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  Exhibit 4.6    
    

 
    BFI CANADA INCOME FUND    
      
    CONSOLIDATED BALANCE SHEETS    
      
    June 30, 2008 (unaudited) and December 31, 2007    
      
    (in thousands of dollars)    

       
    

									
	 
	 	June 30,

2008 	 	December 31,

2007 	 
	 ASSETS
	 	 	 	 	 	 	 
	 CURRENT
	 	 	 	 	 	 	 
	 	 Cash and cash equivalents
	 	$	14,242	 	$	13,359	 
	 	 Accounts receivable
	 	 	128,296	 	 	115,851	 
	 	 Other receivables
	 	 	297	 	 	457	 
	 	 Income taxes recoverable
	 	 	2,629	 	 	—	 
	 	 Prepaid expenses
	 	 	18,522	 	 	15,001	 
	 	 	 	 	 	 
	
	 	 	163,986	 	 	144,668	 
	 OTHER RECEIVABLES
	 	 	620	 	 	761	 
	 FUNDED LANDFILL POST-CLOSURE COSTS (Note 6)
	 	 	6,751	 	 	5,976	 
	 INTANGIBLES
	 	 	138,532	 	 	144,686	 
	 GOODWILL
	 	 	643,584	 	 	616,534	 
	 DEFERRED COSTS
	 	 	8,300	 	 	7,306	 
	 CAPITAL ASSETS
	 	 	431,623	 	 	404,900	 
	 LANDFILL ASSETS
	 	 	648,535	 	 	644,711	 
	 OTHER ASSETS (Note 5)
	 	 	—	 	 	1,670	 
	 FUTURE INCOME TAX ASSETS
	 	 	1,180	 	 	—	 
	 	 	 	 	 	 
	
	 	$	2,043,111	 	$	1,971,212	 
	 	 	 	 	 	 
	 LIABILITIES
	 	 	 	 	 	 	 
	 CURRENT
	 	 	 	 	 	 	 
	 	 Accounts payable
	 	$	58,805	 	$	66,815	 
	 	 Accrued charges
	 	 	63,335	 	 	75,355	 
	 	 Distribution and dividend payable
	 	 	10,409	 	 	10,409	 
	 	 Income taxes payable
	 	 	905	 	 	2,515	 
	 	 Deferred revenues
	 	 	12,722	 	 	12,018	 
	 	 Current portion of long-term debt
	 	 	47,000	 	 	—	 
	 	 Landfill closure and post-closure costs (Note 6)
	 	 	2,330	 	 	2,900	 
	 	 	 	 	 	 
	
	 	 	195,506	 	 	170,012	 
	 LONG-TERM DEBT
	 	 	855,639	 	 	801,973	 
	 LANDFILL CLOSURE AND POST-CLOSURE COSTS (Note 6)
	 	 	62,796	 	 	55,943	 
	 OTHER LIABILITIES (Note 5)
	 	 	6,918	 	 	5,056	 
	 FUTURE INCOME TAX LIABILITIES
	 	 	55,674	 	 	57,668	 
	 	 	 	 	 	 
	
	 	 	1,176,533	 	 	1,090,652	 
	 	 	 	 	 	 
	 NON-CONTROLLING INTEREST (Note 7)
	 	 	245,831	 	 	251,371	 
	 UNITHOLDERS' EQUITY
	 	 	620,747	 	 	629,189	 
	 	 	 	 	 	 
	
	 	$	2,043,111	 	$	1,971,212	 
	 	 	 	 	 	 

1

 

 

 
    BFI CANADA INCOME FUND    
      
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)    
      
    For the periods ended June 30, 2008 and 2007    

    (unaudited — in thousands of dollars, except net income per trust unit amounts)    
        
    

															
	 
	 	Three months ended 	 	Six months ended 	 
	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 REVENUES
	 	$	280,262	 	$	225,515	 	$	524,609	 	$	427,815	 
	 EXPENSES
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 OPERATING
	 	 	170,351	 	 	127,888	 	 	317,499	 	 	244,518	 
	 	 SELLING, GENERAL AND ADMINISTRATION
	 	 	31,666	 	 	26,193	 	 	62,007	 	 	53,191	 
	 	 	 	 	 	 	 	 	 	 
	 INCOME BEFORE THE FOLLOWING
	 	 	78,245	 	 	71,434	 	 	145,103	 	 	130,106	 
	 AMORTIZATION
	 	 	45,736	 	 	41,372	 	 	88,313	 	 	79,290	 
	 INTEREST ON LONG-TERM DEBT
	 	 	12,695	 	 	8,471	 	 	26,069	 	 	18,365	 
	 FINANCING COSTS
	 	 	930	 	 	—	 	 	930	 	 	864	 
	 NET GAIN ON SALE OF CAPITAL ASSETS
	 	 	(127	)	 	(1,026	)	 	(87	)	 	(1,234	)
	 NET (GAIN) LOSS ON FINANCIAL INSTRUMENTS (Note 10)
	 	 	(5,497	)	 	(3,061	)	 	3,550	 	 	(1,206	)
	 NET FOREIGN EXCHANGE LOSS (GAIN)
	 	 	—	 	 	13,483	 	 	(624	)	 	15,104	 
	 OTHER EXPENSES
	 	 	26	 	 	—	 	 	57	 	 	5	 
	 	 	 	 	 	 	 	 	 	 
	 INCOME BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST
	 	 	24,482	 	 	12,195	 	 	26,895	 	 	18,918	 
	 	 	 	 	 	 	 	 	 	 
	 INCOME TAX EXPENSE (RECOVERY)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Current
	 	 	3,042	 	 	3,944	 	 	4,870	 	 	5,607	 
	 	 Future
	 	 	3,480	 	 	1,217	 	 	(6,409	)	 	(6,238	)
	 	 	 	 	 	 	 	 	 	 
	
	 	 	6,522	 	 	5,161	 	 	(1,539	)	 	(631	)
	 	 	 	 	 	 	 	 	 	 
	 INCOME BEFORE NON-CONTROLLING INTEREST
	 	 	17,960	 	 	7,034	 	 	28,434	 	 	19,549	 
	 NON-CONTROLLING INTEREST (Note 7)
	 	 	2,911	 	 	1,174	 	 	4,609	 	 	3,324	 
	 	 	 	 	 	 	 	 	 	 
	 NET INCOME
	 	 	15,049	 	 	5,860	 	 	23,825	 	 	16,225	 
	 OTHER COMPREHENSIVE INCOME (LOSS)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Foreign currency translation adjustment
	 	 	(5,931	)	 	(45,435	)	 	20,041	 	 	(50,493	)
	 	 	 	 	 	 	 	 	 	 
	 COMPREHENSIVE INCOME (LOSS)
	 	$	9,118	 	$	(39,575	)	$	43,866	 	$	(34,268	)
	 	 	 	 	 	 	 	 	 	 
	 Net income per weighted average trust unit, basic and diluted
	 	$	0.26	 	$	0.10	 	$	0.41	 	$	0.29	 
	 Weighted average number of trust units outstanding (thousands), basic (Note 8)
	 	 	57,568	 	 	57,350	 	 	57,568	 	 	55,557	 
	 Weighted average number of trust units outstanding (thousands), diluted (Note 8)
	 	 	68,706	 	 	68,510	 	 	68,706	 	 	66,885	 

2

 

 

 
    BFI CANADA INCOME FUND    
      
    CONSOLIDATED STATEMENTS OF CASH FLOWS    
      
    For the periods ended June 30, 2008 and 2007    
      

(unaudited — in thousands of dollars)    
        
    

																
	 
	 	Three months ended 	 	Six months ended 	 
	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 OPERATING
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Net income
	 	$	15,049	 	$	5,860	 	$	23,825	 	$	16,225	 
	 	 Items not affecting cash
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Write-off of deferred costs
	 	 	191	 	 	33	 	 	919	 	 	68	 
	 	 	 Accretion of landfill closure and post-closure costs
	 	 	785	 	 	759	 	 	1,566	 	 	1,561	 
	 	 	 Amortization of intangibles
	 	 	8,191	 	 	5,138	 	 	16,226	 	 	10,334	 
	 	 	 Amortization of capital assets
	 	 	19,267	 	 	15,702	 	 	38,564	 	 	31,441	 
	 	 	 Amortization of landfill assets
	 	 	18,278	 	 	20,532	 	 	33,523	 	 	37,515	 
	 	 	 Net gain on sale of capital assets
	 	 	(127	)	 	(1,026	)	 	(87	)	 	(1,234	)
	 	 	 Net (gain) loss on financial instruments
	 	 	(5,497	)	 	(3,061	)	 	3,550	 	 	(1,206	)
	 	 	 Net unrealized foreign exchange loss
	 	 	—	 	 	14,320	 	 	—	 	 	16,304	 
	 	 	 Future income taxes
	 	 	3,480	 	 	1,217	 	 	(6,409	)	 	(6,238	)
	 	 	 Non-controlling interest
	 	 	2,911	 	 	1,174	 	 	4,609	 	 	3,324	 
	 	 Landfill closure and post-closure expenditures
	 	 	(382	)	 	(768	)	 	(627	)	 	(1,295	)
	 	 	 	 	 	 	 	 	 	 
	
	 	 	62,146	 	 	59,880	 	 	115,659	 	 	106,799	 
	 	 Changes in non-cash working capital items
	 	 	(7,145	)	 	(6,074	)	 	(17,724	)	 	(24,538	)
	 	 	 	 	 	 	 	 	 	 
	 Cash generated from operating activities
	 	 	55,001	 	 	53,806	 	 	97,935	 	 	82,261	 
	 	 	 	 	 	 	 	 	 	 
	 INVESTING
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Acquisitions (Note 4)
	 	 	(35,816	)	 	(33,148	)	 	(54,869	)	 	(37,453	)
	 	 Investment in other receivables
	 	 	—	 	 	—	 	 	—	 	 	(400	)
	 	 Proceeds from other receivables
	 	 	232	 	 	1,502	 	 	301	 	 	1,856	 
	 	 Funded landfill post-closure costs
	 	 	(200	)	 	(294	)	 	(590	)	 	(642	)
	 	 Purchase of capital assets
	 	 	(24,052	)	 	(23,551	)	 	(37,589	)	 	(40,397	)
	 	 Purchase of landfill assets
	 	 	(13,332	)	 	(16,073	)	 	(21,204	)	 	(25,947	)
	 	 Proceeds from the sale of capital assets
	 	 	462	 	 	1,316	 	 	545	 	 	1,578	 
	 	 Investment in deferred costs
	 	 	(686	)	 	(585	)	 	(1,744	)	 	(1,565	)
	 	 	 	 	 	 	 	 	 	 
	 Cash utilized in investing activities
	 	 	(73,392	)	 	(70,833	)	 	(115,150	)	 	(102,970	)
	 	 	 	 	 	 	 	 	 	 
	 FINANCING
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Proceeds from long-term debt
	 	 	79,983	 	 	65,404	 	 	145,200	 	 	145,756	 
	 	 Repayment of long-term debt
	 	 	(33,754	)	 	(108,017	)	 	(64,371	)	 	(149,251	)
	 	 Trust units issued, net of issue costs
	 	 	(3	)	 	87,589	 	 	(3	)	 	87,579	 
	 	 Distributions and dividends paid to unitholders and participating preferred shareholders
	 	 	(31,227	)	 	(30,686	)	 	(62,454	)	 	(60,369	)
	 	 	 	 	 	 	 	 	 	 
	 Cash generated from financing activities
	 	 	14,999	 	 	14,290	 	 	18,372	 	 	23,715	 
	 	 	 	 	 	 	 	 	 	 
	 	 Effect of foreign exchange changes on foreign cash and cash equivalents
	 	 	45	 	 	590	 	 	(274	)	 	728	 
	 	 	 	 	 	 	 	 	 	 
	 NET CASH (OUTFLOW) INFLOW
	 	 	(3,347	)	 	(2,147	)	 	883	 	 	3,734	 
	 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OR YEAR
	 	 	17,589	 	 	15,156	 	 	13,359	 	 	9,275	 
	 	 	 	 	 	 	 	 	 	 
	 CASH AND CASH EQUIVALENTS, END OF PERIOD
	 	$	14,242	 	$	13,009	 	$	14,242	 	$	13,009	 
	 	 	 	 	 	 	 	 	 	 
	 SUPPLEMENTAL CASH FLOW INFORMATION:
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Cash and cash equivalents are comprised of:
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Cash
	 	$	14,225	 	$	11,218	 	$	14,225	 	$	11,218	 
	 	 	 Cash equivalents
	 	 	17	 	 	1,791	 	 	17	 	 	1,791	 
	 	 	 	 	 	 	 	 	 	 
	
	 	$	14,242	 	$	13,009	 	$	14,242	 	$	13,009	 
	 	 	 	 	 	 	 	 	 	 
	 	 Cash paid during the period for:
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Income taxes
	 	$	8,125	 	$	4,160	 	$	9,490	 	$	4,802	 
	 	 	 Interest
	 	$	11,419	 	$	9,224	 	$	22,651	 	$	19,077	 

3

 

 

 
    BFI CANADA INCOME FUND    
      
    CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY,
  DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS    
      
    For the periods ended June
30, 2008 and 2007    
      
    (unaudited — in thousands of dollars)    
        
    

																
	 
	 	Three months ended 	 	Six months ended 	 
	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 CONTRIBUTED EQUITY
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Trust units, beginning of period or year
	 	$	1,006,751	 	$	916,828	 	$	1,006,751	 	$	908,221	 
	 	 Trust units issued, net of issue costs and related tax effect, during the period
	 	 	(3	)	 	89,441	 	 	(3	)	 	89,431	 
	 	 Trust units issued on exchange of participating preferred shares ("PPSs"), during the period
	 	 	24	 	 	—	 	 	24	 	 	8,617	 
	 	 	 	 	 	 	 	 	 	 
	 	 Trust units, end of period
	 	 	1,006,772	 	 	1,006,269	 	 	1,006,772	 	 	1,006,269	 
	 	 	 	 	 	 	 	 	 	 
	 	 Class A units, beginning of period or year
	 	 	—	 	 	—	 	 	—	 	 	—	 
	 	 Class A units issued, during the period
	 	 	—	 	 	—	 	 	—	 	 	—	 
	 	 	 	 	 	 	 	 	 	 
	 	 Class A units, end of period
	 	 	—	 	 	—	 	 	—	 	 	—	 
	 	 	 	 	 	 	 	 	 	 
	 	 Treasury units, beginning of period or year
	 	 	—	 	 	—	 	 	—	 	 	—	 
	 	 Trust units acquired by the U.S. LTIP, during the period
	 	 	—	 	 	(1,698	)	 	(2,004	)	 	(1,698	)
	 	 Deferred compensation obligation, during the period
	 	 	—	 	 	1,698	 	 	2,004	 	 	1,698	 
	 	 	 	 	 	 	 	 	 	 
	 	 Treasury units, end of period
	 	 	—	 	 	—	 	 	—	 	 	—	 
	 	 	 	 	 	 	 	 	 	 
	 TOTAL CONTRIBUTED EQUITY
	 	 	1,006,772	 	 	1,006,269	 	 	1,006,772	 	 	1,006,269	 
	 	 	 	 	 	 	 	 	 	 
	 DEFICIT
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Accumulated net income, beginning of period or year
	 	 	123,840	 	 	93,742	 	 	115,064	 	 	83,377	 
	 	 Accumulated distributions, beginning of period or year
	 	 	(390,043	)	 	(285,544	)	 	(363,879	)	 	(260,991	)
	 	 	 	 	 	 	 	 	 	 
	 	 Deficit, beginning of period or year
	 	 	(266,203	)	 	(191,802	)	 	(248,815	)	 	(177,614	)
	 	 	 	 	 	 	 	 	 	 
	 	 	 Net income, during the period
	 	 	15,049	 	 	5,860	 	 	23,825	 	 	16,225	 
	 	 	 Distributions declared, during the period
	 	 	(26,165	)	 	(26,016	)	 	(52,329	)	 	(50,569	)
	 	 	 	 	 	 	 	 	 	 
	 	 Accumulated net income, end of period
	 	 	138,889	 	 	99,602	 	 	138,889	 	 	99,602	 
	 	 	 	 	 	 	 	 	 	 
	 	 Accumulated distributions, end of period
	 	 	(416,208	)	 	(311,560	)	 	(416,208	)	 	(311,560	)
	 	 	 	 	 	 	 	 	 	 
	 DEFICIT, END OF PERIOD
	 	 	(277,319	)	 	(211,958	)	 	(277,319	)	 	(211,958	)
	 	 	 	 	 	 	 	 	 	 
	 ACCUMULATED OTHER COMPREHENSIVE LOSS
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Accumulated other comprehensive loss, beginning of period or year
	 	 	(102,775	)	 	(37,946	)	 	(128,747	)	 	(32,888	)
	 	 Foreign currency translation adjustment, during the period
	 	 	(5,931	)	 	(45,435	)	 	20,041	 	 	(50,493	)
	 	 	 	 	 	 	 	 	 	 
	 ACCUMULATED OTHER COMPREHENSIVE LOSS, END OF PERIOD
	 	 	(108,706	)	 	(83,381	)	 	(108,706	)	 	(83,381	)
	 	 	 	 	 	 	 	 	 	 
	 DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS, END OF PERIOD
	 	 	(386,025	)	 	(295,339	)	 	(386,025	)	 	(295,339	)
	 	 	 	 	 	 	 	 	 	 
	 UNITHOLDERS' EQUITY
	 	$	620,747	 	$	710,930	 	$	620,747	 	$	710,930	 
	 	 	 	 	 	 	 	 	 	 

4

 

  BFI CANADA INCOME FUND  

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated)  

 1.     ORGANIZATION  

BFI
Canada Income Fund (the "Fund") is an open ended, limited purpose trust established under the laws of the province of Ontario and governed by a Second Amended and Restated Declaration of
Trust dated January 21, 2005, as supplemented from time to time. The Fund, through its operating subsidiaries, provides vertically integrated non-hazardous solid waste ("waste")
services to commercial, industrial, municipal and residential customers in Canada and the south and northeast United States ("U.S."). The Fund makes cash distributions to unitholders based on
all amounts received by the Fund, and IESI Corporation ("IESI"), an indirect subsidiary of the Fund, pays equivalent dividends to participating preferred shareholders ("non-controlling
interest"), as determined by the Trustees. The declaration of trust provides that monthly cash distributions are to be paid on or about the fifteenth day of the succeeding month. 

 2.     INTERIM FINANCIAL STATEMENTS  

The
unaudited interim consolidated financial statements do not conform in all respects to the requirements of Canadian generally accepted accounting principles ("GAAP") for annual financial statements
and should therefore be read in conjunction with the audited consolidated financial statements and notes thereto included in the Fund's annual report for the year ended December 31, 2007. The
unaudited interim consolidated financial statements have been prepared by management in accordance with GAAP applicable to interim financial statements and follow the same accounting policies and
methods in their application as the most recent audited annual financial statements, except as indicated in Note 3. 

 3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  

 Use of estimates  

In
April 2008, the Fund received a one year extension to continue operating the Lachenaie landfill. Management remains confident that approval for a longer-term expansion will be
obtained prior to the expiry of the one year extension. If the longer-term expansion is not successful, the following assets would be subject to material adjustment: goodwill $19,859
(December 31, 2007 — $19,859) and landfill assets $85,784 (December 31, 2007 — $85,136). At June 30,
2008, no provision for impairment has been recorded. 

 Financial instruments  

Effective
January 1, 2008, the Fund adopted Canadian Institute of Chartered Accountants ("CICA") accounting standards, Financial Instruments — Disclosures
(section 3862), Financial Instruments — Presentation (section 3863), and Capital Disclosures (section 1535), which collectively required
additional disclosures pertaining to the significance, risk, and management of financial instruments, and capital disclosures as they relate to the Fund's objectives, policies, and process for
managing capital (Notes 10 & 11). 

 Loans and receivables  

Allowances
and impairment losses on accounts receivable are recorded to selling, general and administration expense on the Fund's consolidated statement of operations and comprehensive income (loss).
Allowances and impairment losses are included in net income and changes in non-cash working capital items on the Fund's consolidated statement of cash flows. 

 Other financial liabilities  

Interest
on long-term term debt is recorded separately in the Fund's consolidated statement of operations and comprehensive income (loss). Interest expense is included in net income and
proceeds and repayment of long-term debt is included in the financing activities section of the Fund's consolidated statement of cash flows. Changes in accounts payable and accrued charges
are included in changes in non-cash working capital items, and other liabilities (contingent acquisition payables) are included in changes in non-cash working capital items and
acquisitions in the investing section of the Fund's consolidated statement of cash flows. 

 4.     ACQUISITIONS  

For
the six months ended June 30, 2008, the Fund acquired all of the solid waste collection assets, including various current assets, and assumed various liabilities of four waste management
companies, one in Canada and three in the U.S. Aggregate consideration, including consideration in respect of liabilities assumed amounted to $38,213 and is allocated to the Canadian,
U.S. northeast and U.S. south segments as follows: $14,948, $23,014 and $251, respectively. The allocation of the purchase prices are as follows: intangibles $9,874, goodwill $10,225,
capital assets $13,545, and net current assets $4,569. Aggregate cash consideration amounting to $36,378 excludes holdbacks and cash payments due to sellers for achieving various business performance
targets. The allocation of certain purchase prices are absent final fair value adjustments and adjustments for the payment of contingent consideration for achieving 

5

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 4.     ACQUISITIONS (Continued) 

various
business performance targets. Final fair value and contingent consideration adjustments that increase or decrease the fair value of certain assets or liabilities will be recorded against the
respective purchase price allocation. 

Contingent
consideration payments in respect of prior period acquisitions totaled $18,491. 

For
the six months ended June 30, 2007, the Fund acquired all of the outstanding common shares and solid waste collection assets of one waste management company in Canada and one in the U.S.,
and acquired the solid waste collection assets, including various current assets, and assumed various liabilities of one waste management company in Canada and five in the U.S. Aggregate
consideration, including consideration in respect of liabilities assumed, amounted to $42,292 and is allocated to the U.S. northeast, U.S. south and Canadian segments as follows: $814,
$36,229, and $5,249, respectively. The allocation of purchase prices is as follows: intangibles $10,959, goodwill $15,326, capital assets $16,187 and net current liabilities ($180). Aggregate cash
consideration amounted to $35,046. 

Contingent
consideration payments in respect of prior period acquisitions totaled $2,407. 

The
results of these acquisitions have been included in the consolidated financial statements from their respective closing dates. 

 5.     OTHER ASSETS AND OTHER LIABILITIES  

									
	 	 
	 	June 30,

2008 	 	December 31,

2007 	 
	 	 Other assets
	 	 	 	 	 	 	 
	 	 Fair value of foreign currency exchange agreements
	 	$	—	 	$	1,670	 
	 	 	 	 	 	 	 
	 	
	 	$	—	 	$	1,670	 
	 	 	 	 	 	 	 
	 	 Other liabilities
	 	 	 	 	 	 	 
	 	 Fair value of interest rate swaps
	 	$	6,512	 	$	4,394	 
	 	 Fair value of old corrugated cardboard ("OCC") hedges
	 	 	—	 	 	76	 
	 	 Contingent acquisition payables
	 	 	406	 	 	586	 
	 	 	 	 	 	 	 
	 	
	 	$	6,918	 	$	5,056	 
	 	 	 	 	 	 	 

 6.     LANDFILL CLOSURE AND POST-CLOSURE COSTS  

The
following tables outline key assumptions used to determine the fair value of landfill closure and post-closure costs, the expected timing of landfill closure and
post-closure expenditures, and reconcile beginning and ending landfill closure and post-closure costs: 

						
	 	 
	 	June 30,

2008 	 
	 	 Fair value of legally restricted assets
	 	$	6,751	 
	 	 Undiscounted closure and post-closure costs
	 	$	380,195	 
	 	 Credit adjusted risk free rate — Canadian segment landfills
	 	 	5.6	%
	 	 Credit adjusted risk free rate — U.S. segment landfills
	 	 	7.2	%
	 	 	 	 	 
	 	 Expected timing of undiscounted landfill closure and post-closure expenditures
	 	 	 	 
	 	 2008
	 	$	2,330	 
	 	 2009
	 	 	9,395	 
	 	 2010
	 	 	9,097	 
	 	 2011
	 	 	5,123	 
	 	 2012
	 	 	9,692	 
	 	 Thereafter
	 	 	344,558	 
	 	 	 	 	 
	 	
	 	$	380,195	 
	 	 	 	 	 

6

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 6.     LANDFILL CLOSURE AND POST-CLOSURE COSTS (Continued) 

 

									
	 	 
	 	Three months ended

June 30, 2008 	 	Three months ended

June 30, 2007 	 
	 	 Landfill closure and post-closure costs, beginning of period
	 	$	63,085	 	$	66,480	 
	 	 Provision for landfill closure and post-closure costs, during the period
	 	 	2,081	 	 	2,623	 
	 	 Accretion expense, during the period
	 	 	785	 	 	759	 
	 	 Landfill closure and post-closure expenditures, during the period
	 	 	(382	)	 	(768	)
	 	 Foreign currency translation adjustment, during the period
	 	 	(443	)	 	(4,401	)
	 	 	 	 	 	 	 
	 	 Landfill closure and post-closure costs, end of period
	 	$	65,126	 	$	64,693	 
	 	 	 	 	 	 	 

 

									
	 	 
	 	Six months ended

June 30, 2008 	 	Six months ended

June 30, 2007 	 
	 	 Landfill closure and post-closure costs, beginning of year
	 	$	58,843	 	$	64,535	 
	 	 Provision for landfill closure and post-closure costs, during the period
	 	 	3,853	 	 	4,903	 
	 	 Accretion expense, during the period
	 	 	1,566	 	 	1,561	 
	 	 Landfill closure and post-closure expenditures, during the period
	 	 	(627	)	 	(1,295	)
	 	 Foreign currency translation adjustment, during the period
	 	 	1,491	 	 	(5,011	)
	 	 	 	 	 	 	 
	 	 Landfill closure and post-closure costs, end of period
	 	$	65,126	 	$	64,693	 
	 	 	 	 	 	 	 

The
Fund is required to deposit monies into a social utility trust for the purpose of settling post-closure costs. The funding amount is established by the Quebec Government based on each
cubic metre of waste accepted at the Lachenaie landfill and payment is due quarterly. At June 30, 2008, funded landfill post-closure costs, representing the fair value of legally
restricted assets, total $6,751 (December 31, 2007 — $5,976). 

At
June 30, 2008, the Fund has an accrued environmental liability of $10,749 (December 31, 2007 — $10,712). The accrued environmental liability is
included in landfill closure and post-closure costs and relates principally to an inactive landfill which the Fund acquired on the acquisition of IESI. The estimated costs have a total
undiscounted value amounting to $11,073 (December 31, 2007 — $10,914). 

 7.     NON-CONTROLLING INTEREST  

Exchanges
of PPSs are recorded at the carrying value of the PPSs at issuance net of net income and dividends attributable to PPSs to the date of exchange. For the six months ended June 30,
2008, one PPS was exchanged for a trust unit of the Fund (2007 — 364). 

															
	 	 
	 	June 30 	 
	 	 
	 	PPSs 	 	2008 	 	PPSs 	 	2007 	 
	 	 Non-controlling interest, beginning of year
	 	 	11,138	 	$	251,371	 	 	11,774	 	$	281,243	 
	 	 PPSs exchanged for trust units, during the period
	 	 	(1	)	 	(24	)	 	(364	)	 	(8,617	)
	 	 PPSs cancelled, during the period
	 	 	—	 	 	—	 	 	(250	)	 	(6,638	)
	 	 Net income attributable to PPSs, during the period
	 	 	 	 	 	4,609	 	 	 	 	 	3,324	 
	 	 Dividends attributable to PPSs, during the period
	 	 	 	 	 	(10,125	)	 	 	 	 	(10,303	)
	 	 	 	 	 	 	 	 	 	 	 
	 	 Non-controlling interest, end of period
	 	 	11,137	 	$	245,831	 	 	11,160	 	$	259,009	 
	 	 	 	 	 	 	 	 	 	 	 

7

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 8.     UNITHOLDERS' EQUITY  

Details
of issued trust and Class A units for the six months ended June 30, 2008 are as follows: 

									
	 	 
	 	June 30 	 
	 	 
	 	2008 	 	2007 	 
	 	 Trust units issued and outstanding, beginning of year
	 	 	57,568	 	 	53,617	 
	 	 Trust units issued, during the period
	 	 	—	 	 	3,565	 
	 	 Trust units issued on exchange of PPSs, during the period
	 	 	1	 	 	364	 
	 	 	 	 	 	 	 
	 	 Trust units issued and outstanding, end of period
	 	 	57,569	 	 	57,546	 
	 	 	 	 	 	 	 
	 	 Class A units issued and outstanding, beginning of year
	 	 	—	 	 	—	 
	 	 Class A units issued, during the period
	 	 	—	 	 	—	 
	 	 	 	 	 	 	 
	 	 Class A units issued and outstanding, end of period
	 	 	—	 	 	—	 
	 	 	 	 	 	 	 

Accumulated
other comprehensive loss, representing accumulated foreign currency translation adjustments, is comprised principally of accumulated exchange losses on goodwill and capital and landfill
assets, partially offset by accumulated exchange gains on long-term debt, landfill closure and post-closure costs, and future income tax liabilities. 

The
basic weighted average trust units outstanding for the three months ended June 30, 2008 totaled 57,568 (2007 — 57,350). The calculation of net income
per weighted average trust unit, basic, is net of the non-controlling interest's share of net income, and amounts to $0.26
(2007 — $0.10). The diluted weighted average trust units outstanding include the exchange of all PPSs, 11,138
(2007 — 11,160), into trust units of the Fund and totals 68,706 (2007 — 68,510). The calculation of net income per diluted
weighted average trust unit amounts to $0.26 (2007 — $0.10). 

The
basic weighted average trust units outstanding for the six months ended June 30, 2008 totaled 57,568 (2007 — 55,557). The calculation of net income per
weighted average trust unit, basic, is net of the non-controlling interest's share of net income, and amounts to $0.41 (2007 — $0.29). The diluted
weighted average trust units outstanding include the exchange of all PPSs, 11,138 (2007 — 11,328), into trust units of the Fund and totals 68,706
(2007 — 66,885). The calculation of net income per diluted weighted average trust unit amounts to $0.41 (2007 — $0.29). 

At
June 30, 2008, 183 (December 31, 2007 — 108) trust units were held by the U.S. long-term incentive plan rabbi trust. 

 9.     EMPLOYEE FUTURE BENEFITS  

The
components of net benefit plan expense recorded in the consolidated statements of operations and comprehensive income (loss) as an operating expense are as follows: 

															
	 	 
	 	Three months ended

June 30 	 	Six months ended

June 30 	 
	 	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 	 Current service cost
	 	$	16	 	$	16	 	$	33	 	$	33	 
	 	 Interest cost
	 	 	10	 	 	11	 	 	21	 	 	21	 
	 	 Expected return on plan assets
	 	 	(14	)	 	(13	)	 	(28	)	 	(25	)
	 	 Amortization of transition asset
	 	 	—	 	 	—	 	 	(1	)	 	(1	)
	 	 Net actuarial losses
	 	 	4	 	 	5	 	 	7	 	 	10	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 Net benefit plan expense
	 	$	16	 	$	19	 	$	32	 	$	38	 
	 	 	 	 	 	 	 	 	 	 	 

8

 

  BFI CANADA INCOME FUND  

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)  

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated)  

 10.   FINANCIAL INSTRUMENTS  

The
following table illustrates the Fund's financial assets and liabilities by category, including their carrying and fair value amounts. 

																	
	 	 
	 	June 30

2008 	 	December 31

2007 	 
	 	 
	 	Carrying

Amount 	 	Fair Value 	 	Carrying

Amount 	 	Fair Value 	 
	 	 Financial assets
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Held for trading
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Current
	 	$	14,242	 	$	14,242	 	$	13,359	 	$	13,359	 
	 	 	 	 Long-term
	 	$	6,751	 	$	6,751	 	$	7,646	 	$	7,646	 
	 	 	 Loans and receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Current
	 	$	128,593	 	$	128,637	 	$	116,308	 	$	116,347	 
	 	 	 	 Long-term
	 	$	620	 	$	670	 	$	761	 	$	825	 
	 	 Financial liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Other financial liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Current
	 	$	122,140	 	$	122,140	 	$	142,170	 	$	142,170	 
	 	 	 	 Long-term
	 	$	903,045	 	$	916,427	 	$	802,559	 	$	817,423	 
	 	 	 Held for trading
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Long-term
	 	$	6,512	 	$	6,512	 	$	4,470	 	$	4,470	 

The
following table outlines items of income and expense included in the Fund's statement of operations and comprehensive income (loss) by class of financial asset and liability. 

																	
	 	 
	 	Three months

ended June 30 	 	Six months

ended June 30 	 
	 	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 	 Financial assets
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Held for trading
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Net (gain) loss on financial instruments
	 	$	(28	)	$	(2,667	)	$	1,669	 	$	(1,521	)
	 	 	 Loans and receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Selling, general and administration
	 	 	930	 	$	713	 	$	1,389	 	$	1,133	 
	 	 	 	 Interest on long-term debt — (income)
	 	$	(30	)	$	(94	)	$	(63	)	$	(184	)
	 	 Financial liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Held for trading
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Net (gain) loss on financial instruments
	 	$	(5,469	)	$	(394	)	$	1,881	 	$	315	 

 Credit risk  

Credit
risk is defined as the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge its obligation. The Fund's exposure to credit risk
is limited principally to cash and cash equivalents, accounts receivable, other receivables, funded landfill post-closure costs, interest rate swaps, foreign currency exchange agreements,
and hedge agreements for OCC. In all instances, the Fund's risk management objective, whether of credit, liquidity, market or otherwise, is to mitigate its risk exposures to a level consistent with
its risk tolerance. 

 Cash and cash equivalents  

Certain
senior management are responsible for determining which financial institutions the Fund will bank and hold deposits with. Management's selected financial institutions are concurred by the
Board of Trustees. Senior management typically selects financial institutions which are party to its long-term debt facilities and are deemed by management to be of sufficient size,
liquidity, and stability. 

9

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 10.   FINANCIAL INSTRUMENTS (Continued) 

Management
reviews the Fund's exposure to credit risk from time to time or as conditions indicate that the Fund's exposure to credit risk has or is subject to change. The Fund's maximum exposure to
credit risk is the fair value of cash and cash equivalents recorded on the Fund's consolidated balance sheet, $14,242 (December 31, 2007 — $13,359). The
Fund holds no collateral or other credit enhancements as security over its cash and cash equivalent balances. The Fund deems the credit quality of its cash and cash equivalent balances to be high and
no amounts are impaired. 

 Accounts receivable  

The
Fund is subject to credit risk on its accounts receivable through the normal course of business. The Fund performs credit checks or accepts payment or security in advance of service to limit its
exposure to credit risk. The Fund's customer base is sufficiently diverse to provide some mitigation to credit risk exposure. The Fund has assigned various employees to carry out its collection effort
in a manner consistent with its accounts receivable and credit and collections policies. These policies establish procedures to manage, monitor, control, investigate, record and improve accounts
receivable credit and collection. The Fund also has policies and procedures which establish estimates for doubtful account allowances. These calculations are generally based on historical collection
or alternatively historical bad debt provisions. Specific account balance review is permitted where practical and consideration is given to the credit quality of the customer, historical payment
history, and other factors specific to the customer, including bankruptcy or insolvency. 

The
Fund is subject to credit risk from its exposure to a single customer in the U.S. which accounts for approximately 6.6% of the Fund's accounts receivable at June 30, 2008
(December 31, 2007 — 6.0%). The Fund does not consider the risk from this exposure to be significant. 

The
following table illustrates the Fund's ageing of accounts receivable and the Fund's allowance for doubtful accounts by ageing category. 

											
	 	 
	 	June 30

2008 	 
	 	 
	 	Gross 	 	Allowance 	 
	 	 Financial assets — Loans and receivables
	 	 	 	 	 	 	 
	 	 	 Accounts receivable
	 	 	 	 	 	 	 
	 	 	 	 Amounts outstanding 0 to 30 days
	 	$	82,508	 	$	16	 
	 	 	 	 Amounts outstanding 31 to 60 days
	 	 	30,477	 	 	20	 
	 	 	 	 Amounts outstanding 61 to 90 days
	 	 	9,497	 	 	254	 
	 	 	 	 Amounts outstanding 91 days and thereafter
	 	 	7,110	 	 	4,319	 
	 	 	 	 	 	 	 
	 	 	 	 Subtotal
	 	 	129,592	 	 	4,609	 
	 	 	 	 Other accounts receivable
	 	 	3,313	 	 	—	 
	 	 	 	 	 	 	 
	 	 Total gross accounts receivable and allowance
	 	$	132,905	 	$	4,609	 
	 	 	 	 	 	 	 

The
following table illustrates the Fund's movement in its allowance for doubtful accounts for the three and six months ended June 30, 2008. 

										
	 	 
	 	Three months

ended

June 30, 2008 	 	Six months

ended

June 30, 2008 	 
	 	 Accounts receivable — movement in allowance for doubtful accounts
	 	 	 	 	 	 	 
	 	 	 Balance, beginning of the period or year
	 	$	4,216	 	$	4,174	 
	 	 	 Net additions to allowance for doubtful accounts, during the period
	 	 	1,106	 	 	1,565	 
	 	 	 Written-off, uncollectible, during the period
	 	 	(842	)	 	(1,552	)
	 	 	 Recoveries, during the period
	 	 	154	 	 	323	 
	 	 	 Foreign currency translation adjustment, during the period
	 	 	(25	)	 	99	 
	 	 	 	 	 	 	 
	 	 Balance, end of period
	 	$	4,609	 	$	4,609	 
	 	 	 	 	 	 	 

10

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 10.   FINANCIAL INSTRUMENTS (Continued) 

Accounts
receivable are typically assessed for impairment in aggregate, but may be assessed for impairment on an individual basis. Accounts receivable that are deemed by management to be at risk of
collection are provided for through an allowance account. When an accounts receivable balance is considered uncollectable, it is written-off against the allowance account. Subsequent
recoveries of amounts previously written-off are credited against the allowance account and changes to the allowance account are recorded in selling, general and administration expense in
the Fund's statement of operations and comprehensive income (loss). Management typically assesses aggregate accounts receivable impairment applying the Fund's historical rate of collection giving
consideration to broader economic conditions. When assessing accounts receivable for impairment on an individual basis, management typically
considers the credit quality of the customer, historical payment history, and other factors specific to the customer. 

The
Fund's accounts receivable are generally due upon invoice receipt. Accordingly, all amounts which are outstanding for a period that exceeds the current period are past due. Based on historical
collection the Fund has been successful in collecting amounts that are not outstanding for greater than 90 days. The Fund assesses the credit quality of accounts receivable that are neither
past due nor impaired as high. The Fund's maximum exposure to accounts receivable credit risk is equivalent to its net carrying amount. The Fund may request payment in advance of service generally in
the form of credit card deposit or full or partial prepayment as security. Amounts deposited or prepaid in advance of service are recorded to unearned revenue on the Fund's consolidated balance sheet.
The diversity of the Fund's customer base, including diversity in customer size, balance and geographic location inherently reduces the Fund's exposure to credit risk. Accounts receivable considered
impaired at June 30, 2008 are not considered significant. 

 Other receivables  

The
Fund is subject to credit risk on other receivables. The Fund enters into agreements with cities in the province of Quebec to finance containers. Senior management is responsible for reviewing
each agreement, including but not limited to the financial terms, in advance of entering into the agreement. Management views cities in the Province of Quebec to be low risk counterparties. The Fund's
maximum exposure to credit risk is the carrying amount of other receivables, $917 (December 31, 2007 — $1,218). The Fund typically retains ownership of the
containers until such time as all payments are received. Once all payments are received, ownership of the containers is typically transferred to the respective city. The Fund deems the credit quality
of its other receivables balances to be high and no amounts are impaired. 

 Funded landfill post-closure costs  

The
Fund is subject to credit risk on deposits it makes to a social utility trust. The Fund's deposits are invested in bankers acceptances offered through Canadian financial institutions or Government
of Canada treasury bills. Due to the nature of the underlying investments, management deems its exposure to credit risk related to funded landfill post-closure cost amounts to be low. The
Fund's maximum exposure to credit risk is the fair value of funded landfill post-closure costs recorded on the Fund's consolidated balance sheet, $6,751 (December 31,
2007 — $5,976). Management reviews the Fund's exposure to risk from time to time or as conditions indicate that the Fund's exposure to risk has changed or is
subject to change. The Fund holds no collateral or other credit enhancements as security over the invested amounts. However, the Fund deems the credit quality of the financial asset as high in light
of the underlying investments. 

 Interest rate swaps, foreign currency exchange agreements, and hedge agreements for OCC  

The
Fund is subject to credit risk on its interest rate swaps, foreign currency exchange agreements, and OCC agreements (collectively the "agreements"). The Fund enters, or has entered, into these
agreements as a condition of its U.S. long-term debt facility to fix a portion of its variable rate interest charge on advances and borrowings, to mitigate the effects of changes in
U.S. to Canadian foreign currency exchange rates on distributions and dividends funded in Canadian dollars from U.S. sources, and to mitigate the effect of changes in commodity prices on
OCC. As of June 30, 2008, all foreign currency exchange agreements and hedge agreements for OCC have expired. The Fund's corporate treasury function is charged with arranging and approving all
agreements. Suitable counterparties identified by the Fund's treasury function are approved by the Chair of the Audit Committee. The Fund will only enter into agreements with highly rated and
experienced counterparties who have successfully demonstrated that they are capable of executing these arrangements. If the counterparties' credit rating, prepared by reputable third party rating
agencies, is downgraded, the Fund's treasury function will review the agreement and assess if its exposure to the counterparty can be collateralized or if the agreement should be terminated. The
Fund's treasury function also prepares a report, at least once annually, to the Fund's Audit Committee which outlines key terms of its agreements, fair values, counterparties and each counterparties
most recent rating, and where applicable changes to the risks related to each agreement. The Fund's maximum exposure to credit risk is the fair value of interest rate swaps, foreign currency exchange
agreements, and hedge agreements for OCC recorded in other assets and liabilities on the Fund's consolidated balance sheet 

11

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 10.   FINANCIAL INSTRUMENTS (Continued) 

(see note 5).
The Fund holds no collateral or other credit enhancements as security over these agreements. The Fund deems the agreements' credit quality to be high in light of the
counterparties to the agreements and no amounts are either past due or impaired. 

 Liquidity risk  

Liquidity
risk is the risk that the Fund will encounter difficulty in meeting obligations associated with the settlement of its financial liabilities. The Fund's exposure to liquidity risk is due
primarily to its reliance on long-term debt financing. The Fund's treasury function is responsible for ensuring that the Fund has sufficient short, medium and long-term
liquidity. Through its treasury function, the Fund manages liquidity risk on a daily basis by continually monitoring actual and forecasted cash flows and monitoring the Fund's available liquidity
through its revolving credit facilities. The treasury function is also required to ensure that liquidity is made available on the most favourable financial terms and conditions.
The Fund's treasury function reports quarterly to the Audit Committee on the Fund's available capacities and covenant compliance as they relate to the Fund's current compliment of
long-term debt facilities. The Fund's treasury function actively manages its liquidity and is in regular contact with the primary parties to its long-term debt facilities. 

The
contractual maturities of the Fund's financial liabilities are as follows: 

																				
	 	 
	 	June 30, 2008 	 
	 	 
	 	Payments due 	 
	 	 
	 	Total 	 	Less than 1 year 	 	1-3 years 	 	4-5 years 	 	After 5 years 	 
	 	 Finanical liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Non-derivative
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Long-term debt
	 	$	902,639	 	$	47,000	 	$	493,078	 	$	198,627	 	$	163,934	 
	 	 	 Derivative
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 Interest rate swaps
	 	$	12,553	 	$	4,332	 	$	8,016	 	$	205	 	$
	—
 	 

 Market risk  

Market
risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency, interest rate and
other price risk. 

Currency
risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates. The Fund's exposure to currency risk
is attributable to the exchange of U.S. monies to fund Canadian dollar denominated distribution and dividend payments to unit and participating preferred shareholders. The Fund has historically
entered into foreign currency exchange agreements to mitigate its exposure to currency risk. As of February 2008, all foreign currency exchange agreements have expired and have not been
replaced. Accordingly, the Fund is exposed to currency risk on monies received from U.S. sources to fund Canadian dollar denominated obligations. In an effort to mitigate this risk, management
of the Fund uses its discretion in the determination of where distribution and dividend amounts are funded from. The Fund's treasury function actively reviews its exposure and assesses the need to
enter into further foreign currency exchange agreements. The Fund's Board of Trustees also considers currency risk when establishing the Fund's distribution amount per trust unit. 

For
the six month period ended June 30, 2008, the Fund was exposed to currency risk on the portion of distributions and dividends funded from U.S. sources that were not hedged by foreign
currency exchange agreements. Distributions and dividends have no impact on the Fund's determination of net income. The Fund has used a 10.0% variability factor to illustrate the sensitivity of
movements in foreign currency exchange rates between Canada and the U.S. on other comprehensive loss and assumed that distributions and dividends to unit and participating preferred
shareholders are funded equally from Canadian and U.S. sources. Although, the historical exchange rate between Canada and the U.S. has generally moved by less than 5.0% annually, recent
currency exchange rate fluctuations 

12

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 10.   FINANCIAL INSTRUMENTS (Continued) 

have
been, on balance, more pronounced. Accordingly, the following sensitivity analysis has been prepared using a 10.0% fluctuation factor in Canadian to U.S. foreign currency exchange rates
which management contends is reasonably possible to occur. 

									
	 	 
	 	June 30

2008 	 
	 	 
	 	Adverse

movement in

foreign currency

exchange rates —

10.0% 	 	Favourable

movement in

foreign currency

exchange rates —

10.0% 	 
	 	 Currency risk
	 	 	 	 	 	 	 
	 	 Other comprehensive (loss) income
	 	$	(520	)	$	520	 

Interest
rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk arises from the Fund's
interest bearing financial assets and liabilities. The Fund has various financial assets and liabilities which are exposed to interest rate risk, the most notable of which are the Fund's
long-term debt facilities. Although, the Fund's debentures and a portion of the Fund's U.S. term loan bear interest at fixed rates they remain subject to interest rate risk on
maturity or renegotiation. 

A
portion of the Fund's term loan, its two revolving credit facilities, and its variable rate demand solid waste disposal revenue bonds ("IRBs") are subject to interest rate risk. An increase or
decrease in the variable interest rate results in a corresponding increase or decrease to interest expense on long-term debt. The Fund is also subject to interest rate risk on funded
landfill post-closure costs. Funded landfill post-closure costs are invested in interest rate sensitive short-term investments. An increase or decrease in the
return on invested amounts results in either a decrease or increase in the Fund's funding obligation. The Fund is also subject to interest rate risk on its cash equivalents balance and other
receivables. 

The
Fund has entered into interest rate swaps as a condition of its U.S. long-term debt facility to fix a portion of its variable rate charge on advances and borrowings. The
policies and process for managing these risks are included above in the credit risk section. 

The
Fund has used a 1.0% variability factor to illustrate the sensitivity of movements in interest rates and the resulting annualized impact on net income. The Fund deems this variability factor as
reasonable in light of the current interest rate environment. 

										
	 	 
	 	Adverse

movement in

interest rates —

1.0% 	 	Favourable

movement in

interest rates —

1.0% 	 
	 	 Interest rate risk
	 	 	 	 	 	 	 
	 	 	 Net (loss) income
	 	$	(2,805	)	$	2,805	 

 Customer concentration  

A
single customer in the Fund's U.S. northeast segment accounted for 4.8% of consolidated revenues for the six months ended June 30, 2008. On October 31, 2007, two of the
contracts with this customer were renewed for the final year permitted by each contract. These contracts have been re-bid and the Fund is awaiting the results of the bidding process. 

These
contracts can be terminated upon 60 days' notice. If these contracts are terminated, or not renewed, the Fund may not be able to replace the resulting lost revenue. The loss of these
contracts could have a significant impact on the business, its financial condition and its results of operations. 

In
addition, in 2002 the customer announced changes to its waste management plan that would include reducing or eliminating its reliance on private transfer stations, such as those operated by the
Fund. While the plan is preliminary and has undergone substantial revision, the plan contemplates significant changes to the transfer and disposal of residential waste. If these changes are
implemented, it is possible that the Fund's existing contracts would be modified or not renewed. 

13

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 10.   FINANCIAL INSTRUMENTS (Continued) 

 Leverage, restrictive covenants and capital requirements  

The
ability of the Fund to pay distributions or make other payments or advances is subject to applicable laws and contractual restrictions contained in the agreements governing its indebtedness. The
degree to which the Fund is leveraged could have important consequences to unitholders including: the ability of the Fund to obtain additional financing for working capital, capital expenditures or
acquisitions; a significant portion of the Fund's cash flow from operations may be dedicated to payment of principal and interest on its indebtedness, thereby reducing funds available for future
operations; certain of the Fund's borrowings will be subject to variable rates of interest, which will expose the Fund to the risk of increased interest rates; and the Fund may be more vulnerable to
economic downturns and be limited in its ability to withstand competitor pressures. 

The
ability of the Fund to remain competitive, sustain its growth and expand its operations will require large amounts of cash. Management expects to obtain this cash from operations and additional
equity or debt financing. 

If
the Fund undertakes acquisitions or expands its operations, its capital expenditures, including closure, post-closure and remediation expenditures, may increase. The increase in
expenditures may reduce working capital and could require the Fund to finance working capital deficits. In addition, if the Fund is required to close a landfill sooner than it currently anticipates,
or if it reduces its estimate of a landfill's remaining useful life, it may be required to incur closure and post-closure costs earlier or accrue liabilities for them at a
higher rate. 

The
cash needs of the Fund may increase if expenditures for closure and post-closure monitoring increase above current estimated amounts for these obligations. Expenditures for these costs
may increase if any federal, provincial, state or local government regulatory action is taken to accelerate or otherwise increase such expenditures. These factors, together with those discussed above,
could substantially increase the operating costs of the Fund and therefore impair its ability to invest in its existing or new facilities. 

The
Fund may need to refinance its available long-term debt facilities and there can be no assurance that it will be able to do so or be able to do so on terms as favourable as those
presently in place. If the Fund is unable to refinance its long-term debt, or is only able to refinance on less favourable and or more restrictive terms, this may have a significant effect
on the financial position of the
Fund, which may result in a reduction or suspension of cash distributions and dividends to unit and participating preferred shareholders. Distributions from BFI Canada Holdings Inc.
("Holdings"), an indirect subsidiary of the Fund, and IESI to the Fund may be restricted if either Holdings or IESI fails to maintain certain covenants under the Canadian revolving credit facility
(as defined therein) or the U.S. term loan and revolving credit facility (as defined therein), respectively. In addition, the terms of any new credit facility or debt may be less
favourable or more restrictive than the terms of the existing facilities, which may indirectly limit or negatively impact the ability of the Fund to pay cash distributions and dividends. 

 Foreign exchange exposure  

For
the six months ended June 30, 2008, approximately 64% of the Fund's revenues were derived from U.S. sources. Cash distributions and dividends paid per trust unit and PPS are
denominated in Canadian dollars. Any foreign currency hedge arrangements the Fund enters into may not protect it against any losses which may occur as a result of a fluctuation in the exchange rate
between the U.S. and Canada. As a result, these fluctuations may have a significant impact on the Fund's financial results. 

 11.   CAPITAL  

The
Fund's primary objectives, in its management of capital, are as follows: to ensure that there is sufficient liquidity to fulfill management's objective of continuous improvement; to maintain
continued access to capital, whether of long-term debt or equity; and to deliver value to its equity holders. 

The
Fund's treasury function is responsible for arranging and approving financing transactions, including but not limited to short and long-term debt facilities, letters of credit,
revolving facilities, IRB's and equity financing. In addition, the treasury function is responsible for ensuring that any financing results in the most favourable financing terms and conditions in
light of current and expected economic conditions.
Financing transactions initiated by the Fund's treasury function require various levels of approval prior to execution, including senior management approval and up to and including approval from the
Board of Trustees. Compliance with covenants pertaining to financing activities are monitored by the Fund's treasury function and reported to senior management, the Audit Committee, and various
parties external to the Fund. 

To
satisfy its objective, the Fund manages both issued trust units and long-term debt including items that impact the availability of long-term debt (i.e. issued letters
of credit). 

14

 

  BFI CANADA INCOME FUND  

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)  

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated)  

 11.   CAPITAL (Continued)  

The
Fund is a mutual fund trust for the purposes of the income tax act and by its nature is subject to various restrictions including those that impact the Fund's issued equity. Practically, the
requirement of the Fund to maintain a non-resident invested base which does not exceed 50% of the total invested base, is the Fund's most significant externally imposed equity restriction.
The Fund continuously monitors the composition of its invested base which is reported at least annually to senior management and the Board of Trustees. The Fund is in compliance with this externally
imposed restriction. Additionally, the Minister of Finance (Canada) announced "normal growth" guidelines for income trusts as a result of its announced changes to the taxation of income trusts. The
normal growth guidelines restrict the Fund's ability to issue trust units in each of 2007 through 2010 based on the Fund's market capitalization at October 31, 2006. The Fund is in compliance
with this externally imposed restriction. 

The
Fund is also subject to restrictions included in its various long-term debt financing agreements. The Fund is in compliance with all restrictions included in its long-term
debt financing agreements. 

The
Fund is active in its discussions with various external parties to assess the Fund's access to capital. In light of the current environment, access to, and availability of, equity has diminished
since the Minister of Finance (Canada)'s announcement of forthcoming changes to the income tax treatment of distributions and allocations to and from the Fund. Since this announcement, the Fund has
not established a numeric objective for its compliment of equity and debt. Instead, the Fund has focused on ensuring that sufficient liquidity is available to fulfill management's objectives
outlined above. 

 12.   SEGMENTED REPORTING  

The
Fund carries on business through three separate geographic segments: Canada, U.S. south and U.S. northeast. The business segments are vertically integrated and principally include
landfills and landfill gas to energy facilities, collection and disposal of waste and recyclable products, transfer station operations,
and material recovery facilities. The geographic location of each business segment limits the volume and amount of transactions between each segment. 

The
accounting policies applied by the business segments are the same as those described in the summary of significant accounting policies. U.S. corporate selling, general and administration
expenses are allocated to the U.S. south and U.S. northeast segments based on various factors, which may include income before the following(1). The Fund evaluates segment
performance based on gross revenues, less operating and selling, general and administration expenses. 

																
	 	 
	 	Three months ended

June 30 	 	Six months ended

June 30 	 
	 	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 	 Gross Revenues
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Canada
	 	$	100,754	 	$	86,019	 	$	186,522	 	$	159,374	 
	 	 	 U.S. South
	 	 	88,234	 	 	80,398	 	 	168,050	 	 	154,933	 
	 	 	 U.S. Northeast
	 	 	91,274	 	 	59,098	 	 	170,037	 	 	113,508	 
	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	$	280,262	 	$	225,515	 	$	524,609	 	$	427,815	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 Income before the following(1)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Canada
	 	$	34,586	 	$	31,657	 	$	62,740	 	$	56,863	 
	 	 	 U.S. South
	 	 	20,889	 	 	17,778	 	 	38,896	 	 	33,679	 
	 	 	 U.S. Northeast
	 	 	22,770	 	 	21,999	 	 	43,467	 	 	39,564	 
	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	$	78,245	 	$	71,434	 	$	145,103	 	$	130,106	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 Amortization
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Canada
	 	$	15,574	 	$	15,046	 	$	29,166	 	$	28,447	 
	 	 	 U.S. South
	 	 	12,726	 	 	13,431	 	 	24,970	 	 	26,441	 
	 	 	 U.S. Northeast
	 	 	17,436	 	 	12,895	 	 	34,177	 	 	24,402	 
	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	$	45,736	 	$	41,372	 	$	88,313	 	$	79,290	 
	 	 	 	 	 	 	 	 	 	 	 

	(1)
	Income
before the following represents net income before amortization, interest on long-term debt, financing costs, net gain on sale of capital
assets, net (gain) loss on financial instruments, net foreign exchange loss (gain), other expenses, income taxes, and non-controlling interest. 

15

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 12.   SEGMENTED REPORTING (Continued) 

															
	 	 
	 	June 30, 2008 	 
	 	 
	 	Canada 	 	U.S. South 	 	U.S. Northeast 	 	Total 	 
	 	 Capital assets
	 	$	155,976	 	$	151,444	 	$	124,203	 	$	431,623	 
	 	 Goodwill
	 	$	63,789	 	$	169,139	 	$	410,656	 	$	643,584	 
	 	 Total Assets
	 	$	521,988	 	$	511,798	 	$	1,009,325	 	$	2,043,111	 

 

															
	 	 
	 	December 31, 2007 	 
	 	 
	 	Canada 	 	U.S. South 	 	U.S. Northeast 	 	Total 	 
	 	 Capital assets
	 	$	144,681	 	$	148,720	 	$	111,499	 	$	404,900	 
	 	 Goodwill
	 	$	61,461	 	$	162,714	 	$	392,359	 	$	616,534	 
	 	 Total Assets
	 	$	505,129	 	$	498,005	 	$	968,078	 	$	1,971,212	 

 13.   COMMITMENTS AND CONTINGENCIES  

On
the acquisition of IESI, the Fund assumed various obligations which require payment of additional amounts for achieving certain negotiated events or business performance targets, including landfill
expansion approval or target disposal volumes. The Fund is obligated to pay certain sellers various amounts for achieving certain negotiated disposal volumes to a maximum of approximately
U.S. $12,900. Amounts are accrued monthly, and paid from time to time in accordance with underlying agreements, until certain threshold negotiated disposal volume targets are achieved, and the
maximum obligation is satisfied. Monthly accrued amounts, which are paid up to the date the disposal volume threshold targets are met, reduce the threshold payment by a similar amount. The Fund will
record an adjustment to the purchase price allocation when the contingency is resolved and consideration is issued or becomes issuable. Accordingly, all contingent amounts paid, and all future
contingent payments, in respect of the receipt of landfill expansion approval or fulfilling disposal volume targets, are recorded to goodwill. 

 14.   SEASONALITY  

Revenues
are generally higher in spring, summer and autumn months due to higher collected and disposed of waste volumes. Higher collection and disposal revenues are partially offset by higher
operating expenses to service and dispose of additional waste volumes and higher landfill asset amortization. 

 15.   SUBSEQUENT EVENTS  

Effective
August 18, 2008, the Fund announced that its Board of Trustees approved the conversion of the Fund from an income trust to a corporation and concurrently announced a reduction in
monthly cash distributions to $0.04166 per trust unit, commencing with the distribution payable January 15, 2009 to holders of record on December 31, 2008. 

Effective
September 19, 2008, the Fund announced that the Board of Directors for 1768248 Ontario Limited, a wholly owned subsidiary of the Fund prior to conversion and the parent company
of the Fund post conversion ("BFI Canada Ltd."), approved a special quarterly dividend payable in four equal amounts of $0.125 per share commencing on March 31, 2009. 

Effective
September 25, 2008, unitholders voted in favour of the Fund's conversion from an income trust to a corporation. The conversion received approval from the Ontario Superior Court of
Justice on September 30, 2008 and is effective October 1, 2008. The common shares of BFI Canada Ltd. commenced trading on the Toronto Stock Exchange, under the symbol "BFC", on
October 2, 2008. Concurrently, trust units of the Fund have been delisted from the Toronto Stock Exchange and the Fund has submitted an application to cease to be a reporting issuer. 

Effective
October 1, 2008, the Fund entered into a Fourth Amending Agreement to its Fourth Amended and Restated Credit Agreement and a Sixth Amending Agreement to its Amended and Restated
Revolving Credit and Term Loan Agreement. The amending agreements simply recognize the Fund's structural change and had no impact on the Fund's committed amounts, maturity dates or pricing. 

16

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 16.   RECONCILIATION OF CANADIAN TO U.S. GAAP  

The
consolidated financial statements have been prepared in accordance with Canadian GAAP, which differs in certain respects from accounting principles generally accepted in the
U.S. ("U.S. GAAP"). The effects of significant accounting differences and certain disclosure differences on the Fund's consolidated financial statements are quantified and described in
the following tables and notes for the three and six month periods ended June 30, 2008 and 2007 and as at December 31, 2007: 

																											
	
 	

Consolidated Balance Sheet

June 30, 2008 (unaudited) and December 31, 2007

(in thousands of Canadian dollars)

	
 
	 	 
	 	June 30, 2008 	 	December 31, 2007 	 
	 	 
	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 
	 	 ASSETS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 CURRENT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Cash and cash equivalents
	 	$	14,242	 	$	(842	)	C	 	$	13,400	 	$	13,359	 	$	(1,600	)	 	C	 	$	11,759	 
	 	 	 Accounts receivable
	 	 	128,296	 	 	—	 	 	 	 	128,296	 	 	115,851	 	 	—	 	 	 	 	 	115,851	 
	 	 	 Other receivables
	 	 	297	 	 	—	 	 	 	 	297	 	 	457	 	 	—	 	 	 	 	 	457	 
	 	 	 Income taxes recoverable
	 	 	2,629	 	 	—	 	 	 	 	2,629	 	 	—	 	 	—	 	 	 	 	 	—	 
	 	 	 Prepaid expenses
	 	 	18,522	 	 	—	 	 	 	 	18,522	 	 	15,001	 	 	—	 	 	 	 	 	15,001	 
	 	 	 Ristricted cash
	 	 	—	 	 	842	 	C	 	 	842	 	 	—	 	 	1,600	 	 	C	 	 	1,600	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	 	163,986	 	 	—	 	 	 	 	163,986	 	 	144,668	 	 	—	 	 	 	 	 	144,668	 
	 	 OTHER RECEIVABLES
	 	 	620	 	 	—	 	 	 	 	620	 	 	761	 	 	—	 	 	 	 	 	761	 
	 	 FUNDED LANDFILL

POST-CLOSURE COSTS
	 	 	6,751	 	 	—	 	 	 	 	6,751	 	 	5,976	 	 	—	 	 	 	 	 	5,976	 
	 	 INTANGIBLES
	 	 	138,532	 	 	—	 	 	 	 	138,532	 	 	144,686	 	 	—	 	 	 	 	 	144,686	 
	 	 GOODWILL
	 	 	643,584	 	 	—	 	 	 	 	643,584	 	 	616,534	 	 	—	 	 	 	 	 	616,534	 
	 	 DEFERRED COSTS
	 	 	8,300	 	 	—	 	 	 	 	8,300	 	 	7,306	 	 	—	 	 	 	 	 	7,306	 
	 	 DEFERRED FINANCING COSTS
	 	 	—	 	 	9,592	 	B	 	 	9,592	 	 	—	 	 	10,375	 	 	B	 	 	10,375	 
	 	 CAPITAL ASSETS
	 	 	431,623	 	 	71	 	A	 	 	431,694	 	 	404,900	 	 	72	 	 	A	 	 	404,972	 
	 	 LANDFILL ASSETS
	 	 	648,535	 	 	11,049	 	A	 	 	659,584	 	 	644,711	 	 	10,304	 	 	A	 	 	655,015	 
	 	 OTHER ASSETS
	 	 	—	 	 	—	 	 	 	 	—	 	 	1,670	 	 	—	 	 	 	 	 	1,670	 
	 	 FUTURE INCOME TAX ASSETS
	 	 	1,180	 	 	(332	)	A	 	 	525	 	 	—	 	 	—	 	 	 	 	 	—	 
	 	
	 	 	 	 	 	(323	)	B	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	$	2,043,111	 	$	20,057	 	 	 	$	2,063,168	 	$	1,971,212	 	$	20,751	 	 	 	 	$	1,991,963	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 LIABILITIES
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 CURRENT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Accounts payable
	 	$	58,805	 	$	—	 	 	 	$	58,805	 	$	66,815	 	$	—	 	 	 	 	$	66,815	 
	 	 	 Accrued charges
	 	 	63,335	 	 	5,224	 	D,F	 	 	68,559	 	 	75,355	 	 	4,380	 	 	D,F	 	 	79,735	 
	 	 	 Distribution and dividends payable
	 	 	10,409	 	 	—	 	 	 	 	10,409	 	 	10,409	 	 	—	 	 	 	 	 	10,409	 
	 	 	 Income taxes payable
	 	 	905	 	 	—	 	 	 	 	905	 	 	2,515	 	 	—	 	 	 	 	 	2,515	 
	 	 	 Deferred revenues
	 	 	12,722	 	 	—	 	 	 	 	12,722	 	 	12,018	 	 	—	 	 	 	 	 	12,018	 
	 	 	 Current portion of long-term debt
	 	 	47,000	 	 	—	 	 	 	 	47,000	 	 	—	 	 	—	 	 	 	 	 	—	 
	 	 	 Landfill closure and post-closure costs
	 	 	2,330	 	 	—	 	 	 	 	2,330	 	 	2,900	 	 	—	 	 	 	 	 	2,900	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	 	195,506	 	 	5,224	 	 	 	 	200,730	 	 	170,012	 	 	4,380	 	 	 	 	 	174,392	 
	 	 LONG-TERM DEBT
	 	 	855,639	 	 	—	 	 	 	 	855,639	 	 	801,973	 	 	—	 	 	 	 	 	801,973	 
	 	 LANDFILL CLOSURE AND

POST-CLOSURE COSTS
	 	 	62,796	 	 	—	 	 	 	 	62,796	 	 	55,943	 	 	—	 	 	 	 	 	55,943	 
	 	 OTHER LIABILITIES
	 	 	6,918	 	 	—	 	 	 	 	6,918	 	 	5,056	 	 	—	 	 	 	 	 	5,056	 
	 	 FUTURE INCOME TAX LIABILITIES
	 	 	55,674	 	 	3,724	 	A	 	 	62,832	 	 	57,668	 	 	3,784	 	 	A	 	 	65,236	 
	 	
	 	 	 	 	 	3,177	 	B	 	 	 	 	 	 	 	 	3,776	 	 	B	 	 	 	 
	 	
	 	 	 	 	 	257	 	F	 	 	 	 	 	 	 	 	8	 	 	F	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	 	1,176,533	 	 	12,382	 	 	 	 	1,188,915	 	 	1,090,652	 	 	11,948	 	 	 	 	 	1,102,600	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 NON-CONTROLLING

INTEREST
	 	 	245,831	 	 	(245,831	)	F	 	 	—	 	 	251,371	 	 	(251,371	)	 	F	 	 	—	 
	 	 MEZZANINE EQUITY
	 	 	—	 	 	1,462,216	 	F	 	 	1,462,216	 	 	—	 	 	1,561,334	 	 	F	 	 	1,561,334	 
	 	 UNITHOLDERS' EQUITY (DEFICIENCY)
	 	 	

620,747	 	 	

7,064	 	 A
	 	 	

(587,963	
)	 	

629,189	 	 	

6,592	 	 	 A
	 	 	

(671,971	
)
	 	
	 	 	 	 	 	6,092	 	B	 	 	 	 	 	 	 	 	6,599	 	 	B	 	 	 	 
	 	
	 	 	 	 	 	(882	)	D	 	 	 	 	 	 	 	 	(1,404	)	 	D	 	 	 	 
	 	
	 	 	 	 	 	(1,220,984	)	F	 	 	 	 	 	 	 	 	(1,312,947	)	 	F	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	$	2,043,111	 	$	20,057	 	 	 	$	2,063,168	 	$	1,971,212	 	$	20,751	 	 	 	 	$	1,991,963	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

17

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 16.   RECONCILIATION OF CANADIAN TO U.S. GAAP (Continued) 

																											
	
 	

Consolidated Statement of Operations and Comprehensive Income (Loss)

For the three months ended June 30, 2008 and 2007

(unaudited — in thousands of Canadian dollars, except net income per trust unit amounts)

	
 
	 	 
	 	Three months ended June 30, 2008 	 	Three months ended June 30, 2007 	 
	 	 
	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 
	 	 REVENUES
	 	$	280,262	 	$	—	 	 	 	$	280,262	 	$	225,515	 	$	—	 	 	 	 	$	225,515	 
	 	 EXPENSES
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 OPERATING
	 	 	170,351	 	 	—	 	 	 	 	170,351	 	 	127,888	 	 	—	 	 	 	 	 	127,888	 
	 	 	 SELLING, GENERAL AND

ADMINISTRATION
	 	 	31,666	 	 	435	 	D,F	 	 	32,101	 	 	26,193	 	 	1,034	 	 	D,F	 	 	27,227	 
	 	 	 AMORTIZATION
	 	 	45,736	 	 	365	 	A	 	 	46,101	 	 	41,372	 	 	181	 	 	A	 	 	41,553	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 OPERATING INCOME
	 	 	32,509	 	 	(800	)	 	 	 	31,709	 	 	30,062	 	 	(1,215	)	 	 	 	 	28,847	 
	 	 INTEREST ON LONG-TERM DEBT
	 	 	12,695	 	 	(590	)	A	 	 	13,146	 	 	8,471	 	 	(1,252	)	 	A	 	 	7,623	 
	 	
	 	 	 	 	 	1,041	 	B	 	 	 	 	 	 	 	 	404	 	 	B	 	 	 	 
	 	 FINANCING COSTS
	 	 	930	 	 	(930	)	B	 	 	—	 	 	—	 	 	—	 	 	 	 	 	—	 
	 	 NET GAIN ON SALE OF CAPITAL ASSETS
	 	 	(127	)	 	—	 	 	 	 	(127	)	 	(1,026	)	 	—	 	 	 	 	 	(1,026	)
	 	 NET (LOSS) GAIN ON FINANCIAL INSTRUMENTS
	 	 	(5,497	)	 	—	 	 	 	 	(5,497	)	 	(3,061	)	 	—	 	 	 	 	 	(3,061	)
	 	 NET FOREIGN EXCHANGE LOSS
	 	 	—	 	 	—	 	 	 	 	—	 	 	13,483	 	 	—	 	 	 	 	 	13,483	 
	 	 OTHER EXPENSES
	 	 	26	 	 	—	 	 	 	 	26	 	 	—	 	 	—	 	 	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 INCOME BEFORE INCOME TAXES AND NON-

CONTROLLING INTEREST
	 	 	24,482	 	 	(321	)	 	 	 	24,161	 	 	12,195	 	 	(367	)	 	 	 	 	11,828	 
	 	 INCOME TAX EXPENSE (RECOVERY)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Current
	 	 	3,042	 	 	—	 	 	 	 	3,042	 	 	3,944	 	 	—	 	 	 	 	 	3,944	 
	 	 	 Future
	 	 	3,480	 	 	81	 	A	 	 	3,466	 	 	1,217	 	 	305	 	 	A	 	 	1,268	 
	 	
	 	 	 	 	 	(34	)	B	 	 	 	 	 	 	 	 	(144	)	 	B	 	 	 	 
	 	
	 	 	 	 	 	(61	)	F	 	 	 	 	 	 	 	 	(110	)	 	F	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	 	6,522	 	 	(14	)	 	 	 	6,508	 	 	5,161	 	 	51	 	 	 	 	 	5,212	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 INCOME BEFORE NON-

CONTROLLING INTEREST
	 	 	17,960	 	 	(307	)	 	 	 	17,653	 	 	7,034	 	 	(418	)	 	 	 	 	6,616	 
	 	 NON-CONTROLLING INTEREST
	 	 	2,911	 	 	(2,911	)	F	 	 	—	 	 	1,174	 	 	(1,174	)	 	F	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 NET INCOME
	 	 	15,049	 	 	2,604	 	 	 	 	17,653	 	 	5,860	 	 	756	 	 	 	 	 	6,616	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 OTHER COMPREHENSIVE INCOME (LOSS)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Foreign currency translation adjustment
	 	 	(5,931	)	 	(103	)	A,B	 	 	(6,034	)	 	(45,435	)	 	(799	)	 	A,B	 	 	(46,234	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 COMPREHENSIVE INCOME (LOSS)
	 	$	9,118	 	$	2,501	 	 	 	$	11,619	 	$	(39,575	)	$	(43	)	 	 	 	$	(39,618	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Net income per trust unit, basic

and diluted
	 	$	0.26	 	 	 	 	 	 	$	0.26	 	$	0.10	 	 	 	 	 	 	 	$	0.10	 
	 	 Weighted average number of trust units outstanding

(thousands), basic
	 	 	57,568	 	 	 	 	F	 	 	68,706	 	 	57,350	 	 	 	 	 	F	 	 	68,510	 
	 	 Weighted average number of trust units outstanding

(thousands), diluted
	 	 	68,706	 	 	 	 	 	 	 	68,706	 	 	68,510	 	 	 	 	 	 	 	 	68,510	 

18

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 16.   RECONCILIATION OF CANADIAN TO U.S. GAAP (Continued) 

																											
	
 	

Consolidated Statement of Operations and Comprehensive Income (Loss)

For the six months ended June 30, 2008 and 2007

(unaudited — in thousands of Canadian dollars, except net income per trust unit amounts)

	
 
	 	 
	 	Six months ended June 30, 2008 	 	Six months ended June 30, 2007 	 
	 	 
	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 
	 	 REVENUES
	 	$	524,609	 	$	—	 	 	 	$	524,609	 	$	427,815	 	$	—	 	 	 	 	$	427,815	 
	 	 EXPENSES
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 OPERATING
	 	 	317,499	 	 	—	 	 	 	 	317,499	 	 	244,518	 	 	—	 	 	 	 	 	244,518	 
	 	 	 SELLING, GENERAL AND ADMINISTRATION
	 	 	62,007	 	 	(1,176	)	D,F	 	 	60,831	 	 	53,191	 	 	915	 	 	D,F	 	 	54,106	 
	 	 	 AMORTIZATION
	 	 	88,313	 	 	675	 	A	 	 	88,988	 	 	79,290	 	 	333	 	 	A	 	 	79,623	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 OPERATING INCOME
	 	 	56,790	 	 	501	 	 	 	 	57,291	 	 	50,816	 	 	(1,248	)	 	 	 	 	49,568	 
	 	 INTEREST ON LONG-TERM DEBT
	 	 	26,069	 	 	(1,125	)	A	 	 	26,931	 	 	18,365	 	 	(2,510	)	 	A	 	 	16,645	 
	 	
	 	 	 	 	 	1,987	 	B	 	 	 	 	 	 	 	 	790	 	 	B	 	 	 	 
	 	 FINANCING COSTS
	 	 	930	 	 	(930	)	B	 	 	—	 	 	864	 	 	(864	)	 	B	 	 	—	 
	 	 NET GAIN ON SALE OF CAPITAL ASSETS
	 	 	(87	)	 	—	 	 	 	 	(87	)	 	(1,234	)	 	—	 	 	 	 	 	(1,234	)
	 	 NET (LOSS) GAIN ON FINANCIAL INSTRUMENTS
	 	 	3,550	 	 	—	 	 	 	 	3,550	 	 	(1,206	)	 	—	 	 	 	 	 	(1,206	)
	 	 NET FOREIGN EXCHANGE (GAIN) LOSS
	 	 	(624	)	 	—	 	 	 	 	(624	)	 	15,104	 	 	—	 	 	 	 	 	15,104	 
	 	 OTHER EXPENSES
	 	 	57	 	 	—	 	 	 	 	57	 	 	5	 	 	—	 	 	 	 	 	5	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 INCOME BEFORE INCOME TAXES AND NON-

CONTROLLING INTEREST
	 	 	26,895	 	 	569	 	 	 	 	27,464	 	 	18,918	 	 	1,336	 	 	 	 	 	20,254	 
	 	 INCOME TAX EXPENSE (RECOVERY)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Current
	 	 	4,870	 	 	—	 	 	 	 	4,870	 	 	5,607	 	 	—	 	 	 	 	 	5,607	 
	 	 	 Future
	 	 	(6,409	)	 	163	 	A	 	 	(6,374	)	 	(6,238	)	 	3,545	 	 	A	 	 	(2,747	)
	 	
	 	 	 	 	 	(377	)	B	 	 	 	 	 	 	 	 	30	 	 	B	 	 	 	 
	 	
	 	 	 	 	 	249	 	F	 	 	 	 	 	 	 	 	(84	)	 	F	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
	 	 	(1,539	)	 	35	 	 	 	 	(1,504	)	 	(631	)	 	3,491	 	 	 	 	 	2,860	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 INCOME BEFORE NON-

CONTROLLING INTEREST
	 	 	28,434	 	 	534	 	 	 	 	28,968	 	 	19,549	 	 	(2,155	)	 	 	 	 	17,394	 
	 	 NON-CONTROLLING INTEREST
	 	 	4,609	 	 	(4,609	)	F	 	 	—	 	 	3,324	 	 	(3,324	)	 	F	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 NET INCOME
	 	 	23,825	 	 	5,143	 	 	 	 	28,968	 	 	16,225	 	 	1,169	 	 	 	 	 	17,394	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 OTHER COMPREHENSIVE INCOME (LOSS)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Foreign currency translation adjustment
	 	 	20,041	 	 	358	 	A,B	 	 	20,399	 	 	(50,493	)	 	(886	)	 	A,B	 	 	(51,379	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 COMPREHENSIVE INCOME (LOSS)
	 	$	43,866	 	$	5,501	 	 	 	$	49,367	 	$	(34,268	)	$	283	 	 	 	 	$	(33,985	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Net income per trust unit, basic

and diluted
	 	$	0.41	 	 	 	 	 	 	$	0.42	 	$	0.29	 	 	 	 	 	 	 	$	0.26	 
	 	 Weighted average number of trust units outstanding

(thousands), basic
	 	 	57,568	 	 	 	 	F	 	 	68,706	 	 	55,557	 	 	 	 	 	F	 	 	66,885	 
	 	 Weighted average number of trust units outstanding

(thousands), diluted
	 	 	68,706	 	 	 	 	 	 	 	68,706	 	 	66,885	 	 	 	 	 	 	 	 	66,885	 

19

 

  BFI CANADA INCOME FUND  

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)  

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated)  

																										
	

Consolidated Statement of Cash Flows

For the three months ended June 30, 2008 and 2007

(unaudited — in thousands of Canadian dollars)

	
 
	 
	 	Three months ended June 30, 2008 	 	Three months ended June 30, 2007 	 
	 
	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 
	
   NET INFLOW (OUTFLOW) OF CASH RELATED

TO THE FOLLOWING ACTIVITIES
	 	 	 	 	 	 	 	 	 	 	 	 
	 OPERATING
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Net income
	 	$	15,049	 	$	2,604	 	 	 	$	17,653	 	$	5,860	 	$	756	 	 	 	$	6,616	 
	 	 Items not affecting cash
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Write-off of deferred costs
	 	 	191	 	 	—	 	 	 	 	191	 	 	33	 	 	—	 	 	 	 	33	 
	 	 	 Accretion of landfill closure and post-closure costs
	 	 	785	 	 	—	 	 	 	 	785	 	 	759	 	 	—	 	 	 	 	759	 
	 	 	 Amortization of intangibles
	 	 	8,191	 	 	—	 	 	 	 	8,191	 	 	5,138	 	 	—	 	 	 	 	5,138	 
	 	 	 Amortization of capital assets
	 	 	19,267	 	 	1	 	A	 	 	19,268	 	 	15,702	 	 	—	 	 	 	 	15,702	 
	 	 	 Amortization of landfill assets
	 	 	18,278	 	 	364	 	A	 	 	18,642	 	 	20,532	 	 	181	 	A	 	 	20,713	 
	 	 	 Interest on long-term debt
	 	 	—	 	 	1,041	 	B	 	 	1,041	 	 	—	 	 	404	 	B	 	 	404	 
	 	 	 Net gain on sale of capital assets
	 	 	(127	)	 	—	 	 	 	 	(127	)	 	(1,026	)	 	—	 	 	 	 	(1,026	)
	 	 	 Net loss on financial instruments
	 	 	(5,497	)	 	—	 	 	 	 	(5,497	)	 	(3,061	)	 	—	 	 	 	 	(3,061	)
	 	 	 Net unrealized foreign exchange loss
	 	 	—	 	 	—	 	 	 	 	—	 	 	14,320	 	 	—	 	 	 	 	14,320	 
	 	 	 Future income taxes
	 	 	3,480	 	 	(14	)	A,B,F	 	 	3,466	 	 	1,217	 	 	51	 	A,B,F	 	 	1,268	 
	 	 	 Non-controlling interest
	 	 	2,911	 	 	(2,911	)	F	 	 	—	 	 	1,174	 	 	(1,174	)	F	 	 	—	 
	 	 Landfill closure and post-closure expenditures
	 	 	(382	)	 	—	 	 	 	 	(382	)	 	(768	)	 	—	 	 	 	 	(768	)
	 Changes in non-cash working capital items
	 	 	(7,145	)	 	435	 	D,F	 	 	(6,710	)	 	(6,074	)	 	1,034	 	D,F	 	 	(5,040	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Cash generated from operating activities
	 	 	55,001	 	 	1,520	 	 	 	 	56,521	 	 	53,806	 	 	1,252	 	 	 	 	55,058	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 INVESTING
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Acquisitions
	 	 	(35,816	)	 	—	 	 	 	 	(35,816	)	 	(33,148	)	 	—	 	 	 	 	(33,148	)
	 	 Restricted cash withdrawals
	 	 	—	 	 	180	 	C	 	 	180	 	 	—	 	 	1,437	 	C	 	 	1,437	 
	 	 Investment in other receivables
	 	 	232	 	 	—	 	 	 	 	232	 	 	—	 	 	—	 	 	 	 	—	 
	 	 Proceeds from other receivables
	 	 	—	 	 	—	 	 	 	 	—	 	 	1,502	 	 	—	 	 	 	 	1,502	 
	 	 Funded landfill post-closure costs
	 	 	(200	)	 	—	 	 	 	 	(200	)	 	(294	)	 	—	 	 	 	 	(294	)
	 	 Purchase of capital assets
	 	 	(24,052	)	 	—	 	 	 	 	(24,052	)	 	(23,551	)	 	(7	)	A	 	 	(23,558	)
	 	 Purchase of landfill assets
	 	 	(13,332	)	 	(590	)	A	 	 	(13,922	)	 	(16,073	)	 	(1,245	)	A	 	 	(17,318	)
	 	 Proceeds from the sale of capital assets
	 	 	462	 	 	—	 	 	 	 	462	 	 	1,316	 	 	—	 	 	 	 	1,316	 
	 	 Investment in deferred costs
	 	 	(686	)	 	—	 	 	 	 	(686	)	 	(585	)	 	—	 	 	 	 	(585	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Cash utilized in investing activities
	 	 	(73,392	)	 	(410	)	 	 	 	(73,802	)	 	(70,833	)	 	185	 	 	 	 	(70,648	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 FINANCING
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Payment of deferred financing costs
	 	 	—	 	 	(930	)	B	 	 	(930	)	 	—	 	 	—	 	 	 	 	—	 
	 	 Proceeds from long-term debt
	 	 	79,983	 	 	—	 	 	 	 	79,983	 	 	65,404	 	 	—	 	 	 	 	65,404	 
	 	 Repayment of long-term debt
	 	 	(33,754	)	 	—	 	 	 	 	(33,754	)	 	(108,017	)	 	—	 	 	 	 	(108,017	)
	 	 Trust units issued, net of issue costs
	 	 	(3	)	 	—	 	 	 	 	(3	)	 	87,589	 	 	—	 	 	 	 	87,589	 
	 	 Distributions and dividends paid to unitholders and participating preferred shareholders
	 	 	(31,227	)	 	—	 	 	 	 	(31,227	)	 	(30,686	)	 	—	 	 	 	 	(30,686	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Cash generated from (utilized in) financing activities
	 	 	14,999	 	 	(930	)	 	 	 	14,069	 	 	14,290	 	 	—	 	 	 	 	14,290	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Effect of foreign exchange changes on foreign cash and cash equivalents
	 	 	45	 	 	11	 	 	 	 	56	 	 	590	 	 	474	 	 	 	 	1,064	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 NET CASH (OUTFLOW) INFLOW
	 	 	(3,347	)	 	191	 	 	 	 	(3,156	)	 	(2,147	)	 	1,911	 	 	 	 	(236	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
	 	 	17,589	 	 	(1,033	)	 	 	 	16,556	 	 	15,156	 	 	(108	)	 	 	 	15,048	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 CASH AND CASH EQUIVALENTS, END OF PERIOD
	 	$	14,242	 	$	(842	)	 	 	$	13,400	 	$	13,009	 	$	1,803	 	 	 	$	14,812	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 SUPPLEMENTAL CASH FLOW INFORMATION:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Cash and cash equivalents are comprised of:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Cash
	 	$	14,225	 	$	(842	)	 	 	$	13,383	 	$	11,218	 	$	1,803	 	 	 	$	13,021	 
	 	 	 Cash equivalents
	 	 	17	 	 	—	 	 	 	 	17	 	 	1,791	 	 	—	 	 	 	 	1,791	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	 	$	14,242	 	$	(842	)	 	 	$	13,400	 	$	13,009	 	$	1,803	 	 	 	$	14,812	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Cash paid during the year for:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Income taxes
	 	$	8,125	 	$	—	 	 	 	$	8,125	 	$	4,160	 	$	—	 	 	 	$	4,160	 
	 	 	 Interest
	 	$	11,419	 	$	—	 	 	 	$	11,419	 	$	9,224	 	$	—	 	 	 	$	9,224	 

20

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

																										
	

Consolidated Statement of Cash Flows

For the six months ended June 30, 2008 and 2007

(unaudited — in thousands of Canadian dollars)

	
 
	 
	 	Six months ended June 30, 2008 	 	Six months ended June 30, 2007 	 
	 
	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 	Stated in

accordance with

Canadian GAAP 	 	Adjustments

from Canadian

to U.S. GAAP 	 	Note 	 	Stated in

accordance with

U.S. GAAP 	 
	
   NET INFLOW (OUTFLOW) OF CASH RELATED

TO THE FOLLOWING ACTIVITIES
	 	 	 	 	 	 	 	 	 	 	 	 
	 OPERATING
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Net income
	 	$	23,825	 	$	5,143	 	 	 	$	28,968	 	$	16,225	 	$	1,169	 	 	 	$	17,394	 
	 	 Items not affecting cash
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Write-off of deferred costs
	 	 	919	 	 	—	 	 	 	 	919	 	 	68	 	 	—	 	 	 	 	68	 
	 	 	 Accretion of landfill closure and post-closure costs
	 	 	1,566	 	 	—	 	 	 	 	1,566	 	 	1,561	 	 	—	 	 	 	 	1,561	 
	 	 	 Amortization of intangibles
	 	 	16,226	 	 	—	 	 	 	 	16,226	 	 	10,334	 	 	—	 	 	 	 	10,334	 
	 	 	 Amortization of capital assets
	 	 	38,564	 	 	1	 	A	 	 	38,565	 	 	31,441	 	 	—	 	 	 	 	31,441	 
	 	 	 Amortization of landfill assets
	 	 	33,523	 	 	674	 	A	 	 	34,197	 	 	37,515	 	 	333	 	A	 	 	37,848	 
	 	 	 Interest on long-term debt
	 	 	—	 	 	1,987	 	B	 	 	1,987	 	 	—	 	 	790	 	B	 	 	790	 
	 	 	 Net gain on sale of capital assets
	 	 	(87	)	 	—	 	 	 	 	(87	)	 	(1,234	)	 	—	 	 	 	 	(1,234	)
	 	 	 Net loss on financial instruments
	 	 	3,550	 	 	—	 	 	 	 	3,550	 	 	(1,206	)	 	—	 	 	 	 	(1,206	)
	 	 	 Net unrealized foreign exchange loss
	 	 	—	 	 	—	 	 	 	 	—	 	 	16,304	 	 	—	 	 	 	 	16,304	 
	 	 	 Future income taxes
	 	 	(6,409	)	 	35	 	A,B,F	 	 	(6,374	)	 	(6,238	)	 	3,491	 	A,B,F	 	 	(2,747	)
	 	 	 Non-controlling interest
	 	 	4,609	 	 	(4,609	)	F	 	 	—	 	 	3,324	 	 	(3,324	)	F	 	 	—	 
	 	 Landfill closure and post-closure expenditures
	 	 	(627	)	 	—	 	 	 	 	(627	)	 	(1,295	)	 	—	 	 	 	 	(1,295	)
	 Changes in non-cash working capital items
	 	 	(17,724	)	 	(1,176	)	D,F	 	 	(18,900	)	 	(24,538	)	 	915	 	D,F	 	 	(23,623	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Cash generated from operating activities
	 	 	97,935	 	 	2,055	 	 	 	 	99,990	 	 	82,261	 	 	3,374	 	 	 	 	85,635	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 INVESTING
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Acquisitions
	 	 	(54,869	)	 	—	 	 	 	 	(54,869	)	 	(37,453	)	 	—	 	 	 	 	(37,453	)
	 	 Restricted cash withdrawals
	 	 	—	 	 	798	 	C	 	 	798	 	 	—	 	 	2,240	 	C	 	 	2,240	 
	 	 Investment in other receivables
	 	 	301	 	 	—	 	 	 	 	301	 	 	(400	)	 	—	 	 	 	 	(400	)
	 	 Proceeds from other receivables
	 	 	—	 	 	—	 	 	 	 	—	 	 	1,856	 	 	—	 	 	 	 	1,856	 
	 	 Funded landfill post-closure costs
	 	 	(590	)	 	—	 	 	 	 	(590	)	 	(642	)	 	—	 	 	 	 	(642	)
	 	 Purchase of capital assets
	 	 	(37,589	)	 	—	 	 	 	 	(37,589	)	 	(40,397	)	 	(13	)	A	 	 	(40,410	)
	 	 Purchase of landfill assets
	 	 	(21,204	)	 	(1,125	)	A	 	 	(22,329	)	 	(25,947	)	 	(2,497	)	A	 	 	(28,444	)
	 	 Proceeds from the sale of capital assets
	 	 	545	 	 	—	 	 	 	 	545	 	 	1,578	 	 	—	 	 	 	 	1,578	 
	 	 Investment in deferred costs
	 	 	(1,744	)	 	—	 	 	 	 	(1,744	)	 	(1,565	)	 	—	 	 	 	 	(1,565	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Cash utilized in investing activities
	 	 	(115,150	)	 	(327	)	 	 	 	(115,477	)	 	(102,970	)	 	(270	)	 	 	 	(103,240	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 FINANCING
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Payment of deferred financing costs
	 	 	—	 	 	(930	)	B	 	 	(930	)	 	—	 	 	(864	)	B	 	 	(864	)
	 	 Proceeds from long-term debt
	 	 	145,200	 	 	—	 	 	 	 	145,200	 	 	145,756	 	 	—	 	 	 	 	145,756	 
	 	 Repayment of long-term debt
	 	 	(64,371	)	 	—	 	 	 	 	(64,371	)	 	(149,251	)	 	—	 	 	 	 	(149,251	)
	 	 Trust units issued, net of issue costs
	 	 	(3	)	 	—	 	 	 	 	(3	)	 	87,579	 	 	—	 	 	 	 	87,579	 
	 	 Distributions and dividends paid to unitholders and participating preferred shareholders
	 	 	(62,454	)	 	—	 	 	 	 	(62,454	)	 	(60,369	)	 	—	 	 	 	 	(60,369	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Cash generated from (utilized in) financing activities
	 	 	18,372	 	 	(930	)	 	 	 	17,442	 	 	23,715	 	 	(864	)	 	 	 	22,851	 
	 Effect of foreign exchange changes on foreign cash and cash equivalents
	 	 	(274	)	 	(40	)	 	 	 	(314	)	 	728	 	 	361	 	 	 	 	1,089	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 NET CASH INFLOW
	 	 	883	 	 	758	 	 	 	 	1,641	 	 	3,734	 	 	2,601	 	 	 	 	6,335	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
	 	 	13,359	 	 	(1,600	)	 	 	 	11,759	 	 	9,275	 	 	(798	)	 	 	 	8,477	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 CASH AND CASH EQUIVALENTS, END OF PERIOD
	 	$	14,242	 	$	(842	)	 	 	$	13,400	 	$	13,009	 	$	1,803	 	 	 	$	14,812	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 SUPPLEMENTAL CASH FLOW INFORMATION:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Cash and cash equivalents are comprised of:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Cash
	 	$	14,225	 	$	(842	)	 	 	$	13,383	 	$	11,218	 	$	1,803	 	 	 	$	13,021	 
	 	 	 Cash equivalents
	 	 	17	 	 	—	 	 	 	 	17	 	 	1,791	 	 	—	 	 	 	 	1,791	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	 	$	14,242	 	$	(842	)	 	 	$	13,400	 	$	13,009	 	$	1,803	 	 	 	$	14,812	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Cash paid during the year for:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 Income taxes
	 	$	9,490	 	$	—	 	 	 	$	9,490	 	$	4,802	 	$	—	 	 	 	$	4,802	 
	 	 	 Interest
	 	$	22,651	 	$	—	 	 	 	$	22,651	 	$	19,077	 	$	—	 	 	 	$	19,077	 

21

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

        The
following table reconciles net income reported in accordance with Canadian GAAP to net income reportable in accordance with U.S. GAAP for the three and six month periods ended
June 30, 2008 and 2007: 

																	
	 
	 	 
	 	Three months ended June 30 	 	Six months ended June 30 	 
	 
	 	Note 	 	2008 	 	2007 	 	2008 	 	2007 	 
	 Net income in accordance with Canadian GAAP
	 	 	 	$	15,049	 	$	5,860	 	$	23,825	 	$	16,225	 
	 Impact on net earnings of U.S. GAAP adjustments:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 Capitalized interest, net of income taxes
	 	A	 	 	144	 	 	766	 	 	287	 	 	(1,368	)
	 	 Capitalized deferred financing costs, net of income taxes
	 	B	 	 	(77	)	 	(260	)	 	(680	)	 	44	 
	 	 Trust unit based compensation
	 	D	 	 	(274	)	 	(744	)	 	522	 	 	(694	)
	 	 Non-controlling interest
	 	F	 	 	2,911	 	 	1,174	 	 	4,609	 	 	3,324	 
	 	 Trust units held in a rabbi trust, net of income taxes
	 	F	 	 	(100	)	 	(180	)	 	405	 	 	(137	)
	 	 	 	 	 	 	 	 	 	 	 	 
	 Net income in accordance with U.S. GAAP
	 	 	 	$	17,653	 	$	6,616	 	$	28,968	 	$	17,394	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 Basic and diluted earnings per trust unit in accordance with U.S. GAAP
	 	 	 	$	0.26	 	$	0.10	 	$	0.42	 	$	0.26	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 Weighted average trust units outstanding — basic and diluted
	 	F	 	 	68,706	 	 	68,510	 	 	68,706	 	 	66,885	 
	 	 	 	 	 	 	 	 	 	 	 	 

 Reconciliation of Canadian to U.S. GAAP — Notes  

 A.    Capitalized interest on capital and landfill assets acquired, constructed or developed over time  

In
accordance with Canadian GAAP, the cost of tangible assets may include capitalized interest costs directly attributable to an asset's acquisition, construction, or development, prior to the asset's
substantial completion or readiness for use, if the enterprise's accounting policy is to capitalize interest costs. For the purposes of reporting under Canadian GAAP, the Fund has not elected to
capitalize interest on tangible assets acquired, constructed or developed over time and has expensed all interest costs incurred on its long-term debt facilities. Under U.S. GAAP,
the historical cost of acquiring an asset includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use, including interest. To comply with
U.S. GAAP, interest costs attributable to the construction and development of certain Fund-owned landfills and certain capital assets have been deducted from interest expense and
have been capitalized to the respective asset. Capitalized amounts are amortized over the asset's intended useful life in accordance with the respective accounting policy. 

The
increase in landfill and capital asset accounting values, due to the capitalization of interest net of amortization, results in a higher accounting versus tax basis and higher future income tax
liability (deferred tax liability) which is recorded to future income
tax expense on the Fund's consolidated statement of operations and comprehensive income (loss). In addition, higher future income tax liability and landfill and capital asset amounts, which are
translated to Canadian from U.S. dollars, results in a change to the foreign currency translation adjustment amount presented in the Fund's consolidated statement of operations and
comprehensive income (loss). 

 B.    Capitalization of deferred financing costs  

On
January 1, 2007, the Fund adopted CICA section 3855, Financial Instruments — Recognition and Measurement. Upon adoption, the Fund elected to
recognize all transaction costs in net income, including those related to long-term debt instruments. Under U.S. GAAP, costs incurred to secure long-term debt are
deferred and amortized over the term of the underlying debt instrument. To comply with U.S. GAAP, the Fund has reversed the impact of its January 1, 2007 adoption of CICA
section 3855 with respect to deferred financing costs. The reversal results in an increase in deferred financing costs and unitholders' equity (deficit and accumulated other comprehensive
loss), as at January 1, 2007. In addition, financing costs incurred in 2007 and 2008, and recorded in the Fund's consolidated statement of operations and comprehensive income (loss), have been
reversed and capitalized to deferred costs on the Fund's consolidated balance sheet. Amortization of these capitalized deferred financing costs is recorded to interest expense for 2007
and 2008. 

The
increase in deferred financing costs results in a higher accounting versus tax basis and higher future income tax liability (deferred tax liability) which is recorded to future income tax expense
on the Fund's consolidated statement of operations and comprehensive income (loss). In addition, higher deferred financing costs and future income tax liability amounts, which are translated to
Canadian from U.S. dollars results in a change to the foreign currency translation adjustment amount presented on the Fund's consolidated statement of operations and comprehensive
income (loss). 

22

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 C.    Restricted cash  

Under
Canadian GAAP, the Fund includes restricted cash balances in cash and cash equivalents as its intended use is deemed to be current. Under U.S. GAAP, restricted cash amounts are considered
investments that limit the holders' ability to utilize such amounts. In addition, deposits and withdrawals of restricted cash amounts are recorded as an investing activity in the consolidated
statement of cash flows. To comply with U.S. GAAP, the restricted cash amounts, reported in cash and cash equivalents on the Fund's consolidated balance sheet, were reclassified. In addition,
restricted cash deposits and withdrawals were reclassified to investing activities on the Fund's consolidated statement of cash flows. 

 D.    Trust unit based compensation  

Under
Canadian GAAP, trust unit options, with trust unit appreciation rights, and the related changes thereto are recorded to selling, general and administration expense when the quoted market price
of the trust unit exceeds the trust unit option exercise price. Under U.S. GAAP, trust unit appreciation rights are measured at fair value at the date of grant and re-measured at
fair value through settlement. The resulting compensation expense is recorded to selling, general and administration expense. The Fund elected to recognize compensation expense on a straight line
basis over the requisite service period for the entire award. 

The
Fund uses the Black-Scholes-Merton option pricing model which requires the input of highly subjective assumptions. These assumptions include the estimated length of time employees will retain
their options before exercising them and the expected volatility of the Fund's trust unit price over the expected term. Changes in subjective assumptions can materially affect the estimated fair value
of trust unit based compensation and, consequently, the related amount recognized in selling, general and administration expense on the consolidated statement of operations and comprehensive
income (loss). 

In
calculating the fair value of the options at June 30, 2008 and December 31, 2007, the following assumptions were used: 

									
	 	 
	 	June 30,

2008 	 	December 31,

2007 	 
	 	 Dividend yield
	 	 	7.9	%	 	6.8	%
	 	 Expected volatility
	 	 	24.2	%	 	22.8	%
	 	 Risk free interest rate
	 	 	3.4	%	 	3.8	%
	 	 Expected life, stated in years
	 	 	3.5	 	 	4.0	 
	 	 Fair value, per option
	 	$	1.07	 	$	2.15	 

Compensation
expense (recovery) for the three and six months ended June 30, 2008, and recorded to selling, general and administrative expense on the consolidated statement of operations and
comprehensive (loss) income, amounted to $274 (2007 — $744) and ($523) (2007 — $694), respectively. As of June 30,
2008, unrecognized compensation cost for trust unit based compensation totaled $188. Unrecognized compensation cost amounts are recorded through the final vesting date, January 1, 2009. In
determining the expected life of the options, management considered the age of the recipients and duration between the vesting date and date of expiration. These options represent the Fund's first
option grant. Accordingly, the Fund has no historical information with regards to the behaviour of its option recipients. Expected volatility was calculated using changes in monthly trust unit prices
for a period commensurate with the remaining term to full vesting. 

 E.    Future income tax assets, liabilities, expense or recovery  

Adjustments
to future income tax assets and liabilities on the Fund's consolidated balance sheet or to future income tax expense or recovery on the Fund's consolidated statement of operations and
comprehensive income (loss), relate to the various Canadian to U.S. GAAP adjustments outlined in Notes A. through F. 

In
certain circumstances Canadian GAAP requires the measurement of future income tax assets and liabilities applying substantively enacted tax rates or laws. Under U.S. GAAP enacted rates or
laws are the only measure of a company's future income tax assets and liabilities. There were no significant differences between the Fund's use of substantively enacted versus enacted tax rates and
laws. Accordingly, no adjustments have been made in respect of this Canadian to U.S. GAAP difference. 

 F.     Unitholders' equity and non-controlling interest  

Trust
units of the Fund are redeemable by their holders at any time. This redemption feature is required for the Fund to retain its Canadian mutual fund trust status. Upon notification of redemption,
trust unitholders are entitled to receive a price per trust unit equal to the lesser of: (i) 90% of the average closing market price calculated for the 10 days prior to the date the
trust units are surrendered 

23

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 F.     Unitholders' equity and non-controlling interest (Continued) 

for
redemption, and (ii) the closing market price on the date of redemption. In accordance with the Fund's Declaration of Trust, trust units redeemable for cash, in any given month, is limited
to $50, which may be waived at the discretion of the Fund's Trustees. Under Canadian GAAP, trust units of the Fund are considered permanent equity and are presented as a component of unitholders'
equity. 

Participating
preferred shares are ultimately redeemable for trust units of the Fund. Under Canadian GAAP, participating preferred shares are recorded as non-controlling interest in the
mezzanine section of the Fund's consolidated balance sheet. 

Under
U.S. GAAP, issued equity, which is redeemable for cash or other assets and is (a) redeemable at a fixed or determinable price on a fixed or determinable date, (b) redeemable
at the option of the holder, or (c) redeemable upon the occurrence of an event that is not solely within control of the issuer, is classified outside of permanent equity. Accordingly, the Fund
is required to classify its trust units and participating preferred shares as mezzanine equity and to record the value of the Fund's trust units and participating preferred shares at their maximum
redemption amount at each balance sheet date. The increase or decrease resulting from valuing the Fund's trust units and participating preferred shares at their maximum redemption amount is recorded
to deficit. To comply with U.S. GAAP, the Fund's trust units and participating preferred shares are reclassified from Unitholders' Equity and Non-controlling Interest to Mezzanine
Equity, where Mezzanine Equity is classified between Liabilities and Unitholders' Equity on the Fund's consolidated balance sheet. In addition, redemption value adjustments are recorded to Mezzanine
Equity and are offset by an adjustment to deficit. The non-controlling interest's share of net income recorded under Canadian GAAP is eliminated for the purpose of complying with
U.S. GAAP. 

Trust
units of the Fund, acquired for the benefit of the Fund's U.S. long-term incentive plan participants, and held in a rabbi trust have also been reclassified to Mezzanine
Equity. The deferred compensation obligation related to these trust
units has been reclassified from unitholders' equity to accrued charges due to the redemption feature of the trust units. Increases or decreases to the deferred compensation obligation, representing
changes in the fair value of the obligation, are recorded to selling, general and administrative expense. An increase or decrease in accrued compensation obligations results in a higher or lower
accounting versus tax basis and a higher or lower future income tax asset (deferred tax asset) which is recorded to future income tax recovery or expense on the Fund's consolidated statement of
operations and comprehensive (loss) income. 

In
accordance with U.S. GAAP, exchangeable shares are included in the calculation of basic weighted average trust units outstanding whereas Canadian GAAP only includes exchangeable shares in
the calculation of diluted weighted average trust units outstanding. 

 G.    Employee future benefits  

Under
U.S. GAAP, the over or underfunded status of a defined benefit plan is recognized as an asset or liability with the change in funded status recorded through other comprehensive income.
Canadian GAAP does not require recognition of the plan's funded status. Compliance with the U.S. GAAP standard did not have a significant impact on the consolidated financial statements of the
Fund and accordingly is not reflected in the reconciliation between Canadian and U.S. GAAP. 

 Reconciliation of Canadian to U.S. GAAP — Additional Disclosures  

 Restricted cash  

In
accordance with Regulation S-X, restricted cash represents cash received from IRB drawings in advance of incurring the expenditure for which the IRBs are available. At
June 30, 2008 and December 31, 2007, $842 and $1,600, of cash is restricted to fund a portion of landfill construction activities, and equipment, and container expenditures in the Fund's
Texas operations, respectively. 

 Intangibles  

In
accordance with U.S. GAAP, intangible assets acquired in the six months ended June 30, 2008 and subject to amortization are comprised of $340 of customer collection contracts with 3
to 5 year amortization periods, $9,204 of customer lists with 5 to 10 year amortization periods, $330 of non-competition agreements with 2 to 5 year amortization
periods. Intangible assets acquired in the six months ended June 30, 2007 and subject to amortization are comprised of $650 of customer collection contracts with 3 to 5 year amortization
periods, $9,584 of customer lists with 5 to 10 year amortization periods and $725 of non-competition agreements with 3 to 5 year amortization periods. 

24

 

  BFI CANADA INCOME FUND  

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)  

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated)  

 G.    Employee future benefits (Continued)  

 Goodwill  

In
accordance with U.S. GAAP, goodwill acquired by reportable segment for the six months ended is as follows: 

									
	 	 
	 	June 30, 2008 	 	June 30, 2007 	 
	 	 Canada
	 	$	2,328	 	$	2,007	 
	 	 U.S. South
	 	 	45	 	 	13,319	 
	 	 U.S. Northeast
	 	 	7,852	 	 	—	 
	 	 	 	 	 	 	 
	 	
	 	$	10,225	 	$	15,326	 
	 	 	 	 	 	 	 

Goodwill
was neither impaired nor disposed of for the three and six months ended June 2008 and 2007. 

 Unitholders' equity  

The
following table presents Canadian to U.S. GAAP reconciliation items which impact various components of Unitholders' equity. 

													
	 	 
	 	Note 	 	June 30,

2008 	 	December 31,

2007 	 
	 	 Contributed Equity
	 	 	 	 	 	 	 	 	 
	 	 	 Stated in accordance with Canadian GAAP
	 	 	 	$	1,006,772	 	$	1,006,751	 
	 	 	 	 Reclassification of trust units to mezzanine equity
	 	F	 	 	(1,006,772	)	 	(1,006,751	)
	 	 	 	 	 	 	 	 	 
	 	 	 Stated in accordance with U.S. GAAP
	 	 	 	$	—	 	$	—	 
	 	 Deficit
	 	 	 	 	 	 	 	 	 
	 	 	 Stated in accordance with Canadian GAAP
	 	 	 	$	(277,319	)	$	(248,815	)
	 	 	 	 Revaluation of trust units and participating preferred shares reclassified to mezzanine equity and fair value adjustments to rabbi trust units
	 	F	 	 	(214,212	)	 	(306,196	)
	 	 	 	 Capitalized interest
	 	A	 	 	8,025	 	 	7,738	 
	 	 	 	 Capitalized financing costs and transition adjustment
	 	B	 	 	6,699	 	 	7,379	 
	 	 	 	 Fair value of trust unit based compensation
	 	D	 	 	(882	)	 	(1,404	)
	 	 	 	 	 	 	 	 	 
	 	 	 Stated in accordance with U.S. GAAP
	 	 	 	$	(477,689	)	$	(541,298	)
	 	 Accumulated other comprehensive loss
	 	 	 	 	 	 	 	 	 
	 	 	 Stated in accordance with Canadian GAAP
	 	 	 	$	(108,706	)	$	(128,747	)
	 	 	 	 Foreign currency translation of capitalized interest
	 	A	 	 	(961	)	 	(1,146	)
	 	 	 	 Foreign currency translation of capitalized financing costs
	 	B	 	 	(607	)	 	(780	)
	 	 	 	 	 	 	 	 	 
	 	 	 Stated in accordance with U.S. GAAP
	 	 	 	$	(110,274	)	$	(130,673	)
	 	 	 	 	 	 	 	 	 
	 	 Unitholders' Equity stated in accordance with U.S. GAAP
	 	 	 	$	(587,963	)	$	(671,971	)
	 	 	 	 	 	 	 	 	 

25

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 G.    Employee future benefits (Continued) 

 Statement of cash flows  

In
accordance with U.S. GAAP, the change in non-cash working capital items consists of the following: 

																
	 	 
	 	Three months ended June 30 	 	Six months ended June 30 	 
	 	 
	 	2008 	 	2007 	 	2008 	 	2007 	 
	 	 	 Accounts receivable
	 	$	(11,460	)	$	(10,232	)	$	(9,147	)	$	(1,671	)
	 	 	 Prepaid expenses
	 	 	555	 	 	976	 	 	(1,484	)	 	(1,050	)
	 	 	 Accounts payable
	 	 	4,709	 	 	6,098	 	 	(6,921	)	 	(14,748	)
	 	 	 Accrued charges
	 	 	5,214	 	 	(122	)	 	1,732	 	 	(5,730	)
	 	 	 Income taxes payable
	 	 	(4,922	)	 	(903	)	 	(4,239	)	 	(300	)
	 	 	 Deferred revenues
	 	 	(515	)	 	273	 	 	457	 	 	738	 
	 	 	 Effect of foreign currency translation adjustments
	 	 	(291	)	 	(1,130	)	 	702	 	 	(862	)
	 	 	 	 	 	 	 	 	 	 	 
	 	 Change in non-cash working capital items
	 	$	(6,710	)	$	(5,040	)	$	(18,900	)	$	(23,623	)
	 	 	 	 	 	 	 	 	 	 	 

 Reconciliation of Canadian and U.S. GAAP — Recent Accounting Developments Adopted  

 Framework for Fair Value Measurement  

In
September 2006, Financial Accounting Standard No. 157, "Fair Value Measurements", ("SFAS 157") was issued. SFAS 157 defines and establishes a framework for measuring
fair value and expands disclosures for assets and liabilities measured at fair value. SFAS 157 retains the exchange price notion with an emphasis on the price that would be received to sell the
asset or paid to transfer the liability. The standard also emphasizes that fair value is a market-based measurement applying assumptions that market participants would apply in pricing the asset or
liability and establishes a hierarchy as a basis for considering market participant assumptions. Additional disclosures include a focus on the inputs used to measure fair value and the effect these
inputs have on earnings. For the Fund, SFAS 157 was effective January 1, 2008 and was applied prospectively. 

Under
U.S. GAAP, financial assets and liabilities recorded at fair value are measured and classified in one of the following three hierarchical categories: Level 1, quoted market prices
in active markets for identical assets or liabilities; Level 2, observable market based inputs or unobservable inputs that are corroborated by market data; Level 3, unobservable inputs
that are not corroborated by market data. 

The
following table outlines the fair value measurement amount for various financial assets and liabilities at June 30, 2008 and their hierarchical measurement categories: 

															
	 	 
	 	June 30, 2008 	 
	 	 
	 	Quoted prices in

active markets

for identical

assets

(Level 1) 	 	Significant other

observable

inputs

(Level 2) 	 	Significant

unobservable

inputs

(Level 3) 	 	Total 	 
	 	 Funded landfill post-closure costs
	 	$	6,751	 	$	—	 	$	—	 	$	6,751	 
	 	 Other liabilities — interest rate swaps
	 	$	—	 	$	(6,512	)	$	—	 	$	(6,512	)

 The Fair Value Option for Financial Assets and Financial Liabilities  

In
February 2007, Financial Accounting Standard No. 159, "Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159") was issued. SFAS 159 permits
entities to measure many financial instruments and certain other items at fair value. The standard permits all entities to choose, at specified election dates, to measure eligible items at fair value
with unrealized gains and losses recorded to earnings. Upfront costs and fees related to items for which fair value is elected is recognized in earnings as incurred and not deferred. Additional
disclosures include a focus on management's reasons for electing fair value, methods and assumptions used to estimate fair value, and separation of fair value eligible and elected assets and
liabilities from the carrying amounts of similar assets and liabilities measured using another measurement attribute. For the Fund, SFAS 159 was effective January 1, 2008 and has been
applied prospectively. The Fund's adoption of SFAS 159 had no impact on its consolidated financial statements. 

26

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 G.    Employee future benefits (Continued) 

 Reconciliation of Canadian and U.S. GAAP — Recent Accounting Developments  

 Framework for Fair Value Measurement  

In
February 2008, FASB Staff Position No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP 157-2") was issued which delays the effective date
of SFAS 157 for non-financial assets and non-financial liabilities. The Fund has therefore delayed application of SFAS 157 to its non-financial assets
and non-financial liabilities, which include assets and liabilities acquired in connection with a business combination, goodwill, intangible assets and asset retirement obligations
recognized in connection with closure and post-closure landfill obligations, until January 1, 2009. The Fund is currently evaluating the impact of SFAS 157 for
non-financial assets and liabilities on its consolidated financial statements. 

 Business Combinations  

In
December 2007, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard No. 141(R), "Business Combinations" ("SFAS 141(R)"). The standard
establishes principles and requirements for an acquirer to recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the
acquiree, how goodwill or a gain from a bargain purchase option is recognized and measured in a business combination, and outlines disclosure requirements to enable users of the financial statements
to evaluate the nature and financial effects of a business combination. SFAS 141(R) outlines that the acquisition date fair value is the measurement objective for all assets acquired and
liabilities assumed. SFAS 141(R) requires that all acquisition related and restructuring costs be charged to earnings and requires contingent consideration to be recognized at its fair value on
the date of acquisition. Certain contingent consideration arrangements will result in fair value changes being recognized in earnings until settled. This statement eliminates adjustments to goodwill
for changes in future income tax assets (deferred tax assets) and uncertain tax positions after the acquisition accounting measurement period (limited to one year from the date of acquisition).
SFAS 141(R) is effective prospectively for acquisitions that occur on or after January 1, 2009. The Fund is evaluating the impact adopting SFAS 141(R) will have on its accounting
and reporting for future acquisitions. 

 Non-controlling Interests in Consolidation Financial Statements  

In
December 2007, FASB issued Financial Accounting Standard No. 160, "Non-controlling Interests in Consolidated Financial Statements" ("SFAS 160"). SFAS 160
requires ownership interests in subsidiaries held by parties other than the parent to be clearly identified, labeled, and presented in the consolidated statement of financial position within equity,
but separate from parent's equity. The standard also requires consolidated net income attributable to the parent and to the non-controlling interest to be clearly identified and presented
on the face of the consolidated statement of income. While the parents control is retained, the standard requires changes in the parent's ownership interest to be accounted for similarly as an equity
transaction. Upon deconsolidation of a subsidiary, any retained non-controlling equity investment in the former subsidiary is initially measured at fair value and the gain or loss on the
deconsolidation is measured using the fair value of any non-controlling equity investment rather than the carrying amount of the retained investment. For the Fund, SFAS 160 is
effective January 1, 2009 and is applied prospectively, except for the presentation and disclosure requirements which are applied retrospectively for all periods presented. Earlier adoption is
prohibited. The Fund does not expect the adoption of SFAS 160 to have a significant impact on its consolidated financial statements. 

 Disclosures about Derivative Instruments and Hedging Activities  

In
March 2008, FASB issued Financial Accounting Standard No. 161, "Disclosures about Derivative Instruments and Hedging Activities — an amendment of
FASB Statement No. 133" ("SFAS 161"). SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is intended to enhance
the current disclosure framework and requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The additional disclosure conveys
the purpose of derivative use in terms of the risks that the entity is intending to manage. Also, disclosing the fair values of derivative instruments and their gains and losses in a tabular format
and credit-risk-related contingent features and their impact on an entity's liquidity is required. For the Fund, SFAS 161 is effective January 1, 2009. The Fund
does not expect the adoption of SFAS 161 to have a significant impact on its consolidated financial statements. 

27

 
 BFI CANADA INCOME FUND 

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

 For the period ended June 30, 2008

(unaudited — in thousands, except per trust unit amounts, unless otherwise stated) 

 G.    Employee future benefits (Continued) 

 Useful Life of Intangible Assets  

In
April 2008, FASB issued FSP No. 142-3, "Determination of the Useful Life of Intangible Assets", which amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142. The purpose of this guidance is to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. Accordingly, entities are required to disclose information for a
recognized intangible asset that enables users of the financial statements to assess the extent to which the expected future cash flows associated with the asset are affected by the entities intent
and/or ability to renew or extend the arrangement. For the Fund, FSP No. 142-3 is effective January 1, 2009. The Fund does not expect the adoption of FSP
No. 142-3 to have a significant impact on its consolidated financial statements. 

 The Hierarchy of Generally Accepted Accounting Principles  

In
May 2008, Statement of Financial Accounting Standard No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162") was issued, which identifies the sources
of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of non-governmental entities that are presented in conformity
with U.S. GAAP. FASB does not expect this standard to change current practice. SFAS 162 will become effective 60 days following the Security and Exchange Commission's approval of
the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles". The Fund does not expect
the adoption of SFAS 162 to have a material impact on its consolidated financial statements. 

28

QuickLinks

Exhibit 4.6

BFI CANADA INCOME FUND CONSOLIDATED BALANCE SHEETS June 30, 2008 (unaudited) and December 31, 2007 (in thousands of dollars)

BFI CANADA INCOME FUND CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the periods ended June 30, 2008 and 2007 (unaudited — in thousands of dollars, except net income per trust
unit amounts)

BFI CANADA INCOME FUND CONSOLIDATED STATEMENTS OF CASH FLOWS For the periods ended June 30, 2008 and 2007 (unaudited — in thousands of dollars)

BFI CANADA INCOME FUND CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY, DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS For the periods ended June 30, 2008 and 2007 (unaudited — in thousands of
dollars)QuickLinks
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  Exhibit 4.7    
    

 
 

  FORM 51-102F3
  
    Material Change Report    
    

			
	

Item 1	
 	

Name and Address of Company
	

 	
 	

BFI Canada Income Fund (the "Fund" or "BFI Canada")

135 Queens Plate Drive

Suite 300

Toronto, Ontario

M9W 6V1
	

Item 2	
 	

Date of Material Change
	

 	
 	

August 18, 2008
	

Item 3	
 	

News Release
	

 	
 	

A news release was issued through Marketwire on August 18, 2008 and is attached to this report.
	

Item 4	
 	

Summary of Material Change
	

 	
 	

The Fund's Board of Trustees has approved the conversion (the "Conversion") of the Fund from an income trust to a corporation. In addition, the Board of Trustees has approved a reduction to the cash distributions payable to the Fund's
unitholders to C$0.04166 per month effective December 1, 2008.
	

Item 5	
 	

Full Description of Material Change
	

 	
 	
 5.1 — Full Description of Material Change
	

 	
 	

If approved, the Conversion would result in the reorganization of the Fund's trust structure into a publicly-listed corporation that would own all of the units of the Fund. Pursuant to the Conversion, unitholders would receive, for each unit held,
one common share of the corporation on the effective date of the Conversion. It is expected that the Conversion would be completed on a tax-free rollover basis. Following the issuance by the federal Minister of Finance on July 14, 2008 of
proposed rules governing the conversion of income trusts into corporations (the "Proposed Conversion Rules"), unitholders should be able to defer any capital gain resulting from the exchange of their units of the Fund in consideration for shares
of the corporation without the need to complete and file income tax elections. In the event that the Proposed Conversion Rules are not enacted into law in a timely manner, eligible unitholders will be given the right to make income tax elections with
the new corporation to defer the gain on the transfer of their units.
	

 	
 	

The outstanding Participating Preferred Shares that are exchangeable for units of the Fund, would be exchangeable for an equivalent number of common shares of the public corporation.
	

 	
 	

In addition, the Board of Trustees has approved a reduction to the cash distributions payable to the Fund's unitholders to C$0.04166 per month effective December 1, 2008.
	

 	
 	

See the news release attached to this report for a full description of the material change.
	

 	
 	
 5.2 — Disclosure for Restructuring Transactions
	

 	
 	

Not applicable.
	

Item 6	
 	

Reliance on subsection 7.1(2) or (3) of National Instrument 51-102
	

 	
 	

Not applicable.
	

Item 7	
 	

Omitted Information
	

 	
 	

No significant facts in this report remain confidential, and no information has been omitted from this report.

 

			
	

Item 8	
 	

Executive Officer              
	

 	
 	

For further information please contact Chaya Cooperberg, Director, Investor Relations and Corporate Communications, at (416) 401-7729.              
	

Item 9	
 	

Date of Report              
	

 	
 	

August 26, 2008              

2

 

 
 

  BFI CANADA INCOME FUND TO REDUCE DISTRIBUTIONS AND CONVERT TO A CORPORATION
  TO BE BETTER POSITIONED TO CONTINUE CREATING VALUE THROUGH GROWTH    
    

 Conference Call Scheduled for 5:00 PM Eastern on Monday, August 18, 2008  

Toronto, Ontario — August 18, 2008 — BFI
Canada Income Fund (the "Fund" or "BFI Canada") (TSX: BFC.UN) today announced that its Board of Trustees has approved the conversion of the Fund from an income trust
into a dividend paying corporation that will be better positioned to pursue the various growth opportunities available to BFI Canada. In addition, the Board of Trustees has also approved a reduction
in the cash distributions payable to BFI Canada's unitholders to C$0.04166 per month effective December 1, 2008. Each of these initiatives is intended to better position the Fund to continue
creating value through investments in internal and external growth initiatives. 

The
Fund's proposed conversion from a unit trust structure to a share corporation (the "Conversion") is subject to unitholder and other approvals and will be undertaken pursuant to a statutory
plan of arrangement under the Ontario Business Corporations Act that is scheduled to be voted on by unitholders of record at August 26, 2008 at a
special meeting to be held on September 25, 2008. It is expected that the Conversion will be completed on a tax free "rollover" basis for Canadian income tax purposes. Following the
Conversion, the composition of the Board of Directors of the resulting public corporation would be the same as the current Board of Trustees. 

"Our
results demonstrate that the most effective way of creating value is through growth, both organically and through acquisitions. However, we are now at a crossroads," said Keith Carrigan, Vice
Chairman and Chief Executive Officer of the Fund. "Our ability to continue creating value within the trust structure is constrained as we cannot efficiently access capital to fund growth. The
non-hazardous solid waste services sector is undergoing a period of consolidation, particularly in the U.S. market, and we anticipate significant opportunities that we need to be in
a position to act upon. In order to continue to pursue our strategic growth objectives, we require an equity that reflects our financial and operating performance. We also require a structure that
does not limit our growth or our foreign ownership levels, and a structure through which we can efficiently access capital markets. We believe the conversion to a corporate structure is fundamental to
the future success of our business." 

In
addition to listing its common shares on the Toronto Stock Exchange upon completion of the Conversion, it is anticipated that BFI Canada will seek to list its common shares on the New York
Stock Exchange to facilitate its access to the U.S. capital markets. 

Mr. Carrigan
continued, "Given our anticipation of significant acquisition opportunities especially in the U.S. non-hazardous solid waste services market, the
tuck-in acquisitions that we are continually negotiating, and our organic growth requirements, my fellow Trustees and I have decided to reduce our distributions to unitholders in order to
direct more cash flow towards investments in growth. Therefore, effective December 1, 2008, we are changing our distribution policy to a monthly distribution of
$0.04166 per unit." 

Under
the revised distribution policy, the Fund will pay monthly distributions of $0.04166 per unit, commencing with the distribution to Unitholders of record on December 31, 2008, payable on
January 15, 2009. If the Conversion is approved, it is expected that the corporation will maintain the same distribution level, with quarterly dividends of $0.125 per share, as its dividend
policy. 

 Background To and Reasons for the Conversion  

Following
the October 31, 2006 announcement by the federal Minister of Finance regarding the federal government's plan to change the tax treatment of income trusts (the "Trust Proposal")
and the further guidance 

3

 

that
was provided December 15, 2006, management has regularly updated the Board of Trustees with respect to the potential impact and significance of the Trust Proposal to the Fund, including
the impact upon the Fund's strategy of creating value through growth. Since the second quarter of 2007, management has carried out more detailed analyses concerning the strategic direction for the
Fund given its goal of maximizing total return for its investors. 

As
a result of this analysis, the Board of Trustees and senior management have determined that the proposed corporate structure is the most prudent response to the challenges facing the Fund's value
creation strategy as a result of the Trust Proposal. 

In
making this recommendation, the Board of Trustees and senior management believe that the Conversion provides a number of compelling and strategic benefits, including, without limitation, the
expectation that a conversion to a public corporation would: 

	(a)
	attract
new investors, including non-resident investors, and provide, in the aggregate, a more active and attractive market for the
corporation's shares than currently exists for the Fund's units;

	(b)
	result
in a higher equity valuation, as its financial and operational performance would be more easily valued relative to its common share peers in the
U.S. solid waste services market, allowing it to more efficiently raise capital through equity and reducing its reliance on an uncertain debt market for capital;

	(c)
	better
position the Fund to pursue significant opportunities for growth and expansion that are expected to arise and allow it to better execute its strategy
for creating value for its owners; and

	(d)
	result
in it no longer being subjected to the "normal growth" and "undue expansion" limitations included in the Trust Proposal which limit the Fund's
flexibility in making acquisitions in furtherance of its strategy to create value through growth. 

 Fairness Opinion  

The
Board of Trustees retained CIBC World Markets Inc. ("CIBC World Markets") to act as its financial advisor. In connection with this mandate, CIBC World Markets has
provided the Board of Trustees with an opinion that, as at the date thereof and subject to the particular assumptions and considerations summarized therein, the consideration to be received by
unitholders pursuant to the Conversion is fair, from a financial point of view, to such unitholders. The full text of the CIBC World Markets fairness opinion will be appended to the management
information circular to be provided to unitholders in connection with the proposed Conversion. 

 Board Recommendation  

The
Board of Trustees, based upon its own reviews, including consideration of the fairness opinion provided by CIBC World Markets, has unanimously determined that the Conversion is fair to
unitholders and that it is in the best interests of the Fund and its unitholders, and unanimously recommends that unitholders vote in favour of the Conversion. 

 Mechanics of the Conversion  

If
approved, the Conversion would result in the reorganization of the Fund's trust structure into a publicly-listed corporation that would own all of the units of the Fund. Pursuant to the Conversion,
unitholders would receive, for each unit held, one common share of the corporation on the effective date of the Conversion. It is expected that the Conversion would be completed on a
tax-free rollover basis. Following the issuance by the federal 

4

 

Minister
of Finance on July 14, 2008 of proposed rules governing the conversion of income trusts into corporations (the "Proposed Conversion Rules"), unitholders should be able to defer
any capital gain resulting from the exchange of their units of the Fund in consideration for shares of the corporation without the need to complete and file income tax elections. In the event that the
Proposed Conversion Rules are not enacted into law in a timely manner, eligible unitholders will be given the right to make income tax elections with the new corporation to defer the gain on the
transfer of their units. 

The
outstanding Participating Preferred Shares that are exchangeable for units of the Fund, would be exchangeable for an equivalent number of common shares of the public corporation. 

The
Conversion is subject to approval by not less than two-thirds of the votes cast by the unitholders voting in person or by proxy at a special meeting of the unitholders scheduled to be
held on September 25, 2008. 

The
Conversion is also subject to the approval of the Ontario Superior Court of Justice and all necessary regulatory approvals. The Fund will apply to the Toronto Stock Exchange for the substitutional
listing of the public corporation's common shares issuable pursuant to the Conversion. 

It
is anticipated that a management information circular will be mailed to unitholders on or about September 4, 2008, in connection with the Conversion and other matters to be considered at the
special meeting. The Fund expects, subject to receipt of required approvals, that the Conversion will be effective on or about October 1, 2008. 

CIBC World
Markets and Merrill Lynch & Co. have provided advice to the Fund in connection with the Conversion process. 

 Normal Course Issuer Bid  

The
Fund also announced today its intention to buy back certain of its units pursuant to a normal course issuer bid. Please see the Fund's press release dated August 18, 2008 for more
information. 

 Forward-looking statements  

This
document may contain forward-looking statements relating to the Fund's operations or to the environment in which it operates, which are based on the Fund's operations, estimates, forecasts and
projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond the Fund's control. A number of important
factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in the Fund's Annual Information
Form for the period ended December 31, 2007. Consequently, readers should not rely on such forward-looking statements. In addition, these forward-looking statements relate to the date on which
they are made. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Fund cannot assure unitholders that actual results
will be consistent with these forward looking statements, and the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable securities laws. 

 About BFI Canada Income Fund  

The
Fund, through its operating subsidiaries, is one of North America's largest full-service waste management companies, providing non-hazardous solid waste ("waste")
collection and disposal services to commercial, industrial, municipal and residential customers in five Canadian provinces and ten states in the United States ("U.S."). The Fund provides
service to over 1.8 million customers with vertically integrated collection and 

5

 

disposal
assets. The Fund's Canadian segment operates under the BFI Canada brand and is Canada's second largest full-service waste management company providing vertically integrated waste
collection and disposal services in the provinces of British Columbia, Alberta, Manitoba, Ontario, and Quebec. This segment provides service to 20 Canadian markets and operates five landfills,
four transfer collection stations, seven material recovery facilities ("MRFs"), and one landfill gas to energy facility. The Fund's U.S. south and northeast segments, collectively the
U.S. segment or U.S. segments, operate under the IESI brand and provide vertically integrated waste collection and disposal services in two geographic regions: the south, consisting of
various service areas in Texas, Louisiana, Oklahoma, Arkansas, Mississippi, and Missouri, and the northeast, consisting of various service areas in New York, New Jersey, Pennsylvania,
and Maryland. This segment provides service to 39 U.S. markets and operates 17 landfills, 31 transfer collection stations, 10 material recovery facilities, and one
transportation operation. The Fund's units are listed on the Toronto Stock Exchange under the symbol BFC.UN. For more information on the Fund, visit www.bficanada.com. 

 Further information:  

BFI
Canada Income Fund

Chaya Cooperberg

Director, Investor Relations and Corporate Communications

Tel: (416) 401-7729

Email: chaya.cooperberg@bficanada.com 

Management
will hold a conference call on August 18, 2008 at 5:00 PM (EDT). To access the call, participants should dial 416-644-3419 or
1-800-731-6941 at approximately 4:50 PM (EDT). The conference call will also be webcast live at www.bficanada.com and
subsequently archived on the BFI Canada website. 

A rebroadcast of the call will be available until midnight on September 1, 2008. To access the rebroadcast, dial 416-640-1917 or
1-877-289-8525 and quote the reservation number 21280782#. 

6

QuickLinks

Exhibit 4.7

FORM 51-102F3 Material Change Report

BFI CANADA INCOME FUND TO REDUCE DISTRIBUTIONS AND CONVERT TO A CORPORATION TO BE BETTER POSITIONED TO CONTINUE CREATING VALUE THROUGH GROWTH

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