Headnote National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -Relief granted from having to present a reconciliation of U.S. and Canadian GAAP differences and to provide disclosure consistent with the disclosure requirements of Canadian GAAP applicable to public enterprises for the periods ending September 30, 2010 and December 31, 2010 – Relief granted from having to present a reconciliation in accordance with Canadian GAAP for annual an interim acquisition statements and a Canadian GAAP reconciliation of proforma financial information in the business acquisition report required to be filed in connection with an acquisition – Acquirer has filed U.S. GAAP financial statements for the year ended December 31, 2009 with comparatives for 2008 – Acquiree is U.S. GAAP filer – Relief granted on basis that there is a consistent basis of accounting, i.e. U.S. GAAP.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency – ss. 4.1(1)(a), 6.1(5)(b) and 7.1(2).
Date: September 3, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(THE “JURISDICTION”)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
IESI-BFC LTD.
(THE “FILER”)
Decision Document
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) for an exemption from the requirements of: (i) Parts 6 and 7 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (“NI 52-107”) to present a reconciliation in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) of Proforma Financial Information (as defined below) and Canadian GAAP reconciliation information with respect to the Annual and Interim Acquisition Statements (as defined below) in the business acquisition report (the “BAR”) required to be filed in connection with the Filer’s acquisition of Waste Services, Inc. (“WSI”) on July 2, 2010 and (ii) Section 4.1 (a) of NI 52-107 to present a reconciliation of US and Canadian GAAP differences that relate to recognition, measurement and presentation (including an explanation and quantification thereof), and to provide additional disclosure consistent with disclosure requirements of Canadian GAAP applicable to public enterprises for the interim and annual consolidated financial statements of the Filer for periods ending on or before December 31, 2010 (the “Exemptive Relief Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
Interpretation
Terms defined in National Instrument 14-101 Definitions have the same meaning in this decision, unless otherwise defined.
Representations
The decision is based on the following facts represented by the Filer:
The Filer is a corporation existing under the Business Corporations Act (Ontario) and is an SEC issuer, as defined in section 1.1 of NI 52-107.
The Filer’s head office is located at 135 Queens Plate Drive, Suite 300, Toronto, Ontario, M9W 6V1.
The Filer is a reporting issuer in each of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (collectively, the “Jurisdictions”).
The common shares of the Filer are listed and posted for trading on the Toronto Stock Exchange and the New York Stock Exchange.
The Filer is not in default of any of its obligations as a reporting issuer in any of the Jurisdictions.
On July 16, 2009, the Filer announced that it adopted United States generally accepted accounting principles as defined in section 1.1 of NI 52-107 (“US GAAP”) as the comprehensive basis of accounting and financial reporting commencing with its results for the second quarter ended June 30, 2009. On July 30, 2009 it filed its amended unaudited consolidated financial statements for the three months ended March 31, 2009 reflecting its adoption of US GAAP. The Filer filed its fiscal 2009 consolidated financial statements prepared in accordance with US GAAP, and including a reconciliation to Canadian GAAP, on SEDAR on February 23, 2010.
In accordance with section 4.1 of NI 52-107, IESI-BFC is required to present a reconciliation of US and Canadian GAAP differences that relate to recognition, measurement and presentation (including an explanation and quantification thereof), and to provide additional disclosure consistent with disclosure requirements of Canadian GAAP applicable to public enterprises for all interim and annual filings for periods ending on or before December 31, 2010. This Canadian GAAP reconciliation information was included in IESI-BFC’s first quarter interim filing for the three months ended March 31, 2010 and 2009.
On July 2, 2010, the Filer acquired WSI pursuant to a merger agreement dated November 11, 2009 (the “Merger”).
WSI is a Delaware corporation which was an SEC registrant prior to the Merger. WSI was not a reporting issuer in any jurisdiction in Canada.
WSI, which is now a major part of the Filer’s consolidated business, does not now and has not during any of the relevant prior periods used Canadian GAAP as the basis of its accounting and financial reporting.
Under the terms of the Merger, shareholders of WSI received, in exchange for each share of WSI common stock owned immediately prior to the Merger, 0.5833 common shares of the Filer. 27,970,968 common shares of the Filer were issued to the former holders of WSI common stock.
Following the Merger and combination with WSI, the nature of the Filer’s overall business has been significantly altered in terms of size and scope. As a result, the Filer believes that this reconciliation is of limited use to investors as the Filer has been reporting in US GAAP since the interim period for the six months ended June 30, 2009, and the changes in its business since that time (including the July 2010 acquisition of WSI) mean that the Canadian GAAP-reconciled financial information is no longer so readily comparable between periods.
In connection with the Merger, the Filer is required to file a BAR in accordance with Part 8 of National Instrument 51-102 Continuous Disclosure Obligations ( “NI 51-102”) on or before September 15, 2010.
In accordance with section 8.4 of NI 51-102, including section 8.4(4), the Filer’s BAR will incorporate by reference the following financial information prepared in accordance with US GAAP:
a. Unaudited Pro Forma Condensed Combined Financial Statements Prepared From the Consolidated Financial Statements of the Filer, the Consolidated Financial Statements of WSI and the Pro Forma Condensed Consolidated Statements of Operations of WSI Reflecting the Acquisition of Miami-Dade County Operations
i. Unaudited pro forma condensed combined balance sheet as at March 31, 2010 prepared by the management of the Filer
ii. Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2009 prepared by the management of the Filer
iii. Unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2010 prepared by the management of the Filer
(collectively, the “Proforma Financial Information”)
b. Historical Financial Statements of WSI
i. Audited consolidated financial statements of WSI as at and for the years ended December 31, 2009 and December 31, 2008
ii. Unaudited consolidated financial statements of WSI as at and for the three months ended March 31, 2010
c. Combined Financial Statements of Commercial Clean-Up Enterprises, Inc. and We Haul of South Florida, Inc. (acquired by WSI in December 2008)
i. Audited combined financial statements of Commercial Clean-Up Enterprises, Inc. and We Haul of South Florida, Inc. as at and for the nine months ended September 30, 2008
d. Pro Forma Condensed Consolidated Financial Information Prepared From the Consolidated Financial Statements of WSI and the Financial Statements of the Miami-Dade County Operations (a Division of Republic Services of Florida, a Limited Partnership)
i. Unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2009 prepared by WSI
e. Historical Financial Statements of Miami-Dade County Operations (acquired by WSI in September 2009)
i. Audited financial statements of Miami-Dade County Operations as at and for the year ended December 31, 2008 and as at and for the nine months ended September 30, 2009
(the financial statements referred to in paragraphs (b), (c), (d) and (e) above collectively, the “Annual and Interim Acquisition Statements”).
Section 6.1(5)(b) of NI 52-107 requires that the Annual and Interim Acquisition Statements be reconciled to Canadian GAAP consistent with item 7 above. Section 7.1(2) of NI 52-107 requires that the Proforma Financial Information prepared in accordance with US GAAP also be reconciled to Canadian GAAP applicable to public enterprises.
The Filer’s management will consolidate the results of operations of the acquired business from the acquisition date and, as part of that process, will conform the accounting policies of the acquired business to those of the Filer.
Since the Filer has adopted US GAAP as the comprehensive basis of accounting and financial reporting starting with the second quarter ended June 30, 2009, a Canadian GAAP reconciliation of the Proforma Financial Information and Annual and Interim Acquisition Statements is not necessary in order for investors to have a consistent basis of accounting for the Proforma Financial Information, Annual and Interim Acquisition Statements and the Filer’s financial statements.
The Filer will communicate to investors in a news release issued not later than September 15, 2010 and in the news releases announcing the financial results for the interim periods ended September 30, 2010 and December 31, 2010, that it has been granted exemptive relief by the Canadian securities regulatory authorities that permits it to discontinue the preparation and filing of a reconciliation of its reported US GAAP financial statements to Canadian GAAP.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemptive Relief Sought is granted, provided that the Filer complies with the representation in paragraph 18.
“Michael Brown”
__________________________________
Assistant Manager, Corporate Finance
Ontario Securities Commission