More annual reports from Parkland:
2011 ReportPeers and competitors of Parkland:
NGL Energy Partners130297 Hill Knowlton cover:125195-cover 3/16/09 3:21 PM Page 1 (cid:71)(cid:56)(cid:73)(cid:66)(cid:67)(cid:56)(cid:69)(cid:59) (cid:64)(cid:69)(cid:58)(cid:70)(cid:68)(cid:60) (cid:61)(cid:76)(cid:69)(cid:59) (cid:41)(cid:39)(cid:39)(cid:47) (cid:56)(cid:69)(cid:69)(cid:76)(cid:56)(cid:67) (cid:73)(cid:60)(cid:71)(cid:70)(cid:73)(cid:75) (cid:71)(cid:56)(cid:73)(cid:66)(cid:67)(cid:56)(cid:69)(cid:59) (cid:64)(cid:69)(cid:58)(cid:70)(cid:68)(cid:60) (cid:61)(cid:76)(cid:69)(cid:59) (cid:74)(cid:108)(cid:96)(cid:107)(cid:92) (cid:41)(cid:42)(cid:45)(cid:35) (cid:73)(cid:96)(cid:109)(cid:92)(cid:105)(cid:106)(cid:96)(cid:91)(cid:92) (cid:70)(cid:93)(cid:93)(cid:96)(cid:90)(cid:92) (cid:71)(cid:99)(cid:88)(cid:113)(cid:88) (cid:43)(cid:48) (cid:40)(cid:48) (cid:36) (cid:44)(cid:48)(cid:107)(cid:95) (cid:74)(cid:107)(cid:105)(cid:92)(cid:92)(cid:107) (cid:73)(cid:92)(cid:91) (cid:59)(cid:92)(cid:92)(cid:105)(cid:35) (cid:56)(cid:99)(cid:89)(cid:92)(cid:105) (cid:107)(cid:88) (cid:75)(cid:43)(cid:69) (cid:45)(cid:58)(cid:48) (cid:110)(cid:110)(cid:110)(cid:37)(cid:103)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:37)(cid:90)(cid:88) 130297 Hill Knowlton cover:125195-cover 3/16/09 4:16 PM Page 2 (cid:71)(cid:56)(cid:73)(cid:66)(cid:67)(cid:56)(cid:69)(cid:59) (cid:64)(cid:69)(cid:58)(cid:70)(cid:68)(cid:60) (cid:61)(cid:76)(cid:69)(cid:59) (cid:41)(cid:39)(cid:39)(cid:47) (cid:56)(cid:69)(cid:69)(cid:76)(cid:56)(cid:67) (cid:73)(cid:60)(cid:71)(cid:70)(cid:73)(cid:75) (cid:82)(cid:40)(cid:46)(cid:84) (cid:75)(cid:95)(cid:92) (cid:100)(cid:88)(cid:105)(cid:98)(cid:92)(cid:107) (cid:99)(cid:92)(cid:88)(cid:91)(cid:92)(cid:105) (cid:96)(cid:101) (cid:90)(cid:108)(cid:106)(cid:107)(cid:102)(cid:100)(cid:92)(cid:105) (cid:99)(cid:102)(cid:112)(cid:88)(cid:99)(cid:107)(cid:112)(cid:35) (cid:92)(cid:100)(cid:103)(cid:99)(cid:102)(cid:112)(cid:92)(cid:92) (cid:92)(cid:101)(cid:94)(cid:88)(cid:94)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107) (cid:88)(cid:101)(cid:91) (cid:96)(cid:101)(cid:109)(cid:92)(cid:106)(cid:107)(cid:102)(cid:105) (cid:90)(cid:102)(cid:101)(cid:212)(cid:91)(cid:92)(cid:101)(cid:90)(cid:92)(cid:37) (cid:58)(cid:70)(cid:73)(cid:71)(cid:70)(cid:73)(cid:56)(cid:75)(cid:60) (cid:71)(cid:73)(cid:70)(cid:61)(cid:64)(cid:67)(cid:60) (cid:41)(cid:39)(cid:39)(cid:47) (cid:110)(cid:88)(cid:106) (cid:88) (cid:90)(cid:95)(cid:88)(cid:99)(cid:99)(cid:92)(cid:101)(cid:94)(cid:96)(cid:101)(cid:94) (cid:112)(cid:92)(cid:88)(cid:105) (cid:110)(cid:96)(cid:107)(cid:95) (cid:108)(cid:101)(cid:103)(cid:105)(cid:92)(cid:90)(cid:92)(cid:91)(cid:92)(cid:101)(cid:107)(cid:92)(cid:91) (cid:102)(cid:96)(cid:99) (cid:103)(cid:105)(cid:96)(cid:90)(cid:92) (cid:109)(cid:102)(cid:99)(cid:88)(cid:107)(cid:96)(cid:99)(cid:96)(cid:107)(cid:112) (cid:90)(cid:102)(cid:100)(cid:89)(cid:96)(cid:101)(cid:92)(cid:91) (cid:110)(cid:96)(cid:107)(cid:95) (cid:106)(cid:107)(cid:105)(cid:92)(cid:106)(cid:106) (cid:96)(cid:101) (cid:107)(cid:95)(cid:92) (cid:90)(cid:88)(cid:103)(cid:96)(cid:107)(cid:88)(cid:99) (cid:88)(cid:101)(cid:91) (cid:91)(cid:92)(cid:89)(cid:107) (cid:100)(cid:88)(cid:105)(cid:98)(cid:92)(cid:107)(cid:106)(cid:37) (cid:59)(cid:92)(cid:106)(cid:103)(cid:96)(cid:107)(cid:92) (cid:107)(cid:95)(cid:92)(cid:106)(cid:92) (cid:95)(cid:92)(cid:88)(cid:91)(cid:110)(cid:96)(cid:101)(cid:91)(cid:106)(cid:35) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:91)(cid:92)(cid:99)(cid:96)(cid:109)(cid:92)(cid:105)(cid:92)(cid:91) (cid:106)(cid:107)(cid:105)(cid:102)(cid:101)(cid:94) (cid:212)(cid:101)(cid:88)(cid:101)(cid:90)(cid:96)(cid:88)(cid:99) (cid:103)(cid:92)(cid:105)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:101)(cid:90)(cid:92) (cid:88)(cid:101)(cid:91) (cid:102)(cid:103)(cid:92)(cid:105)(cid:88)(cid:107)(cid:96)(cid:101)(cid:94) (cid:105)(cid:92)(cid:106)(cid:108)(cid:99)(cid:107)(cid:106)(cid:35) (cid:110)(cid:95)(cid:96)(cid:99)(cid:92) (cid:100)(cid:88)(cid:96)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101)(cid:96)(cid:101)(cid:94) (cid:102)(cid:108)(cid:105) (cid:100)(cid:102)(cid:101)(cid:107)(cid:95)(cid:99)(cid:112) (cid:91)(cid:96)(cid:106)(cid:107)(cid:105)(cid:96)(cid:89)(cid:108)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106) (cid:88)(cid:101)(cid:91) (cid:103)(cid:108)(cid:105)(cid:106)(cid:108)(cid:96)(cid:101)(cid:94) (cid:102)(cid:108)(cid:105) (cid:94)(cid:105)(cid:102)(cid:110)(cid:107)(cid:95) (cid:106)(cid:107)(cid:105)(cid:88)(cid:107)(cid:92)(cid:94)(cid:112) (cid:110)(cid:96)(cid:107)(cid:95) (cid:107)(cid:110)(cid:102) (cid:88)(cid:90)(cid:104)(cid:108)(cid:96)(cid:106)(cid:96)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106)(cid:37) (cid:78)(cid:92) (cid:95)(cid:88)(cid:109)(cid:92) (cid:88)(cid:99)(cid:106)(cid:102) (cid:106)(cid:107)(cid:88)(cid:112)(cid:92)(cid:91) (cid:107)(cid:105)(cid:108)(cid:92) (cid:107)(cid:102) (cid:102)(cid:108)(cid:105) (cid:90)(cid:102)(cid:101)(cid:106)(cid:92)(cid:105)(cid:109)(cid:88)(cid:107)(cid:96)(cid:109)(cid:92) (cid:212)(cid:101)(cid:88)(cid:101)(cid:90)(cid:96)(cid:88)(cid:99) (cid:100)(cid:88)(cid:101)(cid:88)(cid:94)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107) (cid:88)(cid:101)(cid:91) (cid:90)(cid:102)(cid:105)(cid:92) (cid:109)(cid:88)(cid:99)(cid:108)(cid:92)(cid:106)(cid:36)(cid:89)(cid:88)(cid:106)(cid:92)(cid:91) (cid:99)(cid:92)(cid:88)(cid:91)(cid:92)(cid:105)(cid:106)(cid:95)(cid:96)(cid:103) (cid:88)(cid:103)(cid:103)(cid:105)(cid:102)(cid:88)(cid:90)(cid:95)(cid:37) (cid:75)(cid:102)(cid:91)(cid:88)(cid:112)(cid:35) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:103)(cid:105)(cid:102)(cid:109)(cid:96)(cid:91)(cid:92)(cid:106) (cid:90)(cid:108)(cid:106)(cid:107)(cid:102)(cid:100)(cid:92)(cid:105)(cid:106) (cid:110)(cid:96)(cid:107)(cid:95) (cid:103)(cid:105)(cid:102)(cid:91)(cid:108)(cid:90)(cid:107)(cid:106) (cid:105)(cid:88)(cid:101)(cid:94)(cid:96)(cid:101)(cid:94) (cid:93)(cid:105)(cid:102)(cid:100) (cid:110)(cid:95)(cid:102)(cid:99)(cid:92)(cid:106)(cid:88)(cid:99)(cid:92) (cid:88)(cid:101)(cid:91) (cid:105)(cid:92)(cid:107)(cid:88)(cid:96)(cid:99) (cid:94)(cid:88)(cid:106)(cid:102)(cid:99)(cid:96)(cid:101)(cid:92) (cid:88)(cid:101)(cid:91) (cid:91)(cid:96)(cid:92)(cid:106)(cid:92)(cid:99) (cid:103)(cid:99)(cid:108)(cid:106) (cid:88) (cid:93)(cid:108)(cid:99)(cid:99) (cid:106)(cid:108)(cid:96)(cid:107)(cid:92) (cid:102)(cid:93) (cid:90)(cid:102)(cid:101)(cid:109)(cid:92)(cid:101)(cid:96)(cid:92)(cid:101)(cid:90)(cid:92) (cid:106)(cid:107)(cid:102)(cid:105)(cid:92) (cid:96)(cid:107)(cid:92)(cid:100)(cid:106) (cid:107)(cid:102) (cid:103)(cid:105)(cid:102)(cid:103)(cid:88)(cid:101)(cid:92) (cid:99)(cid:108)(cid:89)(cid:105)(cid:96)(cid:90)(cid:88)(cid:101)(cid:107)(cid:106)(cid:35) (cid:102)(cid:96)(cid:99)(cid:212)(cid:92)(cid:99)(cid:91) (cid:213)(cid:108)(cid:96)(cid:91)(cid:106) (cid:88)(cid:101)(cid:91) (cid:93)(cid:88)(cid:105)(cid:100) (cid:90)(cid:95)(cid:92)(cid:100)(cid:96)(cid:90)(cid:88)(cid:99)(cid:106)(cid:37) (cid:78)(cid:92) (cid:90)(cid:102)(cid:101)(cid:107)(cid:96)(cid:101)(cid:108)(cid:92) (cid:102)(cid:108)(cid:105) (cid:103)(cid:102)(cid:106)(cid:96)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:106) (cid:102)(cid:101)(cid:92) (cid:102)(cid:93) (cid:58)(cid:88)(cid:101)(cid:88)(cid:91)(cid:88)(cid:203)(cid:106) (cid:99)(cid:88)(cid:105)(cid:94)(cid:92)(cid:106)(cid:107) (cid:96)(cid:101)(cid:91)(cid:92)(cid:103)(cid:92)(cid:101)(cid:91)(cid:92)(cid:101)(cid:107) (cid:100)(cid:88)(cid:105)(cid:98)(cid:92)(cid:107)(cid:92)(cid:105)(cid:106) (cid:102)(cid:93) (cid:107)(cid:105)(cid:88)(cid:101)(cid:106)(cid:103)(cid:102)(cid:105)(cid:107)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:105)(cid:92)(cid:99)(cid:88)(cid:107)(cid:92)(cid:91) (cid:93)(cid:108)(cid:92)(cid:99)(cid:106)(cid:37) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:108)(cid:101)(cid:96)(cid:107)(cid:106) (cid:107)(cid:105)(cid:88)(cid:91)(cid:92) (cid:102)(cid:101) (cid:107)(cid:95)(cid:92) (cid:75)(cid:102)(cid:105)(cid:102)(cid:101)(cid:107)(cid:102) (cid:74)(cid:107)(cid:102)(cid:90)(cid:98) (cid:60)(cid:111)(cid:90)(cid:95)(cid:88)(cid:101)(cid:94)(cid:92) (cid:108)(cid:101)(cid:91)(cid:92)(cid:105) (cid:107)(cid:95)(cid:92) (cid:106)(cid:112)(cid:100)(cid:89)(cid:102)(cid:99) (cid:71)(cid:66)(cid:64)(cid:37)(cid:76)(cid:69)(cid:37) (cid:41) (cid:44) (cid:45) (cid:46) (cid:40)(cid:43) (cid:40)(cid:45) (cid:71)(cid:105)(cid:92)(cid:106)(cid:96)(cid:91)(cid:92)(cid:101)(cid:107)(cid:203)(cid:106) (cid:68)(cid:92)(cid:106)(cid:106)(cid:88)(cid:94)(cid:92) (cid:58)(cid:95)(cid:88)(cid:96)(cid:105)(cid:100)(cid:88)(cid:101)(cid:203)(cid:106) (cid:68)(cid:92)(cid:106)(cid:106)(cid:88)(cid:94)(cid:92) (cid:61)(cid:96)(cid:109)(cid:92) (cid:80)(cid:92)(cid:88)(cid:105) (cid:74)(cid:108)(cid:100)(cid:100)(cid:88)(cid:105)(cid:112) (cid:73)(cid:92)(cid:109)(cid:96)(cid:92)(cid:110) (cid:102)(cid:93) (cid:70)(cid:103)(cid:92)(cid:105)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106) (cid:57)(cid:102)(cid:88)(cid:105)(cid:91) (cid:102)(cid:93) (cid:59)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:58)(cid:102)(cid:105)(cid:103)(cid:102)(cid:105)(cid:88)(cid:107)(cid:92) (cid:64)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:61)(cid:70)(cid:73)(cid:78)(cid:56)(cid:73)(cid:59)(cid:36)(cid:67)(cid:70)(cid:70)(cid:66)(cid:64)(cid:69)(cid:62) (cid:64)(cid:69)(cid:61)(cid:70)(cid:73)(cid:68)(cid:56)(cid:75)(cid:64)(cid:70)(cid:69) (cid:59)(cid:64)(cid:74)(cid:58)(cid:67)(cid:56)(cid:64)(cid:68)(cid:60)(cid:73) (cid:58)(cid:92)(cid:105)(cid:107)(cid:88)(cid:96)(cid:101) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:90)(cid:102)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101)(cid:92)(cid:91) (cid:95)(cid:92)(cid:105)(cid:92)(cid:96)(cid:101) (cid:105)(cid:92)(cid:94)(cid:88)(cid:105)(cid:91)(cid:96)(cid:101)(cid:94) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:64)(cid:101)(cid:90)(cid:102)(cid:100)(cid:92) (cid:61)(cid:108)(cid:101)(cid:91) (cid:31)(cid:200)(cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:201)(cid:32) (cid:96)(cid:101)(cid:90)(cid:99)(cid:108)(cid:91)(cid:96)(cid:101)(cid:94) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:107)(cid:95)(cid:88)(cid:107) (cid:90)(cid:102)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101) (cid:110)(cid:102)(cid:105)(cid:91)(cid:106) (cid:106)(cid:108)(cid:90)(cid:95) (cid:88)(cid:106) (cid:200)(cid:90)(cid:102)(cid:108)(cid:99)(cid:91)(cid:201)(cid:35) (cid:200)(cid:106)(cid:95)(cid:102)(cid:108)(cid:99)(cid:91)(cid:201)(cid:35) (cid:200)(cid:90)(cid:88)(cid:101)(cid:201)(cid:35) (cid:200)(cid:88)(cid:101)(cid:107)(cid:96)(cid:90)(cid:96)(cid:103)(cid:88)(cid:107)(cid:92)(cid:201)(cid:35) (cid:200)(cid:92)(cid:106)(cid:107)(cid:96)(cid:100)(cid:88)(cid:107)(cid:92)(cid:201)(cid:35) (cid:200)(cid:103)(cid:105)(cid:102)(cid:103)(cid:102)(cid:106)(cid:92)(cid:201)(cid:35) (cid:200)(cid:103)(cid:99)(cid:88)(cid:101)(cid:201)(cid:35) (cid:200)(cid:92)(cid:111)(cid:103)(cid:92)(cid:90)(cid:107)(cid:201)(cid:35) (cid:200)(cid:89)(cid:92)(cid:99)(cid:96)(cid:92)(cid:109)(cid:92)(cid:201)(cid:35) (cid:200)(cid:110)(cid:96)(cid:99)(cid:99)(cid:201)(cid:35) (cid:200)(cid:100)(cid:88)(cid:112)(cid:201) (cid:88)(cid:101)(cid:91) (cid:106)(cid:96)(cid:100)(cid:96)(cid:99)(cid:88)(cid:105) (cid:92)(cid:111)(cid:103)(cid:105)(cid:92)(cid:106)(cid:106)(cid:96)(cid:102)(cid:101)(cid:106) (cid:88)(cid:101)(cid:91) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:107)(cid:95)(cid:88)(cid:107) (cid:88)(cid:105)(cid:92) (cid:101)(cid:102)(cid:107) (cid:105)(cid:92)(cid:99)(cid:88)(cid:107)(cid:92)(cid:91) (cid:107)(cid:102) (cid:95)(cid:96)(cid:106)(cid:107)(cid:102)(cid:105)(cid:96)(cid:90)(cid:88)(cid:99) (cid:93)(cid:88)(cid:90)(cid:107)(cid:106) (cid:90)(cid:102)(cid:101)(cid:106)(cid:107)(cid:96)(cid:107)(cid:108)(cid:107)(cid:92) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:102)(cid:105) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:108)(cid:101)(cid:91)(cid:92)(cid:105) (cid:88)(cid:103)(cid:103)(cid:99)(cid:96)(cid:90)(cid:88)(cid:89)(cid:99)(cid:92) (cid:106)(cid:92)(cid:90)(cid:108)(cid:105)(cid:96)(cid:107)(cid:96)(cid:92)(cid:106) (cid:99)(cid:88)(cid:110)(cid:106)(cid:37) (cid:64)(cid:101) (cid:103)(cid:88)(cid:105)(cid:107)(cid:96)(cid:90)(cid:108)(cid:99)(cid:88)(cid:105)(cid:35) (cid:107)(cid:95)(cid:96)(cid:106) (cid:56)(cid:101)(cid:101)(cid:108)(cid:88)(cid:99) (cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107) (cid:90)(cid:102)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101)(cid:106) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91) (cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:103)(cid:92)(cid:105)(cid:107)(cid:88)(cid:96)(cid:101)(cid:96)(cid:101)(cid:94) (cid:107)(cid:102)(cid:49) (cid:88)(cid:101) (cid:96)(cid:101)(cid:90)(cid:105)(cid:92)(cid:88)(cid:106)(cid:92) (cid:107)(cid:102) (cid:107)(cid:95)(cid:92) (cid:90)(cid:105)(cid:92)(cid:91)(cid:96)(cid:107) (cid:93)(cid:88)(cid:90)(cid:96)(cid:99)(cid:96)(cid:107)(cid:112)(cid:50) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:103)(cid:105)(cid:102)(cid:109)(cid:96)(cid:91)(cid:92)(cid:91) (cid:108)(cid:101)(cid:91)(cid:92)(cid:105) (cid:107)(cid:95)(cid:92) (cid:95)(cid:92)(cid:88)(cid:91)(cid:96)(cid:101)(cid:94) (cid:200)(cid:62)(cid:102)(cid:96)(cid:101)(cid:94) (cid:61)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:201)(cid:50) (cid:88)(cid:101)(cid:91) (cid:100)(cid:88)(cid:101)(cid:88)(cid:94)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:203)(cid:106) (cid:88)(cid:106)(cid:106)(cid:92)(cid:106)(cid:106)(cid:100)(cid:92)(cid:101)(cid:107) (cid:102)(cid:93) (cid:93)(cid:108)(cid:107)(cid:108)(cid:105)(cid:92) (cid:103)(cid:99)(cid:88)(cid:101)(cid:106) (cid:88)(cid:101)(cid:91) (cid:102)(cid:103)(cid:92)(cid:105)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106)(cid:37) (cid:75)(cid:95)(cid:92) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:90)(cid:102)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101)(cid:92)(cid:91) (cid:96)(cid:101) (cid:107)(cid:95)(cid:96)(cid:106) (cid:56)(cid:101)(cid:101)(cid:108)(cid:88)(cid:99) (cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107) (cid:88)(cid:105)(cid:92) (cid:89)(cid:88)(cid:106)(cid:92)(cid:91) (cid:108)(cid:103)(cid:102)(cid:101) (cid:90)(cid:92)(cid:105)(cid:107)(cid:88)(cid:96)(cid:101) (cid:88)(cid:106)(cid:106)(cid:108)(cid:100)(cid:103)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106) (cid:88)(cid:101)(cid:91) (cid:93)(cid:88)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:106)(cid:108)(cid:90)(cid:95) (cid:88)(cid:106) (cid:95)(cid:96)(cid:106)(cid:107)(cid:102)(cid:105)(cid:96)(cid:90)(cid:88)(cid:99) (cid:107)(cid:105)(cid:92)(cid:101)(cid:91)(cid:106)(cid:35) (cid:90)(cid:108)(cid:105)(cid:105)(cid:92)(cid:101)(cid:107) (cid:90)(cid:102)(cid:101)(cid:91)(cid:96)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106) (cid:88)(cid:101)(cid:91) (cid:92)(cid:111)(cid:103)(cid:92)(cid:90)(cid:107)(cid:92)(cid:91) (cid:93)(cid:108)(cid:107)(cid:108)(cid:105)(cid:92) (cid:91)(cid:92)(cid:109)(cid:92)(cid:99)(cid:102)(cid:103)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106)(cid:35) (cid:110)(cid:95)(cid:96)(cid:90)(cid:95) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:89)(cid:92)(cid:99)(cid:96)(cid:92)(cid:109)(cid:92)(cid:106) (cid:88)(cid:105)(cid:92) (cid:105)(cid:92)(cid:88)(cid:106)(cid:102)(cid:101)(cid:88)(cid:89)(cid:99)(cid:112) (cid:88)(cid:90)(cid:90)(cid:108)(cid:105)(cid:88)(cid:107)(cid:92) (cid:88)(cid:107) (cid:107)(cid:95)(cid:92) (cid:107)(cid:96)(cid:100)(cid:92) (cid:102)(cid:93) (cid:103)(cid:105)(cid:92)(cid:103)(cid:88)(cid:105)(cid:96)(cid:101)(cid:94) (cid:107)(cid:95)(cid:96)(cid:106) (cid:56)(cid:101)(cid:101)(cid:108)(cid:88)(cid:99) (cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107)(cid:37) (cid:63)(cid:102)(cid:110)(cid:92)(cid:109)(cid:92)(cid:105)(cid:35) (cid:107)(cid:95)(cid:92) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:90)(cid:102)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101)(cid:92)(cid:91) (cid:95)(cid:92)(cid:105)(cid:92)(cid:96)(cid:101) (cid:96)(cid:101)(cid:109)(cid:102)(cid:99)(cid:109)(cid:92) (cid:98)(cid:101)(cid:102)(cid:110)(cid:101) (cid:88)(cid:101)(cid:91) (cid:108)(cid:101)(cid:98)(cid:101)(cid:102)(cid:110)(cid:101) (cid:93)(cid:88)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:88)(cid:101)(cid:91) (cid:105)(cid:96)(cid:106)(cid:98)(cid:106) (cid:107)(cid:95)(cid:88)(cid:107) (cid:90)(cid:102)(cid:108)(cid:99)(cid:91) (cid:90)(cid:88)(cid:108)(cid:106)(cid:92) (cid:88)(cid:90)(cid:107)(cid:108)(cid:88)(cid:99) (cid:105)(cid:92)(cid:106)(cid:108)(cid:99)(cid:107)(cid:106) (cid:107)(cid:102) (cid:109)(cid:88)(cid:105)(cid:112) (cid:100)(cid:88)(cid:107)(cid:92)(cid:105)(cid:96)(cid:88)(cid:99)(cid:99)(cid:112) (cid:93)(cid:105)(cid:102)(cid:100) (cid:107)(cid:95)(cid:102)(cid:106)(cid:92) (cid:88)(cid:101)(cid:107)(cid:96)(cid:90)(cid:96)(cid:103)(cid:88)(cid:107)(cid:92)(cid:91)(cid:35) (cid:96)(cid:101)(cid:90)(cid:99)(cid:108)(cid:91)(cid:96)(cid:101)(cid:94)(cid:35) (cid:110)(cid:96)(cid:107)(cid:95)(cid:102)(cid:108)(cid:107) (cid:99)(cid:96)(cid:100)(cid:96)(cid:107)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:35) (cid:93)(cid:88)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:88)(cid:101)(cid:91) (cid:105)(cid:96)(cid:106)(cid:98)(cid:106) (cid:88)(cid:106)(cid:106)(cid:102)(cid:90)(cid:96)(cid:88)(cid:107)(cid:92)(cid:91) (cid:110)(cid:96)(cid:107)(cid:95) (cid:105)(cid:92)(cid:107)(cid:88)(cid:96)(cid:99) (cid:103)(cid:105)(cid:96)(cid:90)(cid:96)(cid:101)(cid:94) (cid:88)(cid:101)(cid:91) (cid:100)(cid:88)(cid:105)(cid:94)(cid:96)(cid:101)(cid:106)(cid:35) (cid:88)(cid:109)(cid:88)(cid:96)(cid:99)(cid:88)(cid:89)(cid:96)(cid:99)(cid:96)(cid:107)(cid:112) (cid:88)(cid:101)(cid:91) (cid:103)(cid:105)(cid:96)(cid:90)(cid:96)(cid:101)(cid:94) (cid:102)(cid:93) (cid:103)(cid:92)(cid:107)(cid:105)(cid:102)(cid:99)(cid:92)(cid:108)(cid:100) (cid:103)(cid:105)(cid:102)(cid:91)(cid:108)(cid:90)(cid:107) (cid:106)(cid:108)(cid:103)(cid:103)(cid:99)(cid:112)(cid:35) (cid:109)(cid:102)(cid:99)(cid:88)(cid:107)(cid:96)(cid:99)(cid:96)(cid:107)(cid:112) (cid:102)(cid:93) (cid:90)(cid:105)(cid:108)(cid:91)(cid:92) (cid:102)(cid:96)(cid:99) (cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:106)(cid:35) (cid:100)(cid:88)(cid:105)(cid:98)(cid:92)(cid:107)(cid:96)(cid:101)(cid:94) (cid:90)(cid:102)(cid:100)(cid:103)(cid:92)(cid:107)(cid:96)(cid:107)(cid:96)(cid:102)(cid:101)(cid:35) (cid:92)(cid:101)(cid:109)(cid:96)(cid:105)(cid:102)(cid:101)(cid:100)(cid:92)(cid:101)(cid:107)(cid:88)(cid:99) (cid:91)(cid:88)(cid:100)(cid:88)(cid:94)(cid:92)(cid:35) (cid:90)(cid:105)(cid:92)(cid:91)(cid:96)(cid:107) (cid:94)(cid:105)(cid:88)(cid:101)(cid:107)(cid:96)(cid:101)(cid:94)(cid:35) (cid:96)(cid:101)(cid:107)(cid:92)(cid:105)(cid:92)(cid:106)(cid:107) (cid:105)(cid:88)(cid:107)(cid:92) (cid:213)(cid:108)(cid:90)(cid:107)(cid:108)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:88)(cid:109)(cid:88)(cid:96)(cid:99)(cid:88)(cid:89)(cid:96)(cid:99)(cid:96)(cid:107)(cid:112) (cid:102)(cid:93) (cid:90)(cid:88)(cid:103)(cid:96)(cid:107)(cid:88)(cid:99) (cid:88)(cid:101)(cid:91) (cid:102)(cid:103)(cid:92)(cid:105)(cid:88)(cid:107)(cid:96)(cid:101)(cid:94) (cid:93)(cid:108)(cid:101)(cid:91)(cid:106)(cid:37) (cid:73)(cid:92)(cid:88)(cid:91)(cid:92)(cid:105)(cid:106) (cid:88)(cid:105)(cid:92) (cid:90)(cid:88)(cid:108)(cid:107)(cid:96)(cid:102)(cid:101)(cid:92)(cid:91) (cid:107)(cid:95)(cid:88)(cid:107) (cid:107)(cid:95)(cid:92) (cid:93)(cid:102)(cid:105)(cid:92)(cid:94)(cid:102)(cid:96)(cid:101)(cid:94) (cid:99)(cid:96)(cid:106)(cid:107) (cid:102)(cid:93) (cid:93)(cid:88)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:96)(cid:106) (cid:101)(cid:102)(cid:107) (cid:92)(cid:111)(cid:95)(cid:88)(cid:108)(cid:106)(cid:107)(cid:96)(cid:109)(cid:92) (cid:88)(cid:101)(cid:91) (cid:107)(cid:95)(cid:88)(cid:107) (cid:88)(cid:91)(cid:91)(cid:96)(cid:107)(cid:96)(cid:102)(cid:101)(cid:88)(cid:99) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:102)(cid:101) (cid:107)(cid:95)(cid:92)(cid:106)(cid:92) (cid:88)(cid:101)(cid:91) (cid:102)(cid:107)(cid:95)(cid:92)(cid:105) (cid:93)(cid:88)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:107)(cid:95)(cid:88)(cid:107) (cid:90)(cid:102)(cid:108)(cid:99)(cid:91) (cid:88)(cid:93)(cid:93)(cid:92)(cid:90)(cid:107) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:203)(cid:106) (cid:102)(cid:103)(cid:92)(cid:105)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106) (cid:102)(cid:105) (cid:212)(cid:101)(cid:88)(cid:101)(cid:90)(cid:96)(cid:88)(cid:99) (cid:105)(cid:92)(cid:106)(cid:108)(cid:99)(cid:107)(cid:106) (cid:88)(cid:105)(cid:92) (cid:96)(cid:101)(cid:90)(cid:99)(cid:108)(cid:91)(cid:92)(cid:91) (cid:96)(cid:101) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:203)(cid:106) (cid:105)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107)(cid:106) (cid:102)(cid:101) (cid:212)(cid:99)(cid:92) (cid:110)(cid:96)(cid:107)(cid:95) (cid:58)(cid:88)(cid:101)(cid:88)(cid:91)(cid:96)(cid:88)(cid:101) (cid:106)(cid:92)(cid:90)(cid:108)(cid:105)(cid:96)(cid:107)(cid:96)(cid:92)(cid:106) (cid:105)(cid:92)(cid:94)(cid:108)(cid:99)(cid:88)(cid:107)(cid:102)(cid:105)(cid:112) (cid:88)(cid:108)(cid:107)(cid:95)(cid:102)(cid:105)(cid:96)(cid:107)(cid:96)(cid:92)(cid:106)(cid:37) (cid:64)(cid:101) (cid:103)(cid:88)(cid:105)(cid:107)(cid:96)(cid:90)(cid:108)(cid:99)(cid:88)(cid:105) (cid:106)(cid:92)(cid:92) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:203)(cid:106) (cid:68)(cid:59)(cid:29)(cid:56) (cid:88)(cid:101)(cid:91) (cid:107)(cid:95)(cid:92) (cid:73)(cid:96)(cid:106)(cid:98) (cid:61)(cid:88)(cid:90)(cid:107)(cid:102)(cid:105)(cid:106) (cid:88)(cid:101)(cid:91) (cid:64)(cid:101)(cid:91)(cid:108)(cid:106)(cid:107)(cid:105)(cid:112) (cid:58)(cid:102)(cid:101)(cid:91)(cid:96)(cid:107)(cid:96)(cid:102)(cid:101)(cid:106) (cid:106)(cid:92)(cid:90)(cid:107)(cid:96)(cid:102)(cid:101) (cid:102)(cid:93) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:203)(cid:106) (cid:56)(cid:101)(cid:101)(cid:108)(cid:88)(cid:99) (cid:64)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:61)(cid:102)(cid:105)(cid:100)(cid:37) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:203)(cid:106) (cid:105)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107)(cid:106) (cid:100)(cid:88)(cid:112) (cid:89)(cid:92) (cid:88)(cid:90)(cid:90)(cid:92)(cid:106)(cid:106)(cid:92)(cid:91) (cid:107)(cid:95)(cid:105)(cid:102)(cid:108)(cid:94)(cid:95) (cid:107)(cid:95)(cid:92) (cid:74)(cid:60)(cid:59)(cid:56)(cid:73) (cid:110)(cid:92)(cid:89)(cid:106)(cid:96)(cid:107)(cid:92) (cid:31)(cid:110)(cid:110)(cid:110)(cid:37)(cid:106)(cid:92)(cid:91)(cid:88)(cid:105)(cid:37)(cid:90)(cid:102)(cid:100)(cid:32) (cid:102)(cid:105) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:203)(cid:106) (cid:110)(cid:92)(cid:89)(cid:106)(cid:96)(cid:107)(cid:92) (cid:31)(cid:110)(cid:110)(cid:110)(cid:37)(cid:103)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:37)(cid:90)(cid:88)(cid:32)(cid:37) (cid:58)(cid:102)(cid:101)(cid:106)(cid:92)(cid:104)(cid:108)(cid:92)(cid:101)(cid:107)(cid:99)(cid:112)(cid:35) (cid:88)(cid:99)(cid:99) (cid:102)(cid:93) (cid:107)(cid:95)(cid:92) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:96)(cid:101) (cid:107)(cid:95)(cid:96)(cid:106) (cid:56)(cid:101)(cid:101)(cid:108)(cid:88)(cid:99) (cid:73)(cid:92)(cid:103)(cid:102)(cid:105)(cid:107) (cid:88)(cid:105)(cid:92) (cid:92)(cid:111)(cid:103)(cid:105)(cid:92)(cid:106)(cid:106)(cid:99)(cid:112) (cid:104)(cid:108)(cid:88)(cid:99)(cid:96)(cid:212)(cid:92)(cid:91) (cid:89)(cid:112) (cid:107)(cid:95)(cid:96)(cid:106) (cid:90)(cid:88)(cid:108)(cid:107)(cid:96)(cid:102)(cid:101)(cid:88)(cid:105)(cid:112) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:37) (cid:75)(cid:95)(cid:92)(cid:105)(cid:92) (cid:96)(cid:106) (cid:101)(cid:102) (cid:105)(cid:92)(cid:103)(cid:105)(cid:92)(cid:106)(cid:92)(cid:101)(cid:107)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:89)(cid:112) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:88)(cid:101)(cid:91) (cid:107)(cid:95)(cid:92)(cid:105)(cid:92) (cid:90)(cid:88)(cid:101) (cid:89)(cid:92) (cid:101)(cid:102) (cid:88)(cid:106)(cid:106)(cid:108)(cid:105)(cid:88)(cid:101)(cid:90)(cid:92) (cid:107)(cid:95)(cid:88)(cid:107) (cid:88)(cid:90)(cid:107)(cid:108)(cid:88)(cid:99) (cid:105)(cid:92)(cid:106)(cid:108)(cid:99)(cid:107)(cid:106) (cid:88)(cid:90)(cid:95)(cid:96)(cid:92)(cid:109)(cid:92)(cid:91) (cid:110)(cid:96)(cid:99)(cid:99) (cid:89)(cid:92) (cid:107)(cid:95)(cid:92) (cid:106)(cid:88)(cid:100)(cid:92) (cid:96)(cid:101) (cid:110)(cid:95)(cid:102)(cid:99)(cid:92) (cid:102)(cid:105) (cid:96)(cid:101) (cid:103)(cid:88)(cid:105)(cid:107) (cid:88)(cid:106) (cid:107)(cid:95)(cid:102)(cid:106)(cid:92) (cid:106)(cid:92)(cid:107) (cid:102)(cid:108)(cid:107) (cid:96)(cid:101) (cid:107)(cid:95)(cid:92) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106)(cid:37) (cid:73)(cid:92)(cid:88)(cid:91)(cid:92)(cid:105)(cid:106) (cid:88)(cid:105)(cid:92) (cid:107)(cid:95)(cid:92)(cid:105)(cid:92)(cid:93)(cid:102)(cid:105)(cid:92) (cid:90)(cid:88)(cid:108)(cid:107)(cid:96)(cid:102)(cid:101)(cid:92)(cid:91) (cid:101)(cid:102)(cid:107) (cid:107)(cid:102) (cid:103)(cid:99)(cid:88)(cid:90)(cid:92) (cid:108)(cid:101)(cid:91)(cid:108)(cid:92) (cid:105)(cid:92)(cid:99)(cid:96)(cid:88)(cid:101)(cid:90)(cid:92) (cid:102)(cid:101) (cid:106)(cid:108)(cid:90)(cid:95) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:88)(cid:101)(cid:91) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106)(cid:37) (cid:75)(cid:95)(cid:92) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106) (cid:90)(cid:102)(cid:101)(cid:107)(cid:88)(cid:96)(cid:101)(cid:92)(cid:91) (cid:96)(cid:101) (cid:107)(cid:95)(cid:96)(cid:106) (cid:91)(cid:102)(cid:90)(cid:108)(cid:100)(cid:92)(cid:101)(cid:107) (cid:88)(cid:105)(cid:92) (cid:100)(cid:88)(cid:91)(cid:92) (cid:88)(cid:106) (cid:102)(cid:93) (cid:107)(cid:95)(cid:92) (cid:91)(cid:88)(cid:107)(cid:92) (cid:102)(cid:93) (cid:96)(cid:106)(cid:106)(cid:108)(cid:92)(cid:37) (cid:71)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91) (cid:91)(cid:102)(cid:92)(cid:106) (cid:101)(cid:102)(cid:107) (cid:108)(cid:101)(cid:91)(cid:92)(cid:105)(cid:107)(cid:88)(cid:98)(cid:92) (cid:88)(cid:101)(cid:112) (cid:102)(cid:89)(cid:99)(cid:96)(cid:94)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101) (cid:107)(cid:102) (cid:108)(cid:103)(cid:91)(cid:88)(cid:107)(cid:92) (cid:103)(cid:108)(cid:89)(cid:99)(cid:96)(cid:90)(cid:99)(cid:112) (cid:102)(cid:105) (cid:107)(cid:102) (cid:105)(cid:92)(cid:109)(cid:96)(cid:106)(cid:92) (cid:88)(cid:101)(cid:112) (cid:102)(cid:93) (cid:107)(cid:95)(cid:92) (cid:96)(cid:101)(cid:90)(cid:99)(cid:108)(cid:91)(cid:92)(cid:91) (cid:93)(cid:102)(cid:105)(cid:110)(cid:88)(cid:105)(cid:91)(cid:36)(cid:99)(cid:102)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94) (cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:106)(cid:35) (cid:110)(cid:95)(cid:92)(cid:107)(cid:95)(cid:92)(cid:105) (cid:88)(cid:106) (cid:88) (cid:105)(cid:92)(cid:106)(cid:108)(cid:99)(cid:107) (cid:102)(cid:93) (cid:101)(cid:92)(cid:110) (cid:96)(cid:101)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:35) (cid:93)(cid:108)(cid:107)(cid:108)(cid:105)(cid:92) (cid:92)(cid:109)(cid:92)(cid:101)(cid:107)(cid:106) (cid:102)(cid:105) (cid:102)(cid:107)(cid:95)(cid:92)(cid:105)(cid:110)(cid:96)(cid:106)(cid:92)(cid:37) (cid:37) (cid:88) (cid:91) (cid:88) (cid:101) (cid:88) (cid:58) (cid:101) (cid:96) (cid:91) (cid:92) (cid:107) (cid:101) (cid:96) (cid:105) (cid:71) (cid:37) (cid:107) (cid:99) (cid:108) (cid:106) (cid:92) (cid:73) (cid:101) (cid:102) (cid:107) (cid:99) (cid:110) (cid:102) (cid:101) (cid:66) (cid:29) (cid:99) (cid:99) (cid:96) (cid:63) (cid:112) (cid:89) (cid:91) (cid:92) (cid:90) (cid:108) (cid:91) (cid:102) (cid:105) (cid:103) (cid:91) (cid:101) (cid:88) (cid:91) (cid:92) (cid:101) (cid:94) (cid:96) (cid:106) (cid:92) (cid:59) Parkland Income Fund 2008 annual report [1] strong Parkland Income Fund has captured a unique market niche as the leading independent fuel marketer in western canada. parkland’s unique strengths include our diversified business portfolio, conservative financial management, experienced leadership team and excellent reputation in the marketplace. strategic Parkland’s track record demonstrates our ability to execute successful acquisitions. We focus on our base of non-urban independent fuel and related products marketing with four key strategic pillars in mind: [1] continue growth through expansion and acquisition; [2] manage risk through diversification and prudent fiscal management; [3] increase our competitiveness through service station upgrades; and [4] reduce operating costs and improve organizational effectiveness and training programs. sUccessFUL 2008 was a challenging year with a slowing economy and volatile oil prices. Despite these challenges, parkland delivered strong financial performance and operating results, while maintaining monthly distributions and pursuing our growth strategy with two acquisitions. 630 630 630 1,201 1,201 1,201 1,144 1,144 1,144 575 575 575 530 530 530 525 525 525 1,039 1,093 1,093 1,093 1,039 1,039 430 430 430 801 801 757 801 757 757 823 823 823 04 04 05 04 05 06 05 06 07 06 07 08 07 08 08 04 04 05 04 05 06 05 06 07 06 07 08 07 08 08 04 04 05 04 05 06 05 06 07 06 07 08 07 08 08 Total Number of Parkland Sites as at December 31, 2008 Retail Volumes as at December 31, 2008 (millions of litres) Commercial and Reseller Volumes as at December 31, 2008 (millions of litres) 300 300 300 462 462 462 420 420 420 [2] 2008 annual report Parkland Income Fund President’s message To our unitholders. the year 2008 was one with many challenges. parkland was faced with declining fuel margins in an environment of rapid fuel price escalation for over half the year. this was followed by the collapse of energy prices and the crisis in credit and equity markets in the second half. Despite these headwinds, we exceeded analyst expectations for earnings, increased our borrowing capacity and continued to grow the business. While our unit price declined, we maintained our monthly distributions to unitholders without interruption or by means of a return of capital and re-purchased units under a normal course issuer bid. parkland Income Fund is one of Canada’s leading independent retail and wholesale marketers of fuel and related products and services, with an expanding chain of non-urban store and branch locations in western and central Canada. We operate retail, Commercial and Supply and Distribution business units. our retail service station and convenience store business positions parkland as the largest independent retail marketer Michael W. Chorlton of transportation fuels and related products and services in the the words Strong, Strategic and Successful were introduced in non-urban areas of western Canada. We have over 630 locations last year’s report and I believe this continues to best describe through company-owned sites and independent dealers using a our position. variety of recognized brand names. With the acquisition of noco energy Canada in May 2008, we expanded our market niche with Strong player. parkland has captured a unique market niche a growing presence in ontario. as the leading independent fuel marketer in western Canada. the company began in 1977 with the purchase of one retail gas our commercial business provides bulk fuel and propane as well station in red Deer, alberta. Since then, we’ve used our in-depth as complementary products such as lubricants, oilfield fluids and knowledge of the market to steadily and deliberately grow through agricultural inputs. the company operates 20 distribution centres a well executed strategy of acquisition and organic growth. for these products in northern alberta, B.C. and the Yukon and supplies fuel to commercial customers through a chain of over 35 the diversity in parkland’s business portfolio is unique in our cardlock sites. industry segment and a key source of our strength. this diversity comes in many forms. We are geographically diverse across In 2008, we added additional long-haul capacity to our distribution western and central Canada. through our retail and commercial business with the acquisition of Wiebe transport Inc. this business divisions, we have a broad foundation of revenue with our product unit supplies and delivers fuel, propane and agricultural inputs to offerings and customer base. our commercial and retail businesses our customers, service stations and distribution centres through have complementary seasonality – keeping us busy year round our growing truck fleet complemented by commercial carriers. and smoothing earnings. We are a strong and growing player with a proven ability to Conservative financial management remains a key part of our capture value through strategic acquisitions. last year proved success. For example, our long-term debt at year end was only 0.9 that our approach to planned, calculated growth is sound. We times to 2008 eBItDa. We successfully increased our credit facility achieved solid business results despite volatile petroleum prices by $31 million in 2008 and expect to have a further increase in place and margins combined with a weakening economy. in early 2009 to continue pursuing excellent growth opportunities. our reputation in the marketplace has earned us a preferred status among our suppliers and customers, giving us greater control over our future. For example, one of our key success factors is a secure source of fuel supply at industry leading prices. to this end, we have long-term supply contracts in place and strong relationships with three major refiners in western Canada and four in central Canada. Parkland Income Fund 2008 annual report [3] (Left to Right) Bradley Willams Vice president, Commercial Business Group Stu Macphail Vice president, Corporate Development alan Crossley Vice president, Supply and Distribution Mike Chorlton president and Ceo abe neufeld Vice president, Commercial Business Development John Schroeder Vice president and CFo Bob espey Vice president, retail Dean Mackey Vice president, Human resources our strength rests on the shoulders of our experienced leadership future development. In May, we acquired noco energy Canada team and we recently made some significant additions. In Inc., expanding our retail and wholesale fuel marketing business november 2008, Bob espey joined us as Vice president, retail into ontario. this acquisition included 56 independently owned and Stu Macphail began a new role as Vice president, Corporate and operated locations focused in non-urban markets under the Development. In January 2009, Dean Mackey joined us as Vice brands esso and Sunoco. later in the year, we also entered into president, Human resources. our leadership approach is based agreements to further expand our esso retail branded business, on our core values: integrity, people, teamwork and success. We adding 40 large dealers in ontario and alberta. believe in doing the right thing, respecting the needs of customers, employees and stakeholders, while achieving greater results by We are also working hard to create a solid, unified base for working together as a team. future growth. throughout 2008, we underwent extensive business process re-engineering and are currently rebuilding Strategic growth. parkland’s track record demonstrates our our enterprise resource planning (erp) software. We are ability to execute successful acquisitions. We have successfully merging our systems, processes, controls and operations, while integrated assets within our organization, while gaining valuable utilizing best business practices, consistency and uniformity talent and leadership. In 2008, we continued this strategic growth. to these core business activities. this will improve our overall In February, we acquired Wiebe transport Inc., which expands operational efficiency, capitalize on synergies and set the stage our fuel delivery capacity and provides key infrastructure for for future acquisitions. Key Strategies Going Forward Growth. [1] retail growth through acquisition and expanded distributorship [2] Increased geographic diversity [3] one acquisition in distribution division [4] added capacity, versatility and flexibility Increase competitiveness. [1] Integration of acquired assets and people [2] Counter cyclical business [3] Fuel volume growth increases buying power risk. [1] Conservative financial management [2] environmental Health & Safety programs [3] Increased business diversity organizational effectiveness. [1] Key additions to leadership team [2] Value based leadership [3] process re-engineering and software consolidation [4] 2008 annual report Parkland Income Fund Successful results. 2008 was a challenging year with a slowing the foundations of our company will remain the same. We will be economy and volatile oil prices. Despite these challenges, parkland fiscally conservative, with a strong balance sheet and solid long- experienced continued growth through acquisitions, while also term supply contracts, maximizing our financial flexibility. We will focusing on consolidation and operational efficiency. In 2008, we continue to increase operational efficiency and consistency to took action to protect our distributable cash, and although our create a strong base for future growth while pursuing our strategy unit value has declined along with others in the equity markets, of accretive acquisitions complimenting organic growth. we have been able to maintain our normal monthly distributions without disruption. We also increased our bank financing capacity We plan to keep our trust status through 2010, barring a major to fund continued growth in our business. development or compelling opportunity. our growth rate has actually accelerated since the Federal Government’s announcement Controllable operating earnings increased in 2008. However, our of changes to trust taxation in 2006. We were a strong company total eBItDa declined compared to 2007, primarily due to losses in prior to becoming a trust in 2002 and that underlying business FIFo inventory value from declining petroleum product prices and remains robust, independent of our status as an income trust. lower refiners’ margins pushing our supply centre earnings lower. Going forward. parkland is well positioned to take on the current people and relationships that are built on hard work, quality economic challenges, stay on point with our strategy and achieve service and mutual trust. these principles are embedded in our solid results in 2009. In the first two months of 2009, our fuel corporate culture. Most importantly, we will keep our focus on our values, our sales volumes held up well despite the current economic weakness. Furthermore, retail and refiners’ margins were strong compared to historic values for this season. Michael W. Chorlton president and Ceo February 27, 2009 Year Over Year Changes in EBITDA ($ millions) 140 120 100 80 60 40 20 0 15.0 (21.7) 115 5.4 5.4 (3.2) (38.7) 4.0 81.2 2007 Fuel Volume Operating and G&A Merchandise and Related Gross Profit Commercial Gross Profit Retail Fuel Margin Wholesale Fuel Margin and FIFO Adjustment Non-recurring 2008 chairman’s message Your Board of Directors faced a challenging year as we were confronted by the economic crisis and still managed to keep the balance of meeting the economic challenges while maintaining focus on vision, values, good governance and strategic development. on the strategic front we have cautiously continued our growth strategy and progressed the development of long-term fuel supplies. this is seen in our acquisitions of Wiebe transport and noco energy and our quick decision to terminate the Beaver Hills fuel production project and move on to our next set of supply alternatives. the responsibility of the Board and management is to look beyond current issues and establish the building blocks for future success. We are committed to the principles of good governance and are highly focused on staying ahead of new standards as they emerge. For example: • our compensation disclosure last year was improved substantially with the new rules in mind. Parkland Income Fund 2008 annual report [5] Jim pantelidis • We have successfully completed the work needed to comply Most of all, today’s marketplace needs businesses that inspire with new standards in business control testing. confidence. Customers want to be confident their expectations will be met, employees want to have confidence in a stable and our focus on health, safety and the environment affects every fulfilling future and investors want to have confidence in their aspect of our business. We are continually improving our policies, returns. our vision at parkland is to be the market leader in practices and training in this area. In our 2008 employee opinion customer loyalty, employee engagement and investor confidence. survey, our focus on health and safety received the most positive We achieve this by meeting and exceeding customer expectations, response – a tribute to the intense effort in this area. giving our employees the environment and opportunities to succeed, and keeping on track with our strategy for growth last year, we greatly increased the scope of our human resources combined with conservative financial management. team, with a view toward utilizing the total capability of each individual. We believe excellence in this area provides people on behalf of the board of directors, I’d like to thank those we are with a foundation they need to achieve their goals. While we privileged to serve for their continued confidence and support. continually develop our current employees, we also have the I am proud of what we’ve achieved so far and look forward to a added opportunity to recruit top talent into our organization as bright future. our company continues to grow in difficult economic times. We have maintained this focus at a time when the economic environment has been extremely challenging at best. Despite these challenges, we have been successful in maintaining unitholders’ monthly distribution, achieving a 91% payout ratio and improving our borrowing capacity. Jim pantelidis Chairman, Board of Directors 2008 Performance Measures Fuel Volume (millions of litres) Merchandise Sales ($ million) Gross Margin ($ million) eBItDa ($ million) total Distributions ($ million) 2008 2,353 61.8 221.4 81.2 63.4 2007 1,963 64.5 232.5 115.0 90.5 2007/2008 2006 % Change 1,501 59.6 138.0 70.7 56.2 20 (4) (5) (29) (30) [6] 2008 annual report Parkland Income Fund Five Year sUmmarY Years ended December 31, ($000’s except volume and per Unit amounts) 2008 2007 2006* 2005* 2004 total assets 405,488 379,806 181,423 140,998 120,873 total long-term liabilities Sales volume (millions of litres) 88,558 2,353 31,709 1,963 5,829 1,501 13,907 1,177 17,612 1,101 net sales and operating revenue 2,348,126 1,697,663 1,199,866 875,539 686,658 Cost of sales and operating expenses 2,126,745 1,465,155 1,061,824 779,092 600,310 Gross profit Direct and operating Marketing, general and administrative eBItDa amortization Interest on long-term debt loss on disposal of capital assets refinery remediation accretion loss on writedown of refinery earnings (loss) before income taxes Income tax expense (recovery) net earnings per unit — basic — diluted Merchandise sales total distributions Funds flow from operations Capital expenditures, net of disposals Maintenance capital, net of disposals Growth capital 221,381 232,508 138,042 96,447 86,348 91,960 48,212 77,668 39,785 47,342 20,044 40,338 14,885 37,227 15,136 81,209 115,055 70,656 41,224 33,985 30,359 21,627 4,831 344 394 113 — 45,168 827 1,676 275 2,677 61 — 88,739 8,002 8,453 1,044 608 — — — 60,551 975 8,077 873 727 — — — 31,547 2,055 44,341 80,737 59,576 29,492 $ $ 0.88 0.88 $ $ 1.66 1.64 $ $ 1.50 1.48 $ $ 0.75 0.75 $ $ 61,780 63,416 79,081 31,132 9,211 21,921 64,538 90,518 114,013 29,475 13,465 16,010 59,624 56,171 69,191 11,148 6,296 4,852 44,970 23,872 41,960 8,588 4,525 4,063 7,828 738 1,414 — — 25,310 (1,305) (8,721) 7,416 0.19 0.19 38,051 21,075 30,048 10,138 4,352 5,786 * Restatement related to early adoption of IFRS mandated FIFO inventory accounting. Parkland Income Fund 2008 annual report [7] revieW oF oPerations our retail Business parkland’s fuel marketing strategy is built upon four principles. 1. non-urban market focus – invest in those markets where we are best suited to compete and grow market share; 2. Multi-branded networks – offer a branded value proposition tailored to the needs of different customers and geographic markets across Canada. our in-house brands include: Fas Gas, Fas Gas plus, Short Stop, race trac. We operate retail branded distributorships under the esso and Sunoco brands. 3. non-fuel revenue streams – lessen our reliance on fuel margins through a continued expansion of our Short Stop and Short Stop express convenience stores with an added focus on the development of car washes and food service relationships; and 4. organizational capability – focus on training and technology to deploy our values based leadership across the company, while maintaining a low cost operating model. We are totally revamping our point of sale processing capability to provide better data and compatibility with our new enterprise resources planning system. FaS GaS pluS raCe traC the Fas Gas plus brand has grown to be the largest segment the race trac brand is used for sites that are owned by of our retail offering. over the past eight years, these sites independent retailers who enter into long-term (typically five- have been built or upgraded to provide consistent in-store year) fuel supply agreements with parkland. We provide brand merchandise offering either with a 2,000 to 2,500 square foot signage, a proprietary fleetcard offering and a loyalty program to Short Stop convenience store or a smaller footprint Short Stop the retailers. our profit from these sites consists of a wholesale express store. the larger sites are generally company-operated fuel margin. the merchandise program, which we developed for with salaried managers and staff so that parkland enjoys the Fas Gas plus sites, has been rolled out to some of the high-quality full retail fuel and the merchandise profit. the smaller sites are independent sites. generally operated by a contracted operator who supplies all on-site labour in exchange for a commission based on fuel sales eSSo volume. parkland consigns fuel to these smaller sites and enjoys In 2005, parkland entered into a retail Branded Distributorship the full retail fuel profit as well as a monthly rent calculated as a agreement with Imperial oil, under which we have the non-exclusive percentage of merchandise sales. In 2008, we implemented a new right to supply branded fuel to independent esso dealers. Since and upgraded in-store design at seven sites with good success. that original agreement was signed, we have steadily increased the design has now been further refined and is set for wider our distributorship area. deployment in the years ahead. Fas Gas was parkland’s original brand used on all retail gasoline we added 35 independently owned and operated esso branded operations. as sites were upgraded, the brand was changed to locations in ontario. these locations increased our overall Fas Gas plus. there are 53 sites remaining in our network where geographic diversity to include both western and central Canada. With the acquisition of noco energy Canada Inc. in May, 2008, upgrading is still to come or where property lease terms make upgrading unfeasible or market potential does not warrant further investment. Whitehorse Whitehorse YUKON N O R T H W E S T T E R R I T O R I E S [8] 2008 annual report Parkland Income Fund Fort Nelson Fort Nelson BRITISH COLUMBIA Prince George Prince George 150 Mile House 150 Mile House Vancouver Vancouver A L B E R T A Fort McMurray Fort McMurray Grande Prairie Grande Prairie Edmonton Edmonton Red Deer Red Deer M A N I T O B A La Ronge La Ronge Thompson Thompson S A S K A T C H E W A N O N T A R I O Kamloops Kamloops Calgary Calgary Saskatoon Saskatoon Cranbrook Cranbrook Regina Regina Winnipeg Winnipeg Dryden Dryden Brandon Brandon Thunder Bay Thunder Bay Sudbury Sudbury Brampton Brampton Toronto Toronto Hamilton Hamilton London London N E W F O U N D L A N D & L A B R A D O R PEI NOVA SCOTIA reTaIl locaTIonS FaS GaS pluS eSSo parkland has conducted an extensive program with a focus on Fas parkland’s retail Branded Distributorship agreement with Imperial Gas plus service stations, which provide improved services and oil provides for food supply to the esso independent dealer network a broader offering. We expect to continue the program over the in alberta and Saskatchewan, plus parts of B.C. and ontario. In succeeding years. FaS GaS as parkland’s traditional brand, Fas Gas has developed a strong and unique position in non-urban markets in western Canada. raCe traC race trac sites are generally dealer owned and operated local businesses in small markets across parkland’s marketing area. 2007 parkland further expanded this agreement into B.C. SHort Stop anD SHort Stop eXpreSS ConVenIenCe FooD StoreS parkland’s convenience store business compliments Fas Gas plus sites with a strong offering of convenience products. Whitehorse Whitehorse YUKON N O R T H W E S T T E R R I T O R I E S Fort Nelson Fort Nelson BRITI SH COLUMBI A A L B E R T A Fort McMurray Fort McMurray Grande Prairie Grande Prairie Prince George Prince George 150 Mile House 150 Mile House Vancouver Vancouver Edmonton Edmonton Red Deer Red Deer Kamloops Kamloops Calgary Calgary Saskatoon Saskatoon N E W F O U N D L A N D & L A B R A D O R Parkland Income Fund 2008 annual report [9] M A N I T O B A La Ronge La Ronge Thompson Thompson S A S K A T C H E W A N O N T A R I O Whitehorse Whitehorse YUKON NORTHWEST TERRITORIES Fort Nelson Fort Nelson BRITISH COLUMBIA A L B E R T A Cranbrook Cranbrook Regina Regina Winnipeg Winnipeg Dryden Dryden Brandon Brandon Thunder Bay Thunder Bay Fort McMurray Fort McMurray M A N I T O B A Grande Prairie Grande Prairie La Ronge La Ronge Thompson Thompson Prince George Prince George S A S K A T C H E W A N Sudbury Sudbury 150 Mile House 150 Mile House Edmonton Edmonton Red Deer Red Deer Kamloops Kamloops Calgary Calgary Vancouver Vancouver Saskatoon Saskatoon Victoria Victoria Cranbrook Cranbrook Regina Regina Winnipeg Winnipeg Brampton Brampton Toronto Toronto Hamilton Hamilton London London Brandon Brandon Thunder Bay Thunder Bay Sudbury Sudbury Toronto Toronto Brampton Brampton Hamilton Hamilton London London PEI NOVA SCOTIA Dryden Dryden O N T A R I O N E W F O U N D L A N D & L A B R A D O R PEI NOVA SCOTIA commercIal locaTIonS neuFelD petroleuM anD propane unIteD petroleuM proDuCtS Based in Grande prairie, alberta, neufeld operates 14 locations in uppI was acquired by parkland in 2007 and markets fuel and northern alberta, northeastern B.C. and the northwest territories. lubricants to a network of commercial accounts and independent neufeld distributes fuel, propane and agricultural inputs such service station operators throughout B.C. as fertilizers and farm chemicals, along with lubricants, oilfield industrial chemicals and frac oils. parKlanD reFInInG ltD. In 2007 parkland acquired Joy propane, a significant propane alternatives are currently being pursued, including storage to parkland owns a refinery at Bowden, alberta. a number of supply business operating in northern B.C. and northern alberta generate cash flow from this site. which has been merged into neufeld petroleum and propane. petroHaul anD WIeBe tranSport Great nortHern oIl one of parkland’s key competitive strengths is its fleet of trucks. parkland owns and operates a bulk facility in Whitehorse, Yukon our acquisitions in 2007 and 2008 introduced additional long that provides home heating fuels under the brand name Great haul trucking operations and we have consolidated the fleets to northern oil. improve service and efficiency. [10] 2008 annual report Parkland Income Fund In the fourth quarter of 2008, parkland added 40 dealers in products such as lubricants, agricultural inputs and oilfield fluids. ontario and alberta with an anticipated annual volume of 200 all these products also carried substantial service components million litres of gasoline and diesel. with significant profit potential. the neufeld acquisition was followed by three tuck in acquisitions for this business – Joy We currently serve 253 dealers in western and central Canada and propane (Dawson Creek, British Columbia), olivers propane (High earn a wholesaler’s profit margin on the fuel volume sold. We are prairie, alberta) and roblyn Bulk Sales (edson, alberta). positioned to build this segment of retail by organic growth and potentially further acquisitions. SunoCo In May, 2007, parkland also acquired the bulk fuel and lubricants business of united petroleum products Inc. (uppI) of Burnaby, British Columbia. this business supplies bulk fuel and lubricants into the acquisition of noco energy also added the Sunoco retail brand areas of British Columbia not accessible to the neufeld branches. to our lineup. We added 17 independently owned and operated Sunoco branded locations in ontario and have the opportunity to In 2008, we continued to build and consolidate the commercial recruit further dealers under this popular brand. businesses acquired in 2007 to gain synergies, extend product our commercial Business the commercial business started with sales of bulk fuels procured lines and expand our footprint. For example, we lowered our fuel acquisition costs, extended the uppI lubricant sales lines through neufeld sites and added branches to serve heavy oil producers. We under our long-term supply contracts to resellers and commercial also increased our sales and marketing efforts in northern alberta customers. this served to optimize the value of our supply and British Columbia to better serve our commercial customer agreements. this was complementary to our Yukon heating oil base. Finally, we acquired the bulk fuel and lubricants business of supply business, Great northern oil. neufeld petroleum and propane (High level) which extended our High level, alberta branch’s product line. In 2007, parkland decided to significantly grow in the commercial area with the acquisition of five complementary businesses as of December 31, 2008, parkland operated 20 distribution serving commercial and industrial customers in northern alberta centers across northern alberta and northeastern British and British Columbia. Columbia. the customer base for these products is varied with the largest group being conventional oil production followed by the catalyst was the $124 million acquisition of neufeld petroleum agricultural, oil and gas exploration, residential, forestry and and propane of Grande prairie, alberta in January, 2007. this heavy oil production. acquisition included marketing branded (petro-Canada) and unbranded bulk fuel and propane, along with complementary ParkLand’s vaLUes in action I am responsible for the payables at Neufeld and strive to develop a rapport, not only with our vendors, but also with our various locations. This means doing what I say I am going to do and following up as well. Since I’m a representative of Parkland, how I conduct my business reflects on the company I work for. Our vendors see that their concerns are handled expeditiously, building credibility and goodwill. When things are not running as smoothly (as sometimes happens), they know from past experience that we will handle their questions with integrity and work as a team to resolve their concerns. Bottom line – success for all. Charlotte nunes-neufeld accounts payable Parkland Income Fund 2008 annual report [11] Bowden refinery Site tankage parkland supplies commercial customers through a chain of 35 additional long-haul trucking capacity to our fleet and extended cardlocks. parkland also sells to independent resellers who in our capability beyond bulk fuel, propane and fertilizer to include turn supply retail operators and commercial customers. these bulk dry products as well. the counter-seasonal demands of the arrangements allow us to fully utilize our supply capacity. fuel propane, fertilizer and bulk dry products businesses allow us to improve our overall fleet efficiency. also, the Wiebe acquisition our commercial business division provides important diversity delivered valuable infrastructure such as maintenance shops and in our product lines and customer base, while decreasing the terminals to reduce our overall distribution cost. seasonality of parkland’s cash flow. the commercial operations are seasonally strong during the fall and winter months, while the fuel With the acquisition of noco energy in ontario, we acquired a business is strong during the spring and summer driving season. profitable wholesale fuels distribution business that extends our our Supply and distribution Business a key success factor for parkland is our ability to have secure During 2007 and 2008, parkland was part of a consortium that sources of fuel supply at competitive prices. parkland continues investigated the development of a condensate-based chemical to enjoy strong relationships with three major refiners in western plant to produce motor fuels and chemicals in the edmonton, Canada and four refiners in central Canada. We maintain lifting alberta area. this project was cancelled in the fourth quarter of refinery supply agreements to ensure lowest product cost. rights at most western Canadian refineries and primary terminals, 2008 due to high capital costs. which provide maximum flexibility to best serve our customers. We have long-term supply contracts in place that provide Parkland refining ltd. From late 2006 through 2008, the Bowden site was used as a contract favorable product cost. Fuel is delivered to our service stations petrochemical processing site. the site is now used as a fuel terminal, by a combination of our own fleet of tractor / trailers and third while we investigate other opportunities for its development. party commercial carriers. Maintaining our own fleet provides improved control of quality, flexibility and timeliness of service. the acquisition of Wiebe transport Inc. in 2008 provided [12] 2008 annual report Parkland Income Fund retail site at Swift Current, Saskatchewan Health, Safety and environment parkland is committed to responsible environmental controls and code of conduct parkland has established a Code of Conduct and Conflict to protecting the health and safety of its employees, customers of Interest Guidelines. every parkland employee, including and suppliers. Directors, officers and Senior Management must acknowledge understanding and compliance of the code. a copy of the code Handling transportation fuels, propane and other products involves is available on our website at www.parkland.ca and the SeDar environmental risk and parkland has developed comprehensive risk website at www.sedar.com. mitigation programs as well as emergency response procedures. employees involved in dangerous goods transportation receive In cases where employees feel they have serious or sensitive issues, extensive training. including possible breaches in the code, parkland has a Whistle Blower policy that provides a means for employees to report issues prior to acquisition, new facilities are evaluated by an independent confidentially and, if desired, anonymously. this policy also outlines environmental consultant, which typically involves soil testing what actions will be taken and the feedback that will be provided to and testing of any underground tanks and piping. parkland has a the employee to ensure the issue has been addressed. program to replace underground steel tanks with double-walled fiberglass tanks or aboveground tanks. all remaining steel tanks in our network are cathodically protected. each operating site has daily inventory balancing procedures and regular audit of test wells to detect underground leaks. community Involvement parkland strives to make a difference in the communities we serve. at the corporate level, we provide financial support to projects that focus on health, education and youth. We are strong supporters of parkland has a Health, Safety and environment (HSe) department the united Way and began a major five year commitment to red and HSe committees, which represent all areas of the business. Deer College in 2007. We also support communities we do business the Committees’ mandates are to ensure consistent health and with through financial contributions and through encouraging safety processes and documentation throughout the organization employees to actively participate in their communities. and to make recommendations regarding procedures and training. an internal Health, Safety and environment audit was successfully completed on our businesses in 2008 as part of a program to audit these businesses every year. Parkland Income Fund 2008 annual report [13] ParkLand’s vaLUes in action I’m a new hire and straight out of university. When I first started, I knew nothing about the company or how to do my job – I was worried about getting through one day working here! But everyone I worked with – in Treasury, Credit, Accounts Payable and Human Resources – was so helpful and patient with me. People led me in the right direction or sat down and helped me themselves. My position requires me to communicate with other departments, so teamwork is key. Before I even knew about the company values, people were making an effort to make me feel part of the team. robyn Davis accounting Clerk at a grassroots level, our Fas Gas plus Community Care Sponsorship program is dedicated to improving the quality of life in the Privacy Statement parkland has in place generally accepted standards of technological communities we serve by supporting organizations that assist security for the purpose of protecting all information provided by families and individuals in need. In 2008, our generous customers customers, suppliers and employees from misuse, loss or corruption. and employees donated over $20,000 and thousands of donation only authorized personnel have access to personally identifiable items through coin boxes and collection bins at our Fas Gas plus information submitted to parkland. Such employees are required retail stores. to maintain the confidentiality of this sensitive data. the policy also applies to any and all agents, affiliates and related entities of In addition to the collection program, Fas Gas plus stores are actively parkland that may receive such information from parkland. involved in community sponsorship through funding, providing facilities and assistance for fundraising and encouraging our staff to volunteer in local projects. We have provided support for food banks, homeless shelters, women’s shelters, youth development, family support and programs for those with special needs. In 2008, Fas Gas plus became a registered alberta’s promise partner. this new relationship assists us in enhancing our existing programs and connects us with non-profit organizations in need of assistance. For more information on the program, go to www.albertaspromise.org. [14] 2008 annual report Parkland Income Fund Board oF directors John F. Bechtold Mr. Bechtold has over 35 years of experience renessen llC, a biotechnology joint venture in the Chicago area. in the north american petroleum Industry including management He has a Bachelor of Mechanical engineering degree from McGill roles at Gulf oil Corporation, Gulf Canada and petro-Canada. During university and a Master of Business administration degree from his career he held senior leadership positions in the upstream, mid- the university of British Columbia. Mr. Chorlton became president stream and downstream segments of the business including 15 years and Ceo of parkland on September 6, 2005 and has served on the in crude oil and refined product supply and four years in the propane Board of Directors since May 5, 2006. business as president of ICG. From 2003 through 2007, Mr. Bechtold served as a member of the Board of the British Columbia oil and Jim dinning Mr. Dinning is Chair of Western Financial Group Inc., an Gas Commission. He is a director of petro andina resources Inc. alberta-based western Canadian financial services company. prior (member of Governance and Human resources and operations and to 2005, Mr. Dinning served as executive Vice president of transalta reserves Committees). past board positions include being a member Corporation. Before joining transalta, he held several key positions of Canada’s energy Supplies allocation Board, the Industry advisory during his 11 years as a member of the legislative assembly of alberta, Board to the Iea, the Canadian energy research Institute Board and including provincial treasurer (1992 to 1997). He is Chairman of the the Canadian propane Gas association Board. He holds BSC (Honours) boards of Western Financial Group Inc. (ex-officio member of all Chemical engineering and MSC petroleum reservoir engineering committees) and Bronco energy and export Development Canada. degrees and completed the Senior executive Management program He serves as a director for oncolytics Biotech Inc. (member of audit at Stanford university. Mr. Bechtold has served on parkland’s Board Committee); russel Metals Inc. (member of audit, Governance and since august 10, 2006 and is a member of the Compensation and environmental/Safety Committees) and liquor Stores Income Fund Corporate Governance Committee and also served as a member of (member of audit, Governance and Compensation Committees). the terminated aromatics project Committee. He is a director of the following private companies: elluminate Inc. and the armstrong Group. He is also a director of the following robert G. Brawn Mr. Brawn brings over 50 years of business not for profit organizations: atlantic Institute for Market Studies; experience to parkland’s Board of Directors, having held various Canada West Foundation and public policy Forum. Mr. Dinning has management roles with companies operating in the oil and gas a Bachelor of Commerce degree and a Masters degree in public industry. Mr. Brawn holds several directorships that span a administration, both from Queen’s university. He also graduated variety of industries, including banking, energy, construction from the Institute of Corporate Directors education program. Mr. and retail. He is currently a director of penn West energy trust; Dinning was appointed as a trustee on august 19, 2004 and was Grande Cache Coal Corporation (Chairman and member of the elected a director of parkland Industries ltd. on May 5, 2005 when Compensation Committee) and Black Diamond Income Fund parkland reorganized to a corporate trustee model. Mr. Dinning (member of the Compensation Committee). Mr. Brawn also serves serves on parkland’s audit Committee. on the following non-public companies: director of atB Financial (Chairman of the Investment Committee); president, Chairman alain Ferland Mr. Ferland has over 30 years of experience and sole shareholder of 738831 alberta ltd. and president and in the petroleum industry and has acted as a member of the Chairman of 620306 alberta ltd. He is Chairman of the Van Horne senior management team in oil, oil services, plastic, airport and Institute, a transportation studies policy group. effective January biotechnology companies. Mr. Ferland has extensive experience in 1, 2009, he was appointed Chairman of the alberta economic strategic planning, operations, logistics, sales, marketing, project Development authority by the premier of alberta. Mr. Brawn is a management and mergers. During his career, Mr. Ferland served professional engineer. Mr. Brawn has served on parkland’s Board on more than ten boards in various capacities. He is also president since november 13, 1996 and is a member of the Compensation of eFFa Management Inc. Mr. Ferland has been president of and Corporate Governance Committee. torr Canada Inc., aéroports de Montréal, Ipl Inc., Geneka Biotechnologies and prior to that was president of ultramar michael W. chorlton Mr. Chorlton’s career progressed from a major ltd. and Vice president of ultramar Diamond Shamrock. He is a petroleum company through agribusiness and high technology. over professional engineer. Mr. Ferland has served on parkland’s Board a 16 year career at Imperial oil and exxon Chemical, he occupied since June 22, 1999 and is Chair of parkland’s Compensation and leadership positions related to marketing, logistics, customer service, Corporate Governance Committee. He also served as a member of planning, finance, business development and plant operations. In the terminated aromatics project Committee. 1992, Mr. Chorlton became president and Ceo of Saskferco products Inc. of regina, Saskatchewan where he took the company from its kris matthews Ms. Matthews is Managing partner of Matthews $440 million green-field investment in an ammonia/urea complex Group llp, a public accounting firm providing consulting and to high levels of reliability and profitability. prior to joining parkland, accounting services to entrepreneurial companies. She has over 20 Mr. Chorlton served for six years as a senior Vice president of years of experience in public practice issuing financial statements. Parkland Income Fund 2008 annual report [15] (Left to Right) ron rogers David Spencer Michael Chorlton John Bechtold alain Ferland robert Brawn Kris Matthews Jim pantelidis Jim Dinning Ms. Matthews is a trustee and director for prime restaurants ron rogers Mr. rogers has over 35 years of experience in royalty Income Fund (Chair of audit Committee), which is perhaps various financial positions with ernst & Young, Warrington best known for its eastside Mario’s restaurants. In 2006, she Inc., the Crown Management Board of Saskatchewan, Moore received her designation of ICD.D from the Institute of Corporate Corporation and Shaw Communications Inc. on retirement in Directors. Ms. Matthews was awarded her Fellowship (FCMa) for 2004, he was Senior Vice president and Chief Financial officer service to her profession and the community in 2002. She is a of Shaw Communications. He received his Bachelor of Commerce past-Chair of CMa alberta and the CMa alberta Governance Degree from St. Mary’s university with concentrations on Committee, and represented CMa alberta as a national board philosophy, economics and accounting and subsequently earned member. Ms. Matthews joined parkland’s Board on May 8, 2003 his Chartered accountancy with ernst & Young. Mr. rogers is and is a member of the audit Committee. currently a member of the board of Corus entertainment (Chair of audit Committee and member of executive Committee); Jim Pantelidis Mr. pantelidis is currently Chairman of the Board of transforce Income Fund (Chair of audit Committee) and the parkland and has served as a director of parkland since 1999. Mr. Brick Furniture Company (member of audit Committee and Chair pantelidis is Chairman and Director of the Consumers Waterheater of Distribution Committee). His community involvement has Income Fund since 2002 (member of the audit, Compensation and included such organizations as the Mississauga General Hospital Investment Committees). He also serves on the Board of rona Inc. Board; the Calgary Division of the united Way executive Board; (member of Investment and Human resources and Compensation the Festival of trees executive Committee for the Children’s Committees); Industrial alliance Insurance and Financial Services Inc. Hospital; the Juvenile Diabetes research Foundation and the (Chairman of Investment Committee and member of Governance and Calgary Stampede Compensation and pension Committee. Mr. Compensation Committee) and equinox Minerals limited (member of rogers has served on parkland’s Board since September 15, 2006 audit and Human resources and Compensation Committees). From and is Chairman of the audit Committee. 2002 to 2006, Mr. pantelidis was on the board of FisherCast Global Corporation and served as Chairman and Chief executive officer david a. Spencer Mr. Spencer is a partner with Bennett Jones from 2004 to 2006. prior to this, Mr. pantelidis served as Chairman llp in Calgary. He specializes in corporate finance, mergers and and Chief executive officer for the Bata International organization. acquisitions and corporate governance. Mr. Spencer was appointed He also spent 30 years in the petroleum industry and was at one time, as a trustee as part of the June 2002 re-organization into a trust, president of both the upstream and downstream divisions of petro- and was elected as a director of parkland Industries ltd. in 2005 Canada. Mr. pantelidis has a Bachelor of Science degree and a Master when parkland reorganized to a corporate trustee model. He of Business administration degree, both from McGill university. Mr. received a law degree from the university of Western ontario. Mr. pantelidis is Chairman of parkland’s Board and a member of the Spencer is a member of parkland’s Compensation and Corporate audit Committee. He also served as Chair of the aromatics project Governance Committee. Committee which terminated prior to December 31, 2008. [16] 2008 annual report Parkland Income Fund corPorate inFormation Head office Suite 236, riverside office plaza 4919 - 59th Street red Deer, alberta t4n 6C9 tel: (403) 357-6400 Fax: (403) 352-0042 email: corpinfo@parkland.ca Website: www.parkland.ca annual General meeting tuesday, april 28, 2009 2:00 p.m. at the red Deer lodge Hotel & Convention Centre 4311 - 49th avenue red Deer, alberta Banker HSBC Bank Canada 108, 4909 - 49th Street red Deer, alberta t4n 1V1 auditors pricewaterhouseCoopers llp 3100, 111 - 5th avenue SW Calgary, alberta t2p 5l3 legal counsel Bennett Jones llp 4500, Bankers Hall east 855 - 2nd avenue SW Calgary, alberta t2p 4K7 Stock exchange listing toronto Stock exchange trading Symbol: pKI.un registrar and Transfer agent Valiant trust Company 310, 606 - 4th Street SW Calgary, alberta t2p 1t1 directors John F. Bechtold robert G. Brawn Michael W. Chorlton Jim Dinning alain Ferland Kris Matthews Jim pantelidis ron rogers David a. Spencer officers Michael W. Chorlton president and Ceo John G. Schroeder Vice president and CFo Corporate Secretary Chief privacy officer Chris r. podolsky Corporate Controller Shaun M. peesker treasurer Wholly owned Subsidiaries 986408 alberta ltd. 986413 alberta ltd. neufeld petroleum and propane ltd. parkland Holdings limited partnership parkland Industries limited partnership parkland Industries ltd. parkland Investment trust parkland refining ltd. 130297 Hill Knowlton cover:125195-cover 3/16/09 3:21 PM Page 1 (cid:71)(cid:56)(cid:73)(cid:66)(cid:67)(cid:56)(cid:69)(cid:59) (cid:64)(cid:69)(cid:58)(cid:70)(cid:68)(cid:60) (cid:61)(cid:76)(cid:69)(cid:59) (cid:41)(cid:39)(cid:39)(cid:47) (cid:56)(cid:69)(cid:69)(cid:76)(cid:56)(cid:67) (cid:73)(cid:60)(cid:71)(cid:70)(cid:73)(cid:75) (cid:71)(cid:56)(cid:73)(cid:66)(cid:67)(cid:56)(cid:69)(cid:59) (cid:64)(cid:69)(cid:58)(cid:70)(cid:68)(cid:60) (cid:61)(cid:76)(cid:69)(cid:59) (cid:74)(cid:108)(cid:96)(cid:107)(cid:92) (cid:41)(cid:42)(cid:45)(cid:35) (cid:73)(cid:96)(cid:109)(cid:92)(cid:105)(cid:106)(cid:96)(cid:91)(cid:92) (cid:70)(cid:93)(cid:93)(cid:96)(cid:90)(cid:92) (cid:71)(cid:99)(cid:88)(cid:113)(cid:88) (cid:43)(cid:48) (cid:40)(cid:48) (cid:36) (cid:44)(cid:48)(cid:107)(cid:95) (cid:74)(cid:107)(cid:105)(cid:92)(cid:92)(cid:107) (cid:73)(cid:92)(cid:91) (cid:59)(cid:92)(cid:92)(cid:105)(cid:35) (cid:56)(cid:99)(cid:89)(cid:92)(cid:105) (cid:107)(cid:88) (cid:75)(cid:43)(cid:69) (cid:45)(cid:58)(cid:48) (cid:110)(cid:110)(cid:110)(cid:37)(cid:103)(cid:88)(cid:105)(cid:98)(cid:99)(cid:88)(cid:101)(cid:91)(cid:37)(cid:90)(cid:88) parkland income fund 2008 Summary report the market leader in customer loyalty, employee engagement and investor confidence. corporate profile 2008 was a challenging year with unprecedented oil price volatility combined with stress in the capital and debt markets. despite these headwinds, parkland delivered strong financial performance and operating results, while maintaining our monthly distributions and pursuing our growth strategy with two acquisitions. We have also stayed true to our conservative financial management and core values-based leadership approach. today, parkland provides customers with products ranging from wholesale and retail gasoline and diesel plus a full suite of convenience store items to propane lubricants, oilfield fluids and farm chemicals. We continue our position as one of canada’s largest independent marketers of transportation and related fuels. parkland units trade on the toronto Stock exchange under the symbol pki.un. 1 five year Summary 2 management’s discussion and analysis 31 management’s r esponsibility for financial r eporting 32 auditors’ report 33 consolidated financial Statements 36 notes to c onsolidated financial Statements 58 Supplementary information 60 corporate information FORWARD-LOOKING INFORMATION DISCLAIMER certain information contained herein regarding parkland income fund (“parkland”) including statements that contain words such as “could”, “should”, “can”, “anticipate”, “estimate”, “propose”, “plan”, “expect”, “believe”, “will”, “may” and similar expressions and statements that are not related to historical facts constitute forward-looking information or statements under applicable securities laws. in particular, this annual report contains forward looking information pertaining to: an increase to the credit facility; information provided under the heading “Going forward”; and management’s assessment of future plans and operations. the forward-looking information and statements contained in this annual report are based upon certain assumptions and factors such as historical trends, current conditions and expected future developments, which parkland believes are reasonably accurate at the time of preparing this annual report. However, the forward-looking information and statements contained herein involve known and unknown factors and risks that could cause actual results to vary materially from those anticipated, including, without limitation, factors and risks associated with retail pricing and margins, availability and pricing of petroleum product supply, volatility of crude oil prices, marketing competition, environmental damage, credit granting, interest rate fluctuation and availability of capital and operating funds. readers are cautioned that the foregoing list of factors is not exhaustive and that additional information on these and other factors that could affect parkland’s operations or financial results are included in parkland’s reports on file with canadian securities regulatory authorities. in particular see parkland’s md&a and the risk factors and industry conditions section of parkland’s annual information form. parkland’s reports may be accessed through the Sedar website (www.sedar.com) or parkland’s website (www.parkland.ca). consequently, all of the forward-looking information and statements in this annual report are expressly qualified by this cautionary statement. there is no representation by parkland and there can be no assurance that actual results achieved will be the same in whole or in part as those set out in the forward-looking information and statements. readers are therefore cautioned not to place undue reliance on such forward-looking information and statements. the forward-looking statements contained in this document are made as of the date of issue. parkland does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. PARKLAND INCOME FuND 2008 Summary report [1] five Year SummarY Years ended December 31, ($000’s except volume and per Unit amounts) 2008 2007 2006 2005 2004 Total assets 405,488 379,806 181,423 140,998 120,873 Total long-term liabilities Sales volume (millions of litres) 88,558 2,353 31,709 1,963 5,829 1,501 13,907 1,177 17,612 1,101 Net sales and operating revenue 2,348,126 1,697,663 1,199,866 875,539 686,658 Cost of sales and operating expenses 2,126,745 1,465,155 1,061,824 779,092 Gross profit Direct and operating Marketing, general and administrative 221,381 232,508 138,042 96,447 91,960 48,212 77,668 39,785 47,342 20,044 40,338 14,885 600,310 86,348 37,227 15,136 EBITDA Amortization Interest on long-term debt Loss on disposal of property, plant and equipment Refinery remediation Accretion Loss on writedown of refinery Earnings (loss) before income taxes Income tax expense (recovery) Net earnings Per Unit — basic — diluted Merchandise sales Total distributions Funds flow from operations Capital expenditures Maintenance capital Growth capital 81,209 115,055 70,656 41,224 33,985 30,359 21,627 4,831 344 394 113 — 45,168 827 1,676 275 2,677 61 — 88,739 8,002 8,453 1,044 608 — — — 60,551 975 8,077 873 727 — — — 31,547 2,055 44,341 80,737 59,576 29,492 $ $ 0.88 0.88 $ $ 1.66 1.64 $ $ 1.50 1.48 $ $ 0.75 0.75 $ $ 61,780 63,416 64,538 90,518 79,081 114,013 31,132 9,211 21,921 29,475 13,465 16,010 59,624 56,171 69,191 11,148 6,296 4,852 44,970 23,872 41,960 8,588 4,525 4,063 7,828 738 1,414 — — 25,310 (1,305) (8,721) 7,416 0.19 0.19 38,051 21,075 30,048 10,138 4,352 5,786 [2] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS management’S DiScuSSion anD analYSiS For the three- and twelve-months ended December 31, 2008 The information in this document is current as of February 27, 2009 INTRODuCTION this md&a provides a comparison of parkland income fund’s performance for its three- and twelve- month periods ended december 31, 2008 with the three- and twelve-month periods ended december 31, 2007 and it reviews parkland’s financial position as at december 31, 2008. it also includes discussion of parkland’s affairs up to february 27, 2009. this discussion should be read in conjunction with the audited consolidated financial statements and accompanying notes. all amounts disclosed are in canadian dollars. prospective data, comments and analysis are also provided wherever appropriate to assist existing and new investors to see the business from a corporate management point of view. Such disclosure is subject to reasonable constraints of maintaining the confidentiality of certain information that, if published, would potentially have an adverse impact on the competitive position of parkland. additional information relating to parkland can be found on its website at www.parkland.ca. the fund’s continuous disclosure materials, including its annual and quarterly md&a, annual and quarterly financial statements, its 2008 annual report, annual information form, management proxy circular, material change reports and the various press releases issued by the fund are also available on its website or directly through the Sedar system at www.sedar.com. FORWARD-LOOKING STATEMENTS certain information included herein is forward-looking. forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving parkland. many of these statements can be identified by looking for words such as “believe”, “expects”, “expected”, “will”, “intends”, “projects”, “projected”, “anticipates”, “estimates”, “continues”, or similar words and include but are not limited to, statements regarding the accretive effects of acquisitions and the anticipated benefits of acquisitions. parkland believes the expectations reflected in such forward- looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties some of which are described in parkland’s annual report, annual information form and other continuous disclosure documents. Such forward-looking statements necessarily involve known and unknown risks and uncertainties and other factors, which may cause parkland’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general economic, market and business conditions; industry capacity; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities including increases in taxes; changes in environmental and other regulations; and other factors, many of which are beyond the control of parkland. any forward-looking statements are made as of the date hereof and parkland does not undertake any obligation, except as required under applicable law, to publicly update or revise such statements to reflect new information, subsequent or otherwise. parkland wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. readers should also refer to the section risks and uncertainties at the end of this md&a for additional information on risk factors and other events that are not within parkland’s control. parkland’s future financial and operating results may fluctuate as a result of these and other risk factors. PARKLAND INCOME FuND 2008 Summary report [3] management’S DiScuSSion anD analYSiS management’S DiScuSSion anD analYSiS OuR BuSINESS Our Vision parkland’s vision is to be the market leader in customer loyalty, employee engagement and investor confidence. Our Mission parkland’s mission is to be the most trusted source of convenience for fuel and related products focused on non-urban markets. Our Values Integrity: We will always do the right thing People: respect the needs of customers, employees and others Teamwork: achieve greater results by working together Success: Set and achieve challenging goals parkland is a red deer, alberta-based marketer of transportation and commercial fuels and related products and services, and an operator of convenience stores primarily in western canada. it transports fuel to its service station and commercial network through its own distribution division and it owns an industrial site in Bowden, alberta, where it formerly operated a refinery. parkland’s value propositions target four main groups: customers, investors, employees and Business partners. Customers parkland strives to offer consistent, reliable, friendly service to its customers at competitive prices. Investors parkland offers investors reliable and sustainable distributions and a superior return on capital. it will achieve this by continuing to develop its core competencies of operational excellence and efficient, streamlined supply chain management. Employees parkland is a values-based culture that is employee friendly. it is investing significantly in recruitment of top talent and professional development and its growth strategy creates opportunity and challenge. employees are unitholders and share in the financial success of the business. Business Partners parkland strives to be a company that is easy to do business with. it is values driven and is financially sound and growing. [4] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS RETAIL parkland operates service stations under three primary business models and various brands which focus on differing customer segments in British columbia, alberta, Saskatchewan, manitoba, ontario, the northwest territories and the yukon. the sites are a mix of company owned and operated, commission operated and dealer sites. our portfolio of brands, fas Gas and race trac, allow us to target different customer segments generally in non-urban areas. parkland has had great success across the west. it is a retail Branded distributor for imperial oil limited with locations in Saskatchewan, alberta, British columbia and ontario operating under the esso brand, and is also a retail Branded distributor for the Sunoco brand in ontario. the retail Business unit serves the motoring public through 630 retail stations in its marketing network, with 14 in the yukon territory, 3 in the northwest territories, 92 in British columbia, 286 in alberta, 131 in Saskatchewan, 22 in manitoba and 82 in ontario. the total number of stations in the network has grown substantially during 2008 primarily as a result of the acquisition of the noco energy fuel marketing business in ontario and the acquisition of additional esso retail branded distributorship sites. this business is performing well in a volatile market environment which featured high and rising fuel prices in the first half of 2008 and then a rapid decline in prices after July. retail margins have remained strong as compared to recent history and our margins on sales to dealers, which are less volatile than retail margins, remain healthy. the three primary business models under which stations are run include: parkland operated or corporate stations, which are managed and staffed by parkland; commission operated stations, which are managed by an independent operator who provides staff in exchange for a commission on fuel volumes sold, is primarily responsible for any ancillary businesses at the site and pays a rent to parkland based on a percentage of other sales revenue generated; and independent dealer sites, which are site owned or controlled by a third party who contracts with parkland for fuel supply for the site. the following table sets out the number of service stations by brand in the parkland network as of december 31, 2008. Parkland operated and commission operated locations Independent dealer operated Total Fas Gas Plus Fas Gas Race Trac Esso Sunoco Total 95 31 126 28 32 60 3 159 162 12 253 265 — 17 17 138 492 630 fuel products sold through the network of service stations include gasoline and diesel fuel as well as propane at selected sites. parkland’s strategy is to increase overall sales volumes and average volumes per site within its current marketing area. the actual number of stations may increase or decrease as new sites are added and under performing sites are closed or sold. the retail fuel business is highly competitive, with margins ultimately dependent on the spread between crude oil, wholesale fuel costs and retail fuel prices. due to its focus on non-urban markets, parkland has limited exposure to the more competitive, larger urban markets where the retail fuel sales are dominated by major oil companies and by more PARKLAND INCOME FuND 2008 Summary report [5] management’S DiScuSSion anD analYSiS recent entrants such as grocery chains and large retailers. this non-urban focus means parkland operates in markets where average sales volumes are lower but earnings are enhanced by typically more stable pricing and margins, lower overhead costs and less expensive real estate. parkland will continue to target growth by leveraging its unique brands within its existing network and through the acquisition of new sites. Fas Gas Plus in 2008, parkland’s strategy has been to continue to maximize penetration of its fas Gas plus brand throughout its traditional non-urban markets by investing in the fas Gas plus station upgrade and conversion program. during 2008, parkland expanded its new store design, introduced in lethbridge, alberta in 2007, to another nine locations and has plans to continue to retrofit existing locations as part of its growth capital plan and to incorporate into all new locations. the fas Gas plus brand brings consumers an urban offering to non-urban markets through continuing to invest and upgrade its locations. Short Stop parkland operates its convenience store business under the brand Short Stop food Stores. as at december 31, 2008, there were 42 Short Stop and 29 Short Stop express convenience stores at sites that have fas Gas plus fuel stations with an additional 23 convenience stores under the brand fas Gas plus. these convenience stores offer a variety of food, beverage, snack and convenience products as well as lottery terminals and automated teller machines. many of the stores are open 24 hours per day and, in many of these locations, offer customers the only 24-hour service in the area. Store layouts meet urban standards for quality product offering, lighting, cleanliness, a proprietary coffee program and modern facilities. Esso the retail Branded distributorship agreement provides parkland with the opportunity to offer the esso brand to independent operators or within its company operated network in alberta, Saskatchewan, British columbia and the northwest territories. during the fourth quarter of 2008 the fund entered into agreements to increase the number of accounts in its esso retail branded distributorship business. parkland added 40 dealers in ontario and alberta with an anticipated annual volume of 200 million litres of gasoline and diesel. these sites are now online and contributing for parkland. Race Trac in the independent dealer business, parkland has focused on increasing its brand value to the operators. the race trac brand is positioned for locations where the fas Gas plus or esso brands are not suited and is an important part of parkland’s brand portfolio. Sunoco in 2008, parkland became the retail Branded distributor for the Sunoco brand in ontario as part of its acquisition of noco canada energy assets and has plans to continue to expand the Sunoco brand to independent dealers throughout ontario. [6] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS COMMERCIAL parkland took a significant step forward to improve diversification and reduce seasonality by completing five commercial acquisitions in 2007. these acquisitions allow parkland to offer branded and unbranded bulk fuel, propane, agricultural inputs, lubricants and related products and services to commercial and industrial customers in alberta and British columbia. the commercial customer base is varied and diverse with the fall and winter months generally providing stronger sales and margins. emphasis in this market is on strong customer service and reliability of distribution. the acquired companies are well established in the markets in which they serve and parkland is focused on the integration of these businesses to provide its customers with a more comprehensive service and product offering. parkland has 22 commercial branch locations situated in alberta and British columbia. the newest branches, Whitecourt and conklin, alberta, were opened in 2008. parkland has a diverse commercial customer base operating across a broad cross-section of industries with no single client accounting for more than 5% of consolidated revenue. Because of its customer diversity, as well as the wide geographic scope of parkland’s service offering and the range of segments in which it operates, a downturn in the activities of individual customers or customers in a particular industry is not expected to have a material adverse impact on the operations of parkland. the oilfield exploration outlook is uncertain as drilling programs will get cut back with declining energy prices and capital market constraints. operational oilfield production remains more stable. parkland is a supplier to a number of service providers to the forestry industry. these customers operate across northern alberta and British columbia. the forestry industry is a relatively small portion of the overall portfolio of the commercial segment. parkland also supplies fuels and lubricants to a select group of mines in northern alberta and British columbia. parkland has participated in this market segment for a number of years and regularly monitors and reviews the financial stability of its customers. Fuel and Propane Marketing parkland markets propane and wholesale and commercial fuels and lubricants to residential, commercial and industrial customers in northern alberta, British columbia and the northwest territories. Fertilizer and Other Agricultural Inputs parkland sells fertilizer and other agricultural inputs in northern alberta. Cardlock parkland markets fuel through 27 cardlock facilities. these cardlock facilities are operated under various brands, including united petroleum, Husky, race trac, petro-canada and neufeld. Great Northern Oil parkland markets home heating fuel under the brand name Great northern oil from a bulk facility in Whitehorse, yukon. this facility also supports fas Gas and race trac service stations located in northern British columbia, the yukon and the northwest territories. PARKLAND INCOME FuND 2008 Summary report [7] management’S DiScuSSion anD analYSiS HuMAN RESOuRCES parkland has approximately 1,200 employees, including 400 retail convenience store personnel throughout western canada and 200 employees in its red deer, alberta head office. parkland’s employees are also owners of the fund, investing in parkland regularly through its unit purchase plan. a profit sharing plan further contributes to the entrepreneurial spirit of parkland’s employees, fostering a sense of ownership and pride throughout the company. parkland commenced an aggressive recruitment and professional development program in 2008 to attract and retain top talent in order to carry out its strategic objective of continued growth by acquisition. key positions have been filled despite the competitive labor market in western canada and parkland will continue to focus on talent development and performance management in 2009. ACCRETIVE ACQuISITIONS corporate acquisitions are an effective means of consolidating assets, improving efficiencies in existing core areas or adding new core areas. parkland intends to continue to be proactive, focused and disciplined in its approach to such acquisitions. Generally, parkland seeks to make acquisitions that: • are accretive to cash from operating activities; • increase fuel sales volumes to increase market presence; • build non-fuel profits to enhance the long-term stability of the enterprise; • optimize supply contracts; and • diversify the customer base. NON-GAAP MEASuRES parkland’s financial results are prepared under canadian Generally accepted accounting principles (Gaap). However, in this document there are references to non-Gaap measures such as eBitda and distributable cash flow. eBitda refers to earnings Before interest on long-term debt, income tax expense, amortization of capital assets, refinery remediation accrual, accretion expense and loss on disposal of capital assets. it can be calculated from the Gaap amounts included in parkland’s financial statements. parkland believes that eBitda is a relevant measure to users of its financial information as it provides an indication of pre-tax earnings available to distribute to debt and equity holders. parkland’s definition of eBitda may not be consistent with other providers of financial information and therefore may not be comparable. Standardized distributable cash flow is a measure defined by the cica. parkland’s adjusted standardized distributable cash flow is referred to as distributable cash flow and contains certain adjustments to standardized distributable cash flow required to better reflect the cash flow available to unitholders. [8] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS RECONCILIATION OF DISTRIBuTABLE CASH FLOW (in thousands of Canadian dollars except per Unit amounts) Three months ended December 31, 2008 Three months ended December 31, 2007 Cash flows from operating activities Less: Total capital expenditures Standardized distributable cash flow (1) Add back (deduct): Growth capital expenditures Proceeds on disposal of capital items Change in non-cash working capital Distributable cash flow Distributions - regular Distributions - year-end special Distribution payout ratio - regular Distribution payout ratio - regular plus year-end special Cash flows from operating activities Less: Total capital expenditures Standardized distributable cash flow (1) Add back (deduct): Growth capital expenditures Proceeds on disposal of capital items Change in non-cash working capital Distributable cash flow Distributions Distribution payout ratio (2) 38,180 14,615 23,565 11,131 78 (17,128) 17,646 15,882 Nil 90% 90% 801 16,371 (15,570) 11,844 125 19,837 16,236 14,489 37,508 89% 320% Year ended December 31, 2008 Year ended December 31, 2007 71,617 31,935 39,682 21,921 803 7,464 69,870 63,416 91% 82,836 30,558 52,278 16,010 1,083 31,177 100,548 90,518 90% (1) Standardized distributable cash flow is a measure defined by the Canadian Institute of Chartered Accountants (CICA). See discussion below. (2) 2007 payout ratio includes year-end special distribution of $37.5 million of which $20.5 million was distributed to Unitholders by way of Trust units. PARKLAND INCOME FuND 2008 Summary report [9] management’S DiScuSSion anD analYSiS parkland’s distribution policy is based on distributable cash flow on an annualized basis, accordingly, the seasonality of parkland’s individual quarterly results must be assessed in the context of annualized distributable cash flow. adjustments recorded by parkland as part of its calculation of distributable cash flow include, but are not limited to, the impact of the seasonality of parkland’s businesses by adjusting for non-cash working capital items thereby eliminating the impact of the timing between the recognition and collection/payment of parkland’s revenues and expenses, which can from quarter to quarter differ significantly. parkland’s calculation also distinguishes between capital expenditures that are maintenance related and those that are growth related, in addition to allowing for the proceeds received on the sale of capital items. productive capacity maintenance is the amount of capital funds required in a period for an enterprise to maintain its future cash flow from operating activities at a constant level. parkland defines its productive capacity as volume of fuel and propane sold, volume of convenience store sales and volume of lubricants sales, agricultural inputs and delivery capacity. the adjustment for productive capacity maintenance in the calculation of standardized distributable cash is capital expenditures during the period excluding the cost of any asset acquisitions or proceeds of any asset dispositions. parkland believes that the current capital programs, based on the current view of its assets and opportunities and the outlook for fuel supply and demand and industry conditions, should be sufficient to maintain productive capacity in the medium term. due to the risks inherent in the industry, particularly the reliance on external parties for supply of fuel and propane and general economic conditions and weather that affects customer demand, there can be no assurance that capital programs, whether limited to the excess of cash flow over distributions or not, will be sufficient to maintain or increase production levels or cash flow from operating activities. as parkland strives to maintain sufficient credit facilities and appropriate levels of debt, the seasonality of the business is not currently expected to influence distribution policies. parkland’s calculation of standardized distributable cash has no adjustment for long-term unfunded contractual obligations. parkland believes the only significant long-term unfunded contractual obligation at this time is for asset retirement obligations and refinery remediation, both of which are expected to be deferred for an extended but undefinable period of time. although it is typical for parkland’s cash flow to have seasonal fluctuations, it is management’s current intention to pay consistent regular monthly distributions throughout the year based on estimated annual cash flows. the directors review distributions quarterly giving consideration to current performance, historical and future trends in the business and the expected sustainability of those trends, as well as capital betterment requirements to sustain performance. distributable cash exceeded cash distributions in the fourth quarter and for the year ended december 31, 2008. the distribution payout ratio for 2008 was 91 percent compared to 90 percent in 2007. accordingly, parkland has maintained the monthly distribution rate of $0.105 per unit. parkland believes the current level of distributions is sustainable and there are no plans under current conditions to reduce or eliminate monthly distributions. [10] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS CASH FLOWS, NET EARNINGS AND EBITDA COMPARED TO DISTRIBuTIONS (in thousands of Canadian dollars except per Unit amounts) Three months ended December 31, 2008 Three months ended December 31, 2007 Cash flows from operating activities Net earnings EBITDA (1) Distributions (2) Excess (shortage) of cash flows from operating activities relative to distributions Excess (shortage) of cash flows from net earnings relative to distributions Excess (shortage) of cash flows from EBITDA relative to distributions Cash flows from operating activities Net earnings EBITDA (1) Distributions (2) Excess (shortage) of cash flows from operating activities relative to distributions Excess (shortage) of cash flows from net earnings relative to distributions Excess (shortage) of cash flows from EBITDA relative to distributions (1) Please refer to the Non-GAAP Measures section for a definition of EBITDA 38,180 10,053 25,072 15,882 22,298 (5,829) 9,190 801 10,222 17,877 51,997 (51,196) (41,775) (34,120) Year ended December 31, 2008 Year ended December 31, 2007 71,617 44,341 81,209 63,416 8,201 (19,075) 17,793 82,836 80,737 115,055 90,518 (7,682) (9,781) 24,537 (2) 2007 payout ratio includes year-end special distribution of $37.5 million of which $20.5 million was distributed to Unitholders by way of Trust units. net earnings includes significant non-cash charges including amortization and accretion expense. these non-cash charges do not impact parkland’s ability to meet its cash distribution payments. Both cash flows from operating activities and eBitda are adequate to fund cash distributions on an annual basis. PARKLAND INCOME FuND 2008 Summary report [11] management’S DiScuSSion anD analYSiS CONSOLIDATED HIGHLIGHTS Three months ended (in millions of Canadian dollars except volume and per Unit amounts) December 31, 2008 Three months ended December 31, 2007 % Change Fuel volume (millions of litres) Net sales and operating revenues Gross profit Gross margin Operating and direct costs Marketing, general and administrative Income before income taxes Income tax (recovery) expense Net earnings EBITDA (1) Earnings per Unit - basic Earnings per Unit - diluted Distributable cash flow (2) Distributions (3) Distribution payout ratio – regular Distribution payout ratio – including year-end special Fuel volume (millions of litres) Net sales and operating revenues Gross profit Gross margin Operating and direct costs Marketing, general and administrative Income before income taxes Income tax (recovery) expense Net earnings EBITDA (1) Earnings per Unit - basic Earnings per Unit - diluted Distributable cash flow (2) Distributions (3) Distribution payout ratio (1) Please refer to the EBITDA section for a definition of this non-GAAP measure (2) Please see Distributable Cash Flow reconciliation table (3) 2007 includes year-end special distribution of $37.5 million 664 524.5 65.4 12.5% 26.9 13.4 13.8 3.7 10.1 25.1 0.20 0.20 17.7 15.9 90% $ $ 516 456.1 61.8 13.6% 32.5 11.5 11.5 1.3 10.2 17.9 0.24 0.23 16.2 52.0 89% 320% $ $ 29 15 6 (17) 17 21 (2) 40 9 (70) Year ended December 31, 2008 Year ended December 31, 2007 % Change 2,353 2,348.1 221.4 9.4% 92.0 48.2 45.2 0.8 44.4 81.2 0.88 0.88 69.9 63.4 91% $ $ 1,963 1,697.7 232.5 13.7% 77.7 39.8 88.7 8.0 80.7 115.1 1.66 1.64 100.6 90.5 90% $ $ 20 38 (5) 18 21 (49) (45) (29) (31) (30) [12] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS THREE MONTHS ENDED DECEMBER 31, 2008 the financial highlights for the fourth quarter of 2008 are as follows: • record Q4 2008 fuel sales volume of 664 million litres, up 29% from 516 million litres the prior year. • record Q4 2008 sales of $525 million, up 15% from $456 million the prior year. • Q4 eBitda of $25.1 million, up 40% from $17.9 million in 2007 ($19.1 million in 2006) and a record for any Q4. • Q4 2008 net earnings of $10.1 million, down 2% from $10.2 million in 2007 • distribution payout ratio 90% for the quarter and 91% year to date. • Q4 2008 eBitda includes $5.0 million non-recurring contract cancellation fee. • Strong contribution from retail fuel sales. parkland entered into agreements in the fourth quarter to increase the number of accounts in its esso retail branded distributorship business. parkland added 40 dealers in ontario and alberta with an anticipated annual volume of 200 million litres of gasoline and diesel. during the fourth quarter parkland received a one-time payment of $5.0 million as a fee to cancel the chemical processing arrangement which utilized part of the Bowden refinery. this is a non-recurring item. parkland continues to use the Bowden site as a fuel terminal for internal and third party use and further development is under study. parkland participated in a feasibility study in 2008 to assess the viability of building a condensate-based refinery in edmonton. in the fourth quarter a decision was reached by the partners in the study to terminate the project. in the fourth quarter parkland wrote off $1.0 million which was advanced in 2007 for its share of the study. Fuel Volumes Gasoline, diesel and propane volumes were strong with total sales of 664 million litres in the quarter ended december 31, 2008, an increase of 29 percent from 516 million litres for the same period in 2007. the increase resulted from the acquisitions completed over the past year. at the retail level, same-store fuel sales volumes increased approximately three percent over the prior year in our company operated and controlled sites but decreased approximately three percent in the independent dealer network. retail fuel volumes overall for the quarter were 339 million litres, up 24 percent or 65 million litres from the same quarter in 2007. most of this quarterly volume increase year over year is attributable to the expansion of the dealer program from the noco acquisition and iol retail branded distributorship. PARKLAND INCOME FuND 2008 Summary report [13] management’S DiScuSSion anD analYSiS Sales, Cost of Sales and Gross Profit the following table details net sales, cost of sales and gross profit for parkland’s three business segments: (in millions of Canadian dollars) Fuel Marketing Segment Net sales Cost of sales Gross profit (1) Gross margin Convenience Store Merchandise Segment Net sales Cost of sales Gross profit Gross margin Commercial Segment Net sales Cost of sales Gross profit Gross margin Gross Profit Sources Total gross profit Less: Convenience store gross profit Gross profit on commercial sales Other revenue included in gross profit (2) Fuel gross profit Cents per litre Three months ended December 31, 2008 Three months ended December 31, 2007 % Change 486.1 432.9 53.2 10.9% 15.0 11.2 3.8 25.3% 23.5 15.1 8.4 35.8% 65.4 3.8 8.4 11.3 41.9 0.063 17 19 7 (4) (5) 0 (11) (16) 0 414.1 364.5 49.6 12.0% 15.6 11.8 3.8 24.3% 26.4 18.0 8.4 31.9% 61.8 3.8 8.4 2.3 47.3 0.092 (1) The Fuel Marketing segment includes a $5 million contract cancellation fee related to the Bowden refinery. (2) Other revenue includes third party hauling generated from the Wiebe acquisition, which is included in the Fuel Marketing segment. [14] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS diesel demand remained very strong and refinery production problems causing shortages of supply continued as we entered the fourth quarter resulting in much higher margins in the fourth quarter than previous years. refiners’ margins for gasoline have declined from September levels but remain stronger than any mid-winter period in the last 10 years. net sales and operating revenue for the three month period ended december 31, 2008 was $524.5 million, up 15 percent from $456.1 million during the same period last year. fuel marketing revenue increased 17 percent and commercial sales decreased 11 percent compared to the same three month period in 2007. the increase in fuel marketing revenues is due to a 31 percent increase in fuel volumes sold offset by a six cent per litre average decrease in selling prices compared to the fourth quarter of 2007. the cost of fuel increased 19 percent during the quarter compared to the same quarter in 2007, contributing to the 11 percent decrease in fuel gross profit. in addition to the retail margins for gasoline and diesel, parkland participates in the refiners’ margins for a significant portion of its supply volumes. in the fourth quarter this participation yielded earnings approximately $3 million higher than the comparative period in 2007. the contribution from this margin category has been highly variable over the past two years as it produced record results in 2007, then declined to minimal amounts in the first half of 2008 and recovered substantially in the past two quarters. convenience store merchandise sales decreased four percent during the three month period compared to 2007. the decrease can be attributed to the conversion of corporate operated sites to commission or dealer operated sites. in the case of a conversion to a commission operated site, this has the impact of decreasing sales in the convenience Store merchandise segment but increasing variable rents which are included in the fuel marketing segment. total cost of sales for the quarter ended december 31, 2008 was $459.2 million, up 17 percent from $394.3 million a year earlier. the commercial segment experienced a 16 percent decrease in the cost of sales compared to the same period in 2007 resulting in gross margin increasing to 35.8 percent from 31.9 percent in the prior year. for the convenience Store segment, the decrease in cost of sales was slightly greater than the decrease in sales, resulting in a gross margin of 25.3 percent in 2008 compared to 24.3 percent in 2007. in previous quarters parkland has made reference to fifo inventory adjustment gains and losses. the fifo inventory adjustment can be better described as the impact of price risk on a fixed quantity of gasoline that was purchased in the late 1990’s as security towards a major fuel supply contract. parkland acquired 30 million litres of gasoline that is held by a major supplier in storage in edmonton. under the lifo inventory valuation method this fuel inventory was previously recorded by parkland at acquisition cost. With the early adoption of the cica Handbook Section 3031, inventories, at december 31, 2007, the 30 million litres of gasoline inventory is revalued quarterly at current fuel costs under the fifo basis. With the significant decrease of crude oil costs in the fourth quarter and the corresponding decrease in gasoline costs during the same period the revaluation of this inventory in the fourth quarter of 2008 resulted in a reduction in fuel margins of $14.9 million, offsetting gains in the first two quarters of 2008. for the year ended december 31, 2008 parkland recorded a cumulative loss of $12.1 million (gain of $4.2 million in 2007). Operating Expenses operating and direct costs were $26.9 million in the fourth quarter compared to $32.4 million for the same period in 2007. Some of this decrease is driven by a decrease in sales volume in the commercial segment during the fourth quarter compared to 2007. in the fourth quarter of 2007 parkland reclassified as operating and direct costs approximately $7 million of local truck delivery expenses which had been recorded as cost of sales in the first three quarters. this affects the quarter over quarter comparison between the periods. operating and direct costs in 2008 includes a $1.7 million bad debt allowance. PARKLAND INCOME FuND 2008 Summary report [15] management’S DiScuSSion anD analYSiS marketing, general and administrative expenses were $13.4 million in the fourth quarter compared to $11.5 million for the same period in 2007. included in this expense category is $0.2 million of operating costs related to the erp implementation and a $1.0 million write-off of the Beaver Hills feasibility study. Interest in Long-term Debt interest on long-term debt was $1.4 million in the fourth quarter compared to $0.5 million for the same period in 2007. the increase is due to the increase in bank indebtedness and long-term debt throughout the year. Income Tax Expense income tax expense was $3.8 million in the fourth quarter compared to $1.3 million for the same period in 2007. in the fourth quarter of 2008 parkland reversed a $3.0 million income tax recovery and recorded a net income tax expense for the year of $0.8 million. Earnings earnings before income taxes in the fourth quarter of 2008 were $13.8 million, up 21 percent from $11.5 million a year earlier. eBitda for the fourth quarter of 2008 was $25.1 million, up 40 percent from $17.9 million in 2007. the increase in eBitda from 2007 is explained by the $3.5 million increase in gross profit combined with a reduction of $3.6 million of cash expenses. eBitda for the quarter, after adjusting for the $15 million loss on fifo inventory adjustment and removing the $5 million non-recurring contract cancellation fee, would have been $35.1 million. Capital Assets and Amortization amortization expense in the fourth quarter of 2008 was $9.1 million, up from $2.8 million a year earlier. during the fourth quarter of 2008, the fund expended $14.6 million (2007 - $16.4 million) in net capital investments, of which $3.5 million (2007 - $4.6 million) was classified as maintenance capital and $11.1 million (2007 - $11.8 million) was classified as growth capital. for accounting purposes, amounts expended on both maintenance and growth capital are treated as purchases of capital assets. the classification of capital as growth or maintenance is subject to judgment, as many of the fund’s capital projects have components of both. it is the fund’s policy to classify all capital assets related to service station upgrades or the replacement and betterment of its trucking fleet as maintenance capital. the construction of a new building on an existing site or the additions of new trucks and trailers to increase the size of the fleet is considered growth capital. Long-term Debt and Cash Balances for the three month period ended december 31, 2008 interest on long-term debt was $1.4 million, up from $0.5 million in the same quarter in 2007. most of the fund’s long-term debt bears interest at variable rates linked to prime. during the fourth quarter, operating activities generated $38.2 million of cash of which $15.9 million was used to fund unitholder distributions, $4.5 million was used to repurchase fund units and $14.6 million was used for net growth and maintenance capital purchases during the quarter. additional net borrowings against the fund’s operating facility provided cash of $8.1 million. parkland’s cash position at december 31, 2008 increased by $10.9 million during the quarter compared to a decrease of $5.1 million in the same quarter of 2007. [16] 2008 Summary report Parkland Income Fund ManageMent’s Discussion anD analysis Year ended decemBer 31, 2008 Fuel Volumes Fuel volumes for the year increased 20 percent with total fuel volume of 2,353 million litres in 2008 compared to 1,963 million litres in 2007. Wholesale fuel volumes increased 39 percent with 1,144 million litres compared to 823 million litres last year. retail fuel volumes for the year increased 10 percent or 108 million litres with most of the net increase in retail fuel volumes being attributed to the IoL retail branded distributorship business. propane volumes increased 29 percent or 33 million litres compared to 2007, mostly due to the full impact of the acquisitions of Neufeld, Joy and united petroleum being reflected in the current year results. Sales, cost of Sales and Gross Profit the following table details net sales, cost of sales and gross profit for parkland’s three business segments: (in millions of Canadian dollars) Fuel Marketing Segment Net sales Cost of sales Gross profit (1) Gross margin Convenience Store Merchandise Segment Net sales Cost of sales Gross profit Gross margin Commercial Segment Net sales Cost of sales Gross profit Gross margin Gross Profit Sources Total gross profit Less: Convenience store gross profit Gross profit on commercial sales Other revenue included in gross profit (2) Fuel gross profit Cents per litre Year ended December 31, 2008 Year ended December 31, 2007 % Change 2,194.0 2,022.4 171.6 7.8% 61.8 45.6 16.2 26.3% 92.4 58.8 33.6 36.4% 221.4 16.2 33.6 20.0 151.6 0.064 41 48 (9) (4) (5) (1) 23 26 19 1,558.2 1,370.3 187.9 12.1% 64.5 48.2 16.4 25.4% 74.9 46.7 28.2 37.6% 232.5 16.4 28.2 9.4 178.5 0.091 (1) The Fuel Marketing segment includes a $5.0 million contract cancellation fee related to the Bowden refinery. (2) Other revenue includes third party hauling generated from the Wiebe acquisition, which is included in the Fuel Marketing segment. PARKLAND INCOME FuND 2008 Summary report [17] management’S DiScuSSion anD analYSiS net sales and operating revenue for the year ended december 31, 2008 was $2,348 million, up 38 percent from $1,697.7 million during the same period last year. the primary reason was a 41 percent increase in fuel marketing revenue and a 23 percent increase in revenue from commercial sales. fuel volumes sold for the twelve month period increased 20 percent compared to 2007. the average cent per litre selling price for fuel volumes sold in 2008 has also increased about 45 percent over the same period in 2007, further contributing to the increase in fuel marketing revenues. total cost of sales for the year ended december 31, 2008 was $2,127 million, up 45 percent from $1,465 million a year earlier. for the convenience store segment the slight decrease in cost of sales was roughly in line with the decrease in sales. for fuel marketing, the largest segment, sales increased by 41 percent while the cost of sales increased by 48 percent, mainly because our cost of gasoline rose more than our selling price for gasoline. total gross profit for the year was $221.4 million, down 5 percent from $232.5 million a year earlier. Operating Expenses operating and direct costs incurred during 2008 were $92.0 million, up 18 percent from $77.7 million a year earlier. marketing, general and administrative expenses were $48 million in 2008, up 21 percent from $39.8 million a year earlier. contributing to the increase in expenses were the acquisitions of noco and Wiebe during 2008 and the increased volume of business during 2008 compared to the prior year. included in this expense category is $1.6 million of operating costs related to the erp implementation and a $1.0 million write-off of the Beaver Hills feasibility study. Interest in Long-term Debt interest on long-term debt was $4.8 million in 2008 compared to $1.7 million in 2007. the increase is due to the increase in bank indebtedness and long-term debt throughout the year. Income Tax Expense income tax expense was $0.8 million in 2008 compared to $8.0 million in 2007. the 2007 income tax expense included a future tax provision of $7.7 million as a result of the taxation of trusts in 2011. Earnings earnings before income taxes for the year were $45.2 million, down 49 percent from $88.7 million a year earlier. the decrease in twelve month earnings is due to the decrease in refiners’ margins experienced during the first six months of 2008 compared to the prior year, combined with an increase in cash expenses of $22.7 million. eBitda for 2008 was $81.2 million, down $33.9 million or 29 percent from $115.1 million in 2007. the decrease in eBitda from 2007 can be summarized as an $11.1 million decrease in gross profit combined with an increase in cash expenses of $22.8 million. eBitda for the year, after adjusting for the $12.1 million loss on fifo inventory adjustment and removing the $6.3 million non-recurring contract cancellation fee, would have been $87.0 million. Capital Assets and Amortization amortization expense was $30.4 million, up 40 percent from $21.6 million a year earlier. a full year of amortization for capital assets and intangible assets acquired in 2007 plus amortization of capital assets acquired in 2008 accounted for the increase. the fund expended $31.9 million in net capital investments, of which $10 million was classified as maintenance capital and $21.9 million was classified as growth capital. [18] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS SuMMARY OF THE EIGHT MOST RECENTLY COMPLETED CONSOLIDATED QuARTERLY RESuLTS (millions of canadian dollars, except volume and per Unit amounts) For the three months ended 2008 Dec 31 Sep 30 Jun 30 Mar 31 2007 Dec 31 Sep 30 Jun 30 Mar 31 Fuel volume (millions of litres) 664 608 525 556 516 549 471 440 Net sales and operating revenue 524.5 734.1 606.6 482.9 456.1 482.9 424.6 334.0 Net earnings EBITDA Net earnings per Unit — Basic — Diluted 10.1 25.1 0.20 0.20 13.1 19.9 0.26 0.26 11.0 19.0 0.22 0.22 10.2 17.2 0.20 0.20 10.2 17.9 0.24 0.23 31.4 25.8 0.63 0.62 22.0 48.2 0.42 0.42 17.1 23.1 0.37 0.37 parkland continues to generate increased fuel volume each quarter compared to the corresponding quarters in the prior year. the addition of the commercial segment has reduced the volatility of quarterly earnings. in 2008 we did not benefit from the seasonal increase in refiners’ margins as compared to 2007. FINANCIAL CONDITION, CAPITAL RESOuRCES AND LIQuIDITY parkland has available an extendible facility, including bank indebtedness and letters of credit, up to a maximum amount of $169 million and bears interest, payable monthly, at the bank’s prime lending rate plus 0.4 to 0.9 percent per annum. the extendible facility is subject to renewal on august 1, 2009 at which time it can be extended at parkland or lender’s option for 364 days. if the extendible facility is not extended, all amounts outstanding are repayable in twelve consecutive quarterly instalments, commencing on the last day of the third month following the then maturity date, with the first eleven of such instalments being one-twenty fifth of the outstanding balance and remainder at the end of the period. Security for the extendible facility is assignment of insurance and an unlimited guarantee from the secured entities. at december 31, 2008 parkland had $70.2 million in long-term debt (excluding $3.2 million of the current portion). at december 31, 2008, $40.0 million of the revolving operating facility was utilized. parkland believes that cash flow from operations will be adequate to fund maintenance capital, interest and targeted distributions. Growth capital expenditures in 2009 will be funded by the revolving extendible credit facility. additional debt incurred will be serviced by anticipated increases in cash flow and it is expected that net debt to eBitda ratios of less than 2.0 times will be maintained. parkland manages its capital structure and makes adjustments according to market conditions to maintain flexibility while achieving objectives stated above. to manage the capital structure, parkland may adjust capital spending, adjust distributions paid to unitholders, issue new units, issue new debt or repay existing debt. parkland takes into account the maximum equity growth limits when managing and monitoring its capital structure. parkland’s allowed growth capital at december 31, 2008 was approximately $272 million (december 31, 2007 - $204 million). if the maximum equity growth allowed is exceeded, the fund may be subject to trust taxation prior to 2011. PARKLAND INCOME FuND 2008 Summary report [19] management’S DiScuSSion anD analYSiS at december 31, 2008, parkland was in compliance with all of the financial covenants under its syndicated credit facility. the ratios are tested on a trailing rolling four quarter basis. the financial covenants under the syndicated credit facility are as follows: 1. ratio of current assets to current liabilities shall not be less than 1.10 to 1.00 on a consolidated basis; 2. ratio of funded debt to eBitda shall not exceed 2.00 to 1.00; 3. ratio of eBitda less maintenance capital expenditures and taxes to sum of interest, principal and distributions shall not be less than 1.00 to 1.00 for the four quarters ended december 31, 2008 and 1.05 to 1.00 thereafter. liquidity risk is the risk parkland will encounter difficulties in meeting its financial liability obligations. parkland manages its liquidity risk through cash and debt management. in managing liquidity risk, parkland has access to various credit products at competitive rates. parkland believes it has sufficient funding through the use of these facilities to meet foreseeable borrowing requirements. DISTRIBuTIONS the following table sets forth the record date, date of payment, per trust unit amount of distributions paid and total cash distributed for 2008: Payment Date Per Trust Unit Total Cash Distributed (thousands) Record Date January 31, 2008 February 28, 2008 March 30, 2008 April 30, 2008 May 31, 2008 June 29, 2008 July 31, 2008 August 31, 2008 September 28, 2008 October 31, 2008 November 30, 2008 December 31, 2008 February 15, 2008 March 14, 2008 April 15, 2008 May 15, 2008 June 13, 2008 July 15, 2008 August 15, 2008 September 15, 2008 October 15, 2008 November 14, 2008 December 15, 2008 January 15, 2009 Total distributions declared to Unitholders Total distributions declared to Unitholders in 2008 Total distributions declared to Unitholders in 2007 Total distributions declared to Unitholders in 2006 Total distributions declared to Unitholders in 2005 Total distributions declared to Unitholders in 2004 Total distributions declared to Unitholders in 2003 Total distributions declared to Unitholders in 2002 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 0.1050 1.2600 5,261 5,281 5,282 5,283 5,284 5,285 5,286 5,287 5,288 5,291 5,292 5,296 63,416 63,416 90,518 56,171 23,872 21,075 20,376 13,208 [20] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS CRITICAL ACCOuNTING ESTIMATES estimates are used when accounting for items such as allowance for doubtful accounts, asset retirement obligations, the refinery remediation accrual, amortization and income taxes. these estimates are subject to measurement uncertainty and the effect on the financial statements of future periods could be material. at december 31, 2004, parkland recorded the net estimated liability that would be realized if the refinery assets were remediated, dismantled and sold for salvage values. estimated remediation costs were supported by a third party report, while other costs were based on management estimates. during 2007 parkland activated a portion of the refinery to toll produce fluids used in the oilfield and utilized tankage for fuel storage. parkland is continuing to pursue other economically viable uses for the remaining processing units at the refinery and therefore any decision to dismantle, remediate and sell the refinery site has been deferred indefinitely. parkland renewed its refinery operating license in 2007 and fully intends to maximize the revenue generating potential of this facility. the obligations relating to future environmental remediation, however, continue to exist. assuming parkland continues operations at the refinery, remediation for any potential environmental liabilities associated with a complete dismantling of the site would be delayed indefinitely. parkland has estimated the cost of remediation on the basis that any future remediation would be part of a multi-year management plan. remediation costs have been estimated from independent engineering studies conducted in January 2008 resulting in an additional $3.0 million accrual as at december 31, 2007. the studies recognize increases in remediation costs as well as increases in remediation standards since the original study conducted in 1999. the expected cost, to be incurred over an extended period after operations cease, are approximately $6.1 million net of salvage value of equipment. actual costs and salvage values could differ significantly from these estimates when, and if, the refinery is remediated, dismantled and sold. parkland has conducted its regular review of the book values of its property, plant and equipment, goodwill and intangible assets and tested for impairment of value. parkland determined that there was no impairment to be recognized. FINANCIAL INSTRuMENTS Credit and Market Risk a substantial portion of parkland’s accounts receivable balance is with customers in the oil and gas and forestry industries and is subject to normal industry credit risks. in light of the current market conditions, parkland’s credit department has been expanded and policies strengthened to control the credit granting process. parkland performs ongoing credit evaluations of its customers and outstanding debts are regularly monitored. parkland is exposed to market risk from changes in the canadian prime interest rate which can impact its borrowing costs. parkland purchases certain products in uS dollars and sells such products to its customers typically in canadian dollars. as a result, fluctuations in the value of the canadian dollar relative to the uS dollar can result in foreign exchange gains and losses. Risk Management parkland manages its exposure to credit risk through rigorous credit granting procedures, typically short payment terms and security interests where applicable. parkland attempts to closely monitor financial conditions of its customers and the industries in which they operate. PARKLAND INCOME FuND 2008 Summary report [21] management’S DiScuSSion anD analYSiS during the fourth quarter of 2008, parkland was able to significantly reduce its accounts receivable balance from $154 million at September 30, 2008 to $113 million at december 31, 2008 as a result of these enhanced credit and collection efforts. at december 31, 2008, the provision for impairment of credit losses was $3.5 million. OFF BALANCE SHEET ARRANGEMENTS the fund has not engaged in any off balance sheet arrangements. OuTLOOK two months into the first quarter of 2009, retail fuel sales volumes remain similar to the prior year and retail margins remain strong in spite of the cold weather season when demand for gasoline is typically weaker. commercial fuel sales volumes have been softer in northern alberta as upstream oil and gas customers have curtailed drilling programs. diesel supply has increased from shortages experienced in 2008 causing margins to trend downward although they remain strong by historic standards. refiners’ margins for gasoline have increased to the degree that they are stronger than any mid-winter period in the past 10 years. as of the current date they have declined somewhat from their peak in mid-february. the fall fertilization season did not generate the volume of activity that was expected as a result of drought and high fertilizer prices but parkland is optimistic that it can make much of that volume up in the second quarter of 2009 as farmers will need fertilizer to plant crops, assuming normal weather conditions. Subsequent to the end of the fourth quarter, 40 dealers in ontario and alberta came on-line as a result of agreements parkland entered into that increased the number of accounts in its esso retail branded distributorship business. these dealers, with an anticipated annual volume of 200 million litres of gasoline and diesel are expected to contribute to parkland’s growth in 2009. While early profitability for 2009 is positive parkland recognizes that it operates in uncertain economic times. demand for parkland’s products fluctuates to a certain extent with economic conditions and may deteriorate over time. profit margins also vary from time to time in response to changes in demand and economic conditions in general. these factors represent a risk for parkland’s profitability going forward. NON CAPITAL RESOuRCES Employees parkland’s ability to deliver on its strategy is contingent on retaining and acquiring employees with the proper skill sets to drive the key initiatives forward. as such, there is a focus on recruiting and retaining key employees. to date, parkland has been successful at filling key positions as needed. compensation plans for senior management have significant incentive arrangements, with overall compensation dependent on parkland’s performance, business unit operating performance and results on individually identified key initiatives. parkland has an active Human resources department, with compensation plans and benefits reviewed on an ongoing basis to best meet the needs of parkland and the various employee groups it includes. in lieu of a pension plan, parkland provides a unit purchase plan with matching employer contributions. a profit sharing plan is also available to most employees with greater than one year service. initiatives like these are intended to bring a sense of ownership to the employee groups as increases in profits and unit prices are beneficial to all. [22] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS Safety in addition to other risks, parkland’s primary business involves the transportation and sale of fuel products and other dangerous goods such as anhydrous ammonia, which have an inherently high degree of risk. parkland provides training to all staff as required to mitigate these risks and has operations and response procedures to cover risk situations. Safety bonuses are also provided to employees in higher risk roles as a means of motivating safe performance of duties. parkland has a director of Health, Safety & environment (“HSe”), two HSe managers and HSe committees. the HSe committees represent all areas of parkland’s business and ensures all identified risks are properly mitigated and that procedures and documentation are consistent across the entire organization. in 2007 and 2008, parkland satisfactorily completed external and internal audits of its safety program and facilities. Technology parkland utilizes technology to assist with the administration and control of its operations. technology initiatives are primarily implemented in-house with outside consultants used to assist in specific areas. parkland’s technology initiatives include upgrading point of Sale systems at convenience store and service station sites, upgrading cardlock hardware and software; expanding the use of its handheld inventory billing devices for bulk fuel sales and continued maintenance and security related to overall network administration and emergency response plan processes. parkland is currently undergoing extensive business process re-engineering and an upgrade of its enterprise resource planning (“erp”) software. parkland has engaged external consultants who have experience in the fuel marketing industry and with our erp software to assist management with this project. extensive testing in a controlled environment will be conducted before implementing any changes to parkland’s accounting and reporting systems. Based on the current long-range technology plans, parkland plans to implement technology changes using qualified and experienced external consultants within a test environment to minimize any undue risk to parkland’s business related to required or planned technology changes. BuSINESS RISKS risks related to the Business and the industry Retail Pricing and Margin Erosion retail pricing for motor fuels is very competitive, with major oil companies and new entrants such as grocery chains and large retailers active in the marketplace. from time to time, factors such as competitive pricing, seasonal over-supply and lack of responsiveness of retail pricing to changes in crude oil costs can lead to lower margins in parkland’s business. this is normally limited to seasonal time frames or limited market areas but could occur more extensively. furthermore, difficult fuel market conditions may also adversely affect parkland’s major customers and create increased credit risk. these risks are partially mitigated by parkland’s other sources of revenue, conservative credit policies, geographic diversification and by the wholesale business, which typically would only share in a portion of any market erosion. Competition We compete with major integrated oil companies, other commercial fuel and propane marketers, convenience store chains, independent convenience stores, gas station operators, large and small food retailers, discount stores and mass merchants, many of which are well-established companies. in recent years, several non-traditional retail segments have entered the motor fuel retail business, including supermarkets, club stores and mass merchants. these non-traditional motor fuel retailers have obtained a significant share of the motor fuel market and this could grow. the emergence of large scale highway truck stops throughout western canada has reduced our share of this market and customer demographic. PARKLAND INCOME FuND 2008 Summary report [23] management’S DiScuSSion anD analYSiS in some of our markets, our competitors have been in existence longer and have greater financial, marketing and other resources than we do. We may not be able to compete successfully against current and future competitors, and competitive pressures faced by us could materially and adversely affect our business, results of operations and financial condition. Volatility in Crude Oil Prices and in Wholesale Petroleum Pricing and Supply our motor fuel and propane revenues are a significant component of total revenues. crude oil and domestic wholesale petroleum markets display significant volatility. We are susceptible to interruptions in the supply of motor fuel at our facilities. General political conditions and instability in oil producing regions, particularly in the middle east, africa and South america, could significantly and adversely affect crude oil supplies and wholesale production costs. local supply interruptions may also occur. Volatility in wholesale petroleum supply and costs could result in significant changes in the retail price of petroleum products and in lower fuel gross margin per litre. in addition, changes in the retail price of petroleum products could dampen consumer demand for motor fuel. these factors could materially influence our motor fuel volume, motor fuel gross profit and overall customer traffic, which, in turn could have a material adverse effect on our operating results and financial condition. the development of the oilsands in northern alberta, together with upgraders producing a distillate stream has the potential to add significant supply volumes in the diesel market over time. production at these facilities is subject to production interruptions which can periodically disrupt the availability of refined product in the region. Some of our supply costs allow us to participate in refiners margins. these margins are volatile and not assured. Credit parkland grants credit to customers ranging from small independent service station operators to larger reseller and commercial/industrial accounts. these accounts may default on their obligations. parkland manages this exposure through rigorous credit granting procedures, typically short payment terms and security interests where applicable. We attempt to closely monitor financial conditions of our customers. Safety and Environmental the operation of service stations, refinery facilities and petroleum, propane and anhydrous ammonia transport trucks and commercial facilities carry an element of safety and environmental risk. to prevent environmental incidents from occurring, parkland has extensive safety and environmental procedures and monitoring programs at all of its facilities. to mitigate the impact of a major accident, parkland has emergency response programs in place and provides its employees with extensive training in operational responsibilities in the event of an environmental incident. Dependence on Key Suppliers parkland’s business depends to a large extent on a small number of fuel suppliers, a number of which are parties to long-term supply agreements with the fund. an interruption or reduction in the supply of products and services by such suppliers could adversely affect parkland’s revenue and distributions in the future. further, if any of the long-term supply agreements are terminated or end in accordance with their terms, parkland may experience disruptions in its ability to supply customers with product until a new source of supply can be secured, if at all. Such a disruption may have a material negative impact on parkland’s revenues, distributions and its reputation. additionally, parkland cannot ensure that it will be able to renegotiate such agreements or negotiate new agreements on terms favorable to parkland. parkland attempts to mitigate this risk by maintaining a diverse supply portfolio to include substantial volumes from each of its major suppliers and growing to a level of annual sales volumes that will offer potential suppliers a compelling share of the fuel supply business in our regional market. a majority of parkland’s fuel supply, measured by volume, is not subject to termination for at least four years. [24] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS Economic Conditions demand for transportation fuels fluctuates to a certain extent with economic conditions. in a general economic slowdown there is less recreational and industrial travel and consequently less demand for fuel products, which may adversely affect parkland’s revenue, profitability and ability to pay distributions. parkland serves the farm trade. this sector is subject to weather variation and commodity price fluctuation. the oil and gas exploration sector is subject to changes in commodity prices and access to capital which impacts the drilling budgets of parkland’s customers. this largely affects oilfield fluids, propane and bulk fuel sales directly as well as impacts communities in primary exploration regions in alberta and northern British columbia. the oil production sector is more stable but will ultimately decline with reduced exploration activity. parkland provides propane and related product sales to this sector. forestry has seen reduced activity over the past year and continues to be weak. mining is susceptible to variations in commodity prices. parkland fuel customers include several mines producing different metals and their demand for fuel may decline. part of parkland’s profitability is derived from its share of refiners’ margins under a long-term supply contract. refiners’ margins may deteriorate in the face of declining demand for petroleum products. Dependence on Key Personnel parkland’s success will be substantially dependent on the continued services of senior management. the loss of the services of one or more members of senior management could adversely affect parkland’s operating results. in addition, parkland’s continued growth depends on the ability of parkland and its subsidiaries to attract and retain skilled operating managers and employees and the ability of its key personnel to manage parkland’s growth and consolidate and integrate its operations. there can be no assurance that parkland will be successful in attracting and retaining such managers, employees and other personnel. Alternate Fuels industry continues to develop alternatives to fossil fuels for motive transport and continues to improve the efficiency of internal combustion engines. to date, no economically viable alternative to the transportation fuels parkland markets is widely available. Should such an alternative become widely available, it may negatively affect the demand for parkland’s products. as well, the federal government and certain provinces have developed or are developing legislation requiring the inclusion of ethanol in gasoline and use of biodiesel which may negatively affect the overall demand for fossil fuel products. Climate Change parkland does not operate any industrial sites and is not a major emitter of greenhouse gases. the federal and provincial governments in canada are formulating laws and regulations designed to limit greenhouse gas emissions which would be expected to result in a decline of consumption of petroleum products over time. PARKLAND INCOME FuND 2008 Summary report [25] management’S DiScuSSion anD analYSiS Technology at the operational level, parkland relies on electronic systems for recording of sales and accumulation of financial data. a major breakdown of computer systems would disrupt the flow of information and could cause a loss of records. this is mitigated by redundancies, emergency response plans and back up procedures. the conversion and upgrade of electronic systems could result in lost or corrupt data which could impact the accuracy of financial reporting and management information. Insurance although we have a comprehensive insurance program in effect, there can be no assurance that potential liabilities will not exceed the applicable coverage limits under our insurance policies. consistent with industry practice, not all risk factors are covered by insurance and no assurance can be given that insurance will be consistently available or will be consistently available on an economically feasible basis. We do not maintain insurance coverage for environmental damage. Management Operations of Industries LP the Board of directors of parkland industries ltd. oversees the management and operation of parkland’s operating entities. as a result, holders of units of parkland will have limited say in matters affecting the operation of the business and, if such holders are in disagreement with the decisions of the Board of directors, they will have limited recourse. the control exercised by the Board of directors may make it more difficult for others to attempt to gain control or influence the activities of the operating entities. Interest Rates most of parkland’s loans have floating rates and may be negatively impacted by increases in interest rates, the effect of which increases would be to reduce the amount of cash available for distributions. in addition, the market price of the units at any given time may be affected by the level of interest rates prevailing at such time. Government Legislation transportation fuel sales are taxed by the federal (GSt and excise tax), provincial and, in some cases, municipal governments. increases in taxes or changes in tax legislation are possible and could negatively affect demand, profitability or the attractiveness of the fund structure as an investment. Refinery Operating Permit the refinery has operated as a toll-based petrochemical processing site and fuel storage site. parkland obtained a new permit in 2007 to allow for continued use or for alternative uses of the facility. the new permit expires in 2017. if operations at the refinery are not continued parkland may incur significant remediation costs. Regional Economic Conditions parkland’s revenues may be negatively influenced by changes in regional or local economic variables and consumer confidence. external factors that affect economic variables and consumer confidence and over which parkland exercises no influence include unemployment rates, levels of personal disposable income and regional or economic conditions. changes in economic conditions could adversely affect consumer spending patterns, travel and tourism in certain of parkland’s market areas. Some of our sites are located in markets which are more severely affected by weak economic conditions. [26] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS Risks Related to the Structure of the Fund the following items refer to the structure of the fund and the legal entities that are contained within this structure. the structure is described in greater detail in the annual information form and the 2007 information circular. parkland income fund (the “fund”) owns parkland income trust (the “trust”) which in turn owns a portion of parkland Holdings limited partnership (“Holdings lp”). the remainder of Holdings lp is held by investors through the class B and class c limited partnership units referred to in note 8 of the financial statements. Holdings lp owns parkland industries limited partnership (“industries lp”) which conducts most of the business of the fund. Holdings lp also owns parkland industries ltd. (the “administrator”) which is the general partner of industries lp, parkland refining ltd. which holds the Bowden refinery assets, Joy propane ltd, united petroleum products inc and neufeld petroleum and propane ltd. Cash Distributions are Not Guaranteed and will Fluctuate with Performance of the Business although the fund intends to distribute the interest and distributions income earned by the fund, less expenses and amounts, if any, paid by the fund in connection with the redemption of units, there can be no assurance regarding the amounts of income to be generated by the Business and transferred indirectly to the fund. the actual amount distributed in respect of the units will depend upon numerous factors, including profitability, fluctuations in working capital, the sustainability of margins, capital expenditures and the actual cash amounts distributed to the fund, directly and indirectly, by the trust, Holdings lp and industries lp. Capital Investment the timing and amount of capital expenditures will directly affect the amount of cash available for distribution to unitholders. distributions may be substantially reduced at times when significant capital or other expenditures are made. Nature of units Securities like the units of parkland are hybrids in that they share certain attributes common to both equity securities and debt instruments. the units do not represent a direct investment in the trusts, Holdings lp, industries lp or the administrator and should not be viewed by investors as trust units, trust notes, Holdings lp units, industries participating lp units or parkland Shares. as holders of units of parkland, unitholders will not have the statutory rights normally associated with ownership of shares of a corporation including, for example, the right to bring “oppression” or “derivative” actions. the units represent a fractional interest in the fund. the fund’s primary assets will be trust notes and trust units. the price per unit is a function of anticipated distributable cash and other market factors. the units are not “deposits” within the meaning of the Canada Deposit Insurance Corporation Act (canada) and are not insured under the provisions of the act or any other legislation. furthermore, the fund is not a trust company and, accordingly, is not registered under any trust and loan company legislation as it does not carry on or intend to carry on the business of a trust company. Distribution of Securities on Redemption or Termination of the Fund upon redemption of units or termination of the fund, the trustee may distribute the fund notes, trust notes, trust units or Holdings lp units directly to the unitholders, subject to obtaining any required regulatory approvals. fund notes, trust notes, trust units or Holdings lp units so distributed may not be qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans and other registered plans, depending upon the circumstances at the time. The Fund May Issue Additional units Diluting Existing unitholders’ Interests the fund declaration of trust authorizes the fund to issue an unlimited number of units for the consideration and on those terms and conditions as are established by the directors without the approval of any unitholders. additional units will be issued by the fund on the exchange of rollover lp units. PARKLAND INCOME FuND 2008 Summary report [27] management’S DiScuSSion anD analYSiS Restrictions on Potential Growth the payout by industries lp of substantially all of its operating cash flow will make additional capital and operating expenditures dependent on increased cash flow or additional financing in the future. lack of those funds could limit the future growth of industries lp and its cash flow. Investment Eligibility and Foreign Property there can be no assurance that the units will continue to be qualified investments for registered retirement savings plans, deferred profit sharing plans, registered retirement income trusts, registered education savings plans or other registered plans or that the units will not be foreign property under the tax act. the tax act imposes penalties for the acquisition or holding of non-qualified or ineligible investments and on excess holdings of foreign property. Enactment of the Tax on Income Trusts on June 12, 2007, the legislation (“Bill c-52”) implementing the new tax on publicly traded income trusts and limited partnerships (the “Sift tax”), referred to as “Specified investment flow-through” (“Sift”) entities received third reading in the House of commons and on June 22, 2007, the Bill received royal assent. for Sifts in existence on october 31, 2006 including parkland, the Sift tax will be effective in 2011 or earlier if certain rules related to “undue expansion” are not adhered to. under the Sift tax, distributions from certain types of income will not be deductible for income tax purposes by Sifts in 2011 and thereafter and any resultant trust level taxable income will be taxed at an approximate of the corporate income tax rate. the Sift rate was initially 31.5 percent however on october 30, 2007, the Government of canada, in its mini-Budget, proposed changing the rate to match corporate rates. distributions from income subject to the Sift tax will be considered taxable dividends to unitholders, generally eligible for the dividend tax credit. as a result, the Sift tax will not adversely affect canadian investors who hold parkland units in a non-tax deferred account. distributions representing a return of capital for income tax purposes will continue to be an adjustment to a unitholder’s adjusted cost base of trust units. parkland’s Board of directors and management are continuously monitoring the impact of this tax on its business strategies. parkland expects future technical interpretations and details will further clarify the legislation. at the present time, parkland believes some or all of the following actions will or could result in the future due to the Sift tax: • if structural or other similar changes are not made, the after-tax distribution yield in 2011 to taxable canadian investors will remain approximately the same, however, the distribution yield in 2011 to tax deferred canadian investors (rrSp’s, rrif’s, pension plans, etc.) and foreign investors would fall by an estimated 31.5 percent and 26.5 percent, respectively; • a portion of parkland’s cash flow could, as a result, be required for the payment of the Sift tax, or other forms of tax, and would not be available for distribution or reinvestment; • parkland could convert to a corporate structure with yield in the form of dividends to facilitate investing a higher proportion or all of its cash flow in projects. Such a conversion could result in the reduction, or the elimination, of the current distribution program in favor of higher capital investment and/or a dividend payment program; • parkland might determine that it is more economic to remain in the trust structure, at least for a period of time, and shelter its taxable income using tax pools and pay all or a portion of its distributions on a return of capital basis, likely at a lower payout ratio. further, as the Sift tax rate exceeds the corporate income tax rate that would be applicable to parkland, the tax strategy might involve paying some corporate tax resulting in all or a portion of those distributions being paid on a return of capital basis at a lower payout ratio. [28] 2008 Summary report Parkland Income Fund ManageMent’s Discussion anD analysis parkland continues to review all organizational structures and alternatives to minimize the impact of the SIFt tax on its unitholders. While there can be no assurance that the negative effect of the tax can be minimized or eliminated, parkland and its advisors will continue to work diligently on these issues. additional detailed risk factors of parkland Income Fund are described in parkland’s annual Information Form for 2008 dated march 17, 2009 which is available on the Fund’s profile at www.sedar.com SuPPlementary InFormatIon parkland seeks to provide relevant information to allow investors to evaluate its operations. the nature of this information is limited by competitive sensitivities, confidentiality terms in written agreements and parkland’s policy not to provide guidance regarding future earnings. We have developed a template of supplementary information that is published with each quarterly financial report. For persons seeking information regarding fuel margins we refer to outside sources: websites of western Canadian refiners, Bloomberg’s oil Buyers Guide, Nymex contracts for gasoline and crude oil as well as Government of Canada, Natural resources Canada reports. Data from these sources will not be sufficient to calculate parkland’s fuel margin given that it does not correlate directly with our market region and supply contracts, but should indicate margin trends. dIStrIbutIon reInveStment Plan parkland has a Distribution reinvestment plan administered by Valiant trust parkland. Details are available from the Fund or from Valiant trust parkland. controlS envIronment management is responsible for the preparation and fair presentation of the consolidated financial statements. We have established disclosure controls and procedures, internal controls over financial reporting, and corporate-wide policies to provide that parkland’s consolidated financial position, results of operations and cash flows are presented fairly. our disclosure controls and procedures are designed to ensure timely disclosure and communication of all material information required by regulators. all internal control systems, no matter how well designed, have inherent limitations. therefore, these systems provide reasonable, but not absolute assurance, that financial information is accurate and complete. parkland, under the supervision and participation of management, including the Chief executive officer and Chief Financial officer, have evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting pursuant to multinational Instrument 52-109 “Certificate of Disclosure in Issuers’ annual and Interim Filings” as of the end of the period covered by this report. Based on the evaluations, it was concluded that our disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2008 to provide reasonable assurance that information required is recorded, processed, summarized and reported within the time periods specified by the applicable Canadian securities regulators. Furthermore, our disclosure controls and procedures and internal control over financial reporting include controls and procedures designed to provide reasonable assurances that information required to be disclosed in reports filed or submitted under applicable Canadian securities regulations is accumulated and communicated to our management, including our Chief executive officer and Chief Financial officer, as appropriate, to allow timely decisions regarding required disclosure. During 2008, parkland conducted a review of the accounting system and internal controls environment at the acquired companies and concluded that there were no material weaknesses in the disclosure controls and procedures as at December 31, 2008. parkland has determined that weaknesses exist relating to the lack of integration of the financial reporting systems and requirement for extensive manual interventions during the financial reporting process. the weaknesses identified are mitigated through other compensating controls. PARKLAND INCOME FuND 2008 Summary report [29] management’S DiScuSSion anD analYSiS parkland is currently undergoing extensive business process re-engineering and an upgrade of its enterprise resource planning (“erp”) software. the objectives of the project include the following: • • introduce best business practices, consistency and uniformity to its core business operations, controls and accounting processes; integrate all systems and processes of the business, including that of the acquired companies, into its erp software; and • complete the integration of the acquired companies by merging systems, processes, controls and operations. the initiatives outlined above are now expected to be substantially completed during 2009. parkland has a disclosure committee, consisting of three senior management members, that approves all items for public disclosure and also considers whether all items required to be disclosed are disclosed. NEW ACCOuNTING STANDARDS ADOPTED on January 1, 2008, the fund adopted the canadian institute of chartered accountants (cica) handbook sections 1535 “capital disclosures”, section 3862 “financial instruments - disclosures” and section 3863 “financial instruments - presentation”. Section 1535 establishes disclosure requirements about an entity’s capital and how it is managed. the purpose will be to enable users of the financial statements to evaluate objectives, policies and processes for managing capital. Sections 3862 and 3863 will replace section 3861 “financial instruments – disclosure and presentation”, revising and enhancing disclosure requirements while carrying forward its presentation requirements. these new sections place increased emphasis on disclosure about the nature and extent of risks arising from financial instruments and how the entity manages those risks. RECENT ACCOuNTING STANDARDS International Financial Reporting Standards (“IFRS”) the canadian accounting Standards Board (“acSB”) has adopted a strategy to apply ifrS to publicly accountable enterprises in the future. in may 2007, the acSB published an updated version of its “implementation plan for incorporating international financial reporting Standards into canadian Gaap”. this plan includes an outline of the key decisions that the acSB will need to make as it implements the Strategic plan for publicly accountable enterprises. one step in the implementation plan is for the acSB to conduct a progress review to determine if the changeover date to ifrS for fiscal years beginning on or after January 1, 2011 continues to be appropriate. the acSB has commenced these activities and published its initial plan “progress review - Steps to ifrS incorporation into canadian Gaap” in July 2007. on february 13, 2008, the acSB confirmed the transition date of January 1, 2011. the transition date of January 1, 2011, will require parkland to restate for comparative purposes amounts reported for the year ended december 31, 2010. [30] 2008 Summary report PARKLAND INCOME FuND management’S DiScuSSion anD analYSiS a diagnostic analysis on parkland’s 2007 financial Statements was performed near the end of 2008. the diagnostic identified the key accounting changes that parkland would expect as a result of ifrS transition. parkland will be reviewing the implementation plan for phase 2 of the ifrS conversion over the coming weeks, following which it will commit resources, approve budget and ensure the participation of both operational and financial representatives on ifrS project teams. Goodwill and Intangible Assets Section 3064, Goodwill and intangibles assets, is effective for periods beginning on or after october 1, 2008 and the fund will implement it as of January 1, 2009. this section, which replaces Section 3062, Goodwill and other intangibles assets, and Section 3450, research and development costs establishes standards for the recognition, measurement and disclosure of goodwill and intangibles assets. parkland has assessed that the impact of the adoption of this standard will not be significant. CONTRACTuAL OBLIGATIONS the fund has contracted obligations under various debt agreements as well as under operating and capital leases for land, building and equipment. minimum lease and principal payments ($000’s) under the existing terms are as follows: Year ending, December 31 2009 2010 2011 2012 2013 Thereafter Mortgages, bank indebtedness, bank loans and notes payable Operating leases 42,929 11,601 11,584 11,535 11,533 23,066 112,248 2,584 1,867 1,531 701 537 2,008 9,228 Capital leases 295 204 38 146 57 642 1,382 the fund also has purchase commitments under its fuel supply contracts that require the purchase of approximately 1.0 billion litres of product over the next year. uNITS OuTSTANDING as at december 31, 2008, parkland had 49.7 million units outstanding and 0.7 million unit options outstanding. all of the options outstanding are currently exercisable into units. managementS reSponSiBilitY for financial StatementS PARKLAND INCOME FuND 2008 Summary report [31] the accompanying financial statements of parkland income fund have been prepared by management in accordance with generally accepted accounting principles. parkland’s accounting procedures and related systems of internal control are designed to provide reasonable assurance that its assets are safeguarded and its financial records are reliable. in recognizing that parkland is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been prepared accordingly and within reasonable limits of materiality. further, management is satisfied that the financial information throughout the balance of this annual report is consistent with the information presented in the financial statements. pricewaterhousecoopers llp have been appointed by the unitholders of parkland to serve as the fund’s external auditors. they have examined the financial statements of the fund for the years ended december 31, 2008 and 2007. the audit committee has reviewed these statements with management and the auditors, and has reported to the Board of directors. the Board has approved the information contained in the financial statements of parkland which are contained in this report. michael W. chorlton president and ceo red deer, alberta february 27, 2009 John G. Schroeder Vice president and cfo red deer, alberta february 27, 2009 [32] 2008 Summary report PARKLAND INCOME FuND auDitorS’ report TO THE uNITHOLDERS OF PARKLAND INCOME FuND We have audited the consolidated balance sheets of parkland income fund (the fund”) as at december 31, 2008 and 2007 and the consolidated statements of earnings and other comprehensive income, accumulated other comprehensive income and retained earnings and cash flows for each of the years in the two year period ended december 31, 2008. these consolidated financial statements are the responsibility of the fund’s management. our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with canadian generally accepted auditing standards. those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. an audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. in our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the fund as at december 31, 2008 and 2007 and the results of its operations and its cash flows for each of the years in the two year period ended december 31, 2008 in accordance with canadian generally accepted accounting principles. chartered accountants calgary, alberta february 26, 2009 ($000’s) ASSETS Current Assets Cash and cash equivalents Accounts receivable Income tax recoverable Inventories (Note 4) Prepaid expenses and other Property, plant and equipment (Note 5) Intangible assets (Note 6) Goodwill Other long-term assets Future income taxes (Note 19) LIABILITIES Current Liabilities Bank indebtedness (Note 7) Accounts payable and accrued liabilities Distributions declared and payable Income tax payable Deferred revenue Long-term debt - current portion (Note 8) Long-term debt (Note 8) Refinery remediation accrual (Note 9) Asset retirement obligations (Note 10) Future income taxes (Note 19) uNITHOLDERS’ CAPITAL (Note 11) Class B Limited Partners’ Capital Class C Limited Partners’ Capital Unitholders’ Capital PARKLAND INCOME FuND 2008 Summary report [33] conSoliDateD Balance Sheet December 31 2008 December 31 2007 19,529 112,927 313 34,666 6,796 174,231 195,917 17,619 13,500 2,699 1,522 6,296 102,360 — 48,476 10,401 167,533 179,952 15,120 11,594 1,374 4,233 405,488 379,806 40,000 73,505 5,385 — 3,260 3,224 125,374 70,151 6,107 3,094 9,206 22,250 85,311 22,175 1,716 3,839 4,101 139,392 14,252 5,713 2,227 9,517 213,932 171,101 3,153 53,461 134,942 191,556 405,488 12,606 54,121 141,978 208,705 379,806 See accompanying notes to the consolidated financial statements. James pantelidis chairman of the Board michael W. chorlton president and ceo [34] 2008 Summary report PARKLAND INCOME FuND conSoliDateD StatementS of earningS anD other comprehenSive income, accumulateD other comprehenSive income anD retaineD earningS For the years ended ($000’s except Unit and per Unit amounts) Net sales and operating revenue Cost of sales Gross profit Expenses Operating and direct costs Marketing, general and administrative Amortization Refinery remediation Accretion expense Interest on long-term debt Loss on disposal of property, plant and equipment Earnings before income taxes Income tax expense (recovery) (Note 19) Current Future Net earnings Other comprehensive income Comprehensive income Accumulated other comprehensive income, beginning of year Other comprehensive income Accumulated other comprehensive income, end of year Retained earnings, beginning of year Allocation to Class B Limited Partners (Note 11) Allocation to Class C Limited Partners (Note 11) Allocation to Unitholders (Note 11) Retained earnings, end of year Net earnings per Unit — basic — diluted Units outstanding (Note 11) See accompanying notes to the consolidated financial statements. December 31 2008 December 31 2007 2,348,126 2,126,745 221,381 91,960 48,212 30,359 394 113 4,831 344 176,213 45,168 (313) 1,140 827 44,341 — 44,341 — — — — (6,298) (4,634) (33,409) — 1,697,663 1,465,155 232,508 77,668 39,785 21,627 2,677 61 1,676 275 143,769 88,739 1,280 6,722 8,002 80,737 — 80,737 — — — — (14,339) (8,624) (57,774) — $ $ 0.88 0.88 49,665 $ $ 1.66 1.64 49,986 PARKLAND INCOME FuND 2008 Summary report [35] conSoliDateD Statement of caSh flowS December 31 2008 December 31 2007 44,341 80,737 30,359 344 2,390 394 113 — 1,140 79,081 (7,464) 71,617 (5,827) (8,860) (6,627) (47,929) 1,736 (4,520) 60,847 960 (10,220) (6,899) (8,808) (1,325) (31,935) 803 — — — — (48,164) 13,233 6,296 19,529 21,627 275 1,916 2,677 61 (2) 6,722 114,013 (31,177) 82,836 (52,959) (15,998) (9,618) (44,443) 50,133 — 29,554 28,583 (14,748) — — (15) (28,924) 1,083 (47,610) (9,872) (10,425) (2,491) (98,254) (30,166) 36,462 6,296 For the years ended ($000’s) Cash Provided By Operations Net earnings Add (deduct) non-cash items Amortization Loss on disposal of property, plant and equipment Unit incentive compensation (Note 11) Refinery remediation accrual (Note 9) Accretion expense (Note 10) Refinery remediation expenditures Future taxes Funds flow from operations Net changes in non-cash working capital (Note 22) Cash from operating activities Financing Activities Long-term debt repayments Distributions to Class B Limited Partners (Note 11) Distributions to Class C Limited Partners (Note 11) Distributions to Unitholders (Note 11) Fund Units issued (Note 11) Repurchase of Fund Units Proceeds from long-term debt Net changes in non-cash working capital (Note 22) Cash used for financing activities Investing Activities Acquisition of Wiebe Transport (Note 17) Acquisition of NOCO Energy Canada Inc. (Note 18) Change in other assets Purchase of property, plant and equipment Proceeds on sale of property, plant and equipment Acquisition of Neufeld Petroleum (Note 13) Acquisition of Joy Propane Ltd. (Note 14) Acquisition of United Petroleum Products Inc. (Note 15) Acquisition of Roblyn Bulk Sales Ltd. (Note 16) Cash used for investing activities Increase (decrease) in cash Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year See accompanying notes to the consolidated financial statements. [36] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS December 31, 2008 All amounts presented in tables are in thousands of Canadian dollars, except Unit, per Unit and text information. 1. ACCOuNTING POLICIES these consolidated financial statements have been prepared in accordance with canadian generally accepted accounting principles. Basis of Presentation parkland income fund is an unincorporated, open-ended limited purpose mutual fund trust established under the laws of the province of alberta on april 30, 2002. the fund was created to acquire the fuel marketing, convenience store and related ancillary businesses formerly owned by parkland industries ltd. this acquisition was completed on June 28, 2002 through a plan of arrangement that resulted in the previous parkland industries ltd. shareholders indirectly exchanging their shares for units in the fund or class B limited partnership units in parkland Holdings limited partnership (“lp units”), a limited partnership controlled by the fund. Principles of Consolidation the consolidated financial Statements include the accounts of parkland income fund and its subsidiaries, partnerships and trusts (collectively the “fund”). all significant accounts and transactions between consolidated entities are eliminated. the lp units are, to the greatest extent possible, the economic equivalent to a unit in the fund. the class B lp units had a call feature which would have resulted in their conversion to trust units in June 2008 resulting in an income tax obligation to the holders. at a meeting of class B lp unitholders on June 22, 2007 this call feature was deferred to June 30, 2011. in certain circumstances the fund may compel the exchange of the lp units. as such, the lp units, including both class B and class c units, are treated as being equivalent to fund units. use of Estimates the preparation of the consolidated financial Statements necessarily involves the use of estimates and approximations. Should the underlying assumptions change, the actual amounts could differ from those estimated. estimates are used when accounting for items such as allowance for doubtful accounts, asset retirement obligations, the refinery remediation accrual, amortization and income taxes. these estimates are subject to measurement uncertainty and the effect on the financial statements of future periods could be material. Financial Instruments a financial asset is cash or a contractual right to receive cash or another financial asset, including equity, from another party. a financial liability is the contractual obligation to deliver cash or another financial asset to another party. a derivative is a financial instrument whose value changes in response to a specified variable, requires little or no net investment and is settled at a future date. an embedded derivative is a derivative that is a part of a non-derivative contract and not directly related to that contract. under this standard, embedded derivatives must be accounted for as a separate financial instrument. a non-financial derivative is a contract that can be settled net in cash or another financial instrument. all financial instruments are initially recorded at fair value and are subsequently accounted for based on one of four classifications: held for trading, held-to-maturity, loans and receivables and other financial liabilities or available-for-sale. the classification of a financial instrument depends on its characteristics and the purpose for which it was acquired. fair values are based upon quoted market prices available from active markets or are otherwise determined using a variety of valuation techniques and models. PARKLAND INCOME FuND 2008 Summary report [37] noteS to conSoliDateD financial StatementS i) Held for trading Held for trading financial instruments are financial assets or financial liabilities that are purchased with the intention of selling or repurchasing in the near term. any financial instrument can be designated as held for trading as long as its fair value can be reliably measured. a derivative is classified as held for trading, unless designated as and considered an effective hedge. Held for trading instruments are recorded at fair value with any subsequent gains or losses from changes in the fair value recorded directly into earnings. all of the fund’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and distributions declared and payable are designated as held for trading and are recorded at fair value. ii) Held-to-maturity Held-to-maturity investments are financial assets with fixed or determinable payments and a fixed maturity that the fund has the intent and ability to hold to maturity. these financial assets are measured at amortized cost using the effective interest method. any gains or losses arising from the sale of a held-to-maturity investment are recorded directly into earnings. the fund has not designated any financial instruments as held-to-maturity. iii) loans and receivables and other financial liabilities loans and receivables and other financial liabilities are accounted for at amortized cost using the effective interest method of amortization. iv) available-for-sale available-for-sale assets are those assets that are not classified as held for trading, held-to-maturity or loans and receivables. available-for-sale instruments are recorded at fair value. any gains or losses arising from the change in fair value is recorded in oci and upon the sale of the instrument or other-than-temporary impairment, the cumulative gain or loss is transferred into earnings. the fund has not designated any financial instruments as available-for-sale. the methods used by the fund in determining the fair value of financial instruments are unchanged as a result of implementing the new standard. under this standard, all guarantees upon inception are required to be recognized on the balance sheet at their fair value. no subsequent re-measurement is required to fair value each guarantee at each subsequent balance sheet date unless the guarantee is considered a derivative. Inventories the fund values its inventories at the lower of cost and market value. the fund uses the first-in first-out (fifo) method of determining the cost of inventory. Goodwill the fund must record goodwill relating to corporate acquisitions when the total purchase price exceeds the fair value for accounting purposes of the net identifiable assets and liabilities of the acquired company. the goodwill balance is assessed for impairment annually at year-end or as events occur that could result in an impairment. impairment is recognized based on the fair value of the reporting entity compared to the book value of the reporting entity. if the fair value of the reporting entity is less than the book value, impairment is measured by allocating the fair value of [38] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS the reporting entity to the identifiable assets and liabilities as if the reporting entity has been acquired in a business combination for a purchase price equal to its fair value. any excess of the book value of goodwill over the implied value of goodwill is the impairment amount. impairment is charged to earnings and is not tax affected, in the year in which it occurs. Goodwill is stated at cost less impairment and is not amortized. Amortization amortization is provided for on a straight line basis over the estimated useful lives of assets at the following annual rates: Land improvements Buildings Equipment Assets under capital lease Intangible Assets 4% 5% 10 — 20% 10 — 20% customer relationships and tradenames acquired during acquisitions are recorded at estimated fair value and will be amortized using the straight-line method over their estimated useful lives of five years. the value of non-compete agreements acquired was recorded at estimated fair value and will be amortized using the straight-line method over the term of the agreement. intangible assets are tested for impairment when conditions exist which may indicate that the estimated future net cash flows from the asset will be insufficient to cover its carrying value. Deferred Revenue deferred revenue consists of deposits and prepayments by customers for the purchase of product not yet delivered and not recorded as revenue by the fund. Income Taxes income earned directly by the limited partnership is not subject to income taxes as its income is taxed directly to the limited partnership unitholders. income earned in the fund and distributed to the fund unitholders is taxed directly to the fund unitholders. income taxes incurred by taxable entities controlled by the fund are accounted for using the future method. under this method, the fund recognizes a future tax liability whenever recovery or settlement of the carrying amount of an asset or liability would result in future income tax outflow. Similarly, the fund recognizes a future income tax asset whenever recovery or settlement of the carrying amount of an asset or liability would generate future income tax reductions. Asset Retirement Obligations the estimated future costs to remove underground fuel storage tanks at locations where the fund has a legal obligation to remove these tanks are recorded as asset retirement obligations at the time the tanks are installed. a corresponding increase to the carrying value of the fuel storage tanks is also recorded at installation. the fund recognizes accretion expense in connection with the discounted retirement obligations and amortization in connection with the increase in carrying value over the estimated remaining life of the respective underground fuel storage tanks. PARKLAND INCOME FuND 2008 Summary report [39] noteS to conSoliDateD financial StatementS Long-Term Debt capital lease obligations, which relate to transactions which are similar in nature to a purchase, are capitalized and included in long-term debt. Earnings Per unit Basic earnings per unit are calculated on the weighted average number of units outstanding for the period. diluted earnings per unit are calculated by application of the treasury Stock method. under this method, the diluted number of units are calculated based upon the weighted average number of units outstanding for the period plus the dilutive effect of the exercise of those employee options which were “in-the-money” during the period. Special distributions to unitholders in the form of additional units are recorded at the declaration date. the computation of earnings per unit for prior years are retroactively restated to reflect the change in units as a result of special distributions in the form of new units issued. Revenue the fund recognizes revenue on its sale of goods when title passes to the purchaser or when services are rendered. Grants of Options and Restricted units the fund accounts for its grants of options and restricted units in accordance with the fair value based method of accounting for stock-based compensation. Cash and Cash Equivalents cash and cash equivalents include short-term investments, such as money market deposits or similar type instruments, with a maturity of three months or less when purchased. 2. CHANGES IN ACCOuNTING POLICIES Capital Disclosures — Presentation and Disclosure the cica issued Handbook section 1535 capital disclosures that requires both qualitative and quantitative disclosures to provide users of financial statements with information to evaluate the entity’s objectives, policies and processes for managing capital. this new section is effective for the fund beginning January 1, 2008. the provisions have been adopted and included in these financial statements in note 12. Financial Instruments — Presentation and Disclosure the cica issued Handbook sections 3862 financial instruments – disclosures and 3863 financial instruments – presentation, which are effective for the fund beginning January 1, 2008. the provisions have been adopted and included in these financial statements in note 21. [40] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS 3. EARNINGS ANALYSIS AND EARNINGS PER uNIT Net earnings Earnings per unit — basic — diluted Equivalent units outstanding, beginning of year Weighted average of Class C units issued Weighted average of Fund units issued Weighted average of Fund units repurchased Weighted average of equivalent units issued pursuant to restricted unit plan Weighted average of equivalent units issued pursuant to distribution reinvestment plan Weighted average of equivalent units issued pursuant to exercise of unit options Denominator utilized in basic earnings per unit Incremental equivalent units outstanding that were dilutive Denominator utilized in diluted earnings per unit 4. INVENTORIES Gas and diesel Agricultural inputs Convenience store merchandise Lubricants Propane Other 2008 2007 44,341 80,737 $ $ 0.88 0.88 49,986 $ $ 155 — (65) 85 53 52 50,266 33 50,299 2008 19,177 6,122 3,525 4,021 717 1,104 34,666 1.66 1.64 39,858 4,960 3,801 — 26 27 163 48,835 460 49,295 2007 33,241 4,624 4,448 2,749 2,297 1,117 48,476 for the year ended december 31, 2008, the amount of inventory recognized as an expense amounted to $1.7 billion. PARKLAND INCOME FuND 2008 Summary report [41] noteS to conSoliDateD financial StatementS 5. PROPERTY, PLANT AND EQuIPMENT December 31, 2008 Land Land improvements Buildings Assets under capital lease Equipment December 31, 2007 Land Land improvements Buildings Assets under capital lease Equipment 6. INTANGIBLE ASSETS December 31, 2008 Customer relationships Tradenames Non-compete agreements December 31, 2007 Customer relationships Tradenames Non-compete agreements Cost 29,455 10,720 52,012 12,675 184,609 289,471 Cost 26,035 9,572 42,927 15,554 156,207 250,295 Cost 17,649 4,966 1,946 24,561 Cost 11,649 4,966 1,146 17,761 Accumulated Amortization — 3,141 14,645 9,551 66,217 93,554 Accumulated Amortization — 2,666 12,206 9,547 45,924 70,343 Accumulated Amortization 4,760 1,835 347 6,942 Accumulated Amortization 1,724 836 81 2,641 Net Book Value 29,455 7,579 37,367 3,124 118,392 195,917 Net Book Value 26,035 6,906 30,721 6,007 110,283 179,952 Net Book Value 12,889 3,131 1,599 17,619 Net Book Value 9,925 4,130 1,065 15,120 the above assets were evaluated as at december 31, 2008 based on criteria in note 1. [42] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS 7. BANK INDEBTEDNESS on august 1, 2007, the fund entered into a credit agreement with a syndicate of banks which included a revolving operating facility for working capital requirements to a maximum of $32 million and subject to margin calculations. on September 26, 2008 this agreement was amended to a maximum of $45 million. the operating facility bears interest at prime plus 0.4%. the effective rate of interest at december 31, 2008 was 3.90 percent (2007 - 6.0 percent). the bank indebtedness is secured in conjunction with the extendible facility and is secured by a mortgage over the fund’s real property, assignment of insurance and an unlimited guarantee from the entities providing security. 8. LONG-TERM DEBT Bank loans Extendible facility Mortgage payable Capital lease obligations Less current portion estimated repayments for the next five years are: 2009 2010 2011 2012 2013 Thereafter Interest expense included in minimum lease payments 2008 167 71,825 — 1,383 73,375 3,224 70,151 2007 310 14,027 248 3,768 18,353 4,101 14,252 Obligations under capital leases Other Loans 377 266 96 198 102 890 1,929 546 1,383 2,929 11,601 11,584 11,536 11,533 22,810 71,992 — 71,992 PARKLAND INCOME FuND 2008 Summary report [43] noteS to conSoliDateD financial StatementS Bank Loans Bank loans are payable in monthly instalments of $8,349 (2007 - $13,189) plus interest ranging from nil to six percent (2007 - nil to 6 percent). the bank loans are secured by vehicles with a net book value of $160,339 (2007 - $346,233). Extendible Facility the extendible facility, including bank indebtedness and letters of credit, is a revolving extendible credit facility up to a maximum amount of $169 million and bears interest, payable monthly, at the bank’s prime lending rate plus 0.4 to 0.9 percent per annum. the extendible facility is subject to renewal on august 1, 2009 at which time it can be extended at the fund or lender’s option for 364 days. if the extendible facility is not extended, all amounts outstanding are repayable in twelve consecutive quarterly instalments, commencing on the last day of the third month following the then maturity date, with the first eleven of such instalments being one-twenty fifth of the outstanding balance and remainder at the end of the period. Security for the extendible facility is assignment of insurance and an unlimited guarantee from the secured entities. Capital Lease Obligations capital lease obligations are payable in monthly instalments totalling $24,283. a balloon payment of $85,000 for one of the leases is due at the end of 2009. the monthly instalments include interest varying from nil to 16.34 percent and prime plus 0.35 percent per annum. the effective rate of interest at year end for the prime based lease was 3.85 percent (2007 - 6.35 percent). the capital lease obligations are for land, buildings, and equipment with a net book value of $3,424,272 and mature at various dates ending September 2022. 9. REFINERY REMEDIATION ACCRuAL Refinery remediation accrual, beginning of year Additions during the year Accretion expense Refinery remediation accrual, end of year 2008 5,713 394 6,107 — 2007 3,038 2,585 90 5,713 in december 2004, the fund eliminated the carrying value of its Bowden refinery and recorded a net liability of $3.4 million for future estimated costs of remediation of the site, net of salvage value, based on the uncertainty of creating an alternative to the refinery being dismantled, remediated and sold for salvage values. the refinery remediation accrual represents the present value estimate of the fund’s cost to remediate the site. during 2006, the fund entered into a custom processing agreement to toll produce fluids used in the oilfields. the commercial agreement utilized a portion of the processing units at the refinery. the fund is continuing to pursue other economically viable uses for the remaining processing units at the refinery and therefore any decision to dismantle, remediate and sell the refinery site has been deferred indefinitely. the fund renewed its refinery operating license in 2007 and fully intends to maximize the revenue generating potential of this facility. the obligations relating to future environmental remediation, however, continue to exist. [44] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS assuming the fund continues operations at the refinery, remediation for any potential environmental liabilities associated with a complete dismantling of the site would be delayed indefinitely. the fund has estimated the discounted cost of remediation on the basis that operations continue and that remediation would be part of a multi year management plan. remediation costs have been estimated from independent engineering studies conducted in december 2007. the total undiscounted estimated future cash flows, to be incurred over an extended period after operations cease, are approximately $13.8 million net of salvage value of equipment and will be accreted. the costs are expected to be incurred between 2018 and 2027. the discount rate used to determine the present value of the future costs is 6.9 percent (2007 - 6.9 percent). 10. ASSET RETIREMENT OBLIGATIONS a reconciliation of the fund’s estimated liability for the removal of its underground storage tanks is as follows: Asset retirement obligations, beginning of year Additions (disposals) during the year Change in estimates Accretion expense Asset retirement obligations, end of year 2008 2,227 (104) 858 113 3,094 2007 1,140 70 956 61 2,227 the fund is liable for the environmental obligations related to the removal of its underground storage tanks at properties that it leases. the asset retirement obligation represents the present value estimate of the fund’s cost to remove these tanks. the total undiscounted estimated future cash flows required to settle the fund’s obligation increased to $4.0 million (2007 - $3.2 million), which primarily reflects the fund’s estimate of increased costs and inflation. discounting these incremental cash flows resulted in a $0.9 million increase in the asset retirement obligation at december 31, 2008. the costs are expected to be incurred between 2009 and 2019. the discount rate used to determine the present value of the future costs is 6.9 percent (2007 - 6.9 percent). 11. uNITHOLDERS’ CAPITAL an unlimited number of fund units and lp units may be created and issued, pursuant to the fund declaration of trust and the amended and restated limited partnership agreement, respectively, as outlined in the plan of arrangement. fund units represent an undivided interest in the fund. lp units represent a partnership interest in parkland Holdings limited partnership and are exchangeable on a one-for-one basis into fund units. Both fund unitholders and lp unitholders are entitled to vote at meetings of the fund and are entitled to distributions from time to time as determined by the Board of directors. PARKLAND INCOME FuND 2008 Summary report [45] noteS to conSoliDateD financial StatementS Number of Units (000’s) 2008 Amount Number of Units (000’s) 8,534 12,606 8,566 — — (5,649) 2,885 6,298 (8,860) (6,891) 3,153 — — (32) 2007 Amount 14,331 14,339 (15,998) (66) 8,534 12,606 Class B Limited Partnership Units Balance, beginning of year Allocation of retained earnings Distribution to partners Exchanged for Fund Units Balance, end of year Class C Limited Partnership Units Balance, beginning of year 5,165 54,121 — — Issued on capital acquisition, net of issue costs Allocation of retained earnings Exchanged for Fund Units Distribution to partners Balance, end of year Fund Units Balance, beginning of year Allocation of retained earnings Issued on vesting of restricted units Unit incentive compensation Issued for cash, net of issue costs Issued under distribution reinvestment plan Issued under unit option plan To be issued to unitholders pursuant to special distribution Distribution to unitholders Exchange of Limited Partnership Units Units repurchased Balance, end of year 167 — (94) 2,320 4,634 (987) — (6,627) 5,519 — (354) — 58,954 8,624 (3,839) (9,618) 5,238 53,461 5,165 54,121 36,287 141,978 30,014 — 33,409 — 2,390 — 26 — 72,693 57,774 — 1,916 47,037 636 2,460 — 4,080 1,089 647 44 462 — 1,275 20,459 (47,929) 7,878 (4,520) — (64,902) 386 — 3,905 — 89 — — 107 81 — — 5,743 (765) 41,542 134,942 36,287 141,978 49,665 191,556 49,986 208,705 pursuant to a normal course issuer bid, the fund repurchased 765,100 fund units for $4.5 million in 2008. [46] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS unit Option Plan the fund has a unit option plan under which the fund may grant up to 3,600,000 unit options to directors, officers, employees and consultants. the maximum number of options is reduced by the number of units allocated to the restricted unit plan. the unit options have a 10 year term and, with limited exceptions, vest proportionally over the first three anniversary dates following the grant. the table below represents the status of the fund’s unit option plan as at december 31, 2008 and 2007 and the changes therein for the years then ended: 2008 2007 Number of Units (000’s) Weighted Average Exercise Price Number of Units (000’s) Weighted Average Exercise Price Option units, beginning of year 779 $ 6.60 1,228 $ 6.20 Cancelled Exercised Option units, end of year Exercisable options, end of year — (97) 682 682 $ $ — 6.68 6.58 6.58 — (449) 779 589 $ $ — 5.50 6.60 6.43 exercise prices for outstanding options at december 31, 2008 have the following ranges: 87,375 from $4.15 - $5.87, 172,595 from $6.32 - $6.68 and 422,013 from $6.73 - $7.27. these issue prices represent the market value at the time of issue. the corresponding remaining contractual life for these options range from four to seven years. the fund accounts for its grants of options using the fair value based method of accounting for stock based compensation. the total cost to be reported is $0.4 million (2007 - $0.4 million). the compensation cost that has been included in marketing, general and administrative expenses is $0.2 million (2007 - $0.2 million). Restricted unit Plan effective January 1, 2006, the fund adopted a restricted unit plan to complement the unit option plan. under the plan the units granted in 2006 vest over a five year period and the units issued in 2007 and 2008 vest over a three year period. the units are subject to entity performance criteria. PARKLAND INCOME FuND 2008 Summary report [47] noteS to conSoliDateD financial StatementS the table below represents the status of the fund’s restricted unit plan as at december 31, 2008 and the changes therein for the year then ended: 2008 Weighted Average Unit Price 2007 Weighted Average Unit Price Number of Units (000’s) Number of Units (000’s) Restricted Units, beginning of year 294 $ 10.62 131 $ 6.60 Granted Issued Cancelled 152 (88) (19) 15.89 10.97 13.93 191 (26) (2) 12.83 6.60 12.38 Restricted Units, end of year 339 $ 12.70 294 $ 10.62 the fund accounts for its grants of restricted units over the graded vesting schedule of each grant. each grant of restricted units is treated as if the grant were a series of awards rather than a single award. the fair value of the award is determined based on the different expected lives for the restricted units that vest each year. the total cost to be reported for the restricted units granted in 2008 is $2.4 million (2007 - $2.4 million). the compensation cost that has been included in marketing, general and administrative expenses for 2008 is $2.2 million (2007 - $1.8 million). 12. CAPITAL MANAGEMENT the fund’s capital structure is comprised of unitholder’s capital plus long-term debt. the fund’s objectives when managing its capital structure are to: 1) maintain financial flexibility so as to preserve the fund’s access to capital markets and its ability to meet its financial obligations; and 2) finance internally generated growth as well as potential acquisitions. the fund monitors its capital structure and financing requirements using non-Gaap financial metrics consisting of net debt to capitalization and net debt to earnings Before interest, taxes, depreciation and amortization (“eBitda”). the metrics are used to monitor and guide the fund’s overall debt position as a measure of the fund’s overall financial strength and flexibility of capital structure. [48] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS the fund targets a net debt to capitalization ratio of below 50% and is calculated as follows: Bank indebtedness Long-term debt, including current portion Cash and cash equivalents Net Debt Unitholders’ Capital Capitalization December 31 2008 December 31 2007 40,000 73,375 (19,529) 93,846 191,556 285,402 22,250 18,353 (6,296) 34,307 208,705 243,012 Net Debt to Capitalization 33% 14% the fund’s net debt to capitalization ratio increased to 33% from 14% at december 31, 2007 primarily due to funding of working capital, acquisitions and growth capital which has increased the fund’s long-term debt. this increase was part of the fund’s overall capital plan to continue to fund future growth. the fund targets a net debt to eBitda of less than 2.0 times. at december 31, 2008, the net debt to eBitda was 1.16 times (december 31, 2007 - 0.30 times) calculated on a trailing twelve-month basis as follows: Net Debt Net earnings Add Interest Income tax (recovery) expense Refinery accrual Accretion Loss on disposal of property, plant and equipment Amortization EBITDA Net Debt to EBITDA December 31 2008 December 31 2007 93,846 44,341 4,831 827 394 113 344 30,359 81,209 34,307 80,737 1,676 8,002 2,677 61 275 21,627 115,055 1.16 0.30 the fund manages its capital structure and makes adjustments according to market conditions to maintain flexibility while achieving objectives stated above. to manage the capital structure, the fund may adjust capital spending, adjust distributions paid to unitholders, issue new units, issue new debt or repay existing debt. the fund takes into account the maximum equity growth limits as detailed below when managing and monitoring its capital structure. the fund’s capital management objectives, evaluation measures, definitions and targets have remained unchanged over the period presented. the fund is subject to certain financial covenants in its credit facility agreements and is in compliance with all financial covenants. PARKLAND INCOME FuND 2008 Summary report [49] noteS to conSoliDateD financial StatementS as a result of the canadian trust legislation passed in June 2007 and effective January 1, 2011, the fund is subject to certain capital growth restrictions referred to as “normal growth” equity rules. these rules limit the amount of unitholders’ capital that can be issued by the fund in each of the next three years, based on the fund’s market capitalization on october 31, 2006, as follows: Normal growth capital allowed in: 2009 2010 Annual Cumulative 68 68 272 340 the fund’s allowed growth capital at december 31, 2008 was approximately $272 million (december 31, 2007 - $204 million). if the maximum equity growth allowed is exceeded, the fund may be subject to trust taxation prior to 2011. 13. ACQuISITION OF NEuFELD PETROLEuM & PROPANE LTD. AND NEuFELD HOLDINGS LTD. on January 24, 2007, the fund acquired all of the outstanding shares of neufeld petroleum & propane ltd. and neufeld Holdings ltd. (“neufeld petroleum”). the transaction was accounted for using the purchase method with the allocation of the purchase price as follows: Estimated fair value of net assets acquired: Capital assets Working capital, net (excluding bank indebtedness) Intangible asset — customer relationships Intangible asset — tradenames Intangible asset — non compete agreement Consideration: Cash paid to vendor Class C Limited Partnership Units Acquisition costs Bank indebtedness assumed Shareholder loans paid out Management bonus paid out Long-term debt assumed (000’s) 87,905 24,750 6,264 4,581 561 124,061 23,468 47,620 1,982 2,138 17,828 4,331 26,694 124,061 the effective date of the transaction was november 1, 2006. the interim period net earnings after tax to January 24, 2007 of $3 million have been credited to the purchase price. [50] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS 14. ACQuISITION OF JOY PROPANE LTD. on april 24, 2007, the fund acquired all of the outstanding shares of Joy propane ltd. the transaction was accounted for using the purchase method with the allocation of the purchase price as follows: Estimated fair value of net assets acquired: Capital assets Working capital, other Cash Goodwill Consideration: Cash paid to vendor Acquisition costs Class C Limited Partnership Units (000’s) 9,717 1,056 1,414 4,489 16,676 11,202 84 5,390 16,676 the effective date of the transaction was february 28, 2007. the interim period net earnings after tax to april 24, 2007 of $168,500 have been credited to the purchase price. there is no tax basis on the goodwill. Goodwill relates to the fuel marketing segment. 15. ACQuISITION OF uNITED PETROLEuM PRODuCTS INC. on may 28, 2007, the fund acquired all of the outstanding shares of united petroleum products inc. the transaction was accounted for using the purchase method with the allocation of the purchase price as follows: Estimated fair value of net assets acquired: Capital assets Working capital, net Intangible asset — customer relationships Intangible asset — non compete agreement Goodwill Consideration: Cash paid to vendor Acquisition costs Class C Limited Partnership Units Bank debt assumed (000’s) 2,538 2,241 5,000 200 7,105 17,084 10,383 41 5,945 715 17,084 PARKLAND INCOME FuND 2008 Summary report [51] noteS to conSoliDateD financial StatementS the effective date of the transaction was may 1, 2007. the interim period net earnings after tax to may 28, 2007 of $247,000 have been credited to the purchase price. there is no tax basis on the goodwill. Goodwill relates to the fuel marketing segment. 16. ACQuISITION OF ROBLYN BuLK SALES LTD. on december 3, 2007, the fund acquired all of the outstanding shares of roblyn Bulk Sales ltd., a distributor of bulk fuels located in edson, alberta. the transaction was accounted for using the purchase method with the allocation of the purchase price as follows: Estimated fair value of net assets acquired: Capital assets Working capital Intangible asset — customer relationships Intangible asset — tradenames Intangible asset — non compete agreement Consideration: Cash paid to vendor Long term debt assumed 17. ACQuISITION OF WIEBE TRANSPORT (000’s) 1,645 246 385 385 385 3,046 2,491 555 3,046 on february 28, 2008, the fund acquired all of the outstanding shares of 1374582 alberta ltd. (“Wiebe transport”). the transaction was accounted for using the purchase method with the allocation of the purchase price as follows: Estimated fair value of net assets acquired: Capital assets Future income taxes Consideration: Cash paid to vendor Class C Limited Partnership Units Acquisition costs the effective date of the transaction was february 28, 2008. (000’s) 10,480 (1,261) 9,219 6,750 2,320 149 9,219 [52] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS 18. ACQuISITION OF NOCO ENERGY FuEL MARKETING BuSINESS on may 29, 2008 the fund acquired the fuel supply and marketing business of noco energy canada inc. the transaction was accounted for using the purchase method with the allocation of the purchase price as follows: Estimated fair value of net assets acquired: Intangible assets Goodwill Working capital Consideration: Cash paid to vendor Acquisition costs (000’s) 6,800 1,906 102 8,808 8,500 308 8,808 the effective date of the transaction was may 29, 2008. Goodwill relates to the fuel marketing segment. the tax basis is equal to the accounting basis. 19. INCOME TAXES income tax expense varies from the amounts that would be computed by applying the canadian federal and provincial income tax rates to earnings before provision for income taxes as shown in the following table: 2008 % 2007 % Provision for income taxes at statutory rates 13,663 30.25 28,876 32.54 Add (deduct) the tax effect of : Income earned in limited partnership (15,600) (34.54) (29,228) (32.94) Effect of taxation of Trusts in 2011 Rate differential and other items 356 2,408 827 0.79 5.33 1.83 7,717 637 8,002 8.69 0.66 8.95 PARKLAND INCOME FuND 2008 Summary report [53] noteS to conSoliDateD financial StatementS the future income tax assets and liabilities are comprised of: Future income tax assets Effect of LIFO to FIFO inventory adjustment Capital assets tax values in excess of carrying values Refinery remediation Future income tax liabilities Capital assets carrying value in excess of tax values Effect of taxation of Trusts in 2011 Effect of LIFO to FIFO inventory adjustment 20. COMMITMENTS 2008 2007 (337) 332 1,527 1,522 1,598 7,608 — 9,206 — 2,805 1,428 4,233 248 7,252 2,017 9,517 the fund has contracted obligations under various debt agreements as well as under operating and capital leases for land, building and equipment. minimum operating lease payments under the existing terms for each of the five succeeding years are as follows 2009 2010 2011 2012 2013 Thereafter 2,584 1,867 1,531 701 537 2,008 the fund has outstanding letters of credit totalling $31.6 million (2007 - $25.1 million) which mature at various dates to october 29, 2009. the fund’s credit facility provides for letters of credit to a maximum of $45.0 million. the fund also has purchase commitments under its fuel supply contracts that require the purchase of approximately 1.0 billion litres of fuel products at variable costs over the next year. [54] 2008 Summary report Parkland Income Fund Notes to CoNsolidated FiNaNCial statemeNts 21. FInancIal InSTrumenTS and rISk manaGemenT Fair Values the fair value of cash and cash equivalents, accounts receivable, tax payable, distributions payable, bank indebtedness, deferred revenue and accounts payable and accrued liabilities are equal to their carrying values due to their short term maturities. the fair value of the extendible facility and operating line of credit equal their carrying values as their interest rates fluctuate with the prime lending rate. the carrying values and fair values of mortgages payable, bank loans, capital lease obligations and mortgages and loans receivable are as follows: Mortgages payable Bank loans Capital lease obligations Mortgages and loans receivable 2008 2007 Carrying Value Fair Value Carrying Value Fair Value — — 167 1,383 2,699 169 1,827 2,571 248 310 3,768 1,119 250 307 4,197 1,170 Fair value of mortgages payable, bank loans, mortgages and loans receivable and capital lease obligations are estimated using discounted cash flow analysis based upon incremental borrowing rates for similar borrowing arrangements. the Fund does not have a significant credit exposure to any individual customer. the Fund reviews a new customer’s credit history before extending credit and conducts regular reviews of its existing customers’ credit performance. mortgages and loans receivable are receivable in monthly instalments of $75,334 (2007 - $38,310), bear interest at rates ranging between nil and 10.75 percent (2007 - nil and 11 percent) and are secured by specific assets of the mortgage. credit and market risk a substantial portion of the Fund’s accounts receivable balance is with customers in the oil and gas and forestry industries and is subject to normal industry credit risks. In light of the current market conditions, the Fund’s credit department has been expanded and policies strengthened to control the credit granting process. the Fund performs ongoing credit evaluations of its customers and outstanding debts are regularly monitored. at December 31, 2008, the provision for impairment of credit losses was $3.5 million. the Fund is exposed to market risk from changes in the Canadian prime interest rate which can impact its borrowing costs. the Fund purchases certain products in uS dollars and sells such products to its customers typically in Canadian dollars. as a result, fluctuations in the value of the Canadian dollar relative to the uS dollar can result in foreign exchange gains and losses. a 1.0 percent change to interest rates would have caused an increase or decrease to earnings by $0.7 million as at December 31, 2008. PARKLAND INCOME FuND 2008 Summary report [55] noteS to conSoliDateD financial StatementS Risk Management the fund manages its exposure to credit risk through rigorous credit granting procedures, typically short payment terms and security interests where applicable. the fund attempts to closely monitor financial conditions of its customers and the industries in which they operate. Liquidity Risk liquidity risk is the risk the fund will encounter difficulties in meeting its financial liability obligations. the fund manages its liquidity risk through cash and debt management. in managing liquidity risk, the fund has access to various credit products at competitive rates. as at december 31, 2008, the fund had available unused credit facilities in the amount of $12 million. the fund believes it has sufficient funding through the use of these facilities to meet foreseeable borrowing requirements. 22. NET CHANGES IN NON-CASH WORKING CAPITAL Accounts receivable Inventories Prepaid expenses and other Accounts payable Income taxes payable Deferred revenue Total for operating activities Operating line of credit Distributions declared and payable Total for financing activities Other cash flow information Cash taxes paid Cash interest paid 2008 (10,567) 13,912 3,605 (11,806) (2,029) (579) (7,464) 17,750 (16,790) 960 715 4,831 2007 (18,646) (7,926) (6,376) (55) (1,871) 3,697 (31,177) 22,250 6,333 28,583 2,802 1,676 [56] 2008 Summary report PARKLAND INCOME FuND noteS to conSoliDateD financial StatementS 23. SEGMENTED INFORMATION the fund’s operations have been predominantly in fuel marketing and convenience store sales in western canada. With the acquisitions in 2007 and 2008, the fund now sells propane, fertilizer, lubes, other agricultural inputs and industrial products and services. the fund’s operating segments have been adjusted to reflect these changes. fuel marketing includes sales of gasoline, diesel, heating oil, propane fuel and variable rents derived from service station sites. convenience Store merchandise continues to include the operations of the fund owned and operated convenience stores that are integrated into fuel marketing sites and bear common operating costs. commercial includes sales of fertilizer, lubes, other agricultural inputs and industrial products and services. due to the amount of common operating and property costs it is not practical to report these segments below their respective gross profits. the segregation of capital expenditures and total assets is not practical as the reportable segments represent product sales that are generated from common locations. Year ended December 31, 2008 Net sales and operating revenue Cost of sales Gross profit Year ended December 31, 2007 Net sales and operating revenue Cost of sales Gross profit 24. RELATED PARTY TRANSACTIONS Fuel Marketing Convenience Store Merchandise Commercial Total 2,193,984 61,780 92,362 2,348,126 2,022,406 45,556 58,783 2,126,745 171,578 16,224 33,579 221,381 1,558,220 1,370,257 187,963 64,538 48,154 16,384 74,905 1,697,663 46,744 1,465,155 28,161 232,508 the fund receives legal services from Bennett Jones llp where a director of the fund is a partner. the fees paid during 2008 amounted to $0.5 million (2007 - $0.7 million). these transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. the exchange amounts represent normal commercial terms. 25. RECENT ACCOuNTING PRONOuNCEMENTS International Financial Reporting Standards (“IFRS”) the canadian accounting Standards Board (“acSB”) has adopted a strategy to apply ifrS to publicly accountable enterprises in the future. in may 2007, the acSB published an updated version of its “implementation plan for incorporating international financial reporting Standards into canadian Gaap”. this plan includes an outline of the key decisions that the acSB will need to make as it implements the Strategic plan for publicly accountable enterprises. one step in the implementation plan is for the acSB to conduct a progress review to determine if the changeover date to ifrS for fiscal years beginning on or after January 1, 2011 continues to be appropriate. the acSB has commenced these activities and published its initial plan “progress review - Steps to ifrS incorporation into canadian Gaap” in July 2007. PARKLAND INCOME FuND 2008 Summary report [57] noteS to conSoliDateD financial StatementS on february 13, 2008, the acSB confirmed the transition date of January 1, 2011. the transition date of January 1, 2011, will require the fund to restate for comparative purposes amounts reported for the year ended december 31, 2010. the fund is still investigating the impact of the adoption of ifrS on its financial statements. Goodwill and Intangible Asses the cica has issued the following new Handbook section which has not yet been implemented by the fund: Section 3064, Goodwill and Intangible Assets, is effective for periods beginning on or after october 1, 2008 and the fund will implement it as of January 1, 2009. this section, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. the fund has assessed that the impact of the adoption of this standard will not be significant. 26. COMPARATIVE FIGuRES certain comparative figures have been reclassified to comply with the presentation adopted in the current period. [58] 2008 Summary report PARKLAND INCOME FuND SupplementarY information Unaudited Three months ended December 31 2007 2008 Year ended December 31 2007 2008 Volume (millions of litres) Retail gas and diesel IOL retail branded distributorship Company operated Dealer operated buy/sell Dealer operated commission Wholesale gas and diesel Propane Intersegment sales Total fuel volume Net sales and operating revenue (thousands of Canadian dollars) Retail gas and diesel IOL retail branded distributorship Company operated Dealer operated buy/sell Dealer operated commission 136 115 61 27 339 316 45 (36) 664 92 108 47 27 274 223 44 (25) 516 449 426 219 107 1,201 1,144 147 (139) 366 418 196 113 1,093 823 114 (67) 2,353 1,963 96,481 94,711 44,626 23,119 74,306 420,525 295,669 90,795 421,994 353,172 37,779 206,344 156,993 22,906 107,566 95,702 258,937 225,786 1,156,429 901,536 Wholesale gas and diesel 243,167 182,133 1,095,387 647,287 Propane Fuel sales Convenience store merchandise sales Commercial sales 20,878 28,397 79,730 62,973 522,982 436,315 2,331,546 1,611,795 14,959 23,486 15,617 61,780 26,349 92,362 64,538 74,905 Total gross sales and operating revenue 561,427 478,281 2,485,688 1,751,238 Intersegment sales (36,896) (22,147) (137,562) (53,575) Total net sales and operating revenue 524,531 456,134 2,348,126 1,697,663 Gross profit (2007 restated - see Note 1 of Consolidated Financial Statements) 65,368 61,841 221,381 232,508 Less: Convenience store merchandise gross profit Gross profit on commercial sales Other revenue included in gross profit Fuel gross profit Cents per litre 3,793 8,401 11,280 41,894 0.0631 3,802 8,398 2,297 16,224 33,579 19,975 16,384 28,161 9,429 47,344 151,603 178,534 0.0918 0.0644 0.0909 PARKLAND INCOME FuND 2008 Summary report [59] SupplementarY information Three months ended December 31 2007 2008 Year ended December 31 2007 2008 Fuel gross profit Retail gas and diesel IOL retail branded distributorship 4,593 5,140 16,566 Company operated Dealer operated buy/sell Dealer operated commission Commercial fuel (Note 1) Total fuel gross profit Station counts Parkland operated and commission operated locations Fas Gas Plus Fas Gas Esso Race Trac Independent dealer operated Esso Race Trac Fuels Fas Gas Plus Fas Gas Sunoco Total stations 14,099 42,017 8,483 11,099 75,698 17,460 11,049 50,202 2,956 3,926 28,935 12,959 2,965 2,568 21,722 25,622 9,336 11,395 87,499 64,104 102,836 41,894 47,344 151,603 178,534 95 28 12 3 92 36 11 2 138 141 253 159 31 32 17 492 630 179 153 26 32 — 390 531 (Note 1) Commercial fuel gross profit includes the gross profit from sales to commercial customers, Parkland’s share of refiners’ margins and any FIFO inventory valuation adjustment. [60] 2008 Summary report Parkland Income Fund Corporate InformatIon Head oFFIce reGIStrar and tranSFer aGent Suite 236, riverside office plaza 4919 - 59th Street red Deer, alberta t4N 6C9 tel: (403) 357-6400 Fax: (403) 352-0042 email: corpinfo@parkland.ca Website: www.parkland.ca annual General meetInG tuesday, april 28, 2009 2:00 p.m. at the red Deer Lodge Hotel & Convention Centre 4311 - 49th avenue red Deer, alberta Banker HSBc Bank canada 108, 4909 - 49th Street red Deer, alberta t4N 1V1 audItorS Pricewaterhousecoopers llP 3100, 111 - 5th avenue SW Calgary, alberta t2p 5L3 leGal counSel Bennett Jones llP 4500, Bankers Hall east 855 - 2nd avenue SW Calgary, alberta t2p 4K7 Stock excHanGe lIStInG toronto Stock exchange trading Symbol: pKI.uN Valiant trust company 310, 606 - 4th Street SW Calgary, alberta t2p 1t1 dIrectorS John F. Bechtold robert G. Brawn michael W. Chorlton Jim Dinning alain Ferland Kris matthews Jim pantelidis ron rogers David a. Spencer oFFIcerS michael W. chorlton president and Ceo John G. Schroeder Vice president and CFo Corporate Secretary Chief privacy officer chris r. Podolsky Corporate Controller Shaun m. Peesker treasurer WHolly oWned SuBSIdIarIeS 986408 alberta Ltd. 986413 alberta Ltd. Neufeld petroleum and propane Ltd. parkland Holdings Limited partnership parkland Industries Limited partnership parkland Industries Ltd. parkland Investment trust parkland refining Ltd. designed and produced by Hill & knowlton result. printed in canada. parklanD income funD Suite 236, riverside office plaza 49 19 - 59th Street red deer, alber ta t4n 6c9 www.parkland.ca
Continue reading text version or see original annual report in PDF format above