SIR Royalty Income Fund reports fiscal 2009 first quarter results



    BURLINGTON, ON, May 14 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN)
("the Fund") today reported its fiscal 2009 first quarter results for the
three-month period ended March 31, 2009.

    
    Q1 2009 Highlights

    -   Net earnings were $1.7 million or $0.32 per Fund unit (basic and
        diluted) compared to $1.8 million or $0.34 per fund unit (basic and
        diluted) for the same period in 2008;
    -   Distributable cash(2) for Q1 2009 totaled $1.7 million and declared
        distributions to unitholders were $1.8 million representing a payout
        ratio(2) of 108.7% compared to distributable cash(2) of $1.8 million
        and declared distributions of $1.8 million representing a payout
        ratio(2) of 97.5% in Q1 2008;
    -   Same store sales(1) ("SSS") for restaurants in the Royalty Pooled
        Restaurants declined 5.6% compared to the first quarter in 2008 (Q1
        2008);
    -   Five new Jack Astor's(R) restaurants and one new Canyon Creek(R)
        restaurant were opened in fiscal 2008 and added to the Royalty Pooled
        Restaurants on January 1, 2009;
    

    "The recessionary climate in Q1 2009 continued to impact consumers'
dining and entertainment decisions, resulting in a decline in our first
quarter same store sales(1) results. This was not unexpected as the Canadian
Restaurant and Foodservices Association in its January 2009 Long Term
Foodservice Forecast projected industry sales in the full service restaurant
category would decline by 3.1% in 2009," said Peter Fowler, Chief Executive
Officer of SIR Corp. ("SIR") "In anticipation of a weaker economic climate in
2009, we have implemented greater cost discipline including slowing of growth
plans, and shifting some of our media-based marketing to individual restaurant
initiatives that have been successful in the past," continued Mr. Fowler.
"Subsequent to Q1 2009, SIR launched its exciting new advertising campaign,
'Get Fresh' for Jack Astor's. The campaign includes direct mail, radio and
television banner advertisements supporting Jack Astor's key markets."
    "While we do not expect to see near-term improvement in the economy, we
will not stray from our strategy of operating best-in-class restaurants and
constantly improving and innovating to meet our guests' evolving tastes. We
are currently evaluating some new ideas and renovations for our Alice
Fazooli's(R) Concept Restaurant at our location in Mississauga, Ontario, which
has received favourable initial guest responses," added Mr. Fowler. "We
believe that our multi-brand approach offering consumers a wide range of
dining experiences will help mitigate some of the economic challenges. As
well, SIR's investments in newly constructing or renovating all but two of our
45 restaurants over the past five years positions us well with modern and
relevant concepts to attract and retain guests. We are confident in the
underlying strength of our portfolio of restaurant brands and look forward to
continuing our focus on excellence and innovation, and providing stable
distributions to our unitholders."

    Financial Results

    Revenue for the Royalty Pooled Restaurants for the three-month period
ended March 31, 2009, increased by 8.3% to $45.5 million compared to $42.0
million for the same period in 2008. The increase in Pooled Revenue resulted
primarily from the addition of six new restaurants to the Royalty Pooled
Restaurants effective January 1, 2009.
    Distributable cash(2) for the first quarter in 2009 (Q1 2009) totaled
$1.7 million or $0.32 per Fund Unit (basic and diluted), and declared
distributions to unitholders totaled $1.8 million, representing a payout
ratio(2) of 108.7% for the period. For Q1 2008, distributable cash(2) totaled
$1.8 million or $0.34 per Fund Unit (basic and diluted) and declared
distributions totaled $1.8 million, representing a payout ratio(2) of 97.5%.
    The Fund's net earnings for Q1 2009 totaled $1.7 million, or $0.32 per
Fund Unit (basic and diluted), compared to $1.8 million or $0.34 per Fund Unit
(basic and diluted) for the same period in 2008.

    
    Financial Highlights                      3 month period  3 month period
    ($000s except restaurant and                    ended           ended
     per unit amounts)                            March 31,       March 31,
    (unaudited)                                     2009            2008
    -------------------------------------------------------------------------
    Royalty Pooled Restaurants                            45              39
    Pooled Revenue generated by SIR                   45,492          42,024
                                             --------------------------------
                                             --------------------------------
    Royalty income to Partnership - 6% of
     Pooled Revenue                                    2,730           2,521
    Partnership other income                               9              17
    Partnership expenses                                 (46)            (43)
                                             --------------------------------

    Partnership earnings                               2,693           2,495

    SIR Corp.'s interest (Class A, B, and
     C GP Units)                                      (1,615)         (1,308)
                                             --------------------------------

    Partnership income allocated to Fund               1,078           1,187
    Interest income                                      750             750
                                             --------------------------------

    Total income of the Fund                           1,828           1,937
    General & administrative expenses                   (128)           (124)
                                             --------------------------------

    Net earnings of the Fund                           1,700           1,813
                                             --------------------------------
                                             --------------------------------

    Earnings per Fund unit (basic and fully
     diluted)                                           0.32            0.34
    Distributable cash(2) per Fund unit                 0.32            0.34
    

    The net earnings, distributable cash(2), and payout ratio(2) for Q1 2009
were negatively affected by continued weakness in the general economy compared
to the same period in 2008. Management believes that the current recession has
negatively impacted consumers' food and entertainment decisions, resulting in
lower SSS(1) in Q1 2009 compared to the same period in 2008.

    Same Store Sales(1)

    For the three-month period ended March 31, 2009, SIR reported to the Fund
a decline in SSS(1) of 5.6% for the Royalty Pooled Restaurants compared to
same store sales growth ("SSSG")(1) of 1.7% for the same period in 2008. The
Canadian Restaurant and Foodservices Association in its Long Term Foodservice
Forecast, prepared in January 2009, projected sales in the full service
restaurant category will decline by 3.1% in 2009. Management believes that
Jack Astor's, with its somewhat lower average cheque has been less affected by
the weaker economy reporting a decline in SSS(1) of 2.9%, while restaurants
with higher average cheques such as Canyon Creek and the downtown Toronto
Signature Restaurants (including reds(R), Loose Moose Tap & Grill(R), Far
Niente(R)/FOUR(TM)/Petit Four(TM)) experienced greater declines, reporting
SSS(1) declines of 10.2% and 13.8%, respectively in Q1 2009. Alice Fazooli's
with an average cheque in the mid-range reported a SSS(1) decline of 6.5%.
    Management is not expecting an improvement in these conditions in the
near term, and sales and profit may be negatively impacted in a weak economic
environment. However, management has taken certain actions with regard to cost
savings and cash preservation strategies including the previously announced
slowing of growth plans, and shifting some of its marketing focus during Q1
2009, from media-based concept marketing to individual restaurant marketing
initiatives.

    
                                              3 month period  3 month period
    SSSG(1) for Royalty Pooled Restaurants          ended           ended
                                                  March 31,       March 31,
                                                    2009            2008
    -------------------------------------------------------------------------
    Jack Astor's                                       (2.9%)           1.7%
    Canyon Creek Chop House                           (10.2%)           0.3%
    Alice Fazooli's                                    (6.5%)           0.9%
    Signature Restaurants                             (13.8%)           4.2%
    -------------------------------------------------------------------------
    Overall SSSG(1)                                    (5.6%)           1.7%
    

    The Fund's 2009 first quarter Financial Statements and Management's
Discussion & Analysis ("MD&A"), and the SIR Royalty Limited Partnership's
Financial Statements, for the three-month period ended March 31, 2009 will be
filed on SEDAR today and will be available via the SEDAR web site at
www.sedar.com tomorrow. The Fund's 2009 first quarter Financial Statements and
MD&A are also available via SIR's website at www.sircorp.com.

    2009 First Quarter Conference Call & Web Cast

    Management of SIR Royalty Income Fund will host a conference call to
discuss the Fund's 2009 first quarter financial results on Friday, May 15,
2009 at 10:00 a.m. (EST). The call will be audio-cast live and archived for 90
days at www.newswire.ca or www.sircorp.com. A replay of the conference call
will be available until Friday May 22nd at midnight by call ing 1-877-289-8525
or 416-640-1917, reference number 21305011 followed by the number sign.

    
    ----------------
    (1) Same store sales and same store sales growth exclude revenue from
        restaurants which are not included in the 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. SSSG 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.

    (2) Distributable cash and payout ratio are non-GAAP financial measures
        and do not have a standardized meaning prescribed by GAAP. However,
        the Fund believes that distributable cash and the payout ratio are
        useful measures as they provide investors with an indication of cash
        available for distribution. The Fund's method of calculating
        distributable cash and the payout ratio may differ from that of other
        issuers and, accordingly, distributable cash and the payout ratio may
        not be comparable to measures used by other issuers. Investors are
        cautioned that distributable cash and the payout ratio should not be
        construed as an alternative to the statement of cash flows as a
        measure of liquidity and cash flows of the Fund. The payout ratio is
        calculated as cash distributed for the period as a percentage of the
        distributable cash for the period. For a detailed explanation of how
        the Fund's distributable cash is calculated, please refer to the
        Fund's MD&A for the three-month period ended March 31, 2009, which
        can be accessed via the SEDAR web site (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 , with 29 locations; Alice Fazooli's , with five
locations; and Canyon Creek Chop House , 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 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 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 the one
new Canyon Creek restaurant, added to the Royalty pool 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.
    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 4 activity (including in downtown Toronto), regulations
(including regarding employees, food safety, tobacco and alcohol), weather,
taxes, foreign exchange rates and interest rates, that there will be no
pandemics or other 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 SIR
management at the time of preparation, may prove to be incorrect. For more
information concerning the Fund's risks and uncertainties, please refer to the
Fund's periodic interim filings, its 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

    %SEDAR: 00020914E




For further information:

For further information: Jeff Good, Chief Financial Officer, SIR Corp.,
5360 South Service Road, Suite 200, Burlington, Ontario, Canada, L7L 5L1, Tel:
(905) 681-2997; Bruce Wigle or Alice Dunning, Investor Relations, Tel: (416)
815-0700 ext. 228 or ext. 255, Email: bwigle@equicomgroup.com or
adunning@equicomgroup.com


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