Pizza Pizza has a Strong Third Quarter Posting 6% Same Store Sales
Growth.
TORONTO, Nov. 7 /CNW/ - Pizza Pizza Royalty Income Fund (the "Fund"),
reported today third quarter financial results for the period July 1, 2005 to
September 30, 2005. Management discussion and analysis of the financial
results and a copy of the Q3 report will be available at www.sedar.com and
www.pizzapizzaroyaltyincomefund.com.
Pizza Pizza Limited ("Pizza Pizza"), the operating company, has
traditionally ended its fiscal year September 30th. After Pizza Pizza files
its September 30, 2005 financial statements, it will convert to a
December 31st year end which is also the Fund's year end. Pizza Pizza
anticipates filing its September 30th year end financial statements before
December 15, 2005.
Pizza Pizza is pleased to announce a strong 2005, third quarter, posting
a 6% same store sales growth ("SSSG") over the same period in 2004.
The Fund, which is a limited purpose, open-ended trust established under
the laws of Ontario, completed its initial public offering on July 6, 2005,
proceeds of which were used to acquire the intellectual property, systems and
operating procedures of Pizza Pizza restaurants in Canada. These rights are
licensed to Pizza Pizza in consideration for a royalty equal to 6% of system
sales. The Royalty is calculated based on the system sales of 340 traditional
quick service restaurants and 160 non-traditional locations that were open at
March 13, 2005 (collectively the "Royalty Pool").
The Pizza Pizza royalty pool system sales for the quarter were
$83.6 million, or an increase of 6% compared to the equivalent period in 2004.
Each Pizza Pizza reporting quarter contains 13 weekly periods. Royalty income
for the Fund was $5,014,889 for the quarter, earnings were $0.211 per unit and
the Fund declared distributions of $0.189 per unit.
At September 30, 2005, the Pizza Pizza restaurant chain included 341
traditional restaurants, the majority of which are in Ontario, and 165
non-traditional restaurants located across Canada.
Financial Highlights
Equity and interest income earned by the Fund through its interest in the
Partnership has been derived as shown in the table below (the following
information provides additional analysis of the operations and financial
position of the Fund and should be read in conjunction with the consolidated
financial statements and accompanying notes):
<<
------------------------------------------------------------------
Three months
ended
September 30,
2005
------------------------------------------------------------------
(in thousands of dollars, except number of restaurants in the Royalty
Pool and earnings per Fund unit)
Restaurants in Royalty Pool 500
--------------------------------------------------------------
System sales reported by
restaurants in the Royalty Pool(1) $ 83,582
--------------------------------------------------------------
Royalty - 6% of system sales 5,015
Interest expense (262)
Amortization (41)
Administrative expense (88)
--------------------------------------------------------------
Partnership earnings for the period
before undernoted $ 4,624
Pizza Pizza's interest (1,269)
--------------------------------------------------------------
Equity income related to Pizza Pizza
royalties earned by Fund 3,355
Interest income 430
--------------------------------------------------------------
Net earnings $ 3,785
--------------------------------------------------------------
Basic and undiluted earnings per
Fund unit $ 0.211
--------------------------------------------------------------
Distributions declared per Fund unit $ 0.189
--------------------------------------------------------------
Same store sales growth 6.0%
Number of restaurants opened during the quarter 4
Number of restaurants closed during the quarter 1
(1) System sales represents system sales of the restaurants included in
the royalty pool from the time of completing the initial public
offering on July 6, 2005 to September 30, 2005.
Outlook
Pizza Pizza is well positioned for future SSSG and continues to
strengthen its position as "Ontario's No. 1 Pizza" through its franchisee
renovation program. With over 90% of traditional restaurants expanded or
relocated within the last five years, Pizza Pizza now offers expanded seating
capacity, thereby targeting additional day-parts and allowing for additional
product offerings to enable restaurants to continue increasing same store
sales. Management is focused on completing the renovation program in 2006.
At September 30, 2005, the Pizza Pizza restaurants included 341
traditional restaurants, most which are in Ontario, and 165 non-traditional
locations across Canada. For the period from March 14, 2005 to September 30,
2005, two traditional Pizza Pizza restaurants were opened and one closed;
there were six non-traditional sites opened and one closed. For the quarter,
one traditional restaurant opened and there was one closure; there were three
non-traditional sites opened.
Forward Looking Statements
Certain statements in this quarterly 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 quarterly 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 quarterly
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.
Pizza Pizza is one of Canada's most popular and successful pizza
restaurant operations. The company is guided by a mission to provide the "best
food, made especially for you" and a focus on quality ingredients, customer
service, community contribution and continual innovation.
Pizza Pizza's trust units are listed on the Toronto Stock Exchange
(PZA.UN).
>>
%SEDAR: 00022262EF
