Amtelecom Income Fund Reports Fourth Quarter and Year End 2006 Results
AYLMER, ON, Feb. 28 /CNW/ - Amtelecom Income Fund (the "Fund" or
"Amtelecom") (TSX - AMT.UN) today reported its unaudited financial results for
the fourth quarter and for the year ended December 31, 2006. The year ended
December 31, 2006 includes 341 days of operations of People's Tel Limited
Partnership (People's) which was acquired by the Fund on January 24, 2006.
"I am pleased to report that fourth quarter results were very strong and
Amtelecom has just completed its most successful year yet." commented Michael
J. Andrews, President and Chief Executive Officer of Amtelecom, "The year saw
a number of major accomplishments including the successful acquisition and
integration of People's in January, a $20 million debt private placement in
May, a successful unit offering in August and on January 1, 2007, the
completion of our reorganization into a fund-on-partnership structure. At the
same time, we have not lost our focus on the customer. We improved our
customer service response times and processes, expanded service offerings and
grew our overall customer base. With the acquisition and reorganization
expenses now behind us, we are well positioned for solid growth in 2007."
Results for the quarter ended December 31, 2006
Total revenues for the quarter came in at $8.0 million. Specific
highlights include:
- Telecommunications revenues were $5.8 million in the quarter
compared to $4.4 million in the same quarter in 2005.
- Cable television revenues held steady at $0.7 million in the quarter
ended 2006 compared to 2005.
- Internet revenues of $1.5 million in the fourth quarter were
$0.8 million more than the $0.7 million in 2005 due to continued
strong growth in the highspeed Internet business.
For the three month period ended December 31, 2006, the Fund's
distributable cash, which excludes acquisition and reorganization expenses,
was $2.7 million compared to $1.6 million in 2005.
During the fourth quarter of 2006, net earnings were $0.4 million and
cash distributions of $2.2 million ($0.30 per unit to Unitholders) were
declared.
Results for the year ended December 31, 2006
For the year ended December 31, 2006, Amtelecom generated revenues of
$31.0 million compared to revenues of $23.7 million in 2005. Amtelecom's
distributable cash, which excludes acquisition and reorganization expenses,
was $9.4 million in 2006 compared to $7.5 million in 2005.
For the year ended December 31, 2006, Amtelecom reported net earnings of
$3.0 million and declared cash distributions of $7.8 million ($1.20 per unit
to Unitholders).
Network access services ended the year at approximately 26,898 lines and
cable television subscribers by year end were 8,716. Amtelecom continued to
experience significant growth in highspeed Internet services adding more than
6,435 subscribers during the year through the People's acquisition and organic
growth bringing total Internet subscribers to 13,661.
All financial statements for the Amtelecom Income Fund are available on
SEDAR at www.sedar.com.
Investor and Analyst Conference Call
Amtelecom Income Fund will hold a conference call to present and discuss
its quarterly results on Friday March 2, 2007 at 10:00 am Eastern Time. The
investment community and media representatives are invited to listen in on
this conference call and will have the opportunity to ask questions. The call
will also be open to the general public.
To participate in the conference call:
- From Toronto, dial: 416-641-6105
- From other locations, dial: 1-866-542-4236
To access the replay facility (6:00 pm on March 2, 2007 through to
11:59 pm on March 16, 2007)
- From Toronto 416-695-5800
- From other locations, dial: 1-800-408-3053
Enter access code: 3216436 followed by number sign
About Amtelecom Income Fund
Amtelecom Income Fund is an unincorporated, open-ended, limited purpose
trust established under the laws of the Province of Ontario created to hold
all of the common shares and notes of Amtelecom Communications Inc. and its
acquired operating subsidiaries (collectively "Amtelecom"). Amtelecom is the
local telephone service provider to several communities in southwestern and
central Ontario, currently providing services through approximately 26,900
residential and business access lines. Amtelecom also provides cable
television service to approximately 8,700 subscribers and Internet services to
approximately 13,600 subscribers.
Caution concerning forward-looking statements
Certain statements in this press release may constitute forward looking
statements which are subject to important risks and uncertainties. The results
or events expressed or implied in these statements may differ materially from
actual results or events.
(*)Canadian GAAP Terminology
Distributable cash is not a defined term under Canadian generally
accepted accounting principles ("GAAP") and there is no standardized measure
of distributable cash. Consequently, distributable cash, as presented, may not
be comparable to similar measures presented by other income funds. Management
believes that since the Fund's operations ultimately support distributions to
Unitholders one of the primary metrics of financial performance is
distributable cash. Therefore, management believes the presentation of this
measure will enhance an investor's understanding of the Fund's operating
performance.
AMTELECOM INCOME FUND
OPERATING STATISTICS
-------------------------------------------------------------------------
Operating statistics December 31, December 31,
2006 2005
-------------------------------------------------------------------------
Network Access Services 26,898 21,547
Cable television subscribers 8,716 8,922
Internet subscribers
Highspeed 10,780 6,119
Dialup 2,881 1,107
-------------------------------------------------------------------------
Total Internet subscribers 13,661 7,226
-------------------------------------------------------------------------
Amtelecom Income Fund
Consolidated Financial Statements
(Unaudited)
For the years ended December 31, 2006 and 2005
Amtelecom Income Fund
Consolidated Balance Sheets
December 31, 2006 and 2005
(In thousands)
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ - $ 580
Accounts receivable 2,158 2,040
Supplies and prepaid expenses 1,023 351
-----------------------------------------------------------------------
3,181 2,971
Property, plant and equipment (note 3) 34,004 26,653
Goodwill 17,799 7,856
Intangible assets (note 4) 36,728 30,948
Deferred costs 516 577
-------------------------------------------------------------------------
$ 92,228 $ 69,005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Bank indebtedness (note 5) $ 111 $ -
Accounts payable and accrued liabilities 5,229 3,260
Distributions payable to unitholders (note 8) 728 596
Income and other taxes payable 195 42
-----------------------------------------------------------------------
$ 6,263 $ 3,898
Long-term debt (note 6) 25,000 15,000
Future income taxes (note 7) 289 496
Unitholders' equity:
Trust units (note 9) 70,671 54,830
Accumulated earnings 17,803 14,767
Accumulated distributions (27,798) (19,986)
-----------------------------------------------------------------------
60,676 49,611
Commitments (note 11)
Subsequent events (note 16)
-------------------------------------------------------------------------
$ 92,228 $ 69,005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
On behalf of the Board:
Director Director
------------------------- -------------------------
Amtelecom Income Fund
Consolidated Statements of Earnings and Accumulated Earnings
Years ended December 31, 2006 and 2005
(In thousands, except per unit amounts)
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Revenue:
Telecommunications $ 22,844 $ 18,043
Cable TV 2,856 2,889
Internet 5,256 2,794
-------------------------------------------------------------------------
30,956 23,726
-------------------------------------------------------------------------
Expenses:
Operating 15,332 12,059
Acquisition and reorganization (note 12) 1,554 -
-------------------------------------------------------------------------
16,886 12,059
-------------------------------------------------------------------------
Earnings before financing costs, income taxes
and amortization 14,070 11,667
Amortization 8,214 6,356
Financing costs:
Operating interest 238 229
Interest on long-term debt 2,371 677
Amortization of deferred financing costs 313 96
-------------------------------------------------------------------------
2,922 1,002
-------------------------------------------------------------------------
Earnings before income taxes 2,934 4,309
Income tax provision (recovery) (note 7):
Current 376 422
Future (478) (564)
-------------------------------------------------------------------------
(102) (142)
Net earnings $ 3,036 $ 4,451
Accumulated earnings, beginning of year 14,767 10,316
-------------------------------------------------------------------------
Accumulated earnings, end of year $ 17,803 $ 14,767
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per unit $ 0.47 $ 0.75
Weighted average number of units outstanding 6,399.8 5,957.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
Amtelecom Income Fund
Consolidated Statements of Cash Flows
Years ended December 31, 2006 and 2005
(In thousands)
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net earnings $ 3,036 $ 4,451
Items not involving cash:
Amortization of plant and equipment 6,019 4,533
Amortization of intangible assets 2,195 1,823
Amortization of deferred costs 313 96
Gain on sale of plant and equipment (26) (9)
Future income tax recovery (478) (564)
Change in non-cash operating working
capital (note 13) 1,932 380
-------------------------------------------------------------------------
12,991 10,710
Investing activities:
Acquisition of People's
Communications Inc. (note 2) (27,094) -
Proceeds on sale of plant and equipment 187 8
Additions to property, plant and equipment (6,046) (4,693)
-------------------------------------------------------------------------
(32,953) (4,685)
Financing activities:
Increase in bank indebtedness 111 -
Deferred costs (252) (356)
Proceeds from acquisition credit facility 25,619 -
Repayment of acquisition credit facility (25,619) -
Proceeds of term credit facility - 1,000
Repayment of term credit facility (10,000) -
Proceeds from senior secured long-term debt 20,000 -
Proceeds from issuance of units (note 9) 17,250 -
Issuance costs (note 9) (1,409) -
Distributions paid to unitholders (note 8) (7,680) (7,149)
-------------------------------------------------------------------------
18,020 (6,505)
-------------------------------------------------------------------------
Decrease in cash during the year (1,942) (480)
Cash, beginning of year 580 1,060
Cash acquired on acquisition (note 2) 1,362 -
-------------------------------------------------------------------------
Cash, end of year $ - $ 580
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow information:
Income taxes paid (received) $ (153) $ 873
Interest paid 2,486 907
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
AMTELECOM INCOME FUND
Notes to the Consolidated Financial Statements
December 31, 2006 and 2005
(In thousands of dollars except per unit amounts)
-------------------------------------------------------------------------
Amtelecom Income Fund (the "Fund") is an unincorporated open-ended,
limited purpose trust established under the laws of the Province of
Ontario pursuant to a Declaration of Trust dated January 14, 2003 and
commenced commercial operations on March 6, 2003. The Fund was created to
invest in entities in the telecommunications, cable television, Internet
or data transmission services or other businesses as may be approved from
time to time by the Trustees of the Fund.
Each unitholder in the Fund participates pro-rata in any distribution
from the Fund. Income tax obligations related to distributions are the
obligations of the unitholder.
1. Significant accounting policies:
These consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles.
Significant accounting policies adopted by the Fund are as follows:
a) Basis of consolidation:
The consolidated financial statements include the accounts of the
Fund and its wholly owned subsidiaries Amtelecom Communications
Inc. ("ACI"), Amtelecom Inc. ("AI") and Amtelecom Cable Inc.
("Cable") since March 6, 2003, the date of amalgamation as well as
341 days of People's Tel Limited Partnership ("PTLP") and
Amtelecom Holdings Limited Partnership ("AHLP") operations since
January 24, 2006, the date of acquisition. Significant
inter-company accounts and transactions have been eliminated in
consolidation.
b) Revenue recognition:
The principal sources of revenue to the Fund and its recognition
policies for these revenues are as follows:
(i) Monthly subscriber fees in connection with telephone, cable
and internet services are recognized in the period in which
the services are rendered to customers; and
(ii) Telecommunications revenue from Canadian Radio-television and
Telecommunications Commission ("CRTC") national fund
contributions and direct toll are recorded monthly.
Customer deposits and amounts received from customers related to
services to be provided in future periods are deferred and
recorded in accounts payable and accrued liabilities.
c) Property, plant and equipment:
Property, plant and equipment are recorded at amortized cost.
Amortization is recorded on a straight-line basis over the
estimated useful lives of the assets as follows:
------------------------------------------------------------------
Buildings 25 - 40 years
Telephone and distribution equipment 5 - 20 years
Work equipment 5 - 20 years
Furniture and fixtures 5 - 10 years
Internet hardware and software 3 - 5 years
------------------------------------------------------------------
Buildings, telephone and distribution equipment and work equipment
under construction begin to be amortized once the assets are put
into service.
d) Goodwill:
Goodwill reflects the price paid for acquired businesses in excess
of the fair value of net tangible assets and identifiable
intangible assets acquired. Goodwill is not amortized but is
tested for impairment annually, or more frequently if
circumstances indicate the asset might be impaired.
The impairment test is carried out in two steps. In the first
step, the carrying amount of the reporting unit is compared with
its fair value. When the fair value of a reporting unit exceeds
its carrying amount, goodwill of the reporting unit is considered
not to be impaired and the second step of the impairment test is
unnecessary. The second step is carried out when the carrying
amount of a reporting unit exceeds its fair value, in which case
the implied fair value of the reporting unit's goodwill is
compared with its carrying amount to measure the amount of the
impairment loss, if any. The implied fair value of goodwill is
determined in the same manner as the value of goodwill is
determined in a business combination described in the preceding
paragraph, using the fair value of the reporting unit as if it was
the purchase price. When the carrying amount of the reporting unit
goodwill exceeds the implied fair value of the goodwill, an
impairment loss is recognized in an amount equal to the excess and
is presented as a separate line item in the statement of earnings
before extraordinary items and discontinued operations.
e) Intangible assets:
Intangible assets are being amortized on a straight-line basis
over their estimated useful lives of 20 years.
f) Deferred costs:
Deferred costs include expenses incurred in connection with
financing and investing activities. Financing costs are amortized
on a straight-line basis over the term of the related debt.
g) Income taxes:
The Fund is a mutual fund trust as defined under the Income Tax
Act (Canada). Pursuant to the Declaration of Trust, all of the
taxable income earned directly by the Fund in the period is
distributable to unitholders and such distributions are deducted
for income tax purposes. Consequently, no provision for income
taxes is required for the Fund. The Fund's subsidiaries are,
however, subject to income taxation and provide for income tax
obligations based upon statutory corporate tax rates and provide
for federal large corporations taxes as necessary.
h) Future income taxes:
The asset and liability method is used to account for future
income taxes. Under this method, future income tax assets and
liabilities are recognized for the estimated income tax
consequences attributable to differences between financial
statement carrying amounts of assets and liabilities and their
respective income tax bases. Future income tax assets and
liabilities are measured using tax rates expected to be in effect
when the temporary differences are expected to be recovered or
settled. The effects of changes in income tax rates are reflected
in future income tax assets and liabilities in the period that the
rate changes are substantively enacted.
i) Impairment of long-lived assets:
Long-lived assets, including property, plant and equipment and
purchased intangibles subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated
undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized by the
amount by which the carrying amount of the asset exceeds the fair
value of the asset. Assets to be disposed of would be separately
presented in the balance sheet and reported at the lower of the
carrying amount or fair value less costs to sell, and are no
longer depreciated. The asset and liabilities of a disposed group
classified as held for sale would be presented separately in the
appropriate asset and liability sections of the balance sheet.
j) Asset retirement obligation:
The Fund recognizes the fair value of a future asset retirement
obligation as a liability in the period in which it incurs a legal
obligation associated with the retirement of tangible long-lived
assets that results from the acquisition, construction,
development, and/or normal use of the assets. The Fund
concurrently recognizes a corresponding increase in the carrying
amount of the related long-lived asset that is depreciated over
the life of the asset. The fair value of the asset retirement
obligation is estimated using the expected cash flow approach that
reflects a range of possible outcomes discounted at a credit-
adjusted risk-free interest rate. Subsequent to the initial
measurement, the asset retirement obligation is adjusted at the
end of each period to reflect the passage of time and changes in
the estimated future cash flows underlying the obligation. Changes
in the obligation due to the passage of time are recognized in
income as an operating expense using the interest method. Changes
in the obligation due to changes in estimated cash flows are
recognized as an adjustment of the carrying amount of the related
long-lived asset that is depreciated over the remaining life of
the asset.
k) Net earnings per trust unit:
The earnings per trust unit are computed by dividing net earnings
by the weighted average number of trust units outstanding during
the year.
l) Use of estimates:
The preparation of the Fund's consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the balance sheet date and
the reported amounts of revenue and expenses during the year.
Actual results could differ from those estimates.
2. Acquisition:
On January 24, 2006 the Fund acquired all of the issued and
outstanding shares of People's Communications Inc. ("People's") for
total cash consideration of $27,094. The transaction was financed
through the Fund's $30,000 acquisition credit facility as described
in note 5.
People's reorganized its corporate structure prior to the closing of
the acquisition by The Fund such that all of the subsidiaries owned
by People's amalgamated with People's and the operations and business
were transferred to PTLP, a limited partnership owned by People's.
Contemporaneously with the acquisition, the limited partnership units
held by People's were transferred to AHLP, a newly formed limited
partnership of which 100% of the limited partnership units are owned
by The Fund.
The acquisition by the Fund has been accounted for by the purchase
method, whereby the net assets acquired are recorded at fair value.
The allocation of the purchase price is based on management's best
estimate of the relative fair values of the identifiable assets
acquired and liabilities assumed at the acquisition date. Goodwill
has been increased by $162 to reflect a reassessment in the value of
supplies on hand at the date of acquisition. The allocation of the
purchase price to the net assets acquired at their assigned values is
as follows:
---------------------------------------------------------------------
Cash and cash equivalents $ 1,362
Short-term investments 250
Accounts receivable 708
Supplies and prepaid expenses 412
Income taxes recoverable 196
Property, plant and equipment 7,485
Goodwill 9,943
Intangible assets 7,975
---------------------------------------------------------------------
Total assets 28,331
Accounts payable and accrued liabilities (1,237)
---------------------------------------------------------------------
Net assets acquired $ 27,094
---------------------------------------------------------------------
---------------------------------------------------------------------
3. Property, plant and equipment:
December 31, 2006
---------------------------------------------------------------------
Cost Accumulated Net book
amortization value
---------------------------------------------------------------------
Land $ 1,234 $ - $ 1,234
Buildings 3,148 301 2,847
Telephone and distribution
equipment 37,768 13,874 23,894
Work equipment 1,087 424 663
Furniture and fixtures 1,478 552 926
Internet hardware and software 5,251 2,817 2,434
Equipment under construction 2,006 - 2,006
---------------------------------------------------------------------
$ 51,972 $ 17,968 $ 34,004
---------------------------------------------------------------------
---------------------------------------------------------------------
December 31, 2005
---------------------------------------------------------------------
Cost Accumulated Net book
amortization value
---------------------------------------------------------------------
Land $ 925 $ - $ 925
Buildings 2,463 175 2,288
Telephone and distribution
equipment 30,376 9,616 20,760
Work equipment 624 234 390
Furniture and fixtures 787 265 522
Internet hardware and software 3,247 1,659 1,588
Equipment under construction 180 - 180
---------------------------------------------------------------------
$ 38,602 $ 11,949 $ 26,653
---------------------------------------------------------------------
---------------------------------------------------------------------
4. Intangible assets:
Intangible assets are comprised of customer contracts and related
relationships.
---------------------------------------------------------------------
December 31, December 31,
2006 2005
---------------------------------------------------------------------
Cost $ 44,053 $ 36,078
Accumulated amortization (7,325) (5,130)
---------------------------------------------------------------------
$ 36,728 $ 30,948
---------------------------------------------------------------------
---------------------------------------------------------------------
5. Short-term credit facilities:
The Fund through its wholly owned subsidiary, ACI, has a revolving
credit facility and an acquisition credit facility that are subject
to annual review and renewal by the Fund's lenders.
The Fund through its wholly owned subsidiary, ACI, has a $7,500
(December 31, 2005 - $5,000) revolving credit facility for a one year
term ending November 25, 2007 bearing interest at a floating rate
between 0.75% and 1.5% over Canadian bank prime lending rate
depending upon the amount drawn and subject to a standby fee on the
undrawn portion of the facility. As at December 31, 2006, $111
(December 31, 2005 - nil) was outstanding under the revolving credit
facility.
The Fund through its wholly owned subsidiary, ACI, also has a $10,000
(December 31, 2005 - $20,000) revolving multi-draw acquisition credit
facility for a one year term ending November 25, 2007, bearing
interest at a floating rate of between 1.0% and 1.75% over Canadian
bank prime lending rate depending upon the amount drawn and subject
to a standby fee on the undrawn portion of the facility. No amount
was outstanding on the revolving multi-draw acquisition facility at
December 31, 2006 or December 31, 2005. The revolving credit facility
and the acquisition credit facility are secured as described in
note 6.
Both the revolving credit facility and the revolving multi-draw
acquisition credit facility were renewed January 1, 2007
(note 16(c)).
6. Long-term debt:
The Fund, through its wholly owned subsidiary, ACI, has a $17,000
(December 31, 2005 - $17,000) term credit facility with no principal
repayments until maturity on November 25, 2008. The facility bears
interest at a floating rate between 0.75% and 1.5% (December 31, 2005
- 0.75% and 1.5%) over Canadian bank prime lending rate depending
upon the amount drawn and subject to a standby fee on the undrawn
portion of the facility. Each of the revolving credit facility and
the acquisition facility, as described in note 5, and the term credit
facility are secured by security interests over all or substantially
all of the assets of the Fund and its subsidiaries. As at
December 31, 2006, $5,000 (December 31, 2005 - $15,000) is
outstanding under the term credit facility bearing interest at
6.08% (December 31, 2005 - 4.88%). The term credit facility was
renewed January 1, 2007 (note 16(c)).
The Fund, through its wholly owned subsidiary AHLP, has $20,000 in
senior secured long-term debt at a fixed rate of interest of 7.24%.
The agreement provides for monthly payments of interest only with the
principal portion repayable in full on May 15, 2016. As at
December 31, 2006, $20,000 (December 31, 2005 - nil) is outstanding.
This agreement was amended on January 1, 2007 (note 16(c)).
7. Income taxes:
Income tax expense differs from the amount that would be computed by
applying the federal and provincial statutory income tax rates of
36.12% (2005 - 36.12%) to income before income taxes. The reasons for
the differences are as follows:
---------------------------------------------------------------------
2006 2005
---------------------------------------------------------------------
Computed tax expense $ 1,058 $ 1,556
Increase (decrease) resulting from:
Adjustment to future tax assets and
liabilities for enacted changes in
tax laws and rates 341 -
Permanent differences 328 352
Write-off of tax credits - 201
Allocation of income to unitholders (1,806) (2,228)
Other (23) (23)
---------------------------------------------------------------------
Income tax recovery $ (102) $ (142)
---------------------------------------------------------------------
---------------------------------------------------------------------
The tax effects of temporary differences that give rise to
significant portions of the future tax assets and future tax
liabilities at December 31 are presented below:
---------------------------------------------------------------------
2006 2005
---------------------------------------------------------------------
Future income tax assets:
Non-deducted financing costs $ 416 $ 661
Non-deducted reserves 47 -
Non-capital losses carried forward 592 417
Property, plant and equipment, difference
between net book value and tax cost 2,955 3,055
---------------------------------------------------------------------
4,010 4,133
Future income tax liabilities:
Intangible assets, difference between net
book value and tax cost (4,299) (4,629)
---------------------------------------------------------------------
Net future income tax liability $ (289) $ (496)
---------------------------------------------------------------------
---------------------------------------------------------------------
Due to the reorganization described in note 16(b) the future tax
liability of $289 was written off through the future income tax
recovery in the statement of earnings on January 1, 2007.
As at December 31, 2006, the Company has the following non-capital
tax losses available to reduce future years' income for income tax
purposes, which expire as follows:
---------------------------------------------------------------------
2010 $ 363
2011 282
2015 511
2016 483
---------------------------------------------------------------------
$ 1,639
---------------------------------------------------------------------
---------------------------------------------------------------------
In respect of income earned through partnership interests of the Fund
which are taxed directly in the hands of the unitholders, the net
book value for accounting purposes of the partnership net assets is
less than their tax basis by approximately $ 450.
8. Distributions to unitholders:
---------------------------------------------------------------------
Unitholders
of record 2006 2005
on the last Distributions Year ended Distributions Year ended
business declared December 31, declared December 31,
day of: per Unit 2006 per Unit 2005
---------------------------------------------------------------------
January $ 0.1000 $ 595.75 $ 0.1000 $ 595.75
February 0.1000 595.75 0.1000 595.75
March 0.1000 595.75 0.1000 595.75
April 0.1000 595.75 0.1000 595.75
May 0.1000 595.75 0.1000 595.75
June 0.1000 595.75 0.1000 595.75
July 0.1000 595.75 0.1000 595.75
August 0.1000 728.44 0.1000 595.75
September 0.1000 728.44 0.1000 595.75
October 0.1000 728.44 0.1000 595.75
November 0.1000 728.44 0.1000 595.75
December 0.1000 728.44 0.1000 595.75
---------------------------------------------------------------------
$ 1.2000 $ 7,812.45 $ 1.2000 $ 7,149.00
---------------------------------------------------------------------
---------------------------------------------------------------------
The Fund's Trust Indenture requires monthly distributions in arrears
of the Fund's distributable cash less any reserves considered
appropriate to satisfy the Fund's current or future obligations, or
to normalize monthly distributions of cash to unitholders.
9. Trust units:
An unlimited number of units may be issued pursuant to the Fund's
Declaration of Trust. Each unit is transferable and represents an
equal, undivided beneficial interest in any distributions from the
Fund and in the net assets of the Fund. All units are of the same
class with equal rights and privileges and are not subject to future
calls or assessments. Each unit entitles the holder to one vote at
all meetings of unitholders.
---------------------------------------------------------------------
December 31 2006 December 31, 2005
Units $ Units $
---------------------------------------------------------------------
Trust units 7,284.4 $ 70,671 5,957.5 $ 54,830
---------------------------------------------------------------------
---------------------------------------------------------------------
On August 31, 2006 the Fund issued 1,326,927 units for gross proceeds
of $17,250 and issuance costs of $1,409.
Issuance costs of $7,505 since inception net of the related current
income tax benefit of $952 (December 31, 2005 - $681) and a future
income tax benefit of $398 (December 31, 2005 - $669) have been
netted from the gross proceeds received of $ 76,825.
10. Financial instruments:
(a) Fair values:
The carrying values of cash, accounts receivable, bank
indebtedness, accounts payable and accrued liabilities,
distributions payable to Unitholders and income and other taxes
payable, approximate their fair value due to the relatively short
periods to maturity of the instruments. The carrying value of the
long-term debt approximates its fair value as the debt bears
interest at rates comparable to current market rates.
(b) Credit risk:
Credit risk arises from the potential default of a customer in
meeting its financial obligation to the Fund. The Fund has credit
evaluation, approval and monitoring processes to mitigate
potential credit risk.
The Fund evaluates the collectibility of accounts receivable and
records an allowance for doubtful accounts that reduces
receivables to the amount management reasonably believes will be
collected.
11. Commitments:
The Fund has entered into operating leases for premises, vehicles and
other equipment. Minimum lease payments over the remaining term of
these leases are as follows:
---------------------------------------------------------------------
2007 433
2008 405
2009 151
2010 23
---------------------------------------------------------------------
---------------------------------------------------------------------
12. Acquisition and reorganization:
Acquisition and reorganization expenses include severance costs,
retiring allowances, integration expenses, professional fees and
other expenses related to acquisition activities that are not
considered part of normal operations or to have any future benefit,
or have been abandoned and the costs related to the Fund's
reorganization to a fund-on-partnership structure, which was
completed on January 1, 2007 (note 16(b)).
13. Change in non-cash operating working capital:
---------------------------------------------------------------------
2006 2005
---------------------------------------------------------------------
Accounts receivable $ 590 $ 1,311
Short term investments 250 -
Supplies and prepaid expenses (260) (23)
Accounts payable and accrued liabilities 732 (568)
Income and other taxes payable/receivable 620 (340)
---------------------------------------------------------------------
$ 1,932 $ 380
---------------------------------------------------------------------
---------------------------------------------------------------------
14. Comparative figures:
Certain of the comparative amounts have been adjusted to conform with
the presentation adopted in the current year.
15. Segmented information:
The Fund has identified its reportable segments to be
telecommunications, cable TV and internet services. This segmentation
is consistent with the manner in which senior management makes
operating decisions and evaluates performance. The results of
operations include those of PTLP for the 341 day period from
January 25, 2006 to December 31, 2006.
---------------------------------------------------------------------
2006 2005
---------------------------------------------------------------------
Revenue:
Telecommunications $ 22,844 $ 18,043
Cable TV 2,856 2,889
Internet 5,256 2,794
---------------------------------------------------------------------
30,956 23,726
Earnings before financing costs, income
taxes and amortization
Telecommunications 11,649 9,728
Cable TV 600 912
Internet 1,821 1,027
---------------------------------------------------------------------
14,070 11,667
Amortization of plant and equipment and
intangible assets:
Telecommunications 5,886 4,610
Cable TV 1,083 943
Internet 1,245 803
---------------------------------------------------------------------
8,214 6,356
Capital expenditures:
Telecommunications 2,779 2,735
Cable TV 2,336 828
Internet 931 1,130
---------------------------------------------------------------------
6,046 4,693
Segment assets:
Telecommunications 73,219 58,219
Cable TV 8,197 7,083
Internet 10,812 3,703
---------------------------------------------------------------------
92,228 69,005
Additions to goodwill (note 2):
Telecommunications 7,457 -
Internet 2,486 -
---------------------------------------------------------------------
9,943 -
Additions to intangible assets (note 2):
Telecommunications 5,981 -
Internet 1,994 -
---------------------------------------------------------------------
7,975 -
16. Subsequent events:
(a) Business Acquisition:
On January 1, 2007 the Fund completed the purchase of the assets
of Gore Bay Cable TV for cash consideration of $300. Gore Bay
Cable TV is a broadcast distribution undertaking serving
approximately 250 cable television customers in the Town of Gore
Bay, Ontario on Manitoulin Island. It also provides a highspeed
Internet service over its cable television network.
(b) Reorganization:
On January 1, 2007, the Fund completed a reorganization (the
"Reorganization") of its organizational structure to a Fund-on-
partnership structure. The Reorganization was undertaken to
eliminate corporate income taxes from the Fund.
On October 31, 2006 the Canadian Minister of Finance announced
measures to amend the tax regime for publicly traded flow through
entities (FTE's). The proposed changes, if enacted, would impact
the Fund by introducing a 31.5% tax at source on distributions
from FTE's beginning in the year 2011.
The Fund considered the planned Reorganization in light of the
announcement made by the Minister of Finance on October 31, 2006,
and determined that the purpose of the Reorganization remained
valid and that proceeding with the Reorganization continued to be
in the best interests of the Unitholders. As a result of this
reorganization, the underlying operations of the Fund will not be
subject to income taxes until 2011.
(c) Financing:
On January 1, 2007, and in conjunction with the Reorganization
(as described in note 16(b)), AHLP entered into an amended and
restated credit agreement with its syndicate of bank lenders (the
"Lenders"), for the purpose of amending AHLP's existing credit
facilities (collectively, the "Bank Credit Facilities") to
reflect the corporate structure resulting from the
Reorganization. The aggregate maximum amount of the Bank Credit
Facilities remains at $34,500 and is comprised of: (i) a
revolving credit facility in the maximum principal amount of
$7,500, subject to borrowing base requirements, the proceeds of
which are to be used for operating purposes; (ii) a $17,000 term
credit facility to fund capital expenses; and (iii) a $10,000
revolving facility for financing acquisitions. Each of the
revolving credit facility and the acquisition facility are
subject to annual review and renewal by the Lenders. The term
credit facility now has four years remaining with a maturity date
of December 31, 2010. The Bank Credit Facilities are subject to a
floating rate of interest plus an applicable margin. The Bank
Credit Facilities are guaranteed by the Fund and each of its
wholly owned subsidiaries and are secured by general security
over all or substantially all of the assets of the Fund and its
wholly owned subsidiaries.
Also in conjunction with the Reorganization, AHLP entered into an
amended and restated term loan agreement dated January 1, 2007
with Integrated Private Debt Fund LP ("IPD") to amend the
financing which was originally provided to the Fund by IPD on
May 10, 2006. Pursuant to the IPD Agreement, IPD continues to
make available to AHLP a $20,000 term loan (the "IPD Loan") at a
fixed rate of interest of 7.24% per annum plus an applicable
margin. The IPD Loan is guaranteed by the Fund and each of its
wholly owned subsidiaries and is secured by general security over
all or substantially all of the assets of the Fund and its wholly
owned subsidiaries. The Bank Credit Facilities, the IPD Loan and
the respective security delivered in connection therewith, rank
on a pari passu basis and are subject to the terms of an
intercreditor agreement between the Lenders and IPD.
%SEDAR: 00018932E
For further information: Michael J. Andrews, President and Chief
Executive Officer, Amtelecom Communications Inc., (519) 773-1237,
mandrews@amtelecom.ca; David Bronicheski, Chief Financial Officer, Amtelecom
Communications Inc., (519) 773-1282, dbronicheski@amtelecom.ca
RSS
Partager
Dites-le à un ami
Version imprimable
Abonnez-vous à Sentinelle CNW
