AutoCanada Income Fund releases financial results for the reporting period ended December 31, 2006



    A conference call to discuss the results for the period ended
    December 31, 2006 will be held Friday, March 23, 2007 at 10:30 a.m.
    Eastern time. To participate in the conference call, please dial
    1-800-733-7571 or 1-416-644-3416 approximately 10 minutes prior to the
    call. A live and archived audio webcast of the conference call will also
    be available on the Fund's website www.autocan.ca.

    EDMONTON, March 22 /CNW/ - AutoCanada Income Fund (the "Fund") (TSX:
ACQ.UN) today announced financial results for the period ended December 31,
2006 which includes results from May 11, 2006 to December 31, 2006 and the
three-month period ended December 31, 2006. For information purposes, the Fund
has also provided a compilation of results for the year ended December 31,
2006, combining financial results for the period from May 11, 2006 to
December 31, 2006 with selected unaudited results of the operations of Canada
One Auto Group ("CAG"), the Fund's predecessor for the period from January 1,
2006 to May 10, 2006.

    
    2006 Highlights

    -   For the period from January 4, 2006 to December 31, 2006, including
        operations from May 11, 2006 to December 31, 2006, the Fund generated
        net earnings of $12,474 or earnings per unit of $0.616, distributable
        cash of $1.421 per unit, including changes in non-cash operating
        working capital amounts and $0.756 before changes in non-cash
        operating working capital balances, and declared distributions of
        $0.639 per unit, for a payout ratio of 45% including changes in non-
        cash working capital amounts and 85% before changes in non-cash
        working capital balances.

    -   Same store revenue and gross profit increased by 4.4% and 10.6%
        respectively in the year ended December 31, 2006, compared to 2005
        year.

    -   Revenue from existing and new dealerships increased by 42.9% to
        $693.7 million in the year ended December 31, 2006 from
        $485.6 million in the 2005 year.

    -   Gross profit from existing and new dealerships increased by 48.1% to
        $113.1 million in the year ended December 31, 2006 from $76.4 million
        in the 2005 year.

    -   EBITDA increased by 17.0% to $21.0 million in the year ended
        December 31, 2006 from $17.9 million in the 2005 year.

    -   Net earnings increased by 7.4% to $16.7 million in the year ended
        December 31, 2006 from $15.5 million in the 2005 year.

    -   The Fund continued to execute its acquisition strategy, which
        includes expanding its presence in Western Canada, by acquiring the
        net operating assets of Victoria Hyundai located in Victoria, British
        Columbia. This acquisition was completed on October 31, 2006.

    -   The Fund commenced operations of its Open Point in Sherwood Park,
        Alberta, Sherwood Park Hyundai in November of 2006.

    -   Subsequent to December 31, 2006, the Fund entered into a credit
        agreement with CAG to finance the acquisition of a Nissan dealership
        by CAG and entered into a management agreement to provide it with
        management services. The Nissan dealership is owned by a subsidiary
        of CAG which owns 46% of the Fund on a fully diluted basis.

    Fourth Quarter 2006 Highlights

    -   For the fourth quarter of 2006, the Fund generated distributable cash
        of $0.391 per unit, including changes in non-cash operating working
        capital amounts and $0.235 before changes in non-cash operating
        working capital balances, and declared distributions of $0.250 per
        unit, for a payout ratio of 64% including changes in non-cash working
        capital amounts and 106% before changes in non-cash working capital
        balances.

    -   Same store revenue and gross profit increased by 10.4% and 6.3%
        respectively in the fourth quarter of 2006, compared to same quarter
        in 2005.

    -   Revenue from existing and new dealerships increased by 38.5% to
        $176.1 million in the fourth quarter of 2006 from $127.1 million in
        the same quarter in 2005.

    -   Gross profit from existing and new dealerships increased by 32.9% to
        $28.9 million in the fourth quarter of 2006 from $21.8 million in the
        same quarter in 2005.

    -   EBITDA decreased by 2.5% to $4.9 million in the fourth quarter of
        2006 from $5.0 million in the same quarter in 2005.

    -   Net earnings decreased by 15.3% to $3.6 million in the fourth quarter
        of 2006 from $4.3 million in the same quarter in 2005.
    

    "We are very pleased with the financial results for the 2006 year,
especially the performance of our recent acquisitions and the continued
organic growth of our existing dealerships" said Patrick Priestner,
AutoCanada's founder and Chief Executive Officer.
    "We continue to significantly improve the cash flow from the dealerships
that the Fund owned at the time of our IPO and receive significant benefits
from the integration of recent acquisitions. We were also pleased to announce
the acquisition of Victoria Hyundai on October 31, 2006 which was an important
step in the execution of our strategy of growth through acquiring
dealerships." Looking forward Mr. Priestner stated that "the Fund continues to
aggressively grow our core automotive retail operations, especially the highly
profitable finance and insurance and parts and service businesses. As part of
this strategy throughout 2007, we will expand physical service bay capacity at
our Grande Prairie and Prince George dealership operations by adding 23
service bays, as well as by increasing the number of technicians and operating
hours at other locations. We anticipate that the Fund will continue to grow as
we execute our growth strategy through accretive acquisitions of other
franchised automotive dealers, continued organic growth, the commencement of
operations at new franchised automotive dealerships that have been awarded to
the Fund by manufacturers and enhance its relationships with a wider range of
manufacturers in order to develop its long-term growth prospects through the
management of franchised automotive dealerships."
    On October 31, 2006, the Department of Finance Canada announced proposed
changes to the taxation of income trusts. "These changes do not impact our
current distribution policy. Nor do they impact our underlying business, our
ability to grow organically, or our acquisition strategy," said Patrick
Priestner. "At the time of our IPO, we paid out all of our long-term debt and
have a $50 million operating line in place which the Fund has dedicated to
acquisitions as we continue to grow our business. Currently we also have a
strong balance sheet with approximately $21 million in unrestricted cash. This
provides a great deal of flexibility to the Fund moving forward."
    For the year ended December 31, 2006, revenues were $693.7 million
compared to $485.6 million for the 2005 year, an increase of 42.9%. Net
earnings increased by 7.4% to $16.7 million in the year ended December 31,
2006 when compared to the 2005 year. The increase in revenues and earnings
were primarily due to four dealerships acquired in the fourth quarter of 2005
and one dealership acquired in the first quarter of 2006.
    Gross profits for the year ended December 31, 2006 were up 48.1% to
$113.1 million when compared to the 2005 year. Gross profit percentages for
the year ended December 31, 2006 were up 0.6% compared with the 2005 year. The
improvement in the Company's gross profits was due primarily to an increase in
gross profits from same stores of 10.6% in the year ended December 31, 2006
and as a result of increase in the commission rate received on life,
dismemberment and disability insurance contracts in 2006.
    Net earnings decreased by 15.3% to $3.6 million in the fourth quarter of
2006 from $4.3 million in the same quarter in 2005. EBITDA decreased by 2.5%
to $4.9 million in the fourth quarter of 2006 from $5.0 million in the same
quarter in 2005. In calculating net earnings and EBITDA for the fourth quarter
2006, the Fund incurred stock based compensation of $163 which is included in
selling, general and administrative expenses which was not an expense in 2005
and we incurred significant start-up operating losses of approximately $160 at
our Sherwood Park Hyundai dealership which opened on November 15, 2006. We
initially planned to open this dealership during the summer of 2006 but the
opening was delayed as a result of construction delays. We expect this
dealership to be profitable during the second quarter of 2007. Also management
estimates that if certain employees and shareholders were paid under the same
contractual terms that currently exist within the Fund, net earnings and
EBITDA for the fourth quarter of 2005 would be reduced by $486 to $3.8 million
and $4.6 million respectively.

    New Locations

    The Fund continued to execute its acquisition strategy and expand its
presence in Western Canada by acquiring the net operating assets of Victoria
Hyundai located in Victoria, British Columbia on October 31, 2006. Victoria
Hyundai sold 464 new vehicles and 410 used vehicles in its last fiscal year
ended June 30, 2006 and currently operates ten service bays. This dealership
is undergoing a substantial renovation.
    In November 2006, the Fund commenced operations of its Open Point in
Sherwood Park, Alberta, Sherwood Park Hyundai, which is expected to generate
approximately 600 new units per year subsequent to the start-up period and
will operate ten service bays. Together, these two new dealerships will
increase both new vehicle volumes and increase service capacity by
approximately 9%.
    Mr. Priestner also announced that "we are very pleased that
DaimlerChrysler Canada Inc. (DCCI) has amended their Multi Dealer Group policy
specific to AutoCanada Income Fund allowing the Fund acquire additional DCCI
dealerships to a maximum 8% (previously 5%) of DCCI Canadian annual sales.
This gives the Fund the potential to acquire an estimated seven additional
dealerships that could sell an additional 6,000 new vehicles per year at an
average of approximately 800 new vehicles per dealership. Further, DCCI has
awarded the Fund an open point for a Chrysler Jeep Dodge dealership. We have
not yet secured land acceptable to ourselves and the manufacturer and the
search for which is continuing. We are extremely proud of our relationship
with DCCI and this opportunity to mutually grow our business. The Chrysler
Jeep Dodge brands are extremely strong in Western Canada as evidenced by our
results and, the Calgary market provides new sustainable, profitable growth
opportunities for the Fund."

    Expansion of Business Structure

    On February 7, 2007, the Fund entered into a credit agreement with CAG to
finance the acquisition of a Nissan dealership (the "Nissan Dealership"), by
CAG and entered into a management agreement to provide it with management
services. The Nissan Dealership is owned and operated by a subsidiary CAG
which owns 46% of the Fund on a fully diluted basis. The Fund obtained the
funds to finance the acquisition of the Nissan dealership through its existing
Revolving Facility. In connection with this arrangement, the Fund has granted
consents to CAG and its subsidiary under the terms of the non-competition
agreements entered into at the time of the Fund's IPO.
    The dealership to be named "Grande Prairie Nissan", in Grande Prairie,
Alberta, was established in 1969, and sold 388 new and 196 used vehicles in
2006. The dealership will be relocated to a new location in Grande Prairie
that has been approved by Nissan Canada and construction is planned to
commence during the summer of 2007. The Fund's arrangement with CAG marks an
expansion of the Fund's business structure. In addition to owning franchised
automobile dealerships, the Fund will earn fees from managing and financing
the acquisition of franchised automobile dealerships offered by select
manufacturers where there is not an arrangement in place with the manufacturer
that would allow the franchised dealership to be owned directly by the Fund.
    The Fund's strategic intent is to continue to seek to expand the range of
automobile brands it sells as automobile manufacturers become more familiar
with the Fund's management, business model and unique publicly traded status.
The structure may vary among dealerships and manufacturers in order to
accommodate the needs of the manufacturer, the dealerships, and the Fund.
These relationships are intended to provide the Fund with the financial
benefits associated with an expanded network of dealerships while
accommodating the requirements of the various automobile manufacturers. The
Fund and CAG intend to work together to obtain the approvals of the various
automobile manufacturers to permit these dealerships to be owned by the Fund
under arrangements approved by the automobile manufacturer. There can be no
assurance that the Fund will be granted such permission.

    Distributable Cash and Cash Distributions

    The Fund's policy is to distribute annually to Unitholders available cash
from operations after cash required for capital expenditures, working capital
reserves, growth capital reserves and other reserves considered advisable by
the Trustees of the Fund. The policy allows the Fund to make stable monthly
distributions to its Unitholders based on the Fund's estimate of distributable
cash for the year. The Fund pays cash distributions on or about the 15th of
each month to Unitholders of record on the last business day of the previous
month.
    The following table summarizes the distributions by the Fund for the
period from May 11, 2006 to December 31, 2006:

    
    (In thousands of dollars)
                                -------------- -------------- --------------
                                                Exchangeable
                                  Fund Units       Units          Total
                    Payment     -------------- -------------- --------------
    Record date       date      Declared  Paid Declared  Paid Declared  Paid
                                --------  ---- --------  ---- --------  ----
                                     $      $       $      $       $      $

    May 31, 2006   June 15, 2006    618    618     525    525   1,143  1,143
    June 30, 2006  July 15, 2006    912    912     775    775   1,687  1,687
    July 31, 2006  August 15, 2006  912    912     775    775   1,687  1,687
    August 31,     September 15,
     2006           2006            912    912     775    775   1,687  1,687
    September 30,  October 16,
     2006           2006            912    912     775    775   1,687  1,687
    October 31,    November 15,
     2006           2006            912    912     775    775   1,687  1,687
    November 30,   December 15,
     2006           2006            912    912     775    775   1,687  1,687
    December 31,   January 15,
     2006           2007            912      -     775      -   1,687      -
                                --------------------------------------------

                                  7,002  6,090   5,950  5,175  12,952 11,265
                                --------------------------------------------
                                --------------------------------------------


    Distributions are paid on Fund Units and Exchangeable Units. As of
    September 30, 2006 the following numbers of units were outstanding:

      Fund Units                                                  10,949,500
      Exchangeable Units                                           9,307,500
                                                                 ------------

                                                                  20,257,000
                                                                 ------------
                                                                 ------------
    

    During the period of May 11, 2006 to December 31, 2006, the Fund declared
distributions of $0.639 per Fund Unit and Exchangeable Unit to Unitholders.
The distributions from May 11, 2006 to December 31, 2006 were funded from cash
flow generated from operations. The Fund's IPO prospectus contemplated an
initial distribution of $0.0564 per unit and thereafter monthly distributions
of $0.0833 per unit or $1 per year in aggregate. The Fund reviews its
distribution policy on a periodic basis. For 2006, the tax deferred portion of
distributions for Canadian federal income tax purposes was approximately 20%.
Based on the proposed legislation announced by the Department of Finance
Canada on October 31, 2006 in connection with the taxation of income trusts
and other flow-through entities (the "Plan"), the taxable income distributed
by the Fund would be taxed commencing in 2011 or earlier in some
circumstances. The Fund is actively reviewing the implications of the Plan to
its unitholders of deferring elective tax deductions until the new regime is
in place. As such, the Fund cannot now determine the portion, if any, of the
2007 distributions that will be tax deferred.
    Distributable cash of the Fund is a measure generally used by Canadian
open-ended trusts as an indicator of financial performance. As one of the
factors that may be considered relevant by prospective investors is the cash
distributed by the Fund relative to the price of the Units, management
believes that distributable cash of the Fund is a useful supplemental measure
that may assist prospective investors in assessing an investment in the Fund.
Distributable Cash is calculated as cash flows provided by operating
activities, adjusted for changes in non-cash operating working capital
balances for the period, plus proceeds on sale of property and equipment, less
purchases of non-growth property and equipment.

    Proposed Tax Measures

    On October 31, 2006, the Department of Finance Canada announced the
proposed legislation in connection with the taxation of income trusts and
other flow-through entities. Included in the Plan are proposed changes to the
taxation of income trusts. The proposed changes, which will not affect
existing publicly traded income trusts such as the Fund until the taxation
year ended December 31, 2011, indicate certain distributions of an income
trust's income will be subject to tax at corporate income tax rates. Those
distributions will, like the dividends that corporations pay, not be
deductible by an income trust. The unitholders in an income trust will be
taxed as though the distributions were dividends and taxable unitholders will
be eligible for the dividend tax credit. Unitholders that hold their units in
tax deferred accounts such as pension plans or registered pension plans or
non-residents unitholders will not be eligible for the dividend tax credit.
The entities that will be subject to these proposed new rules will be fully
defined in the legislation to implement these measures. As a practical matter,
however, it can be assumed that the rules will apply to any publicly-traded
"income trust" (or publicly-traded partnership), other than one that only
holds passive real estate investments. These changes will generally take
effect beginning with the 2007 taxation year for income trusts that begin to
be publicly-traded after October 2006. The aspects of the Plan discussed above
are proposed at this date and still have to pass through the legislative
process and thus the final impact to the Unitholders of the Fund on the
taxation of the Fund's distributions is uncertain at this time.
    The Federal Government in its recent budget announced separate vehicle
levy and rebate programs determined on the basis of fuel consumption. The
combined impact of such programs is not certain, as the actual amount of the
levy on all vehicles is not yet known and, as the levy is paid by the
manufacturer, the degree to which it shall be passed on to the ultimate
consumer not clear. Subject to the aforesaid, management's best estimate is
that the combined impact will be neutral to the Fund's operations as most of
the vehicles it sells, including full size trucks, are not impacted one way or
the other, and although certain of its large vehicles (mostly larger SUVs)
shall be subject to the levy, these are not large volume vehicles, and a
larger number of the vehicles it sells will or may benefit from the rebate,
including some of its newer small SUVs.

    Selected Financial Information and Results from Operations

    The following table shows the audited results of the Fund from May 11,
2006 to December 31, 2006, the unaudited results of the Fund for the
three-month period ended December 31, 2006, the combined unaudited results
from operations of the Fund and the Vendors for the year ended December 31,
2006 and the combined unaudited results of operations of the Fund and CAG for
the three-month period and the audited results of CAG for the year ended
December 31, 2006. Combined revenues, gross profit and selling, general and
administrative expenses of CAG for the three-month period ended December 31,
2005 have been derived from the 2005 audited combined consolidated financial
statements of CAG.

    
    (In thousands of dollars                              The Fund
     except Operating Data                         CAG     and CAG     CAG
     and gross profit %)    The Fund  The Fund  (Vendors) Combined  (Vendors)

                                       October   October   January   January
                           May 11 to     1 to      1 to      1 to      1 to
                            December  December  December  December  December
                            31, 2006  31, 2006  31, 2005  31, 2006  31, 2005
                            --------- --------- --------- --------- ---------
    Income Statement Data
    Revenue                  471,932   176,079   127,122   693,712   485,573

      New vehicles           264,438    98,970    69,052   378,124   279,744
      Used vehicles          130,809    46,425    36,352   201,639   128,907
      Parts, service and
       collision repair       51,776    21,410    15,349    77,861    54,330
      Finance, insurance
       and other              24,909     9,274     6,369    36,088    22,592
    Gross profit              77,523    28,930    21,775   113,113    76,359
      New vehicles            17,980     6,998     5,394    25,964    18,970
      Used vehicle            12,471     3,614     3,738    18,101    12,493
      Parts, service and
       collision repair       23,249     9,514     6,719    34,875    23,706
      Finance and insurance
       and other              23,823     8,804     5,924    34,173    21,190
      Gross profit %            16.4%     16.4%     17.1%     16.3%     15.7%
    Sales, general and
     administrative expenses  56,408    21,682    15,735    84,125    55,650
    Floorplan interest expense 5,195     2,085       974     7,745     4,040
    Other interest expense
     and bank charges            546       405       297       949       775
    Net earnings(1)           12,474     3,623     4,278    16,700    15,544
    EBITDA(2)                 15,521     4,906     5,034    20,979    17,935

    Operating Data
    Vehicles (new and used)
     sold                     13,082     4,690     3,688    19,350    14,136
    New retail vehicles sold   6,455     2,199     1,598     9,141     7,014
    New fleet vehicles sold    1,107       525       482     1,708     1,388
    Used retail vehicles sold  5,520     1,966     1,608     8,501     5,734
    Number of service and
     collision repair orders
     completed               142,303    55,393    39,445   215,232   150,336
    Absorption rate(3)            94%       96%      101%       92%       95%
    Number of franchised
     automobile dealerships
     at year end                  16        16        14        16        14
    Number of service bays
     at period end               245       245       223       245       223
    Same store revenue
     growth(4)                   n/a      10.4%      n/a       4.4%     13.8%
    Same store gross profit
     growth(4)                   n/a       6.3%      n/a      10.6%     24.4%

    Balance Sheet Data
    Cash and cash equivalents 20,880    20,880     9,707    20,880     9,707
    Accounts receivable       27,742    27,742    27,578    27,742    27,578
    Inventories              112,680   112,680    96,206   112,680    96,206
    Revolving floorplan
     facility                113,357   113,357    98,023   113,357    98,023

    (1) Net earnings for the Vendors from January 1, 2006 to May 10, 2006 and
        from January 1, 2005 to December 31, 2005 are net earnings as defined
        by GAAP plus income taxes, stock-based compensation and shareholder
        bonuses (including the performance component related to dealership
        management's compensation) to be consistent with the results of the
        Fund from May 11, 2006 to December 31, 2006.
    (2) EBITDA has been calculated as described under "Non-GAAP Measures"
        above. EBITDA for the Vendors is defined under "Non-GAAP Measures"
        with the exception that to facilitate comparison to the Fund we have
        added stock-based compensation and shareholder bonuses (including the
        performance component related to dealership management's
        compensation) expensed by the Vendors.
    (3) Absorption has been calculated as described under "Non-GAAP Measures"
        above.
    (4) Same store revenue growth and same store gross profit growth is
        calculated using franchised automobile dealerships that we have owned
        for at least two full years.

    The following tables summarize the revenues and gross profit for the year
ended December 31, 2006 on a same store basis by revenue source for the nine
dealerships that were owned and operated for all of 2006 and 2005.

                    Same Store Revenue and Vehicles Sold
          ----------------------------------------------------------------

          (In thousands                      For the Year Ended
           of dollars             ----------------------------------------
           except % change        December 31,  December 31,
           and vehicle data)          2006          2005         % Change
                                      ----          ----         ---------
           Revenue Source

           New vehicles             260,588       257,705           1.1%
           Used vehicles            127,303       119,817           6.2%
           Parts, service and
            collision repair         55,800        52,200           6.9%
           Finance, insurance and
            other                    25,831        19,999          29.2%
                                    -------       -------        -------

           Total                    469,522       449,721           4.4%
                                    -------       -------        -------
                                    -------       -------        -------

           New vehicles sold          7,108         7,630         (6.8)%
           Used vehicles sold         5,326         5,236           1.7%
                                    -------       -------        -------

           Total                     12,434        12,866         (3.4)%
                                    -------       -------        -------
                                    -------       -------        -------


             Same Store Gross Profit and Gross Profit Percentage
    -------------------------------------------------------------------------
                                          For the Year Ended
                       ------------------------------------------------------

                               Gross Profit               Gross Profit %
                       --------------------------- --------------------------
    (In thousands of
     dollars except %
     change and gross   Dec. 31, Dec. 31,    %     Dec. 31, Dec. 31,    %
     profit %)            2006     2005    Change   2006     2005     Change
                          ----     ----    ------   ----     ----     ------
    Revenue Source

    New vehicles         17,407   17,505    (0.6)%     6.7%     6.8%   (0.1)%
    Used vehicles        10,657   11,372    (6.3)%     8.4%     9.5%   (1.1)%
    Parts, service and
     collision repair    25,040   22,816      9.7%    44.9%    43.7%     1.2%
    Finance, insurance
     and other           24,834   18,744     32.5%    96.1%    93.7%     2.4%
                         ------   ------    ------   ------   ------   ------

    Total                77,938   70,437     10.6%    16.6%    15.7%     0.9%
                         ------   ------    ------   ------   ------   ------
                         ------   ------    ------   ------   ------   ------
    

    About AutoCanada

    The Fund commenced business operations on May 11, 2006, when it completed
an initial public offering (the "IPO") of 10,209,500 trust units ("Fund
Units"), at a price of $10 per unit, for aggregate gross proceeds of
$102,095,000. Concurrent with the closing of the IPO, the Fund used the
proceeds from the IPO to acquire an indirect 50.4% interest in AutoCanada
Limited Partnership ("AutoCanada LP") and AutoCanada LP used such net proceeds
to acquire the net assets (the "Purchased Assets") of Canada One Auto Group.
On May 31, 2006, as a result of the exercise of the over allotment option
granted to underwriters, the Fund acquired a further 3.65% interest in the
Purchased Assets and thus increased its total interest in the Purchased Assets
to 54.05%.
    AutoCanada is Canada's only publicly traded entity with interests
exclusively in the operation of franchised automobile dealerships. Through its
54.05% interest in AutoCanada LP, it operates or manages 17 franchised
automobile dealerships in six provinces and has over 900 employees. The Fund
currently sells various new vehicle brands, including Chrysler, Dodge, Jeep,
and Hyundai. In 2006, the operations of the franchised automobile dealerships
owned, sold approximately 19,350 vehicles and processed approximately 215,000
service and collision repair orders in 245 service bays, generating revenue of
approximately $694 million.

    Forward Looking Statements

    Certain statements in management's discussion and analysis may constitute
"forward looking" statements that involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements or industry results to be materially different from any future
results, performance or achievements expressed or implied by such forward
looking statements. These statements relate to future events or future
performance and reflect the expectations of management regarding growth,
results of operations, performance and business prospects and opportunities.
Such forward looking statements reflect current beliefs of management or of
the third parties to which they are attributed and are based on information
currently available to the Fund. In some cases, the statements use such words
as "may", "will", "intend", "should", "expect", "believe", "plan",
"anticipate", "estimate", "predict", "potential", "continue" or the negative
of these terms or other similar terminology. These statements reflect current
expectations regarding future events and operating performance and speak only
as of the date of management's discussion and analysis, or in the case of
third party statements as of the date on which they were made. Forward looking
statements involve significant risks and uncertainties, should not be read as
guarantees of future performance or results, and will not necessarily be
accurate indications of whether or not such results will be achieved. A number
of factors could cause actual results to differ materially from the results
discussed in the forward looking statements, including, but not limited to,
the factors discussed under ''Risk Factors'' in the Fund's Management's
Discussion and Analysis which can be found at www.sedar.com. Although the
forward looking statements are based upon what management believes are
reasonable assumptions, the Fund cannot assure you that actual results will be
consistent with these forward looking statements. These forward looking
statements are made as of the date of management's discussion and analysis
and, except as required by applicable law, the Fund assumes no obligation to
update or revise them to reflect new events or circumstances.

    Non-GAAP Measures

    References to "EBITDA" are to earnings before interest expense (other
than interest expense on floorplan financing and other interest), income
taxes, depreciation and amortization and references to "distributable cash"
are to cash flow available from operating activities available for
distribution to Unitholders' in accordance with the distribution policies of
the Fund. Management believes that, in addition to earnings or loss, EBITDA is
a useful supplemental measure of both performance and cash available for
distribution before debt service, changes in working capital, capital
expenditures and income taxes. Distributable cash of the Fund is a measure
generally used by Canadian open-ended trusts as an indicator of financial
performance. As one of the factors that may be considered relevant by
prospective investors is the cash distributed by the Fund relative to the
price of the Units, management believes that distributable cash of the Fund is
a useful supplemental measure that may assist prospective investors in
assessing an investment in the Fund. Distributable cash is calculated as cash
flows from operating activities, less purchases of non-growth or productive
property and equipment.
    EBITDA and distributable cash are not earnings measures recognized by
GAAP and do not have standardized meanings prescribed by GAAP. Investors are
cautioned that EBITDA and distributable cash should not replace net earnings
or loss (as determined in accordance with GAAP) as an indicator of the Fund's
performance, of its cash flows from operating, investing and financing
activities or as a measure of its liquidity and cash flows. The Fund's methods
of calculating EBITDA and distributable cash may differ from the methods used
by other issuers. Therefore, the Fund's EBITDA and distributable cash may not
be comparable to similar measures presented by other issuers.
    References to "absorption rate" are to the ratio of gross profits of a
franchised automobile dealership from parts, service and collision repair to
the fixed operating costs of the dealership. 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 and
do not include expenses pertaining to head office. 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.
    Additional information about AutoCanada Income Fund is available at the
Fund's website at www.autocan.ca and www.sedar.com.

    
    AutoCanada Income Fund
    Consolidated Balance Sheet
    As at December 31, 2006
    -------------------------------------------------------------------------

    (expressed in Canadian dollar thousands)

    ASSETS                                                                 $

    Current assets
    Cash and cash equivalents                                         20,880
    Restricted cash                                                    3,476
    Accounts receivable                                               27,742
    Inventories                                                      112,680
    Due from vendors                                                   2,640
    Prepaid expenses                                                   1,419
                                                                 ------------

                                                                     168,837
    Property and equipment                                            11,839
    Intangible assets                                                 79,034
    Goodwill                                                          78,744
    Other assets                                                          78
                                                                 ------------

                                                                     338,532
                                                                 ------------
                                                                 ------------
    LIABILITIES

    Current liabilities
    Accounts payable and accrued liabilities                          23,521
    Revolving floorplan facility                                     113,357
    Distributions payable                                              1,687
    Current portion of long-term debt                                     96
    Current portion of obligation under capital lease                     72
                                                                 ------------
                                                                     138,733

    Long-term debt                                                     5,535
    Obligation under capital lease                                       240
                                                                 ------------

                                                                     144,508
                                                                 ------------

    Commitments and contingencies

    UNITHOLDERS' EQUITY

    Fund units                                                       105,200
    Exchangeable units                                                88,847
    Contributed surplus                                                  455
    Accumulated deficit                                                 (478)
                                                                 ------------

                                                                     194,024
                                                                 ------------

                                                                     338,532
                                                                 ------------
                                                                 ------------


    AutoCanada Income Fund
    Consolidated Statement of Operations and Accumulated Deficit
    For the period from January 4, 2006, including operations from May 11,
    2006 (date of commencement of operations) to December 31, 2006
    -------------------------------------------------------------------------

    (expressed in Canadian dollar thousands except unit and per unit amounts)

                                                                           $
    Revenue
    Vehicles                                                         418,808
    Parts, service and collision repair                               51,776
    Other                                                              1,348
                                                                 ------------

                                                                     471,932
    Cost of sales                                                    394,409
                                                                 ------------

    Gross profit                                                      77,523
                                                                 ------------

    Expenses
    Selling, general and administrative                               56,408
    Interest                                                           5,741
    Amortization                                                       2,900
                                                                 ------------

                                                                      65,049
                                                                 ------------

    Net earnings for the period                                       12,474

    Accumulated earnings, beginning of period                              -
    Distributions declared                                           (12,952)
                                                                 ------------

    Accumulated deficit, end of period                                  (478)
                                                                 ------------
                                                                 ------------

    Earnings per unit
    Basic and diluted                                                  0.616
                                                                 ------------
                                                                 ------------

    Weighted average units
    Basic and diluted                                             20,257,000
                                                                 ------------
                                                                 ------------



    AutoCanada Income Fund
    Consolidated Statement of Cash Flows
    For the period from January 4, 2006, including operations from May 11,
    2006 (date of commencement of operations) to December 31, 2006
    -------------------------------------------------------------------------
    (expressed in Canadian dollar thousands)

                                                                           $
    Cash provided by (used in)
    Operating activities
    Net earnings for the period                                       12,474
    Items not affecting cash
      Unit-based compensation                                            455
      Amortization                                                     2,900
      Gain on disposal of property and equipment                           5
                                                                 ------------

                                                                      15,834
    Net change in non-cash operating working capital balances         13,479
                                                                 ------------

                                                                      29,313
                                                                 ------------

    Investing activities
    Business acquisitions                                           (101,662)
    Purchase of property and equipment                                (1,236)
    Proceeds on sale of property and equipment                           197
    Restricted cash                                                    1,431
    Cash acquired on acquisition                                       4,925
                                                                 ------------

                                                                     (96,345)
                                                                 ------------

    Financing activities
    Net proceeds from issuance of units                               93,572
    Proceeds from long-term debt                                       5,674
    Repayment of long-term debt                                          (43)
    Repayment of obligation under capital lease                          (26)
    Distributions paid to Unitholders                                (11,265)
                                                                 ------------

                                                                      87,912
                                                                 ------------

    Increase in cash                                                  20,880

    Cash and cash equivalents, beginning of period                         -
                                                                 ------------

    Cash and cash equivalents, end of period                          20,880
                                                                 ------------
                                                                 ------------

    Supplementary information
      Cash interest paid                                               5,674
      Transfer of inventory to property and equipment                  1,257
      Transfer of property and equipment to inventory                  1,022
    





For further information:

For further information: Tom Orysiuk, CA, Executive Vice-President and
Chief Financial Officer, Phone: (780) 732-3139 Email: torysiuk@autocan.ca

Organization Profile

AUTOCANADA INCOME FUND

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