UNITED STATES
SECURITIES AND EXCHANGE COMMISSION ----------------------
WASHINGTON, D.C. 20549 OMB APPROVAL
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FORM 40-F OMB NUMBER: 3235-0381
Expires: April 30, 2008
[_] REGISTRATION STATEMENT PURSUANT TO SECTION Estimated Average
12 OF THE SECURITIES EXCHANGE ACT OF 1934 burden hours per
response ........ 427
OR -----------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13(a) OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2007 Commission File Number: 001-32677
ADVANTAGE ENERGY INCOME FUND
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(Exact name of Registrant as specified in its charter)
N/A
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(Translation of Registrant's name into English (if applicable))
ALBERTA
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(Province or other jurisdiction of incorporation or organization)
1311
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(Primary Standard Industrial Classification Code Number (if applicable))
N/A
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(I.R.S. Employer Identification Number (if applicable))
SUITE 700, 400 - 3 AVENUE SW, CALGARY, ALBERTA T2P 4H2 1-866-393-0393
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(Address and telephone number of Registrant's principal executive offices)
CORPORATION SERVICE COMPANY
1133 AVENUE OF AMERICAS, 31ST FLOOR, NEW YORK, NY 10036 1-800-927-9800
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(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange on which
registered
TRUST UNITS NEW YORK STOCK EXCHANGE
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Securities registered or to be registered pursuant to Section 12(g) of the Act.
NONE
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(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.
NONE
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(Title of Class)
PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF
SEC 2285 (08-03) INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED
TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID
OMB CONTROL NUMBER.
For annual reports, indicate by check mark the information filed with this
Form:
[X] Annual information form [X] Audited annual financial statements
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report. 138,269,374 Trust Units.
Indicate by check mark whether the Registrant by filing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
(the "Exchange Act"). If "Yes" is marked, indicate the file number assigned to
the Registrant in connection with such Rule.
Yes [_] 82-_________ No [X]
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
DOCUMENTS INCLUDED IN THIS FORM
The following documents are included in the Form:
No. Document
1. Annual Information Form of the Registrant for the year ended
December 31, 2007. (filed herein as Exhibit 99.1)
2. Consolidated Financial Statements of the Registrant for the
fiscal year ended December 31, 2007; including a
reconciliation to US GAAP (Note 15). (filed herein as Exhibit
99.2)
3. Management's Discussion and Analysis of the Registrant for the
fiscal year ended December 31, 2007 (filed herein as Exhibit
99.3).
4. Consent of PricewaterhouseCoopers LLP to the inclusion of the
Auditors' Report dated March 5, 2008 on the Registrant's
Audited Consolidated Financial Statements for the fiscal year
ended December 31, 2007.
5. Consent of KPMG LLP.
6. Consent of Sproule Associated Limited to the incorporation by
reference herein of its Statement of Reserves Data and other
Information in Form 51-101F1, which statement and report is
contained in the Registrant's Annual Information Form for the
fiscal year ended December 31, 2007.
7. CEO Certification pursuant to rule 13a-14(a) of the Exchange
Act.
8. CFO Certification pursuant to rule 13a-14(a) of the Exchange
Act.
9. CEO Certification pursuant to U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10. CFO Certification pursuant to U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
11. Report of KPMG LLP.
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PRINCIPAL DOCUMENTS
A. ANNUAL INFORMATION FORM
For the Annual Information Form for the fiscal year ended December 31, 2007,
see Exhibit 99.1 included herein.
B. AUDITED ANNUAL FINANCIAL STATEMENTS
For consolidated audited financial statements, including the report of
independent chartered accountants with respect thereto, see the Consolidated
Financial Statements of the Registrant for the fiscal year ended December 31,
2007 included herein. The Registrant's financial statements have been
reconciled to United States generally accepted accounting principles ("US
GAAP") as required by Form 40-F under the Exchange Act. See Note 15 -
Reconciliation of Financial Statements to United States Generally Accepted
Accounting Principles in the 2007 Consolidated Financial Statements.
C. MANAGEMENT'S DISCUSSION AND ANALYSIS
For management's discussion and analysis, see Management's Discussion and
Analysis of the Registrant for the fiscal year ended December 31, 2007 included
herein.
CERTIFICATIONS AND DISCLOSURES REGARDING
CONTROLS AND PROCEDURES
A. CERTIFICATIONS. See Exhibits 32.1 and 32.2 to this Annual Report on Form
40-F.
B. DISCLOSURE CONTROLS AND PROCEDURES. As of the end of the registrant's
fiscal year ended December 31, 2007, an evaluation of the effectiveness of
the registrant's "disclosure controls and procedures" (as such term is
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) was carried out by the registrant's
management with the participation of the principal executive officer and
principal financial officer. Based upon that evaluation, the registrant's
principal executive officer and principal financial officer have concluded
that as of the end of that fiscal year, the registrant's disclosure
controls and procedures are effective to ensure that information required
to be disclosed by the registrant in reports that it files or submits
under the Exchange Act is (i) recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission
rules and forms and (ii) accumulated and communicated to the registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure.
It should be noted that while the registrant's principal executive officer
and principal financial officer believe that the registrant's disclosure
controls and procedures provide a reasonable level of assurance that they
are effective, they do not expect that the registrant's disclosure
controls and procedures or internal control over financial reporting will
prevent all errors and fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Reference is
made in the "Controls and Procedures" and "Evaluation of Disclosure
Controls and
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Procedures" sections of Management's Discussion and Analysis of the
Registrant for the fiscal year ended December 31, 2007, included herein.
C. MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
The required disclosure is included in the "Management Report on Internal
Control over Financial Reporting" that accompanies the registrant's
Consolidated Financial Statements for the fiscal year ended December 31,
2007, filed as part of this Annual Report on Form 40-F.
D. ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM. The required
disclosure is included in the "Independent Auditors' Report" that
accompanies the registrant's Consolidated Financial Statements for the
fiscal year ended December 31, 2007, filed as part of this Annual Report
on Form 40-F.
E. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. During the fiscal
year ended December 31, 2007, there were no significant changes in the
registrant's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting. Reference is made
in the "Controls and Procedures" section of Management's Discussion and
Analysis of the Registrant for the fiscal year ended December 31, 2007,
included herein.
NOTICES PURSUANT TO REGULATION BTR
None.
CODE OF ETHICS FOR CHIEF EXECUTIVE OFFICER
AND SENIOR FINANCIAL OFFICERS
The Registrant has adopted a Code of Ethics for its senior officers, principal
financial officer and controller or principal accounting officer, directors and
employees. This code applies to President and Chief Executive Officer, Senior
Vice-President, Vice President Corporate Development, the Vice-President,
Finance and Chief Financial Officer, Vice President Exploitations, Vice
President Operations, Directors and employees. It is available on the
Registrant's web site at WWW.ADVANTAGEINCOME.COM and in print to any unitholder
who requests it. All amendments to the code, and all waivers of the code with
respect to any of the officers covered by it, will be posted on the
Registrant's web site and provided in print to any unitholder who requests
them.
AUDIT COMMITTEE
IDENTIFICATION OF AUDIT COMMITTEE
The following individuals comprise the entire membership of the Advantage Audit
Committee: Carol Pennycook, Rodger Tourigny, Ronald McIntosh.
AUDIT COMMITTEE FINANCIAL EXPERTS
Rodger Tourigny has been determined by the board of the Registrant to meet the
"audit committee financial expert" criteria prescribed by the Securities and
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Exchange Commission and has been designated as audit committee financial expert
for the Audit Committee of the board of the Registrant.
Each of the directors serving on the Audit Committee has also been determined
by the board of the Registrant to be independent within the criteria
established by the New York Stock Exchange, Inc. for audit committee
membership.
PRINCIPAL ACCOUNTING FEES AND
SERVICES - INDEPENDENT AUDITORS
Fees payable to the Registrant's independent auditors for the years ended
December 31, 2007 and December 31, 2006, totaled $1,091,371 and $797,540,
respectively, as detailed in the following tables. All funds are in Canadian
dollars.
The following table discloses fees billed to the Registrant by its former
auditors, KPMG LLP:
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YEAR ENDED YEAR ENDED
DECEMBER 31, 2007 DECEMBER 31, 2006
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AUDIT FEES $203,089 $617,000
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AUDIT-RELATED FEES $57,508 $144,500
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TAX FEES $110,725 $36,040
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ALL OTHER FEES $0 $0
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TOTAL $371,322 $797,540
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The following table discloses fees billed to the Registrant by its current
auditors, PricewaterhouseCoopers LLP:
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YEAR ENDED
DECEMBER 31, 2007
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AUDIT FEES $694,119
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AUDIT-RELATED FEES $0
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TAX FEES $25,930
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ALL OTHER FEES $0
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TOTAL $720,049
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The nature of the services provided by the Registrant's independent auditors
under each of the categories indicated in the table is described below.
AUDIT FEES
Audit fees were for professional services rendered by the Registrant's
independent auditors for the audit of the Registrant's annual financial
statements and services provided in connection with statutory and regulatory
filings or engagements. These services include prospectus work and audit or
review of financials forming part of such prospectus and US GAAP reconciliation
matters.
AUDIT-RELATED FEES
Audit-related fees were for assurance and related services reasonably related
to the performance of the audit or review of the annual statements and are not
reported under "Audit Fees" above. These services include French translation in
connection with prospectus filing.
TAX FEES
Tax fees were for tax compliance, tax advice and tax planning professional
services. These services consisted of: tax compliance, including the
preparation and review of tax returns; and general tax planning and advisory
services relating to common forms of domestic and international taxation (i.e.,
income tax, capital tax, goods and services tax).
ALL OTHER FEES
None.
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PREAPPROVAL POLICIES AND PROCEDURES
In 2007, Advantage's Audit Committee pre-approved all audit, audit-related and
tax fees. The Audit Committee will be informed routinely as to the non-audit
services actually provided by the auditor pursuant to this pre-approval
process. The auditors also present the estimate for the annual audit related
services to the Audit Committee for approval prior to undertaking the annual
audit of the financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
None.
CONTRACTUAL OBLIGATIONS
Payments due by period (Cdn$MM)
TOTAL 2008 2009 2010 2011 2012
------ ----- ----- ----- ----- ----
Building Lease $ 16.6 $ 5.3 $ 4.1 $ 4.1 $ 1.8 $1.3
Capital Lease $ 8.1 $ 1.9 $ 2.1 $ 2.2 $ 1.9 -
Pipeline/Transportation $ 6.0 $ 4.4 $ 1.3 $ 0.3 - -
Convertible Debentures $224.6 $ 5.4 $87.0 $69.9 $62.3 -
TOTAL CONTRACTUAL OBLIGATIONS $255.3 $17.0 $94.5 $76.5 $66.0 $1.3
DISCLOSURES PURSUANT TO REQUIREMENTS OF THE
NEW YORK STOCK EXCHANGE
PRESIDING DIRECTOR AT MEETINGS OF NON-MANAGEMENT DIRECTORS
The Registrant schedules regular executive sessions in which the Registrant's
"non-management directors" (as that term is defined in the rules of the New
York Stock Exchange) meet without management participation. Steven Sharpe
serves as the presiding director (the "Chair of the Board") at such sessions.
Each of the Registrant's non-management directors is "independent" as such term
is used in the rules of the Canadian Securities Commissions and the New York
Stock Exchange Corporate Governance Standards.
COMMUNICATION WITH NON-MANAGEMENT DIRECTORS
Unitholders may send communications to the Registrant's non-management
directors by writing to Investors Relations, Canterra Tower, Suite 700, 400 - 3
Avenue SW, Calgary, Alberta T2P 4H2, or calling the toll free number at
1-866-393-0393. Communications will be referred to the Chair of the Board for
appropriate action. The status of all outstanding concerns addressed to the
Chair of the Board will be reported to the board of directors as appropriate.
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CORPORATE GOVERNANCE GUIDELINES
According to NYSE Rule 303A.09, a listed company must adopt and disclose a set
of corporate governance guidelines with respect to specified topics and must
disclose any significant ways in which its practices differ from those followed
by US domestic companies under the NYSE rules. Such guidelines and disclosures
are required to be posted on the listed company's website. The Registrant has
adopted the required guidelines and made the required disclosures, all of which
are available on the Registrant's website at WWW.ADVANTAGEINCOME.COM and in
print to any unitholder who requests them.
BOARD COMMITTEE CHARTERS
Advantage's Audit Committee Charter, the Terms of Reference of the Human
Resources, Compensation and Corporate Governance Committee and the Terms of
Reference for the Independent Reserve Evaluation Committee are available for
viewing on the Registrant's website at www.advantageincome.com and are
available in print to any person who requests them. Requests for copies of
these documents should be made by contacting: Investor Relations, Canterra
Tower, Suite 700, 400 - 3 Avenue SW, Calgary, Alberta T2P 4H2.
UNDERTAKING
The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F; the securities in
relation to which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Registrant has previously filed with the Commission a Form F-X in
connection with the Trust Units.
Any change to the name or address of the agent for service of process of the
registrant shall be communicated promptly to the Securities and Exchange
Commission by an amendment to the Form F-X referencing the file number of the
relevant registration statement.
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EXHIBITS
The following exhibits are filed as part of this report.
Exhibit
Number Description
23.1 Consent of PricewaterhouseCoopers LLP to the inclusion of the
Auditors' Report dated March 5, 2008 on the Registrant's
Audited Consolidated Financial Statements for the fiscal year
ended December 31, 2007.
23.2 Consent of KPMG LLP
23.3 Consent of Sproule Associated Limited to the incorporation by
reference herein of its Statement of Reserves Data and other
Information in Form 51-101F1, which statement and report is
contained in the Registrant's Annual Information Form for the
fiscal year ended December 31, 2007.
31.1 CEO Certification pursuant to rule 13a-14(a) of the Exchange
Act.
31.2 CFO Certification pursuant to rule 13a-14(a) of the Exchange
Act.
32.1 CEO Certification pursuant to U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 CFO Certification pursuant to U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1 Annual Information Form of the Registrant for the year ended
December 31, 2007.
99.2 Consolidated Financial Statements of the Registrant for the
fiscal year ended December 31, 2007, including a reconciliation
to US GAAP (Note 15).
99.3 Management's Discussion and Analysis of the Registrant for the
fiscal year ended December 31, 2007.
99.4 Report of KPMG LLP.
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SIGNATURE
Pursuant to the requirements of the Exchange Act, the Registrant certifies that
it meets all of the requirements for filing on Form 40-F and has duly caused
this Annual Report on Form 40-F to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Calgary, Province of Alberta, Canada.
Dated: March 28, 2008
ADVANTAGE ENERGY INCOME FUND
By: /s/ Peter Hanrahan
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Name: Peter Hanrahan
Title: Vice-President, Finance and
Chief Financial Officer of
Advantage Oil & Gas Ltd. on
behalf of Advantage Energy
Income Fund
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