SIR Royalty Income Fund announces SIR Corp. fiscal 2008 third quarter results



    BURLINGTON, ON, June 18 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN)
("the Fund") today announced that SIR Corp. ("SIR"), the operating entity from
which the Fund derives distribution income and interest income, has filed its
financial results for the 12 and 36-week periods ended May 4, 2008 ("third
quarter").
    SIR has advised the Fund that revenue for the third quarter of fiscal
2008 increased 8.0% to $41.9 million compared to $38.8 million in revenue for
the same period a year ago. Increased revenue in the third quarter resulted
from same store sales growth(1) ("SSSG") and the increase in number of
restaurants to 41 at the end of the third quarter of fiscal 2008 from 39 at
the end of the third quarter of fiscal 2007. Three new Jack Astor's(R)
restaurants were added to the Royalty Pool effective January 1, 2008, and two
closed restaurants were removed from the Royalty Pool effective January 1,
2008.
    For the 36-week period ended May 4, 2008, revenue increased 8.4% to
$123.1 million compared to $113.6 million for restaurants in the Royalty Pool
for the 36-week period ended May 6, 2007.
    As at May 4, 2008, the Concept Restaurants (Jack Astor's, Alice
Fazooli's(R) and Canyon Creek Chop House(R)) accounted for approximately 88%
of Pooled Revenue and the Signature Restaurants (reds(R), Far
Niente(R)/FOUR(TM) & Petit Four(TM), and The Loose Moose Tap & Grill(R))
accounted for approximately 12%.
    SIR's loss from continuing operations decreased 22.8% to $0.29 million in
the third quarter of fiscal 2008 compared to a loss from continuing operations
of $0.37 million in the third quarter of fiscal 2007. SIR's loss from
continuing operations totalled $2.0 million for the 36-week period ended
May 4, 2008, down 42.6% from a loss from continuing operations of $3.4 million
for the 36-week period ended May 6, 2007.
    SIR's cash provided by continuing operations increased by $1.4 million
for the 12-week period ended May 4, 2008 as compared to the 12-week period
ended May 6, 2007. Cash provided by continuing operations increased by
$0.6 million for the 36-week period ended May 4, 2008 as compared to the
36-week period ended May 6, 2007. Cash used in investing activities for the
12-week periods ended May 4, 2008 and May 6, 2007 was $3.4 million and $2.8
million, respectively. Cash used in investing activities for the 36-week
periods ended May 4, 2008 and May 6, 2007 was $8.9 million and $7.9 million,
respectively. Purchases of property and equipment and restaurant pre-opening
costs amounted to $3.4 million and $3.5 million for the 12-week periods ended
May 4, 2008 and May 6, 2007, respectively and $8.8 million and $8.2 million
for the 36-week periods ended May 4, 2008 and May 6, 2007, respectively.
Fiscal 2008 purchases are a result of the second and third quarter renovations
of the Soul of the Vine into FOUR/Petit Four, the first quarter renovation of
the Loose Moose Tap & Grill, the construction costs of the new Jack Astor's
location in Burlington, Ontario and the new Jack Astor's and Canyon Creek
restaurants near the Toronto Pearson International Airport and the continuing
construction costs for other new Jack Astor's restaurants expected to open in
calendar year 2008.
    SIR has advised the Fund that same store sales(1) ("SSS") for restaurants
in the Royalty Pool for the third quarter of 2008 increased 3.4% to
$37.9 million compared to $36.6 million for the comparable period a year ago.
For the 36-week period ended May 4 2008, SSS(1) increased 3.3% to $111.8
million compared to $108.3 million for the comparable period a year ago.
    Snow fall in southern Ontario during SIR's fiscal 2008 second quarter and
the early part of the third quarter of fiscal 2008 was significantly higher
than average, particularly in the Greater Toronto Area where the majority of
SIR's restaurants are located. SIR's Management believes that this had a
negative effect on the SSSG(1) of SIR's Concept and Signature Restaurants
during these periods.

    
    SSSG(1)                             12-week period      36-week period
                                       ended May 4, 2008   ended May 4, 2008
                                          (unaudited)         (unaudited)
    -------------------------------------------------------------------------
    Jack Astor's                              3.5%                2.3%
    Canyon Creek Chop House                   1.8%                3.5%
    Alice Fazooli's!                          1.8%                3.7%
    Signature Restaurants                     7.4%                7.7%
    -------------------------------------------------------------------------
    Overall SSSG(1)                           3.4%                3.3%
    

    SIR's 2008 third quarter filings, which include its unaudited
consolidated financial statements and management's discussion & analysis, can
be accessed via the Fund's profile on the SEDAR web site at www.sedar.com
under "Other".

    About SIR Corp.

    SIR is a privately held Canadian corporation that owns and operates a
portfolio of 42 restaurants in Canada. SIR's concept brands include: Jack
Astor's Bar and Grill(R), with 26 locations; Alice Fazooli's!(R), with five
locations; and Canyon Creek Chop House(R), with eight locations. SIR also
operates one-of-a-kind "signature" brands in downtown Toronto, which comprise
the upscale reds(R), Far Niente(R)/Four(TM) & Petit Four(TM), and the Loose
Moose Tap & Grill(R). All trademarks related to the concept and signature
brands noted above are used by SIR under a license agreement with SIR Royalty
Limited Partnership in consideration for a Royalty, payable by SIR to the
Partnership, equal to six percent of the revenue of the 39 restaurants
currently included in the Royalty pool. For more information on SIR Corp. or
the SIR Royalty Income Fund, please visit www.sircorp.com.

    About SIR Royalty Income Fund

    The Fund is a trust governed by the laws of the province of Ontario that
receives distribution income from its investment in the SIR Royalty Limited
Partnership and interest income from the SIR Loan. The Fund intends to pay
distributions to unitholders on a monthly basis.

    Caution concerning forward-looking statements
    ---------------------------------------------
    Statements in this release, including the information set forth as to the
future financial or operating performance of the Fund or SIR, that are not
current or historical factual statements may constitute "forward-looking"
information within the meaning of securities laws. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Fund,
the Trust, the Partnership, SIR, the SIR Restaurants, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. When used in this
document, such statements may include, among other language, such words as
"may", "will", "expect", "believe", "plan", "anticipate", "intend", "estimate"
and other similar terminology. These statements reflect Management's current
expectations, estimates and projections regarding future events and operating
performance and speak only as of the date of this document. Readers should not
place undue importance on forward-looking statements and should not rely upon
this information as of any other date. These forward-looking statements
involve a number of risks and uncertainties. The following are some of the
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; legal proceedings and challenges to intellectual property rights;
dependence of the Fund on the financial condition of SIR; legislation and
governmental regulation; accounting policies and practices; and the results of
operations and financial condition of SIR. The foregoing list of factors is
not exhaustive. Many of these issues can affect the Fund's or SIR's actual
results and could cause their actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or on behalf
of, the Fund or SIR. Readers are cautioned that forward-looking statements are
not guarantees of future performance, and should not place undue reliance on
them. The Fund and SIR expressly disclaim any obligation or undertaking to
publicly release any updates or revisions to any forward-looking statements
contained herein to reflect any change in expectations, estimates and
projections with regard thereto or any changes in events, conditions or
circumstances on which any statement is based, except as expressly required by
law.
    In formulating the forward-looking statements contained herein,
Management has assumed that business and economic conditions affecting SIR's
restaurants and the Fund will continue substantially in the ordinary course,
including without limitation with respect to industry conditions, general
levels of economic activity (including in downtown Toronto), regulations
(including those regarding employees, food safety, tobacco and alcohol),
weather, taxes, foreign exchange rates and interest rates, that there will be
no pandemics or other material outbreaks of disease or safety issues affecting
humans or animals or food products, and that there will be no unplanned
material changes in its facilities, equipment, customer and employee
relations, or credit arrangements. These assumptions, although considered
reasonable by Management at the time of preparation, may prove to be
incorrect. In particular, in estimating the revenues for the three new Jack
Astor's restaurants, Management has assumed that they will operate consistent
with other Jack Astor's restaurants. For more information concerning the
Fund's risks and uncertainties, please refer to the October 2004 final
prospectus, and/or its March 31, 2008 Annual Information Form, all of which
are available under the Fund's profile at www.sedar.com.

    (1) Same store sales and same store sales growth exclude revenue from
    restaurants which are not included in the Royalty pool, and exclude
    revenue from restaurants opened or closed during the current or prior
    fiscal year and therefore not open for the full period in both years.
    Same store sales growth is the percentage increase in SSS over the prior
    comparable period. SSS and SSSG are non-GAAP measures that do not have
    standardized meanings prescribed by GAAP. However, SIR believes that SSS
    and SSSG are useful measures and provide investors with an indication of
    the change in year-over-year sales. SIR's method of calculating SSS and
    SSSG may differ from those of other issuers and, accordingly, SSS and
    SSSG may not be comparable to measures used by other issuers.

    %SEDAR: 00020914E




For further information:

For further information: Jeff Good, Chief Financial Officer, SIR Corp.,
Tel: (905) 681-2997; Bruce Wigle, Investor Relations, Tel: (416) 815-0700 ext.
228, Email: bwigle@equicomgroup.com


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