A and W Revenue Royaltie... (TSX:AW.UN)
Historical Stock Chart
From Jul 2019 to Jul 2024
VANCOUVER, Feb. 8 /CNW/ --
-- Same store sales growth((1)) +2.2% for the year; +1.1% for the
fourth quarter
-- Total system sales of A&W Food Services of Canada Inc. up 5.0%
for the year
-- Royalty income for 2010 increased 5.5%
-- Distributable cash((2)) before one-time transaction costs up
5.2% for 2010.
VANCOUVER, Feb. 8 /CNW/ --
TRADING SYMBOL: The Toronto Stock Exchange - AW.UN
VANCOUVER, Feb. 8 /CNW/ - A&W Revenue Royalties Income Fund (the Fund)
reported today results for the fourth quarter period from September 13,
2010 to December 31, 2010 and the full year results from January 1,
2010 to December 31, 2010.
Same store sales growth in A&W restaurants, the most important driver of
growth in the Fund, was +2.2% for the year and +1.1% for the quarter
compared to the same periods last year. This marks the 8(th) consecutive year and 31(st) consecutive quarter of same store sales increases.
"The fourth quarter was an important one for the Fund," said Paul
Hollands, President and Chief Executive Officer of A&W Food Services of
Canada Inc. (A&W Food Services). "In addition to posting our 31(st) straight quarter of increases in same store sales, we undertook a
significant reorganization in the Fund. The combination of this
reorganization and the successful substantial issuer bid enabled us to
maximize ongoing distributions to unitholders. We are delighted that
as a result we have been able to increase distributions to 11.7 cents
per unit per month despite the imposition of the new Specified
Investment Flow Through tax on income funds effective January 1, 2011,
while many other income funds have been forced to reduce their
distributions."
"We're pleased with the continued same store sales growth which occurred
despite the uncertain economic conditions and the impact of the HST on
the restaurant industry in British Columbia," Hollands added.
Total sales of restaurants in the royalty pool and corresponding royalty
income increased by 5.5% in 2010 versus 2009. This growth was achieved
through the same store sales growth and the addition of 15 new
restaurants to the Royalty Pool on January 5, 2010. Due to there being
six fewer days in the fourth quarter in 2010 compared to 2009, sales
and royalty income decreased by 0.2% for the quarter. Same store sales
growth is based on an equal number of days in each quarter.
A copy of the management discussion and analysis and financial
statements of the Fund, A&W Trade Marks Inc. (Trade Marks) and Food
Services for the year will be available on www.sedar.com and www.awincomefund.ca on or before February 11, 2011. The Fund will hold a conference call
to discuss the results on Tuesday, February 8, 2011 at 1:00 p.m.
Pacific Time (4:00 p.m. Eastern Time). The call can be accessed by
dialling toll-free 1-800-814-4861 or (416) 644-3416. A replay will be
available until February 22, 2011, by dialling toll-free 1-877-289-8525
or (416) 640-1917 Passcode: 4407210#.
Highlights
(dollars in thousands Q4 2010 Q4 2009 Year end 2010 Year end 2009
except per unit
amounts)
Same store sales growth 1.1% 0.03% 2.2% 1.5%
((1))
Number of restaurants 700 685 700 685
in the Royalty Pool
Sales reported by the $238,900 $239,385 $776,701 $736,209
restaurants in the
Royalty Pool
Royalty income $7,167 $7,181 $23,301 $22,086
General and 237 167 601 647
administrative expenses
Recapitalization and 661 - 775 -
reorganization costs
Financing fees 449 - 449 -
Net third party 269 183 670 570
interest expense
Recovery of current - - - (43)
income taxes
Partnership 7 - 23 -
distributions to A&W
Food Services
Total distributable $5,544 $6,831 $20,783 $20,912
cash generated for
distributions and
dividends((2))
Distributable cash((2) $0.382 $0.478 $1.419 $1.463
)per weighted average
equivalent unit (2010 -
14,644,999 units; 2009
- 14,289,993 units)( )
Distributions and $0.424 $0.424 $1.272 $1.272
dividends declared per
equivalent unit
Special distribution $0.100 $0.100 $0.200 $0.200
per equivalent unit
Trade Marks' net $1,031 $1,962 $3,648 $4,007
earnings
The Fund's net earnings $3,633 $4,010 $11,982 $11,624
The Fund's basic and $0.436 $0.481 $1.437 $1.394
diluted earnings per
unit
Weighted average units 8,332,994 8,340,000 8,337,889 8,340,000
outstanding
((1) Same store sales growth 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 is a key driver of growth in the Fund. )
((2) Distributable cash is not an earnings measure recognized by 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. )
Financial Results
Royalty income for 2010 was $23,301,000 based on sales of $776,701,000,
an increase of 5.5% over royalty income of $22,086,000 and sales of
$736,209,000 for 2009. The increases in sales and royalty income are
due to the combined impact of the additional net 15 restaurants in the
Royalty Pool and the same store sales increase of 2.2% for the year.
Royalty income in the fourth quarter was $7,167,000 based on sales of
$238,900,000 reported by the A&W restaurants in the Royalty Pool. This
was a decrease of 0.2% over royalty income of $7,181,000 and sales of
$239,385,000 during the same quarter of 2009. The decrease in the
fourth quarter was due to the quarter having six fewer days in 2010
compared to the same quarter in 2009. Same store sales growth for the
fourth quarter was 1.1%. Same store sales growth is based on an equal
number of days in each quarter.
General and administrative expenses for 2010, including expenses for the
Fund under the administration agreement between Trade Marks and the
Fund, decreased by $46,000 to $601,000, compared to $647,000 for 2009.
General and administrative expenses for the fourth quarter increased by
$70,000 to $237,000, compared to $167,000 in the fourth quarter of
2009.
The Fund completed a substantial issuer bid and purchased for
cancellation 2,500,000 of its units on December 22, 2010.
Subsequently, Trade Marks completed the reorganization of its capital
structure as approved by the Fund's unitholders on May 4, 2010. The
costs of these transactions were $775,000 and were paid by Trade Marks
under the administration agreement between Trade Marks and the Fund.
These costs are comprised mainly of professional fees.
Trade Marks' interest expense on its term loan, net of interest income,
for 2010 was $670,000 compared to $570,000 for 2009. Interest on the
term loan for the fourth quarter of 2010 was $269,000, compared to
$183,000 for the same quarter of 2009. The increase in term loan
interest was due to the increase in the amount of the term loan by
$50,000,000 to $60,000,000 effective December 22, 2010. Also included
in interest expense was a $49,000 payment to terminate the interest
rate swap on the $10,000,000 term loan.
Before payment of the $775,000 one-time transaction costs for the Fund's
substantial issuer bid and Trade Marks' reorganization, Trade Marks'
net earnings for 2010 increased by $416,000 over 2009. After payment
of the one-time transaction costs, Trade Marks' 2010 net earnings were
$3,648,000 compared to $4,007,000 for 2009. Trade Marks' net earnings
for the quarter were $1,031,000 compared to $1,962,000 for the same
quarter of 2009.
The Fund's net earnings for 2010 were $11,982,000 or $1.437 per weighted
average unit outstanding compared to $11,624,000 or $1.394 per unit for
2009. The Fund's net earnings for the fourth quarter were $3,633,000
or 43.6¢ per weighted average unit outstanding compared to $4,010,000
or 48.1¢ per unit for the same quarter in 2009. The Fund's net earnings
for 2010 and the fourth quarter were also negatively impacted by the
Fund's share of the one-time costs incurred by Trade Marks.
The transaction costs of $775,000 along with financing fees of $449,000
related to Trade Marks' new term loan also impacted distributable
cash. Before payment of these one-time costs totalling $1,224,000,
distributable cash generated in 2010 increased by $1,095,000 or 5.2%
over 2009. After payment of the one-time costs, distributable cash
generated to pay distributions to unitholders and dividends to A&W Food
Services decreased by $129,000 from $20,912,000 for 2009 to $20,783,000
for 2010, and decreased by $1,287,000 from $6,831,000 for the fourth
quarter of 2009 to $5,544,000 for the fourth quarter of 2010.
Distributable cash and earnings in the fourth quarter were also
negatively impacted by the decrease in the number of days in the
quarter compared to 2009.
The amount of cash distributed in 2010 to unitholders and A&W Food
Services in monthly distributions and dividends was $1.272 per
equivalent unit compared to distributable cash generated of $1.419. In
addition, two Special Distributions of $0.100 per equivalent unit each
were paid in 2010, bringing the total amount of cash distributed in
2010 to $1.472 per equivalent unit.
At the end of 2010 there was a cumulative surplus of distributable cash
of $2,971,000 compared to a cumulative surplus of $3,706,000 at the end
of 2009.
Overview
The Fund is a limited purpose trust established to invest in Trade
Marks, which through its interest in the Partnership, 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 to use its trade-marks, Trade Marks (through the
Partnership) receives royalties equal to 3% of the sales of A&W
restaurants in the Royalty Pool. A&W Food Services 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 reflect sales from new
restaurants, net of the sales of any A&W restaurants that have
permanently closed. The Partnership pays A&W Food Services for the
additional royalty stream in the form of an increase in the limited
partnership interest of A&W Food Services. A&W Food Services' limited
partnership interest may be exchanged for additional non-voting common
shares of Trade Marks which are exchangeable for units of the Fund.
A&W Food Services currently owns 34% of the common shares of Trade
Marks, and therefore currently holds indirectly the equivalent of 34%
of the units of the Fund on a fully-diluted basis.
Trade Marks' dividends to A&W 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, dividends, earnings and
anticipated earnings from growth in same store sales, annual
adjustments to the Royalty Pool 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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/February2011/08/c8916.html
pDon Leslie, Chief Financial Officer: (604) 988-2141 or a href="mailto:investorrelations@aw.ca"investorrelations@aw.ca/a/p