A&W Revenue Royalties Income Fund

Press Releases

A&W Revenue Royalties Income Fund announces strong first quarter 2009 results and special distribution

    TRADING SYMBOL: The Toronto Stock Exchange - AW.UN

    VANCOUVER, April 28 /CNW/ -Highlights

    -   Same store sales growth 6.6%
    -   Royalty income increased to $4.4 million
    -   Distributable cash(1) increased to $4.0 million
    -   Trustees announce Special Distribution of $0.10 per unit, payable
        May 29thA&W Revenue Royalties Income Fund (the Fund) reported today strong
results for the first quarter ended March 22, 2009.
    Same store sales growth in A&W restaurants is the most important driver
of growth in the Fund. Same store sales growth for the quarter was 6.6%. This
marks A&W's 24th consecutive quarter of same store sales growth. While same
store sales growth is reported based on an equal number of days in each
quarter, the fiscal first quarter of 2009 had only 81 days of sales compared
to 83 days in the first quarter of 2008. Despite this shorter time period,
sales reported by restaurants in the Royalty Pool increased 5.4% to $146.1
million compared to $138.5 million in the same quarter of 2008.
    "The strength of our strategy of focusing on the baby boomer customer
resulted in strong sales in a challenging economic environment. We are very
pleased with the same store sales growth of 6.6%," said Paul Hollands,
President and Chief Executive Officer of A&W Food Services of Canada Inc.
(Food Services). "Our marketing initiatives and menu innovations, especially
our Sirloin Uncle Burger, continue to drive strong results. We're pleased to
be able to share this success with the unitholders of the Fund in the form of
a Special Distribution."
    Distributable cash available to pay distributions to unitholders and
dividends to Food Services increased by 4.7% to $3,964,000 compared to
$3,785,000 for the first quarter of 2008. Distributable cash per fully diluted
unit and equivalents increased to 27.8 cents from 27.1 cents.

    Trustees Approve Special Distribution of 10 cents per Unit

    The Trustees of the Fund have approved the payment of a Special
Distribution of 10 cents per unit, payable on May 29, 2009 to unitholders of
record as at May 15, 2009.

    A&W to Host Conference Call at 1:00 p.m. PST on April 28, 2009

    A&W Revenue Royalties Income Fund will hold a conference call to discuss
first quarter results on Tuesday, April 28, 2009 at 1:00 p.m. Pacific Time
(4:00 p.m. Eastern Time). The call can be accessed by dialling toll-free
1-800-732-1073 or (416) 644-3419. A replay will be available until May 15,
2009, by dialling toll-free 1-877-289-8525 or (416) 640-1917 Passcode:
21304215 followed by the number sign.-------------------------------------------------------------------------
    Sales Highlights                                      Q1 2009    Q1 2008
    Same store sales growth                                  6.6%       6.3%
    Sales reported by the restaurants in
     the Royalty Pool(1)                                 $146,065   $138,539
    Number of restaurants in the Royalty Pool                 685        676

    Financial Highlights                                  Q1 2009    Q1 2008
    Royalty income(1)                                      $4,382     $4,156
    General and administrative expenses                      $338       $240
    Net third party interest expense                         $123       $106
    Recovery of current income taxes                         ($43)         -
    Financing fees                                              -        $25
    Total distributable cash generated
     for distributions and dividends(2)                    $3,964     $3,785
    Distributable cash(2) per equivalent unit
     (2009 - 14,266,381 units; 2008 - 13,957,962 units)    $0.278     $0.271
    Distributions and dividends declared
     per equivalent unit                                   $0.212     $0.212
    Special distribution per equivalent unit                    -     $0.100
    Trade Marks' net earnings                                $134        $56
    The Fund's net earnings(3)                             $2,370     $2,673
    The Fund's basic and diluted
     earnings per unit (8,340,000 units)                   $0.284     $0.321
    ($ in thousands except per unit amounts.)

    (1) Q1 2009 had 81 days of sales reported by restaurants in the Royalty
        Pool and royalty income, compared to 83 days in Q1 2008.

    (2) 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

    (3) The Fund's net earnings for Q1 2009 were impacted by a non-cash
        dilution gain which was $304,000 lower than the dilution gain
        recorded in Q1 2008. Interest income for Q1 2009 was lower than
        Q1 2009 as it was based on 81 days compared to 83 days in Q1 2008.Financial Results

    Royalty income for the quarter increased by $226,000 or 5.4% to
$4,382,000 compared to the same quarter in 2008. This increase in royalty
income was driven by the strong same store sales growth and the increase in
the number of restaurants in the Royalty Pool to 685 in 2009 from 676 in 2008,
and was achieved despite the fewer days of sales in the quarter compared to
    Cash expenses, interest and taxes increased by $47,000 primarily due to
costs associated with the internal reorganization of the Fund's subsidiary A&W
Trade Marks Inc. (Trade Marks) involving the creation of A&W Trade Marks
Limited Partnership (TMLP), which took place earlier this year
    Distributions of 21.2 cents per unit were declared in the quarter. The
current monthly distribution rate of 10.6 cents per unit translates into an
annualized distribution of $1.272 per unit. In addition, a Special
Distribution of 10 cents per unit has been announced and will be paid on May
29, 2009 to unitholders of record as at May 15, 2009. Food Services earns
dividends on its investment in Trade Marks at the same rate.


    The Fund is a limited purpose trust established to invest in Trade Marks,
which through its interest in TMLP, 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 (through TMLP)
receives royalties equal to 3% of the sales of A&W restaurants in the Royalty
Pool. A&W is the second largest quick-service hamburger restaurant chain in
Canada. Operating coast-to-coast, A&W restaurants feature famous trade-marked
menu items such as The Burger Family, Chubby Chicken and A&W Root Beer.
    The Royalty Pool is adjusted annually to include the royalty stream from
new restaurants, net of the sales of any A&W restaurants that have permanently
closed. TMLP pays Food Services for the additional royalty stream in the form
of an increase in the limited partnership interest of Food Services. Food
Services' limited partnership interest may be exchanged for additional
preferred and non-voting common shares of Trade Marks which are exchangeable
for units of the Fund.
    Food Services currently owns 41.5% of the common shares of Trade Marks,
and therefore currently owns the equivalent of 41.5% 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 and current income taxes of Trade Marks, and are thereby isolated
from many of the factors that impact an operating business.
    On April 28, 2009, Food Services declared a dividend on its common shares
of $3,500,000 payable to its shareholder on April 30, 2009.

    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 or investorrelations@aw.ca