BURLINGTON, ON, June 24 /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-week period ("third quarter") and 36-week period
ended May 10, 2009.
SIR has advised the Fund that revenue increased 7.4% to $45.0 million for
the 12-week period ended May 10, 2009, compared to $41.9 million in the same
quarter a year ago. For the 36-week period ended May 10, 2009, revenue
increased 9.9% to $135.3 million compared to $123.1 million for the 36-week
period ended May 4, 2008. Higher revenue in both fiscal 2009 periods resulted
primarily from the increased number of restaurants in operation, compared to
the corresponding periods in fiscal 2008.
Net earnings for the third quarter of fiscal 2009 increased to $0.1
million, up from a loss of $0.3 million in the third quarter of fiscal 2008.
SIR's increased net earnings in the quarter resulted primarily from the impact
of corporate cost savings initiatives, partially offset by higher labour
costs. For the 36-week period ended May 10, 2009, SIR recorded a net loss of
$1.8 million, compared to a net loss of $2.0 million in the comparable period
a year ago. SIR's decreased net loss in fiscal 2009 was primarily attributable
to corporate cost savings initiatives, partially offset by higher labour
costs. The year to date net loss was unfavourably impacted by the $0.2 million
in restructuring costs that are not expected to recur and the fluctuation in
the U.S. exchange rates that caused a $0.3 million unfavourable variance in
the unrealized foreign exchange loss.
SIR has advised the Fund that same store sales(1) ("SSS") for Royalty
Pooled Restaurants for the third quarter of 2009 decreased 6.9% to $37.0
million compared to $39.7 million in the third quarter of fiscal 2008. For the
36-week period ended May 10 2009, SSS(1) decreased 3.6% to $113.0 million
compared to $117.2 million for the corresponding period a year ago.
12-week period 36-week period
May 10, 2009 May 10, 2009
SSS(1) (unaudited) (unaudited)
Jack Astor's(R) (2.8%) (0.4%)
Canyon Creek Chop House(R) (14.9%) (8.3%)
Alice Fazooli's(R) (5.7%) (5.2%)
Signature Restaurants (19.0%) (12.2%)
Overall SSS(1) (6.9%) (3.6%)
Management believes that the current weaker economic conditions are the
primary driver of year-over-year SSS(1) declines. However, Jack Astor's with
its somewhat lower average guest cheque has been less impacted by the weakened
economy than SIR's higher average guest cheque restaurants such as Canyon
Creek(R) and the downtown Toronto Signature Restaurants.
Given the current economic conditions, management intends to focus on
maintaining restaurant sales and profits and reducing costs in the near term.
SIR's cost preservation strategies include slowing of growth from its
previously stated goal of reaching a total restaurant count of 68 by December
2010, and shifting some of its marketing focus from media-based concept
marketing to individual restaurant marketing initiatives. Currently, SIR has
secured three sites for development. One is located in Boisbriand, Quebec
where a new Jack Astor's is expected to open in fiscal 2010, and two sites are
located at the corner of Yonge and Gerrard Streets in Toronto, Ontario and are
expected to open in calendar year 2011.
SIR's cash provided by operations increased to $3.4 million for the
12-week period ended May 10, 2009 compared to $1.8 million for the same period
ended May 4, 2008. For the 36-week period ended May 10, 2009, cash provided by
operations totaled $8.7 million compared to $4.3 million for the same period
ended May 4, 2008.
Cash used in investing activities for the 12-week periods ended May 10,
2009 and May 4, 2008 was $1.0 million and $3.4 million, respectively. Cash
used in investing activities for the 36-week periods ended May 10, 2009 and
May 4, 2008 was $7.7 million and $8.9 million, respectively. Purchases of
property and equipment and restaurant pre-opening costs accounted for the
majority of investing activities in both years.
Management believes that there are sufficient cash resources retained in
SIR from its cash generated by operations to fund its working capital
requirements and current commitments for estimated construction costs for new
restaurants. As at May 10, 2009, SIR has cash and cash equivalents of $4.9
million compared to $1.5 million as at August 31, 2008. In addition, SIR's
unused credit facility as at May 10, 2009 is $2.2 million.
Subsequent to May 10, 2009, the lender of SIR's $16.0 million credit
facility approved the extension of this facility for 364 days, maturing on
July 31, 2010, at which time, the construction line, if not extended, would be
converted into a five-year term loan due in 60 equal monthly installments.
SIR's fiscal 2009 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
About SIR Corp.
SIR is a privately held Canadian corporation that owns and operates a
portfolio of 45 restaurants in Canada. SIR's concept brands include: Jack
Astor's Bar and Grill(R), with 29 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 45 Royalty Pooled
Restaurants. 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 consumer confidence; changes in national and
local business and economic conditions; changes in availability of credit;
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 conditions affecting SIR's restaurants
and the Fund will continue substantially in the ordinary course, including
without limitation with respect to general industry conditions, 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. Management is not anticipating an
improvement, in the near future, in economic conditions (particularly as it
relates to the recent unprecedented deterioration of the economic environment
and consumer confidence, which could significantly negatively affect sales and
profit prospects in the near future). Management is not anticipating an
improvement, in the near future, in the availability of credit (particularly
as it relates to the recent disruption of world credit markets, which could
significantly negatively affect sales and profit prospects in the near
future). 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 five new Jack Astor's restaurants and one new
Canyon Creek restaurant added to the Royalty Pooled Restaurants on January 1,
2009, Management has assumed that they will operate consistent with other Jack
Astor's and Canyon Creek restaurants. For more information concerning the
Fund's risks and uncertainties, please refer to the October 2004 final
prospectus, and/or its March 31, 2009 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 Royalty Pooled Restaurants, 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.
For further information:
For further information: Jeff Good, Chief Financial Officer, SIR Corp.,
Tel: (905) 681-2997; Bruce Wigle or Alice Dunning, Investor Relations, Tel:
(416) 815-0700 ext. 228 or ext. 255, Email: email@example.com or