Chesswood Income Fund

Chesswood Income Fund

March 18, 2009 16:10 ET

Chesswood Income Fund Announces Results for Fiscal 2008 and Distribution Policy for Q2 2009

TORONTO, ONTARIO--(Marketwire - March 18, 2009) - Chesswood Income Fund (the "Fund") (TSX:CHW.UN) announced today results for the year-ended December 31, 2008.

"Notwithstanding the obvious challenges in the U.S. economy in 2008, Pawnee generated substantial cash flow to the Fund during the year while repaying $5.5 million in lease financing and reducing its leverage" said Barry Shafran, the Fund's President and CEO. "In these unprecedented times, that is a tribute to our business model which we believe prices risk more appropriately than many of our former competitors" added Shafran.

The end of the year also saw Pawnee's market in the U.S. experience a surprisingly rapid correction in the competitive landscape. In the last quarter of 2008, most of Pawnee's more recent competitors either retreated to their primary markets or closed their doors, resulting in significant increases in new lease applications for Pawnee in November and December. These increases resulted in the return of growth to Pawnee's portfolio, after a twenty-three month period of contraction that reflected Pawnee's unwillingness to match the lower prices of these former competitors, despite market pressure.

The Fund's Canadian businesses also experienced significant change in the year. The Fund's Acura Sherway dealership enjoyed one of the best years in its history. In September, the Fund began the wind-down of its Canadian vehicle leasing business, Lease-Win Limited, and the gradual return of the Fund's invested capital.

"The Fund closed 2008 with almost $2.0 million in available cash while our subsidiaries ended the year with low leverage, strong balance sheets and excellent market positions. We believe that these strengths will continue to serve Chesswood well in these challenging times." said Shafran.

Financial Highlights for the Fund
(in CDN $000's)

For The Year Ended
December 31,
2008 2007

Adjusted EBITDA(1) $ 4,204 $ 11,251

Distributable Cash (1) $ 4,871 $ 8,771

Distributions (2) $ 3,809 $ 8,470

Income Before Taxes, Goodwill Impairment and $ 2,687 $ 10,072
Unrealized Foreign Exchange and Swap Gains/Losses

Net Loss(3) $(12,830) $ (4,518)

(1) - see "Non Gaap Measures" below
(2) - includes dividends on Class B and C shares of Chesswood US
AcquisitionCo Ltd.
(3) - non-cash goodwill impairment charge for 2008 of $14.8 million and for
2007 of $16.8 million.

Distribution Policy and March Distribution

A cash distribution of $0.025 per unit for the month of March will be payable to unitholders of record at the close of business on March 31, 2009 and will be paid on April 15, 2009.

In accordance with the Fund's distribution policy adopted in August 2008, it will continue distributions for the second quarter of 2009 at the current level of $0.025 per month, per unit.

Non GAAP Measures

References to Adjusted EBITDA and Distributable Cash are not recognized measures under Canadian GAAP and do not have standard meanings under Canadian GAAP. Accordingly, these measures may not be comparable to similar measures presented by other issuers.

Please refer to Chesswood's Management Discussion and Analysis for the year-ended December 31, 2008 for additional information concerning these measures and a reconciliation of these measures to the Fund's consolidated net income and cash provided by operating activities, for the period.

About Chesswood Income Fund

The Fund is a financial services trust with operating businesses in both Canada and the U.S.

This press release contains forward-looking statements that involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.


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