Richards Packaging Income Fund Announces 2007 Third Quarter Results And The Acquisition Of The E.J. McKernan Co.



    TORONTO, Oct. 31 /CNW/ - Richards Packaging Income Fund (TSX: RPI.UN)
(the "Fund") announced today results for the quarter ended September 30, 2007.
The Fund owns 95% of Richards Packaging Inc. ("Richards Packaging"), the
leading packaging distributor in Canada, and third largest in North America.
    "Richards Packaging Income Fund delivered another solid quarter with
gross margin and EBITDA(1) as a percentage of sales continuing to run at
strong levels of 17.1% and 10.7% respectively. Revenue for the third quarter
was down $0.9 million over the prior year due mainly to the translation of
Richards US revenue and the Canadian dollar strengthening. Net income was up
$1.4 million, or 13.5 cents per Unit, for the third quarter due to currency
translation gains on financial instruments. A significant achievement during
the quarter was the setting of a fixed interest rate hedge on the long-term
debt which should reduce our effective rate by 0.7% starting in the fourth
quarter(4)" commented Gerry Glynn, Chief Executive Officer.
    We are pleased to announce that, on October 31st, the Fund indirectly
acquired all the outstanding shares of The E.J. McKernan Co. ("McKernan"), a
successful direct mail, catalogue and telemarketing organization and the
largest provider of surplus packaging in the United States, for an aggregate
purchase price, subject to adjustment, of U.S.$30 million. The U.S.$20 million
cash portion of the purchase price was financed by a draw of U.S.$18 million
on Richards Packaging's acquisition credit facility and by a $2 million
private placement of exchangeable shares, exchangeable into 216,216 Units of
the Fund. These shares were subscribed for equally by the CEO and President of
Richards Packaging at a price of $9.25 per share. The balance of the purchase
price for McKernan was funded through the issuance of shares exchangeable into
1,052,632 Units of the Fund to Mr. McKernan, who is continuing in his role as
President of the organization.
    "The acquisition of McKernan is a significant achievement. We expect that
the impact of this transaction on distributable cash(2) for 2008 will be
positive by approximately $1 million(4). We are excited by McKernan's
prospects and welcome their employees to the Richards' family", added Mr.
Glynn.
    Details of the Fund's results are currently available on Richards
Packaging's website at www.richardspackaging.com and on November 1, 2007 on
SEDAR at www.sedar.com.

    About Richards Packaging

    Richards Packaging is a full-service packaging distributor targeting
small- and medium-sized North American businesses. Richards Packaging has
operated for over 90 years and currently serves over 7,000 regional food, wine
and spirits, cosmetic, specialty chemical, pharmaceutical and other companies
from 17 locations throughout North America.

    1   Management defines EBITDA as earnings before amortization, interest,
    unrealized gain / loss on financial instruments and taxes. EBITDA is
    the same as income before under noted items, income taxes and non-
    controlling interests as outlined in the interim consolidated
    financial statements. Management believes that in addition to net
    income, EBITDA is a useful supplemental measure for investors of
    earnings available for distribution prior to debt service, capital
    expenditures and taxes. Management uses this measure as a starting
    point in the determination of earnings available for distribution to
    unitholders and exchangeable shareholders. In addition, EBITDA is
    intended to provide additional information on the Fund's operating
    performance. This earnings measure should not be construed as an
    alternative to net income or as an alternative to cash flow from
    operating, investing and financing activities as a measure of the
    Fund's liquidity and cash flows. EBITDA does not have a standardized
    meaning prescribed by GAAP and therefore the Fund's method of
    calculating EBITDA may not be comparable to similar measures
    presented by other companies or income trusts.

    2   Management defines distributable cash flow, in accordance with the
    Richards Packaging's credit agreement, as EBITDA less interest, cash
    income tax expense, maintenance capital expenditures and loan
    payments. The objective of presenting this measure is to calculate
    the amount which is available for distribution to unitholders and
    exchangeable shareholders. Investors are cautioned that distributable
    cash flow should not be construed as an alternative to cash flow from
    operating, investing and financing activities as a measure of the
    Fund's liquidity and cash flows. Distributable cash flow does not
    have a standardized meaning prescribed by GAAP and therefore the
    Fund's method of calculating distributable cash flow may not be
    comparable to similar measures presented by other income trusts.

    3   Management defines payout ratio as distributions and dividends
    declared over distributable cash flow(2). The objective of presenting
    this measure is to calculate the percentage of actual distributions
    in comparison to the amount available for distribution. Payout ratio
    does not have a standardized meaning prescribed by GAAP. The Fund's
    method of calculating the payout ratio may not be comparable to
    similar measures presented by other income trusts.

    4   This release contains certain forward looking statements (the
    "Statements") regarding future growth potential, results of
    operations, performance and business prospects and opportunities of
    the Fund. These Statements reflect management's current beliefs and
    are based on information currently available to the management of
    Richards Packaging. A number of factors could cause actual events or
    results to differ materially from those discussed in the forward-
    looking statements. Factors that could cause such differences
    include, among other things, changes in customer and supplier
    relationships and the impact on order volumes and pricing,
    competition in the industry, inventory obsolescence, trade risks in
    respect to foreign suppliers and fluctuations in foreign exchange and
    interest rates. Although the Statements contained in this release are
    based upon what management believes to be reasonable assumptions,
    there can be no assurance that actual results will be consistent with
    these Statements. These Statements are made as of the date of this
    release and the Fund assumes no obligation to update or revise them
    to reflect new events or circumstances.





For further information:

For further information: Gerry Glynn, Chief Executive Officer, Richards
Packaging Inc., (905) 624-3391, gglynn@richardspackaging.com; Enzio Di
Gennaro, Chief Financial Officer, Richards Packaging Inc., (416) 245-8230,
edigennaro@richardspackaging.com


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