June 30 - 5,049 (8,219) 1,044 (2,126) 9,726
-------- -------- -------- ---------- --------- ---------
209,857 59,872 (65,807) (18,392) 185,530 137,727

Activity for
the three
months ended
September 30 - 6,275 (8,220) (4,265) (6,210) 42,475
-------- -------- -------- ---------- --------- ---------
Balance,
end of
period $209,857 $ 66,147 $(74,027) $ (22,657) $179,320 $ 180,202
-------- -------- -------- ---------- --------- ---------
-------- -------- -------- ---------- --------- ---------

See accompanying Notes to the Interim Consolidated Financial
Statements.


TREE ISLAND WIRE INCOME FUND
Interim Consolidated Statement of Cash Flows (Unaudited)
For the three month and nine month periods ended
September 30, 2005 and September 30, 2004
(In thousands of dollars)

---------------------------------------------------------------------
---------------------------------------------------------------------
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
--------------------- ----------------------
Operating Activities

Net income for the
period $ 6,275 $ 14,616 $ 17,932 $ 32,464
Items not involving
cash
Depreciation 4,970 5,077 15,383 15,454
Amortization of
deferred charges 133 110 404 330
Future income
tax recovery (719) (305) (3,866) (2,585)
Non-controlling
interest (note 3) - 1,703 - 10,719
--------------------- ----------------------
Net cash flow from
operations 10,659 21,201 29,853 56,382

Change in non-cash
operating assets
and liabilities
Accounts receivable 1,882 10,174 (6,752) (14,516)
Inventories 4,182 (29,246) 23,816 (48,153)
Accounts payable and
accrued liabilities 2,393 8,268 (518) 19,917
Income and other
taxes payable (806) (4,099) (3,973) 5,222
Other (2,440) (2,689) (1,937) (2,552)
--------------------- ----------------------
15,870 3,609 40,489 16,300
--------------------- ----------------------

Investing Activities
Purchase of property,
plant and equipment (1,004) (1,598) (2,316) (2,896)
--------------------- ----------------------
(1,004) (1,598) (2,316) (2,896)
--------------------- ----------------------
Financing Activities
Payments to
non-controlling
interest - (491) - (3,985)
Repayment of
long-term debt (2,185) (15) (2,225) (53)
(Repayment) drawdown
of revolving credit (4,332) 5,610 (11,032) 14,136
Distributions to
unitholders (8,220) (6,857) (24,658) (17,337)
--------------------- ----------------------
(14,737) (1,753) (37,915) (7,239)
--------------------- ----------------------

Increase in cash 129 258 258 6,165
Cash, beginning
of period 2,315 6,062 2,186 155
--------------------- ----------------------
Cash, end of period $ 2,444 $ 6,320 $ 2,444 $ 6,320
--------------------- ----------------------
--------------------- ----------------------

Supplemental
Cashflow Information:

Interest paid $ 960 $ 813 $ 2,871 $ 1,883
--------------------- ----------------------
--------------------- ----------------------

Income taxes paid $ 1,064 $ 10,589 $ 7,881 $ 14,780
--------------------- ----------------------
--------------------- ----------------------

Non-Cash financing
activities:

Issue of fund units
to non-controlling
interest $ - $ 39,683 $ - $ 39,683
--------------------- ----------------------
--------------------- ----------------------

See accompanying Notes to the Interim Consolidated Financial
Statements.


TREE ISLAND WIRE INCOME FUND
Notes to the Interim Consolidated Financial Statements (Unaudited)
For the three month and nine month periods ended September 30, 2005 and
September 30, 2004
(In thousands of dollars, except per unit amounts)


1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited Interim Consolidated Financial Statements of Tree Island Wire Income Fund (the "Fund") have been prepared by management in accordance with Canadian generally accepted accounting principles ("GAAP") on a basis consistent with those followed in the most recent audited annual consolidated financial statements. These unaudited Interim Consolidated Financial Statements do not include all the information and note disclosures required by GAAP for annual consolidated financial statements and therefore should be read in conjunction with the December 31, 2004 audited consolidated financial statements of the Fund and the notes below.

Certain of the comparative figures have been reclassified to conform to the current interim period's presentation.

2. FORMATION OF THE FUND AND CONVERSION OF NON-CONTROLLING INTEREST TO FUND UNITS

The Fund is an unincorporated open-ended, limited purpose trust established under the laws of the Province of British Columbia pursuant to a Declaration of Trust dated September 30, 2002. The Fund was formed to acquire 75% of the common shares and $136,995 of 13.75% Series A unsecured subordinated notes ("Tree Island Notes") of TI Industries Inc. ("TII"), the predecessor of Tree Island Industries Ltd. ("TIL"). This acquisition was completed on November 12, 2002. To finance this acquisition, the Fund issued 16,438,800 units in a public offering for net proceeds of $152,988, after deducting the expenses of the offering.

Each unitholder participates pro rata in distributions of net earnings and, in the event of termination of the Fund, participates pro rata in the net assets remaining after satisfaction of all liabilities. Income tax obligations related to the distribution of net earnings by the Fund are the obligations of the unitholders.

Concurrently, with the Fund's acquisition of its effective 75% interest in TIL, the 25% non-controlling interest in TIL, represented by non-voting common shares and Series B notes, was issued to the former shareholders of TII.

During 2004, 100% of the non-controlling interest in TIL exercised their right to exchange their non-voting shares and Series B notes for 5,479,000 units in the Fund. After the conversion of the non-controlling interest the Fund owns 100% of the common shares of TIL.

3. NON-CONTROLLING INTEREST



Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ----------- -----------

Current period
share of income $ - $ 1,162 $ - $ 7,112
Dividends on
Series B Notes - 91 - 91
Interest on
Series B Notes - 450 - 3,516
------------ ------------ ----------- -----------
$ - $ 1,703 $ - $ 10,719
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------


The Series B Notes were 13.75%, unsecured, subordinated Series B notes issued pursuant to the note indenture between TIL and Computershare Trust Company of Canada, as trustee, dated as of November 12, 2002.

The Series B Notes and non-voting common shares in TIL were exchanged for units in the Fund on the basis of one unit for every $8.35 principal amount of Series B notes and one non-voting common share for an aggregate of 5,479,600 units on July 20, 2004 and October 13, 2004.

4. INCOME TAXES

Income tax obligations relating to distributions from the Fund are the obligations of the unitholders and, accordingly, no provision for income taxes on the income of the Fund has been made. A provision for income taxes is recognized for TIL and its subsidiaries, as TIL and its subsidiaries are subject to tax, including large corporation taxes. The provision for the period is divided between current and future taxes as follows:



Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ----------- -----------

Current tax expense $ (227) $ (6,394) $ (3,916) $ (19,964)
Future tax recovery 719 305 3,866 2,585
------------ ------------ ----------- -----------
$ 492 $ (6,089) $ (50) $ (17,379)
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------


The provision for income taxes varies from the amount that would be expected if computed by applying the Canadian federal and provincial and US federal and state statutory income tax rates to the earnings before income taxes as shown in the following table:



Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ----------- -----------

Net income before
income taxes $ 5,783 $ 22,408 $ 17,982 $ 60,562
Net income of the
Fund subject to
tax in the hands
of the recipient (6,060) (6,096) (17,954) (18,195)
------------ ------------ ----------- -----------

Net (loss) income
of subsidiary
companies before
income taxes (277) 16,312 28 42,367

Tax Rate 37.8% 37.8% 37.8% 37.8%

Expected (recovery)
provision for
income taxes $ (105) $ 6,166 $ 11 $ 16,015
Increased (Reduced) by:
Expenses not
deductible for tax 11 33 31 208
Differential tax rates
on U.S. subsidiaries (5) 441 71 1,267
Other (393) (551) (63) (111)
------------ ------------ ----------- -----------
Income tax (recovery)
provision $ (492) $ 6,089 $ 50 $ 17,379
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------


5. POST-RETIREMENT BENEFITS

(a) The Fund has four defined contribution pension plans. Contributions made by the Fund amounted to $384 for the three months ended September 30, 2005 ($450 for the three months ended September 30, 2004) and $1,241 for the nine months ended September 30, 2005 ($1,238 for nine months ended September 30, 2004). Funding obligations are satisfied upon making contributions.

(b) The senior executive retirement plan is unfunded. The cost expensed in the three months ended September 30, 2005 is $51 ($273 in the three months ended September 30, 2004), and in the nine months ended September 30, 2005 is $154 ($424 in the nine months ended September 30, 2004). At September 30, 2005, $2,284 ($2,216 as at December 31, 2004), an estimate of the amount payable under the plan, is included in accounts payable in respect of this plan.

6. SEGMENTED INFORMATION

(a) General information

The Fund operates primarily within one industry, the steel wire and fabricated wire products industry with no separately reportable business segments. The products are sold primarily to customers in the United States and Canada.

(b) Geographic information



Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ----------- -----------

SALES (i)
Canada $ 19,364 $ 19,806 $ 65,423 $ 61,039
United States 65,503 86,266 199,144 248,430
Other 326 432 1,055 1,169
------------ ------------ ----------- -----------
$ 85,193 $ 106,504 $ 265,622 $ 310,638
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------


As at As at
September December
30, 2005 31, 2004
--------- ---------

PROPERTY, PLANT AND
EQUIPMENT (ii)
Canada $ 61,582 $ 67,985
United States 33,899 41,670
--------- ---------
$ 95,481 $ 109,655
--------- ---------
--------- ---------


GOODWILL (ii)
Canada $ 24,655 $ 24,655
United States 19,030 19,750
--------- ---------
$ 43,685 $ 44,405
--------- ---------
--------- ---------


(i) Sales are attributed to geographic areas based on the location of
customers.

(ii) Property, plant and equipment and goodwill are attributed to
geographic areas based on the location of the subsidiary company
owning the assets.



Contact Information