Richards Packaging Income Fund's fiscal Q4 EBITDA down about US$700,000 on lower revenue, about US$400,000 on higher ocean freight charges, partially offset by about US$200,000 of cost savings; organic revenue down 7.1%

Andrew Rogers

Andrew Rogers

Mar 10, 2011 – CNW

TORONTO , March 9, 2011 (press release) – Richards Packaging Income Fund (the "Fund") announced today results for the quarter and year ended December 31, 2010.

Performance in the fourth quarter was unusually weak with organic revenue shrinkage of 7.1%, as the $3.2 million customer inventory replenishment programs in 2009 failed to repeat. The remaining $0.9 million revenue shortfall reflects the U.S./Cdn. 4¢ appreciation of the dollar. EBITDA1 was down $0.7 million on lower revenue and $0.4 million as a result of higher ocean freight charges that have since subsided, partially offset by $0.2 million of cost containment savings.

As expected, the 2010 results were dramatically impacted by the U.S./Cdn. 9¢ appreciation of the dollar by depressing sales by $8.7 million and EBITDA by $1.3 million. In addition, revenue was slightly lower than 2009 with organic revenue shrinkage of 0.8%. We experienced a $4 million contraction with our top 60 customers as the higher freight costs and Canadian dollar hampered their ability to compete. Partially offsetting this setback was the success of our sales team in generating new small customers which resulted in $3 million of additional sales from 1,000 new customers. This EBITDA impact was partially offset by expense containment initiatives contributing $0.5 million, resulting in an overall decrease of $0.8 million, at a solid 12% of sales level. Net income was $8.8 million, or $0.87 per Unit, down $5.1 million from the same period in 2009 which mainly reflects non-cash foreign currency translation gain on our U.S. dollar denominated debt.

The Fund paid monthly distributions of 6.55¢ per Unit for the year, which represents an annualized yield of 9.0% on the December 31st closing price of $8.75 per Unit. The payout ratio3 for the fourth quarter was 69% and 60% for the 2010 year with free cash flow2 mainly deployed in working capital.

Details of the Fund's results are currently available on Richards Packaging's website at and on March 8th on SEDAR at

The Fund also announces that it intends to continue the normal course issuer bid to acquire up to 200,000 of its outstanding trust units representing approximately 2% of its issued and outstanding units. Under the previous normal course issuer bid, ending November 15 2010, the Fund has purchased 20,600 units at an average weighted price of $7.25. As at March 4, 2011, the Fund had 10,743,470 units issued and outstanding. All purchases will be made through the facilities of and in accordance with the rules of the Toronto Stock Exchange and all units purchased will be cancelled. Except where reliance is had on the Exchange's block purchase exemption, the maximum number of units purchasable under the bid on any trading day will be limited to 2,327 units. The normal course issuer bid will commence on March 10, 2011 and end no later than March 9, 2012. The Trustees of the Fund believe that such purchases are an appropriate and desirable use of available funds.

About Richards Packaging Income Fund

The Fund owns 91% of Richards Packaging Inc. ("Richards Packaging"), the leading packaging distributor in Canada, and third largest in North America. Richards Packaging is a full-service packaging distributor targeting small- and medium-sized North American businesses. Richards Packaging has operated for over 98 years and currently serves over 11,000 regional food, wine and spirits, cosmetic, specialty chemical, pharmaceutical and other companies from 20 locations throughout North America.

1 Management defines EBITDA as earnings before amortization, interest, losses (gains) on financial instruments and taxes. EBITDA is the same as profit from operations as outlined in the annual financial statements after adding back amortization and patent defense costs. 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 operating performance. This earnings measure should not be construed as an alternative to net income or as an alternative to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. EBITDA does not have a standardized meaning prescribed by GAAP and therefore 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 Richards Packaging's credit agreement, as EBITDA less interest, cash income tax expense, maintenance capital expenditures and loan payments. Free cash flow is distributable cash flow less distributions. The objective of presenting these measures is to calculate the amount which is available for distribution to unitholders or exchangeable shareholders and to determine the amount available to fund increases in working capital or expansion capital. 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 liquidity and cash flows. Distributable cash flow does not have a standardized meaning prescribed by GAAP and therefore the 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 flow2. 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 information and statements within the meaning of applicable securities laws (collectively "Statements") regarding future growth potential, results of operations, performance and business prospects and opportunities of the Fund. The Statements are frequently identified by the use of such words as "will", "may", "could", "expect", "plan", "anticipate", "believe" and other similar terminology. Specifically this release contains Statements with respect to compliance with certain financial covenants and the recommencement of distributions. 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 predicted, expressed or implied in the Statements. Factors that could cause such differences include, among other things, changes in customer and supplier relationships, the extent and duration of the worldwide recession 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.

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