A&W Revenue Royalties Income Fund

Press Releases

A&W Revenue Royalties Income Fund posts strong third quarter sales and announces distribution increase

    A&W Revenue Royalties Income Fund will hold a conference call to discuss
    third quarter results on October 15, 2007 at 1:00 p.m. Pacific Time
    (4:00 p.m. Eastern Time). The call can be accessed by dialing toll-free
    1-800-732-9307 or (416) 644-3414. A replay will be available until
    October 29, 2007, by dialing toll-free 1-877-289-8525 or (416) 640-1917
    Passcode: 21249399 followed by the number sign.

    TRADING SYMBOL: The Toronto Stock Exchange - AW.UN

    VANCOUVER, Oct. 15 /CNW/ - A&W Revenue Royalties Income Fund (the Fund)
and A&W Trade Marks Inc. (Trade Marks) each reported today financial results
for the third quarter ended September 9, 2007. A copy of the full quarterly
report will be available at www.sedar.com and www.awincomefund.ca on or before
October 18, 2007.
    The Fund and Trade Marks enjoyed a strong quarter, with same store sales
of the restaurants in the Royalty Pool increasing by 3.3%. This increase is
particularly notable given the comparison to exceptionally strong results in
the third quarter of 2006. Furthermore, these results were achieved during a
period when the overall foodservice industry is experiencing slower growth and
is suffering from the negative impact of declining tourism in Canada. This
marks the 18th consecutive quarter of same store sales growth. Year to date
same store sales growth is now 3.8%. This in turn translated into strong
revenue growth for Trade Marks and the Fund.
    As a result of the strong performance of the Fund and the underlying A&W
restaurants, the Fund is pleased to announce that it is increasing monthly
cash distributions by 2.9%, from 10.3cents per unit to 10.6cents per unit
beginning with the October 2007 distribution. On an annualized basis this
represents a distribution rate of $1.272 per unit. Since inception of the Fund
in February 2002, monthly distributions have been increased 17.8%. The new
monthly distribution of 10.6cents per unit will be payable to unitholders of
record at the close of business on November 15, 2007 and will be paid on
November 30, 2007.
    "We're very pleased with A&W's performance through the third quarter of
2007," said Paul Hollands, President and Chief Executive Officer of A&W Food
Services of Canada Inc. "We continue to drive strong same store sales growth
through our strategic initiatives designed to attract baby boomers to our
restaurants. Most notably, we continued to see solid growth in our breakfast
    Another contributor to growth in the third quarter was the Cruisin' the
Dub program. This summer, over 2,400 Cruisin' the Dub events were held at A&W
restaurants across Canada, up from 1,300 in 2006. These events, which feature
the music and cars of the 50's, 60's and 70's, have been extremely popular
with baby boomers across Canada.
    Overall growth in sales reported by A&W restaurants in the Royalty Pool
was 6.0% for the quarter and 6.2% year to date. The increase in sales and
corresponding increase in royalty income reflects the same store sales growth
and the increase in the number of restaurants in the Royalty Pool from 654
during 2006 to 660 during 2007.
    Cash generated to pay distributions increased by 6.0% for the quarter and
6.7% year to date. Distributable cash per fully diluted unit and equivalents
increased from 33.0cents for the third quarter in 2006 to 34.2cents in 2007.
Year to date distributable cash per fully diluted unit increased from
87.6cents to 91.4cents. Distributions of 30.6cents were declared in the
quarter and 88.6cents year to date. The payout ratio as at September 9, 2007,
excluding the 8.0cents special distribution paid in February this year, was a
conservative 88.2%. A&W Food Services of Canada Inc. (Food Services) earned
dividends on its investment in Trade Marks at the same rate.HIGHLIGHTS

    (dollars in                                    Period from   Period from
    thousands               12 week       12 week        Jan 1,        Jan 1,
    except per         period ended  period ended      2007 to       2006 to
    unit amounts)       Sep 9, 2007  Sep 10, 2006  Sep 9, 2007  Sep 10, 2006

    Same store sales
     growth                     3.3%          9.0%         3.8%          8.1%

    Number of
     restaurants in
     the Royalty Pool           660           654          660           654

    Sales reported by
     the restaurants in
     the Royalty Pool      $158,673      $149,755     $432,286      $407,077

    Royalty income           $4,761        $4,492      $12,969       $12,212

    General and
     expenses                    60            41          364           345

    Net third party
     interest expense           102           112          323           357

    Total distributable
     cash generated for
     distributions and
     dividends               $4,599        $4,339      $12,282       $11,510

    Distributable cash
     per equivalent
     unit (2007 -
     13,437,868 units;
     2006 - 13,138,455
     units)                  $0.342        $0.330       $0.914        $0.876

     declared per unit
     (8,340,000 units)       $0.306        $0.289       $0.886        $0.758

    Trade Marks'
     net earnings              $734          $629       $1,010          $684

    The Fund's
     net earnings            $2,520        $2,467       $6,818        $6,653

    The Fund's basic
     and diluted
     earnings per unit
     (8,340,000 units)       $0.302        $0.296       $0.818        $0.798
    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 A&W Trade
Marks Inc. (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 A&W Food Services of Canada Inc. 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.

    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