A&W Revenue Royalties Income Fund

Press Releases

A&W Revenue Royalties Income Fund announces second quarter 2009 results

    TRADING SYMBOL: The Toronto Stock Exchange - AW.UN

    VANCOUVER, July 21 /CNW/ -Highlights

    -   Royalty income increased to $5.1 million, up 4.2%
    -   Same store sales growth 1.3% for the second quarter; 3.8% year to
    -   Distributable cash(2) increased to $4.9 million, up 3.2%
    -   Year to date distributable cash(2) increased to $8.9 million, up 3.9%A&W Revenue Royalties Income Fund (the Fund) reported today results for
the second quarter ended June 14, 2009. A copy of the full quarterly report
will be available on www.sedar.com and www.awincomefund.ca on or before July
24, 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 1.3%. This
marks A&W's 25th consecutive quarter of same store sales growth. Royalty
income increased by 4.2% to $5.1 million compared to $4.9 million in the same
quarter of 2008, due to the same store sales growth and in the addition of new
restaurants to the Royalty Pool.
    Year to date same store sales growth is now 3.8% and year to date royalty
income increased 4.8% to $9.5 million compared to $9.1 million in 2008 year to
    "Continued investment in our key strategic initiatives focused on
building A&W's appeal to the baby boomer customer and strongly differentiating
the brand resulted in solid sales in challenging economic conditions and a
slower foodservice market. The launch of the sirloin Uncle Burger last year
was very successful, and we are excited about the introduction of the Cheddar
Bacon Uncle Burger this summer," said Paul Hollands, President and Chief
Executive Officer of A&W Food Services of Canada Inc. (Food Services). "Our
same store sales growth of 1.3% for the quarter and 3.8% year to date is a
solid result, especially when compared to the exceptionally strong same store
sales results in the second quarter of 2008.

    A&W to Host Conference Call at 1:00 p.m. PST on July 21, 2009

    A&W Revenue Royalties Income Fund will hold a conference call to discuss
second quarter results on Tuesday, July 21, 2009 at 1:00 p.m. Pacific Time
(4:00 p.m. Eastern Time). The call can be accessed by dialling toll-free
1-800-731-5774 or (416) 644-3423. A replay will be available until August 4,
2009, by dialling toll-free 1-877-289-8525 or (416) 640-1917 Passcode:
21310928 followed by the number sign.-------------------------------------------------------------------------
    Sales Highlights                Q2 2009    Q2 2008   YTD 2009   YTD 2008
    Same store sales growth             1.3%       9.1%       3.8%       7.8%

    Sales reported by the
     restaurants in the Royalty
     Pool(1)                       $170,506   $163,652   $316,571   $302,191

    Number of restaurants in
     the Royalty Pool                   685        676        685        676

    Financial Highlights            Q2 2009    Q2 2008   YTD 2009   YTD 2008
    Royalty income(1)                $5,115     $4,910     $9,497     $9,066

    General and administrative
     expenses                           $85        $51       $423       $291

    Net third party interest
     expense                           $131       $112       $254       $218

    Recovery of current income
     taxes                                -          -       ($43)         -

    Financing fees                        -          -          -        $25

    Total distributable cash
     generated for distributions
     and dividends(2)                $4,899     $4,747     $8,863     $8,532

    Distributable cash(2) per
     equivalent unit (2009 -
     14,266,381 units; 2008 -
     13,957,962 units)               $0.343     $0.340     $0.621     $0.611

    Distributions and dividends
     declared per equivalent unit    $0.318     $0.318     $0.530     $0.530

    Special distribution per
     equivalent unit                 $0.100          -     $0.100     $0.100

    Trade Marks' net earnings          $825       $772       $959       $828

    The Fund's net earnings(3)       $2,546     $2,521     $4,916     $5,194

    The Fund's basic and diluted
     earnings per unit (8,340,000
     units)                          $0.305     $0.302     $0.589     $0.623
    ($ in thousands except per unit amounts.)

    (1) Year to date royalty income was impacted by the shorter first quarter
        in 2009. Q1 2009 had 81 days of sales, compared to 83 days in Q1
    (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 year to date net earnings were impacted by a non-cash
        dilution gain recognized in Q1 2009 which was $304,000 lower than the
        dilution gain recorded in Q1 2008. Year to date net earnings were
        also impacted by lower Interest income for Q1 2009 which was based on
        81 days compared to 83 days in Q1 2008.Financial Results

    Royalty income for the quarter increased by $205,000 or 4.2% to
$5,115,000 compared to the same quarter in 2008. Year to date royalty income
increased by $431,000 or 4.8% to $9,497,000 compared to 2008 year to date.
These increases in royalty income were driven by the same store sales growth
and the increase in the number of restaurants in the Royalty Pool to 685 in
2009 from 676 in 2008.
    Cash expenses, interest and taxes increased by $53,000 for the quarter
and $100,000 year to date 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.
    Distributable cash available to pay distributions to unitholders and
dividends to Food Services increased by $152,000 or 3.2% to $4,899,000 for the
quarter and by $331,000 or 3.9% to $8,863,000 year to date.
    Distributable cash per fully diluted unit and equivalents increased to
34.3 cents for the second quarter in 2009 from 34.0 cents for the second
quarter of 2008. Year to date distributable cash per fully diluted unit
increased to 62.1 cents from 61.1 cents for 2008 year to date.
    Monthly distributions of 31.8 cents per unit were declared in the quarter
and 53.0 cents year to date. 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 was paid on May 29,
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.

    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