(in thousand of dollars except per share data)
ST. CATHARINES, ON, May 9 /CNW/ -
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Three Months Ended March 31
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2005
2006 Restated
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Revenue from continuing operations $ 52,777 $ 47,851
Net earnings before changes
in accounting policies $ 7,233 $ 4,179
Effect of change in accounting for:
Repairs and maintenance $ (17,656) $ (16,740)
Amortization (2,466) (2,423)
Total $ (20,122) $ (19,163)
Net (loss) earnings
Continuing operations $ (12,889) $ (15,620)
Discontinued operations - 636
Total $ (12,889) $ (14,984)
(Loss) earnings per common share
Continuing operations $ (3.31) $ (4.01)
Discontinued operations - 0.16
Total $ (3.31) $ (3.85)
As a result of an exposure draft issued by the Canadian Institute of
Chartered Accountants, the Corporation has reviewed the way it accounts for
repair and maintenance costs of the domestic dry-bulk and product tanker
fleets and the amortization expense of the domestic dry-bulk fleet. The
Corporation has decided to change the recognition of repair and maintenance
costs to expense the costs as incurred, which is generally during the winter
season (January through to March) when vessel traffic is impeded by the winter
weather conditions, and to amortize the domestic dry-bulk fleet over twelve
months rather than nine. Historically the Corporation has recognized these
expenses evenly over the April to December operating season.
The effect on net earnings for the three months ended March 31, 2006 and
2005 is as follows:
- For the change relating to repairs and maintenance costs, net earnings
were reduced by $17,656 and $16,740, respectively.
- For the change relating to amortization expense, net earnings were
reduced by $2,466 and $2,423 respectively.
The above two changes on a combined basis reduced net earnings for the
three months ended March 31, 2006 and 2005 by $20,122 and $19,163,
respectively.
The impact of the change in accounting policies on net earnings for 2005
by quarter is as follows:
As previously
reported Adjustment Restated
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Quarter 1 $ 4,179 $ (19,163) $ (14,984)
Quarter 2 9,246 6,830 16,076
Quarter 3 10,003 5,956 15,959
Quarter 4 8,113 6,311 14,424
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Total $ 31,541 $ (66) $ 31,475
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The Corporation is reporting a net loss for the three months ended March
31, 2006 of $12,889 compared to a net loss of $14,984 for the same period in
2005.
Excluding these adjustments, net earnings for the three months ended
March 31, 2006 would have been $7,233, compared to $4,179 for the 2005 first
quarter, an increase of $3,054. The increase in earnings was due primarily to
increases in the domestic dry-bulk and product tanker segments with minor
increases in earnings in the ocean shipping and real estate segments. The
domestic dry-bulk segment earnings improved due mainly to additional operating
days: the product tanker segment earnings improved principally due to
additional operating days as a result of the Algosea entering service in July
2005, and reduced earnings for the three months ended March 31, 2005 due to
costs associated with the wind-up of U.S. operations relating to the transfer
of registration of a tanker vessel from U.S. to Canadian flag. Also in 2005
the Corporation had a gain on the sale of a vessel which it did not have in
2006.
On April 21, 2006, the Corporation completed the purchase of a product
tanker, the Amalienborg, a 1998 built double-hulled petroleum products tanker,
from Borg Tankers I Limited, Bermuda at a cost of $30.5 million. This vessel
is a sister ship to the Algosea, formerly the Aggersborg, which was purchased
in July 2005, also from Borg Tankers. The Amalienborg is currently trading in
Northern Europe and the Mediterranean and will remain in this trade for
approximately one year.
On May 9, 2006, the Board of Directors declared a dividend of $0.35 per
common share payable on June 1, 2006 to shareholders of record on May 18,
2006.
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