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Press release from CNW Group

AutoCanada Inc. reports all-time record quarterly profit and announces an increase in its quarterly dividend:

Thursday, August 09, 2012

AutoCanada Inc. reports all-time record quarterly profit and announces an increase in its quarterly dividend:18:28 EDT Thursday, August 09, 2012A conference call to discuss the results for the reporting period ended June 30, 2012 will be held on August 9, 2012 at 11:00 a.m. Eastern time (9:00 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, Aug. 9, 2012 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended June 30, 2012                                                           2012 Second Quarter Operating ResultsRevenue increased 1.4% or $4.0 million to $294.8 millionGross profit increased by 7.5% or $3.4 million to $49.0 millionSame store revenue increased by 2.4%Same store gross profit increased by 7.1%EBITDA was $10.2 million vs. $9.3 million in Q2 of 2011, a 9.7% increasePre-tax net earnings increased by $0.9 million or 11.3% to $8.9 millionNet earnings increased by $0.7 million or 11.7% to $6.7 millionThe number of same store new vehicles retailed increased by 7.5%The number of same store used vehicles retailed increased by 12.4%Same store repair orders completed for the quarter went down by 1.8%In commenting on the financial results for the three month period ended June 30, 2012, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The second quarter of 2012 was the Company's most profitable quarter in its history, exceeding our previously most profitable quarter by approximately 10% in terms of EBITDA and over 10% in terms of pre-tax earnings.  During the second quarter of 2012, we generated solid revenue and gross profit gains with strong retail sales volumes for both new and used vehicles.  The second quarter was also notable as we were able to secure three new dealerships, with the investments in two General Motors dealerships in Sherwood Park - the first dealerships we have secured with General Motors of Canada - and a third with Kia Canada, which is an open point dealership opportunity in Edmonton.  We are excited by the development of new relationships with two highly regarded manufacturers, as well as the potential to earn solid returns on these investments.  The three dealerships will be an excellent addition to our Edmonton area platform."Commenting on the announcement of an increase in its quarterly dividend, Mr. Priestner stated, "Within the context of the continued strength of our operations, our financial performance, and our confidence in the outlook for the automotive retail market in Canada, the Board of Directors held its annual business review meeting on July 10, 2012.  The recent acquisition opportunities, along with the 2012 PwC Trendsetter Report which indicates a dealership succession issue within the coming years due to an aging dealer body and ever increasing facility capital requirements, have led the Board to believe that there will be greater opportunities in the coming years than had been previously considered as independent owners exit the business.  It is expected that the bulk of these growth opportunities will come in the latter two to five years, more so than in the short term.  As such, while the Board remains committed to a high dividend, the Board very much supports Management in actively seeking accretive growth opportunities as a means to provide superior long term shareholder value.  Without targeting a specific dividend payout ratio based on earnings, the Board of Directors will remain committed to a high dividend which it shall periodically review within the context of earnings growth, alternative strategic opportunities to re-invest in the business, and sustainability, as evidenced by its decision to raise the quarterly dividend to a rate of $0.16 per share or an annual rate of $0.64 per share."Second Quarter 2012 HighlightsThe Company generated net earnings of $6.7 million or earnings per share of $0.338 versus earnings per share of $0.299 in the second quarter of 2011.  Pre-tax earnings increased by $0.9 million to $8.9 million in the second quarter of 2012 as compared to $8.0 million in the same period in 2011.Same store revenue increased by 2.4% in the second quarter of 2012, compared to the same quarter in 2011.  Same store gross profit increased by 7.1% in the second quarter of 2012, compared to the same quarter in 2011.Revenue from existing and new dealerships increased 1.4% to $294.8 million in the second quarter of 2012 from $290.7 million in the same quarter in 2011.Gross profit from existing and new dealerships increased 7.5% to $49.0 million in the second quarter of 2012 from $45.6 million in the same quarter in 2011.EBITDA increased 9.7% to $10.2 million in the second quarter of 2012 from $9.3 million in the same quarter in 2011.Free cash flow decreased to $2.9 million in the second quarter of 2012 or $0.15 per share as compared to $4.7 million and $0.24 per share in the second quarter of 2011, mainly due a land purchase in Q2 2012.Adjusted free cash flow increased to $9.2 million in the second quarter of 2012 or $0.47 per share as compared to $8.9 million or $0.45 per share in 2011.Return on capital employed on a trailing 12 month basis of 22.2% as compared to 16.0% at June 30, 2011.Dividends Management reviews the Company's financial results on a monthly basis.  The Board of Directors reviews the financial results periodically to 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)                      TotalRecord date Payment date         Declared Paid            $ $February 28, 2012May 31, 2012August 31, 2012 March 15, 2012June 15, 2012September 17, 2012         2,7832,9823,181 2,7832,982-On August 9, 2012, the Board declared a quarterly eligible dividend of $0.16 per common share on AutoCanada's outstanding Class A common shares, payable on September 17, 2012 to shareholders of record at the close of business on August 31, 2012.  The quarterly eligible dividend of $0.16 represents an annual dividend rate of $0.64 per share or a 6.3% increase in the annual dividend rate from the prior quarter.SELECTED QUARTERLY FINANCIAL INFORMATIONThe 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 OperatingData and gross profit %)                  Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012Income Statement Data                 New vehicles 141,533 113,967 128,303 196,850 172,688 142,880 147,383 186,649 Used vehicles 50,922 45,414 44,906 52,054 55,351 53,719 60,453 62,822 Parts, service & collision repair 26,540 28,351 26,462 28,256 26,871 28,673 26,913 28,847 Finance, insurance & other 11,060 10,151 11,113 13,577 14,109 13,046 13,648 16,451Revenue 230,055 197,883 210,784 290,737 269,019 238,318 248,397 294,769                  New vehicles 9,983 9,023 9,725 13,974 12,740 11,267 12,046 14,647 Used vehicles 4,221 3,659 3,486 4,301 5,020 4,573 4,412 4,237 Parts, service & collision repair 14,031 13,994 13,277 15,159 14,493 14,551 14,004 15,228 Finance, insurance & other 9,843 9,050 9,947 12,118 12,641 11,853 12,386 14,878Gross profit 38,078 35,725 36,435 45,552 44,894 42,244 42,848 48,990                 Gross profit % 16.6% 18.1% 17.3% 15.7% 16.7% 17.7% 17.2% 16.6%Operating expenses 33,207 32,010 31,891 35,127 35,742 34,086 35,381 37,661Operating exp. as % of gross profit 87.2% 89.6% 87.5% 77.1% 79.6% 80.7% 82.6% 76.9%Finance costs - floorplan 2,042 1,594 1,685 2,311 2,190 1,871 1.935 2,510Finance costs - long-term debt 278 332 283 323 296 234 230 256Reversal of impairment of intangibles - (8,059) - - - (25,543) - -Income taxes 692 2,418 690 2,029 1,646 8,144 1,441 2,216Net earnings 4 1,983 7,575 1,994 5,950 5,230 23,608 4,113 6,711EBITDA 1, 4 4,011 3,469 4,047 9,319 8,216 7,547 6,808 10,210Basic earnings (loss) per share 0.100 0.381 0.100 0.299 0.263 1.187 0.207 0.338Diluted earnings (loss) per share 0.100 0.381 0.100 0.299 0.263 1.187 0.207 0.338                 Operating DataVehicles (new and used) sold 6,350 5,219 5,826 8,210 7,649 6,313 6,836 8,154New retail vehicles sold 3,358 3,008 3,050 4,158 3,907 3,405 3,434 4,400New fleet vehicles sold 831 306 796 1,900 1,340 775 969 1,313Used retail vehicles sold 2,161 1,905 1,980 2,152 2,402 2,133 2,433 2,441Number of service & collision repair orders completed 77,285 77,037 72,360 80,851 76,176 75,911 74,439 78,104Absorption rate 2 85% 86% 80% 91% 90% 91% 81% 89%# of dealerships at period end 23 23 23 22 22 24 24 24# of same store dealerships 3 19 21 22 21 21 21 21 21# of service bays at period end 339 339 339 322 322 333 333 333Same store revenue growth 3 6.7% 2.4% 2.7% 19.3% 21.6% 24.8% 20.2% 2.4%Same store gross profit growth 3 (4.0)% 2.9% 2.9% 8.2% 22.9% 20.6% 18.3% 7.1%                 Balance Sheet Data                Cash and cash equivalents 34,329 37,541 39,337 43,837 49,366 53,641 53,403 51,198Accounts receivable 37,149 32,832 42,108 51,539 44,172 42,448 51,380 52,042Inventories 137,507 118,088 134,710 149,481 159,732 136,869 155,778 201,302Revolving floorplan facilities 145,652 124,609 152,075 172,600 175,291 150,816 178,145 221,174(In thousands of dollars except OperatingData and gross profit %)                                 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 and six month periods ended June 30, 2012 on a same store basis by revenue source and compare these results to the same periods in 2011.       Same Store Revenue and Vehicles Sold For the Three Months Ended For the Six Months Ended            (In thousands of dollars except % change and vehicle data)June 30,2012 June 30,2011 % Change June 30,2012 June 30,2011 % Change            Revenue Source           New vehicles176,520 183,504 (3.8)% 316,268 301,956 4.7%Used vehicles59,762 49,865 19.8% 117,861 92,911 26.9%Finance & insurance and other15,594 12,854 21.3% 28,579 23,335 22.5%Subtotal248,876 246,223   462,708 418,202    Parts, service & collision repair27,248 26,448 3.0% 52,802 51,070 3.4%Total279,124 272,671 2.4% 515,510 469,272 9.9%            New vehicles - retail sold4,052 3,769 7.5% 7,207 6,509 10.7%New vehicles - fleet sold1,313 1,832 (28.3)% 2,282 2,590 (11.9)%Used vehicles sold2,286 2,033 12.4% 4,591 3,898 17.8%Total7,651 7,634 0.2% 14,080 12,997 8.3%Total vehicles retailed6,338 5,921 9.2% 11,798 10,407 13.4%The following table summarizes the results for the three and six month periods ended June 30, 2012 on a same store basis by revenue source and compare these results to the same periods in 2011.Same Store Gross Profit and Gross Profit Percentage  For the Three Months Ended For the Six Months Ended  Gross Profit Gross Profit % Gross Profit Gross Profit %(In thousands of dollars except % change and gross profit %) June 30,2012 June 30,2011 % Change June 30,2012 June 30,2011 Change June 30,2012 June 30,2011 %Change June 30,2012 June 30,2011 Change                         Revenue Source                        New vehicles 13,778 13,281 3.7% 7.8% 7.2% 0.6% 25,196 22,508 11.9% 8.0% 7.5% 0.5%Used vehicles 3,932 4,165 (5.6)% 6.6% 8.4% (1.8)% 8,107 7,594 6.8% 6.9% 8.2% (1.3)%Finance & insurance and other 14,200 11,579 22.6% 91.1% 90.1% 1.0% 26,092 21,050 24.0% 91.3% 90.2% 1.1%Subtotal 31,910 29,025 9.9%       59,395 51,152 16.1%      Parts, service & collision repair 14,408 14,231 1.2% 52.9% 53.8% (0.9)% 27,707 26,566 4.3% 52.5% 52.0% 0.5%Total 46,318 43,256 7.1% 16.6% 15.9% 0.7% 87,101 77,718 12.1% 16.9% 16.6% 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 monthperiod ended Three monthperiod ended Six month period ended Six month period ended  June 30,2012$ June 30,2011$ June 30,2012$ June 30,2011$Revenue (Note 6) 294,769 290,737 543,165 501,521Cost of sales(Note 7) (245,779) (245,185) (451,327) (419,535)Gross profit 48,990 45,552 91,838 81,986Operating expenses (Note 8) (37,661) (35,127) (73,041) (67,018)Operating profit before other income (expense) 11,329 10,425 18,797 14,968(Loss) Gain on disposal of assets (39) 35 (66) 28Income from investment in associate (Note 11) 83 - 83 -Operating profit 11,373 10,460 18,814 14,996Finance costs (Note 9) (2,943) (2,794) (5,274) (4,914)Finance income (Note 9) 497 313 940 580Net comprehensive income for the period before taxation 8,927 7,979 14,480 10,662Income tax (Note 10) 2,216 2,029 3,658 2,719Net comprehensive income for the period  6,711 5,950 10,822 7,943         Earnings per share         Basic 0.338 0.299 0.544 0.400Diluted 0.338 0.299 0.544 0.400         Weighted average shares         Basic 19,876,139 19,880,930 19,878,535 19,880,930Diluted 19,876,139 19,880,930 19,878,535 19,880,930The accompanying notes are an integral part of these condensed interim consolidated financial statements.Approved on behalf of the Company:                (Signed) "Gordon R. Barefoot", Director                (Signed) "Robin Salmon", DirectorAutoCanada Inc.Condensed Interim Consolidated Statements of Financial Position(Unaudited)(in thousands of Canadian dollars except for share and per share amounts)   June 30,      2012 (Unaudited)$ December 31,        2011 (Audited)$ASSETS    Current assets    Cash and cash equivalents 51,198     53,641Trade and other receivables (Note 12) 52,042     42,448Inventories (Note 13) 201,302    137,016Other current assets 2,763       1,120  307,305    234,225Property and equipment 28,035      25,975Investment in associate (Note 11) 4,237       -Intangible assets 66,181       66,181Goodwill 380       380Other long-term assets 7,923       7,609  414,061    334,370LIABILITIES    Current liabilities    Trade and other payables (Note 15) 33,769      32,279Revolving floorplan facilities (Note 16) 221,174    150,816Current tax payable 5,500       2,046Current lease obligations (Note 17) 1,152       1,204Current indebtedness (Note 16) 2,806       2,859  264,401     189,204Long-term indebtedness (Note 16) 23,027 20,115Deferred tax 9,126 12,056  296,554 221,375EQUITY 117,507 112,995  414,061 334,370The accompanying notes are an integral part of these condensed interim consolidated financial statements.AutoCanada Inc. Condensed Interim Consolidated Statements of Changes in EquityFor the Periods Ended (Unaudited)(in thousands of Canadian dollars)  Sharecapital$Treasuryshares$Contributedsurplus$Totalcapital$Accumulateddeficit$Equity$Balance,  January 1, 2012        190,435       -       3,918       194,353       (81,358)       112,995 Net comprehensive income      -       -       -       -       10,822       10,822 Dividends declared on common shares      -       -       -       -       (5,765)       (5,765) Common shares repurchased (Note 20)      -       (910)       -       (910)       -       (910) Share-based compensation      -       -       365       365       -       365 Balance, June 30, 2012      190,435       (910)       4,283       193,808       (76,301)       117,507                Sharecapital$Treasuryshares$Contributedsurplus$Totalcapital$Accumulateddeficit$Equity$Balance, January 1, 2011        190,435       -       3,918       194,353       (111,979)       82,374 Net comprehensive income      -       -       -       -       7,943       7,943 Dividends declared on common shares      -       -       -       -       (3,777)       (3,777) Balance, June 30, 2011      190,435       -       3,918       194,353       (107,813)       86,540 The accompanying notes are an integral part of these condensed interim consolidated financial statements.AutoCanada Inc.Condensed Interim Consolidated Statements of Cash FlowsFor the Periods Ended(Unaudited)(in thousands of Canadian dollars)        Three monthperiod endedJune 30, 2012Three monthperiod endedJune 30, 2011Six monthperiod endedJune 30, 2012Six monthperiod endedJune 30, 2011Cash provided by (used in):      Operating activities      Net comprehensive income        6,711       5,950       10,822       7,943 Income taxes        2,216       2,029       3,658       2,719 Amortization of prepaid rent        113       113       226       226 Amortization of property and equipment        1,027       1,017       2,051       2,097 Loss (Gain) on disposal of assets        39       (35)       66       (28) Share-based compensation        197       -       360       - Income from investment in associate        (83)       -       (83)       - Income taxes paid        (611)       -       (3,099)       - Net change in non-cash working capital        (3,040)       (3,785)       (3,925)       (3,499)          6,569       5,289       10,076       9,458 Investing activities      Investment in associate        (4,154)       -       (4,154)       - Purchases of property and equipment (Note 14)        (3,624)       (612)       (3,985)       (1,542) Prepayments of rent        -       (540)       (540)       (1,080) Proceeds on sale of property and equipment        6       9       40       6 Proceeds on divestiture of subsidiary        -       1,464       -       1,464          (7,772)       321       (8,639)       (1,152) Financing activities      Proceeds from long-term debt        3,000       -       3,000       - Repayment of long-term indebtedness        (111)       (115)       (205)       (220) Treasury shares purchased        (910)       -       (910)       - Dividends paid        (2,981)       (995)       (5,765)       (1,790)          (1,002)       (1,110)       (3,880)       (2,010) (Decrease) Increase in cash        (2,205)       4,500       (2,443)       6,296 Cash and cash equivalents at beginning of period        53,403       39,337       53,641       37,541 Cash and cash equivalents at end of period        51,198       43,837       51,198       43,837 The accompanying notes are an integral part of these condensed interim consolidated financial statements.ABOUT AUTOCANADAAutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 24 wholly owned franchised dealerships and 2 dealership investments in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2011, 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 MEASURESThis 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:EBITDAEBITDA 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.EBITEBIT 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 FlowFree 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 FlowAdjusted 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 EmployedAdjusted 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 RateAbsorption 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 EmployedAverage 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 EmployedReturn 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 EmployedAdjusted 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 MeasuresEBITDA, 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. SOURCE: AutoCanada Inc.For further information: Jeff Christie, CAVice-President, Finance Phone:  (780) 732-7164 Email: jchristie@autocan.ca