Livingston International Income Fund reports improved operating results in the fourth quarter 2007



    TORONTO, March 18 /CNW/ - Livingston International Income Fund (TSX:
LIV.UN), Canada's largest customs broker and a leading North American provider
of customs brokerage, transportation and integrated logistics services, today
announced improved results from operations for the fourth quarter ended
December 31, 2007.
    "Livingston increased revenues in the latest quarter, despite a
continuing weaker economic environment. Through active management and the
successful integration of new operations, we leveraged revenue growth into
much more significant increases in operating profitability," said Peter Luit,
president and chief executive officer of Livingston International Inc. "While
net income was negatively affected by writedowns on goodwill, intangibles and
fixed assets, we are pleased with the improvement in our more diversified
operations during the quarter. We are confident that our focus on efficient
client service should continue to generate value for our unitholders."

    Quarterly results

    In the fourth quarter, Livingston increased revenues 3.6% to
$84.1 million from $81.2 million in the same quarter of 2006. Livingston
increased EBITDA(1), or earnings before interest, taxes, other income or
expense, depreciation, amortization and impairment of goodwill, intangibles
and fixed assets, to $21.1 million in the quarter, compared with $17.4 million
for the fourth quarter of the previous year. As a percentage of revenue,
EBITDA(1) increased to 25.1% of revenue from 21.4% a year earlier, as a result
of stronger-than-anticipated brokerage volumes, higher volumes in the border
services segment (see "Supplementary information" below) as well as reduced
selling, general and administrative costs. The net loss for the quarter was
$24.7 million, compared with a net loss of $3.3 million in the fourth quarter
of 2006. In the fourth quarter, there were one-time reductions to the cost of
services and selling, general and administrative costs of approximately $1.6
million. The net loss was mainly due to the recognition of an impairment of
goodwill in the amount of $21.1 million and an impairment of intangible and
fixed assets in the amount of $16.7 million related to some of the
transportation and logistics businesses from the PBB acquisition.

    Annual results

    For the year ended December 31, 2007, revenues were marginally higher at
$323.8 million than the $323.0 million in 2006. The Fund's EBITDA(1) declined
somewhat in 2007 to $67.7 million from $68.2 million reported for the previous
year. The EBITDA(1) margin decreased to 20.9% of revenues from 21.1% in the
prior year, mainly due to lower margins in some of the businesses acquired
from PBB and the impact of the Canadian dollar reducing brokerage volumes in
general. In 2007, there were one-time additional expenses to the cost of
services and to selling, general and administrative expenses in the amount of
$0.9 million related to the restructuring of various parts of the business. 
The net loss in 2007 was $15.3 million, compared with net income of
$17.5 million in 2006. Again, this was primarily due to the recognition of the
impairment of goodwill, intangible assets and fixed assets in the amount of
$37.8 million in some of the acquired PBB transportation and logistics
businesses.

    Distributions

    During the fourth quarter, the Fund declared distributions of
$11.6 million, or $0.426 per unit, identical to distributions in the fourth
quarter of 2006. Total distributions declared for 2007 were $46.4 million, or
$1.704 per unit, compared with $45.6 million, or $1.697 per unit, in 2006.

    Reporting segments

    Effective starting in the fourth quarter of 2007, Livingston has modified
its reporting segments as a result of increased business volumes in the former
other services segment and as required by generally accepted accounting
principles ("GAAP"). The Canadian brokerage, U.S. brokerage and transportation
and logistics reporting segments are essentially the same, whereas the
operations in the former other services segment have been segregated into
either border services or the relevant Canadian or U.S. brokerage reporting
segment.
    Border services comprise managed services, which include imported vehicle
registration, and technology services. Event logistics has been grouped with
the Canadian brokerage reporting segment, and the Canadian and U.S. consulting
businesses have been grouped with the Canadian and U.S. customs brokerage
reporting segments, respectively. Details of the revised reporting segments
are shown in Table 1. For comparative purposes, previous-year financial
information has been reclassified to be consistent with the current-year
reporting segments.

    Supplementary information

    The Fund has also provided supplementary information, in Tables 2 and 3,
relating to Livingston's cash flows. There are now two recommended guidelines
for calculating cash available for distribution and payout ratio, giving rise
to different and inconsistent calculations, particularly with respect to the
Fund. For example, the recommended disclosure proposed by the Canadian
Institute of Chartered Accountants for income trusts leads, in the Fund's
case, to significant volatility in the calculation of distributable cash, and,
therefore, management believes it is not a particularly relevant measure for
the Fund. The Fund has adopted the Canadian Securities Administrators ("CSA")
disclosure guidelines regarding operating cash flows, as these are more
indicative of the Fund's performance. The Fund is cognizant that the tax
changes coming in 2011 have resulted in income trusts becoming valued more
along the lines of regular public corporations rather than on a distributable
cash and payout ratio basis, as was formerly the case. Accordingly, these
terms have become less relevant. Management believes this supplementary
information should prove helpful to investors at this time, for transitional
reasons. The Fund intends, however, to de-emphasize these concepts in future
disclosures in favour of GAAP measures and EBITDA(1).
    Livingston International Income Fund will provide its comprehensive
Management's Discussion and Analysis, full financial statements and
accompanying notes in its 2007 annual report, which will be mailed to
unitholders and filed with SEDAR in advance of the Fund's annual meeting. The
meeting is scheduled for May 13, 2008 at 10:00 a.m. EDT in the Gallery of the
TSX Broadcast & Conference Centre, 130 King Street West, Toronto, Ontario.

    
    Highlights
                                        Three months               12 months
    (in millions of dollars except     ended Dec. 31           ended Dec. 31
    per unit amounts, unaudited)    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net revenues                   $84.1       $81.2      $323.8      $323.0
    -------------------------------------------------------------------------
    Net (loss) income              (24.7)       (3.3)      (15.3)       17.5
    -------------------------------------------------------------------------
    Cash flow from operations       71.5        42.9        40.5        73.7
    -------------------------------------------------------------------------
    EBITDA(1)                       21.1        17.4        67.7        68.2
    -------------------------------------------------------------------------
    Distributions to unitholders    11.6        11.6        46.4        45.6
    -------------------------------------------------------------------------
    Distributions per unit to
     unitholders(*)                0.426       0.426       1.704       1.697
    -------------------------------------------------------------------------
    (*) The per-unit calculation is based on the weighted average number of
        units outstanding.
    

    Conference call

    Livingston International Income Fund invites interested investors,
analysts and financial media to dial in to its conference call to review its
fourth quarter and year-end financial results to be held on Wednesday, March
19, 2008 at 2:00 p.m. EDT. The number to call is 1-866-696-5896 or, in the
Toronto area, 416 641-6128, citing confirmation number 3252984.
    A playback will also be available following the scheduled call, until
April 19, by dialling 416 695-5800 in the Toronto area or 1-800-408-3053 and
asking for the Livingston International 4th Quarter 2007 Financial Results
conference call. The pass code for the playback is 3252984. An audio recording
will also be archived on Livingston's web site for one month following the
call.

    About Livingston

    Livingston International Income Fund owns, among other companies,
Livingston International Inc., which is a leading North American provider of
customs, transportation and integrated logistics services. Headquartered in
Toronto, Ontario, Livingston International operates in four business segments:
Canadian customs brokerage services; U.S. customs brokerage services;
transportation and logistics services; and border services, comprising managed
services, which include imported vehicle registration, and technology
services. The Fund and its subsidiaries employ approximately 3,000 staff
located at over 125 key border points, seaports, airports and other strategic
locations across Canada and the United States.

    Forward-looking statements

    Certain statements in this release are forward-looking statements, which
reflect management's current beliefs and expectations. Many factors could
cause actual results to differ materially from the results discussed in the
forward-looking statements, including risks related to dependence on
cross-border trade, economic conditions, tax matters, currency exchange rates,
disruptions in border crossings, contract changes and regulatory change, among
others. Undue reliance should not be placed on forward-looking statements. 
Refer to the forward-looking statements description on page 4 of Livingston's
past interim financial statements filed on www.sedar.com as well as at
www.livingstonintl.com.

    Non-GAAP measures

    The Fund provides some non-GAAP measures as supplementary information
that management believes would be useful to investors to explain the Fund's
financial results. These non-GAAP measures include EBITDA(1) and certain
information as described below related to the calculation of cash flows. See
Table 4 for a reconciliation of EBITDA(1) to net income.
    The information provided in Table 2 is derived from, and should be read
in conjunction with, the consolidated statements of cash flows. Management
believes this supplementary disclosure provides useful additional information
related to the cash flows of the Fund, the repayment of debt and other
investing activities. Certain subtotals, such as adjusted operating cash flows
after maintenance capital expenditures and integration costs, and adjusted
operating cash flows after maintenance capital expenditures, integration costs
and other items (formerly reported as cash available for distribution) that
are presented in Table 2, are not defined terms under GAAP. Management uses
these subtotals as measures of internal performance and as a supplement to the
consolidated statements of cash flows. Investors are cautioned that the Fund
may calculate these measures differently than other companies or income trusts
do and that, therefore, they may not be comparable.



    
    Consolidated Balance Sheet
    As at December 31, 2007 and 2006

                                                 December 31,    December 31,
    (in thousands of dollars, unaudited)                2007            2006
    -------------------------------------------------------------------------
    Assets
    Current assets
    Cash and cash equivalents                         27,286          36,043
    Accounts receivable                              262,375         291,712
    Prepaid expenses                                   4,347           4,499
    Income taxes recoverable                               -             533
    Future income taxes                                2,708           2,862
    -------------------------------------------------------------------------
                                                     296,716         335,649

    Property, plant and equipment                     21,474          28,633
    Goodwill                                         306,901         328,169
    Intangible assets                                 91,027         128,890
    Future income taxes                                3,678           5,394
    Employee future benefits - pension                 6,250           4,150
    Deferred finance fees                                  -           2,643
    Other long-term assets                               650             994
    -------------------------------------------------------------------------
                                                     726,696         834,522
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
    Operating facility for government
     remittances                                      90,271          80,803
    Government remittances payable                   117,784         162,656
    Unitholder distributions payable                   3,869           3,867
    Accounts payable and accrued liabilities          83,260          76,496
    Income taxes payable                               2,826               -
    Client deposits and advances                       5,435           9,472
    Current portion of long-term debt                    460           1,188
    -------------------------------------------------------------------------
                                                     303,905         334,482
    -------------------------------------------------------------------------

    Long-term debt                                   106,859         111,498
    Other liabilities                                  2,015           1,947
    Future income taxes                               17,651          29,227
    Employee future benefits                           9,112           8,582
    -------------------------------------------------------------------------
                                                     439,542         485,736

    Unitholders' equity
    Units                                            408,350         408,349
    Restricted units                                       -              34
    -------------------------------------------------------------------------
                                                     408,350         408,383
    -------------------------------------------------------------------------

    Accumulated earnings                              48,728          64,064
    Distributions to unitholders                    (170,090)       (123,661)
    -------------------------------------------------------------------------
    Deficit                                         (121,362)        (59,597)
    -------------------------------------------------------------------------
    Accumulated other comprehensive income               166               -
    -------------------------------------------------------------------------
                                                     287,154         348,786
    -------------------------------------------------------------------------
                                                     726,696         834,522
    -------------------------------------------------------------------------



    Consolidated Statements of Income and Deficit
    For the periods ended December 31, 2007 and 2006

                                   Three       Three          12          12
                                  months      months      months      months
    (in thousands of dollars,      ended       ended       ended       ended
    except per unit amounts,     Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
    unaudited)                      2007        2006        2007        2006
    -------------------------------------------------------------------------

    Net revenues                  83,512      80,444     321,217     320,195
    Interest income                  604         768       2,621       2,845
    -------------------------------------------------------------------------
                                  84,116      81,212     323,838     323,040

    Cost of services              46,833      45,852     186,382     181,329
    Selling, general and
     administrative expenses      15,823      17,028      68,142      70,056
    Costs related to the
     integration of PBB              328         947       1,643       3,465
    Depreciation                   2,355       3,091      10,926      10,970
    Amortization                   5,536       9,111      22,963      27,008
    Impairment of goodwill
     and other assets             37,803      11,000      37,803      11,000
    -------------------------------------------------------------------------

    (Loss) income before the
     undernoted                  (24,562)     (5,817)     (4,021)     19,212
    -------------------------------------------------------------------------

    Other expense (income)           420      (1,870)      4,423      (1,518)
    -------------------------------------------------------------------------
    Interest expense
      Long-term debt               2,096       1,934       8,203       7,586
      Other                        1,067         820       3,956       3,306
    -------------------------------------------------------------------------
                                   3,163       2,754      12,159      10,892
    -------------------------------------------------------------------------
    (Loss) income before
     income taxes                (28,145)     (6,701)    (20,603)      9,838
    ------------------------------------------------------------------------

    Provision for (recovery
     of) income taxes
      Current                      2,526        (812)      5,191        (263)
      Future                      (5,934)     (2,592)    (10,458)     (7,444)
    -------------------------------------------------------------------------
                                  (3,408)     (3,404)     (5,267)     (7,707)
    -------------------------------------------------------------------------

    Net (loss) income for the
     period                      (24,737)     (3,297)    (15,336)     17,545
    Deficit - beginning of
     period                      (85,018)    (44,694)    (59,597)    (31,534)
    Distributions to
     unitholders                 (11,607)    (11,606)    (46,429)    (45,608)
    -------------------------------------------------------------------------
    Deficit - end of period     (121,362)    (59,597)   (121,362)    (59,597)
    -------------------------------------------------------------------------

    Net (loss) income per unit     (0.91)      (0.12)      (0.56)       0.65
    -------------------------------------------------------------------------

    Net (loss) income per unit,
     diluted                       (0.91)      (0.12)      (0.56)       0.65
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income
    For the period ended December 31, 2007
                                                Three months       12 months
                                                       ended           ended
    (in thousands of dollars, unaudited)       Dec. 31, 2007   Dec. 31, 2007
    -------------------------------------------------------------------------

    Net (loss) for the period                        (24,737)        (15,336)

    Other comprehensive income, net of tax:
    Changes in fair value of interest-rate
     swaps (net of tax of nil)                          (682)           (274)
    Amortization of deferred loss on
     settlement of interest-rate swaps (net
     of tax for the three-month period: $22;
     for the year: $91)                                   40             157
    -------------------------------------------------------------------------
                                                        (642)           (117)
    -------------------------------------------------------------------------
    Comprehensive income (loss) for the period       (25,379)        (15,453)
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    For the periods ended December 31, 2007 and 2006

                                   Three       Three          12          12
                                  months      months      months      months
    (in thousands of dollars,      ended       ended       ended       ended
    except per unit amounts,     Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
    unaudited)                      2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    Net (loss) income for the
     period                      (24,737)     (3,297)    (15,336)     17,545
    Adjustment for non-cash
     items
      Depreciation and
       amortization                7,891      12,202      33,889      37,978
      Future income taxes         (5,934)     (2,592)    (10,458)     (7,444)
      Other liabilities              (79)        (28)       (217)       (114)
      Non-cash interest and
       other expense                 233         203         948         820
      Change in the value of
       interest-rate swaps             -        (141)          -        (141)
      Employee future benefits       269        (472)     (1,570)     (1,672)
      Restricted units                 -          10           -         535
      Impairment of goodwill
       and other assets           37,803      11,000      37,803      11,000
      Foreign-exchange loss
       (gain)                        602          80       2,923         (95)
    -------------------------------------------------------------------------
                                  16,048      16,965      47,982      58,412
    Net change in current
     assets and liabilities       55,475      25,949      (7,435)     15,309
    -------------------------------------------------------------------------
                                  71,523      42,914      40,547      73,721
    -------------------------------------------------------------------------

    Investing activities
    Acquisition of businesses,
     net of cash and cash
     equivalents acquired           (160)     (8,133)     (3,277)      1,480
    Property, plant and
     equipment, net of disposals    (778)     (2,769)     (5,439)     (9,211)
    -------------------------------------------------------------------------
                                    (938)    (10,902)     (8,716)     (7,731)
    -------------------------------------------------------------------------

    Financing activities
    Distributions to
     unitholders                 (11,607)    (11,606)    (46,429)    (43,858)
    Increase in long-term debt         -       5,000           -      80,000
    Repayment of long-term debt     (324)       (392)     (1,259)    (76,180)
    (Decrease) increase in
     operating facility          (52,438)        601       8,596       1,341
    Increase in deferred
     financing costs                   -           -           -      (2,616)
    -------------------------------------------------------------------------
                                 (64,369)     (6,397)    (39,092)    (41,313)
    -------------------------------------------------------------------------

    Foreign-exchange gain
     (loss) on cash held in
     foreign currency                 45         349      (1,496)         66
    -------------------------------------------------------------------------

    Increase (decrease) in
     cash and cash equivalents     6,261      25,964      (8,757)     24,743
    Cash and cash equivalents -
     beginning of period          21,025      10,079      36,043      11,300
    -------------------------------------------------------------------------
    Cash and cash equivalents -
     end of period                27,286      36,043      27,286      36,043
    -------------------------------------------------------------------------
    Cash disbursements made for:
    Income taxes                     835       1,458       4,649       6,768
    Interest                       2,931       2,551      11,212      10,072



    Table 1
    Consolidated Financial and Segmented Information
    For the periods ended December 31, 2007 and 2006

                                   Three       Three          12          12
                                  months      months      months      months
                                   ended       ended       ended       ended
    (in thousands of dollars,    Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
    unaudited)                      2007        2006        2007        2006
    -------------------------------------------------------------------------
    Revenues(*)
      Canadian brokerage(xx)(+)   37,548      40,622     153,502     163,321
      U.S. brokerage              12,205      13,805      53,563      55,213
      Transportation and
       logistics(xx)              17,476      19,328      73,475      78,183
      Border services             16,887       7,457      43,298      26,323
    -------------------------------------------------------------------------
                                  84,116      81,212     323,838     323,040
    -------------------------------------------------------------------------
    Cost of services(*)
      Canadian brokerage         (17,175)    (18,968)    (72,733)    (76,038)
      U.S. brokerage              (5,964)     (6,968)    (27,945)    (29,198)
      Transportation and
       logistics                 (14,391)    (15,733)    (61,055)    (61,473)
      Border services             (9,303)     (4,183)    (24,649)    (14,620)
    -------------------------------------------------------------------------
                                 (46,833)    (45,852)   (186,382)   (181,329)
    -------------------------------------------------------------------------
    Contribution margin
      Canadian brokerage          20,373      21,654      80,769      87,283
      U.S. brokerage               6,241       6,837      25,618      26,015
      Transportation and
       logistics                   3,085       3,595      12,420      16,710
      Border services              7,584       3,274      18,649      11,703
    -------------------------------------------------------------------------
                                  37,283      35,360     137,456     141,711
    -------------------------------------------------------------------------
    Contribution margin, as
     a per cent of revenue
      Canadian brokerage           54.3%       53.3%       52.6%       53.4%
      U.S. brokerage               51.1%       49.5%       47.8%       47.1%
      Transportation and
       logistics                   17.7%       18.6%       16.9%       21.4%
      Border services              44.9%       43.9%       43.1%       44.5%
    -------------------------------------------------------------------------
                                   44.3%       43.5%       42.4%       43.9%
    -------------------------------------------------------------------------

    Selling, general and
     administrative expenses     (15,823)    (17,028)    (68,142)    (70,056)
    -------------------------------------------------------------------------
      As a per cent of revenue    (18.8%)     (21.0%)     (21.0%)     (21.7%)
    -------------------------------------------------------------------------
    Costs related to the
     integration of PBB             (328)       (947)     (1,643)     (3,465)
    -------------------------------------------------------------------------
    EBITDA(1)                     21,132      17,385      67,671      68,190
    -------------------------------------------------------------------------
    EBITDA(1) margin, as a per
     cent of revenue               25.1%       21.4%       20.9%       21.1%
    -------------------------------------------------------------------------
    Net (loss) income            (24,737)     (3,297)    (15,336)     17,545
    -------------------------------------------------------------------------

    (*)   In 2007, the Fund's reportable segments were changed to Canadian
          customs brokerage, U.S. customs brokerage, transportation and
          logistics, and border services. Prior year comparative financial
          information has been reclassified to conform to the current year's
          reporting segments.
    (xx)  In the fourth quarter of 2006, revenue in the amount of
          $1.5 million that was included in the transportation and logistics
          segment for the nine months ended September 30, 2006 was
          reclassified to the Canadian brokerage segment.
    (+)   The Canadian brokerage reporting segment includes interest income.



    Table 2
    Summary of Cash Flows
    For the periods ended December 31, 2007 and 2006

                                   Three       Three          12          12
                                  months      months      months      months
                                   ended       ended       ended       ended
                                 Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                   71,523      42,914      40,547      73,721
    Add (deduct):
    Net change in current
     assets and liabilities(*)   (55,475)    (25,949)      7,435     (15,309)
    Maintenance capital
     expenditures(xx)               (557)       (589)     (2,402)     (2,822)
    Costs related to the
     integration of PBB, net
     of tax                          328         947       1,643       3,465
    Tax impact of integration
     costs                             -         886           -           -
    -------------------------------------------------------------------------
    Adjusted operating cash
     flows after maintenance
     capital expenditures and
     integration costs            15,819      18,209      47,223      59,055
    -------------------------------------------------------------------------
    Employee future benefits        (269)        472       1,570       1,672
    Realized foreign-exchange
     (gains) losses                 (223)     (1,979)      1,581      (1,227)
    Other(xxx)                       120         188         136        (476)
    -------------------------------------------------------------------------
    Adjusted operating cash
     flows after maintenance
     capital expenditures,
     integration costs and
     other items                  15,447      16,890      50,510      59,024
    -------------------------------------------------------------------------
    Distributions to
     unitholders(+)               11,607      11,606      46,429      43,858
    -------------------------------------------------------------------------
    Payout ratio based on
     adjusted operating cash
     flows after maintenance
     capital expenditures and
     integration costs(++)         73.4%       63.7%       98.3%       74.3%
    -------------------------------------------------------------------------
    Payout ratio based on
     adjusted operating cash
     flows after maintenance
     capital expenditures,
     integration costs and
     other items(+++)              75.1%       68.7%       91.9%       74.3%
    -------------------------------------------------------------------------
    Per unit, in dollars
    Adjusted operating cash
     flows after maintenance
     capital expenditures and
     integration costs             0.581       0.668       1.733       2.197
    -------------------------------------------------------------------------
    Adjusted operating cash
     flows after maintenance
     capital expenditures,
     integration costs and
     other items                   0.567       0.620       1.854       2.196
    -------------------------------------------------------------------------
    Distributions to
     unitholders(+)                0.426       0.426       1.704       1.632
    -------------------------------------------------------------------------
    Weighted average units
     outstanding              27,247,667  27,242,675  27,247,630  26,880,958
    -------------------------------------------------------------------------

    (*)    The net change in current assets and liabilities has been excluded
           as these are non-cash in nature. These items also tend to
           fluctuate significantly from quarter to quarter primarily as a
           result of the timing of billings and the payment of government
           remittances around the end of the period.
    (xx)   Maintenance capital expenditures are additions, replacements or
           improvements to property, plant and equipment to maintain
           Livingston's business operations. These expenditures involve the
           replacement of information technology equipment and software as
           well as certain improvements to facilities.
    (xxx)  Other consists of items where the cash and accrual amounts differ
           for other liabilities, restricted units, change in value of
           interest-rate swaps, unrealized foreign exchange and non-foreign
           exchange items included in other expense (income).
    (+)    Distributions are the amounts paid in the period, not what was
           actually declared.
    (++)   The payout ratio is calculated by dividing the cash distributions
           to unitholders by the adjusted operating cash flows after
           maintenance capital expenditures and integration costs, consistent
           with the new CSA guideline for the calculation of distributable
           cash and payout ratio.
    (+++)  The Fund had previously calculated the payout ratio on the basis
           of adjusted operating cash flows after maintenance capital
           expenditures, integration costs and other items, which include
           employee future benefits, realized foreign-exchange (gains) losses
           and other (defined above in footnote(xxx)).



    Table 3
    Cash Flows from Operating Activities, Net Income and Cash Distribution
    Analysis
    For the periods ended December 31, 2007 and 2006

                                   Three       Three          12          12
                                  months      months      months      months
                                   ended       ended       ended       ended
    (in thousands of dollars,    Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
    unaudited)                      2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                   71,523      42,914      40,547      73,721
    -------------------------------------------------------------------------
    Net (loss) income            (24,737)     (3,297)    (15,336)     17,545
    -------------------------------------------------------------------------
    Distributions to
     unitholders                  11,607      11,606      46,429      45,608
    -------------------------------------------------------------------------
    Excess (shortfall) of
     cash flows from
     operating activities
     over cash distributions
     paid                         59,916      31,308      (5,882)     28,113
    -------------------------------------------------------------------------
    Excess (shortfall) of net
     (loss) income over cash
     distributions paid          (36,344)    (14,903)    (61,765)    (28,063)
    -------------------------------------------------------------------------

    For the quarter ended December 31, 2007, there was an excess of
$59.9 million of cash flows from operating activities over cash distributions
paid and a shortfall of $36.3 million of net (loss) income over cash
distributions paid. The excess of cash flows from operating activities over
cash distributions paid related mainly to the net change in current assets and
liabilities of $55.5 million for the quarter ended December 31, 2007. The
distributions were funded through cash flows from operating activities.
    For the year ended December 31, 2007, there was a shortfall of
$5.9 million of cash flows from operating activities over cash distributions
paid and a shortfall of $61.8 million of net (loss) income over cash
distributions paid. The shortfall was primarily funded through cash flows
prior to the net change in current assets and liabilities. In the event that
cash flows do not cover distributions, distributions have to date been funded
through the excess of cash flows from operating activities over cash
distributions paid in prior periods.
    Net (loss) income includes a non-cash charge for the impairment of
goodwill, intangible and fixed assets related to certain transportation and
logistics businesses from the PBB acquisition. The shortfall of net (loss)
income over cash distributions paid was primarily due to the nature of this
charge, together with other non-cash charges for depreciation of fixed assets
and amortization of intangible assets.



    Table 4
    Reconciliation of Net Income to EBITDA(1)
    For the periods ended December 31, 2007 and 2006

                                   Three       Three          12          12
                                  months      months      months      months
                                   ended       ended       ended       ended
    (in thousands of dollars,    Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,
    unaudited)                      2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net (loss) income            (24,737)     (3,297)    (15,336)     17,545
    (Deduct) add:
      Income taxes                (3,408)     (3,404)     (5,267)     (7,707)
      Interest expense             3,163       2,754      12,159      10,892
      Other expense (income)         420      (1,870)      4,423      (1,518)
      Depreciation                 2,355       3,091      10,926      10,970
      Amortization                 5,536       9,111      22,963      27,008
      Impairment of goodwill
       and other assets           37,803      11,000      37,803      11,000
    -------------------------------------------------------------------------
    EBITDA(1)                     21,132      17,385      67,671      68,190
    -------------------------------------------------------------------------


    ---------------------------
    (1) While EBITDA (earnings before interest, taxes, other expense
        (income), depreciation, amortization and impairment of goodwill,
        intangible and fixed assets) is not a recognized measure under
        Canadian GAAP, management believes it to be a useful supplemental
        measure. Investors are cautioned that EBITDA should not be construed
        as an alternative to net income as an indicator of Livingston's
        performance or cash flows. Livingston's method of calculating EBITDA
        may differ from that of other companies or income trusts and may not
        be comparable to measures used by other companies or income trusts.
    





For further information:

For further information: Dawneen MacKenzie, Vice-president, public
affairs, 1-800-387-7582 ext. 3109

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LIVINGSTON INTERNATIONAL INCOME FUND

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Livingston International Inc.

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