SIR Royalty Income Fund announces SIR Corp. fiscal 2009 second quarter results

    BURLINGTON, ON, April 1 /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 24-week period ended February 15, 2009
("second quarter").
    SIR has advised the Fund that revenue for the second quarter of fiscal
2009 increased 9.8% to $45.2 million compared to $41.2 million for the same
period a year ago. For the 24-week period ended February 15, 2009, revenue
increased 11.3% to $90.3 million compared to $81.2 million for the same period
a year ago. Increased revenue for both the 12 and 24-week period ended
February 15, 2009 reflect an increase in the number of restaurants to 45 as at
the end of the second quarter in 2009 from 39 for the same period in 2008.
    Same store sales(1) ("SSS(1)") for the second quarter of fiscal 2009
totaled $38.0 million compared to $39.3 million for the comparable period a
year ago. Both the Concept Restaurants and Signature Restaurants reported same
store sales declines for the period ended February 15, 2009 compared to the
same period a year ago. Overall SSS(1) declined 3.2% in the second quarter of
fiscal 2009. However, Jack Astor's(R), SIR's flagship Concept Restaurant brand
which generates approximately 63% of Year to Date (YTD) Pooled Revenue, was
relatively flat with SSS(1) decline of 0.1%. Management believes that the
recent weaker economic conditions are the primary driver of SSS(1) declines in
the quarter. Jack Astor's, with its lower average cheque was less impacted by
the weaker economy compared to higher average cheque restaurants such as
Canyon Creek(R) and the downtown Toronto Signature Restaurants.
    For the 24-week period ended February 15, 2009, SSS(1) totaled $76.1
million compared to $77.5 million for the comparable period a year ago.
Although overall SSS(1) declined 1.9% YTD, Jack Astor's reported same store
sales growth ("SSSG(1)") of 1.0%.

                                  12-week period ended  24-week period ended
                                   February 15, 2009      February 15, 2009
    SSSG(1)                            (unaudited)           (unaudited)
    Jack Astor's(R)                       (0.1%)                 1.0%
    Canyon Creek Chop House(R)            (4.9%)                (5.2%)
    Alice Fazooli's(R)                    (6.7%)                (4.9%)
    Signature Restaurants                (12.8%)                (8.8%)
    Overall SSSG(1)                       (3.2%)                (1.9%)

    SIR's net loss from operations was $0.04 million in the second quarter of
fiscal 2009 compared to $0.6 million for the comparable period in fiscal 2008.
The YTD net loss of $1.9 million is $0.2 million unfavourable compared to the
net loss of $1.7 million for the same period in fiscal 2008. This is due in
part to the $0.2 million in restructure costs that are not expected to recur
and the increase in interest expense due to higher long term debt. There is
also a $0.4 million foreign exchange loss in the second quarter YTD 2009
compared to a $0.1 million gain in the second quarter YTD 2008. Earnings from
corporate restaurant operations have increased to offset these increased
expenses. Although there has been a decline in SSS(1), this has been mitigated
by the implementation of cost saving initiatives.
    SIR's cash provided by operations increased by $0.6 million to $2.5
million for the 12-week period ended February 15, 2009 compared to the 12-week
period ended February 10, 2008. SIR used cash in investing activities of $2.0
million and $2.7 million for the second quarter of fiscal 2009 and fiscal
2008, respectively. The cash was used primarily for the purchase of property
and equipment, and restaurant preopening costs.
    SIR's revenue and profit may be negatively impacted by the current
economic slowdown. Management is not expecting an improvement in these
conditions in the near future. In anticipation of this, SIR has determined
that the most prudent course of action is to reduce its growth plans and
control its leverage. As announced in the Fiscal 2008 year-end results, SIR
intends to slow its growth from the previously stated goal of 68 restaurants
by December 2010. SIR currently has 45 restaurants open in Canada and since
October 2004, the Fund's Initial Public Offering, SIR has opened fourteen new
restaurants to date. It has secured three additional sites, one with a planned
opening in fiscal year 2010 and two with planned openings in calendar year
2011. Additional sites will be considered, however growth is expected to be
slowed for at least the next calendar year. Management continues to monitor
current economic conditions and consumer confidence. Based on its assessment
of these conditions, the timing of restaurant construction and opening
schedules will be reviewed regularly by Management and adjusted as necessary.
As at February 15, 2009, SIR has cash and cash equivalents of $2.7 million and
an undrawn credit facility of $2.3 million. Management believes that there are
sufficient cash resources retained in SIR from its cash generated by
operations and its financing arrangements to fund its working capital
requirements and current commitments for estimated construction costs for new
    In addition to slower restaurant growth, SIR has implemented some cost
saving initiatives and revised its marketing tactics. SIR continues to review
its opportunities with regard to these and is undertaking cash preservation
    Management is committed to maximizing the performance of all of its
restaurants. During the last five years, SIR has made significant investments
in both new and existing restaurants. All but two of SIR's 45 restaurants have
either been newly constructed or renovated within the past five years. This
leaves SIR well positioned with modern and relevant concepts, which Management
believes will help position SIR to work through the current economic downturn,
and sets a foundation in place to support stable and growing sales and
earnings over the longer term.
    SIR's 2009 second 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
under "Other".

    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 restaurants
currently included in the Royalty pool. For more information on SIR Corp. or
the SIR Royalty Income Fund, please visit

    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 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

    (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 or Alice Dunning, Investor Relations, Tel:
(416) 815-0700 ext. 228 or ext. 255, Email: or

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