TORONTO, ONTARIO -- (MARKET WIRE) -- 11/11/09 -- North American Palladium's ("NAP" or the "Company") (TSX: PDL)(NYSE Amex: PAL) ongoing major exploration program at its 100% owned Lac des Iles ("LDI") mine near Thunder Bay, Ontario continues to yield excellent drill results and expand the size of four targets on the property.
-- Offset Zone: underground drill assay grades and intersections exceed
those of the Roby Zone
-- Cowboy Zone: underground drill assay results have higher grades than
previously released results
-- West Pit: assay results from surface drilling continue to provide
encouragement for exploration and consideration of open pit scenarios
-- North Pit-NVT Rim: assay results from surface drilling and trenching
provide encouragement to continue exploration along the north contact of
the favourable Mine Block Intrusion
"The underground and surface drill results since our September 17, 2009 news release continue to highlight the significant exploration potential remaining at the LDI mine property," said William J. Biggar, NAP's President and Chief Executive Officer. "High potential exists to increase the size and grade of the Offset Zone, as well as extend the limits of the Cowboy Zone and other footwall mineralized zones, and discover and define new zones around the existing open pit mine and elsewhere on our 8,600-hectare property. This continued exploration success means that in order to incorporate all of the 2009 drill results, we've decided to move the release date for the next mineral resource update from Q4 2009 to early Q2 2010."
Offset Zone
The Offset Zone is considered to be the fault-displaced equivalent of the Roby Zone, the source of the highest grade material in the open pit mine and the Roby underground mine. The goals of the 2009 drill program were to increase the tonnage and grade of the mineral resource, upgrade mineral resources from inferred to indicated, and to add new resources to the upper part of the Offset Zone. Phase 2 of the drill program (July to December) is near completion. The Company has received preliminary assay results for nine additional holes from the Offset Zone drilling since the September 17, 2009 news release.
Highlights of the composited assay results for these nine holes (Table 2) include:
1. 194 metres of 4.7 grams per tonne palladium in hole 09-406, including
seven higher grade intervals (Table 2):
-- 16 metres of 8.5 grams per tonne palladium;
-- 26 metres of 7.2 grams per tonne palladium;
-- 10 metres of 9.7 grams per tonne palladium;
2. 83 metres of 6.4 grams per tonne palladium in hole 09-411;
3. 37 metres of 7.7 grams per tonne palladium in hole 09-506; and
4. 12 metres of 14.2 grams per tonne palladium in hole 09-603.
The true thicknesses of holes 09-406 and 09-411 are estimated to be 100 metres and 50 metres respectively (Figure 3), significantly thicker than intersections reported for farther to the south, thus confirming that the Offset Zone is thicker in the north. The Offset Zone remains open to the north.
Cowboy Zone
Phase 2 of the drill program also aimed to increase the lateral and vertical limits of the Cowboy Zone, located 30 to 50 metres to the west of the Offset Zone. The Company has received preliminary assay results from four more Cowboy Zone holes (Table 3) since the September 17, 2009 news release, including the following highlights:
1. 11 metres of 6.0 grams per tonne palladium in hole 09-409; and 2. 11 metres of 7.8 grams per tonne palladium in hole 09-411.
These intersections have the highest palladium grades reported to date for the Cowboy Zone and extend the limit of the zone 30 metres farther to the north (Figure 4) to section 509N.
West Pit
The surface drill program in the West Pit area of the LDI mine property was designed to explore two targets, 507N Pod and Quartz Diorite, located immediately to the west of the open pit mine. The 15 holes were drilled north-to-south or south-to-north, perpendicular to all previous holes in the area. Highlights from the preliminary composited assay results (Table 4) for seven of these additional holes in the West Pit area are as follows:
1. 6 metres of 2.4 grams per tonne palladium from 221 metres down hole in
hole 09-078; and
2. 10 metres of 7.9 grams per tonne palladium from 71 metres down hole in
hole 09-080, including, 5 metres of 10.7 grams per tonne palladium from
71 metres down hole.
These two holes intersected the 507N Pod target (Figures 5 and 6) and extend the PGE mineralization along strike to the east by 50 metres and to the west by 25 metres from the mineralization reported in the September 17, 2009 news release. The intersections to date of the second target, quartz diorite, are lower grade (Table 4) and similar to the grade of the open pit mine (average grade of 1.8 grams per tonne palladium). A follow-up program of 11 additional drill holes is underway to expand the lateral and vertical limits of the 507N Pod mineralization and further establish its geometry and orientation.
North Pit-NVT Rim
The surface drilling and trenching program in the North Pit-NVT Rim area of the LDI mine property was planned to follow-up on historic and previous drill results and discover new mineralized zones along strike northeastwards from the Roby Zone. Work completed in 2009 includes drilling 17 drill holes and digging and sampling 7 trenches on a 175-metre strike-length along the north margin of the favourable Mine Block Intrusion (Figures 7 and 9). An eighth trench was excavated and sampled 40 metres farther to the east, for which assays remain pending from the laboratory.
Highlights of the composited assay results from the North Pit-NVT Rim drill program are (Table 5):
1. 25 metres of 2.4 grams per tonne palladium from 197 metres down hole in
hole 09-036, including 6 metres at 7.9 grams per tonne palladium from
197 metres down hole;
2. 19 metres of 1.1 grams per tonne palladium from 89 metres down hole in
hole 09-039; and
3. 8 metres of 3.4 grams per tonne palladium from 23 metres down hole in
hole 09-044.
The best grades in the drilling are from holes in the west and centre parts of the North Pit area (Figures 7 and 8).
Composited assay highlights of the trenching program include (Table 6):
1. 2 metres of 2.5 grams per tonne palladium from trench 2;
2. 2 metres of 5.7 grams per tonne palladium and a second interval of 5.6
grams per tonne palladium for trench 7; and,
3. 3 metres of 3.5 grams per tonne palladium from trench 8.
In the trenching, the thickness and grade of the PGE mineralization appears to increase eastward. Compared to the drill results, the best grades for the trenching appear to be in the centre and east parts of the North Pit area (Figure 9).
The drilling and trenching results together indicate the presence of a zone of anomalous palladium assays (1 to 10 grams per tonne palladium) which follows the contact with the Roby Zone to the east. This zone has the potential to extend Roby Zone mineralization for approximately 1.5 kilometres across the northern part of the favourable Mine Block Intrusion to the Creek Zone (Figure 2). Follow-up drilling, trenching and prospecting work are planned for the North Pit-NVT Rim area and the Creek Zone area in 2010.
Quality Assurance and Quality Control, Qualified Person
The assay analyses performed during NAP's drill programs are subject to a formal quality assurance and quality control (QAQC) program. Diamond drill core is logged and sampled on site with sample transport by the Company to Activation Laboratories Ltd. (Thunder Bay and Ancaster), an independent accredited laboratory, for assay analysis. Check assay analyses are carried out by SGS Minerals Services (Toronto), a laboratory that is also independent of the Company. Internal check assays have been completed for the North Pit-NVT Rim drill results reported herein and for the results of the September 17 news release. The latter results have been updated on the website. Internal check assays remain to be completed for the Offset Zone, Cowboy Zone and the West Pit drill results and on the North Pit-NVT Rim trenching results.
The drill programs were designed and executed by the Company's Thunder Bay exploration team led by Dr. John Corkery, under the supervision of Dr. Bill Stone, P.Geo. Dr. Stone is a Qualified Person under NI43-101 and is responsible for the technical content of this news release.
North American Palladium: Re-engineering the Future
NAP is a precious metals company that owns the Lac des Iles mine, which produced platinum group metals for 15 years until October 2008 when it was placed on temporary care and maintenance due to low metal prices. Prior to the temporary shutdown, the mine had annual production of 270,000 ounces of palladium, 20,000 ounces of platinum and 20,000 ounces of gold. The company also owns and operates the Sleeping Giant gold mine located in the Abitibi region of Quebec, which produced over 1 million ounces of gold from 1988-2008 at an average grade of 11.44 g/t. North American Palladium has resumed gold production at the Sleeping Giant mine and expects to achieve commercial production at the start of 2010 at an annual rate of 50,000 ounces.
Cautionary Statement on Forward Looking Information
Certain information included in this news release including information relating to exploration results, and future exploration results, constitute 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. The words 'expect', 'believe', 'will', 'intend', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of North American Palladium to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and that the forward-looking statements are not guarantees of future performance. These statements are also based on certain factors and assumptions. For more details on these estimates, risks, assumptions and factors, see the Company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. In addition, there can be no assurance that the Company's Lac des Iles or Sleeping Giant mines will be successfully restarted or that other properties can be successfully developed. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.
Contacts: North American Palladium Annemarie Brissenden Director, Investor Relations 416-360-7590 Ext. 226 abrissenden@nap.com www.nap.com
JACKSONVILLE, Fla., Nov. 11 /PRNewswire-FirstCall/ --
Third Quarter Highlights
-- Operating income of $25.6 million and an operating ratio of 76.7%
-- Adjusted EBITDA(1) of $37.6 million and net cash provided by operating
activities of $48.5 million
-- Completed initial public offering in October
RailAmerica, Inc. (NYSE: RA) today reported third quarter 2009 earnings from continuing operations of $3.5 million or $0.08 per diluted share, compared to $2.0 million or $0.05 per diluted share, for the third quarter of 2008. Net income, which includes discontinued operations, for the third quarter of 2009 was $3.5 million, compared to $2.9 million for the third quarter of 2008. Net income for the third quarter of 2009 includes a tax benefit of $5.4 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20091111/FL09693LOGO )
John Giles, RailAmerica's President and Chief Executive Officer, said, "In the third quarter, we posted solid financial results generating Adjusted EBITDA of $37.6 million, down 4% compared to the record third quarter of 2008 and up 7% compared to the second quarter of 2009. Also, for the third quarter our operating ratio improved to 76.7% compared to 81.5% in the third quarter of 2008 as we continued to strengthen operating efficiencies. With the completion of the initial public offering in October, we have a strong balance sheet with approximately $130 million of cash(2) and are well positioned to make strategic investments that will complement the opportunities we have to grow organically through freight and non-freight revenue growth and further productivity gains."
Third quarter 2009 revenue decreased $23.3 million, or 17%, to $110.1 million from $133.4 million in the third quarter of 2008. Freight revenue declined $27.9 million, or 24%, primarily due a 23% decline in carloads. Non-freight revenue increased $4.6 million, or 26%, to $22.1 million from $17.5 million in the third quarter of 2008.
Third quarter 2009 operating income increased 4% to $25.6 million from $24.7 million in the third quarter of 2008 as lower operating expenses more than offset lower revenue. Lower fuel expense, reduced maintenance expense as a result of a Track Maintenance Agreement executed in 2009, and productivity improvements drove the operating expense decrease. Third quarter 2008 results include a $1.7 million impairment charge, $0.4 million gain on sale and $2.9 million in expenses for headquarters relocation compared to third quarter 2009 results, which include $0.2 million gain on sale and $0.4 million in expenses for headquarters relocation.
Third quarter 2009 net cash provided by operating activities increased $10.5 million, or 28%, to $48.5 million from $38.0 million in the third quarter of 2008. Second quarter 2009 cash used by operating activities was $37.0 million, primarily due to a $55.8 million cash payment made for the termination of the interest rate swap in conjunction with the repayment of the bridge credit facility.
As previously announced, RailAmerica, Inc. will present its third quarter earnings on Thursday, November 12, 2009 at 8:30 a.m. Eastern Time via live teleconference and webcast. Those interested in participating via teleconference may dial (877) 756-2088. Callers outside the U.S. may dial (574) 941-1456. The conference ID number is 38929092. Participants should dial in no later than 10 minutes prior to the call. Presentation materials and access to the live webcast will be available in the Investors section of RailAmerica's website (www.railamerica.com). Following the earnings call, a webcast replay will be archived on the Company's website. A telephone replay will be available through November 26, 2009 beginning approximately two hours after the call. The recording can be accessed by dialing (800) 642-1687 or (706) 645-9291. The conference ID number is 38929092.
RailAmerica, Inc. is the largest owner and operator of short line and regional freight railroads in North America, measured in terms of total track-miles, operating a portfolio of 40 individual railroads with approximately 7,500 miles of track in 27 U.S. states and three Canadian provinces.
Cautionary Note Regarding Forward-Looking Statements
Certain items in this press release and other information we provide from time to time may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future events and financial performance. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. RailAmerica, Inc. can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from RailAmerica, Inc.'s expectations include, but are not limited to, prolonged capital markets disruption and volatility, general economic conditions and business conditions, our relationships with Class I railroads and other connecting carriers, our ability to obtain railcars and locomotives from other providers on which we are currently dependent, legislative and regulatory developments including rulings by the Surface Transportation Board or the Railroad Retirement Board, strikes or work stoppages by our employees, our transportation of hazardous materials by rail, rising fuel costs, acquisition risks, competitive pressures within the industry, risks related to the geographic markets in which we operate; and other risks detailed in RailAmerica, Inc.'s filings with the Securities and Exchange Commission, including our prospectus filed with the Commission on October 13, 2009. In addition, new risks and uncertainties emerge from time to time, and it is not possible for RailAmerica, Inc. to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. RailAmerica, Inc. expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
(1) See schedule at the end of press release for a reconciliation of non-GAAP financial measures
(2) Pro forma to give effect to the initial public offering and repayment of 10% of senior notes
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2009 2008 2009 2008
---- ---- ---- ----
(In thousands, except per share data)
Operating revenue $110,137 $133,400 $316,620 $388,640
Operating expenses:
Transportation 47,524 70,364 138,974 214,728
Selling, general and
administrative 26,799 27,085 74,943 77,190
Net loss (gain) on sale of
assets (159) (434) 855 (532)
Impairment of assets -- 1,731 -- 1,731
Depreciation and amortization 10,365 9,959 30,931 29,558
------- ------- ------- -------
Total operating expenses 84,529 108,705 245,703 322,675
------- ------- ------- -------
Operating income 25,608 24,695 70,917 65,965
Interest expense, including
amortization costs (including
amortization of swap
termination costs of $9,054,
$0, $10,026 and $0,
respectively) (27,507) (17,288) (62,770) (41,622)
Other income (loss) 24 (2,170) (1,396) (3,510)
------- ------- ------- -------
Income (loss) from continuing
operations before income
taxes (1,875) 5,237 6,751 20,833
Provision for (benefit from)
income taxes (5,378) 3,203 (3,028) 13,728
------- ------- ------- -------
Income from continuing
operations 3,503 2,034 9,779 7,105
Discontinued operations:
Gain (loss) on disposal of
discontinued business (net
of income taxes (benefit) of
$(11), $60, $311, and $213,
respectively) (20) 842 12,931 545
------- ------- ------- -------
Net income $3,483 $2,876 $22,710 $7,650
======= ======= ======= =======
Dividends declared and paid
per common share $- $- $0.46 $-
Basic earnings (loss) per
common share:
Continuing operations $0.08 $0.05 $0.23 $0.16
Discontinued operations 0.00 0.02 0.30 0.02
------- ------- ------- -------
Net Income $0.08 $0.07 $0.53 $0.18
Diluted earnings (loss) per
common share:
Continuing operations $0.08 $0.05 $0.23 $0.16
Discontinued operations 0.00 0.02 0.30 0.02
------- ------- ------- -------
Net Income $0.08 $0.07 $0.53 $0.18
Weighted Average common
shares outstanding:
Basic 43,721 43,565 43,688 43,413
Diluted 43,721 43,565 43,688 43,413
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2009 2008
------------- -------------
(In thousands,
except share data)
ASSETS
Current assets:
Cash and cash equivalents $62,208 $26,951
Accounts and notes receivable, net of
allowance of $4,301 and $3,338, respectively 75,473 76,384
Other current assets 17,713 18,480
Current deferred tax assets 5,854 5,854
---------- ----------
Total current assets 161,248 127,669
Property, plant and equipment, net 956,554 953,604
Intangible assets 176,353 172,859
Goodwill 200,635 199,754
Other assets 22,105 16,561
---------- ----------
Total assets $1,516,895 $1,470,447
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $695 $899
Accounts payable 56,219 56,058
Accrued expenses 49,541 51,349
---------- ----------
Total current liabilities 106,455 108,306
Long-term debt, less current maturities 3,208 628,681
Senior secured notes 710,550 -
Deferred income taxes 157,993 144,748
Other liabilities 33,133 117,192
---------- ----------
Total liabilities 1,011,339 998,927
---------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 46,800,000
shares authorized; 43,720,263 shares issued
and outstanding at September 30, 2009; and
43,531,272 shares issued and outstanding at
December 31, 2008 437 435
Additional paid in capital and other 470,510 470,578
Retained earnings 53,254 50,029
Accumulated other comprehensive loss (18,645) (49,522)
---------- ----------
Total stockholders' equity 505,556 471,520
---------- ----------
Total liabilities and stockholders' equity $1,516,895 $1,470,447
========== ==========
RAILAMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
-------------------
2009 2008
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $22,710 $7,650
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization, including
amortization of debt issuance costs
classified in interest expense 39,858 35,108
Amortization of swap termination costs 10,026 -
Net (gain) loss on sale or disposal of
properties (12,448) 868
Foreign exchange (gain) loss on debt (1,160) 2,762
Swap termination costs (55,750) -
Write-off of deferred financing costs 2,593 -
Equity compensation costs 3,146 2,418
Deferred income taxes (5,340) 13,515
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable 1,906 10,378
Other current assets 1,315 2,017
Accounts payable (544) (3,801)
Accrued expenses (1,841) 4,904
Other assets and liabilities 657 898
---------- ----------
Net cash provided by operating activities 5,128 76,717
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (34,451) (47,546)
Proceeds from sale of assets 20,071 14,427
Deferred acquisition/disposition costs and other (355) -
---------- ----------
Net cash used in investing activities (14,735) (33,119)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 709,830 -
Principal payments on long-term debt (625,677) (6,877)
Dividends paid to common stockholders (19,485) -
Sale of common stock - 635
Deferred financing costs paid (20,018) (16,657)
---------- ----------
Net cash provided by (used in) financing
activities 44,650 (22,899)
---------- ----------
Effect of exchange rates on cash 214 (301)
---------- ----------
Net (decrease) increase in cash 35,257 20,398
Cash, beginning of period 26,951 15,387
---------- ----------
Cash, end of period $62,208 $35,785
========== ==========
RAILAMERICA, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(amounts in thousands)
(unaudited)
Three Months Ended September 30,
------------------------------------
2009 2008
----------------- -----------------
Operating revenue $110,137 100.0% $133,400 100.0%
Operating expenses:
Labor and benefits 35,755 32.4% 37,114 27.8%
Equipment rents 8,900 8.1% 10,423 7.8%
Purchased services 7,534 6.8% 10,751 8.1%
Diesel fuel 8,373 7.6% 18,692 14.0%
Casualties and insurance 4,593 4.2% 5,262 3.9%
Materials 2,977 2.7% 2,727 2.0%
Joint facilities 2,497 2.3% 3,291 2.5%
Other expenses 3,694 3.3% 9,189 6.9%
Net gain on sale of assets (159) (0.1)% (434) (0.3)%
Impairment of assets -- 0.0% 1,731 1.3%
Depreciation and amortization 10,365 9.4% 9,959 7.5%
------- ------ ------- ------
Total operating expenses 84,529 76.7% 108,705 81.5%
------- ------ ------- ------
Operating income $25,608 23.3% $24,695 18.5%
======= ====== ======= ======
Nine Months Ended September 30,
-------------------------------------
2009 2008
----------------- -----------------
Operating revenue $316,620 100.0% $388,640 100.0%
Operating expenses:
Labor and benefits 101,216 32.0% 110,720 28.5%
Equipment rents 27,327 8.6% 34,011 8.7%
Purchased services 23,417 7.4% 28,914 7.4%
Diesel fuel 23,285 7.3% 58,274 15.0%
Casualties and insurance 13,965 4.4% 15,099 3.9%
Materials 8,138 2.6% 7,683 2.0%
Joint facilities 4,822 1.5% 9,963 2.6%
Other expenses 11,747 3.7% 27,254 7.0%
Net loss (gain) on sale of
assets 855 0.3% (532) (0.1)%
Impairment of assets --- 0.0% 1,731 0.4%
Depreciation and amortization 30,931 9.8% 29,558 7.6%
------- ------ ------- ------
Total operating expenses 245,703 77.6% 322,675 83.0%
------- ------ ------- ------
Operating income $70,917 22.4% $65,965 17.0%
======= ====== ======= ======
RAILAMERICA, INC. AND SUBSIDIARIES
Railroad Freight Revenue, Carloads and Average Freight Revenue
Per Carload
Comparison by Commodity Group
(unaudited)
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
--------------------------- --------------------------
Average Average
Freight Freight
Revenue Revenue
Freight per Freight per
Revenue Carloads Carload Revenue Carloads Carload
------- -------- ------- ------- -------- -------
(Dollars in thousands, except carloads and average
freight revenue per carload)
Agricultural
Products $15,370 31,405 $489 $17,378 37,081 $469
Chemicals 12,112 20,946 578 15,388 26,456 582
Coal 9,381 46,806 200 9,516 44,110 216
Non-Metallic
Minerals and
Products 8,562 20,081 426 10,020 24,339 412
Pulp, Paper and
Allied Products 8,162 16,267 502 11,679 20,917 558
Forest Products 6,748 12,078 559 10,933 18,431 593
Food or Kindred
Products 6,061 13,042 465 7,464 14,013 533
Metallic Ores and
Metals 6,049 10,382 583 12,542 24,439 513
Waste and Scrap
Materials 5,468 14,350 381 7,191 21,609 333
Petroleum 4,648 9,909 469 5,180 10,541 491
Other 3,957 8,958 442 7,373 24,648 299
Motor Vehicles 1,483 4,047 366 1,194 3,925 304
------- ------- ------- -------- ------- -------
Total $88,001 208,271 $423 $115,858 270,509 $428
======= ======= ======= ======== ======= =======
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
--------------------------- --------------------------
Average Average
Freight Freight
Revenue Revenue
Freight per Freight per
Revenue Carloads Carload Revenue Carloads Carload
------- -------- ------- ------- -------- -------
(Dollars in thousands, except carloads and average
freight revenue per carload)
Agricultural
Products $39,916 88,484 $451 $46,337 109,069 $425
Chemicals 35,135 60,977 576 46,927 83,365 563
Coal 28,339 136,341 208 29,229 136,530 214
Non-Metallic
Minerals and
Products 24,620 58,870 418 29,987 74,151 404
Pulp, Paper and
Allied Products 24,105 47,177 511 31,877 61,076 522
Forest Products 20,559 36,004 571 30,922 56,468 548
Food or Kindred
Products 19,219 39,196 490 19,905 40,763 488
Metallic Ores and
Metals 16,854 29,919 563 41,656 77,346 539
Other 15,527 43,179 360 22,188 75,672 293
Waste and Scrap
Materials 14,791 39,762 372 22,245 63,281 352
Petroleum 14,388 31,260 460 15,305 33,372 459
Motor Vehicles 4,154 11,405 364 4,416 16,105 274
-------- ------- ------- -------- ------- -------
Total $257,607 622,574 $414 $340,994 827,198 $412
======== ======= ======= ======== ======= =======
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
Adjusted EBITDA, is a supplemental measure of liquidity that is not calculated or presented in accordance with U.S. generally accepted accounting principles ("GAAP"). We use non-GAAP financial measures as a supplement to our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. However, Adjusted EBITDA has limitations as an analytical tool. It is not a measurement of our cash flows from operating activities under GAAP and should not be considered as an alternative to cash flow from operating activities as a measure of liquidity.
Adjusted EBITDA assists us in monitoring our ability to undertake key investing and financing functions such as making investments, transferring property, paying dividends, and incurring additional indebtedness, which are generally prohibited by the covenants under our senior secured notes unless we met certain financial ratios and tests. Adjusted EBITDA represents EBITDA before impairment of assets, equity compensation costs, gain (loss) on foreign currency exchange and non-recurring headquarter relocation costs. EBITDA, also a non-GAAP financial measure, is defined as net income (loss) before interest expense, provision for (benefit from) income taxes and depreciation and amortization.
The following tables set forth the reconciliation of Adjusted EBITDA from our cash flow from operating activities (in thousands):
Nine months
ended
Sept. 30,
Q1 2009 Q2 2009 Q3 2009 2009
------- ------- ------- -----------
Cash flows from operating
activities to Adjusted
EBITDA Reconciliation:
Net cash provided by (used in)
operating activities $(6,335) $(37,023) $48,486 $5,128
Changes in working capital
accounts 25,308 2,430 (29,231) (1,493)
Depreciation and amortization,
including amortization of debt
issuance costs classified in
interest expense (15,432) (12,718) (11,708) (39,858)
Amortization of swap
termination costs -- (972) (9,054) (10,026)
Net gain (loss) on sale or
disposal of properties 728 11,530 190 12,448
Foreign exchange gain (loss)
on debt (1,164) 2,324 -- 1,160
Swap termination costs -- 55,750 -- 55,750
Write-off of deferred
financing costs -- (2,593) -- (2,593)
Equity compensation costs (790) (1,152) (1,204) (3,146)
Deferred income taxes (1,322) 658 6,004 5,340
------- ------- ------- --------
Net income 993 18,234 3,483 22,710
------- ------- ------- --------
Add: Discontinued operations
(gain) loss (184) (12,767) 20 (12,931)
------- ------- ------- --------
Income from continuing operations 809 5,467 3,503 9,779
Add:
Provision for (benefit
from) income taxes 1,232 1,118 (5,378) (3,028)
Interest expense, including
amortization costs 18,590 16,673 27,507 62,770
Depreciation and amortization 10,319 10,247 10,365 30,931
------- ------- ------- --------
EBITDA 30,950 33,505 35,997 100,452
Add:
Equity compensation costs 790 1,152 1,204 3,146
Foreign exchange (gain)
loss on debt 1,164 (2,324) -- (1,160)
Write-off of deferred
financing costs -- 2,593 -- 2,593
Non-recurring headquarter
relocation costs 509 127 408 1,044
------- ------- ------- --------
Adjusted EBITDA $33,413 $35,053 $37,609 $106,075
======= ======= ======= ========
Nine months
ended
Sept. 30,
Q1 2008 Q2 2008 Q3 2008 2008
------- ------- ------- -----------
Cash flows from operating
activities to Adjusted EBITDA
Reconciliation:
Net cash provided by operating
activities $8,186 $30,568 $37,963 $76,717
Changes in working capital
accounts 8,602 (7,134) (15,864) (14,396)
Depreciation and amortization,
including amortization of
debt issuance costs
classified in interest
expense (10,506) (11,182) (13,420) (35,108)
Net gain (loss) on sale or
disposal of properties (209) (144) (515) (868)
Foreign exchange gain (loss)
on debt (1,735) 395 (1,422) (2,762)
Equity compensation costs (1,043) (652) (723) (2,418)
Deferred income taxes (5,113) (5,259) (3,143) (13,515)
------- ------- ------- --------
Net income (1,818) 6,592 2,876 7,650
------- ------- ------- --------
Add: Discontinued operations
gain 149 148 (842) (545)
------- ------- ------- --------
Income from continuing
operations (1,669) 6,740 2,034 7,105
Add:
Provision for (benefit from)
income taxes 5,189 5,336 3,203 13,728
Interest expense, including
amortization costs 12,143 12,191 17,288 41,622
Depreciation and amortization 9,786 9,813 9,959 29,558
------- ------- ------- --------
EBITDA 25,449 34,080 32,484 92,013
Add:
Impairment of assets -- -- 1,731 1,731
Equity compensation costs 1,043 652 723 2,418
Foreign exchange (gain) loss
on debt 1,735 (395) 1,422 2,762
Non-recurring headquarter
relocation costs 222 1,152 2,864 4,238
------- ------- ------- --------
Adjusted EBITDA $28,449 $35,489 $39,224 $103,162
SOURCE RailAmerica, Inc.
TORONTO, ONTARIO--(Marketwire - Nov. 11, 2009) - North American Palladium's ("NAP" or the "Company") (TSX: PDL)(NYSE Amex:PAL) ongoing major exploration program at its 100% owned Lac des Iles ("LDI") mine near Thunder Bay, Ontario continues to yield excellent drill results and expand the size of four targets on the property.
-- Offset Zone: underground drill assay grades and intersections exceed
those of the Roby Zone
-- Cowboy Zone: underground drill assay results have higher grades than
previously released results
-- West Pit: assay results from surface drilling continue to provide
encouragement for exploration and consideration of open pit scenarios
-- North Pit-NVT Rim: assay results from surface drilling and trenching
provide encouragement to continue exploration along the north contact of
the favourable Mine Block Intrusion
"The underground and surface drill results since our September 17, 2009 news release continue to highlight the significant exploration potential remaining at the LDI mine property," said William J. Biggar, NAP's President and Chief Executive Officer. "High potential exists to increase the size and grade of the Offset Zone, as well as extend the limits of the Cowboy Zone and other footwall mineralized zones, and discover and define new zones around the existing open pit mine and elsewhere on our 8,600-hectare property. This continued exploration success means that in order to incorporate all of the 2009 drill results, we've decided to move the release date for the next mineral resource update from Q4 2009 to early Q2 2010."
Offset Zone
The Offset Zone is considered to be the fault-displaced equivalent of the Roby Zone, the source of the highest grade material in the open pit mine and the Roby underground mine. The goals of the 2009 drill program were to increase the tonnage and grade of the mineral resource, upgrade mineral resources from inferred to indicated, and to add new resources to the upper part of the Offset Zone. Phase 2 of the drill program (July to December) is near completion. The Company has received preliminary assay results for nine additional holes from the Offset Zone drilling since the September 17, 2009 news release.
Highlights of the composited assay results for these nine holes (Table 2) include:
1. 194 metres of 4.7 grams per tonne palladium in hole 09-406, including
seven higher grade intervals (Table 2):
-- 16 metres of 8.5 grams per tonne palladium;
-- 26 metres of 7.2 grams per tonne palladium;
-- 10 metres of 9.7 grams per tonne palladium;
2. 83 metres of 6.4 grams per tonne palladium in hole 09-411;
3. 37 metres of 7.7 grams per tonne palladium in hole 09-506; and
4. 12 metres of 14.2 grams per tonne palladium in hole 09-603.
The true thicknesses of holes 09-406 and 09-411 are estimated to be 100 metres and 50 metres respectively (Figure 3), significantly thicker than intersections reported for farther to the south, thus confirming that the Offset Zone is thicker in the north. The Offset Zone remains open to the north.
Cowboy Zone
Phase 2 of the drill program also aimed to increase the lateral and vertical limits of the Cowboy Zone, located 30 to 50 metres to the west of the Offset Zone. The Company has received preliminary assay results from four more Cowboy Zone holes (Table 3) since the September 17, 2009 news release, including the following highlights:
1. 11 metres of 6.0 grams per tonne palladium in hole 09-409; and 2. 11 metres of 7.8 grams per tonne palladium in hole 09-411.
These intersections have the highest palladium grades reported to date for the Cowboy Zone and extend the limit of the zone 30 metres farther to the north (Figure 4) to section 509N.
West Pit
The surface drill program in the West Pit area of the LDI mine property was designed to explore two targets, 507N Pod and Quartz Diorite, located immediately to the west of the open pit mine. The 15 holes were drilled north-to-south or south-to-north, perpendicular to all previous holes in the area. Highlights from the preliminary composited assay results (Table 4) for seven of these additional holes in the West Pit area are as follows:
1. 6 metres of 2.4 grams per tonne palladium from 221 metres down hole in
hole 09-078; and
2. 10 metres of 7.9 grams per tonne palladium from 71 metres down hole in
hole 09-080, including, 5 metres of 10.7 grams per tonne palladium from
71 metres down hole.
These two holes intersected the 507N Pod target (Figures 5 and 6) and extend the PGE mineralization along strike to the east by 50 metres and to the west by 25 metres from the mineralization reported in the September 17, 2009 news release. The intersections to date of the second target, quartz diorite, are lower grade (Table 4) and similar to the grade of the open pit mine (average grade of 1.8 grams per tonne palladium). A follow-up program of 11 additional drill holes is underway to expand the lateral and vertical limits of the 507N Pod mineralization and further establish its geometry and orientation.
North Pit-NVT Rim
The surface drilling and trenching program in the North Pit-NVT Rim area of the LDI mine property was planned to follow-up on historic and previous drill results and discover new mineralized zones along strike northeastwards from the Roby Zone. Work completed in 2009 includes drilling 17 drill holes and digging and sampling 7 trenches on a 175-metre strike-length along the north margin of the favourable Mine Block Intrusion (Figures 7 and 9). An eighth trench was excavated and sampled 40 metres farther to the east, for which assays remain pending from the laboratory.
Highlights of the composited assay results from the North Pit-NVT Rim drill program are (Table 5):
1. 25 metres of 2.4 grams per tonne palladium from 197 metres down hole in
hole 09-036, including 6 metres at 7.9 grams per tonne palladium from
197 metres down hole;
2. 19 metres of 1.1 grams per tonne palladium from 89 metres down hole in
hole 09-039; and
3. 8 metres of 3.4 grams per tonne palladium from 23 metres down hole in
hole 09-044.
The best grades in the drilling are from holes in the west and centre parts of the North Pit area (Figures 7 and 8).
Composited assay highlights of the trenching program include (Table 6):
1. 2 metres of 2.5 grams per tonne palladium from trench 2;
2. 2 metres of 5.7 grams per tonne palladium and a second interval of 5.6
grams per tonne palladium for trench 7; and,
3. 3 metres of 3.5 grams per tonne palladium from trench 8.
In the trenching, the thickness and grade of the PGE mineralization appears to increase eastward. Compared to the drill results, the best grades for the trenching appear to be in the centre and east parts of the North Pit area (Figure 9).
The drilling and trenching results together indicate the presence of a zone of anomalous palladium assays (1 to 10 grams per tonne palladium) which follows the contact with the Roby Zone to the east. This zone has the potential to extend Roby Zone mineralization for approximately 1.5 kilometres across the northern part of the favourable Mine Block Intrusion to the Creek Zone (Figure 2). Follow-up drilling, trenching and prospecting work are planned for the North Pit-NVT Rim area and the Creek Zone area in 2010.
Quality Assurance and Quality Control, Qualified Person
The assay analyses performed during NAP's drill programs are subject to a formal quality assurance and quality control (QAQC) program. Diamond drill core is logged and sampled on site with sample transport by the Company to Activation Laboratories Ltd. (Thunder Bay and Ancaster), an independent accredited laboratory, for assay analysis. Check assay analyses are carried out by SGS Minerals Services (Toronto), a laboratory that is also independent of the Company. Internal check assays have been completed for the North Pit-NVT Rim drill results reported herein and for the results of the September 17 news release. The latter results have been updated on the website. Internal check assays remain to be completed for the Offset Zone, Cowboy Zone and the West Pit drill results and on the North Pit-NVT Rim trenching results.
The drill programs were designed and executed by the Company's Thunder Bay exploration team led by Dr. John Corkery, under the supervision of Dr. Bill Stone, P.Geo. Dr. Stone is a Qualified Person under NI43-101 and is responsible for the technical content of this news release.
North American Palladium: Re-engineering the Future
NAP is a precious metals company that owns the Lac des Iles mine, which produced platinum group metals for 15 years until October 2008 when it was placed on temporary care and maintenance due to low metal prices. Prior to the temporary shutdown, the mine had annual production of 270,000 ounces of palladium, 20,000 ounces of platinum and 20,000 ounces of gold. The company also owns and operates the Sleeping Giant gold mine located in the Abitibi region of Quebec, which produced over 1 million ounces of gold from 1988-2008 at an average grade of 11.44 g/t. North American Palladium has resumed gold production at the Sleeping Giant mine and expects to achieve commercial production at the start of 2010 at an annual rate of 50,000 ounces.
Cautionary Statement on Forward Looking Information
Certain information included in this news release including information relating to exploration results, and future exploration results, constitute 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. The words 'expect', 'believe', 'will', 'intend', 'estimate' and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, risks and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of North American Palladium to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and that the forward-looking statements are not guarantees of future performance. These statements are also based on certain factors and assumptions. For more details on these estimates, risks, assumptions and factors, see the Company's most recent Form 40-F/Annual Information Form on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities. In addition, there can be no assurance that the Company's Lac des Iles or Sleeping Giant mines will be successfully restarted or that other properties can be successfully developed. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
North American Palladium
Annemarie Brissenden
Director, Investor Relations
416-360-7590 Ext. 226
abrissenden@nap.com
www.nap.com
Source: North American Palladium Ltd.
SIOUX CITY, Iowa--(BUSINESS WIRE)-- Terra Industries Inc. (NYSE: TRA) today announced that PROXY Governance, Inc. and Egan-Jones Proxy Services, two of the nation's leading independent proxy advisory firms, recommend that Terra shareholders vote FOR Terra's three directors - Martha O. Hesse, Dennis McGlone, and Chairman, Henry R. Slack on the WHITE proxy card at Terra's November 20, 2009 Annual Meeting.
"We are pleased that PROXY Governance and Egan-Jones have separately indicated their support for the re-election of all three Terra directors," said Terra President and CEO Michael Bennett. "PROXY Governance and Egan-Jones' recommendations reinforce our strong belief that Terra's Board of Directors, which has returned more than $1 billion in value to shareholders over the past four years, is best suited to continue executing on our focused and prudent strategy and driving shareholder value."
Bennett continued, "CF Industries Holdings, Inc.'s (NYSE: CF) latest proposal is inadequate and opportunistic and not in the best interests of Terra shareholders. We strongly believe that CF's nominees, if elected to Terra's Board, would work to advance CF's inadequate proposal and CF's self-serving interests at the expense of all other Terra shareholders. We urge Terra shareholders to follow the recommendation of both PROXY Governance and Egan Jones and vote FOR Terra's directors on the WHITE proxy card today and discard any blue proxy card they may receive from CF."
In its November 11, 2009 report, PROXY Governance noted1:
-- "Because the board has made a compelling case that the terms offered by
CF undervalue the company's current business as well as its strategic
prospects, and CF's strategy for the combined company would diversify
away some of the benefits of the strong competitive position Terra's
board and management have built over the years, we believe shareholders
will be best served by voting the management proxy to re-elect the
incumbent directors at this annual meeting."
-- "Because we believe the board has made a compelling case that the
company's stand-alone value exceeds the value of the buy-out offer,
PROXY Governance recommends shareholders vote the management proxy card
to re-elect the management nominees."
-- "In remaining a stand-alone company, however, the company will continue
to benefit from its quality, well-positioned assets, a solid capital
structure, access to a number of strong growth opportunities such as
DEF, and an experienced management team - the factors which contribute
most directly to growing intrinsic value, and which ultimately drive
sustainable long-term share performance."
-- "The three candidates proposed by CF as alternatives to the incumbent
nominees were selected by CF's legal and financial advisors as much for
their lack of connection to CF - whose board and CEO they have not even
met - as for their general business experience; none have any particular
background in the industry, nor have they been positioned in any
shareholder communications as offering potential skill upgrades for the
Terra board."
In its November 9, 2009 report, Egan-Jones noted1:
-- "CF has made five separate proposals to the Terra Board over the last
nine months, none showing any material improvement over the initial
unsolicited offer that CF made on January 15, 2009."
-- "Terra's Board has been consistent in its assessment of the proposals
and the lack of strategic or financial merit in a combination between
Terra and CF."
-- "Terra strives to uphold the highest standards of ethical conduct, to
follow corporate governance best practices, to report accurately and
transparently and to fully comply with the laws, rules and regulations
that govern Terra's business."
-- "As such, we believe that the current slate of directors presented by
the management is in the best interest of the Company and its
shareholders."
Terra shareholders are reminded that their vote is important, no matter how many shares they own. Whether or not they attend the Annual Meeting, Terra shareholders are encouraged to follow the recommendations of both PROXY Governance and Egan-Jones and vote the WHITE proxy today by Internet, telephone or by signing and dating the WHITE proxy card itself and returning it as soon as possible.
Any Terra shareholders who have questions or require assistance voting their shares should contact MacKenzie Partners, Inc., which is assisting Terra in this matter, at (800)-322-2885.
About Terra
Terra Industries Inc., with 2008 revenues of $2.9 billion, is a leading North American producer and marketer of nitrogen products.
Important Information and Where to Find It
On October 13, 2009, Terra filed with the Securities and Exchange Commission (the "SEC") a definitive proxy statement in connection with its 2009 Annual Meeting, and is mailing the definitive proxy statement to its shareholders. Investors and security holders are urged to read the definitive proxy statement relating to the 2009 Annual Meeting and any other relevant documents filed with the SEC (when available), because they contain important information. Investors and security holders may obtain a free copy of the definitive proxy statement and other documents that Terra files with the SEC (when available) at the SEC's Web site at www.sec.gov and Terra's Web site at www.terraindustries.com. In addition, the definitive proxy statement and other documents filed by Terra with the SEC (when available) may be obtained from Terra free of charge by directing a request to Terra Industries Inc., Attn: Investor Relations, Terra Industries Inc., 600 Fourth Street, P.O. Box 6000, Sioux City, IA 51102-6000.
Certain Information Concerning Participants
Terra, its directors, executive officers and certain employees specified in Annex A to Terra's definitive proxy statement for the 2009 Annual Meeting, which was filed with the SEC on October 13, 2009, are participants in the solicitation of Terra's security holders in connection with its 2009 Annual Meeting. Security holders may obtain information regarding the names, affiliations and interests of such individuals in Terra's Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the SEC on February 27, 2009 and amended on April 28, 2009, and its definitive proxy statement for the 2009 Annual Meeting. To the extent holdings of Terra securities have changed since the amounts printed in the definitive proxy statement for the 2009 Annual Meeting, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. These documents (when available) may be obtained free of charge from the SEC's Web site at www.sec.gov and Terra's Web site at www.terraindustries.com.
Forward-Looking Statements
Certain statements in this communication may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and Terra undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks, uncertainties and assumptions include, among others:
-- risks related to potential acquisition transactions,
-- changes in financial and capital markets,
-- general economic conditions within the agricultural industry,
-- competitive factors and price changes (principally, sales prices of nitrogen and methanol products and natural gas costs),
-- changes in product mix,
-- changes in the seasonality of demand patterns,
-- changes in weather conditions,
-- changes in environmental and other government regulation,
-- changes in agricultural regulations and
-- changes in the securities trading markets.
Additional information as to these factors can be found in Terra's 2008 Annual Report/10-K and in Terra's subsequent Quarterly Reports on Form 10-Q, in each case in the sections entitled "Business," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in the Notes to the consolidated financial statements.
Note: Terra Industries' news announcements are also available on its Web site, www.terraindustries.com.
1 Permission to use quotation was neither sought nor obtained.
Source: Terra Industries Inc.
MISSISSAUGA, ONTARIO--(Marketwire - Nov. 11, 2009) - Prime Restaurants Royalty Income Fund ("the Fund") (TSX: EAT.UN) today reported results for the three and nine months ended September 30, 2009.
Gross revenue reported by the royalty pooled restaurants in the third quarter of 2009 was $88.1 million compared to $89.3 million for the same period last year. For the nine months ended September 30, 2009, gross revenues were $250.7 million compared to $258.4 million for the first nine months of 2008. There are 161 royalty pooled restaurants in 2009 compared to 155 royalty pooled restaurants in 2008. For the three and nine months ended September 30, 2009, royalty income from royalty pooled restaurants was $2.9 million and $8.1 million respectively, compared to $2.9 million and $8.4 million for the same periods last year.
Distributable cash available to Unitholders was $1.8 million and $5.4 million for the three and nine months ended June 30, 2009. The Fund declared cash distributions of $1.8 million or $0.28 per unit in the quarter and $5.5 million or $0.85 per unit for the first nine months of 2009 compared to $1.7 million and $5.2 million for the same periods last year. The increases in cash distributions declared are due to the new TradeMarkCo Note and the Limited Voting Units issued on January 1, 2009 in connection with TradeMarkCo's settlement of its obligation with PRC for new restaurants added to the list of royalty pooled restaurants.
The Fund also announced today that the cash distribution payable in the month of December 2009 will be $0.04 per Unit. The distribution for the period from November 1, 2009 to November 30, 2009 of $0.04 per Unit will be made on December 15, 2009 to Unitholders of record at the close of business on November 30, 2009. As disclosed on October 14, 2009, due to the difficult operating environment, Prime Restaurants of Canada ("PRC") requested that PRC Trademarks Inc. ("TradeMarkCo") defer collecting a portion of the royalty payable to it from PRC in the month of November 2009 under the Amended and Restated License and Royalty Agreement dated March 13, 2008 (the "Royalty Agreement"). PRC has since requested that the deferral continue for another month. TradeMarkCo has agreed to defer collecting a portion of the royalty payable in the months of November and December and to refrain from taking any actions under the Royalty Agreement until December 31, 2009 (or earlier in certain limited circumstances). This will not prejudice TradeMarkCo's rights and remedies after December 31, 2009 in respect of all amounts payable under the Royalty Agreement. TradeMarkCo has in turn advised the Fund that TradeMarkCo will be unable to pay the full amount of interest owing on the note of TradeMarkCo held by the Fund in the months of November and December 2009, which is the source of cash for distributions to Unitholders. As a result, the cash distributions payable to Unitholders on November 16, 2009 and December 15, 2009, will be reduced to $0.04 per unit. The Fund's Board of Trustees and TradeMarkCo's Board of Directors have begun considering a longer term distribution policy (although it is not anticipated that monthly cash distributions will be reduced below $0.04 per unit for the foreseeable future).
Sales for the royalty pooled restaurants in 2009 have been affected by intense competition and the negative impact of the current economic recession on consumer's discretionary spending and the casual dining sector. As a result, while the decline in same store sales in the third quarter was less than the second quarter of the year, compared to the prior year's third quarter same store sales declined by 6.3%. By brand, Casey's, East Side Mario's, and the Prime pubs posted same store sales declines of 4.3%, 7.4%, and 3.0%, respectively in the quarter. On a regional basis, Western Canada, Ontario, Quebec, and Atlantic Canada posted same store sales declines of 10.0%, 6.5%, 1.8%, and 2.0% respectively in the third quarter of 2009. For the first nine months of 2009, same store sales declined by 6.6% compared to the prior year. SSSG at Casey's, East Side Mario's, and the Prime Pubs were down 6.2%, 7.2%, and 3.4%, respectively. For the first nine months of 2009, Western Canada, Ontario, Quebec, and Atlantic Canada posted negative SSSG of 10.2%, 6.4%, 7.0%, and 0.6% respectively.
"The third quarter was particularly challenging for Prime and the Canadian casual dining sector as a whole. While we are not satisfied with our results, we are cautiously optimistic that consumers are beginning to dine out again and that we will gradually see improved performance over the long term," commented John Rothschild, Chairman and CEO of Prime Restaurants of Canada Inc. "While we did see improvement in same store sales declines in the quarter compared with the second quarter of this year, we know there is still much work to be done in these challenging times to continue this positive trend."
Operational Review
Four restaurants were closed during the quarter; three East Side Mario's located in Ontario and Alberta, and one pub in Ontario. Additionally, one East Side Mario's restaurant underwent renovations during the quarter. SSSG at the renovated location increased by 7.0% from sales levels prior to the renovation.
FINANCIAL HIGHLIGHTS OF THE FUND:
----------------------------------------------------------------------------
($000's, except per unit
data) Three months Three months Nine months Nine months
ended ended ended ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest and dividend
income $ 1,803 $ 1,785 $ 5,565 $ 5,270
Net earnings 1,772 1,756 5,472 5,182
Total assets 59,176 56,983 59,176 56,983
Distributions to
Unitholders 1,844 1,723 5,531 5,169
----------------------------------------------------------------------------
Trust units - outstanding 6,538,174 6,110,000 6,538,174 6,110,000
----------------------------------------------------------------------------
Trust units - diluted 9,749,794 9,321,620 9,749,794 9,321,620
----------------------------------------------------------------------------
Basic earnings per Trust
Unit $ 0.27 $ 0.29 $ 0.84 $ 0.85
Diluted earnings per Trust
Unit $ 0.28 $ 0.29 $ 0.84 $ 0.85
Distributions paid per
Trust Unit $ 0.28 $ 0.28 $ 0.85 $ 0.85
----------------------------------------------------------------------------
SELECTIVE YEAR-TO-DATE TRADEMARKCO FINANCIAL HIGHLIGHTS:
-----------------------------------------------------------------
($000's except # of Royalty Pooled 2009 2008
Restaurants)
-----------------------------------------------------------------
# of Royalty Pooled Restaurants 161 155
-----------------------------------------------------------------
-----------------------------------------------------------------
Gross Revenue Royalty Pooled
Restaurants $ 250,680 $ 258,410
-----------------------------------------------------------------
-----------------------------------------------------------------
Royalty Income 8,147 8,398
Operating Expenses 490 531
Dividends accrued on Class A and
Class B shares 2,702 2,712
Interest Expense 5,318 5,160
-----------------------------------------------------------------
Outlook
At Casey's, a new "Food First" marketing and operating strategy was introduced in 2009 with a commitment to operational excellence while maintaining Casey's heritage of delivering a value proposition built on quality. During the fourth quarter, Casey's will introduce a new direct mail promotional campaign, providing consumers within the area of a Casey's restaurant with a $10.00 Gift Card with an option to "top-up" with an extra $5.00 by registering the card on a branded website. This promotion was test marketed in eight locations across Ontario and generated significant top line sales growth and increased guest traffic, driven by a 14% redemption rate. During the holiday season Casey's will also be reintroducing its very successful gift card program.
In the pubs business, a new winter menu will be introduced in the fourth quarter, complimented by a Scotch and Whiskey pairing in continued support of its premium pub experience. Also during the fourth quarter, Prime Pubs will be bringing back its gift card program, offering guests a complimentary $5.00 or $10.00 gift card with the purchase of a $30.00 or $50.00 gift card.
At East Side Mario's, management continues to roll out the new refreshed and high energy design, taking the brand back to its roots to provide an authentic taste of Little Italy. With a twenty-year heritage of providing fun and value to Canadian families, East Side Mario's has a well-established identity with an 81% brand loyalty factor as measured by an independent survey. For the balance of 2009, planned initiatives include a group sales package in order to capture the holiday party business as well as the reintroduction of its popular gift card promotion. These programs will be supported by radio and newspaper advertisements.
Looking ahead, management believes that over the near-term consumer concerns about the economic slowdown in Canada will continue to impact restaurant sales across all sectors of the industry. However, as economic conditions improve, management believes the casual dining sector will benefit as consumers return to dining out, and that Prime's multi-brand approach covering all spectrums of the Canadian casual dining and pubs business will prove beneficial. In addition, management believes its ongoing renovation programs, new restaurant openings, new menus and other sales initiatives, combined with its rigorous focus on customer service, will continue to attract new and repeat guests to all of its brands.
Appointment of New Trustee
The Fund also announced today that Mr. Michael Aronovici has been appointed a Trustee of the Fund and a Director of TrademarkCo. Mr. Aronovici is the President of Interaction Restaurants Group Inc., a restaurant management and holding company that has been operating in the Canadian restaurant industry for twenty years, and has been involved with several leading brands such as Pizza Hut and Starbucks Coffee amongst others. Mr. Aronovici is also the past Chairman of the Canadian Restaurant and Foodservice Association and a member of the board of directors of the American National Restaurant Association. With Mr. Aronovici's appointment, it was also announced that Mr. John Rothschild has re- joined the Board of Directors of TradeMarkCo.
The Fund's Board of Trustees and TradeMarkCo's Board of Directors are continuing the strategic review announced on June 29, 2009 to examine various alternatives, including the possible combination of the Fund with TradeMarkCo and PRC in order to reduce costs, maximize operating synergies, and enhance cash available for distribution. There can be no assurance that such a combination or any other transaction will result from the strategic review.
The Fund's financial statements and Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2009 are available at www.primeincomefund.ca and www.sedar.com.
PRC's Consolidated Financial Statements and MD&A
Prime Restaurants of Canada Inc. ("PRC") consolidated financial statements, notes and MD&A can be accessed at www.sedar.com under the "financial statements of operating entity" and "other" document types for the Fund.
Quarterly Conference Call
The Fund will host a conference call on Thursday, November 12, 2009 at 10:00 a.m. ET to discuss the results of the Fund and operations and performance of PRC. Interested participants may dial (416) 849- 2698 or toll-free at (1-866) 400-2270 to access the call. The conference call will also be broadcast over the Fund's website at www.primeincomefund.ca.
The Fund is a limited purpose trust authorised to issue an unlimited number of Trust Units ("Units") and established to invest in PRC Trademarks Inc. ("TradeMarkCo"). The source of revenue for the Fund is through its ownership in, and debt instrument issued by, TradeMarkCo. The Fund receives interest income on the TradeMarkCo Note which it distributes to its Unitholders. TradeMarkCo owns certain trade-marks and licenses their use to PRC which operates and franchises the restaurant and bar business. In return, TradeMarkCo receives royalty income from the royalty pooled restaurants operated and franchised by PRC.
Forward-Looking Statements
The public communications of the Fund often include written or oral forward-looking statements. Statements of this type are included in this new release, and may be included in filings with Canadian securities regulators, or in other communications. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives for 2009 and beyond, our and PRC's strategies or planned future actions, our and PRC's targets or expectations for our financial performance and condition, PRC's ability to pay the Royalty and our ability to pay the distributions. All statements, other than statements of historical fact, contained in this new release are forward-looking statements, including, without limitation, statements regarding the future financial position and operations (including estimated revenue from Royalty Pooled Restaurants and the estimated administrative and other operating expenses of the Fund), business strategy, distributions, plans and objectives of or involving the Fund and PRC. Readers can identify many of these statements by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" and similar words or the negative thereof. Although management of the Fund and PRC believe that the expectations represented in such forward- looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties including those discussed in the Fund's MD&A and the Fund's annual information form dated March 11, 2009, (the "AIF") under "Narrative Description of the Business - Risk Factors" which are available at www.sedar.com. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements.
Assumptions and analysis about the performance of the Fund and PRC and the markets in which they operate are considered in forecasting the Fund's and PRC's expected financial results, PRC's ability to pay the Royalty and the Fund's ability to pay distributions and in making related forward-looking statements. The key assumption in respect of the Fund's level of distributions is that the cumulative distributable cash will be able to support the Fund's current level of distributions. The Fund receives the cash it distributes from TradeMarkCo. TradeMarkCo receives all of the cash it pays to the Fund through a royalty from PRC. Accordingly, the ability of the Fund to pay its distributions depends on PRC's financial performance and ability to pay the royalty. In respect of the ability to maintain and grow the royalty pooled revenue and PRC's financial performance, key assumptions include those relating to the demand for the goods and services under the Prime Marks and in respect of the Canadian markets in which the Royalty Pooled Restaurants operate. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.
The information set forth in the MD&A and AIF identifies factors that could affect the operating results and performance of the Fund and PRC. We caution that the list of factors discussed in the MD&A and the AIF is not exhaustive, and that, when relying on forward-looking statements to make decisions with respect to the Fund, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, the Fund does not undertake to update any forward-looking statement, whether written or oral, that it may make or that may be made, from time to time, on its behalf.
Definition of Distributable Cash and Non-GAAP Measures
Management views Distributable Cash as a useful supplemental measure of operating performance that provides investors with an indication of cash available for distribution. Management calculates Distributable cash as operating cash flows for the Fund (net earnings adjusted for non-cash items such as deferred revenue). Distributable Cash is not an earnings measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, Distributable Cash may not be comparable with similar measures presented by other entities.
FOR FURTHER INFORMATION PLEASE CONTACT:
Prime Restaurants of Canada
John Rothschild
Chairman and CEO
(905) 568-0000
jrothschild@primerestaurants.com
www.primerestaurants.com
Source: Prime Restaurants Royalty Income Fund
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