TSE SYMBOL: BEI NYSE SYMBOL: BEI August 15, 2002
Boardwalk Reports Record Operating Results For Second Quarter Of 2002
36% Increase In FFO Per Share From Rental Operations In Second Quarter
FFO Guidance For 2002 Increased Due To Strong First Half Results And Expectations For The Balance Of The Year
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CALGARY, Aug. 15 /CNW/ - Boardwalk Equities Inc.
("BEI" - TSX, NYSE) is pleased to report strong financial results
for the second quarter of 2002, which exceeded consensus estimates.
For the second quarter ended June 30, 2002, the Company
reported Total Revenues of $67.1 million and Funds From Operations
("FFO"), a key performance measurement for real estate companies,
of $18.0 million, and FFO excluding gains of $17.0 million. FFO per
share for the second quarter was $0.36 on a diluted basis, and FFO
excluding gains per share was $0.34.
Funds From Operations ("FFO") is a generally accepted measure of
operating performance of real estate companies, however is a non-GAAP
measurement. The Company calculates FFO by taking Net Earnings and
adding non cash items including Income taxes and Amortization.
The amount is currently referenced on Boardwalk's Consolidated
Statement of Cash Flows. The determination of this amount may differ
from that of other real estate companies.
Highlights of the Company's second quarter 2002 financial results
include:
- Rental revenues of $59.6 million, an increase of 18.3% compared to
$50.3 million for the three-month period ended June 30, 2001.
- Net operating income of $41.5 million, representing a 21.7% increase
from $34.1 million in the same period last year.
- Funds From Operations (FFO) of $18.0 million, an increase of 43.9%
compared to $12.5 million for the three-month period ended June 30,
2001. FFO excluding gains of $17.0 million, an increase of 36.2%
compared to $12.5 million for the three-month period ended June 30,
2001.
- FFO per share of $0.36 on a diluted basis, compared to $0.25 for the
three-month period ended June 30, 2001. FFO per share from rental
operations, which excludes gains, was $0.34 on a diluted basis, up
36.0% compared to $0.25 for the three-month period ended
June 30, 2001.
Highlights of the Company's financial results for the first
six months of 2002 include:
- Rental revenues of $114.3 million, an increase of 14.0%
compared to $100.3 million for the six-month period ended
June 30, 2001.
- Net operating income of $78.2 million, representing a 17.6%
increase from $66.5 million in the same period last year.
- Funds From Operations (FFO) of $32.3 million, an increase
of 4.0% compared to $31.0 million for the six-month period
ended June 30, 2001. FFO excluding gains of $31.3 million,
an increase of 33.0% compared to $23.5 million for the six-month
period ended June 30, 2001.
- FFO per share of $0.65 on a diluted basis, compared to $0.62
for the six-month period ended June 30, 2001. FFO per share
from rental operations, which excludes gains, was $0.63 on a
diluted basis, up 34.0% compared to $0.47 for the six-month
period ended June 30, 2001.
Commenting on the Company's second quarter results, Sam Kolias,
President and C.E.O., said "We are very pleased to report continued
strong results from our rental operations which has enabled the Company
to report record financial results. The fundamentals for the multi-family
rental sector in Canada continue to be attractive with very limited new
supply and low vacancy rates. Boardwalk is concentrated in strong markets
which has enabled us to deliver solid internal growth from our portfolio.
In addition, we are very pleased with the performance to date of our Nuns'
Island portfolio acquisition in Montreal which closed during the second
quarter. This acquisition, which was the largest acquisition in the
Company's history, has performed very well to date and resulted in the
Company being able to deliver strong external growth as well."
The average vacancy rate across the Company's portfolio for the second
quarter of 2002 was 5.9%, down slightly from 6.2% in the second quarter of
last year. Excluding the recent Montreal acquisition, which had an average
0.2% vacancy in the two months that the Company owned the portfolio in the
second quarter, the average vacancy rate across the Company's portfolio for
the second quarter of 2002 was 6.4%, up slightly from 6.2% in the same
period last year.
The Company's overall average vacancy rate as of July 2002 had fallen
to 5.0% compared to 6.0% in July of 2001.
The average monthly rent realized in the second quarter of 2002 was
$712 per unit, up $49, or 7.4% from $663 per unit for the same period last
year. Management estimates that market rents for its properties at the end
of June, 2002 averaged $769 per unit per month which compares to an average
in-place rent per occupied unit of $744 for the six months ended June 30,
2002.
The Company's reported FFO excluding gains of $0.34 per share in the
second quarter of 2002 exceeded analyst expectations which ranged from
$0.29 to $0.32.
Same-Property Results
Boardwalk continued to show strong performance in its stabilized
properties (defined as properties owned for over 24 months). The
"same-property" results for the Company's stabilized portfolio for the
three month period ended June 30, 2002 showed rental growth of 6.1% and
NOI growth of 9.2% compared to the same period last year. For the six
month period ended June 30, 2002, the stabilized property portfolio
had rental growth of 6.9% and NOI growth of 8.6% compared to the same
period last year. A total of 24,216 units, representing approximately
84% of Boardwalk's total portfolio, were classified as stabilized as
at June 30, 2002.
<<
Same-Property Results - Stabilized Portfolio
Three Months Ended June 30, 2002 vs. Three Months Ended June 30, 2001
Rental % of Total NOI
Rental Operating (Stabilized
Revenues Expenses NOI Portfolio)
-------------------------------------------------------------------------
Calgary +3.2% -6.7% +7.4% 25.5
Edmonton +8.9% -2.7% +15.2% 43.2
Ontario +7.3% +3.3% +10.7% 12.0
Other Alberta +7.9% +13.6% +5.3% 5.9
Saskatchewan +1.3% +10.2% -3.5% 13.4
Total +6.1% +0.4% +9.2% 100.0
-------------------------------------------------------------------------
Same-Property Results - Stabilized Portfolio
Six Months Ended June 30, 2002 vs. Six Months Ended June 30, 2001
Rental of Total NOI
Rental Operating (Stabilized
Revenues Expenses NOI Portfolio)
-------------------------------------------------------------------------
Calgary +5.7% +15.1% +2.4% 25.1
Edmonton +9.5% +0.8% +13.6% 44.0
Ontario +7.4% -3.4% +18.9% 11.6
Other Alberta +3.2% +10.9% +0.3% 6.3
Saskatchewan +3.1% +5.1% +1.7% 13.1
Total +6.9% +3.7% +8.6% 100.0
-------------------------------------------------------------------------
>>
Acquisition and Disposition Activity
The second quarter 2002 results include operating profits from
dispositions of $1.0 million on sales of $7.5 million related to the
disposition of 121 units in several smaller non-core properties.
There were no dispositions in the comparable period last year.
In the second quarter of 2002, the Company completed the previously
announced acquisition of a 3,100-unit portfolio located on Nuns' Island,
immediately south of downtown Montreal, at a contract price of
$180.2 million, including property transfer costs and other closing costs.
A fair value adjustment of approximately $20 million, relating to the
$109.8 million of assumed mortgage debt on the acquisition with an
average interest rate of 9.25%, resulted in the total book cost of the
acquisition amounting to approximately $200 million.
The acquisition closed effective May 1, 2002.
Continued Financial Strength
The Company maintained its strong financial position in the quarter.
Boardwalk's total mortgage debt was $1.26 billion as at June 30, 2002,
up from $1.11 billion at December 31, 2001. As of June 30, 2002, the
Company's debt had an average maturity of 5.0 years with a weighted
average interest rate of 6.04%, and the Company's
debt-to-total-market-capitalization ratio was 62.8%.
The Company's interest coverage ratio for the three month period
ended June 30, 2002 increased to 1.94 times (excluding gains on sales)
compared to 1.79 times in the same period last year.
Expensing of Stock Options
The Company intends to expense stock options on its financial
statements starting in 2003. Management's best estimate of the impact
of implementing the change today would be approximately $0.01 per share
per quarter.
Outlook and Upward Revision in Earnings Guidance
Commenting on the outlook for the Company, Sam Kolias, said
"Boardwalk remains well positioned to show a strong improvement in
results in the current year, driven by both internal and external growth.
We continue to demonstrate strong same-property performance with our
portfolio which is well positioned in strong markets. Our recent
acquisition of the Nuns' Island portfolio in Montreal will also continue
to make a strong contribution to results for the balance of the year."
Rob Geremia, Senior Vice President and CFO, stated "With the Company's
strong performance in the first half of 2002, we currently believe that we
are on track to exceed our previously stated guidance for fiscal 2002. We
are increasing our guidance for 2002 for FFO per share, excluding gains,
to between $1.23 and $1.25, which is up from our previous guidance of
$1.20 to $1.23. In addition, we continue to anticipate approximately a
two cent per share FFO contribution from property sales in 2002 which
would result in our expectations for total FFO per share for the year
being between $1.25 and $1.27."
Supplementary Information
Boardwalk produces Quarterly Supplemental Information that provides
detailed information regarding the Company's activities during the quarter.
The Second Quarter Supplemental Information is available on the INVESTOR
section of our website (www.bwalk.com).
Teleconference on Second Quarter, 2002 Financial Results
We invite you to participate in the teleconference that will be held to
discuss the Company's second quarter 2002 results this morning at 11:15am EST.
Senior management will speak to the financial results and provide a corporate
update. Presentation materials and a Supplementary Information Package for the
second quarter of 2002 will be made available on the INVESTOR section of our
website (www.bwalk.com) prior to the call.
Participation & Registration: For participation and registration for
the conference call please RSVP to Investor Relations at 403-531-9255 or by
email to investor@bwalk.com.
Teleconference Dial-In Numbers:
The telephone numbers for the conference are: 416-640-4127 (within Toronto)
or toll-free 1-888-881-4892 (outside Toronto).
Webcast: Investors will be able to listen to the call and view our slide
presentation over the Internet by visiting http://investor.bwalk.com 15 min.
prior to the start of the call. An information page will be provided for
software needed and system requirements. The live audiocast will also be
available at http://www.newswire.ca/webcast/pages/BoardwalkEquities20020815/
Replay: An audio recording of the teleconference will be available
approximately one hour after the call until 11:59pm EST on August 22nd, 2002.
You can access it by dialing 416-640-1917 and using the following passcode,
201251 followed by the pound key. An audio archive will also be available on
our Investor site (http://investor.bwalk.com) approximately two hours after
the conference call until August 22nd, 2002.
Corporate Profile
Boardwalk Equities Inc. is Canada's largest owner/operator of
multi-family rental properties. Boardwalk currently owns in excess of
250 properties with approximately 29,000 units totalling approximately
25 million net rentable square feet. The company's portfolio is concentrated
in the provinces of Alberta, Saskatchewan, Ontario and Quebec. Boardwalk is
headquartered in Calgary and its shares are listed on both the Toronto Stock
Exchange and the New York Stock Exchange and trade under the symbol BEI. The
Company has a total market capitalization of approximately $2.0 billion.
Additional information is available at Boardwalk's web site at
www.bwalk.com. Recent investor information can be found on the Internet at
http://investor.bwalk.com/.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995. The forward-looking
statements are statements that involve risks and uncertainties, including, but
not limited to, changes in the demand for apartment and town home rentals, the
effects of economic conditions, the impact of competition and competitive
pricing, the effects of the Company's accounting policies and other matters
detailed in the Company's filings with Canadian and United States securities
regulators available on SEDAR in Canada and by request through the Securities
and Exchange Commission in the United States, including matters set forth in
the Company's Annual Report to Shareholders under the heading "Management's
Discussion and Analysis". Because of these risks and uncertainties, the
results, expectations, achievements, or performance described in this release
may be different from those currently anticipated by the Company.
<<
Consolidated Balance Sheets
(CDN.$ Thousands)
As At
June 30, 2002 December 31, 2001
-------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Revenue producing properties $ 1,573,632 $ 1,381,541
Properties held for resale 6,883 6,630
Mortgages and accounts receivable 17,988 22,325
Other assets 16,308 14,423
Deferred financing costs 34,315 32,957
Technology 5,273 5,743
Cash and short term investments 2,060 25,672
-------------------------------------------------------------------------
$ 1,656,459 $ 1,489,291
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Mortgages payable $ 1,264,459 $ 1,108,406
Accounts payable and accrued liabilities 20,288 19,525
Refundable security deposits and other 10,741 10,418
Capital lease obligations 6,599 7,203
Future income taxes (NOTE 5) 61,413 58,755
-------------------------------------------------------------------------
$ 1,363,500 $ 1,204,307
Shareholders' Equity
Share capital (NOTE 2) $ 263,313 258,202
Retained earnings 29,646 26,782
-------------------------------------------------------------------------
292,959 284,984
-------------------------------------------------------------------------
$ 1,656,459 $ 1,489,291
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statement of Earnings - For the three and six months ended
(CDN.$ thousands, except per share amounts) (Unaudited)
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
(6 Months) (6 Months) (3 Months) (3 Months)
-------------------------------------------------------------------------
Revenue
Rental income $ 114,328 $ 100,314 $ 59,566 $ 50,347
Sales - properties
held for resale 7,498 18,012 7,498 -
-------------------------------------------------------------------------
$ 121,826 $ 118,326 $ 67,064 $ 50,347
-------------------------------------------------------------------------
Expenses
Revenue producing properties
Operating expenses $ 12,558 $ 12,088 $ 6,689 6,097
Utilities 15,997 15,811 5,701 5,719
Utility rebate (NOTE 6) (3,303) (3,733) (67) (468)
Property taxes 10,919 9,678 5,713 4,868
Cost of sales - properties
held for resale 6,531 10,501 6,531 -
Administration 8,929 7,829 4,540 3,945
Financing costs 36,405 33,538 19,089 16,851
Amortization 22,514 25,282 11,608 12,828
-------------------------------------------------------------------------
$ 110,550 $ 110,994 $ 59,804 $ 49,840
-------------------------------------------------------------------------
Operating earnings before
income taxes $ 11,276 $ 7,332 $ 7,260 $ 507
Large corporations
taxes 1,523 1,578 862 824
Income taxes (NOTE 5) 3,833 (2,017) 2,412 (3,211)
-------------------------------------------------------------------------
Net earnings for
the period $ 5,920 $ 7,771 $ 3,986 $ 2,894
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings per share (NOTE 3)
Basic $ 0.12 $ 0.16 $ 0.08 $ 0.06
Diluted $ 0.12 $ 0.15 $ 0.08 $ 0.06
-------------------------------------------------------------------------
Consolidated Statement of Retained Earnings
(CDN.$ thousands, except per share amounts) (Unaudited)
As at
June June
2002 2001
(6 Months) (6 Months)
Retained earnings, beginning of period $ 26,782 $ 47,788
Net earnings 5,920 7,771
Dividends paid (2,477) (2,496)
Premium on share repurchases (579) -
---------------------
Retained earnings, end of period $ 29,646 $ 53,063
---------------------
---------------------
Consolidated Statement of Cash Flows- For the three and six months ended
(CDN $Thousands, except per share amounts) (Unaudited)
June 30, June 30, June 30, June 30,
Cash obtained from 2002 2001 2002 2001
(applied to): (6 Months) (6 Months) (3 Months) (3 Months)
Operating activities
Net earnings $ 5,920 $ 7,771 $ 3,986 $ 2,894
Income taxes 3,833 (2,017) 2,412 (3,211)
Amortization 22,514 25,282 11,608 12,828
-------------------------------------------------------------------------
Funds from operations 32,267 31,036 18,006 12,511
Net change in operating
working capital 3,538 (10,573) 426 (3,757)
Net change in properties
held for resale 5,857 9,583 5,990 (111)
-------------------------------------------------------------------------
Total operating
cash flows 41,662 30,046 24,422 8,643
-------------------------------------------------------------------------
Financing activities
Issue of common shares for
cash (net of issue costs) 5,584 1,455 4,472 1,416
Stock repurchase program (1,045) (5) - -
Dividends paid (2,477) (2,496) - -
Financing of revenue
producing properties 100,883 71,437 15,702 38,799
Repayment of debt on
revenue producing
properties (75,929) (71,122) (17,727) (46,368)
Deferred financing costs (1,854) (1,637) (39) (574)
-------------------------------------------------------------------------
25,162 (2,368) 2,408 (6,727)
-------------------------------------------------------------------------
Investing activities
Purchase of revenue producing
properties (NOTE 4) (74,817) (6,738) (71,991) -
Project improvements to
revenue producing
properties (14,946) (28,639) (8,410) (12,876)
Technology (673) (5,788) (119) (255)
-------------------------------------------------------------------------
(90,436) (41,165) (80,520) (13,131)
-------------------------------------------------------------------------
(Decrease) increase in cash
and cash equivalents balance
during period (23,612) (13,487) (53,690) (11,215)
Cash and cash equivalents,
beginning of period 25,672 21,055 55,750 18,783
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 2,060 7,568 2,060 7,568
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Funds from operations per share
Basic 0.65 0.62 0.36 0.25
Diluted 0.65 0.62 0.36 0.25
-------------------------------------------------------------------------
Taxes Paid 1,809 1,760 1,200 882
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interest Paid 33,487 32,293 17,095 16,246
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
Notes to the Consolidated Financial Statements
For the three months and six months ended June 30, 2002
Note 1 - Basis of Presentation
These unaudited interim consolidated financial statements have been
prepared in accordance with the recommendations of the handbook of the
Canadian Institute of Chartered Accountants ("CICA Handbook") and with the
recommendations of the Canadian Institute of Public and Private Real Estate
Companies ("CIPPREC") and are consistent with those used in the audited
consolidated financial statements as at and for the year ended December 31,
2001. The interim financial statements should be read in conjunction with
the audited financial statements.
The preparation of financial statements in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP") requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and to make disclosure of contingent
assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.
Due to seasonality, the operating results for the six months ended
June 30, 2002 are not necessarily indicative of the results that may be
expected for the full year ended December 31, 2002.
Note 2 - Share capital
(a) Issued June 30, December 31,
2002 2001
Number Amount Number Amount
-------- -------- -------- -------
Common Shares outstanding
(thousands) 49,831 $ 263,313 49,404 $ 258,202
(b) Stock options
The Corporation has a stock option plan that provides for the
granting to directors, officers and associates of the Corporation options
to purchase up to 10,643,636 (December 31, 2001 - 9,136,441) common shares.
As at June 30, 2002, there are a total of 3,873,153
(December 31, 2001 - 3,647,834) options outstanding to directors, officers
and associates. The exercise prices range from $9.11 to $22.92
(December 31, 2001 - $9.11 to $22.92). These options expire up to
March 14, 2012. All options are issued at market prices.
<<
June 30, 2002 December 31, 2001
-------------------------------------------------------------------------
3 months Weighted-Average 12 months Weighted-Average
Options Exercise Price Options Exercise Price
Outstanding at
beginning of
period 3,647,834 $12.60 4,399,288 $12.37
Granted 893,722 12.08 205,000 10.48
Exercised (513,800) 10.87 (371,157) 5.63
Forfeited (154,603) 18.37 (585,297) 14.55
-------------------------------------------------------------------------
Outstanding
at end of
period 3,873,153 $12.47 3,647,834 $12.60
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Options exercisable at period end
The following table summarized information about the options outstanding
at June 30, 2002:
Options Outstanding Options Exercisable
-------------------------------------------------------------------------
Range of Number Weighted Weighted Number Weighted Weighted
Exercise Outstanding Average Average Exercisable Average Average
Prices Remaining Exercise Remaining Exercise
Contractual Price Contractual Price
Life (years) Life (years)
-------------------------------------------------------------------------
$9.01 to
$11.00 752,000 7.6 $9.37 689,800 7.6 $9.36
$11.01 to
$13.00 2,021,422 6.8 11.92 1,043,700 7.5 11.86
$13.01 to
$15.00 533,631 7.2 13.72 266,613 6.4 13.76
$15.01 to
$17.00 379,400 5.5 16.06 241,440 4.7 16.08
$17.01 to
$19.00 84,700 0.7 17.93 80,450 0.7 17.97
$19.01 to
$21.00 28,000 0.7 19.73 28,000 0.7 19.73
$21.01 to
$23.00 74,000 0.8 22.53 74,000 0.8 22.53
-------------------------------------------------------------------------
3,873,153 6.59 $12.47 2,424,003 6.7 $12.40
-------------------------------------------------------------------------
The Company accounts for its stock-based compensation plans using
the intrinsic-value method whereby no costs have been recognized in the
financial statement for share options granted to employees and directors.
As now required by Canadian Generally Accepted Accounting Principles,
the impact on compensation costs of using the fair value method, whereby
compensation costs had been recorded in net earnings, must be disclosed.
If the fair value method had been used, the Company's net earnings and net
earnings per share would approximate the following pro forma amounts
(thousands except per share amounts):
June 30, 2002 June 30, 2002
(6 months) (3 months)
-------------------------------------------------------------------------
Compensation Costs $(834,000) $(520,000)
Net Earnings
As reported $5,920 $3,986
Pro forma $5,074 $3,458
Net Earnings per Common Share
Basic
As reported $0.12 $0.08
Pro forma $0.10 $0.07
Diluted
As reported $0.12 $0.08
Pro forma $0.10 $0.07
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with weighted average assumptions
for grants as follows:
Risk free interest rate 5.83%
Expected lives (years) 7-10
Expected volatility 42.64%
Dividend per share $ 0.05
Note 3 - Per share calculations
The following table sets forth the computation of basic and diluted
earnings per share with respect to (loss) earnings (CDN $ Thousands, except
per share amounts).
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
(6 months) (6 months) (3 months) (3 months)
-------------------------------------------------------------------------
Numerator
Net (loss) earnings
for the period $5,920 $7,771 $3,986 $2,894
Funds from operations $32,253 $31,036 $17,992 $12,511
Denominator
Denominator for basic
earnings per share
- weighted average
shares 49,444,946 49,953,908 49,554,415 49,992,548
Effect of dilutive
securities
Stock options 442,255 222,293 646,002 222,293
Denominator for diluted
earnings per share
adjusted for weighted
average shares and
assumed conversion 49,887,201 50,176,201 50,200,417 50,214,841
Basic earnings per share $0.12 $0.16 $0.08 $0.06
Diluted earnings per share $0.12 $0.15 $0.08 $0.06
Basic FFO per share $0.65 $0.62 $0.36 $0.25
Diluted FFO per share $0.65 $0.62 $0.36 $0.25
Note 4 - Dispositions and Acquisitions of Revenue Producing Properties
Dispositions
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
(6 months) (6 months) (3 months)(3 months)
-------------------------------------------------------------------------
Cash received $3,025,661 $13,312,392 $3,025,661 -
Vendor take back mortgage 500,000 4,700,000 500,000 -
Debt assumed 3,972,305 - 3,972,305 -
-------------------------------------------------------------------------
Total proceeds $7,497,966 $18,012,392 $7,497,966 -
-------------------------------------------------
-------------------------------------------------
Net book value $6,531,262 $10,501,402 $6,531,262 -
Gain on sale $966,705 $7,510,990 $966,705 -
Units sold 121 236 121 -
Acquisitions
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
(6 months) (6 months) (3 months) (3 months)
-------------------------------------------------------------------------
Cash paid $74,817,001 $6,738,227 $71,991,341 -
Debt assumed 109,597,474 14,054,624 109,597,474 -
Shares issued - 7,116,000 - -
-------------------------------------------------------------------------
Total purchase price 184,414,475 27,908,851 181,588,815 -
-------------------------------------------------
-------------------------------------------------
Fair value adjustment
to debt 19,500,000 - 19,500,000 -
-------------------------------------------------------------------------
Book Value $203,914,475 $27,908,851 $201,088,815 -
-------------------------------------------------------------------------
Units acquired 3,160 711 3,100
Note 5 - Future income taxes
The recovery of income taxes is computed as follows (thousands):
6 Months, 6 Months, 3 Months 3 months
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
-------------------------------------------------------------------------
Tax expense based on
expected rate of 36%
(2001 - 40%) $4,030 $2,658 $2,609 $182
Non-taxable portion
of capital gains and
other (197) (1,397) (197) (115)
Adjustment for change
in effective tax rate - (3,278) - (3,278)
-------------------------------------------------------------------------
Income tax expense
(recovery) $ 3,833 $(2,017) 2,412 (3,211)
-------------------------------------------------------------------------
The future income tax liability is calculated as follows:
-------------------------------------------------------------------------
As at June 30, 2002 December 31, 2001
-------------------------------------------------------------------------
Tax assets related to operating losses $59,493 $ 52,991
Tax liabilities related to differences
in tax and book basis (120,906) (111,746)
-------------------------------------------------------------------------
Future income tax liability $(61,413) $ (58,755)
-------------------------------------------------------------------------
>>
Note 6 - Utility Rebate
As of March 2, 2002, ATCO Gas, the transporter of all natural gas in
Alberta, distributed a non-recurring rebate. The Alberta Energy &
Utility Board instructed ATCO to rebate a portion of the sale proceeds
of the Viking-Kinsella producing assets, to ATCO North customers in the
form of a one time rebate. The rebate was distributed to all ATCO North
customers, based on historical usage, at a rate of $3.325/GJ.
For the period ended June 30, 2001, the Alberta Government introduced
two separate rebate programs to assist corporations with the increase in
energy prices in 2001. The natural gas rebate program expired in April 2001
(resulting in a disproportionate share of this rebate in the first quarter
of 2001) and the electrical rebate program expired on December 31, 2001.
Due to the current electricity pricing environment, there was not an
extension of this program in 2002.
Note 7 - Subsequent Events
Property Acquisitions
Subsequent to June 30, 2002 the Corporation has contracted to acquire
52 units for a purchase price of $1.85 million. The acquisition was
financed through cash of $ 0.6 million and the assumption of an existing
mortgage and is contracted to close in August 2002.
%SEDAR: 00004201E
For further information please contact:
Sam Kolias,
President and CEO,
(403) 531-9255;
Roberto Geremia,
Senior Vice President, Finance
and Chief Financial Officer,
(403) 531-9255;
Mike Hough,
Senior Vice President,
(416) 364-0849;
Paul Moon,
Director of Corporate Communications,
(403) 531-9255.
Information can also be found on the Internet at
http://www.bwalk.com.
