A&W Revenue Royalties Income Fund

Press Releases

A&W Revenue Royalties Income Fund posts strong first quarter results

    A&W Revenue Royalties Income Fund will hold a conference call to discuss
    first quarter results on May 1, 2007 at 1:00 p.m. Pacific Time (4:00 p.m.
    Eastern Time). The call can be accessed by dialing toll-free 1-800-731-
    5319 or (416) 644-3423. A replay will be available until May 15, 2007, by
    dialing toll-free 1-877-289-8525 or (416) 640-1917 Passcode: 21227514
    followed by the number sign.

    TRADING SYMBOL: The Toronto Stock Exchange - AW.UN

    VANCOUVER, May 1 /CNW/ - A&W Revenue Royalties Income Fund (the Fund) and
A&W Trade Marks Inc. (Trade Marks) each reported today financial results for
the first quarter ended March 25, 2007. A copy of the full quarterly report
will be available at www.sedar.com and www.awincomefund.ca on or before May 8,
    The Fund enjoyed a strong quarter, with same store sales of the A&W
restaurants in the Royalty Pool increasing by 3.6% over the same quarter of
2006. This is the 16th consecutive quarter of same store sales increases.
During the quarter, total royalty income increased by 5.3%, resulting from the
same store sales increase plus the increased number of restaurants in the
Royalty Pool.
    "We are pleased with the same store sales growth of 3.6%, especially when
compared to the exceptionally strong results in the first quarter of 2006."
said Paul Hollands, President and Chief Executive Officer of A&W Food Services
of Canada Inc. "Our key strategic initiatives to attract baby boomer customers
continue to drive strong results and generate great momentum in the business."
    Total sales reported by A&W restaurants in the royalty pool increased by
$6,397,000 to $128,114,000 during the first quarter. As noted, this reflects
the same store sales growth and the increase in the number of restaurants in
the Royalty Pool from 654 to 660, effective December 31, 2006.
    Cash generated in the quarter to pay distributions and dividends
increased by 7.4% to $3,481,000. Distributable cash per fully diluted unit and
equivalents increased from 24.7 cents for the first quarter in 2006 to
25.9 cents in the first quarter of 2007. Monthly distributions of 10 cents per
unit per month were declared in the first quarter of 2007. The current monthly
distribution rate of 10 cents per unit translates into an annualized
distribution of $1.20 per unit, an increase of 3.9% over the 2006 annual
distribution of $1.155. In addition, a special distribution of 8 cents per
unit was paid in February 2007. A&W Food Services of Canada Inc. (Food
Services) earned dividends on its investment in Trade Marks at the same rate.HIGHLIGHTS
                                                   Period from   Period from
                                                   Jan 1, 2007   Jan 1, 2006
    (dollars in thousands except                       to            to
     per unit amounts)                            Mar 25, 2007  Mar 26, 2006
    Same store sales growth                               3.6%          8.9%
    Number of restaurants in the Royalty Pool              660           654
    Sales reported by the restaurants in the
     Royalty Pool                                     $128,114      $121,717
    Royalty income                                      $3,843        $3,651
    General and administrative expenses                   $251          $254
    Net third party interest expense                      $111          $128
    Large corporations tax                                   -           $28
    Total distributable cash generated for
     distributions and dividends                        $3,481        $3,241
    Distributable cash per equivalent unit
     (2007 - 13,437,868 units;
     2006 - 13,138,455 units)                           $0.259        $0.247
    Monthly distributions declared per unit
     (8,340,000 units)                                  $0.200        $0.186
    Special distribution declared per unit
     (8,340,000 units)                                  $0.080             -
    Trade Marks' net loss                               ($145)        ($256)
    The Fund's net earnings                             $1,973        $1,924
    The Fund's basic and diluted earnings per unit
     (8,340,000 units)                                  $0.237        $0.231
    Distributable cash is not an earnings measure recognized by generally
    accepted accounting principles ("GAAP") and therefore may not be
    comparable to similar measures presented by other issuers. This
    information is provided as it identifies the amount of actual cash
    available to pay distributions to unitholders and dividends to Food
    Services.The Fund is a limited purpose trust established to invest in Trade Marks,
which owns the A&W trade-marks used in the A&W quick service restaurant
business in Canada. The A&W trade-marks comprise some of the best-known brand
names in the Canadian foodservice industry. In return for licensing Food
Services to use its trade-marks, Trade Marks receives royalties equal to 3% of
the sales of A&W restaurants in the Royalty Pool. Same store sales growth of
the A&W restaurants in the Royalty Pool is therefore the primary driver of
growth in the Fund's revenue.
    The Royalty Pool is adjusted in January of each year (except in 2006 when
the Royalty Pool was adjusted on January 5, 2006 and December 31, 2006, and
2007 in which there is no adjustment) to include the royalty stream from new
restaurants, net of the sales of any A&W restaurants that have permanently
closed. Trade Marks pays Food Services for the additional royalty stream in
the form of common shares and Class B shares of Trade Marks which are the
economic equivalent of units of the Fund. Food Services currently owns 38% of
the common shares of Trade Marks, and therefore owns the equivalent of 38% of
the units of the Fund on a fully-diluted basis.
    Trade Marks' dividends to Food Services and the Fund, and the Fund's
distributions to unitholders are based on top-line revenues of the A&W
restaurants in the Royalty Pool, less interest, general and administrative
expenses of Trade Marks, and are thereby isolated from many of the factors
that impact an operating business.
    Food Services also announced today that it has declared dividends in the
amount of $3,000,000 to the shareholders of record on May 1, 2007, payable on
May 3, 2007. These dividends are paid out of Food Services' available working
capital. Food Services is a privately held company.

    Certain statements in this report may be forward-looking in nature. These
include references to liquidity, subordinated dividends, earnings and
anticipated earnings from growth in same store sales and new restaurant
openings. Actual results may differ materially from those expressed or implied
in these forward-looking statements. The forward-looking statements are based
on assumptions that management considered reasonable at the time they were
prepared. These forward-looking statements are subject to a number of risk
factors, including the ability of A&W Food Services of Canada Inc. to
implement its marketing strategies, the opening of new A&W restaurants,
general economic and business conditions, financial and political instability,
and other factors disclosed previously and from time to time in the Fund's
public filings.
    Additional information relating to the Fund is on SEDAR at www.sedar.com
and on the Fund's website at www.awincomefund.ca.

For further information:
For further information: Don Leslie, Chief Financial Officer, (604)
988-2141, email: investorrelations@aw.ca