BNA Releases Semi-Annual Financials

BAM Split Corp. has released its Semi-Annual Financial Statements for the six months ended March 31, 2010.

A somewhat non-standard feature of these financial statement is explained in note 4 of the 2009 Annual Financials:

As at September 30, 2009 the following Preferred Shares were issued and outstanding and have been included in liabilities, net of $6.2 million (September 30, 2008 – $3.8 million) of associated transaction costs which are amortized using the effective interest method of amortization.

On September 30, 2009, the company had $367.825-million par value of preferreds outstanding which was stated on the books as a liability of $361.592-million. When calculating Asset Coverage, use the par value, not the book value! Ideally, the analyst will reduce the net assets of the firm by the unamortized costs, but in the great scheme of things (total assets of $1.371-billion) it’s only a rounding error.

The amortization of this expense makes the income statement look less good than it is, but if we add back the six-months’ amortization of ($923,000) to the net income as stated ($13,702,000) we get $14,625,000 to cover preferred dividends of $9,968,000, for income coverage of 1.5-:1, a slight improvement from the 1H09 figure of 1.4+:1.

BAM Split Corp. has three series of prefereds outstanding, BNA.PR.B, BNA.PR.C and BNA.PR.D. All are tracked by HIMIPref™. The first is relegated to the Scraps index on volume concerns, but the latter two are the sole constituents of the SplitShare index. These issues were last mentioned on PrefBlog during the Summer 2009 reorganization.

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