Other Capital Disclosures
Additional Capital Disclosure
Superior's objectives when managing capital are: (i) to maintain a flexible capital structure to preserve its ability to meet its financial obligations, including potential obligations from acquisitions; and (ii) to safeguard its assets while maximizing the growth of its businesses and returns to its shareholders.
In the management of capital, Superior includes shareholders' equity (excluding accumulated other comprehensive loss) current and long-term debt, convertible debentures, securitized accounts receivable and cash and cash equivalents.
Superior manages its capital structure and makes adjustments in light of changes in economic conditions and nature of the underlying assets. In order to maintain or adjust the capital structure, Superior may adjust the amount of dividends to Shareholders, issue additional share capital, issue new debt or convertible debentures, or issue new debt or convertible debentures with different characteristics.
Superior monitors its capital based on the ratio of senior debt outstanding to net earnings before interest, taxes, depreciation, amortization and other non-cash expenses (EBITDA), as defined by its revolving term credit facility, and the ratio of total debt outstanding to EBITDA. Superior's reference to EBITDA as defined by its revolving term credit facility may be referred to as compliance EBITDA in its other public reports.
Superior is subject to various financial covenants in its credit facility agreements, including senior debt, total debt to EBITDA ratio and restricted payments test which are measured on a quarterly basis. As at March 31, 2013 and December 31, 2012 Superior was in compliance with all of its financial covenants.
Superior's financial objectives and strategy related to managing its capital as described above remained unchanged from the prior fiscal year. Superior believes that its debt to EBITDA ratios are within reasonable limits, in light of Superior's size, the nature of its businesses and its capital management objectives.
Financial Measures utilized for bank covenant purposes
Compliance EBITDA
Compliance EBITDA represents earnings before interest, taxes, depreciation, amortization and other non-cash expenses calculated on a 12 month trailing basis giving pro forma effect to acquisitions and divestitures and is used by Superior to calculate its debt covenants and other credit information. Compliance EBITDA is not a defined performance measure under IFRS. Superior's calculation of compliance EBITDA may differ from similar calculations used by comparable entities.
The capital structure of Superior and the calculation of its key capital ratios are as follows:
-------------------------------------------------------------------------------------------------------------------------------------------------------- March 31, December 31,As at 2013 2012----------------------------------------------------------------------------Total shareholders' equity 550.3 383.0Exclude accumulated other comprehensive loss 41.6 54.1----------------------------------------------------------------------------Shareholders' equity excluding accumulated other comprehensive loss 591.9 437.1Current borrowing (1) 56.9 59.7Borrowing (1) 461.7 579.9Less: Senior unsecured notes (150.0) (150.0)----------------------------------------------------------------------------Consolidated secured debt 368.6 489.6Add: Senior unsecured notes 150.0 150.0----------------------------------------------------------------------------Consolidated debt 518.6 639.6Current portion of convertible unsecured subordinated debentures(1) 24.7 50.0Convertible unsecured subordinated debentures (1) 466.7 491.5----------------------------------------------------------------------------Total debt 1,010.0 1,181.1----------------------------------------------------------------------------Total capital 1,601.9 1,618.2--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Borrowing and convertible unsecured subordinated debentures are before deferred issuance costs and option value.-------------------------------------------------------------------------------------------------------------------------------------------------------- March 31, December 31,Twelve months ended 2013 2012----------------------------------------------------------------------------Net earnings 93.5 90.0Adjusted for: Finance expense 74.7 77.6 Realized gains on derivative financial instruments included in finance expense 2.2 2.2 Depreciation of property, plant and equipment 42.1 42.4 Depreciation and amortization included in cost of sales 44.3 44.9 Losses on disposal of assets 1.0 1.0 Amortization of intangible assets 21.1 23.5 Impairment of property, plant and equipment 4.7 4.7 Income tax expense 18.7 9.0 Unrealized gains on derivative financial instruments (26.2) (32.1) Pro-forma impact of acquisitions 0.1 -----------------------------------------------------------------------------Compliance EBITDA(1)(2) 276.2 263.2--------------------------------------------------------------------------------------------------------------------------------------------------------(1) EBITDA, as defined by Superior's revolving-term credit facility, is calculated on a trailing 12-month basis taking into consideration the pro-forma impact of acquisitions and dispositions in accordance with the requirements of Superior's credit facility. Superior's calculation of EBITDA and debt to EBITDA ratios may differ from those of similar entities.(2) The twelve months ended December 31, 2012 has been restated for the impact of adopting IAS 19 Employee Benefits, amendments on January 1, 2013. Refer to Note 2. March 31, December 31, 2013 2012(1)----------------------------------------------------------------------------Consolidated secured debt to Compliance EBITDA 1.3:1 1.9:1Consolidated debt to Compliance EBITDA 1.9:1 2.4:1Total debt to Compliance EBITDA 3.7:1 4.5:1--------------------------------------------------------------------------------------------------------------------------------------------------------(1) The compliance ratios has been restated for the impact of adopting IAS 19 Employee Benefits, amendments on January 1, 2013. Refer to Note 2.
