AutoCanada Income Fund releases financial results for the reporting period
ended September 30, 2009 and announces its intention to convert to a
corporation and the termination of the special committee:

    
    A conference call to discuss the results for the period ended
    September 30, 2009 will be held on November 10, 2009 at 11 a.m. Eastern
    time. To participate in the live conference call, please dial
    1-800-814-4860 or 1-416-644-3415 approximately 10 minutes prior to the
    call. An archived audio webcast of the conference call will also be
    available on the Fund's website www.autocan.ca.
    

EDMONTON, Nov. 6 /CNW/ - AutoCanada Income Fund (the "Fund") (TSX: ACQ.UN) today announced financial results for the three-month period ended September 30, 2009.

    
    -------------------------------------------------------------------------
                     2009 Third Quarter Operating Results

           -   Net earnings of $5.1 million
           -   EBITDA of $6.7 million
           -   Revenue of  $212.9 million
           -   Gross profit of  $38.8 million
           -   Same store revenue decreased by 3.9%
           -   Same store gross profit decreased by 6.3%
    -------------------------------------------------------------------------

    Third Quarter 2009 Summary

    -   Adjusted distributable cash for the third quarter of 2009 decreased
        by $1.7 million to $5.9 million from $7.6 million in 2008.
    -   In the third quarter of 2009, the Fund generated net earnings of
        $5.1 million or basic earnings per unit of $0.256, standardized
        distributable cash of $0.463 per unit and adjusted distributable cash
        of $0.297 per unit, and declared distributions of $nil per unit, for
        a standardized payout ratio of 0.0% and an adjusted payout ratio of
        0.0%.
    -   Same store revenue decreased by $7.7 million and same store gross
        profit decreased by $2.4 million in the third quarter of 2009,
        compared to the results of the Fund for the same quarter in 2008.
    -   Revenue from existing and new dealerships decreased by 1.8% to
        $212.9 million in the third quarter of 2009 from the $216.7 million
        in the same quarter in 2008.
    -   Gross profit from existing and new dealerships decreased by 3.7% to
        $38.8 million in the third quarter of 2009 from the $40.3 million in
        the same quarter in 2008.
    -   EBITDA decreased by 15.8% to $6.7 million in the third quarter of
        2009 from the $8.0 million in the same quarter in 2008.
    -   Net earnings increased to $5.1 million in the third quarter of 2009
        from a $38.3 million loss in the same quarter in 2008.
        -  Net earnings for the three months ended September 30, 2009, not
           including the goodwill impairment charge and its related future
           income tax recovery from the three month period ended
           September 30, 2008, decreased by $1.6 million to $5.1 million from
           $6.7 million.
    -   Same store new vehicle unit sales decreased 1.7% in the third quarter
        of 2009 as compared to the same quarter in 2008.
        -  New vehicle unit sales in Canada decreased by 6.0% in the third
           quarter of 2009 as compared to the same quarter in 2008.
        -  New vehicles unit sales in British Columbia and Alberta (our
           primary markets) decreased by 8.8% and 18.1% respectively in the
           third quarter of 2009 as compared to the same quarter in 2009.
    -   New vehicle units retailed in the third quarter of 2009 decreased by
        9 units as compared to 2008. Used vehicle units retailed decreased by
        125 units. Although sales volumes during the third quarter were down
        slightly from the comparable period in 2008, EBITDA decreased by
        15.8%. The Fund attributes the lower earnings, despite marginal
        change in units retailed, to lower earnings in our finance and
        insurance department. Tighter lending conditions due to the economic
        downturn has negatively affected our finance and insurance revenue
        per vehicle retailed, thus impacting our earnings.
    

In commenting on the results of the past quarter, Patrick Priestner, AutoCanada's Chief Executive Officer, noted that "Despite the prolonged economic downturn in Canada as well as the continued tightening of credit available to both business and consumers the Fund produced a very strong quarter and we are pleased with our results relative to the industry as a whole."

Mr. Priestner further noted that, "The Fund and the automotive retail industry still face significant challenges as a result of the decline in demand in Western Canada for new vehicles due to the global recession and credit crisis. Despite an industry-wide decline in retail sales, we are pleased that our relative market share has increased in most geographical markets in which we operate. As a result of the possibility that credit conditions will remain constrained for a protracted period as well as changes to the taxation of income trusts we have determined that it would be prudent to convert to a publicly traded corporation at the end of this year. By converting to a corporation a year early we can benefit from the lower tax rate that is available to corporations, retain cash and be in a much stronger position to execute our business plan and continue to grow our business which will add value for our unitholders."

Conversion to a Corporation

AutoCanada Income Fund is pleased to announce its plans to convert to a corporation (the "Reorganization") pursuant to a plan of arrangement transaction under the Business Corporations Act (Alberta). Pursuant to the Reorganization, holders of fund units ("Unitholders") of the Fund will receive common shares ("Common Shares") of a newly-formed corporation (AutoCanada Inc. "ACI") on a one-for-one basis (the "Exchange Ratio"). The Reorganization will result in ACI holding the assets and business operations previously held and operated by the Fund and its subsidiaries. All of the members of the Board of Trustees of the Fund and Board of Directors of AutoCanada GP Inc. will continue as directors of ACI and senior officers of the Fund will continue as directors of ACI. Also in the Reorganization, holders of exchangeable limited partnership units ("Exchangeable Units") of AutoCanada Limited Partnership (the "Partnership") will ultimately exchange their Exchangeable Units for Common Shares based on the Exchange Ratio. The Reorganization will result in ACI having approximately 19.9 million Common Shares issued and outstanding.

Since the October 31, 2006 announcement by the Federal government and subsequent legislation to impose income taxes on publicly traded income trusts and limited partnerships, the Fund's management and Board of Trustees have been continuously reviewing the Fund's strategic objectives and available options to ensure that the Fund's capital structure is efficient and that unitholder value is being maximized. Over the past year, management has carried out a more detailed analysis in relation to the growth opportunities and strategic direction for the business.

As a result of the analysis, the Board of Trustees of the Fund and the Board of Directors of AutoCanada GP Inc. have unanimously concluded that the proposed Reorganization best enables AutoCanada to execute its business and strategic plan and deliver strong growth and capital appreciation for unitholders of the Fund, and thus has unanimously resolved to recommend that unitholders of the Fund vote their Fund units and Exchangeable Units in favour of the Reorganization.

Officers and Directors of AutoCanada GP Inc. beneficially owning 46.89% of the issued and outstanding Fund units and Exchangeable Units of the Fund intend to vote their Fund units and Exchangeable Units in favour of the Reorganization. Given the diminished value of the income fund structure, management and the Board believe that the best opportunity for creating value is to reinvest a significant portion of overall funds from operations into the business and to focus on increasing overall earnings per share. At the same time, management and the Board recognize that many investors require or prefer an element of cash yield from their investment. By converting to a growth-orientated, dividend-paying corporation, management and the Board believe that AutoCanada will be best positioned to invest in attractive growth opportunities while at the same time potentially be in the position to provide income-orientated investors with an attractive cash yield through a dividend.

The Reorganization is subject to the receipt of all required regulatory, stock exchange and Court of Queen's Bench approvals as well as approval by at least 66 2/3% of the votes cast by Unitholders and the holders of Exchangeable Units present in person or by proxy at a duly convened special meeting (the "Unitholder Meeting") of securityholders of the Fund. It is anticipated that an information circular and proxy statement in connection with the Unitholder Meeting will be mailed to Unitholders and the holders of Exchangeable Units on or about November 18, 2009 and the Unitholders Meeting will be held on December 17, 2009. Subject to receiving all necessary approvals, closing of the Reorganization is expected to be on December 31, 2009.

Coinciding with the meeting to vote on the Reorganization, Unitholders will vote on amending the terms to the Partnership Agreement and the Option Plan. These items require amendment in order to facilitate, or as a result of the Reorganization.

The Reorganization has been structured to allow Unitholders resident in Canada to receive Common Shares on a tax-deferred basis.

Application will be made to list the public corporation's common shares on the Toronto Stock Exchange on a substitutional basis.

Gordon Barefoot, Chair of the Board of Trustees of AutoCanada Income Fund said, "We are undertaking this transaction to simplify the business structure, resulting in modest reductions in G&A, and position AutoCanada to pursue growth opportunities that should result in capital appreciation for securityholders. The income fund structure is a less desirable business organization for AutoCanada in the current market because the Fund is not paying distributions and the proposed corporate structure may allow for dividends to be declared and paid to securityholders in the future. The Board of Directors and management will continue to closely monitor the results of operations and our progress in achieving various business objectives for the balance 2009 and into 2010 and if we continue to meet these objectives we anticipate declaring, at an appropriate time, a dividend that would be competitive with other investment options that would be available to investors at that time."

Termination of a Special Committee

On May 13, 2009, the Fund announced the creation of a Special Committee of independent directors formed to review financing, restructuring and strategic alternatives at that time. Since this announcement, the Fund has been able to secure alternate floorplan financing for all owned and managed dealerships. In addition, the Fund recently refinanced its Non-Revolving Fixed Term Facility with Chrysler Financial Canada with a $20 million Revolving Loan from HSBC Bank Canada. The Fund confirms that the advance from HSBC Bank Canada was made on October 26, 2009 and the Chrysler Financial Canada facility was paid out in full. As a result of the significant progress made with respect to the Fund's financing and the proposed restructuring described above, the Board of Trustees has deemed the Special Committee to no longer be necessary.

Gordon Barefoot, Chair of the Special Committee stated, "We are pleased with management's progress with respect to financing. With the replacement of the Fund's floorplan and term financing, and the proposal to convert to a corporation, the Special Committee is satisfied that it has achieved its purpose. The Fund has developed a strategic plan to address the challenges faced earlier in the year and the Special Committee is satisfied with this plan."

Distributions to Unitholders

The Fund's policy is to distribute to Unitholders available cash provided by operations after cash required for capital expenditures, working capital reserves, growth of capital reserves and other reserves considered advisable by the Trustees of the Fund. The Board of Trustees approves all distributions and reviews the distribution levels on a periodic basis.

On February 13, 2009, in view of the continued market unpredictability, general economic deterioration both within the auto industry and generally, rising unemployment, and tight credit markets, the Board of Trustees had concluded that it was prudent to reduce monthly distribution from $0.0833 per unit ($1.00 per unit annually) to $0.0417 per unit ($0.50 per unit annually), commencing February 2009, in order to provide additional financial flexibility.

On March 14, 2009, in response to the continued deteriorating retail credit markets and continued economic decline, the Board of Trustees determined it would be prudent to temporarily suspend distributions until such time as market conditions stabilize.

The following table summarizes the distributions declared by the Fund for the period from January 1, 2009 to September 30, 2009.

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

    January 30,   February 16,
          2009           2009     881     881     775     775   1,656   1,656
    February 27,  March 16,
           2009       2009        441     441     388     388     829     829
    N/A(1)        N/A(1)            -       -       -       -       -       -
                               ----------------------------------------------
                                1,322   1,322   1,163   1,163   2,485   2,485

    (1) No further distributions since those disclosed above have been
        declared as at the date of this MD&A. No record date or payment date
        is applicable.

    Distributions are paid on Fund Units and Exchangeable Units. As of
September 30, 2009 the following numbers of units were outstanding:

    Fund Units                                                    10,573,430
    Exchangeable Units                                             9,307,500
                                                                -------------

                                                                  19,880,930
                                                                -------------
                                                                -------------
    

During the three-month and nine-month periods ended September 30, 2009, the Fund declared distributions of $0.000 and $0.125 respectively per Fund Unit and Exchangeable Unit to Unitholders. The Fund reviews its distribution policy on a periodic basis.

SELECTED QUARTERLY FINANCIAL INFORMATION AND RESULTS FROM OPERATIONS

The following table shows the unaudited results of the Fund 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 %)

                                          Q4        Q1        Q2        Q3
                                         2007      2008      2008      2008


    Income Statement Data
      New vehicles                     111,683   107,688   128,371   118,807
      Used vehicles                     50,468    55,712    61,223    57,790
      Parts, service &
       collision repair                 23,863    23,536    26,610    26,492
      Finance, insurance & other        10,697    11,180    13,121    13,597
                                     ----------------------------------------
    Revenue                            196,711   198,116   229,325   216,686
                                     ----------------------------------------

      New vehicles                       8,176     7,012     9,699     9,266
      Used vehicles                      3,746     4,393     5,180     5,156
      Parts, service &
       collision repair                 11,494    11,082    12,896    13,290
      Finance, insurance & other        10,106    10,579    12,244    12,629
                                     ----------------------------------------
    Gross profit                        33,522    33,066    40,019    40,341
                                     ----------------------------------------

    Gross profit %                       17.0%     16.7%     17.5%     18.6%
    Sales, general & admin expenses     25,654    26,317    29,916    30,491
    SG&A exp. as % of gross profit       76.5%     79.6%     74.8%     75.5%
    Floorplan interest expense           2,432     2,034     1,895     1,693
    Other interest & bank charges          296       256       396       458
    Future income taxes                 (1,182)      330       148    (1,869)
    Net earnings(4)                      5,466     3,358     6,906   (38,318)
    EBITDA(1)(4)                         5,310     4,621     8,022     7,975

    Operating Data
    Vehicles (new and used) sold         5,363     5,552     6,576     6,462
    New retail vehicles sold             2,618     2,462     3,471     3,245
    New fleet vehicles sold                569       716       470       532
    Used retail vehicles sold            2,176     2,374     2,635     2,685
    Number of service & collision
     repair orders completed            57,552    61,169    72,227    74,300
    Absorption rate(2)                     93%       90%      100%       99%
    No. of dealerships                      19        19        20        21
    No. of same store dealerships(3)        11        13        14        14
    No. of service bays at period end      260       260       279       284
    Same store revenue growth(3)          5.3%    (0.6)%    (3.8)%   (17.1)%
    Same store gross profit growth(3)     6.5%      0.7%      0.2%    (3.3)%

    Balance Sheet Data
    Cash and cash equivalents           18,014    15,298    18,459    19,194
    Accounts receivable                 34,274    36,411    35,374    39,390
    Inventories                        142,128   132,549   135,447   134,565
    Revolving floorplan facilities     143,655   134,023   131,505   135,562



                                          Q4        Q1        Q2        Q3
                                         2008      2009      2009      2009

    Income Statement Data
      New vehicles                      96,634    87,176   108,181   117,513
      Used vehicles                     47,605    49,550    55,098    56,386
      Parts, service &
       collision repair                 27,105    26,390    27,322    26,941
      Finance, insurance & other        11,023     9,683    11,669    12,027
                                     ----------------------------------------
    Revenue                            182,367   172,799   202,270   212,867
                                     ----------------------------------------

      New vehicles                       6,729     5,828     7,951     9,003
      Used vehicles                      3,671     3,810     5,677     5,744
      Parts, service &
       collision repair                 13,090    12,811    13,708    13,374
      Finance, insurance & other        10,137     8,732    10,489    10,717
                                     ----------------------------------------
    Gross profit                        33,627    31,181    37,825    38,838
                                     ----------------------------------------

    Gross profit %                       18.4%     18.0%     18.7%     18.3%
    Sales, general & admin expenses     28,157    27,813    30,450    30,565
    SG&A exp. as % of gross profit       83.7%     89.2%     80.5%     78.7%
    Floorplan interest expense           1,443       970     1,104     1,399
    Other interest & bank charges          441       375       552       802
    Future income taxes                 (8,579)       97        67        36
    Net earnings(4)                    (67,121)    1,054     4,750     5,099
    EBITDA(1)(4)                         3,868     2,230     6,135     6,716

    Operating Data
    Vehicles (new and used) sold         5,124     5,149     6,067     6,415
    New retail vehicles sold             2,376     2,219     3,030     3,236
    New fleet vehicles sold                526       473       446       619
    Used retail vehicles sold            2,222     2,385     2,591     2,560
    Number of service & collision
     repair orders completed            69,560    70,021    75,062    79,346
    Absorption rate(2)                     94%       84%       90%       92%
    No. of dealerships                      22        22        22        22
    No. of same store dealerships(3)        14        16        17        18
    No. of service bays at period end      288       323       323       321
    Same store revenue growth(3)       (16.7)%   (19.8)%   (15.3)%    (3.9)%
    Same store gross profit growth(3)   (8.0)%   (12.8)%    (8.7)%    (6.3)%

    Balance Sheet Data
    Cash and cash equivalents           19,592    12,522    14,842    23,224
    Accounts receivable                 31,195    33,821    27,034    38,134
    Inventories                        139,948   116,478    90,141   107,431
    Revolving floorplan facilities     137,453   114,625    73,161   105,254

    (1) EBITDA has been calculated as described under "Non-GAAP Measures"
        above.
    (2) Absorption has been calculated as described under "Non-GAAP
        Measures" above.
    (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 and
nine-month periods ended September, 2009 on a same store basis by revenue
source and compares these results to the same period in 2008.

             Same Store Gross Profit and Gross Profit Percentage

                                     For the Three Months Ended
                                Gross Profit            Gross Profit %
    (In thousands of
     dollars except
     % change and       Sept 30, Sept 30,      %   Sept 30, Sept 30,     %
     gross profit %)       2009     2008    Change    2009     2008    Change
                                          --------                   --------
    Revenue Source
    New vehicles          7,852    8,321    (5.6)%     7.7%     7.9%   (2.5)%
    Used vehicles         5,333    4,868      9.5%    10.2%     9.0%   13.3 %
    Finance & insurance
     and other            9,815   12,028   (18.4)%    91.7%    94.0%   (2.4)%
                         -------  -------  -------
    Subtotal             23,000   25,217    (8.8)%
    Parts, service &
     collision repair    12,122   12,260    (1.1)%    50.0%    50.1%   (0.0)%
                         -------  -------  -------  -------  -------  -------
    Total                35,122   37,477    (6.3)%    18.6%    19.0%   (2.1)%
                         -------  -------  -------  -------  -------  -------
                         -------  -------  -------  -------  -------  -------


                                     For the Nine Months Ended
                                Gross Profit            Gross Profit %
    (In thousands of
     dollars except
     % change and       Sept 30, Sept 30,      %   Sept 30, Sept 30,     %
     gross profit %)       2009     2008    Change    2009     2008    Change
                                          --------                   --------
    Revenue Source
    New vehicles         19,891   24,220   (17.9)%     7.3%     7.4%   (1.4)%
    Used vehicles        14,259   14,121      1.0%     9.6%     8.5%   12.9 %
    Finance & insurance
     and other           27,635   34,167   (19.1)%    91.9%    94.2%   (2.4)%
                         -------  -------  -------
    Subtotal             61,785   72,508   (14.8)%
    Parts, service &
     collision repair    36,297   35,255      3.0%    49.8%    48.5%     2.7%
                         -------  -------  -------  -------  -------  -------
    Total                98,082  107,763    (9.0)%    18.7%    17.9%     4.5%
                         -------  -------  -------  -------  -------  -------
                         -------  -------  -------  -------  -------  -------

    

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 million. The costs of issuance of the units were $8.523 million. Concurrent with the closing of the IPO, the Fund used the net cash proceeds from the IPO to acquire a 50.4% indirect interest in AutoCanada LP which used such net proceeds to acquire, through various limited partnerships, the net assets (the "Acquired Business") of Canada One Auto Group ("CAG" or the "Vendors"). In connection with this transaction, 10,047,500 Exchangeable Units were issued to the Vendors in the amount of $10 per unit for a total of $100.475 million. On May 31, 2006, the underwriters exercised their over-allotment option for 740,000 additional units for $7.400 million thereby increasing the interest of the Fund to 54.05%.

In August of 2008, the Fund announced it had received regulatory approval from the Toronto Stock Exchange to purchase for cancellation, from time to time, the Funds issued and outstanding units subject to limits discussed later in this report. As at June 30, 2009, the Fund has cancelled all repurchased units. As a result of the normal course issuer bid, there were 10,573,430 Fund units issued and outstanding. The Fund now owns an indirect 53.2% interest in AutoCanada LP.

Prior to December 31, 2010, income tax obligations relating to distributions from the Fund are expected to be obligations of unitholders. As a result of new tax legislation, substantively enacted on June 12, 2007, the Fund recognized non-cash future income tax expense each quarter commencing in quarters ended after June 30, 2007. It would be inappropriate for the Fund to recognize current income tax expense until the new tax becomes effective on January 1, 2011 at which point the distributions made by the Fund will be subject to the then applicable tax rate which at current activity levels would be 27.3% for 2011 and 25.8% for 2012 and beyond. The new tax rate will apply to the taxable income of the Fund which allows the Fund claim deductions from net income for tax purposes related to balances that have accumulated in various tax pools. Until such time as the new legislated tax becomes effective in 2011 the new tax does not impact the cash earnings of the business provided that distributions will continue to exceed the taxable income of the Fund, the Fund continues to operate within the rules outlined with the Specified Investment Flow-Through (SIFT) legislation and the Fund does not convert into a taxable corporation prior to December 31, 2010.

AutoCanada is Canada's only publicly traded entity with interests exclusively in the operation of franchised automobile dealerships. Through its 53% interest in AutoCanada LP, it presently owns or manages 22 franchised automobile dealerships in six provinces and has over 1,100 employees. Through its owned and managed dealerships, it currently sells Chrysler, Dodge, Jeep(R), Infiniti, Nissan, Hyundai, Subaru, Volkswagen and Mitsubishi branded vehicles. In 2008, its owned and managed dealerships sold approximately 23,700 vehicles, processed approximately 277,300 service and collision repair orders in 284 service bays, and generated revenue of approximately $827 million.

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.

In particular, material forward-looking statements in this press release include:

    
    -   significant challenges the Fund may face as a result of the sharp
        decline in demand for new vehicles as a result of the global
        recession and credit crisis.
    -   assumptions of future credit and market conditions
    -   assumptions regarding the effect of conversion to a corporation on
        the Fund's results
    

Although we believe that the expectations reflected by the forward-looking statements presented in this release are reasonable, our forward-looking statements have been based on assumptions and factors concerning future events that may prove to be inaccurate. Those assumptions and factors are based on information currently available to us about ourselves and the businesses in which we operate. Information used in developing forward-looking statements has been acquired from various sources including third-party consultants, suppliers, regulators, and other sources. In some instances, material assumptions are disclosed elsewhere in this release in respect of forward-looking statements.

The Fund'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

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. 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.

References to "standardized distributable cash" and "adjusted distributable cash" are to cash flow provided by operating activities available for distribution to unitholders of the Fund (the "Unitholders") in accordance with the distribution policies of the Fund. Standardized distributable cash and adjusted distributable cash of the Fund are measures generally used by Canadian open-ended trusts as an indicator of financial performance. As two 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 standardized distributable cash and adjusted distributable cash of the Fund are useful supplemental measures that may assist prospective investors in assessing an investment in the Fund. Standardized distributable cash is calculated as cash flows from operating activities, including the effects of changes in non-cash working capital, less total capital expenditures. Adjusted distributable cash is calculated as cash flows provided by operating activities before changes in non-cash working capital, less purchases of non-growth property and equipment.

References to "standardized payout ratio" represent a comparison of distributions declared to standardized distributable cash. References to "adjusted payout ratio" represent a comparison of distributions declared to adjusted distributable cash. Management believes that both standardized payout ratio and adjusted payout ratio are indicators of the Fund's conservatism and its ability to continue to make distributions to Unitholders at current rates.

EBITDA, standardized distributable cash, adjusted distributable cash, standardized payout ratio and adjusted payout ratio are not earnings measures recognized by GAAP and do not have standardized meanings prescribed by GAAP. Investors are cautioned that EBITDA, standardized distributable cash, adjusted distributable cash, standardized payout ratio and adjusted payout ratio 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, adjusted distributable cash, and adjusted payout ratio may differ from the methods used by other issuers. Therefore, the Fund's EBITDA, adjusted distributable cash, and adjusted payout ratio may not be comparable to similar measures presented by other issuers. For a reconciliation of adjusted distributable cash to standardized distributable cash, please see "Adjusted Distributable Cash" below.

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. 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
    Interim Consolidated Balance Sheet
    -------------------------------------------------------------------------

    (expressed in Canadian dollar thousands)

                                                 September 30,   December 31,
                                                         2009           2008
                                                   (unaudited)
    ASSETS                                                  $              $
    Current assets
    Cash and cash equivalents                          23,224         19,592
    Restricted cash                                         -          3,238
    Accounts receivable                                38,134         31,195
    Inventories (note 3)                              107,431        139,948
    Prepaid expenses                                    1,929          1,565
                                                    ----------     ----------

                                                      170,718        195,538

    Property & equipment                               18,427         17,227
    Intangible assets                                  43,700         43,700
    Future income taxes (note 2(a) & 10)                  384            585
    Other assets                                           54             54
                                                    ----------     ----------

                                                      233,283        257,104
                                                    ----------     ----------
                                                    ----------     ----------

    LIABILITIES
    Current liabilities
    Accounts payable and accrued liabilities           26,090         21,990
    Revolving floorplan facilities (note 4)           105,254        137,453
    Distributions payable (note 8)                          -          1,656
    Current portion of long term debt (note 5)          4,472            570
                                                    ----------     ----------

                                                      135,816        161,669

    Long term debt (note 5)                            19,064         25,522
                                                    ----------     ----------

                                                      154,880        187,191
                                                    ----------     ----------
    Contingencies (note 6)

    UNITHOLDERS' EQUITY
    Fund units (note 7(a) and (c))                    101,588        101,588
    Exchangeable units (note 7(d))                     88,847         88,847
    Contributed surplus (note 7(e))                     3,894          3,822
    Deficit                                          (115,926)      (124,344)
                                                    ----------     ----------

                                                       78,403         69,913
                                                    ----------     ----------

                                                      233,283        257,104
                                                    ----------     ----------
                                                    ----------     ----------


    Approved on behalf of the Fund:

    (Signed) "Gordon R. Barefoot"  Trustee  (Signed) "Robin Salmon"  Trustee



    AutoCanada Income Fund
    Interim Consolidated Statement of Operations, Comprehensive Income (Loss)
    -------------------------------------------------------------------------
    and Deficit
    -----------

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

                          Three          Three           Nine           Nine
                   Months ended   Months ended   Months ended   Months ended
                   September 30,  September 30,  September 30,  September 30,
                           2009           2008           2009           2008
                     (unaudited)    (unaudited)    (unaudited)    (unaudited)
                                   (Restated -                   (Restated -
                                     Note 2(d))                    Note 2(d))
                              $              $              $              $
    Revenue
    Vehicles            185,569        189,474        506,064        565,743
    Parts, service and
     collision repair    26,942         26,492         80,660         76,638
    Other                   356            720          1,212          1,746
                    ---------------------------------------------------------

                        212,867        216,686        587,936        644,127
    Cost of sales
     (note 3)           174,028        176,346        480,091        530,702
                    ---------------------------------------------------------

    Gross profit         38,839         40,340        107,845        113,425
                    ---------------------------------------------------------

    Expenses
    Selling, general
     and administrative  30,565         30,491         88,828         86,723
    Interest              2,201          2,151          5,202          6,732
    Amortization            937            885          2,711          2,414
    Goodwill impairment       -         47,000              -         47,000
                    ---------------------------------------------------------

                         33,703         80,527         96,741        142,869
                    ---------------------------------------------------------

    Earnings (loss)
     before income taxes  5,136        (40,187)        11,104        (29,444)
    Future income taxes
     (recovery) (note
     2(a) & 10)              37         (1,869)           201         (1,391)
                    ---------------------------------------------------------

    Net earnings (loss)
     & comprehensive
     income (loss) for
     the period           5,099        (38,318)        10,903        (28,053)
                    ---------------------------------------------------------

    Deficit, beginning
     of period - as
     previously stated (121,025)       (17,233)      (124,344)       (16,968)
    Change in
     accounting policy
     related to future
     income taxes
     (note 2(a))              -          8,385              -          7,979
    Distributions
     declared (note 8)        -         (5,057)        (2,485)       (15,181)
                    ---------------------------------------------------------

    Deficit, end of
     period            (115,926)       (52,223)      (115,926)       (52,223)
                    ---------------------------------------------------------
                    ---------------------------------------------------------

    Earnings (loss)
     per unit
    Basic                 0.256         (1.892)         0.548         (1.385)
                    ---------------------------------------------------------
                    ---------------------------------------------------------
    Diluted               0.256         (1.892)         0.548         (1.385)
                    ---------------------------------------------------------
                    ---------------------------------------------------------

    Weighted average
     units
    Basic            19,880,930     20,249,732     19,880,930     20,254,560
                    ---------------------------------------------------------
                    ---------------------------------------------------------

    Diluted          19,880,930     20,249,732     19,880,930     20,254,560
                    ---------------------------------------------------------
                    ---------------------------------------------------------



    AutoCanada Income Fund
    Interim Consolidated Statement of Cash Flows
    -------------------------------------------------------------------------
    (expressed in Canadian dollar thousands)

                          Three          Three           Nine           Nine
                   Months Ended   Months Ended   Months ended   Months ended
                   September 30,  September 30,  September 30,  September 30,
                           2009           2008           2009           2008
                     (unaudited)    (unaudited)    (unaudited)    (unaudited)
    Cash provided by
     (used in)                $              $              $              $

    Operating activities
    Net earnings
     (loss) for the
     period               5,099        (38,318)        10,903        (28,053)
    Items not affecting
     cash
      Future income
       taxes (recovery)
       (note 10)             37         (1,869)           201         (1,391)
      Unit based
       compensation
       (note 7(e))           11             19             72            121
      Amortization          937            885          2,711          2,414
      (Gain) loss on
       disposal of
       property &
       equipment             17            (21)             8             (7)
      Goodwill impairment     -         47,000              -         47,000
                    ---------------------------------------------------------

                          6,101          7,696         13,895         20,084
    Net change in
     non-cash working
     capital balances     3,556          2,760         (4,841)         6,918
                    ---------------------------------------------------------

                          9,657         10,465          9,054         27,002
                    ---------------------------------------------------------

    Investing
     activities
    Business
     acquisitions-            -         (8,297)             -        (20,801)
    Purchase of
     property &
     equipment             (458)        (1,662)        (3,698)        (3,335)
    Proceeds on sale
     of other assets
     (net of purchases)       -             37              -             25
    Proceeds on sale
     of property &
     equipment               37            223             92            247
    Restricted cash         925           (941)         3,238            442
                    ---------------------------------------------------------

                            504         (10,640)         (367)       (23,422)
                    ---------------------------------------------------------
    Financing
     activities
    Proceeds from long
     term debt                -           6,495           286         13,561
    Repayment of long
     term debt           (1,779)           (224)       (2,856)          (485)
    Repurchase of
     Fund units               -            (295)            -           (295)
    Distributions paid
     to Unitholders           -          (5,057)       (2,485)       (15,181)
                    ---------------------------------------------------------

                         (1,779)            919        (5,055)        (2,400)
                    ---------------------------------------------------------

    Increase in cash      8,382             735         3,632          1,180
    Cash and cash
     equivalents,
     beginning of
     period              14,842          18,459        19,592         18,014
                    ---------------------------------------------------------

    Cash and cash
     equivalents, end
     of period           23,224          19,194        23,224         19,194
                    ---------------------------------------------------------
                    ---------------------------------------------------------

    Supplementary
     information
      Cash interest
       paid               1,921           2,114         4,713          6,723
      Transfer of
       inventory to
       property &
       equipment            640              60         1,006            863
      Transfer of
       property &
       equipment to
       inventory            286             135           706            544
    

SOURCE AUTOCANADA INCOME FUND

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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