Horizon North Logistics Inc. Announces Results For The Period Ended June 30,
2010

CALGARY, Aug. 9 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the quarter ended June 30, 2010 and 2009.

Overview and Outlook

Our core businesses continue to show improvement with increased oil sands development activity in northern Alberta being the primary driver. Our expanded BlackSand camp facilities near Fort McMurray, Alberta are running at capacity, and the production backlog at our manufacturing plants is now well into 2011.

With improved mineral prices, the mining industry in western Canada is becoming more active and we are participating in a number of new and expanding camp manufacturing and management projects in this sector.

Our road and location matting business has enjoyed increased activity levels associated with unconventional natural gas and in-situ oil sands development projects, which we expect to continue through the latter half of the year.

Highlights for the quarter included:

    
    -   49% increase in bed rental days compared to Q2 2009;
    -   55% increase in mat rental days compared to Q2 2009;
    -   Award of $140 million of camp manufacturing contracts;
    -   Continued ramp up of camp manufacturing personnel, up 22% in the
        quarter and 177% compared to this time last year.
    

These factors contributed to an increase in revenue from operations of 29% for the three months ended June 30, 2010 as compared to the same period in the prior year (excluding the $8.0 million cancellation fee in 2009).

EBITDAS margins for the quarter amounted to 17% of revenue as compared to 21% of revenue in the same period in the prior year, and were negatively impacted by the following factors:

    
    -   Lower margins were realized on manufacturing projects undertaken as
        work performed in the quarter was focused on jobs that were bid and
        awarded in the relatively depressed market conditions of late 2009;
    -   Margins on sales of our first blast resistant structures were
        negative as customer pricing on the initial units was set prior
        to the final determination of construction and finishing costs.
        Market demand for this product is growing, with recent orders
        carrying pricing that will result in significantly improved profit
        margins;
    -   Contribution from the Marine segment was a slight loss as activity
        levels in the western Arctic remain low in comparison to oil & gas
        exploration projects ongoing in the second quarter of 2009.
    

We expect quarterly revenues to continue to increase resulting in an uplift in year over year revenues as a result of the factors described above. From a financing perspective, the Corporation's combined cash flow and borrowing capacity on our credit lines will be sufficient to support our existing capital and operational plans.

    
    Financial Summary

    -------------------------------------------------------------------------
                                   Three       Three         Six         Six
                                  Months      Months      Months      Months
                                   Ended       Ended       Ended       Ended
    (000's except per            June 30,    June 30,    June 30,    June 30,
     share amounts)                 2010        2009        2010        2009
    -------------------------------------------------------------------------

    Revenue from operations    $  45,851   $  35,574   $  89,973   $  76,151
    Cancellation fee                   -       8,000           -       8,000
                              -----------------------------------------------
    Total Revenue              $  45,851   $  43,574   $  89,973   $  84,151

    EBITDAS from
     operations(1)                 7,876       7,419      17,327      19,809
    Cancellation fee                   -       8,000           -       8,000
                              -----------------------------------------------
    Total EBITDAS                  7,876      15,419      17,327      27,809

    Earnings from
     operations(1)                   869       1,267       3,724       6,677
    Cancellation fee                   -       8,000           -       8,000
                              -----------------------------------------------
    Total operating earnings         869       9,267       3,724      14,677

    Net earnings                     171       5,883       1,283       9,585
    Net earnings per share
     - diluted                 $       -   $    0.05   $    0.01   $    0.09
    Total assets                 252,907     228,013     252,907     228,013
    Total long-term financial
     liabilities(2)               34,509      21,914      34,509      21,914
    Funds from operations(3)       7,045      13,936      14,700      25,305
    Capital spending              13,568       2,027      26,809       8,070
    Debt to total
     capitalization ratio         0.17:1      0.11:1      0.17:1      0.11:1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) EBITDAS (Earnings before interest, taxes, depreciation, amortization,
        accretion of notes payable, gain/loss on disposal of property, plant
        and equipment and stock based compensation) and operating earnings
        are not recognized measures under Canadian generally accepted
        accounting principles (GAAP). Management believes that in addition to
        net earnings, EBITDAS is a useful supplemental measure as it provides
        an indication of the Corporation's ability to generate cash flow in
        order to fund working capital, service debt, pay current income taxes
        and fund capital programs. Management believes that in addition to
        net earnings, operating earnings is a useful supplemental measure as
        it provides an indication of the results generated by the
        Corporation's principal business activities prior to consideration of
        how those activities are financed or taxed. Investors should be
        cautioned, however, that EBITDAS and operating earnings should not be
        construed as alternatives to net earnings determined in accordance
        with GAAP as an indicator of the Corporation's performance. Horizon's
        method of calculating EBITDAS and operating earnings may differ from
        other entities and accordingly, EBITDAS and operating earnings may
        not be comparable to measures used by other entities. For a
        reconciliation of EBITDAS and operating earnings to net earnings,
        please refer to page 2 of the Management's Discussion and Analysis.
    (2) Long-term financial liabilities include operating lines of credit,
        the current and long-term portions of long-term debt.
    (3) Funds from operations is not a recognized measure under GAAP.
        Management believes that in addition to cash flow from operations,
        funds from operations is a useful supplemental measure as it provides
        an indication of the cash flow generated by the Corporation's
        principal business activities prior to consideration of changes in
        working capital. Investors should be cautioned, however, that funds
        from operations should not be construed as an alternative to cash
        flow from operations determined in accordance with GAAP as an
        indicator of the Corporation's performance. Horizon's method of
        calculating funds from operations may differ from other entities and
        accordingly, funds from operations may not be comparable to measures
        used by other entities. Funds from operations is equal to cash flow
        from operations before changes in non-cash working capital items
        related to operations.



    Financial Results

    -------------------------------------------------------------------------
                               Three months ended June 30, 2010

                                                             Inter-
                                                           segment
                   Camps &              Marine             Elimina-
    (000's)       Catering   Matting  Services  Corporate    tions     Total
    -------------------------------------------------------------------------
    Revenue
      Revenue
       from
       operations $ 40,437  $  5,686  $    396  $      -  $   (668) $ 45,851
      Cancellation
       fee               -         -         -         -         -         -
    -------------------------------------------------------------------------
    Total revenue $ 40,437  $  5,686  $    396  $      -  $   (668) $ 45,851
    -------------------------------------------------------------------------

    Expenses
      Cost of
       goods sold   10,731       588         -         -         -    11,319
      Operating     20,561     3,261       970         -      (646)   24,146
      General &
       adminis-
       trative         866       117         7     1,549         -     2,539
      Foreign
       exchange
       loss (gain)       3       (27)        -        (5)        -       (29)
    -------------------------------------------------------------------------

    EBITDAS
      EBIDTAS
       from
       operations $  8,276  $  1,747  $   (581) $ (1,544) $    (22) $  7,876
      Cancellation
       fee               -         -         -         -         -         -
    -------------------------------------------------------------------------
    Total EBITDAS $  8,276  $  1,747  $   (581) $ (1,544) $    (22) $  7,876
    -------------------------------------------------------------------------
      Stock based
       compensation    120        32         3       202         -       357
      Depreciation
       & amorti-
       zation        4,655     1,344       296       120       (20)    6,395
      Loss (gain)
       on disposal
       of property,
       plant &
       equipment       264       (21)        -        12         -       255

    Earnings (loss)
     from operations
      Operating
       earnings
       (loss)     $  3,237  $    392  $   (880) $ (1,878) $     (2) $    869
      Cancellation
       fee               -         -         -         -         -         -
    -------------------------------------------------------------------------
    Total
     operating
     earnings
     (loss)       $  3,237  $    392  $   (880) $ (1,878) $     (2) $    869
    ---------------------------------------------------------------

    Interest
     income                                                              (14)
    Interest
     expense on
     operating
     lines of
     credit                                                               99
    Interest
     expense on
     long-term
     debt                                                                331
    Loss on
     equity
     investments                                                         150
    Accretion
     of notes
     payable                                                            (147)
    Income tax
     expense                                                             279
                                                                   ----------

    Net earnings                                                    $    171
                                                                   ----------
                                                                   ----------



    -------------------------------------------------------------------------
                               Three months ended June 30, 2009

                                                             Inter-
                                                           segment
                   Camps &              Marine             Elimina-
    (000's)       Catering   Matting  Services  Corporate    tions     Total
    -------------------------------------------------------------------------
    Revenue
      Revenue
       from
       operations $ 29,925  $  4,039  $  1,992  $      -  $   (382) $ 35,574
      Cancellation
       fee           8,000         -         -         -         -     8,000
    -------------------------------------------------------------------------
    Total revenue $ 37,925  $  4,039  $  1,992  $      -  $   (382) $ 43,574
    -------------------------------------------------------------------------

    Expenses
      Cost of
       goods sold    7,491       539         -         -        (5)    8,025
      Operating     15,280     2,034     1,059         -      (377)   17,996
      General &
       adminis-
       trative         493       100         4     1,518         -     2,115
      Foreign
       exchange
       loss (gain)       -       121         -      (102)        -        19
    -------------------------------------------------------------------------

    EBITDAS
      EBIDTAS from
       operations $  6,661  $  1,245  $    929  $ (1,416) $      -  $  7,419
      Cancellation
       fee           8,000         -         -         -         -     8,000
    -------------------------------------------------------------------------
    Total EBITDAS $ 14,661  $  1,245  $    929  $ (1,416) $      -  $ 15,419
    -------------------------------------------------------------------------
      Stock based
       compensation     17        23         3       154         -       197
      Depreciation
       & amorti-
       zation        5,204     1,513       289        59       (32)    7,033
      Gain on
       disposal of
       property,
       plant &
       equipment    (1,027)      (51)        -         -         -    (1,078)

    Earnings
     (loss) from
     operations
      Operating
       earnings
       (loss)     $  2,467  $   (240) $    637  $ (1,629) $     32  $  1,267
      Cancellation
       fee           8,000         -         -         -         -     8,000
    -------------------------------------------------------------------------
    Total operating
     earnings
     (loss)       $ 10,467  $   (240) $    637  $ (1,629) $     32  $  9,267
    ---------------------------------------------------------------

    Interest
     income                                                              (10)
    Interest
     expense on
     operating
     lines of
     credit                                                               88
    Interest
     expense on
     long-term
     debt                                                                419
    Earnings on
     equity
     investments                                                         (22)
    Income tax
     expense                                                           2,909
                                                                   ----------

    Net earnings                                                    $  5,883
                                                                   ----------
                                                                   ----------
    

Camps & Catering

Camps & Catering revenue is comprised of camp rental and catering revenue, camp and space unit sales, equipment and space rental revenue, and service revenue from transportation and installation.

    
                                Three months ending       Six months ending
                                      June 30                  June 30
    (000's except bed         ----------------------- -----------------------
     rental days and                2010        2009        2010        2009
     catering only days)      ----------- ----------- ----------- -----------

      Camp rental and catering
       revenue                 $  21,275   $  14,321   $  44,669   $  38,814
      Camp and space sales
       revenue                    14,349      11,306      20,043      15,910
      Rental revenue               1,057       1,014       1,559       1,533
      Service revenue              3,756       3,284       9,753       7,784
                              ----------- ----------- ----------- -----------
    Revenue from operations    $  40,437   $  29,925   $  76,024   $  64,041
      Cancellation fee                 -       8,000           -       8,000
                              ----------- ----------- ----------- -----------
    Total revenue              $  40,437   $  37,925   $  76,024   $  72,041
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    EBITDAS
      Operations               $   8,276   $   6,661   $  18,061   $  18,842
      Cancellation fee                 -       8,000           -       8,000
                              ----------- ----------- ----------- -----------
    Total EBITDAS              $   8,276   $  14,661   $  18,061   $  26,842
                              ----------- ----------- ----------- -----------
    Operating earnings
      Operations               $   3,237   $   2,467   $   8,421   $   9,399
      Cancellation fee                 -       8,000           -       8,000
                              ----------- ----------- ----------- -----------
    Total operating earnings   $   3,237   $  10,467   $   8,421   $  17,399
                              ----------- ----------- ----------- -----------

    Bed rental days(1)           106,130      71,258     222,654     188,637
    Catering only days(2)         31,314      30,872      56,854      78,893

    (1) One bed rental day equals the rental of one bed and the provision of
        related catering and housekeeping services for one day.
    (2) One catering only day equals the provision of catering and
        housekeeping services with no related bed rental for one day.
    

Revenues in the second quarter of 2009 included a cancellation fee of $8,000,000 related to the restructuring of a long-term contract with a large oil sands client, which flowed directly into EBITDAS and operating earnings.

Revenue from operations in the Camps & Catering segment was $40,437,000 for the three months ended June 30, 2010, compared to $29,925,000 for the same period in 2009, an increase of $10,512,000. EBITDAS from operations for the three months ended June 30, 2010 was $8,276,000 or 20% of revenue compared to $6,661,000 or 22% of revenue the same period in 2009.

Camp rental and catering revenue

Revenues from camp rental and catering operations were $21,275,000 for the three months ended June 30, 2010 compared to $14,321,000 for the same period in 2009, an increase of $6,954,000. Revenues are derived from the following main business areas: the BlackSand facilities which include the Executive Lodge and craft camp facilities, north of Fort McMurray, Alberta, and the conventional camp and catering operations which include open camps, rig camps, catering only work, and ancillary equipment rentals.

BlackSand

Revenues from the BlackSand facilities for the three months ended June 30, 2010 were $15,754,000 as compared to $7,415,000 for the same period in 2009. The increase of $8,339,000 came from higher volumes and slightly higher revenue per day based on the mix of rentable rooms between executive and craft accommodations.

Bed rental days for the three months ended June 30, 2010 were 95,954 as compared to 46,497 in the same period in 2009 which translates into utilization of approximately 86% during the second quarter of 2010 as compared to average utilization of 53% during the second quarter of 2009. Both volume and utilization levels in the second quarter of 2010 were significantly improved, as oil sands operators continued to ramp up both new and previously delayed projects. Volumes and utilization in second quarter of 2009 were lower as a number of oil sands operators moved to temporarily postpone or delay projects in response to both lower oil prices and general economic circumstances. On a bed rental per day basis, revenues increased to $164 per day in the second quarter of 2010 from $159 per day in the same period in 2009.

Expansion of both the craft camp facilities and the Executive Lodge was undertaken in 2010. The craft camp facilities were expanded in the first quarter of 2010, adding 230 beds. These beds were redeployed from the underutilized facilities in the conventional camp rental and catering part of the business. Expansion of the Executive Lodge was completed in the second quarter of 2010 adding 144 newly manufactured beds. The additional beds brought the total rentable beds at the BlackSand facilities to approximately 1,300 at the end of June 2010.

Conventional Camp Rental and Catering

Revenues from open camp and rig camp operations, which combine both bed rental and provision of catering and housekeeping services, for the three months ended June 30, 2010 were $1,460,000 as compared to $3,427,000 for the same period in 2009, a decrease of $1,967,000. The decrease was driven by lower volumes with bed rental days of 10,176 for the three months ended June 30, 2010 as compared to 24,761 for the same period in 2009. The majority of this decrease was a result of lower open camp activity with decreased utilization across our operating locations. As a result, approximately 230 beds were redeployed for use at the BlackSand craft camp facilities from various operating locations. Revenues per bed rental day basis were slightly higher at $143 per day in the three months ended June 30, 2010 as compared to $138 in the same period in 2009. Revenue generated by the provision of bed rental only for the three months ended June 30, 2010 was $514,000 as compared to $502,000 for the same period in 2009.

Revenues from the provision of catering and housekeeping only services, with no associated bed rentals, for the three months ended June 30, 2010 was $3,547,000 as compared to $2,977,000 for the same period in 2009, an increase of $570,000. Catering only days were 31,314 in the three months ended June 30, 2010 as compared to 30,872 for the same period in 2009. Higher revenue was from increasing mining activity in the Northwest Territories where the corporation operates a customer owned camp at a gold mine under construction. The mine construction project is in the ramp-up phase and catering and housekeeping revenues are expected to keep pace with ongoing development.

Camp and space sales revenue

Camp and space sales revenues for the three months ended June 30, 2010 were $14,349,000 as compared to $11,306,000 for the same period in 2009. Included in the second quarter revenue was $1,442,000 related to the sale of blast resistant structures, with the balance from the completion of design and engineering work for a large oil sands camp project which was announced at the end of April 2010.

Revenues in 2009 were mainly from two larger projects with stronger margins. Projects undertaken in 2010 to date have been lower margin projects bid and awarded in more difficult economic times. Our manufacturing facilities have now cleared the majority of these lower margin backlog projects and units from our recently awarded camp manufacturing contracts started production late in the second quarter of 2010.

Rental revenue

Space rental revenues for the three months ended June 30, 2010 were $1,057,000 as compared to $1,014,000 for the same period in 2009, an increase of $43,000. Rental fleet utilization was consistent each quarter at 76%.

Service revenue

Revenues from service work for the three months ended June 30, 2010 were $3,756,000 as compared to $3,284,000 for the same period in 2009, an increase of $472,000. Service revenues were higher in the quarter mainly driven by the increase in manufacturing and rental activity.

EBITDAS from the BlackSand facilities for the three months ended June 30, 2010 was $5,980,000 or 38% of revenue as compared to $1,861,000 or 25% of revenue for the same period in 2009. The increased EBITDAS percentage is a result of both higher volumes and utilization for the three months ended June 30, 2010 as compared to the same period in 2009.

EBITDAS from the operations other than BlackSand in the three months ended June 30, 2010 were $2,296,000 or 9% of revenue as compared to $4,800,000 or 21% of revenue for the same period in 2009. The blast resistant units sold were the first production units for this product and as such, the production process had not been optimized. The EBITDAS on sale of these first units was a loss of approximately $700,000. Normalizing for this sale, EBITDAS for the three months ended June 30, 2010 was $2,996,000 or 12% of revenue. Decreased volumes from the conventional camp rental and catering business contributed lower EBITDAS, as did lower margin service work. Manufacturing projects undertaken during the quarter contributed lower margins as they were bid and awarded in more difficult economic times.

Matting

Matting revenue is comprised of mat rental revenue, mat sales revenue, installation, transportation, service, and other revenue as follows:

    
                                 Three months ended       Six months ended
                                      June 30                  June 30
    (000's except trucking,   ----------------------- -----------------------
     rental days and mats)          2010        2009        2010        2009
                              ----------- ----------- ----------- -----------

    Mat rental revenue         $   1,525   $   1,309   $   2,654   $   2,214
    Mat sales revenue                889         597       4,576       2,120
    Installation,
     transportation, service
     and other revenue             3,272       2,133       7,946       4,832

                              ----------- ----------- ----------- -----------
    Total revenue              $   5,686   $   4,039   $  15,176   $   9,166
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    EBITDAS                    $   1,747   $   1,245   $   3,752   $   2,282
    Operating earnings (loss)  $     392   $    (240)  $     938   $    (838)

    Mat rental days              833,659     538,209   1,329,940     843,847
    Average mats in rental
     fleet                        12,190      12,479      12,673      12,958
    Mats sold
      New mats                       659          48       2,714       1,274
      Used mats                    1,010         981       5,361       2,090
                              ----------- ----------- ----------- -----------
    Total mats sold                1,669       1,029       8,075       3,364
    

Revenues from the Matting segment for the three months ended June 30, 2010 were $5,686,000 as compared to $4,039,000 for the same period in 2009, an increase of $1,647,000.

Mat rental revenues for the three months ended June 30, 2010 were $1,525,000 as compared to $1,309,000 for the same period in 2009, an increase of $216,000. This increase was driven by higher mat rental days of 833,659 for the three months ended June 30, 2010 compared to 538,209 for the same period in 2009, driven by both shale gas activity and wet weather which required customers to rent mats and extend existing rentals. The increase in mat rental days was partially offset by lower rental rates. Mat rental rates for the second quarter of 2010 were $1.83 per day as compared to $2.43 per day for the same period in 2009, a decrease of $0.60 per day. The three months ended June 30, 2010 had a large rental contract that was at a discounted rental rate. This accounted for $0.30 per day of the rate decrease with the remainder from continuing competitive pressure from existing competitors.

Mat sales revenues for the three months ended June 30, 2010 were $889,000 as compared to $597,000 for the same period in 2009. The total number of mats sold increased as compared to the same period in 2009, as overall customer demand and activity levels increased in 2010. Revenue per mat sold during the second quarter of 2010 was $533, down from $580 in the second quarter of 2009. Although a higher percentage of mats sold in the second quarter of 2010 were new mats, they were mostly oak edge mats which are a combination of oak and other softwood lumbers, and sell at a lower price than solid oak mats. This effect, combined with market pressure on used mat pricing, combined to lower the overall revenue per mat figure.

Installation, transportation, service and other revenues for the three months ended June 30, 2010 were $3,272,000 as compared to $2,133,000 for the same period in 2009. The increase was from service associated with increased mat sales and mat rental days, as well as movement of approximately 41,000 customer owned mats.

EBITDAS for the three months ended June 30, 2010 was $1,747,000 as compared to $1,245,000, and consistent at 31% of revenue in both periods of 2010 and 2009. The increase of $502,000 in EBITDAS is attributable to increased volumes in all areas.

Marine Services

Marine Services revenue is comprised of tug and barge revenue, barge camp revenue, and rental and other revenue as follows:

    
                                  Three months ended        Six months ended
                                        June 30                 June 30
                              ----------------------- -----------------------
    (000's)                         2010        2009        2010        2009
                              ----------- ----------- ----------- -----------
    Tug revenue                $       -   $      30   $       -   $      30
    Barge revenue                      -           -           -           -
    Barge camp revenue               101       1,676         101       2,958
    Rental and other revenue         295         286         528         759
                              ----------- ----------- ----------- -----------
    Total revenue              $     396   $   1,992   $     629   $   3,747
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    EBITDAS                    $    (581)  $     929   $    (721)  $   1,820
    Operating (loss) earnings  $    (880)  $     637   $  (1,318)  $   1,236
    

Revenue from the Marine Services segment for the three months ended June 30, 2010 was $396,000 as compared to $1,992,000 for the same period in 2009. Revenues in the second quarter of 2009 were primarily related to equipment rentals in support of drilling programs which did not take place in the second quarter of 2010. Also included in the second quarter 2009 revenue was a customer payment of a $500,000 penalty for postponing their 2009/2010 barge camp rental commitments.

EBITDAS for the three months ended June 30, 2010 was a loss of $581,000 as compared to income of $929,000 for the same period in 2009, a decrease of $1,510,000. The majority of the decrease was related to overall lower activity levels in the region. In the three months ended June 30, 2010, the John Wurmlinger accommodation/work barge was dry docked and underwent a comprehensive out of water inspection. This type of inspection is required every four years to meet Transport Canada's regulations, and was undertaken to ensure the vessel would be ready to satisfy upcoming customer project commitments. In addition to constructing dry dock facilities, incremental costs of $141,000 were incurred related to this project.

Corporate

Corporate costs are the costs of the head office which include the Executive Chairman, President and Chief Executive Officer, Chief Financial Officer, Vice President of Safety, Corporate Secretary, Corporate Accounting staff, and associated costs of supporting a public company. Cash costs for the three months ended June 30, 2010 were $1,549,000 as compared to $1,518,000 for the same period in 2009. This increase of $29,000 is related to additional staff and higher incentive compensation estimates based on the increased level of activity anticipated in 2010.

    
    Consolidated Balance Sheets (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                            June    December
    (000's)                                                 2010        2009
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash                                             $       -   $   3,724
      Accounts receivable                                 27,240      23,218
      Inventory                                           13,990      11,834
      Prepaid expenses                                     2,532       1,830
      Income taxes receivable                                763         990
    -------------------------------------------------------------------------
                                                          44,525      41,596

    Other assets                                           3,002       3,061

    Property, plant and equipment, net                   169,876     156,426

    Intangible assets, net                                31,102      35,320

    Goodwill                                               2,136       2,136

    Long-term investments                                  2,266       2,463
    -------------------------------------------------------------------------
                                                       $ 252,907   $ 241,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Bank indebtedness                                $   2,135   $       -
      Operating lines of credit                            8,700       6,900
      Accounts payable and accrued liabilities            16,252      12,391
      Deferred revenue                                    15,135       2,068
      Current portion of long-term debt                    1,711       1,939
    -------------------------------------------------------------------------
                                                          43,933      23,298

    Long-term debt                                        24,098      35,863

    Future income tax liability                           13,750      12,687
    -------------------------------------------------------------------------
                                                          81,781      71,848

    Shareholders' equity:
      Share capital                                      245,353     245,353
      Contributed surplus                                 12,501      11,812
      Deficit                                            (86,728)    (88,011)
    -------------------------------------------------------------------------
                                                         171,126     169,154
    -------------------------------------------------------------------------
                                                       $ 252,907   $ 241,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and (Deficit) Retained Earnings
    For the quarter ended June 30, 2010 and 2009 (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
    (000's) except per                   June 30                 June 30
     share amounts                  2010        2009        2010        2009
    -------------------------------------------------------------------------
    Revenue                    $  45,851   $  43,574   $  89,973   $  84,151

    Expenses:
      Cost of goods sold          11,319       8,025      17,366      12,720
      Operating                   24,146      17,996      49,809      39,081
      General and administrative   2,539       2,115       5,468       4,529
      Stock based compensation       357         197         689         108
      Depreciation of property,
       plant and equipment         4,256       4,791       8,265       9,550
      Amortization of intangible
       assets                      2,139       2,242       4,277       4,484
      Loss (gain) on disposal
       of property, plant and
       equipment                     255      (1,078)        372      (1,010)
      Foreign exchange (gain)
       loss                          (29)         19           3          12
    -------------------------------------------------------------------------
                                  44,982      34,307      86,249      69,474
    -------------------------------------------------------------------------
    Operating earnings               869       9,267       3,724      14,677

    Interest income                  (14)        (10)        (14)        (16)
    Interest expense on operating
     lines of credit                  99          88         170         152
    Interest expense on long-term
     debt                            331         419         785         854
    Accretion of notes payable      (147)          -         (54)          -
    Loss (earnings) on equity
     investments                     150         (22)        197         164
    -------------------------------------------------------------------------
    Earnings before income taxes     450       8,792       2,640      13,523

    Income taxes
      Current tax (recovery)
       expense                       (64)        737         294         861
      Future tax expense             343       2,172       1,063       3,077
    -------------------------------------------------------------------------
                                     279       2,909       1,357       3,938
    -------------------------------------------------------------------------
    Net earnings and other
     comprehensive income            171       5,883       1,283       9,585

    Deficit, beginning of
     period                      (86,899)    (89,765)    (88,011)    (93,467)
    -------------------------------------------------------------------------
    Deficit, end of period     $ (86,728)  $ (83,882)  $ (86,728)  $ (83,882)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                    $       -   $    0.05   $    0.01   $    0.09
      Diluted                  $       -   $    0.05   $    0.01   $    0.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    For the quarter ended June 30, 2010 and 2009 (Unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                         June 30                 June 30
    (000's)                         2010        2009        2010        2009
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:

    Net earnings               $     171   $   5,883   $   1,283   $   9,585
    Items not involving cash:
      Depreciation of property,
       plant and equipment         4,256       4,791       8,265       9,550
      Amortization of intangible
       assets                      2,139       2,242       4,277       4,484
      Future income tax expense      343       2,172       1,063       3,077
      Stock based compensation       357         197         689         108
      Amortization of other
       assets                         32           -          59           -
      Accretion of notes
       payable                      (147)          -         (54)          -
      Loss (earnings) on
       equity investments            150         (22)        197         164
      Gain on sale of property,
       plant and equipment          (256)     (1,327)     (1,079)     (1,663)
    -------------------------------------------------------------------------
                                   7,045      13,936      14,700      25,305

    Changes in non-cash working
     capital items                18,918       5,477       5,799       3,272
    -------------------------------------------------------------------------
                                  25,963      19,413      20,499      28,577
    Investing activities:

    Purchase of property, plant
     and equipment               (13,568)     (2,027)    (22,409)     (8,070)
    Purchase of intangibles          (43)          -         (59)          -
    Proceeds on sale of property,
     plant and equipment           2,072       3,868       6,172       5,272
    Return of capital from
     equity investments                -         589           -         589
    -------------------------------------------------------------------------
                                 (11,539)      2,430     (16,296)     (2,209)

    Changes in non-cash working
     capital items                (2,483)          -          39           -
    -------------------------------------------------------------------------
                                 (14,022)      2,430     (16,257)     (2,209)

    Financing activities:

    (Repayment of) proceeds
     from bank indebtedness         (498)        251       2,135        (377)
    Proceeds from operating
     lines of credit               1,800       1,719       1,800         504
    Proceeds from long-term
     debt                          8,400           -      20,143           -
    Repayment of long-term
     debt                        (21,730)    (23,244)    (32,082)    (25,186)
    -------------------------------------------------------------------------
                                 (12,028)    (21,274)     (8,004)    (25,059)

    Changes in non-cash working
     capital items                    87          72          38        (161)
    -------------------------------------------------------------------------
                                 (11,941)    (21,202)     (7,966)    (25,220)
    -------------------------------------------------------------------------
    Decrease in cash position          -         641      (3,724)      1,148

    Cash, beginning of period          -         507       3,724           -
    -------------------------------------------------------------------------
    Cash, end of period        $       -   $   1,148   $       -   $   1,148
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
      Income taxes (received)
       paid                    $     (66)  $  (1,679)  $     234   $   7,009
      Interest income received        14          10          14       2,197
      Interest paid                  445         615         969          39
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

This press release may contain forward-looking statements that are subject to risk factors associated with the oil and gas and mining businesses and the overall economy. The Corporation believes that the expectations reflected in this press release are reasonable, but results may be affected by a variety of variables. The Corporation relies on litigation protection for "forward-looking" statements.

SOURCE Horizon North Logistics Inc.

For further information: For further information: Bob German, President and Chief Executive Officer, or Scott Matson, Vice President Finance and Chief Financial Officer, 1600, 505 - 3rd Street S.W., Calgary, Alberta T2P 3E6, Telephone: (403) 517-4654, Fax: (403) 517-4678; website: www.horizonnorth.ca


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