Sun Gro Horticulture Income Fund Releases 2009 Third Quarter Results
Fund significantly improves year-over-year operating performance,
continues to reduce debt
TRADING SYMBOL: Toronto Stock Exchange - GRO.UN
Sun Gro Horticulture Income Fund will hold a conference call and webcast
to discuss 2009 third quarter and nine-month results on Thursday,
November 5, 2009 at 7:30 am Pacific Time (10:30 am Eastern). The call can
be accessed by dialing: 1-877-974-0470 or 416-915-5650 (Greater Toronto
Area and International).
A replay will be available through November 19, 2009 at: 1-877-289-8525
or 416-640-1917. Passcode 4173722 followed by the number sign.
To access the live and archived webcast, please go to:
http://www.investorcalendar.com/IC/CEPage.asp?ID=151403 or to
the Fund's website at: www.sungro.com.
VANCOUVER, - Sun Gro Horticulture Income Fund (the Fund)
today reported financial results for the three months ended September 30,
2009, which represents the third quarter of its 2009 fiscal year. The Fund's
wholly-owned subsidiary, Sun Gro Horticulture Canada Ltd. (Sun Gro or the
company) recorded operating income of $3.2 million, up from $0.8 million in
the third quarter of 2008. Year-over-year, gross margin improved to 46% from
44% in 2008, while EBITDA was up by 31%. Net earnings for the quarter also
improved markedly, swinging from a loss of $2.5 million in 2008 to a profit of
$3.7 million this year.
As in the first half of the year, the positive results were achieved
despite lower sales volumes, largely due to the economic downturn. The
performance improvement was driven by a combination of factors. These included
the positive impact of a stronger US dollar on Sun Gro's primarily US dollar
denominated revenues, the ongoing favourable effect of its 2008 productivity
initiatives on operating costs, lower energy prices and transportation costs,
and improved peat harvest conditions. "Although the business environment has not notably improved, we have
sustained our performance improvement trend and made a strong start to the
seasonally slower second half of the year," said Mitch Weaver, President and
CEO of Sun Gro and a Trustee of the Fund. "We remain focused on reducing debt,
driving greater operating efficiency by strengthening our infrastructure, and
strategically growing our business. We are making good progress." Third Quarter Financial Results Third quarter revenues of $45.6 million were only slightly lower than the
$45.9 million reported in 2008, despite an 8% decrease in overall sales
volumes as measured in equivalent bales (EBs, referring to 10 cubic feet of
product). US dollar product pricing remained stable, while the average value
of the US dollar in relation to the Canadian dollar was up by 5% from the
third quarter of 2008, offsetting much of the effect of the volume decline. Year-over-year, sales volumes were lower in all product categories except
sand-based mixes. Volumes of peat and bark-based growing mixes decreased by 2%
due to reduced sales of private label retail products. The lower retail
volumes were partially offset by a modest increase in sales to Sun Gro's core
professional grower segment. Volumes of straight peat moss decreased by 15%,
due to the company's decision not to renew two large contracts. Reduced sales
of landscape products also brought bulk bark mix volumes down by 14%. In the
sand-based mix category, volumes increased by 17%, due mainly to the
successful repositioning of the company's sales focus from new golf course
development to golf course and sports field renovation. EBITDA for the third quarter increased to $5.1 million from $3.8 million
in 2008. The gain was driven by Sun Gro's improved cost structure and the
positive impact of the stronger US dollar on revenues. The EBITDA growth was
achieved despite a $1.0 million realized loss on foreign exchange contracts
that was recorded during the quarter. This compares to a gain of $0.3 million
in the same period of 2008. Sun Gro's annual peat harvest benefited from improved weather conditions
during the third quarter and had a strong finish in September. Overall harvest
volumes were comparable to 2008 levels, but regional yields varied greatly.
Harvest volumes in New Brunswick were significantly higher than in 2008 and a
modest improvement was seen in Alberta, while wet weather in Manitoba resulted
in historically low harvest yields for the second consecutive year. The low
harvest volumes in Manitoba resulted in increased costs and production
inefficiencies; however, costs in Alberta and New Brunswick were lower than in
2008, due to the improved harvest, as well as the positive impact of Sun Gro's
productivity initiatives. As part of the ongoing strategic rationalization of its operations in
Eastern Canada, Sun Gro permanently closed its Kennetcook, Nova Scotia
production facility in September and released its harvest rights to the
adjacent bog. As a result, the value of all remaining assets and the bog were
written off and the Fund recorded a one-time charge of $2.9 million in the
third quarter. The Kennetcook facility was temporarily closed in March 2008.
Equipment from the plant was relocated at that time for use at other Sun Gro
production facilities. Nine Month Financial Results For the first nine months of 2009, revenues of $179.5 million were up by
7% over 2008, despite an 11% decline in overall sales volumes. As with the
quarterly result, the revenue increase was primarily due to the stronger US
dollar, as well as stable pricing. Gross margin improved to 44% from 40% in
2008. Operating income increased significantly to $16.6 million from $2.4
million in 2008, while EBITDA was up by 50% and net earnings improved to $16.0
million from a loss of $25.0 million in 2008.
Reconciliation of net earnings (loss) to earnings before interest, taxes,
depreciation and amortization (EBITDA)
Three Three Nine Nine
months months months months
(in thousands of dollars) ended ended ended ended
Sept 30, Sept 30, Sept 30, Sept 30,
2009 2008 2009 2008
-------------------------------------------
Net earnings (loss) for
the period $ 3,658 $ (2,461) $ 16,011 $(25,014)
Adjustments:
Interest expense 2,139 1,853 7,176 5,262
Depreciation, depletion
and accretion 2,397 2,308 8,872 8,562
Amortization of intangibles 595 578 1,833 1,843
Goodwill and asset
impairments 2,855 - 2,855 24,945
Unrealized (gain) loss on
foreign currency contracts (3,799) 1,306 (12,486) 4,134
Unrealized foreign exchange
(gain) loss on US dollar
assets and liabilities (2,913) 874 (4,911) 974
Loss (gain) on disposal of
property, plant and
equipment (61) 106 (1,135) 140
Income tax provision
(recovery), net 180 (715) 3,674 (6,248)
-------------------------------------------
EBITDA $ 5,051 $ 3,849 $ 21,889 $ 14,598
-------------------------------------------
-------------------------------------------
Balance Sheet ImprovementsDuring the third quarter, Sun Gro reduced its long-term debt by $1.0
million. In addition, complying with the terms of its senior note agreement,
it deposited $0.8 million to a restricted cash account. Drawings on the Fund's
revolving operating facility at the end of the third quarter were $24.0
million, down by $10.1 million from $34.1 million at the beginning of the
year. The reduction was due to reduced sales activity and more efficient use
of working capital. At September 30, 2009, the Fund was in compliance with all
of its debt covenants and had improved its senior leverage ratio to 3.3 from
5.3 a year ago. "I am pleased with the excellent progress we have made with repaying our
long-term debt and reducing the usage of our revolving operating facility,"
said Weaver. "We expect to be in compliance with our debt covenants at
year-end. However, due to the seasonal nature of our business, we are
forecasting that we will likely exceed our required senior leverage ratio of
3.0 at March 31, 2010 and be temporarily out of compliance. We expect that a
suitable modification to our covenant will be made prior to then with the
lender, and that the Fund will return to compliance with existing covenants
during the second quarter, and for the balance of 2010." Distributable Cash After the $1.8 million of debt repayments and the restricted cash
deposits, the Fund generated distributable cash of $0.3 million, or $0.02 per
unit, in the three months ended September 30, 2009. Under its credit facility,
the Fund is prohibited from making distributions. All available funds are
being used to strengthen the Fund's balance sheet, which in recent years was
leveraged to acquire key peat resources and build out Sun Gro's US plant
network. By comparison, in the third quarter of 2008, the Fund generated
distributable cash of $1.3 million, or $0.06 per unit, and declared
distributions of $1.7 million, or $0.075 per unit.
Statement of Distributable Cash
Three Three Nine Nine
months months months months
(in thousands of dollars ended ended ended ended
except per-unit amounts) Sept 30, Sept 30, Sept 30, Sept 30,
2009 2008 2009 2008
-------------------------------------------
Cash flows from operating
activities $ 6,054 $ 302 $ 17,866 $ 9,290
Adjustments:
Change in non-cash operating
working capital (3,135) 1,963 (4,016) (717)
Sustaining capital
expenditures (782) (802) (1,618) (2,410)
Payments on capital leases
and other term loans (103) (123) (388) (692)
Restricted cash (835) - (3,795) -
Repayments on term loans (862) - (5,459) -
-------------------------------------------
Distributable cash $ 337 $ 1,340 $ 2,590 $ 5,471
-------------------------------------------
-------------------------------------------
Distributable cash per unit $ 0.02 $ 0.06 $ 0.12 $ 0.25
-------------------------------------------
-------------------------------------------
Distributions declared
per unit $ - $ 0.075 $ - $ 0.4125
-------------------------------------------
-------------------------------------------
Operating Results for the three months ended September 30, 2009 and 2008
Comparative Statements of Earnings
(Loss) and Comprehensive Income
(Loss) Three months Three months
(In thousands of dollars except ended ended
per-unit amounts, number of units September 30, September 30,
outstanding and EBs(1)) 2009 2008
------------------ ------------------
Revenue $ 45,614 100% $ 45,871 100%
Cost of goods sold 24,716 54% 25,783 56%
------------ ------------
Gross profit 20,898 46% 20,088 44%
Distribution expenses 8,412 18% 10,272 22%
Selling expenses 4,335 10% 4,077 9%
General and administrative expenses 4,989 11% 4,927 11%
------------ ------------
Total operating expenses 17,736 39% 19,276 42%
------------ ------------
Operating income 3,162 7% 812 2%
Other income (expense), net 5,670 12% (2,135) -5%
Asset impairment (2,855) -6% - 0%
Interest expense (2,139) -5% (1,853) -4%
------------ ------------
Earnings (loss) before income taxes 3,838 8% (3,176) -7%
Income tax (provision) recovery
Current 7 0% 269 1%
Future (187) 0% 446 1%
------------ ------------
Income tax (provision) recovery, net (180) 0% 715 2%
------------ ------------
Net earnings (loss) for the period 3,658 8% $ (2,461) -5%
Other comprehensive income (loss):
Unrealized gain (loss) on
translating financial statements
of self-sustaining foreign
operations (2,607) -6% 916 2%
------------ ------------
Comprehensive income (loss)
for the period $ 1,051 2% $ (1,545) -3%
------------ ------------
------------ ------------
Basic and diluted earnings (loss)
per unit $ 0.16 $ (0.11)
------------ ------------
------------ ------------
Weighted average number of units
outstanding 22,284,681 22,284,681
------------ ------------
------------ ------------
Selected supplemental revenue
information
Volume in thousands of EBs(1)
Peat and Bark-based Growing Mixes 1,084 1,102
Peat Moss 1,010 1,182
Bulk Bark Mixes 539 625
Fertilizer and Minerals 63 72
Sand-based Mixes 197 168
------------ ------------
Total 2,893 3,149
------------ ------------
------------ ------------
Average revenue per EB(1) (US $)
Peat and Bark-based Growing Mixes $ 19.60 $ 19.94
Peat Moss 10.83 10.17
Bulk Bark Mixes 9.08 8.91
Fertilizer and Minerals 41.67 46.97
Sand-based Mixes 9.64 11.07
------------ ------------
Total $ 14.37 $ 14.22
------------ ------------
------------ ------------
Average revenue per EB(1)
(Canadian $)
Peat and Bark-based Growing Mixes $ 21.75 $ 20.43
Peat Moss 12.03 10.41
Bulk Bark Mixes 10.07 9.11
Fertilizer and Minerals 46.48 47.99
Sand-based Mixes 10.81 11.30
------------ ------------
Total $ 15.97 $ 14.56
------------ ------------
------------ ------------
(1) An EB, or equivalent bale, is Sun Gro's standard unit of measure,
referring to 10 cubic feet of product. Calculation of average revenue
per EB does not include transportation-related surcharges or the cost
of early payment discounts.
Operating Results for the nine months ended September 30, 2009 and 2008
Comparative Statements of Earnings
(Loss) and Comprehensive Income
(Loss) Nine months Nine months
(In thousands of dollars except ended ended
per-unit amounts, number of units September 30, September 30,
outstanding and EBs(1)) 2009 2008
------------------ ------------------
Revenue $ 179,468 100% $ 168,281 100%
Cost of goods sold 100,662 56% 100,320 60%
------------ ------------
Gross profit 78,806 44% 67,961 40%
Distribution expenses 29,911 17% 38,320 23%
Selling expenses 14,500 8% 12,376 7%
General and administrative expenses 17,746 10% 14,844 9%
------------ ------------
Total operating expenses 62,157 35% 65,540 39%
------------ ------------
Operating income 16,649 9% 2,421 1%
Other income (expense), net 13,067 8% (3,476) -2%
Goodwill and asset impairments (2,855) -2% (24,945) -15%
Interest expense (7,176) -4% (5,262) -3%
------------ ------------
Earnings (loss) before income taxes 19,685 11% (31,262) -19%
Income tax (provision) recovery
Current (863) 0% (763) 0%
Future (2,811) -2% 7,011 4%
------------ ------------
Income tax (provision) recovery, net (3,674) -2% 6,248 4%
------------ ------------
Net earnings (loss) for the period 16,011 9% $ (25,014) -15%
Other comprehensive income (loss):
Unrealized gain (loss) on
translating financial statements
of self-sustaining foreign
operations (5,510) -3% 2,278 1%
------------ ------------
Comprehensive income (loss)
for the period $ 10,501 6% $ (22,736) -14%
------------ ------------
------------ ------------
Basic and diluted earnings (loss)
per unit $ 0.72 $ (1.12)
------------ ------------
------------ ------------
Weighted average number of units
outstanding 22,284,681 22,284,681
------------ ------------
------------ ------------
Selected supplemental revenue
information
Volume in thousands of EBs(1)
Peat and Bark-based Growing Mixes 4,472 4,697
Peat Moss 2,813 3,763
Bulk Bark Mixes 1,850 2,005
Fertilizer and Minerals 225 258
Sand-based Mixes 622 497
------------ ------------
Total 9,982 11,220
------------ ------------
------------ ------------
Average revenue per EB(1) (US $)
Peat and Bark-based Growing Mixes $ 20.11 $ 19.90
Peat Moss 10.87 10.62
Bulk Bark Mixes 8.45 8.87
Fertilizer and Minerals 43.17 44.63
Sand-based Mixes 10.67 11.15
------------ ------------
Total $ 15.28 $ 15.00
------------ ------------
------------ ------------
Average revenue per EB(1)
(Canadian $)
Peat and Bark-based Growing Mixes $ 23.87 $ 19.97
Peat Moss 12.72 10.69
Bulk Bark Mixes 9.94 8.93
Fertilizer and Minerals 51.05 44.82
Sand-based Mixes 12.49 11.20
------------ ------------
Total $ 18.05 $ 15.06
------------ ------------
------------ ------------
(1) An EB, or equivalent bale, is Sun Gro's standard unit of measure,
referring to 10 cubic feet of product. Calculation of average revenue
per EB does not include transportation-related surcharges or the cost
of early payment discounts.
OutlookUntil there is a substantial improvement in general economic conditions
and a resurgence of US new home construction activity, Sun Gro does not
anticipate any significant growth in its sales volumes and operating income.
It expects to continue to benefit from generally lower transportation costs.
The lower costs are due to lower freight rates resulting from reduced demand
and lower energy prices, as well as more efficient truck loading and routing.
Sun Gro believes that peat supply currently on hand will be sufficient to
support sales at current levels until the 2010 harvest begins. It does not
expect to incur significant additional costs for cross-regional shipments of
peat as a result of the 2009 Manitoba harvest shortfall. "While we are optimistic about our capacity to sustain the stronger
financial performance we have delivered for the last four quarters, the
foreign exchange environment remains volatile. Further strengthening of the
Canadian dollar could put significant pressure on our margins," said Weaver.
"We will continue to closely monitor our exposure and use forward exchange
contracts to help manage currency exchange risk." Foreign exchange contracts for the remainder of 2009 total US$9.0 million
at an average rate of $1.10 (or US$0.91). For 2010, Sun Gro has entered into
foreign exchange contracts totaling US$45.0 million at an average rate of
$1.15 (or US$0.87). Copies of management's discussion and analysis (MD&A) and the Fund's
audited financial statements for the three months ended September 30, 2009
will be available at www.sedar.com and www.sungro.com on or about November 12,
2009. Forward-Looking Information This news release contains "forward-looking information". Forward-looking
information relates to future events or future performance and reflects the
Fund's expectations regarding Sun Gro's growth, results of operations,
performance, business prospects, opportunities or industry performance, or
trends. In some cases, forward-looking information can be identified by
terminology such as "may", "will", "should", "expect", "intend", "plan",
"anticipate", "believe", "predict", "potential", "continue" or the negative of
these terms or other comparable terminology. In particular, the disclosure in
the "Outlook" section above includes forward-looking information regarding Sun
Gro's anticipated sales volumes for the balance of 2009. Forward-looking
information is also included in the "Balance Sheet Improvements" section,
including management's expectation that Sun Gro will be temporarily out of
compliance with its senior leverage ratio at the end of the first quarter of
2010, as well as management's expectation that a suitable modification of the
debt covenants under Sun Gro's credit facilities will be negotiated with Sun
Gro's lenders prior to March 31, 2010. These statements are intended to
provide investors with information that reflects management's reasonable
expectations regarding the anticipated financial performance of Sun Gro and
the Fund. Readers are cautioned that these statements may not be appropriate
for other purposes. Any forward-looking information included in this news
release reflects Sun Gro's current internal projections, expectations or
beliefs and is based on information currently available. A number of factors
could cause actual events or results to differ materially from those discussed
in any forward-looking information. Important factors that could cause actual
results to differ materially from Sun Gro's expectations include, among other
things, risks associated with fluctuations in currency exchange rates and
interest rates, changes in tax laws, the impact of adverse weather conditions
on harvesting operations, an increase in freight rates, failure to
successfully implement Sun Gro's strategies of adding mix products and
targeting the professional grower market, failure of acquisitions to be
accretive to unitholders or to be accretive within Sun Gro's anticipated time
frames, inability to refinance acquisition debt, failure to meet certain
financial covenant requirements, the impact of an increase in fuel costs,
reduced consumer demand due to natural disasters and economic factors, and
competitive activity. Readers should specifically consider these factors,
including the risks and uncertainties described in the 2008 year-end MD&A
filed on SEDAR. Although Sun Gro believes that any forward-looking information
contained in this news release is based on reasonable assumptions, readers
cannot be assured that actual results will be consistent with such statements.
Accordingly, readers are cautioned against placing undue reliance on
forward-looking information. Any forward-looking information provided in this
news release is provided as of the date of the news release and Sun Gro
assumes no obligation to update or revise the information to reflect new
events or circumstances, except as required by law. Non-GAAP Measures EBITDA is not an earnings measure recognized by GAAP and does not have a
standardized meaning prescribed by GAAP. Therefore, EBITDA of the Fund may not
be comparable to EBITDA measures presented by other issuers. However, EBITDA
is commonly used as an indicator of financial performance and the Fund
believes that EBITDA is a useful supplemental measure that may assist in
assessing the potential return on an investment in the Fund. The calculation of EBITDA is based on net earnings (loss) for the period,
adjusted for interest expense, income tax provision or recovery, depreciation,
depletion and accretion, amortization of intangibles, goodwill and asset
impairments, gain or loss on disposal of property, plant and equipment,
unrealized gain or loss on foreign currency contracts and unrealized foreign
exchange gain or loss on US dollar assets and liabilities. Distributable cash is not an earnings measure recognized by GAAP and does
not have a standardized meaning prescribed by GAAP. Therefore, the
distributable cash of the Fund may not be comparable to the distributable cash
measures presented by other issuers. However, distributable cash is commonly
used by Canadian open-ended trusts as an indicator of financial performance
and the Fund believes that distributable cash is a useful supplemental measure
that may assist in assessing the potential return on an investment in the
Fund. The calculation of distributable cash is based on cash flows from
operating activities, adjusted for changes in non-cash operating working
capital, sustaining capital expenditures, government grants and government
loans, other loans for certain production equipment, capital lease
obligations, repayments on term loans, restricted cash payments and such
reserves as the Board of Directors of Sun Gro and Trustees of the Fund may
consider appropriate. Certain expenditures that are incurred as part of
earnings-enhancing capital projects and acquisitions are excluded from the
determination of distributable cash flow if the project or acquisition is
funded by term debt or equity financing. Income Fund Profile Sun Gro Horticulture Income Fund was launched with the completion of an
Initial Public Offering on March 27, 2002. Units of the Fund are listed for
trading on the Toronto Stock Exchange. At November 4, 2009, there were
22,284,681 units of the Fund issued and outstanding. Company Profile Sun Gro is the largest producer and distributor of peat and bark-based
growing mixes to professional plant growers in the US and Canada. It is also
North America's largest producer and distributor of sphagnum peat moss, with
approximately 65,000 acres of peat bogs under lease. Sun Gro sells its
professional products primarily to greenhouse, nursery and specialty crop
growers. The company also sells peat moss and potting mixes to retail
customers, either by way of private label partnerships or under its own brand
names. In addition, Sun Gro sells sand-based mixes to golf course developers
and landscapers. The US accounts for approximately 80% of its sales volumes.
The company's North America-wide production network now comprises 12 Canadian
operating plants and 13 US operating plants.
Sun Gro Horticulture Income Fund
Consolidated Balance Sheet
(in thousands of dollars) (unaudited)
As at As at
September 30, December 31,
2009 2008
------------- -------------
Assets
Current assets
Cash $ - $ 2,277
Accounts receivable 33,717 43,838
Inventories 41,084 43,003
Unrealized gain on foreign currency
contracts 2,354 -
Prepaid expenses and other assets 1,892 4,200
------------- -------------
79,047 93,318
Property, plant and equipment 111,762 123,492
Intangible assets 41,570 44,853
Unrealized gain on foreign currency contracts 247 -
Restricted cash 3,774 -
Other assets 1,292 1,379
------------- -------------
$ 237,692 $ 263,042
------------- -------------
------------- -------------
Liabilities and Unitholders' Equity
Current liabilities
Bank overdraft $ 1,397 $ -
Operating line 24,026 34,109
Accounts payable and accrued liabilities 16,520 21,204
Unrealized loss on foreign currency
contracts - 8,843
Current portion of long-term debt 7,573 6,598
------------- -------------
49,516 70,754
Other liabilities 5,770 5,518
Unrealized loss on foreign currency contracts - 1,042
Long-term debt 60,614 76,455
Future income taxes 13,558 11,540
------------- -------------
129,458 165,309
------------- -------------
Unitholders' equity
Capital contributions 211,726 211,726
Accumulated other comprehensive loss (17,710) (12,200)
Cumulative earnings 47,236 31,225
Cumulative distributions declared (133,018) (133,018)
------------- -------------
108,234 97,733
------------- -------------
$ 237,692 $ 263,042
------------- -------------
------------- -------------
Sun Gro Horticulture Income Fund
Consolidated Statements of Earnings (Loss) and Comprehensive Income
(Loss)
(in thousands of dollars except per-unit amounts and number of units
outstanding)
(unaudited)
Three Three Nine Nine
months months months months
ended ended ended ended
Sept 30, Sept 30, Sept 30, Sept 30,
2009 2008 2009 2008
-----------------------------------------------
Revenue $ 45,614 $ 45,871 $ 179,468 $ 168,281
Cost of goods sold 24,716 25,783 100,662 100,320
-----------------------------------------------
Gross profit 20,898 20,088 78,806 67,961
Distribution expenses 8,412 10,272 29,911 38,320
Selling expenses 4,335 4,077 14,500 12,376
General and administrative
expenses 4,989 4,927 17,746 14,844
-----------------------------------------------
Total operating expenses 17,736 19,276 62,157 65,540
-----------------------------------------------
Operating income 3,162 812 16,649 2,421
Other income (expense), net 5,670 (2,135) 13,067 (3,476)
Goodwill and asset
impairments (2,855) - (2,855) (24,945)
Interest expense (2,139) (1,853) (7,176) (5,262)
-----------------------------------------------
Earnings (loss) before
income taxes 3,838 (3,176) 19,685 (31,262)
Income tax (provision)
recovery
Current 7 269 (863) (763)
Future (187) 446 (2,811) 7,011
-----------------------------------------------
Income tax (provision)
recovery, net (180) 715 (3,674) 6,248
-----------------------------------------------
Net earnings (loss) for
the period 3,658 (2,461) 16,011 (25,014)
Other comprehensive income
(loss):
Unrealized (loss) gain
on translating financial
statements of
self-sustaining foreign
operations (2,607) 916 (5,510) 2,278
-----------------------------------------------
Comprehensive income
(loss) for the period $ 1,051 $ (1,545) $ 10,501 $ (22,736)
-----------------------------------------------
-----------------------------------------------
Basic and diluted earnings
(loss) per unit $ 0.16 $ (0.11) $ 0.72 $ (1.12)
-----------------------------------------------
-----------------------------------------------
Weighted average number
of units outstanding 22,284,681 22,284,681 22,284,681 22,284,681
-----------------------------------------------
-----------------------------------------------
Sun Gro Horticulture Income Fund
Consolidated Statements of Changes in Unitholders' Equity
(in thousands of dollars) (unaudited)
Accumu-
lated
Other
Unit- Compre- Cumulative
holders' hensive Cumulative Distri-
Capital Loss Earnings butions Total
------------------------------------------------------
Balance -
December 31,
2007 $ 211,726 $ (22,668) $ 73,286 $(123,825) $ 138,519
Loss for the year - - (42,061) - (42,061)
Other comprehensive
income for the
year - 10,468 - - 10,468
Distributions for
the year - - - (9,193) (9,193)
------------------------------------------------------
Balance -
December 31,
2008 $ 211,726 $ (12,200) $ 31,225 $(133,018) $ 97,733
Earnings for the
period - - 16,011 - 16,011
Other comprehensive
loss for the
period - (5,510) - - (5,510)
------------------------------------------------------
Balance -
September 30,
2009 $ 211,726 $ (17,710) $ 47,236 $(133,018) $ 108,234
------------------------------------------------------
------------------------------------------------------
Sun Gro Horticulture Income Fund
Consolidated Statements of Cash Flows
(in thousands of dollars) (unaudited)
Three Three Nine Nine
months months months months
ended ended ended ended
Sept 30, Sept 30, Sept 30, Sept 30,
2009 2008 2009 2008
-----------------------------------------------
Cash flows from
operating activities
Net earnings (loss) for
the period $ 3,658 $ (2,461) $ 16,011 $ (25,014)
Items not affecting
cash
Depreciation, depletion
and accretion 2,397 2,308 8,872 8,562
Amortization of
intangible assets 595 578 1,833 1,843
Asset impairment 2,855 - 2,855 1,572
Goodwill impairment - - - 23,373
Unrealized (gain) loss
on foreign currency
contracts (3,799) 1,306 (12,486) 4,134
Unrealized foreign
exchange (gain) loss
on US dollar assets
and liabilities (2,913) 874 (4,911) 974
Loss (gain) on disposal
of property, plant
and equipment (61) 106 (1,135) 140
Future income tax
(recovery) provision 187 (446) 2,811 (7,011)
-----------------------------------------------
2,919 2,265 13,850 8,573
Change in non-cash
operating working
capital 3,135 (1,963) 4,016 717
-----------------------------------------------
6,054 302 17,866 9,290
Cash flows from investing
activities
Instalment note payment
for business acquisition - - (496) (392)
Additions to property,
plant and equipment (782) (802) (1,618) (2,410)
Proceeds from disposal
of property, plant and
equipment 68 49 1,438 64
-----------------------------------------------
(714) (753) (676) (2,738)
Cash flows from
financing activities
Distributions paid to
unitholders - (2,508) - (10,864)
Proceeds from term loans - - - 50,425
Restricted cash payments (835) - (3,795) -
Repayment of term loans (862) - (6,213) (39,790)
Decrease in
operating line (3,848) 4,456 (10,083) (3,427)
Payments on capital
leases and other
term loans (103) (123) (388) (392)
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(5,648) 1,825 (20,479) (4,048)
Effect of exchange rate
changes on cash 18 196 (385) (477)
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Decrease (increase) in
bank indebtedness (290) 1,570 (3,674) 2,027
Cash (bank indebtedness) -
beginning of the period (1,107) (1,509) 2,277 (1,966)
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Cash (bank indebtedness)
- end of the period $ (1,397) $ 61 $ (1,397) $ 61
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Supplemental cash flow
information
Interest paid $ 2,116 $ 1,718 $ 7,114 $ 5,024
Income taxes paid
(refund), net $ (47) $ 34 $ (69) $ 405
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