ANALYSIS OF FOURTH QUARTER 2004 RESULTS
Operating and financial results
The Fund
The results of operations of the Fund are entirely dependant on the performance of YPG. YPG's results are presented and commented on below in order to provide information on the underlying operations of this investment.
YPG
You should refer to the information presented in tabular form in the section entitled “Analysis of Quarterly Results” for more meaningful information on reported revenues and income from operations.
Adjusted Revenues increased to $170.2 million during the three-month period ended December 31, 2004, up $6.9 million over Adjusted Revenues of $163.3 million in the corresponding period of 2003. This increase of 4.3% is in line with the yearly growth.
Adjusted EBITDA of $98.7 million for the three-month period ended December 31, 2004 increased by $2.5 million or 2.6% over the same period last year. The Adjusted EBITDA margin of 58.0% was slightly lower in the last quarter of 2004 compared to 58.9% in 2003. Our continued focus on optimization of efficiency resulted in an additional restructuring initiative during the fourth quarter of 2004. As such, our EBITDA was impacted by an additional charge of $1.4 million.
There was a substantial decrease in depreciation and amortization for the three-month period ended December 31, 2004, compared to the corresponding period of the preceding year, mainly due to lower amortization on certain intangibles. On November 29, 2002, when we acquired the directory businesses from Bell, intangible assets such as customer contracts and customer relationships were recorded at fair value and were amortized over their expected useful lives, pro rata relative to revenues, for a period not exceeding 24 months. The unamortized balance of these particular intangibles as at January 1, 2004 was minimal and as such, the related amortization decreased by $18.3 million in the fourth quarter of 2004 to $1.2 million.
Interest expense, including standby and other charges in the fourth quarter of 2004 decreased to $11.4 million compared to $12.3 million in 2003. The decrease in interest expense is a result of a lower level of borrowings, and lower interest rates under our new credit facilities, commercial paper program and Medium Term Notes.
Net earnings amounted to $60.9 million in the three-month period ended December 31, 2004, compared to $54.1 million for the same period of the preceding year.
Capital resources and liquidity
The Fund
Distributions to unitholders declared amounted to $79.1 million ($0.2298 per unit) during the last quarter of 2004, $31.3 million ($0.2154 per unit) in 2003.
YPG
During the quarter, we experienced a significant increase in cash flow from operations mostly due to the receipt of payment from one of our large commercial relationships which should have been received in the third quarter.
Interest, including standby charges, paid during the three-month period ended December 31, 2004, amounted to $18 million compared to $10.3 million in 2003. The change in the timing of interest payments following the refinancing of our credit facilities into our Medium Term Notes program contributed to the higher level of payments during the fourth quarter of 2004 which reflects the new semi-annual payment schedule.
During the quarter, we fully reimbursed without penalties, our unsecured Term A loan facility of $50 million, which was to mature August 1, 2007. We also issued an additional $250 million of 15-year Notes from our Medium Term Notes program and repaid $91 million of borrowings under our Commercial Paper program.
|
