Canadian Tire Corporation Investors

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					Canadian Tire Corporation
              August 2009
Forward-looking I f
F                    i
      d l ki Information

                                                 forward looking.          forward-looking
This disclosure contains statements that are forward-looking These forward looking statements
relate to, among other things, our objectives, goals, strategies, intentions, plans, beliefs,
expectations and estimates, and can generally be identified by the use of words such as “may”,
“will”, “could”, “should”, “would”, “suspect”, “outlook”, “expect”, “intend”, “estimate”, “anticipate”,
“believe”, “plan”, “forecast”, “objective” and “continue” (or the negative thereof) and words and
expressions of similar import, and include statements concerning possible or assumed future
results.                                                                     forward-looking
results Certain material factors or assumptions are applied in making forward looking
statements, and actual results may differ materially from those expressed or implied in such
statements. Information about material factors that could cause actual results to differ materially
from expectations and about material factors or assumptions applied in making forward-looking
statements may be found in the body of this document, as well as in the Q2 2009
Management’s Discussion and Analysis (“MD&A”).
The forward-looking information contained in this document is presented for the purpose of
assisting the Company's security holders and financial analysts in understanding its financial
position and results of operations as at and for the periods ended on the dates presented and
the Company’s strategic priorities and objectives, and may not be appropriate for other
purposes. When relying on the forward-looking statements to make decisions with respect to
    Company, investors                should carefully
the Compan in estors and others sho ld caref ll consider the foregoing factors and other
uncertainties and potential events. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, such statements involve risks and
uncertainties, and undue reliance should not be placed on such statements. The Company
does not undertake to update any forward-looking statements, including those statements that
         p         y                                                   y
are incorporated by reference herein, whether written or oral, that may be made from time to
time by or on its behalf, except in accordance with applicable securities laws.



                                                                                                          2
            Five Di i    Yet Interrelated, B i
            Fi Distinct, Y I        l d Businesses




  CTR                      Financial Services      Mark’s                   Petroleum              PartSource
  475 stores               >5 million              375 stores               273 gas bars           88 stores
                           MasterCard accounts

  Canadian Tire Retail     Canadian Tire           Mark’s Work              Canadian Tire          PartSource is an 88-
     Canada s
  is Canada’s most         Financial Services      Wearhouse is a           Petroleum is one of    store strong
  shopped general          offers Canadian Tire-   leading clothing and     Canada’s largest       specialty retail
  merchandise retailer     branded credit cards,   footwear retailer –      independent            network, as well as a
  and a leader in each     personal loans, lines   the largest              gasoline retailers     supplier for
  of its three core        of credit, insurance    Canadian industrial      with 273 gas bars      Canadian Tire
  product categories –     and warranty            apparel and              including 267          Retail’s cornerstone
                 Leisure
  Automotive , Leisure,    products as well as
                           products,                         retailer
                                                   footwear retailer, the   convenience stores     automotive
  and Home .               residential mortgages   2nd largest casual       and kiosks and 73      business. Its expert
                           and high-interest       pants and jeans          car washes, creating   staff sells
                           savings accounts and    retailer.                customer loyalty to    competitively priced
                           the One-and-OnlyTM                               drive growth for       auto parts, catering
                           account.                                         Canadian Tire Retail   to professional
                                                                               d Canadian Ti
                                                                            and C     di Tire         t    ti i t ll
                                                                                                   automotive installers
                                                                            Financial Services.    and serious do-it-
Canadian Tire’s products and services provide                                                      yourselfers.
                   the essentials of everyday living for people of all ages
                                                                                                                           3
      Core A
      C    Assets


 Store Networks
     – Canadian Tire Retail: approximately 400 new or rebuilt stores since 1994
     – Mark’s: approximately 280 stores built, upgraded or acquired since 2002
     – Petroleum: 2/3 of sites now upgraded or rebranded
     – PartSource: now has close to 100 sites, including 9 Hub stores


 Supply Chain
     – New Canadian Tire Retail DC in Eastern Quebec


 All Financial Services credit cards relaunched with PayPass technology in 2008




                                                                                   4
   Strategic and O
   S      i            i   l Strengths
               d Operational S      h


 One of Canada’s most trusted brands
 Loyal customer base across all of our businesses
 Products and service offering targeted at the needs (not just wants) of everyday
  Canadian families at competitive prices
 Financial Services one of the best run credit card businesses in the country – very
  capable risk management team
 Financially strong company, fully funded and able to adapt and respond to the
  changing Canadian economy




                                                            We are well-positioned
                                                    for days like today and tomorrow



                                                                                        5
         Strategic P i i i
    2009 S      i Priorities


 Three fundamental priorities as we continue to grow and
  benefit from our strong brand:


     – Driving productivity and efficiency
     – Investments in growth
     – Enhancing financial flexibility




  2009 focus will be based on a balanced approach to
                                 maximize earnings potential




                                                               6
      Focused on Productivity and Efficiency


Initiative                    Future Impact / Rationale


Automotive Infrastructure     Strengthened technology platform, significantly enhanced supply chain, and
                              improved customer service; capture long-term top line and bottom line benefits


Canadian Tire Retail Change   More efficient promotional planning, pricing management, and vendor relationship
Program                       management


Technology Renewal            Upgrade of the technology infrastructure that supports Canadian Tire Retail,
                              Petroleum and PartSource; will provide increased functionality, reduced risk, lower
                              operating costs and a simplified architecture

Financial Services            Technology investments and process improvements continue to drive down
                              operating costs as a percentage of receivables




                                                                                                                    7
      Growth Initiatives

Initiative                      Future Impact / Rationale


Real estate projects            Focused growth and upgrade of network to strengthen brand and generate returns,
                                including CTR capital-light formats with 10% IRR
                                       •40 Canadian Tire Retail stores (Smart and Small Market stores)
                                        24 Petroleum sites
                                       •24 P t l      it
                                       •27 Mark’s stores
                                       •22 PartSource stores


Financial Services              Drive managed growth of receivables with benefits of relaunched cards with
                                PayPass capability, testing of further new credit cards, and select investments in
                                balance transfer offers




                Reduction in gross capital expenses to approximately $326 million in 2009
                                                                                         ($472 million in 2008)
                                g g        g p                   g
                 Focused on managing working capital and investing in initiatives that will
                                                      deliver positive cash flow in 2009


                                                                                                                     8
    New C i l Li h S
    N                       Formats
        Capital-Light Store F

Smart Store                                       Small Market Store
   Next wave of renewal                             100+ underserved markets
   Dramatically different inside, store within      $5-9MM revenue
    store concept; Mark’s within each store          Capital light design – greater use of outdoor
   Higher productivity per square foot               space; intense merchandising; Mark’s within
   Capital-light: $0.6 - $1MM per store              each store & gas bar
   Test expansion into select food products,        5 in 2009
    including some frozen & refrigerated food
   35 in 2009




                                                                                                      9
                  Consolidated Hi hli h
          Q2 2009 C    lid d Highlights

  ($ in millions except per share            Q
                                             Q2 2009             Q2 20081
                                                                 Q                  Change
                                                                                        g            2009 YTD           2008 YTD1                  g
                                                                                                                                               Change
  amounts)

  Retail sales2                                2,789.1              2,949.5           (5.4)%             4,578.9              4,789.8            (4.4)%

  Gross operating revenue                      2,324.8              2,450.7           (5.1)%             4,082.9              4,276.0            (4.5)%

  EBITDA3, 4                                      250.1                216.6          15.5%                 406.2                391.1             3.9%

  EBITDA3, 4                                      189.2                169.5           11.6%                298.6                283.6             5.3%
  (   l di Financial S i
  (excluding Fi              )
                 i l Services)

  Adjusted net earnings4                          103.0                  94.7           8.8%                152.6                150.3             1.5%
  (excludes non-operating gains
  and losses)

  Adjusted basic earnings                           1 26
                                                    1.26                 1.16
                                                                         1 16           8.6%
                                                                                        8 6%                  1 87
                                                                                                              1.87                 1.84
                                                                                                                                   1 84            1 3%
                                                                                                                                                   1.3%
  per share4


( )
(1)           g
      2008 figures have been restated for the implementation, on a retrospective basis, of CICA HB 3064 – Goodwill and Intangible Assets and the
                                                 p            ,          p            ,                                        g
      amendments to CICA HB 1000 – Financial Statement Concepts.
(2)   Represents retail sales at CTR (which includes PartSource), Mark’s corporate and franchise stores and Petroleum’s sites.
(3)   We consider EBITDA to be an effective measure of the contribution of our businesses to our profitability on an operational basis before allocating the cost
      of interest, income taxes, depreciation and amortization.
(4)   Non-GAAP measure.

                                                                                                                                                                    10
           Financial Fl ibili
           Fi    i l Flexibility
Financing Source                 Amount          Description
                                 Available
Committed bank lines of credit   $1.22 billion   • Provided by 11 domestic and international financial institutions
                                                 • Supports the $800 million commercial paper program
                                                 • No amounts were drawn on the bank lines as at July 4, 2009
Commercial paper program         $800 million    • Canadian Tire had no commercial paper outstanding as at July 4, 2009

Medium Term Notes (MTN)          $750 million    • New Shelf Prospectus completed as of April 8, 2009, providing access
program                                            of up to $750 million
                                                 • $200 million was drawn upon as an MTN issuance in June 2009
Securitization of receivables    Transaction     • Handled through Glacier Credit Card Trust
                                 specific        • Financial Services has not securitized any credit card receivables in
                                                   2009 to date

Broker GIC deposits              No specified    • Funds are available through broker networks
                                 limit           • Financial Services held $1.6 billion in broker GIC deposits as at July 4,
                                                   2009
High Interest Savings Accounts   No specified    • Increased in the second quarter of 2009
                                 limit           • At the end of Q2 2009, Financial Services held $490 million in High
                                                   Interest Savings deposits
Sale/leaseback transactions      Transaction     • Strategic transactions involving Company owned properties
                                 specific          No transactions were completed i th second quarter of 2009
                                                 • N t         ti              l t d in the   d     t   f

        Securitization an important funding program, in the past and future, but we have alternatives

                                                                                                                               11
   Financial S i
   Fi                   Risk Management C
         i l Services - Ri k M                   i
                                        Competencies

 We have been on a journey over the last three years:
     – New technologies
     – Conservative credit limits
     – Reduced near prime exposure


 Action to manage future credit risk exposure:
       Third    t     i    f the ti     i k          t function
     – Thi d party review of th entire risk management f   ti
     – Reduced credit limits for cardholders
     – Enhanced predictive scorecards to identify high risk customer behaviour
     – Enhanced collection strategies
     – Newly developed bankruptcy model scorecards


               Focused on mitigating future credit risk exposure to ensure
                            we perform as well as we can in an economic downturn
                                                                                   12
       Managing P f li P fi bili
       M    i Portfolio Profitability


  The Financial Services Business Model:
  (Approximate Percentages of 2008 Average Receivables)



             Gross yield including insurance              25%
             Operating expenses                           7.0%
             Write-offs and bankruptcies                  6.0%
             Funding cost                                 5.0%
             Loyalty and other                            2.0%
                                                          = 5.0% ROR



We       th l    l f       ti            t di           i t t
W manage the level of operating expenses to drive a consistent
          4.5% to 5% return on receivables

                                                                       13
                   Financial S i
                   Fi                    Year K M i
                         i l Services 10 Y    Key Metrics
              Operating leverage has driven consistent performance
                                       1998A        1999A        2000A        2001A        2002A        2003A           2004A   2005A    2006A    2007A    2008A

Credit Card(1)

    Sales ($B)                             1.9          2.1          2.6          3.3          4.7          6.0           7.2      8.1      9.1     10.4     11.1

    GAAR(2) ($B)                           0.9          0.9          1.1          1.2          1.6          2.1           2.5      2.8      3.1      3.5      3.7

    Average Balance ($)                   556           681         758           729          930        1,164         1,436    1,614    1,736    1,899    2,031

    Yield                             22.59%       21.94%       20.68%       19.58%       17.28%       17.19%       16.84%      16.47%   16.08%   15.64%   15.74%


    Net Write-off Rate                 5.95%         5.87%       5.46%         5.43%        5.03%        5.90%          5.86%   6.15%    5.98%    5.67%    6.44%

Total Portfolio

    ROR(3)                             5.90%         6.10%       4.42%         5.37%        5.17%        4.81%          4.89%   4.77%    5.25%    5.11%    4.93%

    OPEX as a % of GAAR(4)            18.55%       18.32%       17.71%       15.15%       11.45%       10.28%           9.29%   8.37%    7.83%    7.89%    7.44%



      (1) Includes Retail Card & CT MasterCards
      (2) Gross Average Accounts Receivable
      (3) Excludes Securitization Gain/(Loss), LTIP, Gain on disposal of shares and gain/(loss) on disposal of assets
      (4) OPEX excludes LTIP

                                                                                                                                                              14
     Outlook
     O l k 2009/2010


 R ll t of 2 new capital-light CTR store f
  Roll-out f         it l li ht      t         t
                                          formats
 Continued network expansion at Mark’s and PartSource
 Reduction in gross capital expenses from approximately $472 million in 2008 to
         illi in
  $326 million i 2009
 Key productivity expenditures substantially complete: CTR change program,
  automotive infrastructure, IT renewal etc.
 C ti    d l /l      b k ti iti for b         t          ti     d Montreal
  Continued sale/leaseback activities f urban store properties and M t l DC
 Tax rates continue to decline
 $150 million Debentures @ 12.10% mature in May 2010


                                         A balanced plan for growth with a focus on
                                           driving efficiency and productivity,
                                  expense management and financial flexibility


                                                                                      15

				
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