AutoCanada Inc. releases financial results for the reporting period ended
September 30, 2010 and declares a quarterly dividend of $0.04 per common
share:
A conference call to discuss the results for the reporting period ended September 30, 2010 will be held on November 5, 2010 at 10:00 a.m. Eastern time. To participate in the conference call, please dial 1-888-231-8191 or (647) 427-7450 approximately 10 minutes prior to the call. A live and archived audio webcast of the conference call will also be available on the Company's website www.autocan.ca.
EDMONTON, Nov. 4 /CNW/ - AutoCanada Inc. (the "Company" or "AutoCanada") (TSX: ACQ) today announced financial results for the reporting period ended September 30, 2010:
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2010 Third Quarter Operating Results
- Revenue increased by 9.5% or $20.3 million
- Same store revenue increased by 6.7% or $12.8 million
- Gross profit decreased by 1.3% or $0.5 million
- Same store gross profit decreased by 4.0% or $1.4 million
- Pre-tax earnings decreased by 47.4% to $2.7 million from $5.1 million
- EBITDA decreased 40.2% to $4.0 million from $6.7 million
- Net earnings decreased by 60.7% to $2.0 million from $5.1 million
- Repair orders completed for the quarter were down 2.6%
- The number of new vehicles retailed increased by 3.7%
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In commenting on the financial results for the three months ended September 30, 2010, Pat Priestner, Chief Executive Officer of AutoCanada Inc. stated that, "The Company's third quarter operating results reflect the challenges we have met. Although I am not satisfied with the level of profitability, I am confident that the management reorganization, once completed, will improve our SG&A over the long term and contribute to more positive earnings in the future." Mr. Priestner further stated, "The used vehicle market, which has proved challenging for new car dealerships in general, and which has resulted in increased wholesale losses due to aging, combined with reduced margins from a more competitive used market, has resulted in Management better monitoring used inventory levels which together with new systems for purchasing and marketing of used vehicles, should improve used vehicle turnover and gross margins. With these changes I am confident that we can look to improved profitability and am pleased that the Board has approved the $0.04 per share dividend."
Third Quarter 2010 Highlights
- Net earnings of $2.0 million or basic and diluted earnings per share
of $0.101.
- Pre-tax earnings of $2.7 million or basic and diluted pre-tax
earnings per share of $0.136.
- Same store revenue increased by 6.7% in the third quarter of 2010,
compared to the same quarter in 2009.
- Same store gross profit decreased by 4.0% in the third quarter of
2010, compared to the same quarter in 2009.
- Revenue from existing and new dealerships increased 9.5% to
$233.1 million in the third quarter of 2010 from $212.9 million in
the same quarter in 2009.
- Gross profit from existing and new dealerships decreased 1.3% to
$38.3 million in the third quarter of 2010 from $38.8 million in the
same quarter in 2009.
- EBITDA decreased 40.2% to $4.0 million in the third quarter of 2010
from $6.7 million in the same quarter in 2009.
- Free cash flow generated of $0.216 per share and adjusted free cash
flow of $0.184 in the third quarter of 2010.
Declaration of a Quarterly Dividend
The Board of Directors of AutoCanada declared today a quarterly eligible dividend of $0.04 per common share on AutoCanada's outstanding Class A common shares, payable on December 15, 2010 to shareholders of record at the close of business on November 30, 2010.
SELECTED QUARTERLY FINANCIAL INFORMATION
The following table shows the unaudited results of the AutoCanada 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
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
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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
Income taxes (8,579) 97 67 37
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 284 319 319 321
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
Q4 Q1 Q2 Q3
2009 2010 2010 2010
Income Statement Data
New vehicles 102,880 115,395 146,664 143,872
Used vehicles 48,135 48,216 56,124 49,655
Parts, service &
collision repair 27,730 27,011 28,555 27,454
Finance, insurance &
other 10,252 10,918 12,958 12,138
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Revenue 188,997 201,540 244,301 233,119
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New vehicles 7,157 7,809 11,017 9,622
Used vehicles 4,309 3,977 4,720 4,021
Parts, service &
collision repair 13,447 13,106 14,443 13,833
Finance, insurance &
other 9,218 9,825 11,666 10,857
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Gross profit 34,131 34,717 41,846 38,333
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Gross profit % 18.1% 17.2% 17.1% 16.4%
Sales, general & admin
expenses 29,313 29,834 33,273 32,136
SG&A exp. as % of gross
profit 85.9% 85.9% 79.5% 83.8%
Floorplan interest expense 1,382 1,661 2,198 2,022
Other interest & bank
charges 552 362 442 442
Income taxes 248 522 1,337 699
Net earnings(4) 1,675 1,433 3,647 2,002
EBITDA(1)(4) 3,271 3,079 6,180 4,014
Operating Data
Vehicles (new and used)
sold 5,451 5,676 7,017 6,363
New retail vehicles sold 2,559 2,787 3,613 3,358
New fleet vehicles sold 695 661 943 844
Used retail vehicles sold 2,197 2,228 2,461 2,161
Number of service &
collision repair orders
completed 76,853 75,311 80,072 77,285
Absorption rate(2) 91% 85% 87% 85%
No. of dealerships 22 22 23 23
No. of same store
dealerships(3) 19 19 19 19
No. of service bays at
period end 331 331 339 339
Same store revenue
growth(3) 1.3% 16.9% 19.4% 6.7%
Same store gross profit
growth(3) (1.1)% 11.1% 7.5% (4.0)%
Balance Sheet Data
Cash and cash equivalents 22,465 23,615 31,880 34,329
Accounts receivable 35,388 40,752 46,826 37,149
Inventories 108,324 153,847 177,524 137,507
Revolving floorplan
facilities 102,650 160,590 194,388 145,652
(1) EBITDA has been calculated as described under "NON-GAAP MEASURES".
(2) Absorption has been calculated as described under "NON-GAAP
MEASURES".
(3) Same store revenue growth & same store gross profit growth is
calculated using franchised automobile dealerships that we have owned
for at least 2 full years.
(4) The results from operations have been lower in the first and fourth
quarters of each year, largely due to consumer purchasing patterns
during the holiday season, inclement weather and the reduced number
of business days during the holiday season. As a result, our
financial performance is generally not as strong during the first and
fourth quarters than during the other quarters of each fiscal year.
The timing of acquisitions may have also caused substantial
fluctuations in operating results from quarter to quarter.
Same Store Revenue and Vehicles Sold
For the Three Months Ended For the Nine Months Ended
---------------------------- ----------------------------
(In thousands
of dollars
except % Sept- Sept- Sept- Sept-
change and ember 30, ember 30, % ember 30, ember 30, %
vehicle data) 2010 2009 Change 2010 2009 Change
Revenue Source
New vehicles 124,018 103,397 19.9% 356,862 275,649 29.5%
Used vehicles 45,373 52,530 (13.6)% 142,419 150,723 (5.5)%
Finance &
insurance and
other 10,110 10,764 (6.1)% 31,127 30,273 2.8%
---------------------------- ----------------------------
Subtotal 179,501 166,691 530,408 456,645
Parts, service
& collision
repair 24,389 24,424 (0.1)% 74,249 73,537 1.0%
---------------------------- ----------------------------
Total 203,890 191,115 6.7% 604,657 530,182 14.0%
---------------------------- ----------------------------
New vehicles
- retail sold 2,753 2,773 (0.7)% 8,281 7,391 12.0%
New vehicles
- fleet sold 835 614 36.0% 2,423 1,490 62.6%
Used vehicles
sold 1,936 2,371 (18.3)% 6,258 6,977 (10.3)%
---------------------------- ----------------------------
Total 5,524 5,758 (4.1)% 16,962 15,858 7.0%
---------------------------- ----------------------------
Total vehicles
retailed 4,689 5,144 (8.8)% 14,539 14,368 1.2%
---------------------------- ----------------------------
The following table summarizes the gross profit for the three and nine months ended September 30, 2010 on a same store basis by revenue source and compares these results to the same period in 2009.
Same Store Gross Profit and Gross Profit Percentage
(In thousands
of dollars
except % For the Three Months Ended
change and Gross Profit Gross Profit %
gross Sept 30, Sept 30, % Sept 30, Sept 30, %
profit %) 2010 2009 Change 2010 2009 Change
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Revenue Source
New vehicles 8,425 7,945 6.0% 6.8% 7.7% (0.9)%
Used vehicles 3,756 5,351 (29.8)% 8.3% 10.2% (1.9)%
F&I and other 9,343 9,871 (5.3)% 92.4% 91.7% 0.7%
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Subtotal 21,524 23,167 (7.1)%
Parts, service
& collision
repair 12,462 12,236 1.9% 51.1% 50.1% 1.0%
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Total 33,986 35,403 (4.0)% 16.7% 18.5% (1.8)%
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(In thousands
of dollars
except % For the Nine Months Ended
change and Gross Profit Gross Profit %
gross Sept 30, Sept 30, % Sept 30, Sept 30, %
profit %) 2010 2009 Change 2010 2009 Change
------ ------
Revenue Source
New vehicles 25,216 20,070 25.6% 7.1% 7.3% (0.2)%
Used vehicles 12,009 14,335 (16.2)% 8.4% 9.5% (1.1)%
F&I and other 28,787 27,802 3.5% 92.5% 91.8% 0.7%
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Subtotal 66,012 62,207 6.3%
Parts, service
& collision
repair 37,193 36,630 1.5% 50.1% 49.8% 0.3%
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Total 103,205 98,837 4.4% 17.1% 18.6% (1.5)%
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About AutoCanada
AutoCanada is one of Canada's largest multi-location automobile dealership groups, currently operating 23 franchised dealerships in British Columbia, Alberta, Manitoba, Ontario, New Brunswick and Nova Scotia. In 2009, the 22 franchised automobile dealerships owned by the Company at that time, sold approximately 23,000 vehicles and processed approximately 300,000 service and collision repair orders in our 331 service bays.
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:
- Our expectation of improvement in SG&A expense and overall
profitability over the long term as a result of actions taken in the
third quarter;
- Used vehicle systems and marketing and its effect on turnover and
gross margins;
The foregoing factors are further discussed in the Company's Annual Information Form dated March 22, 2010 which is filed on SEDAR at www.sedar.com.
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
Our press release contains certain financial measures that do not have any standardized meaning prescribed by Canadian GAAP. Therefore, these financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned these measures should not be construed as an alternative to net earnings (loss) or to cash provided by (used in) operating, investing, and financing activities determined in accordance with Canadian GAAP, as indicators of our performance. We provide these measures to assist investors in determining our ability to generate earnings and cash provided by (used in) operating activities and to provide additional information on how these cash resources are used. We list and define these "NON-GAAP MEASURES" below:
EBITDA
EBITDA is a measure commonly reported and widely used by investors as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. The Company believes EBITDA assists investors in comparing a company's performance on a consistent basis without regard to depreciation and amortization and asset impairment charges which are non-cash in nature and can vary significantly depending upon accounting methods or non-operating factors such as historical cost. References to "EBITDA" are to earnings before interest expense (other than interest expense on floorplan financing and other interest), income taxes, depreciation, amortization and asset impairment charges.
Free Cash Flow
Free cash flow is a measure used by management to evaluate its performance. While the closest Canadian GAAP measure is cash provided by operating activities, free cash flow is considered relevant because it provides an indication of how much cash generated by operations is available after capital expenditures. It shall be noted that although we consider this measure to be free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes. Investors should be cautioned that free cash flow may not actually be available for growth or distribution of the Company. References to "Free cash flow" are to cash provided by (used in) operating activities (including the net change in non-cash working capital balances) less capital expenditures (not including acquisitions of dealerships and dealership facilities).
Adjusted Free Cash Flow
Adjusted free cash flow is a measure used by management to evaluate its performance. Free cash flow is considered relevant because it provides an indication of how much cash generated by operations before changes in non-cash working capital is available after deducting expenditures for non-growth capital assets. It shall be noted that although we consider this measure to be adjusted free cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for distributions, re-investment in the Company, potential acquisitions, or other purposes. Investors should be cautioned that adjusted free cash flow may not actually be available for growth or distribution of the Company. References to "Adjusted free cash flow" are to cash provided by (used in) operating activities (before changes in non-cash working capital balances) less non-growth capital expenditures.
Absorption Rate
Absorption rate is an operating measure commonly used in the retail automotive industry as an indicator of the performance of the parts, service and collision repair operations of a franchised automobile dealership. Absorption rate is not a measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, absorption rate may not be comparable to similar measures presented by other issuers that operate in the retail automotive industry. References to ''absorption rate'' are to the extent to which the gross profits of a franchised automobile dealership from parts, service and collision repair cover the costs of these departments plus the fixed costs of operating the dealership, but does not include expenses pertaining to our head office. For this purpose, fixed operating costs include fixed salaries and benefits, administration costs, occupancy costs, insurance expense, utilities expense and interest expense (other than interest expense relating to floor plan financing) of the dealerships only.
Cautionary Note Regarding Non-GAAP Measures
EBITDA and Free Cash Flow are not earnings measures recognized by GAAP and do not have standardized meanings prescribed by GAAP. Investors are cautioned that these non-GAAP measures should not replace net earnings or loss (as determined in accordance with GAAP) as an indicator of the Company's performance, of its cash flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Company's methods of calculating EBITDA and Free Cash Flow may differ from the methods used by other issuers. Therefore, the Company's EBITDA and Free Cash Flow may not be comparable to similar measures presented by other issuers.
Additional information about AutoCanada Inc. is available at the Company's website at www.autocan.ca and www.sedar.com.
AutoCanada Inc.
Interim Consolidated Balance Sheet
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(expressed in Canadian dollar thousands)
September December
30, 2010 31, 2009
(Unaudited)
$ $
ASSETS
Current assets
Cash and cash equivalents 34,329 22,465
Accounts receivable 37,149 35,388
Inventories 137,507 108,324
Prepaid expenses 1,960 1,649
Future income taxes - 500
--------- ---------
210,945 168,326
Property & equipment 23,974 17,794
Intangible assets 45,059 43,700
Goodwill 221 -
Future income taxes - 1,647
Prepaid rent 3,423 2,142
Other assets 56 56
--------- ---------
283,678 233,665
--------- ---------
--------- ---------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 25,366 25,556
Revolving floorplan facilities 145,652 102,650
Income taxes payable 1,227 -
Current portion of long-term debt 443 271
Future income taxes - 2,012
--------- ---------
172,688 130,489
Long-term debt 24,200 23,074
Future income taxes 1,196 -
--------- ---------
198,084 153,563
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Economic dependence
SHAREHOLDERS' EQUITY
Share capital 190,435 190,435
Contributed surplus 3,918 3,918
Deficit (108,759) (114,251)
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85,594 80,102
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283,678 233,665
--------- ---------
--------- ---------
Approved on behalf of the Company:
(Signed) "Gordon R. Barefoot" Director
(Signed) "Robin Salmon" Director
AutoCanada Inc.
Interim Consolidated Statement of Operations, Comprehensive Income and
Deficit
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(expressed in Canadian dollar thousands except share and per share
amounts)
Three Three Nine Nine
Months Months Months Months
ended ended ended ended
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
Revenue
Vehicles 204,856 185,569 594,044 506,064
Parts, service and
collision repair 27,545 26,942 83,347 80,660
Other 718 356 1,569 1,212
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233,119 212,867 678,960 587,936
Cost of sales 194,786 174,028 564,063 480,091
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Gross profit 38,333 38,839 114,897 107,845
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Expenses
Selling, general and
administrative 32,136 30,565 95,243 88,828
Interest 2,464 2,201 7,127 5,202
Amortization 1,032 937 2,887 2,711
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35,632 33,703 105,257 96,741
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Earnings before income
taxes 2,701 5,136 9,640 11,104
Income taxes 699 37 2,558 201
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Net earnings & comprehensive
income for the period 2,002 5,099 7,082 10,903
Deficit, beginning
of period (109,966) (121,025) (114,251) (124,344)
Dividends declared (795) - (1,590) (2,485)
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Deficit, end of period (108,759) (115,926) (108,759) (115,926)
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Earnings per share
Basic and diluted 0.101 0.256 0.356 0.548
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Weighted average shares
Basic and diluted 19,880,930 19,880,930 19,880,930 19,880,930
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AutoCanada Inc.
Interim Consolidated Statement of Cash Flows
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(expressed in Canadian dollar thousands)
Three Three Nine Nine
Months Months Months Months
ended ended ended ended
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
(unaudited) (unaudited) (unaudited) (unaudited)
Cash provided by
(used in) $ $ $ $
Operating activities
Net earnings for the
period 2,002 5,099 7,082 10,903
Items not affecting cash
Future income taxes 1,005 37 1,331 201
Unit based compensation - 11 - 72
Amortization 1,032 937 2,887 2,711
(Gain) loss on disposal
of property & equipment (10) 17 (12) 8
------------------------------------------------
4,029 6,101 11,288 13,895
Net change in non-cash
working capital
balances 841 3,556 13,970 (4,841)
------------------------------------------------
4,870 9,657 25,258 9,054
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Investing activities
Business acquisitions - - (3,550) -
Prepayment of rent (427) - (1,281) -
Purchase of property &
equipment (6,660) (458) (8,358) (3,698)
Proceeds on sale of
property & equipment 23 37 87 95
Restricted cash - 925 - 3,236
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(7,064) 504 (13,102) (367)
------------------------------------------------
Financing activities
Proceeds from long
term debt 5,510 - 5,510 286
Repayment of long
term debt (72) (1,779) (4,212) (2,856)
Dividends paid (795) - (1,590) (2,485)
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4,643 (1,779) (292) (5,055)
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Increase in cash 2,449 8,382 11,864 3,632
Cash and cash equivalents,
beginning of period 31,880 14,842 22,465 19,592
------------------------------------------------
Cash and cash equivalents,
end of period 34,329 23,224 34,329 23,224
------------------------------------------------
------------------------------------------------
Supplementary information
Cash interest paid 2,642 1,921 7,184 4,713
Transfer of inventory
to property & equipment 524 640 1,026 1,006
Transfer of property &
equipment to inventory 231 286 642 706
For further information: Tom Orysiuk, CA, Executive Vice-President and Chief Financial Officer, Phone: (780) 732-3139, Email: [email protected]
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