TORONTO, Feb. 2 /CNW/ -
Distributions:
Pizza Pizza Royalty Income Fund (the "Fund") (TSX: PZA.UN) today announced a cash distribution of $0.0775 per unit for the month of February, 2009. The distribution will be payable to unitholders of record at the close of business on February 27, 2009, and will be paid on March 13, 2009.
In 2008, Unitholders earned distributions per unit of $0.923 compared to $0.888 per unit in 2007, or a 3.9% increase.
The Fund's payout ratio for 2008 was 92% compared to 94% in 2007.
The Fund, indirectly, has a positive working capital balance at December 31, 2008 of $3.5 million ($1.9 million - 2007) accumulated as a reserve.
Sales:
Royalty Pool sales for 2008 increased 14.9% to $470.6 million compared to $409.5 million in 2007. For the fourth quarter, Royalty Pool sales increased 2.9% to $122.4 million compared to $118.9 million for the same quarter in 2007. The increase in Royalty Pool sales was the result of the positive SSSG plus the 37, net new restaurants added to the Royalty Pool on January 1, 2008, and the full-year impact in 2008 of the 41 Pizza 73 restaurants added to the Royalty Pool on July 24, 2007 with the acquisition of the Pizza 73 trademarks.
Pizza Pizza Limited (the "Company") reported same store sales increased 1.7% for its year ended December 28, 2008 compared to the prior, fiscal year; the fourth quarter same store sales decreased slightly by 0.6% compared to the same quarter in 2007.
"Pizza Pizza continues to direct marketing efforts to meet the challenging economy and is pleased with the positive sales growth for the year. Growing and protecting our brands and increasing market share will continue to be our focus," said Curt Feltner, Chief Financial Officer.
Restaurants:
During the fourth quarter of 2008, Pizza Pizza opened two traditional restaurants and one non-traditional location and closed two traditional locations; six traditional and 12 non-traditional locations have opened and four traditional and five non-traditional locations have closed. This brings the total number of Pizza Pizza locations to 568 at December 31, 2008, of which 559 were in the Fund's 2008 Royalty Pool. Two traditional Pizza 73 locations were opened during the fourth quarter; for the year, nine traditional and six non-traditional locations have opened, bringing the total Pizza 73 restaurants to 72, of which 50 were in the Fund's 2008 Royalty Pool.
As previously announced, royalties from all Pizza Pizza restaurants opened in 2008, and the Pizza 73 restaurants opened after September 2, 2007 and prior to September 1, 2008, were vended into the Fund on January 1, 2009. The Pizza 73 restaurants opened after September 1, 2008 will be vended into the Fund on January 1, 2010.
About the Fund:
The Fund is a limited purpose, open-ended trust established under the laws of Ontario. The Fund, indirectly through the Partnership, has acquired the trademarks and trade names used by the Company in its Pizza Pizza and Pizza 73 restaurants. The Pizza Pizza trademarks were licensed to the Company in 2005 for 99 years, for which the Company pays the Fund a royalty equal to 6% of the system sales of its Pizza Pizza restaurants in the Royalty Pool. There were 559 Pizza Pizza restaurants in the Royalty Pool for 2008. On July 24, 2007, the Partnership acquired the trademarks and other intellectual property of Pizza 73, which were licensed to the Company for 99 years, for which the Company pays the Fund a royalty equal to 9% of the system sales of its Pizza 73 restaurants. There were 50 Pizza 73 restaurants in the Royalty Pool for 2008. The 2008 Royalty Pool had 609 total restaurants. The 2009 Royalty Pool will have 637 total restaurants.
A key attribute of the Fund is that revenues are based on top-line, system sales of the Royalty Pool restaurants and not on the profitability of either the Company or the restaurants in the Royalty Pool. Moreover, the Fund is not subject to the variability of earnings or expenses of the operating companies. The Fund's only expenses are administration expenses and the interest on debt. Thus, the success of the Fund depends primarily on the ability of Pizza Pizza to maintain and increase system sales of the Royalty Pool restaurants and to meet its royalty obligations.
The Fund's trust units are listed on the Toronto Stock Exchange under the symbol PZA.UN.
Forward Looking Statements
Certain statements in this report may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this report, such statements include such words as "may", "will", "expect", "believe", "plan", and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this report. These forward-looking statements involve a number of risks and uncertainties. The following are some factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking statements: competition; changes in demographic trends; changing consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; legislation and governmental regulation; accounting policies and practices; and the results of operations and financial condition of Pizza Pizza. The foregoing list of factors is not exhaustive and should be considered in conjunction with the other risks and uncertainties described in the Fund's Annual Information Form. The Fund assumes no obligation to update these forward looking statements, except as required by applicable securities laws.
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