Tuesday, May 8, 2012

ACQ - <span class="simulate_din_font">AutoCanada Inc. announces an increase in earnings for the quarter ended March 31, 2012 and an increase in its quarterly dividend:</span> (CAD 0.15)

Company: Autocanada Inc
Stock Name: ACQ
Amount: CAD 0.15
Announcement Date: 08/05/2012
Record Date: 29/05/2012

Dividend Detail:




A conference call to discuss the results for the reporting period ended
March 31, 2012 will be held on May 9, 2012 at 10:00 a.m. Eastern time
(8:00 a.m. Mountain time). To participate in the conference call,
please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes
prior to the call. A live and archived audio webcast of the conference
call will also be available on the Company's website www.autocan.ca.



EDMONTON, May 8, 2012 /CNW/ - AutoCanada Inc. (the "Company" or
"AutoCanada") (TSX: ACQ) today announced financial results for the
reporting period ended March 31, 2012.












������������������������������������������������������������������2012 First Quarter Operating Results





  • Revenue increased 17.8% or $37.6 million


  • Gross profit increased by 17.6% or $6.4 million


  • Same store revenue increased by 20.2%


  • Same store gross profit increased by 18.3%


  • EBITDA was $6.8 million vs. $4.0 million in Q1 of 2011, a 68.2% increase


  • Pre-tax net earnings increased by $2.9 million or 107% to $5.6 million


  • Net earnings increased by $2.1 million or 106% to $4.1 million


  • The number of same store new vehicles retailed increased by 15.1%


  • The number of same store used vehicles retailed increased by 23.6%


  • Same store repair orders completed for the quarter were up 5.7%





In commenting on the financial results for the three month period ended
March 31, 2012, Pat Priestner, Chief Executive Officer of AutoCanada
Inc. stated that, "The first quarter of 2012 was a very strong quarter
for the Company with increases in revenue, gross profit and volume
sales in all four business streams. The strong sales performance in the
first quarter of 2012 resulted in another record first quarter in terms
of pre-tax earnings and EBITDA."



Commenting on the announcement of an increase in its quarterly dividend,
Mr. Priestner stated, "Our continued strong results were a primary
factor in our decision to raise the dividend for the fifth consecutive
quarter.�� Management believes that raising the quarterly dividend to an
annual rate of $0.60 per share will provide an attractive yield to
investors and will continue to attract investors who seek a combination
of both growth opportunity and a regular income stream."



First Quarter 2012 Highlights




  • The Company generated net earnings of $4.1 million or earnings per share
    of $0.21 versus earnings per share of $0.10 in the first quarter of
    2011.�� Pre-tax earnings increased by $2.9 million to $5.6 million in
    the first quarter of 2012 as compared to $2.0 million in the same
    period in 2011.


  • Same store revenue increased by 20.2% in the first quarter of 2012,
    compared to the same quarter in 2011.�� Same store gross profit
    increased by 18.3% in the first quarter of 2012, compared to the same
    quarter in 2011.


  • Revenue from existing and new dealerships increased 17.8% to $248.4
    million
    in the first quarter of 2012 from $210.8 million in the same
    quarter in 2011.


  • Gross profit from existing and new dealerships increased 17.6% to $42.8
    million
    in the first quarter of 2012 from $36.4 million in the same
    quarter in 2011.


  • EBITDA increased 68.2% to $6.8 million in the first quarter of 2012 from
    $4.0 million in the same quarter in 2011.


  • Free cash flow remained constant at $3.2 million in the first quarter of
    2012 or $0.16 per share as compared to the first quarter of 2011,
    mainly due to income taxes paid in 2012.


  • Adjusted free cash flow increased to $4.2 million in the first quarter
    of 2012 or $0.21 per share as compared to $3.7 million or $0.18 per
    share in 2011.


  • Adjusted return on capital employed increased to 4.7% in the first
    quarter of 2012 as compared to 2.6% in 2011.


  • Return on capital employed on a trailing 12 month basis of 22.4% as
    compared to 13.3% at March 31, 2011.



Dividends



Management reviews the Company's financial results on a monthly basis.��
The Board of Directors reviews the financial results on a quarterly
basis, or as requested by Management, and determine whether a dividend
shall be paid based on a number of factors.



The following table summarizes the dividends declared by the Company in
2012:





































































(In thousands of dollars)

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Total

Record date

Payment date

��

��

��

��

��

Declared

Paid

��

��

��

��

��

��

��

$

$

February 28, 2012

May 31, 2012

March 15, 2012

June 15, 2012

��

��

��

��

��

2,783

2,982

2,783

-

��

��

��

��

��

��

��

��

��


On May 8, 2012, the Board declared a quarterly eligible dividend of
$0.15 per common share on AutoCanada's outstanding Class A common
shares, payable on June 15, 2012 to shareholders of record at the close
of business on May 31, 2012.�� The quarterly eligible dividend of $0.15
represents an annual dividend rate of $0.60 per share or a 7% increase
in the dividend from the prior quarter.�� When compared to the annual
dividend rate at March 31, 2011, the Company has increased the dividend
by 200% from an annual rate of $0.20 to the new annualized rate of
$0.60 per share. The next scheduled dividend review will be in August
of 2012.



SELECTED QUARTERLY FINANCIAL INFORMATION



The following table shows the unaudited results of the Company for each
of the eight most recently completed quarters.�� The results of
operations for these periods are not necessarily indicative of the
results of operations to be expected in any given comparable period.





















































































































































































































































































































































































































































































(In thousands of dollars except Operating Data and gross profit %)

��

��

��

��

��

��

��

��

��

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Income Statement Data

��

��

��

��

��

��

��

��

�� New vehicles

144,655

141,533

113,967

128,303

196,850

172,688

142,880

147,383

�� Used vehicles

57,181

50,922

45,414

44,906

52,054

55,351

53,719

60,453

�� Parts, service & collision repair

27,501

26,540

28,351

26,462

28,256

26,871

28,673

26,913

�� Finance, insurance & other

12,442

11,060

10,151

11,113

13,577

14,109

13,046

13,648

Revenue

241,779

230,055

197,883

210,784

290,737

269,019

238,318

248,397

��

��

��

��

��

��

��

��

��

�� New vehicles

11,030

9,983

9,023

9,725

13,974

12,740

11,267

12,046

�� Used vehicles

4,906

4,221

3,659

3,486

4,302

5,020

4,573

4,412

�� Parts, service & collision repair

14,612

14,031

13,994

13,277

15,159

14,493

14,551

14,004

�� Finance, insurance & other

11,107

9,843

9,050

9,947

12,117

12,641

11,853

12,386

Gross profit

41,655

38,078

35,725

36,435

45,552

44,894

42,244

42,848

��

��

��

��

��

��

��

��

��

Gross profit %

17.2%

16.6%

18.1%

17.3%

15.7%

16.7%

17.7%

17.2%

Operating expenses

34,280

33,207

32,010

31,891

35,127

35,742

34,086

35,381

Operating exp. as % of gross profit

82.3%

87.2%

89.6%

87.5%

77.1%

79.6%

80.7%

82.6%

Finance costs - floorplan

2,230

2,042

1,594

1,685

2,311

2,190

1,871

1.935

Finance costs - long-term debt

230

278

332

283

323

296

234

230

Reversal of impairment of intangibles

-

-

(8,059)

-

-

-

(25,543)

-

Income taxes

1,330

692

2,418

690

2,029

1,646

8,144

1,441

Net earnings 4

3,624

1,983

7,575

1,994

5,951

5,230

23,608

4,113

EBITDA 1, 4

Basic earnings (loss) per share

Diluted earnings (loss) per share

6,164

0.182

0.182

4,011

0.100

0.100

3,469

0.381

0.381

4,047

0.100

0.100

9,321

0.299

0.299

8,216

0.263

0.263

7,547

1.187

1.187

6,808

0.207

0.207
������������������

Operating Data

Vehicles (new and used) sold

6,994

6,350

5,219

5,826

8,210

7,649

6,313

6,836

New retail vehicles sold

3,614

3,358

3,008

3,050

4,158

3,907

3,405

3,434

New fleet vehicles sold

919

831

306

796

1,900

1,340

775

969

Used retail vehicles sold

2,461

2,161

1,905

1,980

2,152

2,402

2,133

2,433

Number of service & collision repair orders completed

80,072

77,285

77,037

72,360

80,851

76,176

75,911

74,439

Absorption rate 2

87%

85%

86%

80%

91%

90%

91%

81%

# of dealerships at period end

23

23

23

23

22

22

24

24

# of same store dealerships 3

19

19

21

22

21

21

21

21

# of service bays at period end

339

339

339

339

322

322

333

333

Same store revenue growth 3

19.4%

6.7%

2.4%

2.7%

19.3%

21.6%

24.8%

20.2%

Same store gross profit growth 3

7.5%

(4.0)%

2.9%

2.9%

8.2%

22.9%

20.6%

18.3%

��

��

��

��

��

��

��

��

��

Balance Sheet Data

��

��

��

��

��

��

��

��

Cash and cash equivalents

31,880

34,329

37,541

39,337

43,837

49,366

53,641

53,403

Accounts receivable

46,787

37,149

32,832

42,108

51,539

44,172

42,448

51,380

Inventories

177,294

137,507

118,088

134,710

149,481

159,732

136,869

155,778

Revolving floorplan facilities

194,388

145,652

124,609

152,075

172,600

175,291

150,816

178,145































1

����������

EBITDA has been calculated as described under "NON-GAAP MEASURES".

2
��
Absorption has been calculated as described under "NON-GAAP MEASURES".

3��
��
Same store revenue growth & same store gross profit growth is calculated
using franchised automobile dealerships that we have owned for at least
2 full years.

4��
��
The results from operations have been lower in the first and fourth
quarters of each year, largely due to consumer purchasing patterns
during the holiday season, inclement weather and the reduced number of
business days during the holiday season. As a result, our financial
performance is generally not as strong during the first and fourth
quarters than during the other quarters of each fiscal year. The timing
of acquisitions may have also caused substantial fluctuations in
operating results from quarter to quarter.

��
��
��


The following table summarizes the results for the three-month period
ended March 31, 2012 on a same store basis by revenue source and
compares these results to the same period in 2011.








































































































Same Store Revenue and Vehicles Sold

��

For the Three-Month Period Ended

(In thousands of dollars except % change and vehicle data)

March 31,

2012

March 31,

2011

% Change

��

��

��

��

Revenue Source

New vehicles

139,748

118,452

18.0%

Used vehicles

58,099

�������� 43,047

35.0%

Finance, insurance and other

12,984

10,480

23.9%

Subtotal

210,831

171,979

22.6%

Parts, service and collision repair

25,554

24,622

3.8%

Total

236,385

196,601

20.2%

��

��

��

��

New vehicles - retail sold

3,155

�������� 2,740

15.1%

New vehicles - fleet sold

969

758

27.8%

Used vehicles sold

2,305

1,865

23.6%


Total




6,429

5,363

19.9%

Total vehicles retailed

5,460

4,605

18.6%

��

��

��

��


The following table summarizes the results for the three months ended
March 31, 2012 on a same store basis by revenue source and compares
these results to the same period in 2011.














































































































Same Store Gross Profit and Gross Profit Percentage

��

For the Three-Month Period Ended

��

Gross Profit

��

Gross Profit %

(In thousands of dollars except % change and gross profit %)

Mar. 31,

2012

Mar. 31,

2011

%

Change

��

Mar. 31,

2012

Mar. 31,

2011

%

Change

Revenue Source

��

��

��

��

��

��

��

New vehicles

11,418

9,227

23.7%

��

8.2%

7.8%

0.4%

Used vehicles

4,175

3,429

21.8%

��

7.2%

8.0%

�������� (0.8)%

Finance, insurance and other

11,892

9,471

25.6%

��

91.6%

90.4%

�������������� 1.2%

Subtotal

27,485

22,127

24.2%

��

��

��

��

Parts, service and collision repair

13,299

�� 12,335

7.8%

��

52.0%

50.1%

�������������� 1.9%

Total

40,784

34,462

18.3%

��

17.3%

17.5%

(0.3)%

��

��

��

��

��

��

��

��


AutoCanada Inc.

Condensed Interim Consolidated Statements of Comprehensive Income

(Unaudited)

(in thousands of Canadian dollars except for share and per share
amounts)


















































































































��

Three month

period ended

Three month

period ended

��

March 31,

2012

$

March 31,

2011

$

Revenue (Note 6)

������������248,397��

������������210,784��

Cost of sales (Note 7)

������������(205,548)��

������������(174,349)��

Gross profit

������������42,849��

������������36,435��

Operating expenses (Note 8)

������������(35,381)��

������������(31,891)��

Operating profit before other income

������������7,468��

������������4,544��

Loss on disposal of assets

������������(27)��

������������(7)��

Operating profit

������������7,441��

������������4,537��

Finance costs (Note 9)

������������(2,330)��

������������(2,120)��

Finance income (Note 9)

������������443��

������������267��

Net comprehensive income for the period before taxation

������������5,554��

������������2,684��

Income tax (Note 10)

������������1,441��

������������690��

Net comprehensive income for the period

������������4,113��

������������1,994��

��

��

��

Earnings per share (Note 18)��

��

��

Basic��

������������0.207��

������������0.100��

Diluted��

������������0.207��

������������0.100��

��

��

��

Weighted average shares (Note 18)��

��

��

Basic��

������������19,880,930��

������������19,880,930��

Diluted��

������������19,880,930��

������������19,880,930��


The accompanying notes are an integral part of these condensed interim
consolidated financial statements.



Approved on behalf of the Company:






(Signed) "Gordon R. Barefoot", Director��������(Signed) "Robin Salmon",
Director



AutoCanada Inc.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited)

(in thousands of Canadian dollars except for share and per share
amounts)


























































































































































��

March 31,

������������2012��

(Unaudited)

$

December 31,

������������2011��

(Audited)

$

ASSETS

��

��

Current assets

��

��

Cash and cash equivalents

������������53,403��

������������53,641��

Trade and other receivables (Note 11)

������������51,380��

������������42,448��

Inventories (Note 12)

������������155,778��

������������137,040��

Other current assets

������������1,303��

������������1,120��

��

������������261,864��

������������234,249��

Property and equipment

������������24,846��

������������25,975��

Intangible assets

������������66,181��

������������66,181��

Goodwill

������������380��

������������380��

Other long-term assets

������������8,036��

������������7,609��

��

������������361,307��

������������334,394��

LIABILITIES

��

��

Current liabilities

��

��

Trade and other payables (Note 13)

������������31,924��

������������32,303��

Revolving floorplan facilities (Note 14)

������������178,145��

������������150,816��

Current tax payable

������������9,204��

������������2,046��

Current lease obligations (Note 15)

������������663��

������������1,204��

Current indebtedness (Note 14)

������������2,833��

������������2,859��

��

������������222,769��

������������189,228��

Long-term indebtedness (Note 14)

������������20,071��

������������20,115��

Deferred tax

������������3,875��

������������12,056��

��

������������246,715��

������������221,399��

EQUITY

��

��

Share capital (Note 18)

������������190,435��

������������190,435��

Contributed surplus

������������4,186��

������������3,918��

Accumulated deficit

������������(80,029)��

������������(81,358)��

��

������������114,592��

������������112,995��

��

������������361,307��

������������334,394��


The accompanying notes are an integral part of these condensed interim
consolidated financial statements.



AutoCanada Inc.

Condensed Interim Consolidated Statements of Changes in Equity

For the Periods Ended

(Unaudited)

(in thousands of Canadian dollars)




































































































��

Share

capital

$

Contributed

surplus

$

Total

capital

$

Accumulated

deficit

$



Equity

$

Balance,�� January 1, 2012��

������������190,435��

������������3,918��

������������194,353��

������������(81,358)��

������������112,995��

Net comprehensive income

������������-��

������������-��

������������-��

������������4,113��

������������4,113��

Dividends declared on common shares

������������-��

������������-��

������������-��

������������(2,784)��

������������(2,784)��

Share based compensation

������������-��

������������268��

������������268��

������������-��

������������268��

Balance, March 31, 2012

������������190,435��

������������4,186��

������������194,621��

������������(80,029)��

������������114,592��

��

��

��

��

��

��

��

Share

capital

$

Contributed

surplus

$

Total

capital

$

Accumulated

deficit

$

Equity

$

Balance, January 1, 2011��

������������190,435��

������������3,918��

������������194,353��

������������(111,979)��

������������82,374��

Net comprehensive income

������������-��

������������-��

������������-��

������������1,994��

������������1,994��

Dividends declared on common shares

������������-��

������������-��

������������-��

������������(795)��

������������(795)��

Balance, March 31, 2011

������������190,435��

������������3,918��

������������194,353��

������������(110,780)��

������������83,573��


The accompanying notes are an integral part of these condensed interim
consolidated financial statements.









AutoCanada Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the Periods Ended

(Unaudited)

(in thousands of Canadian dollars)

















































































































































































��

��

��

��

��

��

Three month

period ended

March 31,

2012

Three month

period ended

March 31,

2011

Cash provided by (used in):

��

��

��

��

Operating activities

��

��

��

��

Net comprehensive income before tax

��

��

������������4,113��

������������1,994��

Income taxes

��

��

������������1,441��

������������690��

Amortization of prepaid rent

��

��

������������113��

������������113��

Amortization of property and equipment

��

��

������������1,024��

������������1,080��

Share-based compensation

��

��

������������163��

������������-��

Loss on disposal of assets

��

��

������������27��

������������7��

Income taxes paid

��

��

������������(2,372)��

������������-��

Net change in non-cash working capital

��

��

������������(1,001)��

������������284��

��

��

��

������������3,508��

������������4,168��

Investing activities

��

��

��

��

Purchases of property and equipment

��

��

������������(361)��

������������(930)��

Prepayments of rent

��

��

������������(540)��

������������(540)��

Proceeds on sale of property and equipment

��

��

������������33��

������������-��

��

��

��

������������(868)��

������������(1,470)��

Financing activities

��

��

��

��

Repayment of long-term indebtedness

��

��

������������(94)��

������������(107)��

Dividends paid

��

��

������������(2,784)��

������������(795)��

��

��

��

������������(2,878)��

������������(902)��

Increase (decrease) in cash

��

��

������������(238)��

������������1,796��

Cash and cash equivalents at beginning of period

��

��

������������53,641��

������������37,541��

Cash and cash equivalents at end of period

��

��

������������53,403��

������������39,337��


The accompanying notes are an integral part of these condensed interim
consolidated financial statements.






ABOUT AUTOCANADA



AutoCanada is one of Canada's largest multi-location automobile
dealership groups, currently operating 25 franchised dealerships in
British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova
Scotia. In 2012, our dealerships sold approximately 28,000 vehicles and
processed approximately 300,000��service and collision repair orders in
our 333 service bays during that time.



Our dealerships derive their revenue from the following four
inter-related business operations: new vehicle sales; used vehicle
sales; parts, service and collision repair; and finance and insurance.
While new vehicle sales are the most important source of revenue, they
generally result in lower gross profits than used vehicle sales, parts,
service and collision repair operations and finance and insurance
sales. Overall gross profit margins increase as revenues from higher
margin operations increase relative to revenues from lower margin
operations. We earn fees for arranging financing on new and used
vehicle purchases on behalf of third parties.�� Under our agreements
with our retail financing sources we are required to collect and
provide accurate financial information, which if not accurate, may
require us to be responsible for the underlying loan provided to the
consumer.��



FORWARD LOOKING STATEMENTS



Certain statements contained in this press release are forward-looking
statements and information (collectively "forward-looking statements"),
within the meaning of the applicable Canadian securities legislation.��
We hereby provide cautionary statements identifying important factors
that could cause our actual results to differ materially from those
projected in these forward-looking statements.�� Any statements that
express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as "will likely
result", "are expected to", "will continue", "is anticipated",
"projection", "vision", "goals", "objective", "target", "schedules",
"outlook", "anticipate", "expect", "estimate", "could", "should",
"expect", "plan", "seek", "may", "intend", "likely", "will", "believe"
and similar expressions are not historical facts and are
forward-looking and may involve estimates and assumptions and are
subject to risks, uncertainties and other factors some of which are
beyond our control and difficult to predict.�� Accordingly, these
factors could cause actual results or outcomes to differ materially
from those expressed in the forward-looking statements.�� Therefore, any
such forward-looking statements are qualified in their entirety by
reference to the factors discussed throughout this document.



The Company's Annual Information Form and other documents filed with
securities regulatory authorities (accessible through the SEDAR website
www.sedar.com describe the risks, material assumptions and other factors that could
influence actual results and which are incorporated herein by
reference.



Further, any forward-looking statement speaks only as of the date on
which such statement is made, and, except as required by applicable
law, we undertake no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated
events.�� New factors emerge from time to time, and it is not possible
for management to predict all of such factors and to assess in advance
the impact of each such factor on our business or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statement.



NON-GAAP MEASURES



This press release contains certain financial measures that do not have
any standardized meaning prescribed by Canadian GAAP.�� Therefore, these
financial measures may not be comparable to similar measures presented
by other issuers.�� Investors are cautioned these measures should not be
construed as an alternative to net earnings (loss) or to cash provided
by (used in) operating, investing, and financing activities determined
in accordance with Canadian GAAP, as indicators of our performance.�� We
provide these measures to assist investors in determining our ability
to generate earnings and cash provided by (used in) operating
activities and to provide additional information on how these cash
resources are used.�� We list and define these "NON-GAAP MEASURES"
below:



EBITDA



EBITDA is a measure commonly reported and widely used by investors as an
indicator of a company's operating performance and ability to incur and
service debt, and as a valuation metric.�� The Company believes EBITDA
assists investors in comparing a company's performance on a consistent
basis without regard to depreciation and amortization and asset
impairment charges which are non-cash in nature and can vary
significantly depending upon accounting methods or non-operating
factors such as historical cost.�� References to "EBITDA" are to
earnings before interest expense (other than interest expense on
floorplan financing and other interest), income taxes, depreciation,
amortization and asset impairment charges.��



EBIT



EBIT is a measure used by management in the calculation of Return on
capital employed (defined below).�� Management's calculation of EBIT is
EBITDA (calculated above) less depreciation and amortization.



Free Cash Flow



Free cash flow is a measure used by management to evaluate its
performance.�� While the closest Canadian GAAP measure is cash provided
by operating activities, free cash flow is considered relevant because
it provides an indication of how much cash generated by operations is
available after capital expenditures.�� It shall be noted that although
we consider this measure to be free cash flow, financial and
non-financial covenants in our credit facilities and dealer agreements
may restrict cash from being available for distributions, re-investment
in the Company, potential acquisitions, or other purposes.�� Investors
should be cautioned that free cash flow may not actually be available
for growth or distribution of the Company.�� References to "Free cash
flow" are to cash provided by (used in) operating activities (including
the net change in non-cash working capital balances) less capital
expenditures (not including acquisitions of dealerships and dealership
facilities).



Adjusted Free Cash Flow



Adjusted free cash flow is a measure used by management to evaluate its
performance.�� Adjusted free cash flow is considered relevant because it
provides an indication of how much cash generated by operations before
changes in non-cash working capital is available after deducting
expenditures for non-growth capital assets.�� It shall be noted that
although we consider this measure to be adjusted free cash flow,
financial and non-financial covenants in our credit facilities and
dealer agreements may restrict cash from being available for
distributions, re-investment in the Company, potential acquisitions, or
other purposes.�� Investors should be cautioned that adjusted free cash
flow may not actually be available for growth or distribution of the
Company.�� References to "Adjusted free cash flow" are to cash provided
by (used in) operating activities (before changes in non-cash working
capital balances) less non-growth capital expenditures.



Adjusted Average Capital Employed



Adjusted average capital employed is a measure used by management to
determine the amount of capital invested in AutoCanada and is used in
the measure of Adjusted Return on Capital Employed (described below).��
Adjusted average capital employed is calculated as the average balance
of interest bearing debt for the period (including current portion of
long term debt, excluding revolving floorplan facilities) and the
average balance of shareholders equity for the period, adjusted for
impairments of intangible assets, net of deferred tax.�� Management does
not include future income tax, non-interest bearing debt, or revolving
floorplan facilities in the calculation of adjusted average capital
employed as it does not consider these items to be capital, but rather
debt incurred to finance the operating activities of the Company.



Absorption Rate



Absorption rate is an operating measure commonly used in the retail
automotive industry as an indicator of the performance of the parts,
service and collision repair operations of a franchised automobile
dealership. Absorption rate is not a measure recognized by GAAP and
does not have a standardized meaning prescribed by GAAP. Therefore,
absorption rate may not be comparable to similar measures presented by
other issuers that operate in the retail automotive industry.��
References to ''absorption rate'' are to the extent to which the gross
profits of a franchised automobile dealership from parts, service and
collision repair cover the costs of these departments plus the fixed
costs of operating the dealership, but does not include expenses
pertaining to our head office. For this purpose, fixed operating costs
include fixed salaries and benefits, administration costs, occupancy
costs, insurance expense, utilities expense and interest expense (other
than interest expense relating to floor plan financing) of the
dealerships only.��



Average Capital Employed



Average capital employed is a measure used by management to determine
the amount of capital invested in AutoCanada and is used in the measure
of Return on Capital Employed (described below).�� Average capital
employed is calculated as the average balance of interest bearing debt
for the period (including current portion of long term debt, excluding
revolving floorplan facilities) and the average balance of shareholders
equity for the period.�� Management does not include future income tax,
non-interest bearing debt, or revolving floorplan facilities in the
calculation of average capital employed as it does not consider these
items to be capital, but rather debt incurred to finance the operating
activities of the Company.



Return on Capital Employed



Return on capital employed is a measure used by management to evaluate
the profitability of our invested capital.�� As a corporation,
management of AutoCanada may use this measure to compare potential
acquisitions and other capital investments against our internally
computed cost of capital to determine whether the investment shall
create value for our shareholders.�� Management may also use this
measure to look at past acquisitions, capital investments and the
Company as a whole in order to ensure shareholder value is being
achieved by these capital investments.�� Return on capital employed is
calculated as EBIT (defined above) divided by Average Capital Employed
(defined above).



Adjusted Return on Capital Employed



Adjusted return on capital employed is a measure used by management to
evaluate the profitability of our invested capital.�� As a corporation,
management of AutoCanada may use this measure to compare potential
acquisitions and other capital investments against our internally
computed cost of capital to determine whether the investment shall
create value for our shareholders.�� Management may also use this
measure to look at past acquisitions, capital investments and the
Company as a whole in order to ensure shareholder value is being
achieved by these capital investments.�� Adjusted return on capital
employed is calculated as EBIT (defined above) divided by Adjusted
Average Capital Employed (defined above).



Cautionary Note Regarding Non-GAAP Measures



EBITDA, EBIT, Free Cash Flow, Adjusted Free Cash Flow, Absorption Rate,
Average Capital Employed and Return on Capital Employed are not
earnings measures recognized by GAAP and do not have standardized
meanings prescribed by GAAP.�� Investors are cautioned that these
non-GAAP measures should not replace net earnings or loss (as
determined in accordance with GAAP) as an indicator of the Company's
performance, of its cash flows from operating, investing and financing
activities or as a measure of its liquidity and cash flows. The
Company's methods of calculating EBITDA, EBIT, Free Cash Flow, Adjusted
Free Cash Flow, Absorption Rate, Average Capital Employed and Return on
Capital Employed may differ from the methods used by other issuers.
Therefore, the Company's EBITDA, EBIT, Free Cash Flow, Adjusted Free
Cash Flow, Absorption Rate, Average Capital Employed and Return on
Capital Employed may not be comparable to similar measures presented by
other issuers.��



Additional information about AutoCanada Inc. is available at the
Company's website at www.autocan.ca and www.sedar.com.



��






For further information:

Jeff Christie, CA
Vice-President, Finance
Phone:�� (780) 732-7164 Email:��jchristie@autocan.ca









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