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Canada (State or Other Jurisdiction of Incorporation or Organization) | 1629 (Primary Standard Industrial Classification Code Number) | Not Applicable (I.R.S. Employer Identification Number) |
Zone 3, Acheson Industrial Area 2-53016 Highway 60 Acheson, Alberta T7X 5A7 (780) 960-7171 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) | Vincent J. Gallant Zone 3, Acheson Industrial Area 2-53016 Highway 60 Acheson, Alberta T7X 5A7 (780) 960-7171 (Name, address, including zip code, and telephone number, including area code, of agent for service) |
Gary W. Orloff, Esq. Bracewell & Giuliani LLP 711 Louisiana Street, Suite 2300 Houston, Texas 77002-2770 Phone: (713) 221-1306 Fax: (713) 221-2166 | Kris F. Heinzelman, Esq. Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019-7475 Phone: (212) 474-1336 Fax: (212) 474-3700 |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
Underwriting | Proceeds to North | Proceeds to the | ||||||||||||||
Price to | Discounts and | American Energy | Selling | |||||||||||||
Public | Commissions | Partners Inc. | Shareholders | |||||||||||||
Per Share | US$ | US$ | US$ | US$ | ||||||||||||
Total | US$ | US$ | US$ | US$ |
Credit Suisse | UBS Investment Bank | Jefferies & Company |
International |
Stephens Inc. |
Peters & Co. Limited |
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F-1 | ||||||||
Form of Underwriting agreement | ||||||||
Purchase Agreement | ||||||||
Opinion of Bordern Ladner Gervais LLP | ||||||||
Voting & Corporate Governance Agreement | ||||||||
Advisory Services Agreement | ||||||||
Series A Preferred Share Purchase Agreement | ||||||||
Consent of KPMG LLP | ||||||||
Power of Attorney |
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• | Mining and Site Preparation. Surface mining for oil sands and other natural resources; construction of infrastructure associated with mining operations and reclamation activities; clearing, stripping, excavating and grading for mining operations and industrial site construction for mega-projects; and underground utility installation for plant, refinery and commercial building construction; | |
• | Piling. Installing all types of driven and drilled piles, caissons and earth retention and stabilization systems for industrial projects primarily focused in the oil sands; and | |
• | Pipeline Installation. Installing transmission and distribution pipe made of various materials. | |
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Our Markets |
Canadian Oil Sands |
Conventional Oil and Gas |
Minerals Mining |
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Commercial and Public Construction |
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Common shares offered by us | shares ( shares if the underwriters’ over-allotment option is fully exercised) | |
Common shares offered by the selling shareholders | shares ( shares if the underwriters’ over-allotment option is fully exercised) | |
Underwriters’ over-allotment option | shares | |
Common shares to be outstanding after this offering | shares ( shares if the underwriters’ over-allotment option is fully exercised) | |
Common shares to be owned by the selling shareholders after this offering | shares ( shares if the underwriters’ over-allotment option is fully exercised) | |
Use of proceeds | We estimate that our proceeds from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately US$158.8 million, or C$176.4 million, assuming the shares are offered at US$ , or C$ , per share, respectively, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. We will use the net proceeds of this offering to purchase certain equipment currently under operating leases, repurchase all of our outstanding 9% senior secured notes, acquire all of the outstanding Seller preferred shares and for other general corporate purposes, including potential acquisitions. See “Use of Proceeds.” | |
We will not receive any proceeds from the sale of shares by the selling shareholders. | ||
Proposed New York Stock Exchange symbol | “NOA” | |
Proposed Toronto Stock Exchange symbol | “NOA” |
• | 111,542 shares issuable upon exercise of outstanding stock options under our 2004 Share Option Plan as of September 30, 2006; and | |
• | 3,458 additional shares reserved for issuance under our 2004 Share Option Plan. | |
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Historical | Pro Forma | ||||||||||||||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||||
April 1, 2003 | November 26, | Year Ended | Ended | Three Months | |||||||||||||||||||||||||||||||
to | 2003 to | March 31, | June 30, | Year Ended | Ended | ||||||||||||||||||||||||||||||
November 25, | March 31, | March 31, | June 30, | ||||||||||||||||||||||||||||||||
2003(a) | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | 2006 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||||||
Revenue(b) | $ | 250,652 | $ | 127,611 | $ | 357,323 | $ | 492,237 | $ | 104,359 | $ | 138,100 | $ | 492,237 | $ | 138,100 | |||||||||||||||||||
Project costs | 156,976 | 83,256 | 240,919 | 308,949 | 66,546 | 67,009 | 304,579 | 66,380 | |||||||||||||||||||||||||||
Equipment costs | 43,484 | 13,686 | 52,831 | 64,832 | 17,014 | 23,935 | 64,832 | 23,935 | |||||||||||||||||||||||||||
Equipment operating lease expense | 10,502 | 1,430 | 6,645 | 16,405 | 2,898 | 7,200 | 3,328 | 2,106 | |||||||||||||||||||||||||||
Depreciation | 6,566 | 6,674 | 20,762 | 21,725 | 4,989 | 7,312 | 24,762 | 8,422 | |||||||||||||||||||||||||||
Gross profit | 33,124 | 22,565 | 36,166 | 80,326 | 12,912 | 32,644 | 94,736 | 37,257 | |||||||||||||||||||||||||||
General and administrative | 7,783 | 6,065 | 22,873 | 30,903 | 7,250 | 9,235 | 32,684 | 9,145 | |||||||||||||||||||||||||||
(Gain) loss on disposal of plant and equipment | (49 | ) | 131 | 494 | (733 | ) | 272 | 113 | (733 | ) | 113 | ||||||||||||||||||||||||
Amortization of intangible assets | — | 12,928 | 3,368 | 730 | 183 | 183 | 730 | 183 | |||||||||||||||||||||||||||
Operating income | 25,390 | 3,441 | 9,431 | 49,426 | 5,207 | 23,113 | 62,055 | 27,816 | |||||||||||||||||||||||||||
Management fee(c) | 41,070 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Interest expense(d) | 2,457 | 10,079 | 31,141 | 68,776 | 49,863 | 10,168 | 27,423 | 6,685 | |||||||||||||||||||||||||||
Foreign exchange (gain) loss | (7 | ) | (661 | ) | (19,815 | ) | (13,953 | ) | 1,221 | (13,466 | ) | (8,103 | ) | (10,214 | ) | ||||||||||||||||||||
Loss on acquisition of Series A preferred shares | — | — | — | — | — | — | 679 | — | |||||||||||||||||||||||||||
Gain on acquisition of Seller preferred shares | — | — | — | — | — | — | (8,000 | ) | — | ||||||||||||||||||||||||||
Loss on repurchase of 9% senior secured notes | — | — | — | — | — | — | 3,428 | — | |||||||||||||||||||||||||||
Other (income) expense | (367 | ) | (230 | ) | (421 | ) | 1,118 | 1,895 | (583 | ) | 1,118 | (583 | ) | ||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments | — | 12,205 | 43,113 | 14,689 | 1,282 | 7,996 | 14,689 | 7,996 | |||||||||||||||||||||||||||
Income (loss) before income taxes | (17,763 | ) | (17,952 | ) | (44,587 | ) | (21,204 | ) | (49,054 | ) | 18,998 | 30,821 | 23,932 | ||||||||||||||||||||||
Income taxes (benefit) | (6,622 | ) | (5,670 | ) | (2,264 | ) | 737 | 150 | 1,104 | 737 | 105 | ||||||||||||||||||||||||
Net income (loss)(e) | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | $ | 30,084 | $ | 23,827 | ||||||||||||||
Net income (loss) per share: | |||||||||||||||||||||||||||||||||||
Basic | $ | (13.28 | ) | $ | (45.66 | ) | $ | (23.62 | ) | $ | (53.02 | ) | $ | 19.22 | $ | $ | |||||||||||||||||||
Diluted | (13.28 | ) | (45.66 | ) | (23.62 | ) | (53.02 | ) | 14.16 | ||||||||||||||||||||||||||
Weighted average shares: | |||||||||||||||||||||||||||||||||||
Basic | 925,000 | 926,986 | 928,740 | 928,000 | 931,000 | ||||||||||||||||||||||||||||||
Diluted | 925,000 | 926,986 | 928,740 | 928,000 | 1,307,780 | ||||||||||||||||||||||||||||||
Balance Sheet Data (end of period): | |||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 36,595 | $ | 17,924 | $ | 42,804 | $ | 45,093 | $ | 70,220 | |||||||||||||||||||||||||
Plant and equipment, net | 167,905 | 177,089 | 185,566 | 191,269 | 236,268 | ||||||||||||||||||||||||||||||
Total assets | 489,974 | 540,155 | 587,011 | 598,332 | 669,902 | ||||||||||||||||||||||||||||||
Total debt(f) | 313,798 | 310,402 | 314,959 | 302,373 | 234,937 | ||||||||||||||||||||||||||||||
Other long-term financial liabilities(f) | 46,266 | 86,723 | 141,179 | 149,543 | 71,030 | ||||||||||||||||||||||||||||||
Total long-term financial liabilities(f) | 352,027 | 395,354 | 453,092 | 448,483 | 302,534 | ||||||||||||||||||||||||||||||
Seller preferred shares(g) | 35,000 | 35,000 | 35,000 | 35,000 | — | ||||||||||||||||||||||||||||||
Series A preferred shares(g) | — | — | 375 | 391 | — | ||||||||||||||||||||||||||||||
Series B preferred shares(g) | — | — | 42,193 | 43,122 | �� | — | |||||||||||||||||||||||||||||
Total shareholders’ equity(h) | 80,355 | 38,829 | 18,111 | 36,317 | 258,761 |
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Historical | Pro Forma | |||||||||||||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||||
April 1, 2003 | November 26, | Year Ended | Ended | Three Months | ||||||||||||||||||||||||||||||
to | 2003 to | March 31, | June 30, | Year Ended | Ended | |||||||||||||||||||||||||||||
November 25, | March 31, | March 31, | June 30, | |||||||||||||||||||||||||||||||
2003(a) | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | 2006 | |||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||||||||
EBITDA(i) | $ | (8,740 | ) | $ | 11,729 | $ | 10,684 | $ | 70,027 | $ | 5,981 | $ | 36,661 | $ | 83,556 | $ | 39,222 | |||||||||||||||||
Consolidated EBITDA(i) | (8,789 | ) | 23,462 | 34,448 | 70,648 | 8,651 | 31,511 | 82,513 | 37,334 | |||||||||||||||||||||||||
Cash provided by (used in) operating activities | 2,509 | 15,477 | (4,833 | ) | 33,864 | (16,130 | ) | 15,254 | ||||||||||||||||||||||||||
Cash used in investing activities | (4,625 | ) | (364,514 | ) | (25,055 | ) | (22,168 | ) | (2,955 | ) | (11,574 | ) | ||||||||||||||||||||||
Cash provided by financing activities | 6,967 | 385,632 | 11,217 | 13,184 | 14,773 | (1,391 | ) | |||||||||||||||||||||||||||
Capital expenditures, net of capital leases | 5,234 | 2,501 | 25,679 | 29,015 | 5,693 | 11,843 |
(a) | The historical statement of operations data and other financial data for the period from April 1, 2003 to November 25, 2003 have been derived from the historical financial statements of Norama Ltd. The financial statements for periods ended before November 26, 2003 are not necessarily comparable in all respects to the financial statements for periods ended after November 25, 2003. See “Business — Our History.” | |
(b) | Effective April 1, 2005, we changed our accounting policy regarding the recognition of revenue on claims. This change in accounting policy has been applied retroactively. Prior to this change, revenue from claims was included in total estimated contract revenue when awarded or received. After this change, claims are included in total estimated contract revenue, only to the extent that contract costs related to the claim have been incurred and when it is probable that the claim will result in a bona fide addition to contract value and can be reliably estimated. Those two conditions are satisfied when (1) the contract or other evidence provides a legal basis for the claim or a legal opinion is obtained providing a reasonable basis to support the claim, (2) additional costs incurred were caused by unforeseen circumstances and are not the result of deficiencies in our performance, (3) costs associated with the claim are identifiable and reasonable in view of work performed and (4) evidence supporting the claim is objective and verifiable. No profit is recognized on claims until final settlement occurs. This can lead to a situation where costs are recognized in one period and revenue is recognized when customer agreement is obtained or claim resolution occurs, which can be in subsequent periods. Historical claim recoveries should not be considered indicative of future claim recoveries. The change in policy resulted in an increase in claims revenue and unbilled revenue of approximately $6.1 million and $8.1 million for the three months ended June 30, 2006 and 2005, respectively, and $12.9 million for the year ended March 31, 2006, but did not result in any adjustments to prior periods. Substantially all of the amounts recognized as claims revenue have been collected subsequent to March 31, 2006. | |
(c) | Management fees paid to the corporate shareholder of our predecessor company, Norama Ltd., represented fees for services rendered and were determined with reference to taxable income. Subsequent to the Acquisition on November 26, 2003, these fees are no longer paid. |
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(d) | Interest expense consists of the following (in thousands): |
Historical | Pro Forma | |||||||||||||||||||||||||||||||||
Predecessor | �� | |||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||||
April 1, 2003 | November 26, | Year Ended | Ended | Three Months | ||||||||||||||||||||||||||||||
to | 2003 to | March 31, | June 30, | Year Ended | Ended | |||||||||||||||||||||||||||||
November 25, | March 31, | March 31, | June 30, | |||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | 2006 | |||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||||
Interest on senior notes | $ | — | $ | 8,096 | $ | 23,189 | $ | 28,838 | $ | 6,535 | $ | 7,346 | $ | 23,238 | $ | 5,817 | ||||||||||||||||||
Interest on senior secured credit facility/revolving credit facility | 599 | 1,089 | 3,274 | 564 | 564 | — | 564 | — | ||||||||||||||||||||||||||
Change in redemption value of Series B preferred shares | — | — | — | 34,668 | 41,498 | 929 | — | — | ||||||||||||||||||||||||||
Amortization of deferred financing costs | — | 814 | 2,554 | 3,338 | 672 | 887 | 2,307 | 578 | ||||||||||||||||||||||||||
Other | 1,858 | 80 | 2,124 | 1,368 | 594 | 1,006 | 1,314 | 290 | ||||||||||||||||||||||||||
$ | 2,457 | $ | 10,079 | $ | 31,141 | $ | 68,776 | $ | 49,863 | $ | 10,168 | $ | 27,423 | $ | 6,685 | |||||||||||||||||||
(e) | Our consolidated financial statements have been prepared in accordance with Canadian GAAP, which differs in certain material respects from U.S. GAAP. If U.S. GAAP were employed, our net loss would be adjusted as follows (in thousands): |
Historical | Pro Forma | ||||||||||||||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||||
April 1, 2003 | November 26, | Year Ended | Ended | Three Months | |||||||||||||||||||||||||||||||
to | 2003 to | March 31, | June 30, | Year Ended | Ended | ||||||||||||||||||||||||||||||
November 25, | March 31, | March 31, | June 30, | ||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | 2006 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||||
Net income (loss) – Canadian GAAP | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | $ | 30,084 | $ | 23,827 | ||||||||||||||
Capitalized interest(1) | — | — | — | 847 | 107 | 249 | 847 | 249 | |||||||||||||||||||||||||||
Depreciation of capitalized interest(1) | — | — | — | — | — | (44 | ) | — | (44 | ) | |||||||||||||||||||||||||
Amortization using effective interest method(2) | — | — | — | 590 | 43 | 135 | 345 | 82 | |||||||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments(3) | — | — | — | (484 | ) | — | (159 | ) | (578 | ) | (119 | ) | |||||||||||||||||||||||
Difference between accretion of Series B preferred shares under Canadian GAAP and U.S. GAAP(4) | — | — | — | — | — | 90 | — | — | |||||||||||||||||||||||||||
Income (loss) before income taxes | (11,141 | ) | (12,282 | ) | (42,323 | ) | (20,988 | ) | (49,054 | ) | 18,165 | 30,698 | 23,995 | ||||||||||||||||||||||
Income taxes: | |||||||||||||||||||||||||||||||||||
Deferred income taxes | — | — | — | — | — | (364 | ) | — | (258 | ) | |||||||||||||||||||||||||
Net income (loss) – U.S. GAAP | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (20,988 | ) | (49,054 | ) | 17,801 | $ | 30,698 | $ | 23,737 | ||||||||||||||||
Net income (loss) per share – basic – U.S. GAAP | $ | (13.28 | ) | $ | (45.66 | ) | $ | (22.60 | ) | $ | (52.86 | ) | $ | 19.12 | $ | $ | |||||||||||||||||||
Net income (loss) per share – diluted – U.S. GAAP | $ | (13.28 | ) | $ | (45.66 | ) | $ | (22.60 | ) | $ | (52.86 | ) | $ | 14.05 | $ | $ | |||||||||||||||||||
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(1) U.S. GAAP requires capitalization of interest costs as part of the historical cost of acquiring certain qualifying assets that require a period of time to prepare for their intended use. This is not required under Canadian GAAP. Accordingly, the capitalized amount is subject to depreciation in accordance with our policies when the asset is placed into service. | ||
(2) Under Canadian GAAP, we defer and amortize debt issuance costs on a straight-line basis over the stated term of the related debt. Under U.S. GAAP, we are required to amortize financing costs over the stated term of the related debt using the effective interest method resulting in a consistent interest rate over the term of the debt. | ||
(3) U.S. GAAP requires that every derivative instrument (including certain derivative instruments embedded in other contracts and debt instruments) be recorded in the balance sheet as either an asset or liability measured at its fair value. The issuances of our 83/4% senior notes and 9% senior secured notes both included certain contingent embedded derivatives which provided for the acceleration of redemption by the holder at a premium in certain instances. These embedded derivatives met the criteria for bifurcation from the debt contract and separate measurement at fair value. Under U.S. GAAP, the embedded derivatives have been measured at fair value and classified as part of the carrying amount of the senior notes on the consolidated balance sheet, with changes in the fair value being recorded in net income (loss) as realized and unrealized (gain) loss on derivative financial instruments for the period. Under Canadian GAAP, separate accounting of embedded derivatives from the host contract is not permitted. | ||
(4) Under Canadian GAAP, we classify the Series B preferred shares as a liability and accrete the carrying amount of $42.2 million on their amendment date (March 30, 2006) to the December 31, 2011 redemption value of $69.6 million using the effective interest method. Under U.S. GAAP, we recognize the fair value of the amended Series B preferred shares as minority interest as such amount was recognized as temporary equity in the accounts of the pre-amalgamated North American Energy Partners Inc., the issuer of the Series B preferred shares, in accordance with Emerging Issues Task Force Topic D-98. Under U.S. GAAP, we accrete the initial fair value of the amended Series B preferred shares of $45.9 million recorded on their amendment date (March 30, 2006) to the December 31, 2011 redemption value of $69.6 million using the effective interest method, which is consistent with the treatment of the Series B preferred shares as temporary equity in the financial statements of the pre-amalgamated North American Energy Partners Inc. The accretion charge is recognized as a charge to minority interest under U.S. GAAP and interest expense in our financial statements under Canadian GAAP. | ||
(f) | Total debt as of June 30, 2006 consist of the following (in thousands): | |
Revolving credit facility | $ | — | ||
Obligations under capital leases, including current portion | 11,937 | |||
9% senior secured notes due 2010 | 67,436 | |||
83/4% senior notes due 2011 | 223,000 | |||
Total debt | $ | 302,373 | ||
Our 83/4% senior notes are reflected above at the current exchange rate at each balance sheet date. We have entered into cross-currency and interest rate swaps, which represent an economic hedge of the 83/4% senior notes. At maturity, we will be required to pay $263.0 million in order to retire these senior notes and the swaps. This amount reflects the fixed exchange rate of C$1.315 = US$1.00 established as of November 26, 2003, the inception of the swap contracts. | ||
Other long-term financial liabilities consist of derivative financial instruments and redeemable preferred shares. | ||
Total long-term financial liabilities consists of total debt, excluding current portion of obligations under capital leases, plus our redeemable preferred shares and the value of the cross-currency and interest rate swaps recognized on our balance sheet. | ||
(g) | The Series A preferred shares of NACG Preferred Corp. are referred to as the Seller preferred shares. The Series A preferred shares of North American Energy Partners Inc. are referred to as the Series A preferred shares. The Series B preferred shares of North American Energy Partners Inc. are referred to as the Series B preferred shares. See note 13(a) to our consolidated financial statements included elsewhere in this prospectus for a description of the preferred shares. |
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(h) | The cumulative effect of material differences between Canadian and U.S. GAAP on shareholders’ equity is as follows (in thousands): |
Pro Forma | |||||||||||||||||||||
March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2006 | |||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||
Shareholders’ equity – Canadian GAAP | $ | 80,355 | $ | 38,829 | $ | 18,111 | $ | 36,317 | $ | 258,761 | |||||||||||
Capitalized interest(1) | — | — | 847 | 1,096 | 1,096 | ||||||||||||||||
Depreciation of capitalized interest(1) | — | — | — | (44 | ) | (44 | ) | ||||||||||||||
Amortization using effective interest method(2) | — | — | 590 | 725 | 427 | ||||||||||||||||
Realized and unrealized loss on derivative financial instruments(3) | — | — | (484 | ) | (643 | ) | (697 | ) | |||||||||||||
Excess of fair value of amended Series B preferred shares over carrying value of original Series B preferred shares(4) | — | — | (3,707 | ) | (3,707 | ) | — | ||||||||||||||
Cumulative difference between accretion of Series B preferred shares under Canadian GAAP and U.S. GAAP(4) | — | — | — | 90 | — | ||||||||||||||||
Deferred income taxes | — | — | — | (364 | ) | (258 | ) | ||||||||||||||
Shareholders’ equity – U.S. GAAP | $ | 80,355 | $ | 38,829 | $ | 15,357 | $ | 33,470 | $ | 259,285 | |||||||||||
(1) U.S. GAAP requires capitalization of interest costs as part of the historical cost of acquiring certain qualifying assets that require a period of time to prepare for their intended use. This is not required under Canadian GAAP. Accordingly, the capitalized amount is subject to depreciation in accordance with our policies when the asset is placed into service. | ||
(2) Under Canadian GAAP, we defer and amortize debt issuance costs on a straight-line basis over the stated term of the related debt. Under U.S. GAAP, we are required to amortize financing costs over the stated term of the related debt using the effective interest method resulting in a consistent interest rate over the term of the debt. | ||
(3) U.S. GAAP requires that every derivative instrument (including certain derivative instruments embedded in other contracts and debt instruments) be recorded in the balance sheet as either an asset or liability measured at its fair value. The issuances of our 83/4% senior notes and 9% senior secured notes both included certain contingent embedded derivatives which provided for the acceleration of redemption by the holder at a premium in certain instances. These embedded derivatives met the criteria for bifurcation from the debt contract and separate measurement at fair value. Under U.S. GAAP, the embedded derivatives have been measured at fair value and classified as part of the carrying amount of the senior notes on the consolidated balance sheet, with changes in the fair value being recorded in net income as realized and unrealized (gain) loss on derivative financial instruments for the period. Under Canadian GAAP, separate accounting of embedded derivatives from the host contract is not permitted. | ||
(4) Prior to the modification of the terms of the Series B preferred shares, there were no differences between Canadian GAAP and U.S. GAAP related to the Series B preferred shares. As a result of the modification of terms of the Series B preferred shares on March 30, 2006, under Canadian GAAP, we continue to classify the Series B preferred shares as a liability and accrete the carrying amount to the December 31, 2011 redemption value of $69.6 million using the effective interest method. Under U.S. GAAP, the Company recognized the fair value of the Series B preferred shares as minority interest as such amount was recognized as temporary equity in the accounts of the pre-amalgamated North American Energy Partners Inc., the issuer of the shares, in accordance with EITF Topic D-98 and recognized a charge of $3.7 million to retained earnings for the difference between the fair value and the carrying amount of the Series B preferred shares on the modification date. Under U.S. GAAP, we accrete the initial fair value of the Series B preferred shares of $45.9 million to the December 31, 2011 redemption value of $69.6 million using the effective interest method, which is consistent with the treatment of the Series B preferred shares as temporary equity in the financial statements of the pre-amalgamated North American Energy Partners Inc. The accretion charge is recognized as a charge to minority interest as opposed to retained earnings in the accounts of North American Energy Partners Inc. under U.S. GAAP and interest expense in our financial statements under Canadian GAAP. | ||
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(i) | EBITDA is calculated as net income (loss) before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA is defined as EBITDA, excluding the effects of foreign exchange gain or loss, realized and unrealized gain or loss on derivative financial instruments, non-cash stock-based compensation expense, gain or loss on disposal of plant and equipment and certain other non-cash items included in the calculation of net income (loss). We believe that EBITDA is a meaningful measure of the performance of our business because it excludes items, such as depreciation and amortization, interest and taxes, that are not directly related to the operating performance of our business. Management reviews EBITDA to determine whether capital assets are being allocated efficiently. In addition, our revolving credit facility requires us to maintain a minimum Consolidated EBITDA. Non-compliance with this financial covenant could result in our being required to immediately repay all amounts outstanding under our revolving credit facility. We are required to maintain a minimum trailing twelve month Consolidated EBITDA through December 31, 2006 of $65.5 million, with this minimum amount increasing periodically until maturity. However, EBITDA and Consolidated EBITDA are not measures of performance under Canadian GAAP or U.S. GAAP and our computations of EBITDA and Consolidated EBITDA may vary from others in our industry. EBITDA and Consolidated EBITDA should not be considered as alternatives to operating income or net income as measures of operating performance or cash flows as measures of liquidity. EBITDA and Consolidated EBITDA have important limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under Canadian GAAP or U.S. GAAP. For example, EBITDA and Consolidated EBITDA: | |
• | do not reflect our cash expenditures or requirements for capital expenditures or capital commitments; | |
• | do not reflect changes in, or cash requirements for, our working capital needs; | |
��� | do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; | |
• | exclude tax payments that represent a reduction in cash available to us; and | |
• | do not reflect any cash requirements for assets being depreciated and amortized that may have to be replaced in the future. |
In addition, Consolidated EBITDA excludes foreign exchange gains and losses and unrealized and realized gains and losses on derivative financial instruments, which, in the case of unrealized losses, may ultimately result in a liability that will need to be paid and, in the case of realized losses, represents an actual use of cash during the period. | |
A reconciliation of net income (loss) to EBITDA as set forth in our consolidated statements of operations is as follows (in thousands): | |
Historical | Pro Forma | ||||||||||||||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||||
April 1, 2003 | November 26, | Year Ended | Ended | Three Months | |||||||||||||||||||||||||||||||
to | 2003 to | March 31, | June 30, | Year Ended | Ended | ||||||||||||||||||||||||||||||
November 25, | March 31, | March 31, | June 30, | ||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | 2006 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | $ | 30,084 | $ | 23,827 | ||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||||
Depreciation | 6,566 | 6,674 | 20,762 | 21,725 | 4,989 | 7,312 | 24,762 | 8,422 | |||||||||||||||||||||||||||
Amortization | — | 12,928 | 3,368 | 730 | 183 | 183 | 730 | 183 | |||||||||||||||||||||||||||
Interest expense | 2,457 | 10,079 | 31,141 | 68,776 | 49,863 | 10,168 | 27,243 | 6,685 | |||||||||||||||||||||||||||
Income taxes (benefit) | (6,622 | ) | (5,670 | ) | (2,264 | ) | 737 | 150 | 1,104 | 737 | 105 | ||||||||||||||||||||||||
EBITDA(1) | $ | (8,740 | ) | $ | 11,729 | $ | 10,684 | $ | 70,027 | $ | 5,981 | $ | 36,661 | $ | 83,556 | $ | 39,222 | ||||||||||||||||||
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Historical | Pro Forma | ||||||||||||||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||||
April 1, 2003 | November 26, | Year Ended | Ended | Three Months | |||||||||||||||||||||||||||||||
to | 2003 to | March 31, | June 30, | Year Ended | Ended | ||||||||||||||||||||||||||||||
November 25, | March 31, | March 31, | June 30, | ||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | 2006 | 2006 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||||||||
EBITDA | $ | (8,740 | ) | $ | 11,729 | $ | 10,684 | $ | 70,027 | $ | 5,981 | $ | 36,661 | $ | 83,556 | $ | 39,222 | ||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||||
Unrealized foreign exchange loss (gain) on senior notes | — | (740 | ) | (20,340 | ) | (14,258 | ) | 928 | (13,571 | ) | (8,103 | ) | (10,319 | ) | |||||||||||||||||||||
Loss (gain) on disposal of plant and equipment | (49 | ) | 131 | 494 | (733 | ) | 272 | 113 | (733 | ) | 113 | ||||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments | — | 12,205 | 43,113 | 14,689 | 1,282 | 7,996 | 14,689 | 7,996 | |||||||||||||||||||||||||||
Non-cash stock-based compensation expense | — | 137 | 497 | 923 | 188 | 312 | 1,104 | 322 | |||||||||||||||||||||||||||
Gain on acquisition of Seller preferred shares | — | — | — | — | — | — | (8,000 | ) | — | ||||||||||||||||||||||||||
Consolidated EBITDA(1) | $ | (8,789 | ) | $ | 23,462 | $ | 34,448 | $ | 70,648 | $ | 8,651 | $ | 31,511 | $ | 82,513 | 37,334 | |||||||||||||||||||
(1) | Pro forma EBITDA and pro forma Consolidated EBITDA for the year ended March 31, 2006 include losses of $4.1 million due to the repurchase of our 9% senior secured notes and the Series A preferred shares because the definition of Consolidated EBITDA in our revolving credit facility does not adjust for cash gains and losses. |
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Anticipated major projects in the oil sands may not materialize. |
• | changes in the perception of the economic viability of these projects; | |
• | shortage of pipeline capacity to transport production to major markets; | |
• | lack of sufficient governmental infrastructure to support growth; | |
• | shortage of skilled workers in this remote region of Canada; and | |
• | cost overruns on announced projects. |
Changes in our customers’ perception of oil prices over the long-term could cause our customers to defer, reduce or stop their investment in oil sands projects, which would, in turn, reduce our revenue from those customers. |
Insufficient pipeline, upgrading and refining capacity could cause our customers to delay, reduce or cancel plans to construct new oil sands projects or expand existing projects, which would, in turn, reduce our revenue from those customers. |
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Lack of sufficient governmental infrastructure to support the growth in the oil sands region could cause our customers to delay, reduce or cancel their future expansions, which would, in turn, reduce our revenue from those customers. |
Shortages of qualified personnel or significant labor disputes could adversely affect our business. |
Cost overruns by our customers on their projects may cause our customers to terminate future projects or expansions which could adversely affect the amount of work we receive from those customers. |
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Our ability to grow our operations in the future may be hampered by our inability to obtain long lead time equipment, particularly tires, which are currently in limited supply. |
Our customer base is concentrated, and the loss of or a significant reduction in business from a major customer could adversely impact our financial condition. |
Because most of our customers are Canadian energy companies, a downturn in the Canadian energy industry could result in a decrease in the demand for our services. |
Lump sum and unit-price contracts expose us to losses when our estimates of project costs are lower than actual costs. |
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• | site conditions differing from those assumed in the original bid; | |
• | scope modifications during the execution of the project; | |
• | the availability and cost of skilled workers in the geographic location of the project; | |
• | the availability and proximity of materials; | |
• | unfavorable weather conditions hindering productivity; | |
• | inability or failure of our customers to perform their contractual commitments; | |
• | equipment availability and productivity and timing differences resulting from project construction not starting on time; and | |
• | the general coordination of work inherent in all large projects we undertake. |
Until we establish and maintain effective internal controls over financial reporting, we cannot assure you that we will have appropriate procedures in place to eliminate future financial reporting inaccuracies and avoid delays in financial reporting. |
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If, as of the end of our 2008 fiscal year, we are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to confirm our assessment, investors could lose confidence in our reported financial information, and the trading price of our common shares and our business could be adversely affected. |
Our substantial debt could adversely affect us, make us more vulnerable to adverse economic or industry conditions and prevent us from fulfilling our debt obligations. |
• | limiting our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements, potential growth or other purposes; | |
• | limiting our ability to use operating cash flow in other areas of our business; | |
• | limiting our ability to post surety bonds required by some of our customers; | |
• | placing us at a competitive disadvantage compared to competitors with less debt; | |
• | increasing our vulnerability to, and reducing our flexibility in planning for, adverse changes in economic, industry and competitive conditions; and | |
• | increasing our vulnerability to increases in interest rates because borrowings under our revolving credit facility and payments under some of our equipment leases are subject to variable interest rates. |
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The terms of our debt agreements may restrict our current and future operations, particularly our ability to respond to changes in our business or take certain actions. |
• | incur or guarantee additional debt, issue certain equity securities or enter into sale and leaseback transactions; | |
• | pay dividends or distributions on our shares or repurchase our shares, redeem subordinated debt or make other restricted payments; | |
• | incur dividend or other payment restrictions affecting certain of our subsidiaries; | |
• | issue equity securities of subsidiaries; | |
• | make certain investments or acquisitions; | |
• | create liens on our assets; | |
• | enter into transactions with affiliates; | |
• | consolidate, merge or transfer all or substantially all of our assets; and | |
• | transfer or sell assets, including shares of our subsidiaries. |
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We may not be able to generate sufficient cash flow to meet our debt service and other obligations due to events beyond our control. |
Currency rate fluctuations could adversely affect our ability to borrow under our revolving credit facility and to repay our 83/4% senior notes and 9% senior secured notes and may affect the cost of goods we purchase. |
If we are unable to obtain surety bonds or letters of credit required by some of our customers, our business could be impaired. |
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A change in strategy by our customers to reduce outsourcing could adversely affect our results. |
Our operations are subject to weather-related factors that may cause delays in our completion of projects. |
We are dependent on our ability to lease equipment, and a tightening of this form of credit could adversely affect our ability to bid for new work and/or supply some of our existing contracts. |
Our business is highly competitive and competitors may outbid us on major projects that are awarded based on bid proposals. |
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A significant amount of our revenue is generated by providing non-recurring services. |
Penalty clauses in our customer contracts could expose us to losses if total project costs exceed original estimates or if projects are not completed by specified completion date milestones. |
Demand for our services may be adversely impacted by regulations affecting the energy industry. |
Environmental laws and regulations may expose us to liability arising out of our operations or the operations of our customers. |
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Failure by our customers to obtain required permits and licenses may affect the demand for our services. |
Our projects expose us to potential professional liability, product liability, warranty or other claims. |
We may not be able to achieve the expected benefits from any future acquisitions, which would adversely affect our financial condition and results of operations. |
Aboriginal peoples may make claims against our customers or their projects regarding the lands on which their projects are located. |
Unanticipated short term shutdowns of our customers’ operating facilities may result in temporary cessation or cancellation of projects in which we are participating. |
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Many of our senior officers have either recently joined the company or have just been promoted and have only worked together as a management team for a short period of time. |
We will incur significantly higher costs as a result of being a public company. |
If you purchase common shares in this offering, you will experience immediate dilution in the net tangible book value per share and could experience further dilution as a result of any additional share issuances, such as under our share option plan. |
There has been no active trading market for our common shares, and an active trading market for the common shares may not develop. |
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Fluctuations in the value of the Canadian and U.S. dollars can affect the value of our common shares and future dividends, if any. |
If our share price fluctuates after this offering, you could lose a significant part of your investment. |
• | changes in projections as to the level of capital spending in the oil sands region; | |
• | changes in stock market analyst recommendations or earnings estimates regarding our common shares, other comparable companies or the construction or oil and gas industries generally; | |
• | actual or anticipated fluctuations in our operating results or future prospects; | |
• | reaction to our public announcements; | |
• | strategic actions taken by us or our competitors, such as acquisitions or restructurings; | |
• | new laws or regulations or new interpretations of existing laws or regulations applicable to our business and operations; | |
• | changes in accounting standards, policies, guidance, interpretations or principles; | |
• | adverse conditions in the financial markets or general economic conditions, including those resulting from war, incidents of terrorism and responses to such events; | |
• | sales of common shares by us, members of our management team or our existing shareholders; and | |
• | the extent of analysts’ interest in following our company. |
Future sales, or the perception of future sales, of a substantial amount of our common shares may depress the price of our common shares. |
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We currently do not intend to pay cash dividends on our common shares, and our ability to pay dividends is limited by our debt agreements, our subsidiaries’ ability to distribute funds to us and Canadian law. |
Our principal shareholders are in a position to affect our ongoing operations, corporate transactions and other matters, and their interests may conflict with or differ from your interests as a shareholder. |
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We are a holding company and rely on our subsidiaries for our operating funds, and our subsidiaries have no obligation to supply us with any funds. |
You may be unable to enforce actions against us and certain of our directors and officers and others named in this prospectus under U.S. federal securities laws. |
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• | the timing and success of business development efforts; | |
• | changes in oil and gas prices; | |
• | our ability to hire and retain a skilled labor force; | |
• | our ability to bid successfully on new projects and accurately forecast costs associated with unit-price or lump sum contracts; | |
• | our ability to establish and maintain effective internal controls; | |
• | our substantial debt, which could make us more vulnerable to adverse economic conditions and affect our ability to comply with the terms of the agreements governing our indebtedness; | |
• | restrictive covenants in our debt agreements, which may restrict the manner in which we operate our business; | |
• | foreign currency exchange rate fluctuations, capital markets conditions and inflation rates; | |
• | weather conditions; | |
• | our ability to obtain surety bonds as required by some of our customers; | |
• | decreases in outsourcing work by our customers or shut-downs or cutbacks at major businesses that use our services; | |
• | our ability to purchase or lease equipment; | |
• | changes in laws or regulations, third party relations and approvals, and decisions of courts, regulators and governmental bodies that may adversely affect our business or the business of the customers we serve; |
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• | our ability to successfully identify and acquire new businesses and assets and integrate them into our existing operations; and | |
• | those other factors discussed in the section entitled “Risk Factors.” |
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• | approximately $45.0 million to purchase certain equipment currently under operating leases, including prepayment penalties, | |
• | approximately $76.3 million to repurchase all of our outstanding 9% senior secured notes due 2010, which notes were used for refinancing bank indebtedness, related fees and expenses and for general corporate purposes, | |
• | $27.0 million to acquire all of the outstanding Seller preferred shares, and | |
• | with the balance available for general corporate purposes, including working capital, capital expenditures and potential acquisitions. While we currently have no agreements for the acquisition of any material business or assets, we regularly evaluate potential acquisitions and may effect them quickly and at any time. |
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• | on an actual basis; | |
• | as adjusted on a pro forma basis to give effect to the Reorganization; and | |
• | as further adjusted on a pro forma basis to give effect to this offering and the use of proceeds therefrom, assuming the shares are offered at US$ , or C$ , per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. |
June 30, 2006 | |||||||||||||||
Pro Forma for the | |||||||||||||||
Pro Forma | Reorganization | ||||||||||||||
for the | and the | ||||||||||||||
Actual | Reorganization | Offering(a) | |||||||||||||
(In thousands) | |||||||||||||||
Cash and cash equivalents | $ | 45,093 | $ | 44,093 | $ | 70,220 | |||||||||
Total debt (including current portion): | |||||||||||||||
Revolving credit facility(b) | $ | — | $ | — | $ | — | |||||||||
Obligations under capital leases | 11,937 | 11,937 | 11,937 | ||||||||||||
9% senior secured notes due 2010 | 67,436 | 67,436 | — | ||||||||||||
83/4% senior notes due 2011(c) | 223,000 | 223,000 | 223,000 | ||||||||||||
Total debt, including current portion | 302,373 | 302,373 | 234,937 | ||||||||||||
Derivative financial instruments | 71,030 | 71,030 | 71,030 | ||||||||||||
Redeemable preferred shares: | |||||||||||||||
Seller preferred shares | 35,000 | — | — | ||||||||||||
Series A preferred shares | 391 | — | — | ||||||||||||
Series B preferred shares | 43,122 | — | — | ||||||||||||
Total redeemable preferred shares | 78,513 | — | — | ||||||||||||
Shareholders’ equity(d): | |||||||||||||||
Common shares | 93,100 | 136,221 | 318,160 | (e) | |||||||||||
Contributed surplus | 1,869 | 1,869 | 1,869 | ||||||||||||
Deficit | (58,652 | ) | (50,561 | ) | (61,268 | ) | |||||||||
Total shareholders’ equity | 36,317 | 87,529 | 258,761 | ||||||||||||
Total capitalization | $ | 533,326 | $ | 505,025 | $ | 634,948 | |||||||||
(a) | A $1.00 increase or decrease in the assumed initial public offering price per share would increase or decrease each of cash, share capital, total shareholders’ equity and total capitalization by $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. | |
(b) | We entered into an amended and restated credit agreement dated as of July 19, 2006 to provide for borrowings and letters of credit in an aggregate amount of $55.0 million. As of July 20, 2006, we had approximately $37.0 million of available borrowings under the revolving credit facility after taking into account $18.0 million of outstanding and undrawn letters of credit. See “Description of Certain Indebtedness – Revolving Credit Facility.” | |
(c) | Our 83/4 senior notes are reflected at the current exchange rate as of June 30, 2006. We have entered into cross-currency and interest rate swaps, which represent an economic hedge of the 83/4% senior notes. At maturity, we will be required to pay $263.0 million (compared to $294.0 million at June 30, 2006) in order to retire these senior notes and the swaps. This amount reflects the fixed exchange rate of C$1.315 = US$1.00 established as of November 26, 2003, the inception of the swap contracts. | |
(d) | This table does not reflect 111,542 common shares issuable upon exercise of outstanding stock options under our existing stock option plan as of September 30, 2006. | |
(e) | Assumes we receive net proceeds from this offering of approximately US$158.8 million, or C$176.4 million. | |
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Assumed initial public offering price per share | $ | ||||||||
Net tangible book value (deficiency) per share as of June 30, 2006 | $ | ||||||||
Increase in pro forma net tangible book value per share attributable to the offering | |||||||||
Pro forma net tangible book value per share after the offering | |||||||||
Dilution in net tangible book value per share to new investors | $ | ||||||||
Shares Purchased | Total Consideration | |||||||||||||||||||
Average Price | ||||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | ||||||||||||||||
Existing shareholders | % | $ | % | $ | ||||||||||||||||
New investors | ||||||||||||||||||||
Total | 100.0% | $ | 100.0% | |||||||||||||||||
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(1) | See the list of our subsidiaries under “Business — Subsidiaries.” |
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(1) | See the list of our subsidiaries under “Business — Subsidiaries.” |
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Predecessor | ||||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||||
Year Ended | April 1, 2003 | November 26, | Year Ended | Ended | ||||||||||||||||||||||||||||||
March 31, | to | 2003 to | March 31, | June 30, | ||||||||||||||||||||||||||||||
November 25, | March 31, | |||||||||||||||||||||||||||||||||
2002(a) | 2003(a) | 2003(a) | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||
Statement of operations data: | ||||||||||||||||||||||||||||||||||
Revenue(b) | $ | 249,351 | $ | 344,186 | $ | 250,652 | $ | 127,611 | $ | 357,323 | $ | 492,237 | $ | 104,359 | $ | 138,100 | ||||||||||||||||||
Project costs | 127,996 | 219,979 | 156,976 | 83,256 | 240,919 | 308,949 | 66,546 | 67,009 | ||||||||||||||||||||||||||
Equipment costs | 56,693 | 55,871 | 43,484 | 13,686 | 52,831 | 64,832 | 17,014 | 23,935 | ||||||||||||||||||||||||||
Equipment operating lease expense | 20,596 | 16,357 | 10,502 | 1,430 | 6,645 | 16,405 | 2,898 | 7,200 | ||||||||||||||||||||||||||
Depreciation | 11,299 | 10,974 | 6,566 | 6,674 | 20,762 | 21,725 | 4,989 | 7,312 | ||||||||||||||||||||||||||
Gross profit | 32,767 | 41,005 | 33,124 | 22,565 | 36,166 | 80,326 | 12,912 | 32,644 | ||||||||||||||||||||||||||
General and administrative | 12,794 | 12,233 | 7,783 | 6,065 | 22,873 | 30,903 | 7,250 | 9,235 | ||||||||||||||||||||||||||
Gain (loss) on disposal of plant and equipment | (218 | ) | (2,265 | ) | (49 | ) | 131 | 494 | (733 | ) | 272 | 113 | ||||||||||||||||||||||
Amortization of intangible assets | — | — | — | 12,928 | 3,368 | 730 | 183 | 183 | ||||||||||||||||||||||||||
Operating income | 20,191 | 31,037 | 25,390 | 3,441 | 9,431 | 49,426 | 5,207 | 23,113 | ||||||||||||||||||||||||||
Management fee(c) | 14,400 | 8,000 | 41,070 | — | — | — | — | — | ||||||||||||||||||||||||||
Interest expense(d) | 3,510 | 4,162 | 2,457 | 10,079 | 31,141 | 68,776 | 49,863 | 10,168 | ||||||||||||||||||||||||||
Foreign exchange (gain) loss | (17 | ) | (234 | ) | (7 | ) | (661 | ) | (19,815 | ) | (13,953 | ) | 1,221 | (13,466 | ) | |||||||||||||||||||
Other (income) expense | — | — | (367 | ) | (230 | ) | (421 | ) | 1,118 | 1,895 | (583 | ) | ||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments | — | — | — | 12,205 | 43,113 | 14,689 | 1,282 | 7,996 | ||||||||||||||||||||||||||
Income (loss) before income taxes | 2,298 | 19,109 | (17,763 | ) | (17,952 | ) | (44,587 | ) | (21,204 | ) | (49,054 | ) | 18,998 | |||||||||||||||||||||
Income taxes (benefit) | 689 | 6,620 | (6,622 | ) | (5,670 | ) | (2,264 | ) | 737 | 150 | 1,104 | |||||||||||||||||||||||
Net income (loss)(e) | $ | 1,609 | $ | 12,489 | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | |||||||||||||
Net income (loss) per share data: | ||||||||||||||||||||||||||||||||||
Net income (loss) per share: | ||||||||||||||||||||||||||||||||||
Basic | $ | (13.28 | ) | $ | (45.66 | ) | $ | (23.62 | ) | $ | (53.02 | ) | $ | 19.22 | ||||||||||||||||||||
Diluted | (13.28 | ) | (45.66 | ) | (23.62 | ) | (53.02 | ) | 14.16 | |||||||||||||||||||||||||
Weighted average shares: | ||||||||||||||||||||||||||||||||||
Basic | 925,000 | 926,986 | 928,740 | 928,000 | 931,000 | |||||||||||||||||||||||||||||
Diluted | 925,000 | 926,986 | 928,740 | 928,000 | 1,307,780 |
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Predecessor | |||||||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||
Year Ended | April 1, 2003 | November 26, | Year Ended | Ended | |||||||||||||||||||||||||||||
March 31, | to | 2003 to | March 31, | June 30, | |||||||||||||||||||||||||||||
November 25, | March 31, | ||||||||||||||||||||||||||||||||
2002(a) | 2003(a) | 2003(a) | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||||||||||||||
Balance sheet data (end of period): | |||||||||||||||||||||||||||||||||
Cash | $ | 436 | $ | 651 | $ | 36,595 | $ | 17,924 | $ | 42,804 | $ | 45,093 | |||||||||||||||||||||
Plant and equipment, net | 56,759 | 76,234 | 167,905 | 177,089 | 185,566 | 191,269 | |||||||||||||||||||||||||||
Total assets | 120,431 | 158,584 | 489,974 | 540,155 | 587,011 | 598,332 | |||||||||||||||||||||||||||
Total debt(f) | 50,139 | 63,401 | 313,798 | 310,402 | 314,959 | 302,373 | |||||||||||||||||||||||||||
Other long-term financial liabilities(f) | — | — | 46,266 | 86,723 | 141,179 | 149,543 | |||||||||||||||||||||||||||
Total long-term financial liabilities(f) | 27,969 | 40,342 | 387,027 | 430,354 | 530,660 | 526,996 | |||||||||||||||||||||||||||
Seller preferred shares | — | — | 35,000 | 35,000 | 35,000 | 35,000 | |||||||||||||||||||||||||||
Series A preferred shares | — | — | — | — | 375 | 391 | |||||||||||||||||||||||||||
Series B preferred shares | — | — | — | — | 42,193 | 43,122 | |||||||||||||||||||||||||||
Total shareholders’ equity(g) | 17,379 | 29,818 | 80,355 | 38,829 | 18,111 | 36,317 | |||||||||||||||||||||||||||
Other financial data: | |||||||||||||||||||||||||||||||||
EBITDA(h) | $ | 17,107 | $ | 34,245 | $ | (8,740 | ) | $ | 11,729 | $ | 10,684 | $ | 70,027 | $ | 5,981 | $ | 36,661 | ||||||||||||||||
Consolidated EBITDA(h) | 16,889 | 31,980 | (8,789 | ) | 23,462 | 34,448 | 70,648 | 8,651 | 31,511 | ||||||||||||||||||||||||
Cash provided by (used in) operating activities | 4,175 | 16,283 | 2,509 | 15,477 | (4,833 | ) | 33,864 | (16,130 | ) | 15,254 | |||||||||||||||||||||||
Cash used in investing activities | (6,464 | ) | (18,745 | ) | (4,625 | ) | (364,514 | ) | (25,055 | ) | (22,168 | ) | (2,955 | ) | (11,574 | ) | |||||||||||||||||
Cash provided by (used in) financing activities | (8,522 | ) | 2,677 | 6,967 | 385,632 | 11,217 | 13,184 | 14,773 | (1,391 | ) | |||||||||||||||||||||||
Capital expenditures, net of capital leases | 8,668 | 22,932 | 5,234 | 2,501 | 25,679 | 29,015 | 5,693 | 11,843 |
(a) | The historical balance sheet data, statement of operations data and other financial data as of and for years ended March 31, 2002 and 2003 and the period from April 1 to November 25, 2003 have been derived from the historical financial statements of Norama Ltd. The financial statements for periods ended before November 26, 2003 are not necessarily comparable in all respects to the financial statements for periods ended after November 25, 2003. See “Business — Our History.” | |
(b) | Effective April 1, 2005, we changed our accounting policy regarding the recognition of revenue on claims. This change in accounting policy has been applied retroactively. Prior to this change, revenue from claims was included in total estimated contract revenue when awarded or received. After this change, claims are included in total estimated contract revenue, only to the extent that contract costs related to the claim have been incurred and when it is probable that the claim will result in a bona fide addition to contract value and can be reliably estimated. Those two conditions are satisfied when (1) the contract or other evidence provides a legal basis for the claim or a legal opinion is obtained providing a reasonable basis to support the claim, (2) additional costs incurred were caused by unforeseen circumstances and are not the result of deficiencies in our performance, (3) costs associated with the claim are identifiable and reasonable in view of work performed and (4) evidence supporting the claim is objective and verifiable. No profit is recognized on claims until final settlement occurs. This can lead to a situation where costs are recognized in one period and revenue is recognized when customer agreement is obtained or claim resolution occurs, which can be in subsequent periods. Historical claim recoveries should not be considered indicative of future claim recoveries. The change in policy resulted in an increase in claims revenue and unbilled revenue of approximately $6.1 million and $8.1 million for the three months ended June 30, 2006 and 2005, respectively, and $12.9 million for the year ended March 31, 2006, but did not result in any adjustments to prior periods. Substantially all of the amounts recognized as claims revenue have been collected subsequent to March 31, 2006. | |
(c) | Management fees paid to the corporate shareholder of our predecessor company, Norama Ltd., represented fees for services rendered and were determined with reference to taxable income. Subsequent to the Acquisition on November 26, 2003, these fees are no longer paid. |
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(d) | Interest expense consists of the following (in thousands): |
Predecessor | |||||||||||||||||||||||||
April 1, 2003 | Three Months | ||||||||||||||||||||||||
to | November 26, | Year Ended | Ended | ||||||||||||||||||||||
November 25, | 2003 to | March 31, | June 30, | ||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Interest on senior notes | $ | — | $ | 8,096 | $ | 23,189 | $ | 28,838 | $ | 6,535 | $ | 7,346 | |||||||||||||
Interest on senior secured credit facility/revolving credit facility | 599 | 1,089 | 3,274 | 564 | 564 | — | |||||||||||||||||||
Change in redemption value of Series B preferred shares | — | — | — | 34,668 | 41,498 | 929 | |||||||||||||||||||
Amortization of deferred financing costs | — | 814 | 2,554 | 3,338 | 672 | 887 | |||||||||||||||||||
Other | 1,858 | 80 | 2,124 | 1,368 | 594 | 311 | |||||||||||||||||||
$ | 2,457 | $ | 10,079 | $ | 31,141 | $ | 68,776 | $ | 49,863 | $ | 10,168 | ||||||||||||||
(e) | Our consolidated financial statements have been prepared in accordance with Canadian GAAP, which differs in certain material respects from U.S. GAAP. If U.S. GAAP were employed, our net income (loss) would be adjusted as follows (in thousands): |
Predecessor | ||||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||||
Year Ended | November 26, | Ended | ||||||||||||||||||||||||||||||||
March 31, | April 1, 2003 to | 2003 to | Year Ended March 31, | June 30, | ||||||||||||||||||||||||||||||
November 25, | March 31, | |||||||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Net income (loss) — Canadian GAAP | $ | 1,609 | $ | 12,489 | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | |||||||||||||
Capitalized interest(1) | — | — | — | — | — | 847 | 107 | 249 | ||||||||||||||||||||||||||
Depreciation of capitalized interest(1) | — | — | — | — | — | — | — | (44 | ) | |||||||||||||||||||||||||
Amortization using effective interest method(2) | — | — | — | — | — | 590 | 43 | 135 | ||||||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments(3) | — | — | — | — | — | (484 | ) | — | (159 | ) | ||||||||||||||||||||||||
Difference between accretion of Series B preferred shares under Canadian and U.S. GAAP(4) | — | — | — | — | — | — | — | 90 | ||||||||||||||||||||||||||
Income (loss) before income taxes | 1,609 | 12,489 | (11,141 | ) | (12,282 | ) | (42,323 | ) | (20,988 | ) | (49,054 | ) | 18,165 | |||||||||||||||||||||
Income taxes: | ||||||||||||||||||||||||||||||||||
Deferred income taxes | — | — | — | — | — | — | — | (364 | ) | |||||||||||||||||||||||||
Net income (loss) – U.S. GAAP | $ | 1,609 | $ | 12,489 | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (20,988 | ) | (49,054 | ) | 17,801 | |||||||||||||||
Net income (loss) per share – basic – U.S. GAAP | $ | (13.28 | ) | $ | (45.66 | ) | $ | (22.60 | ) | $ | (52.86 | ) | $ | 19.12 | ||||||||||||||||||||
Net income (loss) per share – diluted – U.S. GAAP | $ | (13.28 | ) | $ | (45.66 | ) | $ | (22.60 | ) | $ | (52.86 | ) | $ | 14.05 | ||||||||||||||||||||
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(1) U.S. GAAP requires capitalization of interest costs as part of the historical cost of acquiring certain qualifying assets that require a period of time to prepare for their intended use. This is not required under Canadian GAAP. Accordingly, the capitalized amount is subject to depreciation in accordance with our policies when the asset is placed into service. | ||
(2) Under Canadian GAAP, we defer and amortize debt issuance costs on a straight-line basis over the stated term of the related debt. Under U.S. GAAP, we are required to amortize financing costs over the stated term of the related debt using the effective interest method resulting in a consistent interest rate over the term of the debt. | ||
(3) U.S. GAAP requires that every derivative instrument (including certain derivative instruments embedded in other contracts and debt instruments) be recorded in the balance sheet as either an asset or liability measured at its fair value. The issuances of our 83/4% senior notes and 9% senior secured notes both included certain contingent embedded derivatives which provided for the acceleration of redemption by the holder at a premium in certain instances. These embedded derivatives met the criteria for bifurcation from the debt contract and separate measurement at fair value. Under U.S. GAAP, the embedded derivatives have been measured at fair value and classified as part of the carrying amount of the senior notes on the consolidated balance sheet, with changes in the fair value being recorded in net income as realized and unrealized (gain) loss on derivative financial instruments for the period. Under Canadian GAAP, separate accounting of embedded derivatives from the host contract is not permitted. | ||
(4) Under Canadian GAAP, we classify the Series B preferred shares as a liability and accrete the carrying amount of $42.2 million on their amendment date (March 30, 2006) to the December 31, 2011 redemption value of $69.6 million using the effective interest method. Under U.S. GAAP, we recognize the fair value of the amended Series B preferred shares as minority interest as such amount was recognized as temporary equity in the accounts of the pre-amalgamated North American Energy Partners Inc., the issuer of the Series B preferred shares, in accordance with Emerging Issues Task Force Topic D-98. Under U.S. GAAP, we accrete the initial fair value of the amended Series B preferred shares of $45.9 million recorded on their amendment date (March 30, 2006) to the December 31, 2011 redemption value of $69.6 million using the effective interest method, which is consistent with the treatment of the Series B preferred shares as temporary equity in the financial statements of the pre-amalgamated North American Energy Partners Inc. The accretion charge is recognized as a charge to minority interest under U.S. GAAP and interest expense in our financial statements under Canadian GAAP. | ||
(f) | Total debt as of June 30, 2006 consist of the following (in thousands): | |
Revolving credit facility | $ | — | ||
Obligations under capital leases, including current portion | 11,937 | |||
9% senior secured notes due 2010 | 67,436 | |||
83/4% senior notes due 2011 | 223,000 | |||
Total debt | $ | 302,373 | ||
Our 83/4% senior notes are reflected above at the current exchange rate at each balance sheet date. We have entered into cross-currency and interest rate swaps, which represent an economic hedge of the 83/4% senior notes. At maturity, we will be required to pay $263.0 million in order to retire these senior notes and the swaps. This amount reflects the fixed exchange rate of C$1.315 = US$1.00 established as of November 26, 2003, the inception of the swap contracts. | ||
Other long-term financial liabilities consist of derivative financial instruments and redeemable preferred shares. | ||
Total long-term financial liabilities consists of total debt, excluding current portion of obligations under capital leases, plus our redeemable preferred shares and the value of the cross-currency and interest rate swaps recognized on our balance sheet. |
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(g) | The cumulative effect of material differences between Canadian and U.S. GAAP on shareholders’ equity is as follows (in thousands): |
March 31, | March 31, | March 31, | June 30, | |||||||||||||
2004 | 2005 | 2006 | 2006 | |||||||||||||
(Unaudited) | ||||||||||||||||
Shareholders’ equity – Canadian GAAP | $ | 80,355 | $ | 38,829 | $ | 18,111 | $ | 36,317 | ||||||||
Capitalized interest(1) | — | — | 847 | 1,096 | ||||||||||||
Depreciation of capitalized interest(1) | — | — | — | (44 | ) | |||||||||||
Amortization using effective interest method(2) | — | — | 590 | 725 | ||||||||||||
Realized and unrealized loss on derivative financial instruments(3) | — | — | (484 | ) | (643 | ) | ||||||||||
Excess of fair value of amended Series B preferred shares over carrying value of original Series B preferred shares(4) | — | — | (3,707 | ) | (3,707 | ) | ||||||||||
Cumulative difference between accretion of Series B preferred shares under Canadian GAAP and U.S. GAAP(4) | — | — | — | 90 | ||||||||||||
Deferred income taxes | — | — | — | (364 | ) | |||||||||||
Shareholders’ equity – U.S. GAAP | $ | 80,355 | $ | 38,829 | $ | 15,357 | $ | 33,470 | ||||||||
(1) U.S. GAAP requires capitalization of interest costs as part of the historical cost of acquiring certain qualifying assets that require a period of time to prepare for their intended use. This is not required under Canadian GAAP. Accordingly, the capitalized amount is subject to depreciation in accordance with our policies when the asset is placed into service. | ||
(2) Under Canadian GAAP, we defer and amortize debt issuance costs on a straight-line basis over the stated term of the related debt. Under U.S. GAAP, we are required to amortize financing costs over the stated term of the related debt using the effective interest method resulting in a consistent interest rate over the term of the debt. | ||
(3) U.S. GAAP requires that every derivative instrument (including certain derivative instruments embedded in other contracts and debt instruments) be recorded in the balance sheet as either an asset or liability measured at its fair value. The issuances of our 83/4% senior notes and 9% senior secured notes both included certain contingent embedded derivatives which provided for the acceleration of redemption by the holder at a premium in certain instances. These embedded derivatives met the criteria for bifurcation from the debt contract and separate measurement at fair value. Under U.S. GAAP, the embedded derivatives have been measured at fair value and classified as part of the carrying amount of the senior notes on the consolidated balance sheet, with changes in the fair value being recorded in net income as realized and unrealized (gain) loss on derivative financial instruments for the period. Under Canadian GAAP, separate accounting of embedded derivatives from the host contract is not permitted. | ||
(4) Prior to the modification of the terms of the Series B preferred shares, there were no differences between Canadian GAAP and U.S. GAAP related to the Series B preferred shares. As a result of the modification of terms of the Series B preferred shares on March 30, 2006, under Canadian GAAP, we continue to classify the Series B preferred shares as a liability and accrete the carrying amount to the December 31, 2011 redemption value of $69.6 million using the effective interest method. Under U.S. GAAP, the Company recognized the fair value of the Series B preferred shares as minority interest as such amount was recognized as temporary equity in the accounts of the pre-amalgamated North American Energy Partners Inc., the issuer of the shares, in accordance with EITF Topic D-98 and recognized a charge of $3.7 million to retained earnings for the difference between the fair value and the carrying amount of the Series B preferred shares on the modification date. Under U.S. GAAP, we accrete the initial fair value of the Series B preferred shares of $45.9 million to the December 31, 2011 redemption value of $69.6 million using the effective interest method, which is consistent with the treatment of the Series B preferred shares as temporary equity in the financial statements of the pre-amalgamated North American Energy Partners Inc. The accretion charge is recognized as a charge to minority interest as opposed to retained earnings in the accounts of the pre-amalgamated North American Energy Partners Inc. under U.S. GAAP and interest expense in our financial statements under Canadian GAAP. | ||
(h) | EBITDA is calculated as net income (loss) before interest expense, income taxes, depreciation and amortization. Consolidated EBITDA is defined as EBITDA, excluding the effects of foreign exchange gain or loss, realized and unrealized gain or loss on derivative financial instruments, non-cash stock-based compensation expense, gain or loss on disposal of plant and equipment and certain other non-cash items included in the calculation of net income (loss). We believe that EBITDA is a meaningful measure of the performance of our business because it excludes items, such as depreciation and | |
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amortization, interest and taxes, that are not directly related to the operating performance of our business. Management reviews EBITDA to determine whether capital assets are being allocated efficiently. In addition, our revolving credit facility requires us to maintain a minimum Consolidated EBITDA. Non-compliance with this financial covenant could result in our being required to immediately repay all amounts outstanding under our revolving credit facility. We are required to maintain a minimum trailing twelve month Consolidated EBITDA through December 31, 2006 of $65.5 million, with this minimum amount increasing periodically until maturity. However, EBITDA and Consolidated EBITDA are not measures of performance under Canadian GAAP or U.S. GAAP and our computations of EBITDA and Consolidated EBITDA may vary from others in our industry. EBITDA and Consolidated EBITDA should not be considered as alternatives to operating income or net income as measures of operating performance or cash flows as measures of liquidity. EBITDA and Consolidated EBITDA have important limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under Canadian GAAP or U.S. GAAP. For example, EBITDA and Consolidated EBITDA: |
• | do not reflect our cash expenditures or requirements for capital expenditures or capital commitments; | |
• | do not reflect changes in, or cash requirements for, our working capital needs; | |
• | do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; | |
• | exclude tax payments that represent a reduction in cash available to us; and | |
• | do not reflect any cash requirements for assets being depreciated and amortized that may have to be replaced in the future. |
In addition, Consolidated EBITDA excludes foreign exchange gains and losses and unrealized and realized gains and losses on derivative financial instruments, which, in the case of unrealized losses, may ultimately result in a liability that will need to be paid and, in the case of realized losses, represents an actual use of cash during the period. | |
A reconciliation of net income (loss) to EBITDA as set forth in our consolidated statements of operations is as follows (in thousands): |
Predecessor | ||||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||||
Year Ended | April 1, 2003 | November 26, | Ended | |||||||||||||||||||||||||||||||
March 31, | to | 2003 to | Year Ended March 31, | June 30, | ||||||||||||||||||||||||||||||
November 25, | March 31, | |||||||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 1,609 | $ | 12,489 | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | |||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||
Depreciation | 11,299 | 10,974 | 6,566 | 6,674 | 20,762 | 21,725 | 4,989 | 7,312 | ||||||||||||||||||||||||||
Amortization | — | — | — | 12,928 | 3,368 | 730 | 183 | 183 | ||||||||||||||||||||||||||
Interest expense | 3,510 | 4,162 | 2,457 | 10,079 | 31,141 | 68,776 | 49,863 | 10,168 | ||||||||||||||||||||||||||
Income taxes | 689 | 6,620 | (6,622 | ) | (5,670 | ) | (2,264 | ) | 737 | 150 | 1,104 | |||||||||||||||||||||||
EBITDA | $ | 17,107 | $ | 34,245 | $ | (8,740 | ) | $ | 11,729 | $ | 10,684 | $ | 70,027 | $ | 5,981 | $ | 36,661 | |||||||||||||||||
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Predecessor | ||||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||||
Year Ended | April 1, 2003 | November 26, | Year Ended | Ended | ||||||||||||||||||||||||||||||
March 31, | to | 2003 to | March 31, | June 30, | ||||||||||||||||||||||||||||||
November 25, | March 31, | |||||||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
EBITDA | $ | 17,107 | $ | 34,245 | $ | (8,740 | ) | $ | 11,729 | $ | 10,684 | $ | 70,027 | $ | 5,981 | $ | 36,661 | |||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||
Unrealized foreign exchange loss (gain) on senior notes | — | — | — | (740 | ) | (20,340 | ) | (14,258 | ) | 928 | (13,571 | ) | ||||||||||||||||||||||
Loss (gain) on disposal of plant and equipment | (218 | ) | (2,265 | ) | (49 | ) | 131 | 494 | (733 | ) | 272 | 113 | ||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments | — | — | — | 12,205 | 43,113 | 14,689 | 1,282 | 7,996 | ||||||||||||||||||||||||||
Non-cash stock-based compensation expense | — | — | — | 137 | 497 | 923 | 188 | 312 | ||||||||||||||||||||||||||
Consolidated EBITDA | $ | 16,889 | $ | 31,980 | $ | (8,789 | ) | $ | 23,462 | $ | 34,448 | $ | 70,648 | $ | 8,651 | $ | 31,511 | |||||||||||||||||
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Pro Forma | |||||||||||||||||||||||
for the | |||||||||||||||||||||||
Adjustments | Pro Forma | Adjustments | Reorganization | ||||||||||||||||||||
for the | for the | for this | and this | ||||||||||||||||||||
Historical | Reorganization | Reorganization | Offering | Offering | |||||||||||||||||||
(In thousands of Canadian dollars) | |||||||||||||||||||||||
ASSETS | �� | ||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 45,093 | $ | (1,000 | )(a) | $ | 44,093 | $ | 26,127 | (c)(e) | $ | 70,220 | |||||||||||
Accounts receivable & unbilled revenue | 114,421 | 114,421 | 114,421 | ||||||||||||||||||||
Prepaid expenses & other current assets | 3,811 | 3,811 | 3,811 | ||||||||||||||||||||
Future income taxes | 10,291 | 10,291 | 10,291 | ||||||||||||||||||||
173,616 | 172,616 | 198,743 | |||||||||||||||||||||
Future income taxes | 16,790 | 16,790 | 6,291 | (i) | 23,081 | ||||||||||||||||||
Plant and equipment | 191,269 | 191,269 | 44,999 | (d) | 236,268 | ||||||||||||||||||
Goodwill | 198,549 | 198,549 | 198,549 | ||||||||||||||||||||
Intangible assets, net | 589 | 589 | 589 | ||||||||||||||||||||
Deferred financing costs, net | 17,519 | 17,519 | (4,847 | )(e) | 12,672 | ||||||||||||||||||
Total assets | $ | 598,332 | $ | 597,332 | $ | 669,902 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts payable & accrued liabilities | $ | 75,166 | 26,300 | (f) | $ | 101,466 | (27,605 | )(e)(f)(h) | $ | 73,861 | |||||||||||||
Billings in excess of costs incurred and estimated earnings on uncompleted contracts | 6,616 | 6,616 | 6,616 | ||||||||||||||||||||
Current portion of capital lease obligations | 3,433 | 3,433 | 3,433 | ||||||||||||||||||||
Future income taxes | 4,882 | 4,882 | 4,882 | ||||||||||||||||||||
90,097 | 116,397 | 88,792 | |||||||||||||||||||||
Capital lease obligations | 8,504 | 8,504 | 8,504 | ||||||||||||||||||||
Senior notes | 290,436 | 290,436 | (67,436 | )(e) | 223,000 | ||||||||||||||||||
Future income taxes | 23,435 | 23,435 | (3,621 | )(i) | 19,814 | ||||||||||||||||||
Derivative financial instruments | 71,030 | 71,030 | 71,030 | ||||||||||||||||||||
Seller preferred shares | 35,000 | (35,000 | )(f) | — | — | ||||||||||||||||||
Series A preferred shares | 391 | (391 | )(a) | — | — | ||||||||||||||||||
Series B preferred shares | 43,122 | (43,122 | )(b) | — | — | ||||||||||||||||||
Total liabilities | 562,015 | 509,802 | 411,141 | ||||||||||||||||||||
Shareholders’ equity: | |||||||||||||||||||||||
Common shares | 93,100 | 43,122 | (b) | 136,221 | 181,939 | (g)(i) | 318,160 | ||||||||||||||||
Contributed surplus | 1,869 | 1,869 | 1,869 | ||||||||||||||||||||
Deficit | (58,652 | ) | 8,091 | (a)(f) | (50,561 | ) | (10,707 | )(e)(h)(i) | (61,268 | ) | |||||||||||||
Total shareholders’ equity | 36,317 | 87,529 | 258,761 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 598,332 | $ | 597,332 | $ | 669,902 | |||||||||||||||||
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Pro Forma | |||||||||||||||||||||
for the | |||||||||||||||||||||
Adjustments | Pro Forma | Adjustments | Reorganization | ||||||||||||||||||
for the | for the | for this | and this | ||||||||||||||||||
Historical | Reorganization | Reorganization | Offering(a) | Offering | |||||||||||||||||
(In thousands of Canadian dollars, except per share amounts) | |||||||||||||||||||||
Revenue | $ | 492,237 | $ | 492,237 | $ | 492,237 | |||||||||||||||
Project costs | 308,949 | 308,949 | (4,370 | )(e) | 304,579 | ||||||||||||||||
Equipment costs | 64,832 | 64,832 | 64,832 | ||||||||||||||||||
Equipment operating lease expense | 16,405 | 16,405 | (13,077 | )(e) | 3,328 | ||||||||||||||||
Depreciation | 21,725 | 21,725 | 3,037 | (f) | 24,762 | ||||||||||||||||
Gross profit | 80,326 | 80,326 | 94,736 | ||||||||||||||||||
General and administrative | 30,903 | 30,903 | 1,781 | (g)(k) | 32,684 | ||||||||||||||||
Gain on disposal of property and equipment | (733 | ) | (733 | ) | (733 | ) | |||||||||||||||
Amortization of intangible assets | 730 | 730 | 730 | ||||||||||||||||||
Operating income | 49,426 | 49,426 | 62,055 | ||||||||||||||||||
Interest expense | 68,776 | (34,722 | )(b) | 34,054 | (6,631 | )(h) | 27,243 | ||||||||||||||
Foreign exchange gain | (13,953 | ) | (13,953 | ) | 5,850 | (i) | (8,103 | ) | |||||||||||||
Loss on acquisition of Series A preferred shares | — | 679 | (c) | 679 | 679 | ||||||||||||||||
Gain on acquisition of Seller preferred shares | — | (8,000 | )(d) | (8,000 | ) | (8,000 | ) | ||||||||||||||
Loss on repurchase of 9% senior secured notes | — | — | 3,428 | (j) | 3,428 | ||||||||||||||||
Realized and unrealized loss on derivative financial instruments | 14,689 | 14,689 | 14,689 | ||||||||||||||||||
Financing costs | 2,095 | 2,095 | 2,095 | ||||||||||||||||||
Other income | (977 | ) | (977 | ) | (977 | ) | |||||||||||||||
Income (loss) before income taxes | (21,204 | ) | 20,839 | 30,821 | |||||||||||||||||
Income taxes | 737 | 737 | 737 | ||||||||||||||||||
Net income (loss)(m) | $ | (21,941 | ) | $ | 20,102 | $ | 30,084 | ||||||||||||||
Net income (loss) per share: | |||||||||||||||||||||
Basic | $ | 23.62 | $ | ||||||||||||||||||
Diluted | $ | 23.62 | $ | ||||||||||||||||||
Weighted average shares: | |||||||||||||||||||||
Basic | 928,000 | ||||||||||||||||||||
Diluted | 928,000 | ||||||||||||||||||||
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Pro Forma | |||||||||||||||||||||
for the | |||||||||||||||||||||
Adjustments | Pro Forma | Adjustments | Reorganization | ||||||||||||||||||
for the | for the | for this | and this | ||||||||||||||||||
Historical | Reorganization | Reorganization | Offering(a) | Offering | |||||||||||||||||
(In thousands of Canadian dollars, except per share amounts) | |||||||||||||||||||||
Revenue | $ | 138,000 | $ | 138,000 | $ | 138,100 | |||||||||||||||
Project costs | 67,009 | 67,009 | (629 | )(e) | 66,380 | ||||||||||||||||
Equipment costs | 23,935 | 23,935 | 23,935 | ||||||||||||||||||
Equipment operating lease expense | 7,200 | 7,200 | (5,094 | )(e) | 2,106 | ||||||||||||||||
Depreciation | 7,312 | 7,312 | 1,110 | (f) | 8,422 | ||||||||||||||||
Gross profit | 32,644 | 32,644 | 37,257 | ||||||||||||||||||
General and administrative | 9,235 | 9,235 | (90 | )(g)(k) | 9,145 | ||||||||||||||||
Loss on disposal of property and equipment | 113 | 113 | 113 | ||||||||||||||||||
Amortization of intangible assets | 183 | 183 | 183 | ||||||||||||||||||
Operating income | 23,113 | 23,113 | 27,816 | ||||||||||||||||||
Interest expense | 10,168 | (1,644 | )(b) | 8,524 | (1,839 | )(h) | 6,685 | ||||||||||||||
Foreign exchange gain | (13,466 | ) | (13,466 | ) | 3,252 | (i) | (10,214 | ) | |||||||||||||
Realized and unrealized loss on derivative financial instruments | 7,996 | 7,996 | 7,996 | ||||||||||||||||||
Other income | (583 | ) | (583 | ) | (583 | ) | |||||||||||||||
Income before income taxes | 18,998 | 20,642 | 23,932 | ||||||||||||||||||
Income taxes | 1,104 | 1,104 | (999 | )(l) | 105 | ||||||||||||||||
Net income(m) | $ | 17,894 | $ | 19,538 | $ | 23,827 | |||||||||||||||
Net income per share: | |||||||||||||||||||||
Basic | $ | 19.22 | $ | ||||||||||||||||||
Diluted | $ | 14.16 | $ | ||||||||||||||||||
Weighted average shares: | |||||||||||||||||||||
Basic | 931,000 | ||||||||||||||||||||
Diluted | 1,307,789 | ||||||||||||||||||||
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• | The issued and outstanding common shares of NACG Holdings Inc. will be subject to a for split. The computation of pro forma basic and diluted earnings per share have been adjusted to reflect this split. | |
• | NACG Holdings Inc. will purchase all of the issued and outstanding Series A preferred shares for cash consideration of $1.0 million pursuant to affiliate purchase rights provisions under the terms of the Series A preferred shares. | |
• | In accordance with the terms of a put/ call agreement dated March 30, 2006, NACG Holdings Inc. will exercise its call option to acquire all of the issued and outstanding Series B preferred shares. | |
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Each holder of the Series B preferred shares will receive five common shares of NACG Holdings Inc. for each Series B preferred share held (376,220 common shares of NACG Holdings Inc. will be issued in exchange for the Series B preferred shares for no additional consideration, with such number of shares to be adjusted pursuant to the share split described above). Under the terms of the put/ call agreement, the Series B preferred shares will be contributed to NACG Preferred Corp., which in turn will contribute the Series B preferred shares to the pre-amalgamated North American Energy Partners Inc. for cancellation. | ||
• | NACG Holdings Inc. will acquire all of the issued and outstanding Seller preferred shares in exchange for a promissory note of $27.0 million, and the Seller preferred shares will be cancelled. These notes will subsequently be redeemed for cash from a portion of the proceeds received from this offering. | |
• | We will acquire certain equipment currently under operating leases for cash consideration of $45.0 million and will terminate certain operating lease obligations, including early termination penalties. Because the early termination penalties are nominal, the Company will account for the cash outlay as a cost to acquire the equipment. | |
• | We will repurchase all of our outstanding 9% senior secured notes for cash consideration of $73.6 million. This price represents a premium of 9.5% over the stated value of the notes. The noteholders have agreed to receive $73.6 million in exchange for the notes plus accrued interest, subject to the completion of this offering. | |
• | We will terminate the advisory services agreement with our sponsors. A termination fee of $2.0 million will be paid upon the completion of this offering to terminate the advisory services agreement. | |
(a) | Reflects the purchase of the Series A preferred shares for $1.0 million in connection with the Reorganization. The excess of the redemption amount over the carrying value of the Series A preferred shares at June 30, 2006 of $0.6 million has been charged to deficit. | |
(b) | Reflects the conversion of the Series B preferred shares into common shares in connection with the Reorganization. As a result, the carrying amount of the Series B preferred shares of $43.1 million at June 30, 2006 has been eliminated and the value of our common shares has increased by a corresponding amount. | |
(c) | Reflects the net cash proceeds from this offering that will be available for general corporate purposes. No pro forma adjustment has been recorded for any interest income that may be earned related to available funds to be used for general corporate purposes. | |
(d) | Reflects the purchase of certain equipment under operating leases and short-term rental agreements for cash consideration of $45.0 million with a portion of the proceeds from this offering. | |
(e) | Reflects the repurchase of all of our outstanding 9% senior secured notes with $76.3 million from the proceeds from this offering, including the tender offer premium, and accrued interest resulting in an extinguishment loss of $8.3 million and the write-off of deferred financing costs of $4.8 million, both of which have been charged to deficit. | |
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(f) | Reflects the acquisition of all of the outstanding Seller preferred shares in exchange for notes payable of $27.0 million and the subsequent cancellation of the Seller preferred shares as part of the Reorganization. These notes payable will subsequently be redeemed for cash from proceeds received from this offering. The extinguishment gain of $8.0 million and the reversal of accrued dividends on the Seller preferred shares of $0.7 million at June 30, 2006 has been recorded as a reduction to deficit. | |
(g) | Reflects the cash proceeds from this offering of common shares of $194.4 million, less underwriting discounts and commissions of $12.6 million and estimated offering expenses of approximately $5.4 million. | |
(h) | Reflects $2.0 million payment to terminate the advisory services agreement, net of the reversal of $0.1 million charged under the advisory services agreement. | |
(i) | Reflects the tax effect of the above pro forma adjustments. | |
(a) | The Unaudited Pro Forma Condensed Consolidated Statements of Operations do not give effect to the application of our proceeds from this offering that will be available for general corporate purposes. No pro forma adjustment has been recorded for any interest income that may be earned related to available funds to be used for general corporate purposes. | |
(b) | Reflects the decrease in interest expense of $34.7 million and $1.6 million for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively, resulting from the conversion of the Series B preferred shares into NACG Holdings Inc. common shares and the purchase of the Series A preferred shares. | |
(c) | Reflects the difference between the $1.0 million redemption amount for the Series A preferred shares and their $0.4 million carrying value on May 19, 2005, their issue date. | |
(d) | Reflects the difference between the $27.0 million acquisition amount for the Seller preferred shares and their $35.0 million carrying value at April 1, 2005. | |
(e) | Reflects the reduction in project costs and equipment operating lease expense of $17.4 million and $5.7 million for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively, resulting from the purchase of equipment under certain operating leases with a portion of the proceeds from this offering. | |
(f) | Reflects the increase in depreciation expense of $3.0 million and $1.1 million for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively, resulting from the purchase of equipment under certain operating leases with a portion of the proceeds from this offering. | |
(g) | Reflects the $2.0 million payment to terminate the advisory services agreement with the sponsors, net of the reversal of $0.4 million charged under the advisory services agreement for the year ended March 31, 2006 and the reversal of $0.1 million charged under the advisory services agreement for the three months ended June 30, 2006. | |
(h) | Reflects the decrease in interest expense of $6.6 million and $1.8 million for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively, including amortization of deferred financing costs of $1.0 million and $0.3 million for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively. This resulted from the repurchase of all of our outstanding 9% senior secured notes, assuming the repurchase occurred on May 19, 2005, the date the notes were issued. | |
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(i) | Reflects the elimination of foreign exchange gains of $5.9 million and $3.3 million for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively, recorded with respect to our 9% senior secured notes. | |
(j) | Reflects the loss of $3.4 million required to repurchase all of our outstanding 9% senior secured notes on May 19, 2005, the date the notes were issued. | |
(k) | Reflects the remeasurement at fair value of 37,276 options granted to employees and directors during the year ended March 31, 2006 and 6,388 options granted to employees and directors during the three months ended June 30, 2006 under the terms of the 2004 Share Option Plan. The 2004 Share Option Plan provides that each option includes a cashless exercise alternative which provides that we may elect at our sole discretion to physically settle the cashless exercise with shares. The fair values of the options granted have been measured using the assumptions set out in note 21 to our consolidated financial statements included elsewhere in this prospectus, except that an expected volatility of 40% has been assumed in the Black-Scholes option-pricing model. The fair values of $3.3 million and $0.5 million for the respective awards have increased compensation expense by $0.2 million and $10,000 for the year ended March 31, 2006 and the three months ended June 30, 2006, respectively. | |
(l) | Reflects the tax effect of the above pro forma adjustments resulting in $1.0 million of tax expense due to the removal of the previous valuation allowance. | |
(m) | These unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP. If U.S. GAAP were employed, our pro forma net income would be as follows: | |
Three Months | |||||||||
Year Ended | Ended | ||||||||
March 31, 2006 | June 30, 2006 | ||||||||
(in thousands) | |||||||||
Pro forma net income — Canadian GAAP | $ | 30,084 | $ | 23,827 | |||||
Capitalized interest(1) | 847 | 249 | |||||||
Depreciation of capitalized interest(1) | — | (44 | ) | ||||||
Amortization using effective interest method(2) | 345 | 82 | |||||||
Realized and unrealized loss on derivative financial instruments(3) | (578 | ) | (119 | ) | |||||
Income before income taxes | 30,698 | 23,995 | |||||||
Income taxes: | |||||||||
Deferred income taxes | — | (258 | ) | ||||||
Pro forma net income — U.S. GAAP | $ | 30,698 | $ | 23,737 | |||||
The cumulative effect of these adjustments on our pro forma shareholders’ equity is as follows: | ||
June 30, 2006 | ||||
(in thousands) | ||||
Pro forma shareholders’ equity — Canadian GAAP | $ | 258,761 | ||
Capitalized interest(1) | 1,096 | |||
Depreciation of capitalized interest(1) | (44 | ) | ||
Amortization using effective interest method(2) | 427 | |||
Realized and unrealized loss on derivative financial instruments(3) | (697 | ) | ||
Deferred income taxes | (258 | ) | ||
Pro forma shareholders’ equity — U.S. GAAP | $ | 259,285 | ||
The areas of material difference between Canadian and U.S. GAAP and their impact on our unaudited pro forma condensed consolidated financial statements are described below: | ||
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(1) U.S. GAAP requires capitalization of interest costs as part of the historical cost of acquiring certain qualifying assets that require a period of time to prepare for their intended use. This is not required under Canadian GAAP. Accordingly, the capitalized amount is subject to depreciation in accordance with our policies when the asset is placed into service. | ||
(2) Under Canadian GAAP, we defer and amortize debt issuance costs on a straight-line basis over the stated term of the related debt. Under U.S. GAAP, we are required to amortize financing costs over the stated term of the related debt using the effective interest method resulting in a consistent interest rate over the term of the debt in accordance with Accounting Principles Board Opinion No. 21. | ||
(3) Statement of Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts and debt instruments) be recorded in the balance sheet as either an asset or liability measured at its fair value. On November 26, 2003, we issued 83/4% senior notes for US$200 million (Canadian $263 million). This issuance included certain contingent embedded derivatives which provided for the acceleration of redemption by the holder at a premium in certain instances. This embedded derivative met the criteria for bifurcation from the debt contract and separate measurement at fair value. The embedded derivative has been measured at fair value and classified as part of the carrying amount of the notes on the pro forma condensed consolidated balance sheet, with changes in the fair value being recorded in net income (loss) as realized and unrealized (gain) loss on derivative financial instruments for the period under U.S. GAAP. Under Canadian GAAP, separate accounting of embedded derivatives from the host contract is not permitted by CICA Emerging Issues Committee Abstract No. 117. | ||
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Misstatements due to internal control deficiencies |
Derivative financial instruments |
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Valuation of Series A and Series B preferred shares |
Financing costs |
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Revenue recognition |
• | Cost-plus. A cost-plus contract is where all work is completed based on actual costs incurred to complete the work. These costs include all labor, equipment, materials and any subcontractor’s costs. In addition to these direct costs, all site and corporate overhead costs are charged to the project. An agreed upon fee in the form of a fixed percentage is then applied to all costs charged to the project. This type of contract is utilized where the project involves a large amount of risk or the scope of the project cannot be readily determined. Revenue recognition is based on actual incurred costs to date plus an applicable fee that represents profit. | |
• | Time-and-materials. A time-and-materials contract involves using the components of a cost-plus job to calculate rates for the supply of labor and equipment. In this regard, all components of the rates are fixed and we are compensated for each hour of labor and equipment supplied. The risk associated with this type of contract is the estimation of the rates and incurring expenses in excess of a specific component of the agreed upon rate. Therefore, any cost overrun must come out of the fixed margin included in the rates. Revenue is recognized as the labor, equipment, materials, subcontract costs and other services are supplied to the customer. | |
• | Unit-price. A unit-price contract is utilized in the execution of projects with large repetitive quantities of work and is commonly utilized for site preparation, mining and pipeline work. We are compensated for each unit of work we perform (for example, cubic meters of earth moved, lineal meters of pipe installed or completed piles). Within the unit price contract, there is an allowance for labor, equipment, materials and any subcontractor’s costs. Once these costs are calculated, we add any site and corporate overhead costs along with an allowance for the margin we want to achieve. The risk associated with this type of contract is in the calculation of the unit costs with respect to completing the required work. Revenue on unit-price contracts is recognized using thepercentage-of-completion method, measured by the ratio of costs incurred to date to estimated total cost. |
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• | Lump sum. A lump sum contract is utilized when a detailed scope of work is known for a specific project. Thus, the associated costs can be readily calculated and a firm price provided to the customer for the execution of the work. The risk lies in the fact that there is no escalation of the price if the work takes longer or more resources are required than were estimated in the established price. The price is fixed regardless of the amount of work required to complete the project. Revenue on lump sum contracts is recognized using thepercentage-of-completion method, measured by the ratio of costs incurred to date to estimated total cost. |
• | site conditions that differ from those assumed in the original bid, to the extent that contract remedies are unavailable; | |
• | identification and evaluation of scope modifications during the execution of the project; | |
• | the availability and cost of skilled workers in the geographic location of the project; | |
• | the availability and proximity of materials; | |
• | unfavorable weather conditions hindering productivity; | |
• | equipment productivity and timing differences resulting from project construction not starting on time; and | |
• | general coordination of work inherent in all large projects we undertake. |
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Plant and equipment |
Goodwill |
Derivative financial instruments |
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Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||
2004(a) | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||
(Non-GAAP) | (Unaudited) | |||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 378,263 | 100.0 | % | $ | 357,323 | 100.0 | % | $ | 492,237 | 100.0 | % | $ | 104,359 | 100.0 | % | $ | 138,100 | 100.0 | % | ||||||||||||||||||||
Project costs | 240,232 | 63.5 | 240,919 | 67.4 | 308,949 | 62.8 | 66,546 | 63.8 | 67,009 | 48.5 | ||||||||||||||||||||||||||||||
Equipment costs | 57,170 | 15.1 | 52,831 | 14.8 | 64,832 | 13.2 | 17,014 | 16.3 | 23,935 | 17.3 | ||||||||||||||||||||||||||||||
Equipment operating lease expense | 11,932 | 3.2 | 6,645 | 1.9 | 16,405 | 3.3 | 2,898 | 2.8 | 7,200 | 5.2 | ||||||||||||||||||||||||||||||
Depreciation | 13,240 | 3.5 | 20,762 | 5.8 | 21,725 | 4.4 | 4,989 | 4.8 | 7,312 | 5.3 | ||||||||||||||||||||||||||||||
Gross profit | 55,689 | 14.7 | 36,166 | 10.1 | 80,326 | 16.3 | 12,912 | 12.4 | 32,644 | 23.6 | ||||||||||||||||||||||||||||||
General and administrative | 13,848 | 3.7 | 22,873 | 6.4 | 30,903 | 6.3 | 7,250 | 6.9 | 9,235 | �� | 6.7 | |||||||||||||||||||||||||||||
Loss (gain) on disposal of plant and equipment | 82 | 0.0 | 494 | 0.1 | (733 | ) | (0.1 | ) | 272 | 0.3 | 113 | 0.1 | ||||||||||||||||||||||||||||
Amortization of intangible assets | 12,928 | 3.4 | 3,368 | 1.0 | 730 | 0.1 | 183 | 0.2 | 183 | 0.1 | ||||||||||||||||||||||||||||||
Operating income | 28,831 | 7.6 | 9,431 | 2.6 | 49,426 | 10.0 | 5,207 | 5.0 | 23,113 | 16.7 | ||||||||||||||||||||||||||||||
Interest expense | 12,536 | 3.3 | 31,141 | 8.7 | 68,776 | 14.0 | 49,863 | 47.8 | 10,168 | 7.4 | ||||||||||||||||||||||||||||||
Foreign exchange gain | (668 | ) | (0.2 | ) | (19,815 | ) | (5.5 | ) | (13,953 | ) | (2.8 | ) | 1,221 | 1.2 | (13,446 | ) | (9.7 | ) | ||||||||||||||||||||||
Other income | (597 | ) | (0.2 | ) | (421 | ) | (0.1 | ) | (977 | ) | (0.2 | ) | (200 | ) | (0.2 | ) | (583 | ) | (0.4 | ) | ||||||||||||||||||||
Financing costs | — | — | — | — | 2,095 | 0.4 | 2,095 | 2.0 | — | 0.0 | ||||||||||||||||||||||||||||||
Realized and unrealized loss on derivative financial instruments | 12,205 | 3.2 | 43,113 | 12.1 | 14,689 | 3.0 | 1,282 | 1.2 | 7,996 | 5.8 | ||||||||||||||||||||||||||||||
Management fees | 41,070 | 10.9 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Income (loss) before income taxes | (35,715 | ) | (9.4 | ) | (44,587 | ) | (12.5 | ) | (21,204 | ) | (4.4 | ) | (49,054 | ) | (47.0 | ) | 18,998 | 13.8 | ||||||||||||||||||||||
Income taxes (benefit) | (12,292 | ) | (3.2 | ) | (2,264 | ) | (0.6 | ) | 737 | 0.1 | 150 | 0.1 | 1,104 | 0.8 | ||||||||||||||||||||||||||
Net income (loss) | $ | (23,423 | ) | (6.2 | )% | $ | (42,323 | ) | (11.8 | )% | $ | (21,941 | ) | (4.5 | )% | $ | (49,204 | ) | (47.1 | )% | $ | 17,894 | 13.0 | % | ||||||||||||||||
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Year Ended March 31, | Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
2004(a) | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||||
(Non-GAAP) | (Unaudited) | |||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||
Segmented Results of Operations | ||||||||||||||||||||||||||||||||||||||||||
Revenue by operating segment: | ||||||||||||||||||||||||||||||||||||||||||
Mining and site preparation | $ | 235,772 | 62.3 | % | $ | 264,835 | 74.1 | % | $ | 366,721 | 74.5 | % | $ | 82,637 | 79.2 | % | $ | 111,387 | 80.7 | % | ||||||||||||||||||||||
Piling | 48,982 | 13.0 | 61,006 | 17.1 | 91,434 | 18.6 | 20,030 | 19.2 | 23,276 | 16.9 | ||||||||||||||||||||||||||||||||
Pipeline | 93,509 | 24.7 | 31,482 | 8.8 | 34,082 | 6.9 | 1,692 | 1.6 | 3,437 | 2.4 | ||||||||||||||||||||||||||||||||
Total | $ | 378,263 | 100.0 | % | $ | 357,323 | 100.0 | % | $ | 492,237 | 100.0 | % | 104,359 | 100.0 | % | $ | 138,100 | 100.0 | % | |||||||||||||||||||||||
Profit by operating segment: | ||||||||||||||||||||||||||||||||||||||||||
Mining and site preparation | $ | 25,899 | 47.4 | % | $ | 11,617 | 38.9 | % | $ | 50,730 | 61.7 | % | $ | 11,689 | 78.8 | % | $ | 24,127 | 73.6 | % | ||||||||||||||||||||||
Piling | 10,831 | 19.8 | 13,319 | 44.6 | 22,586 | 27.4 | 2,838 | 19.1 | 7,976 | 24.3 | ||||||||||||||||||||||||||||||||
Pipeline | 17,946 | 32.8 | 4,902 | 16.5 | 8,996 | 10.9 | 309 | 2.1 | 659 | 2.0 | ||||||||||||||||||||||||||||||||
Total | $ | 54,676 | 100.0 | % | $ | 29,838 | 100.0 | % | $ | 82,312 | 100.0 | % | $ | 14,836 | 100.0 | % | $ | 32,762 | 100.0 | % | ||||||||||||||||||||||
Equipment hours by operating segment: | ||||||||||||||||||||||||||||||||||||||||||
Mining and site preparation | 511,546 | 73.6 | % | 673,613 | 88.2 | % | 811,891 | 93.0 | % | 174,714 | 94.1 | % | 236,098 | 95.1 | % | |||||||||||||||||||||||||||
Piling | 57,569 | 8.3 | 56,460 | 7.4 | 37,300 | 4.3 | 7,452 | 4.0 | 11,097 | 4.5 | ||||||||||||||||||||||||||||||||
Pipeline | 126,033 | 18.1 | 33,847 | 4.4 | 24,197 | 2.8 | 3,585 | 1.9 | 1,102 | 0.4 | ||||||||||||||||||||||||||||||||
Total | 695,148 | 100.0 | % | 763,920 | 100.0 | % | 873,388 | 100.0 | % | 185,751 | 100.0 | % | 248,297 | 100.0 | % | |||||||||||||||||||||||||||
(a) | The historical statement of operations and other financial data for the year ended March 31, 2004 have been derived from the historical financial statements of Norama Ltd. for the period from April 1, 2003 to November 25, 2003 and our historical financial statements for the period from November 26, 2003 to March 31, 2004. The pre- and post-Acquisition periods during the fiscal year ended March 31, 2004 have strictly been added together. The combined results do not reflect the results that would have been obtained had the Acquisition occurred at the beginning of the period. No pro forma adjustments have been made to attempt to reflect the results of operations that would have been attained had the Acquisition occurred at the beginning of the period. GAAP does not allow for such a combination of pre- and post-Acquisition periods. The Acquisition was primarily a change of ownership of the business we acquired from Norama Ltd., and we have operated the business in substantially the same manner as Norama Ltd. did before the Acquisition. Therefore, the pre- and post-Acquisition periods are presented on a combined basis to allow for a meaningful comparison to other full fiscal years. Any references to the fiscal year ended March 31, 2004 below shall refer to the combined periods. |
Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005 |
• | Mining and Site Preparation.Mining and Site Preparation revenue increased by $28.8 million, or 34.8%, from $82.6 million for the three months ended June 30, 2005 to $111.4 million for the three months ended June 30, 2006, primarily due to increased activity in 2006 related to a large site preparation project for Shell and the continued ramp up on the CNRL overburden removal project in the Fort McMurray region. Additionally, there was a claim settlement arising from a site |
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preparation project completed during 2005 for which $6.1 million was recognized as revenue in the current reporting period. | ||
• | Piling.Piling revenue increased by $3.2 million, or 16.5%, from $20.0 million for the three months ended June 30, 2005 to $23.3 million for the three months ended June 30, 2006, primarily due to a higher volume of projects in the Fort McMurray and Calgary regions because of strong economic and construction activities. | |
• | Pipeline.Pipeline revenue increased by $1.7 million, or 100.0%, from $1.7 million for the three months ended June 30, 2005 to $3.4 million for the three months ended June 30, 2006 due to an increase in work performed for EnCana. | |
Segment profit |
• | Mining and Site Preparation.Mining and Site Preparation operating segment profit increased by $12.4 million over the three months ended June 30, 2005. This was primarily due to increased project activity and better margins due to a claim settlement over the comparative period’s project work, as discussed above. | |
• | Piling.Piling operating segment profit increased $5.1 million due to increased volume and higher margin work primarily in the Fort McMurray and Calgary regions as discussed above. | |
• | Pipeline.Pipeline operating segment profit increased by $0.4 million compared to the three months ended June 30, 2005. Increased volume of work was the primary contributor to the increase in operating segment profit. | |
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Fiscal Year Ended March 31, 2006 Compared to Fiscal Year Ended March 31, 2005 |
• | Mining and Site Preparation.Mining and Site Preparation revenue increased by $101.9 million, or 38.5%, from $264.8 million for the fiscal year ended March 31, 2005 to $366.7 million for the fiscal year ended March 31, 2006, primarily due to activity in fiscal 2006 related to the large site preparation and underground utility installation and overburden removal project for CNRL and a substantial mining services project for Grande Cache Coal Corporation. Revenue generated by these projects in fiscal 2006 more than offset the decline in revenue resulting from the substantial completion of the Syncrude Upgrader Expansion, or UE-1, and OPTI/ Nexen Long Lake projects. In addition, we recognized $12.9 million of claims revenue and unbilled revenue in the fiscal year ended March 31, 2006 as a result of a change in accounting policy. See “Accounting Policy Changes – Revenue Recognition.” | |
• | Piling.Piling revenue increased by $30.4 million, or 49.9%, from $61.0 million for the fiscal year ended March 31, 2005 to $91.4 million for the fiscal year ended March 31, 2006, primarily due to a higher volume of projects in the Fort McMurray, Vancouver and Regina regions because of strong economic and construction activity, as well as the addition of several large piling projects, including projects for Suncor Energy and Flint Infrastructure Services Ltd. | |
• | Pipeline.Pipeline revenue increased by $2.6 million, or 8.3%, from $31.5 million for the fiscal year ended March 31, 2005 to $34.1 million for the fiscal year ended March 31, 2006 due to an increase in work performed for EnCana and CNRL in fiscal 2006. |
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• | Mining and Site Preparation.Mining and Site Preparation operating segment profit increased by $39.1 million over the prior year. This was primarily due to increased project activity and performance combined with efficient use of equipment and the loss recognition on a large steam-assisted gravity drainage site project in fiscal 2005. | |
• | Piling.Piling operating segment profit increased $9.3 million due to increased volume and higher margin work primarily in the Fort McMurray and Calgary regions. | |
• | Pipeline.Pipeline operating segment profit increased by $4.1 million over the prior year due to the 8.3% increase in revenue combined with higher margin work completed for CNRL and EnCana in the current year. |
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Fiscal Year Ended March 31, 2005 Compared to Fiscal Year Ended March 31, 2004 |
• | Mining and Site Preparation.Mining and Site Preparation revenue increased by $29.0 million, or 12.3%, from $235.8 million for the fiscal year ended March 31, 2004 to $264.8 million for the fiscal year ended March 31, 2005. Contributing to this increase was revenue from new projects such as the underground utility installation contract for CNRL and the mining services contract for Grande Cache Coal Corporation, as well as the OPTI/ Nexen Long Lake project. Offsetting these increases were decreases in revenue from the Syncrude UE-1 project as this contract neared completion, the Syncrude Aurora II project as this contract was completed in the fiscal 2004, and the Albian site as they lowered their demand for contract services in fiscal 2005. | |
• | Piling.Piling revenue increased by $12.0 million, or 24.5% from $49.0 million for the fiscal year ended March 31, 2004 to $61.0 million for the fiscal year ended March 31, 2005, primarily due to a higher volume of contracts in the Vancouver, Regina and Fort McMurray regions due to strong economic activity, as well as the addition of large piling contracts for Flint Infrastructure Services Ltd. and Suncor Energy. This additional work more than offset the loss of revenue generated by the Syncrude UE-1 piling contract in fiscal 2004. | |
• | Pipeline. Pipeline revenue decreased by $62.0 million, or 66.3%, from $93.5 million for the fiscal year ended March 31, 2004 to $31.5 million for the fiscal year ended March 31, 2005, primarily due to a decrease in work performed for EnCana in fiscal 2005. The decrease in volume was primarily due to our customer repositioning its efforts in the region and drilling a much lower number of gas wells. |
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• | Mining and Site Preparation. Mining and Site Preparation segment profit decreased by $14.3 million, or 55.2%, from $25.9 million for the fiscal year ended March 31, 2004 to $11.6 million for the fiscal year ended March 31, 2005. This was primarily due to loss recognition on a large steam-assisted gravity drainage site project in fiscal 2005. | |
• | Piling. Piling segment profit increased by $2.5 million, or 23.2% from $10.8 million for the fiscal year ended March 31, 2004 to $13.3 million for the fiscal year ended March 31, 2005, primarily due to a higher volume of contracts in the Vancouver, Regina and Fort McMurray regions due to strong economic activity, as well as the addition of large piling contracts for Flint Infrastructure Services Ltd. and Suncor Energy. | |
• | Pipeline. Pipeline segment profit decreased by $13.0 million, or 72.6%, from $17.9 million for the fiscal year ended March 31, 2004 to $4.9 million for the fiscal year ended March 31, 2005, primarily due to a decrease in work performed for our major pipeline customer in fiscal 2005. |
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Fiscal | ||||||||||||||||||||||||||||||||||||
Year | ||||||||||||||||||||||||||||||||||||
Fiscal Year 2005 | Fiscal Year 2006 | 2007 | ||||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | ||||||||||||||||||||||||||||
(In millions of dollars, except equipment hours) | ||||||||||||||||||||||||||||||||||||
Revenue | $ | 70.9 | $ | 82.7 | $ | 81.0 | $ | 122.7 | $ | 104.4 | $ | 124.0 | $ | 121.5 | $ | 142.3 | $ | 138.1 | ||||||||||||||||||
Gross profit | 8.1 | 9.8 | (5.7 | ) | 24.0 | 12.9 | 21.9 | 13.8 | 31.7 | 32.6 | ||||||||||||||||||||||||||
Net income (loss) | (5.1 | ) | (4.7 | ) | (32.4 | ) | (0.1 | ) | (49.2 | ) | 11.5 | 2.1 | 13.7 | 17.9 | ||||||||||||||||||||||
Equipment hours | 137,434 | 193,205 | 191,555 | 241,727 | 185,751 | 234,649 | 221,355 | 231,633 | 248,297 |
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• | Step 1 – We compare the carrying amount of each reporting unit to its fair value. If the carrying amount of a reporting unit exceeds its fair value, we have to perform the second step of the process. If not, no further work is required. | |
• | Step 2 – We compare the implied fair value of each reporting unit’s goodwill to its carrying amount. If the carrying amount of a reporting unit’s goodwill exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess. |
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Operating activities |
Investing activities |
Financing activities |
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Liquidity Requirements |
Sources of Liquidity |
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Payments Due by Fiscal Year | ||||||||||||||||||||||||
2011 and | ||||||||||||||||||||||||
Total | 2007 | 2008 | 2009 | 2010 | After | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Long-term debt(a) | $ | 290.4 | $ | — | $ | — | $ | — | $ | — | $ | 290.4 | ||||||||||||
Seller preferred shares | 35.0 | — | — | — | — | 35.0 | ||||||||||||||||||
Series A preferred shares(b) | 1.0 | — | — | — | — | 1.0 | ||||||||||||||||||
Series B preferred shares(b) | 69.6 | — | — | — | — | 69.6 | ||||||||||||||||||
Capital leases (including interest) | 13.1 | 4.0 | 3.7 | 3.1 | 2.1 | 0.2 | ||||||||||||||||||
Operating leases | 55.7 | 17.5 | 18.1 | 9.8 | 8.1 | 2.2 | ||||||||||||||||||
Total contractual obligations | $ | 464.8 | $ | 21.5 | $ | 21.8 | $ | 12.9 | $ | 10.2 | $ | 398.4 | ||||||||||||
(a) | Includes $223.0 million related to our 83/4% senior notes. We have entered into cross-currency and interest rate swaps, which represent an economic hedge of the 83/4% senior notes. At maturity, we will be required to pay $263.0 million in order to retire these senior notes and the swaps. This amount reflects the fixed exchange rate of C$1.315 = US$1.00 established as of November 26, 2003, the inception of the swap contracts. At June 30, 2006 the carrying value of the derivative financial instruments was $71.0 million. | |
(b) | Reflected at fully accreted redemption value. | |
Hedge relationships |
Generally accepted accounting principles |
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Revenue recognition |
Consolidation of variable interest entities |
Arrangements containing a lease |
Vendor rebates |
Accounting for convertible debt instruments |
Non-monetary transactions |
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Implicit variable interests under AcG-15 |
Conditional asset retirement obligations |
Financial instruments |
Revenue recognition |
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United States accounting pronouncements recently adopted |
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Recent United States accounting pronouncements not yet adopted |
Foreign currency risk |
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Interest rate risk |
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• | Mining and Site Preparation. Surface mining for oil sands and other natural resources, including overburden removal, hauling sand and gravel and supplying labor and equipment to support customers’ mining operations; construction of infrastructure associated with mining operations and reclamation activities; clearing, stripping, excavating and grading for mining operations and industrial site construction for mega-projects; and underground utility installation for plant, refinery and commercial building construction; | |
• | Piling. Installing all types of driven and drilled piles, caissons and earth retention and stabilization systems for industrial projects primarily focused in the oil sands and related petrochemical or refinery complexes, as well as commercial buildings and infrastructure projects; and |
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• | Pipeline Installation. Installing transmission and distribution pipe made of various materials for oil, natural gas and water. |
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Leading market position |
Large, well-maintained equipment fleet strategically located in the Canadian oil sands |
Broad service offering across a project’s lifecycle |
Long-term customer relationships |
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Experienced management team |
Capitalize on growth opportunities in the Canadian oil sands |
Leverage our complementary services |
Increase our recurring revenue base |
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Leverage long-term relationships with existing customers |
Increase our presence outside of the Canadian oil sands |
Enhance operating efficiencies to improve revenue and margins |
Canadian Oil Sands |
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Bitumen | ||||||||||||||||
Startup | Capacity | |||||||||||||||
Company | Project Name | Status | Date | (bpd) | ||||||||||||
Athabasca Oil Sands Project (Albian) | Muskeg River Mine Expansion and Debottleneck | Application | 2010 | 115,000 | ||||||||||||
Jackpine Mine | Approved | 2010 | 100,000 | |||||||||||||
Scotford Upgrader Debottleneck | Application | 2007 | 45,000 | |||||||||||||
Scotford Upgrader Expansion | Application | 2009 | 90,000 | |||||||||||||
CNRL | Horizon Mine and Upgrader | Construction | 2008 | 135,000 | ||||||||||||
Husky | Lloydminster Upgrader Debottleneck | Construction | 2006 | 12,000 | ||||||||||||
Imperial/ ExxonMobil | Kearl Mine | Application | 2010 | 100,000 |
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Bitumen | ||||||||||||||||
Startup | Capacity | |||||||||||||||
Company | Project Name | Status | Date | (bpd) | ||||||||||||
OPTI/ Nexen | Long Lake Upgrader | Construction | 2007 | 72,000 | ||||||||||||
Suncor | Steepbank Debottleneck | Construction | 2006 | 25,000 | ||||||||||||
Millennium Mine Debottleneck | Construction | 2008 | 23,000 | |||||||||||||
Millennium Coker Unit | Construction | 2008 | 116,000 | |||||||||||||
Voyageur Upgrader | Application | 2010 | 156,000 | |||||||||||||
Syncrude | Stage 3 Expansion | Construction | 2006 | 116,300 | ||||||||||||
Synenco | Northern Lights Mine | Disclosure | 2009 | 50,000 | ||||||||||||
Northern Lights Upgrader | Disclosure | 2010 | 50,000 | |||||||||||||
Total E&P | Joslyn Mine | Application | 2010 | 50,000 | ||||||||||||
Joslyn/Surmont Upgrader | Announced | 2010 | 50,000 | |||||||||||||
BA Energy | Heartland Upgrader Phase 1 | Construction | 2008 | 54,400 | ||||||||||||
Heartland Upgrader Phase 2 | Approved | 2010 | 54,400 | |||||||||||||
North West Upgrading | North West Upgrader | Application | 2010 | 50,000 | ||||||||||||
Peace River Oil Upgrading | Bluesky Upgrader | Announced | 2010 | 25,000 |
Conventional Oil and Gas |
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Minerals Mining |
Commercial and Public Construction |
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Year Ended March 31, | |||||||||||||||||||||||||||||||||||||||||
2002(a) | 2003(a) | 2004(a) | 2005 | 2006 | |||||||||||||||||||||||||||||||||||||
(Non-GAAP) | |||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Mining and site preparation | $ | 186,141 | 74.6 | % | $ | 245,235 | 71.3 | % | $ | 235,772 | 62.4 | % | $ | 264,835 | 74.1 | % | $ | 366,721 | 74.5 | % | |||||||||||||||||||||
Piling | 35,132 | 14.1 | 61,006 | 17.7 | 48,982 | 12.9 | 61,006 | 17.1 | 91,434 | 18.6 | |||||||||||||||||||||||||||||||
Pipeline installation | 28,078 | 11.3 | 37,945 | 11.0 | 93,509 | 24.7 | 31,482 | 8.8 | 34,082 | 6.9 | |||||||||||||||||||||||||||||||
Total | $ | 249,351 | 100.0 | % | $ | 344,186 | 100.0 | % | $ | 378,263 | 100.0 | % | $ | 357,323 | 100.0 | % | $ | 492,237 | 100.0 | % | |||||||||||||||||||||
(a) | Revenues for the fiscal years ended March 31, 2002 and 2003 are of Norama Ltd., our predecessor company. Revenues for the fiscal year ended March 31, 2004 consist of the revenues of Norama Ltd. from April 1, 2003 to November 25, 2003, prior to the Acquisition, combined with our revenues from November 26, 2003 to March 31, 2004, after the Acquisition. The pre- and post- Acquisition periods during the fiscal year ended March 31, 2004 have strictly been added together. No pro forma adjustments have been made to attempt to reflect the revenues that would have been attained had the Acquisition occurred at the beginning of the period. GAAP does not allow for such a combination of pre- and post-Acquisition periods. The Acquisition was primarily a change of ownership of the business we acquired from Norama Ltd., and we have operated the business in substantially the same manner as Norama Ltd. did before the Acquisition. Therefore, the pre- and post-Acquisition periods are presented on a combined basis to allow for a meaningful comparison to other full fiscal years. |
Mining and site preparation |
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Piling |
Pipeline Installation |
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Capacity | Horsepower | Number | Number | ||||||||||||
Category | Range | Range | in Fleet | Leased | |||||||||||
Mining and site preparation: | |||||||||||||||
Articulating trucks | 30-42 tons | 305-460 | 36 | — | |||||||||||
Mining trucks | 50-330 tons | 650-2,700 | 98 | 29 | |||||||||||
Shovels | 36-58 cubic yards | 2,600-3,760 | 4 | 2 | |||||||||||
Excavators | 1-20 cubic yards | 94-1,350 | 106 | 15 | |||||||||||
Crawler tractors | N/A | 120-1,350 | 90 | 14 | |||||||||||
Graders | 14-24 feet | 150-500 | 20 | 8 | |||||||||||
Scrapers | 28-31 cubic yards | 450 | 14 | — | |||||||||||
Loaders | 1.5-16 cubic yards | 110-690 | 44 | 1 | |||||||||||
Skidsteer loaders | 1-2.25 cubic yards | 70-150 | 38 | — | |||||||||||
Packers | 44,175-68,796 lbs | 216-315 | 20 | — | |||||||||||
Pipeline: | |||||||||||||||
Snow cats | N/A | 175 | 3 | — | |||||||||||
Trenchers | N/A | 165 | 2 | — | |||||||||||
Pipelayers | 16,000-140,000 lbs | 78-265 | 34 | — | |||||||||||
Piling: | |||||||||||||||
Drill rigs | 60-135 feet (drill depth) | 210-1,500 | 31 | 2 | |||||||||||
Cranes | 25-100 tons | 200-263 | 17 | 1 | |||||||||||
Total | 557 | 72 | |||||||||||||
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State or Other Jurisdiction of | ||
Name | Incorporation or Organization | |
North American Construction Group Inc. | Canada | |
North American Caisson Ltd. | Alberta, Canada | |
North American Construction Ltd. | Canada | |
North American Engineering Inc. | Alberta, Canada | |
North American Enterprises Ltd. | Alberta, Canada | |
North American Industries Inc. | Alberta, Canada | |
North American Maintenance Ltd. | Alberta, Canada | |
North American Mining Inc. | Alberta, Canada | |
North American Pipeline Inc. | Alberta, Canada | |
North American Road Inc. | Alberta, Canada | |
North American Services Inc. | Alberta, Canada | |
North American Site Development Ltd. | Alberta, Canada | |
North American Site Services Inc. | Alberta, Canada | |
Griffiths Pile Driving Inc. | Alberta, Canada | |
NACG Finance LLC | Delaware |
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Location | Function | Owned or Leased | ||
Acheson, Alberta | Corporate headquarters and major equipment repair facility | Leased(a) | ||
Calgary, Alberta | Regional office and equipment repair facility – piling operations | Building Owned Land Leased(b) | ||
Syncrude Mine Site, South End Fort McMurray, Alberta | Regional office and major equipment repair facility – earthworks and mining operations | Building Owned Land Provided | ||
Syncrude Plant Site Fort McMurray, Alberta | Satellite office and minor repair facility – all operations | Building Rented(c) Land Provided | ||
CNRL Plant Site Fort McMurray, Alberta | Site office and maintenance facility | Facility Owned Land Provided | ||
Aurora Mine Site Fort McMurray, Alberta | Satellite office and equipment repair facility – all operations | Building Under Construction Land Provided | ||
Albian Sands Mine Site Fort McMurray, Alberta | Satellite office and equipment repair facility – all operations | Building Leased(d) Land Provided | ||
New Westminster, British Columbia | Regional office and equipment repair facility – piling operations | Building Owned Land Leased(e) | ||
Fort Nelson, British Columbia | Satellite office – pipeline operations | Leased(f) | ||
Regina, Saskatchewan | Regional office and equipment repair facility – piling operations | Leased(g) |
(a) | Lease expires November 30, 2007. | |
(b) | Lease expires December 31, 2010. | |
(c) | Lease expires November 30, 2009. | |
(d) | Leased on a month-to-month basis. | |
(e) | Lease expires March 31, 2010. | |
(f) | Lease expires July 10, 2008. | |
(g) | Lease expires March 14, 2008. |
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Name and Municipality of Residence | Age | Position | |||||
Rodney J. Ruston | 55 | Director, President and Chief Executive Officer | |||||
Edmonton, Alberta | |||||||
Vincent J. Gallant | 48 | Vice President, Corporate | |||||
Edmonton, Alberta | |||||||
Robert G. Harris | 58 | Vice President, Human Resources, Health, | |||||
Edmonton, Alberta | Safety & Environment | ||||||
Christopher J. Hayman | 43 | Vice President, Supply Chain | |||||
St. Albert, Alberta | |||||||
William M. Koehn | 44 | Vice President, Operations and Chief Operating | |||||
Spruce Grove, Alberta | Officer | ||||||
Miles W. Safranovich | 42 | Vice President, Business Development and | |||||
Spruce Grove, Alberta | Estimating | ||||||
Douglas A. Wilkes | 51 | Vice President, Finance and Chief Financial | |||||
Surrey, British Columbia | Officer | ||||||
Ronald A. McIntosh | 64 | Chairman of the Board | |||||
Calgary, Alberta | |||||||
George R. Brokaw | 38 | Director | |||||
Southampton, New York | |||||||
John A. Brussa | 49 | Director | |||||
Calgary, Alberta | |||||||
Donald R. Getty(a) | 73 | Director | |||||
Edmonton, Alberta | |||||||
Martin P. Gouin(b) | 45 | Director | |||||
Edmonton, Alberta | |||||||
John D. Hawkins | 42 | Director | |||||
Houston, Texas | |||||||
William C. Oehmig | 57 | Director | |||||
Houston, Texas | |||||||
Richard D. Paterson | 63 | Director | |||||
San Francisco, California | |||||||
Allen R. Sello | 67 | Director | |||||
West Vancouver, British Columbia | |||||||
Peter W. Tomsett | 48 | Director | |||||
West Vancouver, British Columbia | |||||||
K. Rick Turner | 48 | Director | |||||
Little Rock, Arkansas |
(a) | Mr. Getty will not seek reelection as a director at our planned November 3, 2006 meeting of shareholders. |
(b) | Effective with the purchase of the Seller preferred shares, Mr. Gouin will resign as a director. |
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• | The Audit Committee recommends independent public accountants to the board, reviews the quarterly and annual financial statements and associated audit reports and reviews the fees paid to our auditors. The Audit Committee reports its findings to the board and makes recommendations to the board for ratification. Rule 10A-3 under the Securities Exchange Act of 1934, as amended, and the listing requirements of the NYSE and the requirements of the Canadian securities regulatory authorities require that our audit committee be composed of a majority of independent directors within 90 days of the effectiveness of the registration statement of which this prospectus is a part and that it be composed solely of independent directors within one year of such date. Accordingly, we intend to adjust the composition of the audit committee following the completion of this offering. Following this offering, one member of the audit committee will be designated as the audit committee financial expert, as defined by Item 401(h) of Regulation S-K of the Exchange Act. Our board of directors will adopt a written charter for the audit committee that will be available on our website after the completion of this offering. The Audit Committee is currently composed of Messrs. Brokaw, Hawkins, McIntosh, Sello and Turner, with Mr. Sello serving as Chairman. |
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• | The Compensation Committee is charged with the responsibility for supervising executive compensation policies for us and our subsidiaries, administering the employee incentive plans, reviewing officers’ salaries, approving significant changes in executive employee benefits and recommending to the board such other forms of remuneration as it deems appropriate. The listing requirements of the NYSE applicable to domestic listed companies require that our compensation committee be composed of a majority of independent directors within 90 days of the listing of our common shares on the NYSE and that it be composed solely of independent directors within one year of such listing. Accordingly, we intend to adjust the composition of the compensation committee following the completion of this offering. Our board of directors will adopt a written charter for the compensation committee that will be available on our website after the completion of this offering. The Compensation Committee is currently composed of Messrs. Brussa, Oehmig, Paterson and Sello, with Mr. Paterson serving as Chairman. | |
• | The Governance Committee is responsible for recommending to the board of directors proposed nominees for election to the board of directors by the shareholders at annual meetings, including an annual review as to the renominations of incumbents and proposed nominees for election by the board of directors to fill vacancies that occur between shareholder meetings, and making recommendations to the board of directors regarding corporate governance matters and practices. The listing requirements of the NYSE applicable to domestic listed companies require that we establish a nominating and corporate Governance Committee composed of a majority of independent directors within 90 days of the listing of our common shares on the NYSE and that it be composed solely of independent directors and have at least three members within one year of such listing. Our board of directors will adopt a written charter for the Governance Committee that will be available on our website after the completion of this offering. The Governance Committee is currently composed of Messrs. Brussa, Hawkins, Paterson, Tomsett and Turner, with Mr. Tomsett serving as Chairman. | |
• | The Risk Committee is responsible for overseeing all of our non-financial risks, approving our risk management policies and reviewing the risks and related risk mitigation plans within our strategic plan. The Risk Committee is currently composed of Messrs. Brokaw, McIntosh, Oehmig and Tomsett, with Mr. Oehmig serving as Chairman. | |
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Long-Term | |||||||||||||||||||||
Compensation | |||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||
Securities | |||||||||||||||||||||
Fiscal | Other Annual | Underlying | |||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Compensation | Options(a) | ||||||||||||||||
Rodney J. Ruston | 2006 | $ | 536,539 | $ | 300,000 | (d | ) | 27,500 | |||||||||||||
President and | |||||||||||||||||||||
Chief Executive Officer | |||||||||||||||||||||
(Hired May 2005) | |||||||||||||||||||||
William M. Koehn | 2006 | 240,000 | 241,385 | (b) | (d | ) | — | ||||||||||||||
Vice President, Operations | 2005 | 224,000 | — | (d | ) | — | |||||||||||||||
and Chief Operating Officer | 2004 | 170,000 | 1,040,000 | (b)(c) | (d | ) | 5,000 | ||||||||||||||
Vincent J. Gallant | 2006 | 204,000 | 235,350 | (b) | (d | ) | — | ||||||||||||||
Vice President, Corporate | 2005 | 204,000 | — | (d | ) | — | |||||||||||||||
2004 | 162,000 | 1,040,000 | (b)(c) | (d | ) | 5,000 | |||||||||||||||
Miles W. Safranovich(e) | 2006 | 195,808 | 210,384 | (b) | (d | ) | 2,000 | ||||||||||||||
Vice President, Contracts | 2005 | 61,385 | — | (d | ) | 3,000 | |||||||||||||||
& Technical Services | |||||||||||||||||||||
(Hired November 2004) | |||||||||||||||||||||
Christopher J. Hayman(f) | 2006 | 183,641 | 186,910 | (b) | (d | ) | 2,000 | ||||||||||||||
Vice President, Finance | 2005 | 56,250 | — | (d | ) | 3,000 | |||||||||||||||
(Hired January 2005) |
(a) | Consists of options to purchase our common shares. The options granted to Mr. Ruston expire on May 9, 2015. The options granted to Messrs. Koehn and Gallant expire on November 26, 2013. The options granted in fiscal 2005 and 2006 to Mr. Safranovich expire on November 17, 2014 and |
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November 2, 2015, respectively. The options granted in fiscal 2005 and 2006 to Mr. Hayman expire on February 17, 2015 and November 2, 2015, respectively. | ||
(b) | Bonus pursuant to our Annual Incentive Plan. | |
(c) | Includes a $750,000 transaction bonus and a $250,000 performance bonus, both paid by Norama Inc., the parent company of Norama Ltd., upon closing of the Acquisition. | |
(d) | The amount of other annual compensation does not exceed the lesser of $50,000 and 10% of the salary and bonus for the fiscal year. | |
(e) | Effective July 2006, Mr. Safranovich was appointed Vice President, Business Development & Estimating. | |
(f) | Effective September 2006, Mr. Hayman was appointed Vice President, Supply Chain and is no longer Vice President, Finance. | |
Number of | Percentage of | |||||||||||||||||||
Securities | Total Options | |||||||||||||||||||
Underlying | Granted to | |||||||||||||||||||
Options | Employees in | Exercise | Grant Date | |||||||||||||||||
Name | Granted | Fiscal Year | Price | Expiration Date | Value(a) | |||||||||||||||
Rodney J. Ruston | 27,500 | 79.7% | $ | 100 | May 9, 2015 | $ | 2,014,302 | |||||||||||||
William M. Koehn | — | — | — | — | — | |||||||||||||||
Vincent J. Gallant | — | — | — | — | — | |||||||||||||||
Miles W. Safranovich | 2,000 | 5.8% | $ | 100 | November 2, 2015 | 104,090 | ||||||||||||||
Christopher J. Hayman | 2,000 | 5.8% | $ | 100 | November 2, 2015 | 104,090 |
(a) | Value estimated using the Black-Scholes option-pricing model. For assumptions used, see note 21 to our consolidated financial statements included elsewhere in this prospectus. |
Number of | Value of | |||||||||||||||
Securities | Unexercised | |||||||||||||||
Underlying | In-the-Money | |||||||||||||||
Unexercised Options | Options at | |||||||||||||||
Shares | at March 31, 2006 | March 31, 2006 | ||||||||||||||
Acquired on | Value | (Exercisable/ | (Exercisable/ | |||||||||||||
Name | Exercise | Realized | Unexercisable) | Unexercisable) | ||||||||||||
Rodney J. Ruston | — | — | —/27,500 | —/ — | ||||||||||||
William M. Koehn | — | — | 2,000/3,000 | —/ — | ||||||||||||
Vincent J. Gallant | — | — | 2,000/3,000 | —/ — | ||||||||||||
Miles W. Safranovich | — | — | 600/4,400 | —/ — | ||||||||||||
Christopher J. Hayman | — | — | 600/4,400 | —/ — |
Common Shares | ||||||||||||
Underlying Options | Exercise | |||||||||||
Category | Granted | Exercised | Price | |||||||||
All executive officers and past executive officers | 55,300 | — | $ | 100 | ||||||||
All directors and past directors who are not also executive officers | 15,992 | — | 100 | |||||||||
All other employees or past employees | 32,250 | — | 100 |
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Directors |
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Permitted Transactions |
• | issuances of capital shares pursuant to, or the funding of, employment arrangements, share options and share ownership plans approved by the board of directors; | |
• | the grant of share options or similar rights to employees and directors pursuant to plans approved by the board of directors; | |
• | loans or advances to executive officers approved by the board of directors; | |
• | the payment of reasonable fees to our directors and the directors of our subsidiaries who are not our employees or employees of our subsidiaries in their capacities as board members or members of committees of the board as may be approved by the board; | |
• | any transaction between our subsidiaries; and | |
• | the registration rights agreement described below, the investor shareholders agreement described in “Description of Share Capital — Shareholders Agreements” and the advisory services agreement described in this “Related Party Transactions” section. |
Termination |
• | provide them copies of all documents, reports, financial data and other information regarding us, | |
• | permit them to consult with and advise our management on matters relating to our operations, | |
• | permit them to discuss our company’s affairs, finances and accounts with our officers, directors and outside accountants, | |
• | permit them to visit and inspect any of our properties and facilities, including but not limited to books of account, | |
• | permit them to attend, to the extent that a director is not related to the sponsor, to designate and send a representative to attend all meetings of our board of directors in a non-voting observer capacity, | |
• | provide them copies of certain of our financial statements and reports, and | |
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• | provide them copies of all materials sent by us to our board of directors, other than materials relating to transactions in which the sponsor has an interest. |
• | up to 120 days if we have |
• | decided to file a registration statement for an underwritten public offering of our common equity securities, the net proceeds of which are expected to be at least US$20.0 million, or | |
• | initiated discussions with underwriters in preparation for a public offering of our common equity securities as to which we expect to receive net proceeds of at least US$20.0 million and the demand registration, in the underwriters’ opinion, would have a material adverse effect on the offering or | |
• | up to 90 days following a request for a demand registration if we are in possession of material information that we reasonably deem advisable not to disclose in a registration statement. |
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• | each of the named executive officers; | |
• | each of our directors; | |
• | all of our directors and executive officers as a group; | |
• | each of the selling shareholders identified in the table as offering common shares hereby; and | |
• | each beneficial owner of more than 5% of our outstanding voting common shares. |
Common Shares | ||||||||||||||||||||||||||||
Beneficially Owned | ||||||||||||||||||||||||||||
After the Offering | ||||||||||||||||||||||||||||
Common Shares | Common | Common Shares | Assuming Full | |||||||||||||||||||||||||
Beneficially Owned | Shares | Beneficially Owned | Exercise of Over- | |||||||||||||||||||||||||
Prior to the Offering | Offered Hereby | After the Offering | Allotment Option | |||||||||||||||||||||||||
Name and Address of Beneficial Owner | Number | % | Number | Number | % | Number | % | |||||||||||||||||||||
George R. Brokaw | 555 | (a) | * | — | ||||||||||||||||||||||||
John A. Brussa | 4,555 | (a) | * | — | ||||||||||||||||||||||||
Vincent J. Gallant | 7,000 | (b) | * | — | ||||||||||||||||||||||||
Donald R. Getty | 2,388 | (c) | * | |||||||||||||||||||||||||
Martin P. Gouin | — | — | — | |||||||||||||||||||||||||
Robert G. Harris | — | — | — | |||||||||||||||||||||||||
John D. Hawkins | 555 | (a)(i) | * | — | ||||||||||||||||||||||||
Christopher J. Hayman | 1,600 | (d) | * | — | ||||||||||||||||||||||||
William M. Koehn | 7,000 | (b) | * | — | ||||||||||||||||||||||||
Ronald A. McIntosh | 3,400 | (e) | * | — |
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Common Shares | |||||||||||||||||||||||||||||
Beneficially Owned | |||||||||||||||||||||||||||||
After the Offering | |||||||||||||||||||||||||||||
Common Shares | Common | Common Shares | Assuming Full | ||||||||||||||||||||||||||
Beneficially Owned | Shares | Beneficially Owned | Exercise of Over- | ||||||||||||||||||||||||||
Prior to the Offering | Offered Hereby | After the Offering | Allotment Option | ||||||||||||||||||||||||||
Name and Address of Beneficial Owner | Number | % | Number | Number | % | Number | % | ||||||||||||||||||||||
William C. Oehmig | 6,626 | (f)(g) | * | — | |||||||||||||||||||||||||
Richard D. Paterson | 555 | (a)(k) | * | — | |||||||||||||||||||||||||
Rodney J. Ruston | 6,000 | (g) | * | — | |||||||||||||||||||||||||
Allen R. Sello | 1,000 | * | — | ||||||||||||||||||||||||||
Miles W. Safranovich | 1,100 | (d) | * | — | |||||||||||||||||||||||||
Peter W. Tomsett | — | — | — | ||||||||||||||||||||||||||
K. Rick Turner | 555 | (a) | * | — | |||||||||||||||||||||||||
Douglas A. Wilkes | — | — | — | ||||||||||||||||||||||||||
Directors and executive officers as a group (18 persons) | 42,889 | (h) | 4.62 | — | |||||||||||||||||||||||||
Sterling Group Partners I, L.P. | 272,456 | (i) | 29.88 | ||||||||||||||||||||||||||
Eight Greenway Plaza, Suite 702 Houston, Texas 77046 | |||||||||||||||||||||||||||||
Perry Luxco S.A.R.L. | 104,542 | (j) | 11.47 | ||||||||||||||||||||||||||
Carré Bonn 20, Rue de la Poste L-2346 Luxembourg | |||||||||||||||||||||||||||||
Perry Partners, L.P. | 92,707 | (j) | 10.17 | ||||||||||||||||||||||||||
767 Fifth Avenue 19th Floor New York, New York 10153 | |||||||||||||||||||||||||||||
Genstar Capital Partners III, L.P. | 190,412 | (k) | 20.88 | ||||||||||||||||||||||||||
Four Embarcadero Center Suite 1900 San Francisco, California 94111 | |||||||||||||||||||||||||||||
Stargen III, L.P. | 6,838 | (k) | * | ||||||||||||||||||||||||||
Four Embarcadero Center Suite 1900 San Francisco, California 94111 | |||||||||||||||||||||||||||||
Stephens-NACG LLC | 131,500 | (l) | 14.42 | ||||||||||||||||||||||||||
111 Center Street Little Rock, Arkansas 72201 | |||||||||||||||||||||||||||||
Paribas North America, Inc. | 65,750 | (m) | 7.21 | ||||||||||||||||||||||||||
787 Seventh Avenue New York, New York 10019 | |||||||||||||||||||||||||||||
Perry Partners International, Inc. | — | (j) | * | ||||||||||||||||||||||||||
767 Fifth Avenue 19thFloor New York, New York 10153 | |||||||||||||||||||||||||||||
L.H. Caldwell | 6,575 | (n) | * | ||||||||||||||||||||||||||
736 Market Street, Suite 1400 Chattanooga, TN 37402 | |||||||||||||||||||||||||||||
TSW II, L.P. | 6,575 | (n) | * | ||||||||||||||||||||||||||
736 Market Street, Suite 1400 Chattanooga, TN 37402 | |||||||||||||||||||||||||||||
Gary L. Rosenthal | 657 | (o) | * | ||||||||||||||||||||||||||
Eight Greenway Plaza, Suite 720 Houston, Texas 77046 | |||||||||||||||||||||||||||||
R. Kent Wallace | 394 | (p) | * | ||||||||||||||||||||||||||
Eight Greenway Plaza, Suite 720 Houston, Texas 77046 |
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* | Less than 1%. | |
(a) | Includes currently exercisable options to purchase 555 shares. | |
(b) | Includes currently exercisable options to purchase 2,000 shares. | |
(c) | Includes currently exercisable options to purchase 1,388 shares. | |
(d) | Includes currently exercisable options to purchase 600 shares. | |
(e) | Includes currently exercisable options to purchase 1,400 shares. | |
(f) | Includes 1,842 shares that have been donated by Mr. Oehmig but over which Mr. Oehmig retains sole voting power. | |
(g) | Includes currently exercisable options to purchase 5,500 shares. | |
(h) | Includes currently exercisable options to purchase 16,263 shares. | |
(i) | Sterling Group Partners I GP, L.P. is the sole general partner of Sterling Group Partners I, L.P. Sterling Group Partners I GP, L.P. has five general partners, each of which is wholly-owned by one of Frank J. Hevrdejs, William C. Oehmig, T. Hunter Nelson, John D. Hawkins and C. Kevin Garland. Each of these individuals disclaims beneficial ownership of the shares owned by Sterling Group Partners I, L.P. Sterling Group Partners I, L.P. is an affiliate of The Sterling Group, L.P., one of our sponsors. See “Our Equity Sponsors.” | |
(j) | Richard Perry is the President and sole shareholder of Perry Corp., which is the investment manager of Perry Luxco S.A.R.L. and Perry Partners International, Inc. and the managing general partner of Perry Partners, L.P. As such, Mr. Perry may be deemed to have beneficial ownership over the respective common shares owned by Perry Luxco S.A.R.L., Perry Partners, L.P. and Perry Partners International, Inc.; however, Mr. Perry disclaims such beneficial ownership, except to the extent of his pecuniary interest, if any, therein. Perry Corp. is an affiliate of Perry Strategic Capital Inc., one of our sponsors. See “Our Equity Sponsors.” | |
(k) | Genstar Capital III, L.P. is the sole general partner of each of Genstar Capital Partners III, L.P. and Stargen III, L.P., and Genstar III GP LLC is the sole general partner of Genstar Capital III, L.P. Jean-Pierre L. Conte, Richard F. Hoskins and Richard D. Paterson are the managing members of Genstar III GP LLC. In such capacity, Messrs. Conte, Hoskins and Paterson may be deemed to beneficially own common shares beneficially owned, or deemed to be beneficially owned, by Genstar III GP LLC, but disclaim such beneficial ownership. Genstar Capital Partners III, L.P. and Stargen III, L.P. are affiliates of Genstar Capital, L.P., one of our sponsors. See “Our Equity Sponsors.” | |
(l) | SF Holding Corp. is the sole manager of Stephens-NACG LLC. Warren A. Stephens owns 50% of the capital shares of SF Holding Corp. and may be deemed to have beneficial ownership of the common shares beneficially owned by Stephens-NACG LLC. SF Holding Corp. is one of our sponsors. See “Our Equity Sponsors.” | |
(m) | Includes 20,620 non-voting common shares, which are convertible on a share-for-share basis into voting common shares in certain circumstances, including if such shares are sold in this offering. | |
(n) | Mr. Caldwell may be deemed to beneficially own the shares beneficially owned by TSW II, L.P. Mr. Caldwell owns an approximately 0.85% limited partner interest in Sterling Group Partners I, L.P. and therefore may be deemed to have beneficial ownership of the common shares beneficially owned by Sterling Group Partners I, L.P. to the extent of his pecuniary interest therein. | |
(o) | Mr. Rosenthal is a principal with The Sterling Group, L.P., one of our sponsors. | |
(p) | Mr. Wallace is an employee of The Sterling Group, L.P., one of our sponsors, and was our Secretary from October 2003 to June 2005. | |
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• | incur debt or enter into sale and leaseback transactions or contractual contingent obligations; | |
• | prepay, purchase or otherwise acquire or retire prior to stated maturity certain debt or amend the indentures; | |
• | create or allow to exist liens or other encumbrances; | |
• | transfer assets (including any class of stock or the voting rights of any of our subsidiaries) except for sales and other transfers of inventory or surplus, immaterial or obsolete assets in our ordinary course of business and other exceptions set forth in the credit agreement; | |
• | enter into mergers, consolidations and asset dispositions of all or substantially all of our, or any of our subsidiaries, properties; | |
• | make investments, including acquisitions; | |
• | enter into transactions with related parties other than in the ordinary course of business on an arm’s-length basis on terms no less favorable to us than those available from third parties; | |
• | make any material change in the general nature of the business conducted by us; and | |
• | pay dividends or redeem shares of capital stock. |
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Stated Objects or Purposes |
Directors |
• | relates primarily to the director’s remuneration as a director, officer, employee or agent of us or an affiliate; | |
• | is for indemnity or insurance otherwise permitted under the CBCA; or | |
• | is with an affiliate of ours. |
Action Necessary to Change the Rights of Holders of Our Shares |
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Shareholder Meetings |
Change of Control |
Shareholder Ownership Disclosure |
Certain Transfers/ Rights of First Refusal and Tag Along Rights |
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Approved Sales |
Preemptive Rights |
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Public Offerings |
Material Agreements |
Termination |
Competition Act |
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Investment Canada Act |
• | acquisition of our common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities; | |
• | acquisition or control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and |
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• | acquisition or control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of voting interests, remains unchanged. |
Other |
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• | 1.0% of the total number of common shares then outstanding; or | |
• | the average weekly trading volume of our common shares during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC. |
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• | an individual citizen or resident of the United States; | |
• | a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust, if one or more U.S. persons (as defined in Section 7701(a)(30) of the Internal Revenue Code) have the authority to control all substantial decisions of the trust and a court within the United States is able to exercise primary supervision over the administration of the trust. |
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Treatment of U.S. Holders |
Foreign Tax Credit |
Sale of Shares |
Controlled Foreign Corporations |
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Dividends |
Dispositions |
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Number of | |||||
Underwriter | Shares | ||||
Credit Suisse Securities (USA) LLC | |||||
UBS Securities LLC | |||||
Jefferies & Company, Inc. | |||||
CIBC World Markets Corp. | |||||
Simmons & Company International | |||||
Stephens Inc. | |||||
Peters & Co. Limited | |||||
Total | |||||
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Per Share | Total | |||||||||||||||
Without | With | Without | With | |||||||||||||
Over-allotment | Over-allotment | Over-allotment | Over-allotment | |||||||||||||
Underwriting Discounts and Commissions paid by us | US$ | US$ | US$ | US$ | ||||||||||||
Expenses payable by us | US$ | US$ | US$ | US$ |
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• | the information presented in this prospectus and otherwise available to the underwriters; | |
• | the history of and prospects for our industry in which we will compete; | |
• | an assessment of our management; | |
• | our present operations; | |
• | our historical results of operations; | |
• | our earnings prospects; | |
• | the general condition of the securities markets at the time of the offering; and | |
• | the recent market prices of, and the demand for, publicly traded common shares of generally comparable companies. |
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• | Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position for the underwriters. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market. | |
• | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
• | Syndicate covering transactions involve purchases of the common shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over- allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. | |
• | Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the common shares originally sold by such syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
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• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to the company; and | |
• | it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the common shares in, from or otherwise involving the United Kingdom. |
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• | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; | |
• | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than€43,000,000 and (3) an annual net turnover of more than€50,000,000, as shown in its last annual or consolidated accounts; | |
• | to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the manager for any such offer; or | |
• | in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
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North American Energy Partners Inc. Zone 3 Acheson Industrial Area Acheson, Alberta Canada T7X 5A7 Telephone: 780-960-7171 Attention: Vice President, Corporate |
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2006 | ||||||||||||||||||||||||
April | May | June | July | August | September | |||||||||||||||||||
High for period | 0.8926 | 0.9100 | 0.9098 | 0.8999 | 0.9037 | 0.9048 | ||||||||||||||||||
Low for period | 0.8534 | 0.8903 | 0.8896 | 0.8760 | 0.8840 | 0.8872 |
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Year Ended March 31, | ||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | ||||||||||||||||
Average for period(1) | 0.6381 | 0.6474 | 0.7412 | 0.7852 | 0.8409 |
(1) | Determined by averaging the exchange rates on the last day of each month during the respective period. |
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Audited Consolidated Financial Statements of NACG Holdings Inc. | |||||
Report of Independent Registered Public Accounting Firm | F-2 | ||||
Consolidated Balance Sheets as of March 31, 2005 and 2006 and June 30, 2006 (unaudited) | F-3 | ||||
Consolidated Statements of Operations and Retained Earnings (Deficit) for the Fiscal Years Ended March 31, 2004, 2005 and 2006 and the Three Months Ended June 30, 2005 and 2006 (unaudited) | F-4 | ||||
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2004, 2005 and 2006 and the Three Months Ended June 30, 2005 and 2006 (unaudited) | F-5 | ||||
Notes to the Consolidated Financial Statements | F-6 |
F-1
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March 31, | March 31, | June 30, | |||||||||||
2005 | 2006 | 2006 | |||||||||||
(In thousands of Canadian dollars) | |||||||||||||
(Unaudited) | |||||||||||||
ASSETS | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 17,924 | $ | 42,804 | $ | 45,093 | |||||||
Accounts receivable (note 4) | 57,745 | 67,235 | 76,302 | ||||||||||
Unbilled revenue (note 5) | 41,411 | 43,494 | 38,119 | ||||||||||
Inventory | 134 | 57 | 13 | ||||||||||
Prepaid expenses | 1,862 | 1,796 | 3,798 | ||||||||||
Future income taxes (note 12) | 15,100 | 5,583 | 10,291 | ||||||||||
134,176 | 160,969 | 173,616 | |||||||||||
Future income taxes (note 12) | 13,485 | 23,367 | 16,790 | ||||||||||
Plant and equipment (note 6) | 177,089 | 185,566 | 191,269 | ||||||||||
Goodwill (note 3) | 198,549 | 198,549 | 198,549 | ||||||||||
Intangible assets, net of accumulated amortization of $17,209 (March 31, 2006 – $17,026; March 31, 2005 – $16,296) (note 7) | 1,502 | 772 | 589 | ||||||||||
Deferred financing costs, net of accumulated amortization of $6,891 (March 31, 2006 – $6,004; March 31, 2005 – $3,368) (note 8) | 15,354 | 17,788 | 17,519 | ||||||||||
$ | 540,155 | $ | 587,011 | $ | 598,332 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 59,090 | $ | 54,085 | $ | 53,503 | |||||||
Accrued liabilities (note 9) | 15,201 | 24,603 | 21,663 | ||||||||||
Billings in excess of costs incurred and estimated earnings on uncompleted contracts (note 5) | 1,325 | 5,124 | 6,616 | ||||||||||
Current portion of capital lease obligations (note 10) | 1,771 | 3,046 | 3,433 | ||||||||||
Future income taxes (note 12) | 15,100 | 5,583 | 4,882 | ||||||||||
92,487 | 92,441 | 90,097 | |||||||||||
Senior secured credit facility (note 11(a)) | 61,257 | — | — | ||||||||||
Capital lease obligations (note 10) | 5,454 | 7,906 | 8,504 | ||||||||||
Senior notes (note 11(b)) | 241,920 | 304,007 | 290,436 | ||||||||||
Derivative financial instruments (note 18(c)) | 51,723 | 63,611 | 71,030 | ||||||||||
Redeemable preferred shares (note 13(a)) | 35,000 | 77,568 | 78,513 | ||||||||||
Future income taxes (note 12) | 13,485 | 23,367 | 23,435 | ||||||||||
501,326 | 568,900 | 562,015 | |||||||||||
Shareholders’ equity: | |||||||||||||
Common shares (authorized – unlimited number of voting and non-voting common shares; issued and outstanding – June 30, 2006 and March 31, 2006 – 910,380 voting common shares and 20,620 non-voting common shares (March 31, 2005 – 907,380 voting common shares and 20,620 non-voting common shares)) (note 13(b)) | 92,800 | 93,100 | 93,100 | ||||||||||
Contributed surplus (notes 13(c) and 21) | 634 | 1,557 | 1,869 | ||||||||||
Deficit | (54,605 | ) | (76,546 | ) | (58,652 | ) | |||||||
38,829 | 18,111 | 36,317 | |||||||||||
Commitments (note 19) | |||||||||||||
United States generally accepted accounting principles (note 23) | |||||||||||||
Subsequent events (notes 11(c), 21 and 24) | |||||||||||||
$ | 540,155 | $ | 587,011 | $ | 598,332 | ||||||||
F-3
Table of Contents
Predecessor | ||||||||||||||||||||||||||
Company | ||||||||||||||||||||||||||
Period from | Period from | Three Months | Three Months | |||||||||||||||||||||||
April 1, 2003 to | November 26, 2003 | Year Ended | Year Ended | Ended | Ended | |||||||||||||||||||||
November 25, | to March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||||
(In thousands of Canadian dollars) | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Revenue | $ | 250,652 | $ | 127,611 | $ | 357,323 | $ | 492,237 | $ | 104,359 | $ | 138,100 | ||||||||||||||
Project costs | 156,976 | 83,256 | 240,919 | 308,949 | 66,546 | 67,009 | ||||||||||||||||||||
Equipment costs | 43,484 | 13,686 | 52,831 | 64,832 | 17,014 | 23,935 | ||||||||||||||||||||
Equipment operating lease expense | 10,502 | 1,430 | 6,645 | 16,405 | 2,898 | 7,200 | ||||||||||||||||||||
Depreciation | 6,566 | 6,674 | 20,762 | 21,725 | 4,989 | 7,312 | ||||||||||||||||||||
Gross profit | 33,124 | 22,565 | 36,166 | 80,326 | 12,912 | 32,644 | ||||||||||||||||||||
General and administrative (notes 17(a) and 17(b)) | 7,783 | 6,065 | 22,873 | 30,903 | 7,250 | 9,235 | ||||||||||||||||||||
(Gain) loss on disposal of property, plant and equipment | (49 | ) | 131 | 494 | (733 | ) | 272 | 113 | ||||||||||||||||||
Amortization of intangible assets | — | 12,928 | 3,368 | 730 | 183 | 183 | ||||||||||||||||||||
Operating income before the undernoted | 25,390 | 3,441 | 9,431 | 49,426 | 5,207 | 23,113 | ||||||||||||||||||||
Interest expense (note 14) | 2,457 | 10,079 | 31,141 | 68,776 | 49,863 | 10,168 | ||||||||||||||||||||
Foreign exchange (gain) loss (note 18(c)) | (7 | ) | (661 | ) | (19,815 | ) | (13,953 | ) | 1,221 | (13,466 | ) | |||||||||||||||
Realized and unrealized loss on derivative financial instruments (note 18(c)) | — | 12,205 | 43,113 | 14,689 | 1,282 | 7,996 | ||||||||||||||||||||
Financing costs (note 8) | — | — | — | 2,095 | 2,095 | — | ||||||||||||||||||||
Other income | (367 | ) | (230 | ) | (421 | ) | (977 | ) | (200 | ) | (583 | ) | ||||||||||||||
Management fees (note 17(c)) | 41,070 | — | — | — | — | — | ||||||||||||||||||||
Income (loss) before income taxes | (17,763 | ) | (17,952 | ) | (44,587 | ) | (21,204 | ) | (49,054 | ) | 18,998 | |||||||||||||||
Income taxes (note 12): | ||||||||||||||||||||||||||
Current income taxes | 218 | 1,178 | 2,711 | 737 | 150 | (132 | ) | |||||||||||||||||||
Future income taxes | (6,840 | ) | (6,848 | ) | (4,975 | ) | — | — | 1,236 | |||||||||||||||||
Net income (loss) for the period | (11,141 | ) | (12,282 | ) | (42,323 | ) | (21,941 | ) | (49,204 | ) | 17,894 | |||||||||||||||
Retained earnings (deficit), beginning of period | 29,817 | — | (12,282 | ) | (54,605 | ) | (54,605 | ) | (76,546 | ) | ||||||||||||||||
Retained earnings (deficit), end of period | $ | 18,676 | $ | (12,282 | ) | $ | (54,605 | ) | $ | (76,546 | ) | $ | (103,809 | ) | $ | (58,652 | ) | |||||||||
Net income (loss) per share – basic (note 13(d)) | $ | — | $ | (13.28 | ) | $ | (45.66 | ) | $ | (23.62 | ) | $ | (53.02 | ) | $ | 19.22 | ||||||||||
Net income (loss) per share – diluted (note 13(d)) | $ | — | $ | (13.28 | ) | $ | (45.66 | ) | $ | (23.62 | ) | $ | (53.02 | ) | $ | 14.16 | ||||||||||
F-4
Table of Contents
Predecessor | |||||||||||||||||||||||||||
Company | |||||||||||||||||||||||||||
Period from | Period from | Three Months | Three Months | ||||||||||||||||||||||||
April 1, 2003 to | November 26, 2003 | Year Ended | Year Ended | Ended | Ended | ||||||||||||||||||||||
November 25, | to March 31, | March 31, | March 31, | June 30, | June 30, | ||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||
(In thousands of Canadian dollars) | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
Cash provided by (used in): | |||||||||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||||||
Net income (loss) for the period | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | ||||||||||
Items not affecting cash: | |||||||||||||||||||||||||||
Depreciation | 6,566 | 6,674 | 20,762 | 21,725 | 4,989 | 7,312 | |||||||||||||||||||||
Amortization of intangible assets | — | 12,928 | 3,368 | 730 | 183 | 183 | |||||||||||||||||||||
Amortization of deferred financing costs | — | 814 | 2,554 | 3,338 | 672 | 887 | |||||||||||||||||||||
Financing costs (note 8) | — | — | — | 2,095 | 2,095 | — | |||||||||||||||||||||
(Gain) loss on disposal of plant and equipment | (49 | ) | 131 | 494 | (733 | ) | 272 | 113 | |||||||||||||||||||
Unrealized foreign exchange gain on senior notes (note 18(c)) | — | (740 | ) | (20,340 | ) | (14,258 | ) | 928 | (13,571 | ) | |||||||||||||||||
Unrealized loss on derivative financial instruments (note 18(c)) | — | 11,266 | 40,457 | 11,888 | 587 | 7,419 | |||||||||||||||||||||
(Decrease) increase in allowance for doubtful accounts | 141 | (60 | ) | (69 | ) | (94 | ) | (67 | ) | — | |||||||||||||||||
Stock-based compensation expense (note 21) | — | 137 | 497 | 923 | 188 | 312 | |||||||||||||||||||||
Change in redemption value and accretion of mandatorily redeemable preferred shares | — | — | — | 34,722 | 41,507 | 945 | |||||||||||||||||||||
Future income taxes | (6,840 | ) | (6,848 | ) | (4,975 | ) | — | — | 1,236 | ||||||||||||||||||
Net changes in non-cash working capital (note 15(b)) | 13,832 | 3,457 | (5,258 | ) | (4,531 | ) | (18,280 | ) | (7,476 | ) | |||||||||||||||||
2,509 | 15,477 | (4,833 | ) | 33,864 | (16,130 | ) | 15,254 | ||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||
Purchase of plant and equipment | (5,234 | ) | (2,501 | ) | (25,679 | ) | (29,015 | ) | (5,693 | ) | (11,843 | ) | |||||||||||||||
Net changes in non-cash working capital (note 15(b)) | — | — | — | 1,391 | 2,350 | (204 | ) | ||||||||||||||||||||
Proceeds on disposal of plant and equipment | 609 | 5,765 | 624 | 5,456 | 388 | 473 | |||||||||||||||||||||
Acquisition (note 3) | — | (367,778 | ) | — | — | — | — | ||||||||||||||||||||
(4,625 | ) | (364,514 | ) | (25,055 | ) | (22,168 | ) | (2,955 | ) | (11,574 | ) | ||||||||||||||||
Financing activities: | |||||||||||||||||||||||||||
Issuance of 9% senior secured notes (note 11(b)) | — | — | — | 76,345 | 76,345 | — | |||||||||||||||||||||
Repayment of senior secured credit facility (note 11(a)) | (4,428 | ) | (1,500 | ) | (7,250 | ) | (61,257 | ) | (61,257 | ) | — | ||||||||||||||||
Issuance of Series B preferred shares (note 13(a)) | — | — | — | 8,376 | 7,500 | — | |||||||||||||||||||||
Repurchase of Series B preferred shares (note 13(a)) | — | — | — | (851 | ) | — | — | ||||||||||||||||||||
Financing costs (note 8) | — | (18,080 | ) | (642 | ) | (7,546 | ) | (7,381 | ) | (618 | ) | ||||||||||||||||
Repayment of capital lease obligations | (3,289 | ) | (288 | ) | (1,198 | ) | (2,183 | ) | (434 | ) | (773 | ) | |||||||||||||||
Increase in senior secured credit facility | — | — | 20,007 | — | — | — | |||||||||||||||||||||
Issuance of 83/4% senior notes | — | 263,000 | — | — | — | — | |||||||||||||||||||||
Issuance of common shares | — | 92,500 | 300 | 300 | — | — | |||||||||||||||||||||
Proceeds from term credit facility | — | 50,000 | — | — | — | — | |||||||||||||||||||||
Advances from Norama Inc. | 17,696 | — | — | — | — | — | |||||||||||||||||||||
Decrease in cheques issued in excess of cash deposits | (2,496 | ) | — | — | — | — | — | ||||||||||||||||||||
Decrease in operating line of credit | (516 | ) | — | — | — | — | — | ||||||||||||||||||||
6,967 | 385,632 | 11,217 | 13,184 | 14,773 | (1,391 | ) | |||||||||||||||||||||
Increase (decrease) in cash and cash equivalents | 4,851 | 36,595 | (18,671 | ) | 24,880 | (4,312 | ) | 2,289 | |||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | 36,595 | 17,924 | 17,924 | 42,804 | |||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 4,851 | $ | 36,595 | $ | 17,924 | $ | 42,804 | $ | 13,612 | $ | 45,093 | |||||||||||||||
F-5
Table of Contents
1. | Nature of operations |
2. | Significant accounting policies |
(a) | Basis of presentation |
F-6
Table of Contents
% Owned | ||||
• North American Caisson Ltd. | 100% | |||
• North American Construction Ltd. | 100% | |||
• North American Engineering Ltd. | 100% | |||
• North American Enterprises Ltd. | 100% | |||
• North American Industries Inc. | 100% | |||
• North American Mining Inc. | 100% | |||
• North American Maintenance Ltd. | 100% | |||
• North American Pipeline Inc. | 100% | |||
• North American Road Inc. | 100% | |||
• North American Services Inc. | 100% | |||
• North American Site Development Ltd. | 100% | |||
• North American Site Services Inc. | 100% | |||
• Griffiths Pile Driving Inc. | 100% |
(b) | Use of estimates: |
(c) | Revenue recognition: |
F-7
Table of Contents
(d) | Cash and cash equivalents: |
F-8
Table of Contents
(e) | Allowance for doubtful accounts: |
(f) | Inventory: |
(g) | Plant and equipment: |
Asset | Basis | Rate | ||
Heavy equipment | Straight-line | Operating hours | ||
Major component parts in use | Straight-line | Operating hours | ||
Spare component parts | N/A | N/A | ||
Other equipment | Straight-line | 10-20% | ||
Licensed motor vehicles | Declining balance | 30% | ||
Office and computer equipment | Straight-line | 25% | ||
Buildings | Straight-line | 10% | ||
Leasehold improvements | Straight-line | Lease term | ||
Assets under construction | N/A | N/A |
(h) | Goodwill: |
F-9
Table of Contents
(i) | Intangible assets: |
(j) | Deferred financing costs: |
(k) | Impairment of long-lived assets: |
(l) | Foreign currency translation: |
(m) | Derivative financial instruments: |
F-10
Table of Contents
(n) | Income taxes: |
(o) | Stock–based compensation plan: |
(p) | Earnings per share: |
(q) | Recently adopted Canadian accounting pronouncements: |
i. Hedge relationships: |
F-11
Table of Contents
ii. Generally accepted accounting principles: |
iii. Revenue recognition: |
iv. Consolidation of variable interest entities: |
v. Arrangements containing a lease: |
vi. Vendor rebates: |
vii. Accounting for convertible debt instruments: |
F-12
Table of Contents
viii. Non-monetary transactions: |
ix. Implicit variable interests under AcG-15: |
x. Conditional asset retirement obligations: |
(r) | Recent Canadian accounting pronouncements not yet adopted: |
i. Financial instruments: |
F-13
Table of Contents
3. | Acquisition |
Current assets, including cash of $19,642 | $ | 83,910 | ||||
Property, plant and equipment, including capital leases of $2,131 | 176,779 | |||||
Intangible assets | 17,798 | |||||
Goodwill | 198,549 | |||||
Total assets acquired | 477,036 | |||||
Current liabilities | (40,662 | ) | ||||
Future income taxes | (11,823 | ) | ||||
Capital lease obligations | (2,131 | ) | ||||
Total liabilities assumed | (54,616 | ) | ||||
Net assets acquired | $ | 422,420 | ||||
F-14
Table of Contents
Proceeds from issuance of 83/4% senior notes | $ | 263,000 | |||
Proceeds from issuance of share capital | 92,500 | ||||
Proceeds from issuance of Series A preferred shares of NACG Preferred Corp. | 35,000 | ||||
Proceeds from initial borrowing under the new: | |||||
Term credit facility | 50,000 | ||||
Revolving credit facility | — | ||||
Less: deferred financing costs | (18,080 | ) | |||
$ | 422,420 | ||||
Net assets acquired | $ | 422,420 | ||
Less: issuance of Series A preferred shares of NACG Preferred Corp. | (35,000 | ) | ||
Less: cash acquired from acquisition and financing | (19,642 | ) | ||
$ | 367,778 | |||
4. | Accounts receivable |
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
Accounts receivable – trade | $ | 45,379 | $ | 55,666 | $ | 67,542 | ||||||
Accounts receivable – holdbacks | 12,476 | 10,748 | 8,302 | |||||||||
Accounts receivable – other | 54 | 891 | 528 | |||||||||
Allowance for doubtful accounts | (164 | ) | (70 | ) | (70 | ) | ||||||
$ | 57,745 | $ | 67,235 | $ | 76,302 | |||||||
F-15
Table of Contents
5. | Costs incurred and estimated earnings net of billings on uncompleted contracts |
March 31, | March 31, | June 30, | |||||||||||
2005 | 2006 | 2006 | |||||||||||
(Unaudited) | |||||||||||||
Costs incurred and estimated earnings on uncompleted contracts | $ | 885,301 | $ | 610,006 | $ | 443,468 | |||||||
Less: billings to date | (845,215 | ) | (571,636 | ) | (411,965 | ) | |||||||
$ | 40,086 | $ | 38,370 | $ | 31,503 | ||||||||
March 31, | March 31, | June 30, | |||||||||||
2005 | 2006 | 2006 | |||||||||||
(Unaudited) | |||||||||||||
Unbilled revenue | $ | 41,411 | $ | 43,494 | $ | 38,119 | |||||||
Billings in excess of costs incurred and estimated earnings on uncompleted contracts | (1,325 | ) | (5,124 | ) | (6,616 | ) | |||||||
$ | 40,086 | $ | 38,370 | $ | 31,503 | ||||||||
6. | Plant and equipment |
Accumulated | Net Book | |||||||||||
June 30, 2006 | Cost | Depreciation | Value | |||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Heavy equipment | $ | 178,517 | $ | 34,885 | $ | 143,632 | ||||||
Major component parts in use | 6,129 | 2,363 | 3,766 | |||||||||
Spare component parts | 3,678 | — | 3,678 | |||||||||
Other equipment | 13,480 | 4,568 | 8,912 | |||||||||
Licensed motor vehicles | 20,156 | 9,195 | 10,961 | |||||||||
Office and computer equipment | 3,459 | 1,675 | 1,784 | |||||||||
Buildings | 15,927 | 65 | 15,862 | |||||||||
Leasehold improvements | 2,972 | 339 | 2,633 | |||||||||
Assets under construction | 41 | — | 41 | |||||||||
$ | 244,359 | $ | 53,090 | $ | 191,269 | |||||||
F-16
Table of Contents
Accumulated | Net Book | |||||||||||
March 31, 2006 | Cost | Depreciation | Value | |||||||||
Heavy equipment | $ | 174,042 | $ | 31,347 | $ | 142,695 | ||||||
Major component parts in use | 4,922 | 2,091 | 2,831 | |||||||||
Spare component parts | 1,170 | — | 1,170 | |||||||||
Other equipment | 13,074 | 4,186 | 8,888 | |||||||||
Licensed motor vehicles | 18,223 | 8,410 | 9,813 | |||||||||
Office and computer equipment | 3,362 | 1,493 | 1,869 | |||||||||
Leasehold improvements | 2,959 | 247 | 2,712 | |||||||||
Assets under construction | 15,588 | — | 15,588 | |||||||||
$ | 233,340 | $ | 47,774 | $ | 185,566 | |||||||
Accumulated | Net Book | |||||||||||
March 31, 2005 | Cost | Depreciation | Value | |||||||||
Heavy equipment | $ | 165,296 | $ | 17,966 | $ | 147,330 | ||||||
Major component parts in use | 4,659 | 1,182 | 3,477 | |||||||||
Spare component parts | 841 | — | 841 | |||||||||
Other equipment | 12,088 | 2,473 | 9,615 | |||||||||
Licensed motor vehicles | 16,043 | 4,670 | 11,373 | |||||||||
Office and computer equipment | 2,088 | 791 | 1,297 | |||||||||
Assets under construction | 3,156 | — | 3,156 | |||||||||
$ | 204,171 | $ | 27,082 | $ | 177,089 | |||||||
7. | Intangible assets |
Accumulated | Net Book | |||||||||||
June 30, 2006 | Cost | Amortization | Value | |||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Customer contracts in progress and related relationships | $ | 15,323 | $ | 15,323 | $ | — | ||||||
Trade names | 350 | 90 | 260 | |||||||||
Non-competition agreement | 100 | 52 | 48 | |||||||||
Employee arrangements | 2,025 | 1,744 | 281 | |||||||||
$ | 17,798 | $ | 17,209 | $ | 589 | |||||||
F-17
Table of Contents
Accumulated | Net Book | |||||||||||
March 31, 2006 | Cost | Amortization | Value | |||||||||
Customer contracts in progress and related relationships | $ | 15,323 | $ | 15,323 | $ | — | ||||||
Trade names | 350 | 81 | 269 | |||||||||
Non-competition agreement | 100 | 47 | 53 | |||||||||
Employee arrangements | 2,025 | 1,575 | 450 | |||||||||
$ | 17,798 | $ | 17,026 | $ | 772 | |||||||
Accumulated | Net Book | |||||||||||
March 31, 2005 | Cost | Amortization | Value | |||||||||
Customer contracts in progress and related relationships | $ | 15,323 | $ | 15,323 | $ | — | ||||||
Trade names | 350 | 47 | 303 | |||||||||
Non-competition agreement | 100 | 26 | 74 | |||||||||
Employee arrangements | 2,025 | 900 | 1,125 | |||||||||
$ | 17,798 | $ | 16,296 | $ | 1,502 | |||||||
For the year ending March 31, | ||||
2007 | $ | 505 | ||
2008 | 55 | |||
2009 | 48 | |||
2010 | 35 | |||
2011 and thereafter | 129 | |||
$ | 772 | |||
8. | Deferred financing costs |
F-18
Table of Contents
9. | Accrued liabilities |
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
Accrued interest payable | $ | 9,127 | $ | 10,878 | $ | 3,373 | ||||||
Payroll liabilities | 2,283 | 7,423 | 9,289 | |||||||||
Income and other taxes payable | 1,679 | 1,241 | 1,562 | |||||||||
Liabilities related to equipment leases | 2,112 | 5,061 | 7,439 | |||||||||
$ | 15,201 | $ | 24,603 | $ | 21,663 | |||||||
10. | Capital lease obligations |
(Unaudited) | |||||
2007 (July 2006 to March 2007) | $ | 2,919 | |||
2008 | 3,960 | ||||
2009 | 3,176 | ||||
2010 | 2,396 | ||||
2011 | 527 | ||||
12,978 | |||||
Less: amount representing interest – weighted average rate of 4.69% | 1,042 | ||||
Present value of minimum capital lease payments | 11,937 | ||||
Less: current portion | 3,433 | ||||
$ | 8,504 | ||||
2007 | $ | 3,766 | |||
2008 | 3,620 | ||||
2009 | 2,963 | ||||
2010 | 2,090 | ||||
2011 | 224 | ||||
12,663 | |||||
Less amount representing interest weighted average rate of 6.57% | 1,711 | ||||
Present value of minimum capital lease payments | 10,952 | ||||
Less current portion | 3,046 | ||||
$ | 7,906 | ||||
F-19
Table of Contents
11. | Long-term debt |
(a) | Senior secured credit facility: |
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
Revolving credit facility | $ | 20,007 | $ | — | $ | — | ||||||
Term credit facility | 41,250 | — | — | |||||||||
$ | 61,257 | $ | — | $ | — | |||||||
(b) | Senior notes: |
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
83/4% senior unsecured notes due 2011 | $ | 241,920 | $ | 233,420 | $ | 223,000 | ||||||
9% senior secured notes due 2010 | — | 70,587 | 67,436 | |||||||||
$ | 241,920 | $ | 304,007 | $ | 290,436 | |||||||
F-20
Table of Contents
(c) | Revolving credit facility: |
F-21
Table of Contents
12. | Income taxes |
Predecessor | |||||||||||||||||||||||||
Company | |||||||||||||||||||||||||
Period from | |||||||||||||||||||||||||
Period from | November 26, | Three Months Ended | |||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | ||||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Net loss before income taxes | $ | (17,763 | ) | $ | (17,952 | ) | $ | (44,587 | ) | $ | (21,204 | ) | $ | (49,054 | ) | $ | 18,998 | ||||||||
Statutory tax rate | 36.60 | % | 35.20 | % | 33.62 | % | 33.62 | % | 33.62 | % | 32.12 | % | |||||||||||||
Expected provision (recovery) at statutory tax rate | $ | (6,501 | ) | $ | (6,319 | ) | $ | (14,990 | ) | $ | (7,129 | ) | $ | (16,492 | ) | $ | 6,102 | ||||||||
Increase (decrease) related to: | |||||||||||||||||||||||||
Change in future income tax liability, resulting from substantially enacted change in future statutory income tax rates | (669 | ) | (342 | ) | — | — | — | 252 | |||||||||||||||||
Change in redemption value and accretion of redeemable preferred shares | — | — | — | 11,674 | 14,063 | 304 | |||||||||||||||||||
Change in future income tax liability, resulting from valuation allowance | — | — | 12,189 | (4,097 | ) | 3,802 | (5,858 | ) | |||||||||||||||||
Large corporations tax | 137 | 319 | 871 | 716 | 150 | (136 | ) | ||||||||||||||||||
Other | 411 | 672 | (334 | ) | (427 | ) | (1,373 | ) | 440 | ||||||||||||||||
Income tax provision (recovery) | $ | (6,622 | ) | $ | (5,670 | ) | $ | (2,264 | ) | $ | 737 | $ | 150 | $ | 1,104 | ||||||||||
F-22
Table of Contents
March 31, | March 31, | June 30, | |||||||||||
2005 | 2006 | 2006 | |||||||||||
(Unaudited) | |||||||||||||
Future income tax assets: | |||||||||||||
Non-capital losses carried forward | $ | 30,538 | $ | 22,312 | $ | 16,241 | |||||||
Derivative financial instruments | 8,068 | 6,843 | 4,526 | ||||||||||
Unrealized foreign exchange on senior notes | — | 2,299 | 2,236 | ||||||||||
Billings in excess of costs on uncompleted contracts | — | 1,723 | 2,125 | ||||||||||
Capital lease obligations | — | 1,631 | 1,953 | ||||||||||
Total future income tax assets | 38,606 | 34,808 | 27,081 | ||||||||||
Less valuation allowance | (9,955 | ) | (5,858 | ) | — | ||||||||
Net future income tax assets | 28,651 | 28,950 | 27,081 | ||||||||||
Future income tax liabilities: | |||||||||||||
Unbilled revenue and uncertified revenue included in accounts receivable | 10,972 | 1,970 | 2,215 | ||||||||||
Accounts receivable – holdbacks | 4,194 | 3,613 | 2,667 | ||||||||||
Property, plant and equipment | 12,432 | 20,263 | 19,719 | ||||||||||
Deferred financing costs | 548 | 1,038 | 1,037 | ||||||||||
Intangible assets | 505 | 130 | 95 | ||||||||||
Unrealized foreign exchange on senior notes | — | 1,936 | 2,584 | ||||||||||
Total future income tax liabilities | 28,651 | 28,950 | 28,317 | ||||||||||
Net future income taxes | $ | — | $ | — | $ | (1,236 | ) | ||||||
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
Current asset | $ | 15,100 | $ | 5,583 | $ | 10,291 | ||||||
Long-term asset | 13,485 | 23,367 | 16,790 | |||||||||
Current liability | (15,100 | ) | (5,583 | ) | (4,882 | ) | ||||||
Long-term liability | (13,485 | ) | (23,367 | ) | (23,435 | ) | ||||||
$ | — | $ | — | $ | (1,236 | ) | ||||||
2012 | 41,881 | |||
2013 | 9,017 |
F-23
Table of Contents
13. | Shares |
(a) | Redeemable preferred shares: |
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
NACG Preferred Corp. Series A redeemable preferred shares(i) | $ | 35,000 | $ | 35,000 | $ | 35,000 | ||||||
NAEPI Series A preferred shares (ii) | — | 375 | 391 | |||||||||
NAEPI Series B preferred shares (iii) | — | 42,193 | 43,122 | |||||||||
$ | 35,000 | $ | 77,568 | $ | 78,513 | |||||||
i. | NACG Preferred Corp. preferred shares |
Number of | ||||||||
Shares | Amount | |||||||
Outstanding at November 26, 2003 | — | $ | — | |||||
Issued | 35,000 | 35,000 | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2004 | 35,000 | $ | 35,000 | |||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2005 | 35,000 | $ | 35,000 | |||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2006 | 35,000 | $ | 35,000 | |||||
Issued (unaudited) | — | — | ||||||
Redeemed (unaudited) | — | — | ||||||
Outstanding at June 30, 2006 (unaudited) | 35,000 | $ | 35,000 | |||||
F-24
Table of Contents
ii. | NAEPI Series A preferred shares |
Number of | ||||||||
Shares | Amount | |||||||
Outstanding at November 26, 2003 | — | $ | — | |||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2004 | — | — | ||||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2005 | — | — | ||||||
Issued | 1,000 | 321 | ||||||
Accretion | — | 54 | ||||||
Outstanding at March 31, 2006 | 1,000 | $ | 375 | |||||
Issued (unaudited) | — | — | ||||||
Accretion (unaudited) | — | 16 | ||||||
Outstanding at June 30, 2006 (unaudited) | 1,000 | $ | 391 | |||||
F-25
Table of Contents
iii. | NAEPI Series B preferred shares |
Number of | ||||||||
Shares | Amount | |||||||
Outstanding at November 26, 2003 | — | $ | — | |||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2004 | — | — | ||||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2005 | — | $ | — | |||||
Issued | 83,462 | 8,376 | ||||||
Repurchased | (8,218 | ) | (851 | ) | ||||
Change in redemption amount | — | 34,668 | ||||||
Outstanding at March 31, 2006 | 75,244 | $ | 42,193 | |||||
Issued (unaudited) | — | — | ||||||
Repurchased (unaudited) | — | — | ||||||
Change in redemption amount (unaudited) | — | — | ||||||
Accretion (unaudited) | — | 929 | ||||||
Outstanding at June 30, 2006 (unaudited) | 75,244 | $ | 43,122 | |||||
F-26
Table of Contents
F-27
Table of Contents
(b) | Common shares: |
Number of | ||||||||
Shares | Amount | |||||||
Common voting shares | ||||||||
Outstanding at November 26, 2003 | — | $ | — | |||||
Issued | 904,380 | 90,438 | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2004 | 904,380 | 90,438 | ||||||
Issued | 3,000 | 300 | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2005 | 907,380 | 90,738 | ||||||
Issued | 3,000 | 300 | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2006 | 910,380 | $ | 91,038 | |||||
Issued (unaudited) | — | — | ||||||
Redeemed (unaudited) | — | — | ||||||
Outstanding at June 30, 2006 (unaudited) | 910,380 | $ | 91,038 | |||||
Common non-voting shares | ||||||||
Outstanding at November 26, 2003 | — | $ | — | |||||
Issued | 20,620 | 2,062 | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2004 | 20,620 | 2,062 | ||||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2005 | 20,620 | 2,062 | ||||||
Issued | — | — | ||||||
Redeemed | — | — | ||||||
Outstanding at March 31, 2006 | 20,620 | $ | 2,062 | |||||
Issued (unaudited) | — | — | ||||||
Redeemed (unaudited) | — | — | ||||||
Outstanding at June 30, 2006 (unaudited) | 20,620 | $ | 2,062 | |||||
Total common shares (unaudited) | 931,000 | $ | 93,100 | |||||
F-28
Table of Contents
(c) | Contributed surplus: |
Balance, November 26, 2003 | $ | — | ||
Stock-based compensation (note 21) | 137 | |||
Balance, March 31, 2004 | 137 | |||
Stock-based compensation (note 21) | 497 | |||
Balance, March 31, 2005 | 634 | |||
Stock-based compensation (note 21) | 923 | |||
Balance, March 31, 2006 | $ | 1,557 | ||
Stock-based compensation (note 21) (unaudited) | 312 | |||
Balance, June 30, 2006 (unaudited) | $ | 1,869 | ||
(d) | Net income (loss) per share: |
F-29
Table of Contents
Period from | |||||||||||||||||||||
November 26, | Three Months | Three Months | |||||||||||||||||||
2003 to | Year ended | Year ended | Ended | Ended | |||||||||||||||||
March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Basic net income (loss) per share | |||||||||||||||||||||
Net loss | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | |||||||
Weighted average number of common shares outstanding | 925,000 | 926,986 | 928,740 | 928,000 | 931,000 | ||||||||||||||||
Net loss per common share — basic and diluted | $ | (13.28 | ) | $ | (45.66 | ) | $ | (23.62 | ) | $ | (53.02 | ) | $ | 19.22 | |||||||
Diluted net income (loss) per share | |||||||||||||||||||||
Net income (loss) available to common shareholders | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | |||||||
Dilutive effect of NAEPI Series B preferred shares | — | — | — | — | 630 | ||||||||||||||||
Net income (loss), assuming dilution | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 18,524 | |||||||
Weighted average number of common shares outstanding | 925,000 | 926,986 | 928,740 | 928,000 | 931,000 | ||||||||||||||||
Dilutive effect of: | |||||||||||||||||||||
NAEPI Series B preferred shares | — | — | — | — | 376,220 | ||||||||||||||||
Stock options | — | — | — | — | 560 | ||||||||||||||||
Weighted average number of diluted common shares outstanding | 925,000 | 926,986 | 928,740 | 928,000 | 1,307,780 | ||||||||||||||||
Diluted net income (loss) per common share | $ | (13.28 | ) | $ | (45.66 | ) | $ | (23.62 | ) | $ | (53.02 | ) | $ | 14.16 | |||||||
F-30
Table of Contents
14. | Interest expense |
Predecessor | ||||||||||||||||||||||||
Company | ||||||||||||||||||||||||
Period from | Three Months | |||||||||||||||||||||||
Period from | November 26, | Ended | ||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | |||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Interest on senior notes | $ | — | $ | 8,096 | $ | 23,189 | $ | 28,838 | $ | 6,535 | $ | 7,346 | ||||||||||||
Interest on senior secured credit facility | 599 | 1,089 | 3,274 | 564 | 564 | — | ||||||||||||||||||
Interest on capital lease obligations | 294 | 56 | 230 | 457 | 89 | 154 | ||||||||||||||||||
Interest on NACG Preferred Corp. Series A preferred shares | — | — | — | — | — | 700 | ||||||||||||||||||
Change in redemption value of Series B preferred shares | — | — | — | 34,668 | 41,498 | 929 | ||||||||||||||||||
Accretion of Series A preferred shares | — | — | — | 54 | 9 | 16 | ||||||||||||||||||
Interest on advances from Norama Inc. | 1,468 | — | — | — | — | — | ||||||||||||||||||
Interest on long-term debt | 2,361 | 9,241 | 26,693 | 64,581 | 48,695 | 9,145 | ||||||||||||||||||
Amortization of deferred financing costs | — | 814 | 2,554 | 3,338 | 672 | 887 | ||||||||||||||||||
Other interest | 96 | 24 | 1,894 | 857 | 496 | 136 | ||||||||||||||||||
$ | 2,457 | $ | 10,079 | $ | 31,141 | $ | 68,776 | $ | 49,863 | $ | 10,168 | |||||||||||||
15. | Other information |
(a) | Supplemental cash flow information: |
Predecessor | |||||||||||||||||||||||||
Company | |||||||||||||||||||||||||
Period from | Three Months | ||||||||||||||||||||||||
Period from | November 26, | Ended | |||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | ||||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Cash paid during the period for: | |||||||||||||||||||||||||
Interest | $ | 2,431 | $ | 1,736 | $ | 31,398 | $ | 28,978 | $ | 14,671 | $ | 15,844 | |||||||||||||
Income taxes | 325 | 269 | 3,588 | 617 | 163 | 190 | |||||||||||||||||||
Cash received during the period for: | |||||||||||||||||||||||||
Interest | 100 | 177 | 362 | 530 | 108 | 486 | |||||||||||||||||||
Income taxes | — | 18 | — | 2 | — | — | |||||||||||||||||||
Non-cash transactions: | |||||||||||||||||||||||||
Acquisition of plant and equipment by means of capital leases | — | 1,195 | 5,385 | 5,910 | 981 | 1,758 | |||||||||||||||||||
Issuance of Series A preferred shares | — | — | — | 321 | 321 | — |
F-31
Table of Contents
(b) | Net change in non-cash working capital: |
Predecessor | |||||||||||||||||||||||||
Company | |||||||||||||||||||||||||
Period from | |||||||||||||||||||||||||
Period from | November 26, | Three Months Ended | |||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | ||||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||||
Accounts receivable | $ | 3,338 | $ | 19,556 | $ | (24,029 | ) | $ | (9,396 | ) | $ | 3,463 | $ | (9,067 | ) | ||||||||||
Unbilled revenue | 15,289 | (17,528 | ) | (13,735 | ) | (2,083 | ) | (6,740 | ) | 5,375 | |||||||||||||||
Inventory | — | (1,609 | ) | 1,475 | 77 | 26 | 44 | ||||||||||||||||||
Prepaid expenses | (544 | ) | (295 | ) | (590 | ) | 66 | (957 | ) | (2,002 | ) | ||||||||||||||
Accounts payable | (2,794 | ) | (2,839 | ) | 29,789 | (6,209 | ) | (5,031 | ) | (508 | ) | ||||||||||||||
Accrued liabilities | (1,457 | ) | 6,172 | 507 | 9,215 | (8,194 | ) | (2,810 | ) | ||||||||||||||||
Billings in excess of costs incurred and estimated earnings on uncompleted contracts | — | — | 1,325 | 3,799 | (847 | ) | 1,492 | ||||||||||||||||||
$ | 13,832 | $ | 3,457 | $ | (5,258 | ) | $ | (4,531 | ) | $ | (18,280 | ) | $ | (7,476 | ) | ||||||||||
Investing activities: | |||||||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | — | $ | 1,204 | $ | 1,398 | $ | (74 | ) | ||||||||||||
Accrued liabilities | — | — | — | 187 | 952 | (130 | ) | ||||||||||||||||||
$ | — | $ | — | $ | — | $ | 1,391 | $ | 2,350 | $ | (204 | ) | |||||||||||||
(c) | Investment in joint venture: |
Predecessor | ||||||||||||
Company | ||||||||||||
Period from | ||||||||||||
Period from | November 26, | Nine Months | ||||||||||
April 1, 2003 to | 2003 to | Ended | ||||||||||
November 25, | March 31, | December 31, | ||||||||||
2003 | 2004 | 2004 | ||||||||||
Revenue | $ | 340 | $ | 4 | $ | 7,631 | ||||||
Project costs | (308 | ) | 21 | (8,840 | ) | |||||||
General and administrative | (5 | ) | (37 | ) | — | |||||||
Net income (loss) | $ | 27 | $ | (12 | ) | $ | (1,209 | ) | ||||
F-32
Table of Contents
Predecessor | |||||||||||||
Company | |||||||||||||
Period from | |||||||||||||
Period from | November 26, | Nine Months | |||||||||||
April 1, 2003 to | 2003 to | Ended | |||||||||||
November 25, | March 31, | December 31, | |||||||||||
2003 | 2004 | 2004 | |||||||||||
Cash provided by: | |||||||||||||
Operating activities | $ | (49 | ) | $ | 61 | $ | (4,668 | ) | |||||
Investing activities | — | — | — | ||||||||||
Financing activities | 49 | (59 | ) | 5,061 | |||||||||
$ | — | $ | (2 | ) | $ | 393 | |||||||
16. | Segmented information |
(a) | General overview: |
• | Mining and Site Preparation: |
The Mining and Site Preparation segment provides mining and site preparation services, including overburden removal and reclamation services, project management and underground utility construction, to a variety of customers throughout Western Canada. |
• | Piling: |
The Piling segment provides deep foundation construction and design build services to a variety of industrial and commercial customers throughout Western Canada. |
• | Pipeline: |
The Pipeline segment provides both small and large diameter pipeline construction and installation services to energy and industrial clients throughout Western Canada. |
(b) | Results by business segment: |
Mining and Site | ||||||||||||||||
For the three months ended June 30, 2006 | Preparation | Piling | Pipeline | Total | ||||||||||||
(Unaudited) | ||||||||||||||||
Revenues from external customers | $ | 111,387 | $ | 23,276 | $ | 3,437 | $ | 138,100 | ||||||||
Depreciation of plant and equipment | 4,947 | 648 | 132 | 5,727 | ||||||||||||
Segment profits | 24,127 | 7,976 | 659 | 32,762 | ||||||||||||
Segment assets | 338,280 | 82,632 | 40,541 | 461,453 | ||||||||||||
Expenditures for segment plant and equipment | 6,984 | 1,330 | — | 8,314 |
Mining and Site | ||||||||||||||||
For the three months ended June 30, 2005 | Preparation | Piling | Pipeline | Total | ||||||||||||
(Unaudited) | ||||||||||||||||
Revenues from external customers | $ | 82,637 | $ | 20,030 | $ | 1,692 | $ | 104,359 | ||||||||
Depreciation of plant and equipment | 2,347 | 432 | 87 | 2,866 | ||||||||||||
Segment profits | 11,689 | 2,838 | 309 | 14,836 | ||||||||||||
Segment assets | 321,492 | 83,293 | 39,606 | 444,391 | ||||||||||||
Expenditures for segment plant and equipment | 3,115 | 192 | — | 3,307 |
F-33
Table of Contents
Mining and Site | ||||||||||||||||
For the Year Ended March 31, 2006 | Preparation | Piling | Pipeline | Total | ||||||||||||
Revenues from external customers | $ | 366,721 | $ | 91,434 | $ | 34,082 | $ | 492,237 | ||||||||
Depreciation of plant and equipment | 10,118 | 2,543 | 1,352 | 14,013 | ||||||||||||
Segment profits | 50,730 | 22,586 | 8,996 | 82,312 | ||||||||||||
Segment assets | 327,850 | 84,117 | 48,804 | 460,771 | ||||||||||||
Expenditures for segment plant and equipment | 25,090 | 880 | 82 | 26,052 |
Mining and Site | ||||||||||||||||
For the Year Ended March 31, 2005 | Preparation | Piling | Pipeline | Total | ||||||||||||
Revenues from external customers | $ | 264,835 | $ | 61,006 | $ | 31,482 | $ | 357,323 | ||||||||
Depreciation of plant and equipment | 10,308 | 2,335 | 218 | 12,861 | ||||||||||||
Segment profits | 11,617 | 13,319 | 4,902 | 29,838 | ||||||||||||
Segment assets | 315,740 | 74,975 | 48,635 | 439,350 | ||||||||||||
Expenditures for segment plant and equipment | 16,888 | 202 | 774 | 17,864 |
Mining and Site | ||||||||||||||||
For the Period from November 26, 2003 to March 31, 2004 | Preparation | Piling | Pipeline | Total | ||||||||||||
Revenues from external customers | $ | 53,404 | $ | 9,565 | $ | 64,642 | $ | 127,611 | ||||||||
Depreciation of plant and equipment | 3,116 | 465 | 383 | 3,964 | ||||||||||||
Segment profits | 8,154 | 2,501 | 12,892 | 23,547 | ||||||||||||
Segment assets | 264,822 | 76,896 | 68,751 | 410,469 | ||||||||||||
Expenditures for segment plant and equipment | 61 | 30 | 1,671 | 1,762 |
Predecessor Company | ||||||||||||||||
Mining and Site | ||||||||||||||||
For the Period from April 1, 2003 to November 25, 2003 | Preparation | Piling | Pipeline | Total | ||||||||||||
Revenues from external customers | $ | 182,368 | $ | 39,417 | $ | 28,867 | $ | 250,652 | ||||||||
Depreciation of plant and equipment | 3,590 | 1,256 | 158 | 5,004 | ||||||||||||
Segment profits | 17,745 | 8,330 | 5,054 | 31,129 | ||||||||||||
Segment assets | 77,906 | 31,792 | 15,904 | 125,602 | ||||||||||||
Expenditures for segment plant and equipment | 2,591 | 417 | — | 3,008 |
F-34
Table of Contents
(c) | Reconciliations: |
i. | Income (loss) before income taxes: |
Predecessor | ||||||||||||||||||||||||
Company | ||||||||||||||||||||||||
Period from | ||||||||||||||||||||||||
Period from | November 26, | Three Months Ended | ||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | |||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Total profit for reportable segments | $ | 31,129 | $ | 23,547 | $ | 29,838 | $ | 82,312 | $ | 14,836 | $ | 32,762 | ||||||||||||
Unallocated corporate expenses | (41,300 | ) | (40,437 | ) | (80,219 | ) | (102,190 | ) | (61,626 | ) | (13,533 | ) | ||||||||||||
Unallocated equipment revenue (costs) | (7,592 | ) | (1,062 | ) | 5,794 | (1,326 | ) | (2,264 | ) | (231 | ) | |||||||||||||
Income (loss) before income taxes | $ | (17,763 | ) | $ | (17,952 | ) | $ | (44,587 | ) | $ | (21,204 | ) | $ | (49,054 | ) | $ | 18,998 | |||||||
ii. | Total assets: |
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
Total assets for reportable segments | $ | 439,350 | $ | 460,771 | $ | 461,453 | ||||||
Corporate assets | 100,805 | 126,240 | 136,879 | |||||||||
Total assets | $ | 540,155 | $ | 587,011 | $ | 598,332 | ||||||
(d) | Customers: |
Predecessor | ||||||||||||||||||||||||
Company | ||||||||||||||||||||||||
Period from | Three Months | |||||||||||||||||||||||
Period from | November 26, | Ended | ||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | |||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Customer A | — | — | — | 2% | 1% | 20% | ||||||||||||||||||
Customer B | — | — | 12 | % | 32% | 34% | 15% | |||||||||||||||||
Customer C | 64 | % | 27 | % | 26 | % | 16% | 15% | 11% | |||||||||||||||
Customer D | — | — | 9 | % | 10% | 14% | 8% | |||||||||||||||||
Customer E | 9 | % | 11 | % | 8 | % | 5% | 4% | 5% | |||||||||||||||
Customer F | — | 4 | % | 11 | % | 2% | 4% | 4% | ||||||||||||||||
Customer G | 12 | % | 51 | % | 10 | % | 6% | 2% | 2% |
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17. | Related party transactions |
(a) | Transactions with Sponsors: |
(b) | Office rent: |
(c) | Predecessor company transactions: |
18. | Financial instruments |
(a) | Fair value: |
F-36
Table of Contents
(b) | Interest rate risk: |
(c) | Foreign currency risk and derivative financial instruments: |
(d) | Operating leases: |
(e) | Credit risk: |
F-37
Table of Contents
March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(unaudited) | ||||||||||||
Customer A | 33% | 21% | 9% | |||||||||
Customer B | 9% | 11% | 2% | |||||||||
Customer C | 11% | 9% | 16% |
19. | Commitments |
(Unaudited) | ||||
2007 (July 2006 to March 2007) | $ | 17,546 | ||
2008 | 18,070 | |||
2009 | 9,827 | |||
2010 | 8,148 | |||
2011 and thereafter | 2,211 | |||
$ | 55,802 | |||
For the year ending March 31, | ||||
2007 | $ | 21,176 | ||
2008 | 16,506 | |||
2009 | 9,587 | |||
2010 | 8,148 | |||
2011 and thereafter | 2,232 | |||
$ | 57,649 | |||
20. | Employee contribution plans |
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Table of Contents
21. | Stock-based compensation plan |
Weighted Average | ||||||||
Number of | Exercise Price | |||||||
Options | $ Per Share | |||||||
Outstanding at November 26, 2003 | — | $ | — | |||||
Granted | 54,130 | 100.00 | ||||||
Exercised | — | — | ||||||
Forfeited | — | — | ||||||
Outstanding at March 31, 2004 | 54,130 | 100.00 | ||||||
Granted | 24,112 | 100.00 | ||||||
Exercised | — | — | ||||||
Forfeited | (2,000 | ) | (100.00 | ) | ||||
Outstanding at March 31, 2005 | 76,242 | 100.00 | ||||||
Granted | 37,276 | 100.00 | ||||||
Exercised | — | — | ||||||
Forfeited | (10,200 | ) | (100.00 | ) | ||||
Outstanding at March 31, 2006 | 103,318 | $ | 100.00 | |||||
Granted (unaudited) | 6,388 | 100.00 | ||||||
Exercised (unaudited) | — | — | ||||||
Forfeited (unaudited) | (6,164 | ) | (100.00 | ) | ||||
Outstanding at June 30, 2006 (unaudited) | 103,542 | $ | 100.00 | |||||
F-39
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Period from | |||||||||||||||||||||
November 26, | Three Months Ended | ||||||||||||||||||||
2003 to | Year Ended | Year Ended | |||||||||||||||||||
March 31, | March 31, | March 31, | June 30, | June 30, | |||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | |||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Number of options granted | 54,130 | 24,112 | 37,276 | 20,000 | 6.388 | ||||||||||||||||
Weighted average fair value per option granted($) | 37.71 | 68.50 | 68.13 | 80.86 | 61.51 | ||||||||||||||||
Weighted average assumptions | |||||||||||||||||||||
Dividend yield | nil | % | nil | % | nil | % | nil | % | nil | % | |||||||||||
Expected volatility | nil | % | nil | % | nil | % | nil | % | nil | % | |||||||||||
Risk-free interest rate | 4.79 | % | 4.25 | % | 4.13 | % | 4.18 | % | 4.63 | % | |||||||||||
Expected life (years) | 10 | 10 | 10 | 10 | 10 |
22. | Comparative figures |
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23. | United States generally accepted accounting principles |
Predecessor | |||||||||||||||||||||||||
Company | |||||||||||||||||||||||||
Period from | |||||||||||||||||||||||||
Period from | November 26, | Three Months Ended | |||||||||||||||||||||||
April 1, 2003 to | 2003 to | Year Ended | Year Ended | ||||||||||||||||||||||
November 25, | March 31, | March 31, | March 31, | June 30, | June 30, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Net income (loss) (as reported) | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (21,941 | ) | $ | (49,204 | ) | $ | 17,894 | ||||||||
Capitalized interest(a) | — | — | — | 847 | 107 | 249 | |||||||||||||||||||
Depreciation of capitalized interest(a) | — | — | — | — | — | (44 | ) | ||||||||||||||||||
Amortization using effective interest method(b) | — | — | — | 590 | 43 | 135 | |||||||||||||||||||
Realized and unrealized loss on derivative financial instruments(e) | — | — | — | (484 | ) | — | (159 | ) | |||||||||||||||||
Difference between accretion of Series B preferred shares under Canadian GAAP and U.S. GAAP(f) | — | — | — | — | — | 90 | |||||||||||||||||||
Income (loss) before income taxes | (11,141 | ) | (12,282 | ) | (42,323 | ) | (20,988 | ) | (49,054 | ) | $ | 18,165 | |||||||||||||
Income taxes: | |||||||||||||||||||||||||
Deferred income taxes | — | — | — | — | — | (364 | ) | ||||||||||||||||||
Net income (loss) – U.S. GAAP | $ | (11,141 | ) | $ | (12,282 | ) | $ | (42,323 | ) | $ | (20,988 | ) | (49,054 | ) | $ | 17,801 | |||||||||
Basic net income (loss) per share– U.S. GAAP | $ | — | $ | (13.28 | ) | $ | (45.66 | ) | $ | (22.60 | ) | $ | (52.86 | ) | $ | 19.12 | |||||||||
Diluted net income (loss) per share – U.S. GAAP | $ | — | $ | (13.28 | ) | $ | (45.66 | ) | $ | (22.60 | ) | $ | (52.86 | ) | $ | 14.02 | |||||||||
F-41
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March 31, | March 31, | June 30, | ||||||||||
2005 | 2006 | 2006 | ||||||||||
(Unaudited) | ||||||||||||
Shareholders’ equity (as reported) – Canadian GAAP | $ | 38,829 | $ | 18,111 | $ | 36,317 | ||||||
Capitalized interest(a) | — | 847 | 1,096 | |||||||||
Depreciation of capitalized interest(a) | — | — | (44 | ) | ||||||||
Amortization using effective interest method(b) | — | 590 | 725 | |||||||||
Realized and unrealized loss on derivative financial instruments(e) | — | (484 | ) | (643 | ) | |||||||
Excess of fair value of amended NAEPI Series B preferred shares over carrying value of original NAEPI Series B preferred shares(f) | — | (3,707 | ) | (3,707 | ) | |||||||
Cumulative difference between accretion of Series B preferred shares under Canadian GAAP and U.S. GAAP(f) | — | — | 90 | |||||||||
Deferred income taxes | — | — | (364 | ) | ||||||||
Shareholders’ equity – U.S. GAAP | $ | 38,829 | $ | 15,357 | $ | 33,470 | ||||||
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Common | Contributed | |||||||||||||||
Shares | Surplus | Deficit | Total | |||||||||||||
Balance, November 26, 2003 – U.S. GAAP | $ | — | $ | — | $ | — | $ | — | ||||||||
Issue of common voting shares | 90,438 | — | — | 90,438 | ||||||||||||
Issue of common non-voting shares | 2,062 | — | — | 2,062 | ||||||||||||
Net loss | — | — | (12,282 | ) | (12,282 | ) | ||||||||||
Stock based compensation (note 13(c)) | — | 137 | — | 137 | ||||||||||||
Balance, March 31, 2004 – U.S. GAAP | 92,500 | 137 | (12,282 | ) | 80,355 | |||||||||||
Issue of common voting shares | 300 | — | — | 300 | ||||||||||||
Net loss | — | — | (42,323 | ) | (42,323 | ) | ||||||||||
Stock based compensation (note 13(c)) | — | 497 | — | 497 | ||||||||||||
Balance, March 31, 2005 – U.S. GAAP | 92,800 | 634 | (54,605 | ) | 38,829 | |||||||||||
Issue of common voting shares | 300 | — | $ | — | 300 | |||||||||||
Net loss | — | — | (20,988 | ) | (20,988 | ) | ||||||||||
Excess of fair value of amended NAEPI Series B preferred shares over carrying value of original NAEPI Series B preferred shares(f) | — | — | (3,707 | ) | (3,707 | ) | ||||||||||
Stock based compensation (note 13(c)) | — | 923 | — | 923 | ||||||||||||
Balance, March 31, 2006 – U.S. GAAP | 93,100 | 1,557 | (79,300 | ) | 15,357 | |||||||||||
Net income (unaudited) | — | — | 17,801 | 17,801 | ||||||||||||
Stock based compensation (note 13(c)) (unaudited) | — | 312 | — | 312 | ||||||||||||
Balance, June 30, 2006 – U.S. GAAP (unaudited) | $ | 93,100 | $ | 1,869 | $ | (61,499 | ) | $ | 33,470 | |||||||
(a) | Capitalization of interest: |
(b) | Deferred charges: |
F-43
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(c) | Reporting comprehensive income: |
(d) | Stock-based compensation: |
(e) | Derivative financial instruments: |
F-44
Table of Contents
(f) | NAEPI Series B Preferred Shares: |
(g) | Investment in joint venture: |
(h) | Other Matters: |
(i) | United States accounting pronouncements recently adopted: |
F-45
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F-46
Table of Contents
(j) | Recent United States accounting pronouncements not yet adopted: |
F-47
Table of Contents
24. | Subsequent events |
F-48
Table of Contents
F-49
Table of Contents
F-50
Table of Contents
Table of Contents
Table of Contents
Item 6. | Indemnification of Directors and Officers |
Applicable Laws of Canada |
By-laws |
II-1
Table of Contents
Indemnity Agreements |
Other |
Item 7. | Recent Sales of Unregistered Securities |
NACG Holdings Inc. |
II-2
Table of Contents
NACG Preferred Corp. |
North American Energy Partners Inc. |
II-3
Table of Contents
Item 8. | Exhibits and Financial Statement Schedules |
(a) | Exhibits |
Exhibit | ||||||
Number | Description | |||||
1 | .1* | — | Form of underwriting agreement. | |||
2 | .1* | — | Purchase Agreement, dated October 31, 2003, among Norama Ltd. and North American Equipment Ltd., as Sellers, Martin Gouin and Roger Gouin, as Principals, and NACG Preferred Corp. and NACG Acquisition Inc., as Buyers. | |||
3 | .1** | — | Articles of Incorporation of NACG Holdings Inc., as amended. | |||
3 | .2** | — | By-law No. 1 of NACG Holdings Inc. | |||
4 | .1** | — | Registration Rights Agreement, dated as of November 26, 2003, among NACG Holdings Inc. and the shareholders party thereto. | |||
4 | .2† | — | Amended and Restated 2004 Share Option Plan. | |||
5 | .1* | — | Opinion of Borden Ladner Gervais LLP. | |||
10 | .1** | — | First Amended and Restated Credit Agreement, dated as of July 19, 2006, among North American Energy Partners Inc., the lenders named therein and BNP Paribas (Canada), as Administrative Agent and Collateral Agent. | |||
10 | .2 | — | Intercreditor Agreement, dated as of May 19, 2005, between GE Finance Canada Holding Company, Wells Fargo Bank, N.A. and Computershare Trust Company of Canada, and consented to by North American Energy Partners Inc. and its subsidiaries (filed as Exhibit 10.2 to North American Energy Partners Inc.’s registration statement on Form F-4, Registration No. 333-125610 (the “2005 Registration Statement”), and incorporated herein by reference). | |||
10 | .3 | — | Form of Indemnity Agreement between NACG Holdings Inc., NACG Preferred Corp., North American Energy Partners Inc., North American Construction Group Inc. and their respective officers and directors (filed as Exhibit 10.3 to the 2005 Registration Statement and incorporated herein by reference). | |||
10 | .4 | — | Indenture, dated as of November 26, 2003, among North American Energy Partners Inc., the guarantors named therein and Wells Fargo Bank, N.A., as Trustee (filed as Exhibit 4.1 to North American Energy Partners Inc.’s registration statement on Form F-4, Registration No. 333-111396, and incorporated herein by reference). | |||
10 | .5 | — | Indenture, dated as of May 19, 2005, among North American Energy Partners Inc., the guarantors named therein and Wells Fargo Bank, N.A., as Trustee (filed as Exhibit 4.1 to the 2005 Registration Statement and incorporated herein by reference). | |||
10 | .6† | — | Employment Agreement with Rodney J. Ruston. | |||
10 | .7† | — | Employment Agreement with Vincent J. Gallant. | |||
10 | .8† | — | Employment Agreement with Robert G. Harris. | |||
10 | .9† | — | Employment Agreement with Christopher J. Hayman. |
II-4
Table of Contents
Exhibit | ||||||
Number | Description | |||||
10 | .10† | — | Employment Agreement with William M. Koehn. | |||
10 | .11† | — | Employment Agreement with Miles W. Safranovich. | |||
10 | .12*** | — | Overburden Removal and Mining Services Contract, dated November 17, 2004, between Canadian Natural Resources Limited and Noramac Ventures Inc. | |||
10 | .13** | — | Amended and Restated Joint Venture Agreement, dated September 30, 2004, among North American Construction Group Inc., Fort McKay Construction Ltd. and Noramac Ventures Ltd, including the assignment of contract from Noramac Ventures Ltd. to North American Construction Group Inc., dated February 27, 2006. | |||
10 | .14** | — | Office Lease, as amended as of November 26, 2003, between Acheson Properties Ltd. and North American Construction Group Inc. | |||
10 | .15** | — | Office Lease, dated as of March 15, 2003, between Acheson Properties Ltd. and North American Construction Group Inc. | |||
10 | .16** | — | Office Lease, dated as of July 1, 2003, between Acheson Properties Ltd. and North American Construction Group Inc. | |||
10 | .17* | — | Voting and Corporate Governance Agreement, dated November 26, 2003, among NACG Holdings Inc. and the shareholders party thereto. | |||
10 | .18* | — | Advisory Services Agreement, dated November 21, 2003, between NACG Holdings Inc. and its subsidiaries and The Sterling Group, L.P., Genstar Capital, L.P., Perry Strategic Capital, Inc. and Stephens Group, Inc. | |||
10 | .19† | — | Employment Agreement with Douglas A. Wilkes. | |||
10 | .20* | — | Series A Preferred Share Purchase Agreement, dated October 7, 2006, among NACG Holdings Inc., NACG Preferred Corp., North American Construction Group Inc. and Norama Ltd. | |||
21 | .1** | — | Subsidiaries of NACG Holdings Inc. | |||
23 | .1* | — | Consent of Borden Ladner Gervais LLP (included in their opinion filed as Exhibit 5.1). | |||
23 | .2* | — | Consent of KPMG LLP. | |||
24 | .1** | — | Powers of attorney. | |||
24 | .2* | — | Power of attorney. |
* | Filed herewith. |
** | Previously filed. |
*** | Portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission. |
† | To be filed by amendment. |
II-5
Table of Contents
Balance, | Charged to | |||||||||||||||
Beginning of | Costs and | Balance, | ||||||||||||||
Period | Expense(1) | Deductions(2) | End of Period | |||||||||||||
April 1, 2003 to November 25, 2003 (Predecessor) | $ | 152,000 | $ | 141,000 | $ | — | $ | 293,000 | ||||||||
November 26, 2003 to March 31, 2004 | 293,000 | 47,836 | (12,164 | ) | 233,000 | |||||||||||
April 1, 2004 to March 31, 2005 | 233,000 | 40,378 | (109,789 | ) | 163,589 | |||||||||||
April 1, 2005 to March 31, 2006 | 163,589 | (93,830 | ) | (187,661 | ) | 69,758 | ||||||||||
April 1, 2006 to June 30, 2006 | 69,758 | — | — | 69,758 |
(1) | Represents increase (decrease) in allowance for doubtful accounts receivable charged to expense. |
(2) | Represents the accounts receivable written-off against the allowance for doubtful accounts receivable. |
Balance, | Charged to | |||||||||||||||
Beginning of | Costs and | Balance, | ||||||||||||||
Period | Expense(1) | Deductions | End of Period | |||||||||||||
April 1, 2003 to November 25, 2003 (Predecessor) | $ | — | $ | — | $ | — | $ | — | ||||||||
November 26, 2003 to March 31, 2004 | — | — | — | — | ||||||||||||
April 1, 2004 to March 31, 2005 | — | 9,955 | — | 9,955 | ||||||||||||
April 1, 2005 to March 31, 2006 | 9,955 | (4,097 | ) | — | 5,858 | |||||||||||
April 1, 2006 to June 30, 2006 | 5,858 | — | (5,858 | ) | — |
(1) | Represents increase (decrease) in valuation allowance charged to provision for future income taxes. |
Item 9. | Undertakings |
II-6
Table of Contents
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. | |
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
II-7
Table of Contents
NACG Holdings Inc. |
By: | /s/Vincent J. Gallant |
Vincent J. Gallant | |
Vice President, Corporate |
Name | Title | |||
/s/Rodney J. Ruston | Director, President and Chief Executive Officer (Principal Executive Officer) | |||
/s/Douglas A. Wilkes | Vice President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer) | |||
* | Director | |||
* | Director | |||
* | Director | |||
* | Director | |||
/s/John D. Hawkins | Director and authorized representative in the United States | |||
/s/Ronald A. McIntosh | Chairman | |||
* | Director | |||
* | Director | |||
* | Director | |||
* | Director | |||
* | Director | |||
Constituting all of the Board of Directors | ||||
*By: | /s/Vincent J. Gallant Attorney-in-fact for persons indicated |
II-8
Table of Contents
Exhibit | ||||||
Number | Description | |||||
1 | .1* | — | Form of underwriting agreement. | |||
2 | .1* | — | Purchase Agreement, dated October 31, 2003, among Norama Ltd. and North American Equipment Ltd., as Sellers, Martin Gouin and Roger Gouin, as Principals, and NACG Preferred Corp. and NACG Acquisition Inc., as Buyers. | |||
3 | .1** | — | Articles of Incorporation of NACG Holdings Inc., as amended. | |||
3 | .2** | — | By-law No. 1 of NACG Holdings Inc. | |||
4 | .1** | — | Registration Rights Agreement, dated as of November 26, 2003, among NACG Holdings Inc. and the shareholders party thereto. | |||
4 | .2† | — | Amended and Restated 2004 Share Option Plan. | |||
5 | .1* | — | Opinion of Borden Ladner Gervais LLP. | |||
10 | .1** | — | First Amended and Restated Credit Agreement, dated as of July 19, 2006, among North American Energy Partners Inc., the lenders named therein and BNP Paribas (Canada), as Administrative Agent and Collateral Agent. | |||
10 | .2 | — | Intercreditor Agreement, dated as of May 19, 2005, between GE Finance Canada Holding Company, Wells Fargo Bank, N.A. and Computershare Trust Company of Canada, and consented to by North American Energy Partners Inc. and its subsidiaries (filed as Exhibit 10.2 to North American Energy Partners Inc.’s registration statement on Form F-4, Registration No. 333-125610 (the “2005 Registration Statement”), and incorporated herein by reference). | |||
10 | .3 | — | Form of Indemnity Agreement between NACG Holdings Inc., NACG Preferred Corp., North American Energy Partners Inc., North American Construction Group Inc. and their respective officers and directors (filed as Exhibit 10.3 to the 2005 Registration Statement and incorporated herein by reference). | |||
10 | .4 | — | Indenture, dated as of November 26, 2003, among North American Energy Partners Inc., the guarantors named therein and Wells Fargo Bank, N.A., as Trustee (filed as Exhibit 4.1 to North American Energy Partners Inc.’s registration statement on Form F-4, Registration No. 333-111396, and incorporated herein by reference). | |||
10 | .5 | — | Indenture, dated as of May 19, 2005, among North American Energy Partners Inc., the guarantors named therein and Wells Fargo Bank, N.A., as Trustee (filed as Exhibit 4.1 to the 2005 Registration Statement and incorporated herein by reference). | |||
10 | .6† | — | Employment Agreement with Rodney J. Ruston. | |||
10 | .7† | — | Employment Agreement with Vincent J. Gallant. | |||
10 | .8† | — | Employment Agreement with Robert G. Harris. | |||
10 | .9† | — | Employment Agreement with Christopher J. Hayman. | |||
10 | .10† | — | Employment Agreement with William M. Koehn. | |||
10 | .11† | — | Employment Agreement with Miles W. Safranovich. | |||
10 | .12*** | — | Overburden Removal and Mining Services Contract, dated November 17, 2004, between Canadian Natural Resources Limited and Noramac Ventures Inc. | |||
10 | .13** | — | Amended and Restated Joint Venture Agreement, dated September 30, 2004, among North American Construction Group Inc., Fort McKay Construction Ltd. and Noramac Ventures Ltd., including the assignment of contract from Noramac Ventures Ltd. to North American Construction Group Inc., dated February 27, 2006. | |||
10 | .14** | — | Office Lease, as amended as of November 26, 2003, between Acheson Properties Ltd. and North American Construction Group Inc. | |||
10 | .15** | — | Office Lease, dated as of March 15, 2003, between Acheson Properties Ltd. and North American Construction Group Inc. |
Table of Contents
Exhibit | ||||||
Number | Description | |||||
10 | .16** | — | Office Lease, dated as of July 1, 2003, between Acheson Properties Ltd. and North American Construction Group Inc. | |||
10 | .17* | — | Voting and Corporate Governance Agreement, dated November 26, 2003, among NACG Holdings Inc. and the shareholders party thereto. | |||
10 | .18* | — | Advisory Services Agreement, dated November 21, 2003, between NACG Holdings Inc. and its subsidiaries and The Sterling Group, L.P., Genstar Capital, L.P., Perry Strategic Capital, Inc. and Stephens Group, Inc. | |||
10 | .19† | — | Employment Agreement with Douglas A. Wilkes. | |||
10 | .20* | — | Series A Preferred Share Purchase Agreement, dated October 7, 2006, among NACG Holdings Inc., NACG Preferred Corp., North American Construction Group Inc. and Norama Ltd. | |||
21 | .1** | — | Subsidiaries of NACG Holdings Inc. | |||
23 | .1* | — | Consent of Borden Ladner Gervais LLP (included in their opinion filed as Exhibit 5.1). | |||
23 | .2* | — | Consent of KPMG LLP. | |||
24 | .1** | — | Powers of attorney. | |||
24 | .2* | — | Power of attorney. |
* | Filed herewith. |
** | Previously filed. |
*** | Previously filed. Portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission. |
† | To be filed by amendment. |