K-Bro Linen Income Fund Issues Revised Announcement Regarding Third Quarter 2007 Results with Revenue Up 12% and EBITDA Up 17% in the Quarter



    EDMONTON, Nov. 12 /CNW/ - K-Bro Linen Income Fund ("K-Bro") (TSX -
KBL.UN) today provided a revised announcement regarding its financial results
for the third quarter ended September 30, 2007. The revision from its November
9 announcement is with respect to the comparative Q3 2006 basic and diluted
earnings per unit that should have been noted as $0.24, not $0.17.

    Highlights

    
    -   Revenue for the third quarter of 2007 was $19.1 million, an increase
        of 12.0% over the third quarter of 2006.
    -   EBITDA(1) for the third quarter of 2007 was $2.4 million, an increase
        of 16.6% over the same period in 2006.
    -   EBITDA margin improved to 12.7% in the third quarter of 2007 from
        12.2% in the third quarter of 2006.
    -   For the period, K-Bro made distributions of $0.27501 per unit
        ($1.10 annualized) and adjusted distributable cash(1) was $0.38 per
        unit. This amounted to distributions for the quarter of $1.5 million
        compared to distributable cash of $2.0 million, resulting in an
        adjusted payout ratio(1) of 73.8%.
    -   Earnings before income taxes improved in the third quarter of 2007 by
        34.5% over the same period in 2006 as a result of the increased
        revenue and the increased EBITDA margin. However, net earnings after
        taxes decreased in the third quarter of 2007 to $1.0 million from
        $1.3 million in 2006 because in 2006, the income tax recovery in the
        third quarter was substantially higher than in 2007 as a result of
        the impact of a reduction in future income tax rates enacted in the
        third quarter of 2006.

    Financial Highlights (in 000's except percentages and per unit amounts)

    The following table provides certain selected consolidated financial and
operating data prepared by K-Bro management for the periods indicated:


    -------------------------------------------------------------------------
                                           For the three      For the nine
                                           months ended       months ended
                                           September 30,      September 30,
    -------------------------------------------------------------------------
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Revenue                            $19,059   $17,024   $55,376   $47,396
    -------------------------------------------------------------------------
    Operating expenses                  16,630    14,940    48,072    41,360
    -------------------------------------------------------------------------
    EBITDA(1)                           $2,429    $2,084    $7,304    $6,036
    -------------------------------------------------------------------------
    EBITDA(1) as a % of revenue          12.7%     12.2%     13.2%     12.7%
    -------------------------------------------------------------------------
    Earnings before income taxes           756       562     2,370     1,971
    -------------------------------------------------------------------------
    Income tax recovery                    262       727       699       943
    -------------------------------------------------------------------------
    Net earnings                        $1,018    $1,289    $3,069    $2,914
    -------------------------------------------------------------------------
    Basic & diluted earnings per Unit    $0.19     $0.24     $0.56     $0.57
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total assets                       $76,384   $75,024   $76,384   $75,024
    -------------------------------------------------------------------------
    Long-term debt, end of period      $12,734    $9,861   $12,734    $9,861
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash provided by operating
     activities                           $207      $860    $3,977    $1,632
    -------------------------------------------------------------------------
    Net change in non-cash working
     capital items                       1,991     1,074     2,765     4,043
    -------------------------------------------------------------------------
    Maintenance capital expenditures      (150)     (205)     (546)     (464)
    -------------------------------------------------------------------------
    Adjusted distributable cash(1)      $2,048    $1,729    $6,194    $5,211
    -------------------------------------------------------------------------
    Distributions declared              $1,512    $1,512    $4,535    $4,238
    -------------------------------------------------------------------------
    Adjusted payout ratio(1)             73.8%     87.4%     73.2%     81.3%
    -------------------------------------------------------------------------
    Note:
           (1)  Non-GAAP Measures:
                In order to provide a better understanding of its results,
                K-Bro uses the terms EBITDA, Adjusted distributable cash and
                Adjusted payout ratio. These are not earnings or cashflow
                measures recognized by Canadian generally accepted accounting
                principles ("GAAP") and have no standardized meaning
                prescribed by GAAP. Therefore, EBITDA, Adjusted distributable
                cash and Adjusted payout ratio may not be comparable to
                similar measures presented by other issuers. EBITDA is
                defined by management as revenue less operating expenses
                which represents income from operations before amortization.
                Adjusted distributable cash is defined by management as cash
                provided by operating activities, plus or minus the net
                change in non-cash working capital items, less maintenance
                capital expenditures and less cash taxes. Management believes
                this measure reflects the cash generated from the ongoing
                operation of the business. Adjusted distributable cash is a
                non-GAAP measure generally used by Canadian income trusts as
                an indicator of financial performance and it should not be
                seen as a measurement of liquidity or a substitute for
                comparable metrics prepared in accordance with GAAP. This
                measure is commonly used by management, and management
                believes by investors and other stakeholders, to evaluate the
                ongoing performance of K-Bro. K-Bro reports on its Adjusted
                payout ratio (calculated as actual cash distributions divided
                by adjusted distributable cash) because management believes
                that this is a key measure used by investors to value K-Bro,
                assess its performance and provide an indication of the
                sustainability of its distributions. The Adjusted payout
                ratio depends on the Adjusted distributable cash and the
                Fund's distribution policy.
    

    The revenue increase in the third quarter of 2007 was primarily the
result of increases in price and volume from existing customers.
    EBITDA increased by $345 (16.6%) in the quarter compared to the same
period in 2006 as a result of this additional volume and an improved EBITDA
margin.
    K-Bro generated cash from operating activities of $207 for the third
quarter of 2007, a decrease of $653 compared to the third quarter of 2006.
This decrease is attributable to an increased working capital requirement
associated with the increased volume and the timing of receipts from customers
and payments to suppliers.

    Outlook

    "Our Alberta labour situation remains very challenging but our organic
growth continues as a very positive factor in our results" said Linda McCurdy,
President and Chief Executive Officer. "Our focus remains on labour costs and
productivity, completion and transitioning into our new Calgary plant that is
under construction as well as pursuing various growth opportunities. We feel
that this focus will allow us to end 2007 on a strong basis and set the stage
for 2008."
    Further information can be found in the disclosure documents filed by
K-Bro Linen Income Fund with the securities regulatory authorities, available
at www.sedar.com.

    Corporate Profile

    K-Bro is the largest owner and operator of laundry and linen processing
facilities in Canada. K-Bro provides a comprehensive range of general linen
and operating room linen processing, management and distribution services to
healthcare institutions, hotels and other commercial accounts. K-Bro currently
owns and operates processing plants from leased facilities in five Canadian
cities: Toronto, Edmonton, Calgary, Vancouver and Victoria.

    Financial Results

    Figures expressed in percentages are calculated from actual unrounded
amounts.

    Notice to Readers

    This news release contains forward-looking information that represents
internal expectations, estimates or beliefs. Certain statements contained
within this news release constitute forward-looking statements. The use of any
of the words "anticipate", "continue", "expect", "may", "will", "project",
"should", "believe", and similar expressions are intended to identify forward
looking statements. The expectations, estimates and beliefs contained in such
forward-looking statements necessarily involve known and unknown risks and
uncertainties which may cause the Fund's actual performance and financial
results in future periods to differ materially from any expectations,
estimates and beliefs of future performance or results expressed or implied by
such forward-looking statements. These risks and uncertainties include, among
other things, K-Bro's competitive environment, labour costs and stability, the
Supreme Court's ruling on British Columbia's Bill 29, utility costs,
integration of acquisitions, K-Bro's dependence on long-term contracts, the
availability of future financing, the impact of the federal government's "Tax
Fairness" plan and such other risks and uncertainties as described in the
Fund's periodic reports filed with Canadian securities regulatory authorities.
Accordingly, unitholders and potential investors are cautioned that events or
circumstances could cause actual results to differ materially from those
discussed. K-Bro does not undertake any obligation to publicly revise these
forward-looking statements to reflect subsequent events or circumstances,
except as required by applicable law.

    %SEDAR: 00021539E




For further information:

For further information: Linda McCurdy, President & CEO, K-Bro Linen
Income Fund, Phone: (780) 453-5218; Doug Thomson, C.A., Vice-President & CFO,
K-Bro Linen Income Fund, Phone: (780) 453-5218


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