LIQUOR STORES INCOME FUND

LIQUOR STORES
INCOME FUND
RBC Capital Markets
Trust Investor Symposium
January 23 & 24, 2007
Management Team
Irv Kipnes
Chief Executive Officer
Rick Crook
President & Chief Operating Officer
Pat de Grace
Vice President of Finance & Chief Financial Officer
2
Simple Structure
LIQ.UN
100%
Trust
74.3%
Vendors
25.7%
Partnership
105
Stores
3
Simple Business
Convenient locations
Strong real estate expertise
Liquor products comprise 99%+ of sales
Experienced liquor store operators
Cash business
Proven strategies for continued growth
4
Favorable Regulatory Environment
Legislated “level playing field”
Separate and distinct business requirement in the Alberta
Act
Uniform wholesale and postage stamp delivery costs
5
Ideal Income Fund Assets
Stable revenues & margins with EBITDA
growth of 21.1%
Attractive industry growing at 5% to 2005
Alberta’s largest liquor store retailer by
number of stores
6
Strong and Consistent Revenue Growth
AGR
5.0% C
$1.6
1.8
1.6
1.4
1.2
$1.0
0.8
0.6
0.4
0.2
0
1996
1997
1998
1999
Spirits
2000
Wine
2001
2002
Coolers
2003
2004
2005
2006
Beer
● Total BCLDB sales are $2.25 billion. Historic information is not available.
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$ Billions
1.0
Strong Sales Growth
$ M illio ns
%C
14.4
AGR
$157.4
$96.5
$56.6
$59.7
$63.2
$107.2
$113.7
$120.0
$69.0
$46.7
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
8
Reliable and Growing EBITDA
$12.9
21.1
R
AG
C
%
$ M illion s
$9.1
$7.5
$8.0
$5.2
$2.3
$2.4
1996
1997
$3.1
1998
$2.9
1999
$3.0
2000
2001
2002
2003
2004
2005
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Outstanding Product Merchandising
Major competitive advantage
Optimal traffic flow
Upscale attractive designs
Broader product offering
Higher margin product focus
• Our average sales in Alberta stores are $2.5
million compared to industry average of $1.5
million.
10
Brand Marketing
Targeted local advertising
“Club Card” loyalty program
11
Strong Financial Capacity
Completed three new issues for proceeds of
$93.1 million on 5 million units
Credit facility $63.8 million
Operating line $32 million balloon to $38 million
Acquisition loan $15 million
Fixed asset loan $14.5 million
Other $2.3 million
Approximately $16 million currently used including
approximately $9 million for seasonal inventory requirements
Approximately $56 million available for acquisition
& development including working capital required
Debt to economic value approximately 20%
assuming full credit facility utilization and $19
unit price
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Strong Alignment with Unitholders
Management, directors, and vendors currently hold
>25.7% of units (fully diluted) including recent market
purchases
Long Term Incentive Plan now operative
15.7% of outstanding units subordinated to
exchangeable units and Fund units to December 2007
13
Real Estate Competitive Advantage
Convenient high
traffic shopping
locations
60% of stores
anchored by major
tenants
Long-term leases
14
Growth in the Mix!
New stores
Acquired or developed 55 stores since IPO
Cash distributions
To date three increases in distributions:
May 2005
- 7.5% to $1.075 per year
February 2006
- 11.6% to $1.20 per year
November 2006 - 16.7% to $1.40 per year
15
Track Record of Consistent Store Growth
35 stores developed
70 stores acquired
18.0
105
R
AG
C
%
75
50
35
40
42
Developed
20
06
20
05
20
04
20
03
20
02
20
01
24
20
00
19
99
21
19
98
19
97
19
96
20
22
38
Acquisitions
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Largest Number of Liquor Stores In Alberta
Fort
McMurray
5 stores
Slave Lake
3 stores
St. Albert
3 stores
Grande Prairie
2 stores
Stony Plain
2 stores
Edson
2 stores
Calgary
Kamloops, BC
34 stores
1 store
Banff
1 store
Canmore
2 stores
Vancouver, BC
2 stores
Kelowna, BC
2 stores
Chilliwack, BC
1 store
Richmond, BC
1 store
* To December 2006
Edmonton
32 stores
Sherwood
Park
2 stores
Leduc
3 stores
Red Deer
3 stores
Airdrie
1 store
High River
1 store
Lethbridge
1 store
Victoria, BC
1 store
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Alberta - Chain Store Ownership
97
Single-Sto re Owners o f
Chains < 5 - 790
59
28
Chains > 5 Sto res - 19
21
14
19
Calgary Co -Op - 14
Western Cellars
(So beys) - 21
790
Real Canadian Liquo r
Sto res (Lo blaws) - 28
Liquo r B arn - 59
LSIF - 97
Total Stores Alberta – 1050 approximately
(Source: Alberta Liquor and Gaming Commission (AGLC))
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September 2006 YTD Operating Results
2006
Sales
2005
$ 150,987,655
$ 106,758,276
139,028,468
98,608,440
$ 11,959,187
$ 8,149,836
7.92%
7.63%
11,496,300
9,921,095
Earnings / unit
$0.85
$0.67
Distributable cash / unit
$0.93
$0.72
Cost of sales & expenses
Operating margin
Percent of sales
Units outstanding
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Historic Unit Price
Liquor Stores Income Fund Historic Unit Price
24.00
23.00
22.00
21.00
20.00
19.00
18.00
17.00
16.00
15.00
14.00
13.00
12.00
11.00
28/ 09/ 0
28/ 12/ 04
28/ 03/ 0
28/ 06/ 0
28/ 09/ 0
28/ 12/ 05
28/ 03/ 0
28/ 06/ 0
28/ 09/ 0
28/ 12/ 06
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Risk Factors
The Fund’s results of operations, business prospects, financial condition, cash distributions to
Unitholders and the trading price of the Fund’s units are subject to a number of risks. These risk factors
include: risks relating to government regulation; competition; the Company's ability to locate and secure
acceptable store sites and to adapt to changing market conditions; risks relating to future acquisitions
and development of new stores; failure to successfully integrate acquisitions; dependence on key
personnel; the Company’s ability to hire and retain staff at current wage levels, risks related to future
unionization, supply interruption; reliance on information and control systems; dependence on capital
markets to fund the Company's growth strategy beyond its available credit facilities; dependence of the
Fund on the Company; leverage and restrictive covenants in agreements relating to current and future
indebtedness of the Company; restrictions on the potential growth of the Company as a consequence of
the payment by the Company of a substantial amount of its operating cash flow; income tax related
risks; and the Vendors' right to approve certain material transactions.
For a discussion of these risks and other risks associated with an investment in Fund Units, see “Risk
Factors” detailed the Fund’s Annual Information Form, which is available at www.sedar.com.
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Non-GAAP Measures
References to “EBITDA” are to earnings before interest, income taxes, depreciation and amortization and
references to ‘‘distributable cash’’ are to cash available for distribution to Unitholders in accordance with the
distribution policies of the Fund. Management believes that, in addition to income or loss, EBITDA and cash
available for distribution before debt service, changes in working capital, capital expenditures and income taxes are
useful supplemental measures of performance. Specifically, management believes that EBITDA is the appropriate
measure from which to make adjustments to determine the distributable cash of the Fund. Distributable cash of the
Fund is a measure generally used by Canadian open-ended trusts as an indicator of financial performance. As one
of the factors that may be considered relevant by prospective investors is the cash distributed by the Fund relative
to the price of the Fund Units, management believes that distributable cash of the Fund is a useful supplemental
measure that may assist prospective investors in assessing an investment in the Fund.
EBITDA and distributable cash are not earnings measures recognized by GAAP and do not have standardized
meanings prescribed by GAAP. Investors are cautioned that EBITDA and distributable cash should not replace net
income or loss (as determined in accordance with GAAP) as an indicator of the Fund's performance, of its cash
flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Fund's
methods of calculating EBITDA and distributable cash may differ from the methods used by other issuers.
Therefore, the Fund's EBITDA and distributable cash may not be comparable to similar measures presented by
other issuers.
Operating margin for purposes of disclosure under “Operating Results” have been derived by adding interest
expense, income tax expense, amortization of property and equipment, intangibles and pre-opening costs and noncontrolling interest to net earnings for the period.
Operating margin as so calculated is not a measure recognized by GAAP and does not have a standardized
meaning prescribed by GAAP. Investors are cautioned that operating margin as so calculated should not replace
net income or loss (as determined in accordance with GAAP) as an indicator of the Fund's performance, of its cash
flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Fund's
method of calculating operating margin as so calculated may differ from the methods used by other issuers.
Therefore, the Fund's operating margin as so calculated may not be comparable to similar measures presented by
other issuers.
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Forward Looking Information
This presentation contains forward-looking statements. This management’s discussion and analysis
contains forward-looking statements. All statements other than statements of historical fact contained in
this management’s discussion and analysis are forward-looking statements, including, without limitation,
statements regarding the future financial position, cash distributions, business strategy, proposed
acquisitions, budgets, litigation, projected costs and plans and objectives of or involving the Fund or
Liquor Stores LP. You can identify many of these statements by looking for words such as ‘‘believes’’,
‘‘expects’’, ‘‘will’’, ‘‘intends’’, ‘‘projects’’, ‘‘anticipates’’, ‘‘estimates’’, ‘‘continues’’ or similar words or the
negative thereof. These forward-looking statements include statements with respect to the amount and
timing of the payment of the distributions of the Fund. There can be no assurance that the plans,
intentions or expectations upon which these forward-looking statements are based will occur. Forwardlooking statements are subject to risks, uncertainties and assumptions, including, but not limited to, those
discussed elsewhere in this management’s discussion and analysis. There can be no assurance that
such expectations will prove to be correct.
Some of the factors that could affect future results and could cause results to differ materially from those
expressed in the forward-looking statements contained herein include, but are not limited to, those
discussed under ‘Risk Factors”.
The information contained in this management’s discussion and analysis, including the information set
forth under ‘‘Risk Factors’’, identifies additional factors that could affect the operating results and
performance of the Fund and Liquor Stores LP.
The forward-looking statements contained herein are expressly qualified in their entirety by this
cautionary statement. The forward-looking statements included in this management’s discussion and
analysis is made as of the date of this management’s discussion and analysis and the Fund assumes no
obligation to update or revise them to reflect new events or circumstances except as expressly required
by applicable securities law.
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