Monthly distributions to Unitholders increased for the third time this year based strong franchise sales and 6.6% same store sales growth
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 6, 2007) - Boston Pizza Royalties Income Fund (the "Fund") (TSX:BPF.UN) and Boston Pizza International Inc. ("BPI") each reported today financial results for the period of July 1, 2007 to September 30, 2007 (the "Period") and the year-to-date results from January 1, 2007 to September 30, 2007 ("Year-to-date"). A copy of the combined third quarter report is available at www.sedar.com and www.bpincomefund.com. The Fund will host a conference call to discuss third quarter results on November 6, 2007 at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until November 13, 2007 by dialling 1-800-319-6413 or 604-638-9010 and entering the pin code: 6811 followed by # sign.
Same Store Sales Growth ("SSSG"), the key metric for revenue growth of the Fund, was 6.6% for the Period and 6.6% Year-to-date. Overall growth in franchise sales of royalty pooled restaurants, which is a combination of new restaurants added to the royalty pool and SSSG, was 21.7%. During the Period, BPI opened seven new Boston Pizza restaurants. Subsequent to September 30th, BPI opened another six new locations, bringing the current total number of Boston Pizza restaurants open in Canada to 286, of which 266 are included in the royalty pool. Also during the Period, four restaurants were renovated to the latest design standards. Year-to-date, 17 Boston Pizza restaurants have completed major renovations.
"Boston Pizza has continued to perform very well through the third quarter of 2007," said Mike Cordoba, Chief Executive Officer of Boston Pizza. "We are particularly pleased with the same store sales growth of 6.6% compared to the first nine months of 2006, which is a key factor in the profitability of our franchisees and in our ability to increase distributions to Unitholders of the Fund. In addition, overall franchise sales of restaurants in the royalty pool were $156.1 million in the Period, an increase of 21.7% compared to the third quarter of 2006. These strong sales results were driven by effective promotional activities, an updated menu launched in May and our unique store renovation program."
Earnings before income taxes per unit increased by 5.7% during the Period compared to the same period in 2006. Earnings before income taxes of the Fund for the Period were $4.7 million or $0.37 per unit compared to the third quarter of 2006 in which Net Earnings were $3.8 million or $0.35 per unit. Distributions declared for the Period were $0.34 per unit compared to the third quarter of 2006 in which distributions declared were $0.32 per unit. Distributions for the Period were funded entirely by cash flow from operations. No debt was incurred at any point during the Period to fund distributions.
Based on the continued positive results, the Trustees of the Fund are pleased to announce an increase in monthly cash distributions to Unitholders of 11.5 cents per unit ($1.380 annualized) from 11.3 cents per unit (1.356 annualized) for October. This marks the third distribution increase to date in 2007. Since the Fund's initial public offering in July 2002, monthly distributions have been increased a total of thirteen times, rising 38.0% over that time. The distribution will be paid to Unitholders of record at the close of business on November 21, 2007 and will be payable on November 30, 2007. The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to Unitholders.
The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trade-marks and trade names used by BPI in its Boston Pizza restaurants in Canada. The trade-marks are licensed to BPI for 99 years for which BPI pays the Fund 4% of franchise revenues of royalty pooled restaurants. Effective January 1, 2007, there are 266 restaurants in the royalty pool.
HIGHLIGHTS
The following table sets out selected historical information and other data from the financial statements of the Fund and the Boston Pizza Royalties Limited Partnership (the "Partnership"), which should be read in conjunction with the attached consolidated financial statements of the Fund.
Jul. 1, Jul. 1, Jan. 1, Jan. 1,
2007 to 2006 to 2007 to 2006 to
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2007 2006 2007 2006
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(in thousands of dollars - except restaurants and per unit items)
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Number of restaurants in
Royalty Pool 266 226 266 226
Franchise Sales reported by
restaurants in Royalty Pool $ 156,111 $ 128,280 $ 439,980 $ 362,134
Royalty Income - 4% of
Franchise Sales of
Royalty Pool Restaurants $ 6,244 $ 5,131 $ 17,599 $ 14,485
Partnership administrative
and interest expenses $ 215 $ 255 $ 859 $ 765
Partnership earnings for the
period before undernoted $ 6,029 $ 4,876 $ 16,740 $ 13,720
BPI's interest in the earnings
of the Partnership $ 1,783 $ 1,530 $ 5,350 $ 4,625
Equity income related to BPI
royalties earned by the Fund $ 4,246 $ 3,346 $ 11,390 $ 9,095
Interest income $ 450 $ 450 $ 1,350 $ 1,350
Earnings before income taxes $ 4,696 $ 3,796 $ 12,740 $ 10,445
Future income taxes $ 176 $ 0 $ 2,999 $ 0
Net earnings $ 4,520 $ 3,796 $ 9,741 $ 10,445
Basic Earnings per Fund unit $ 0.35 $ 0.35 $ 0.78 $ 0.97
Diluted earnings per Fund unit $ 0.35 $ 0.35 $ 0.78 $ 0.97
Distributions declared per
Fund unit $ 0.34 $ 0.32 $ 0.90 $ 0.84
Same store sales growth 6.6% 6.8% 6.6% 8.9%
Number of restaurants opened
during period 7 6 14 23
Number of restaurants closed
during period 0 0 0 0
BOSTON PIZZA ROYALTIES INCOME FUND
Consolidated Balance Sheets
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September 30, December 31,
2007 2006
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(Unaudited)
Assets
Current assets:
Cash $ 320 $ 275
Interest receivable on note receivable
from Boston Pizza International Inc. 150,000 150,000
Distributions receivable from Boston
Pizza Royalties Limited Partnership - 1,048,645
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150,320 1,198,920
Note receivable from Boston Pizza
International Inc. 24,000,000 24,000,000
Investment in Boston Pizza Royalties
Limited Partnership (note 4) 126,596,440 98,854,840
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$ 150,746,760 $ 124,053,760
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Liabilities and Unitholders' Equity
Current liabilities:
Distributions payable to Fund
unitholders $ - $ 1,198,640
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Future income taxes (note 6) 2,999,000 -
Unitholders' equity:
Fund units 149,182,700 122,606,237
Retained earnings (deficit) (1,434,940) 248,883
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147,747,760 122,855,120
Contingency (note 5)
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$ 150,746,760 $ 124,053,760
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See accompanying notes to consolidated financial statements.
BOSTON PIZZA ROYALTIES INCOME FUND
Consolidated Statements of Earnings and Comprehensive Income
(Unaudited)
Three and nine months ended September 30, 2007, with comparative figures
for 2006
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Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2007 2006 2007 2006
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Revenue (note 3(a)):
Equity income
related to
BPI royalties $ 4,246,025 $ 3,345,705 $ 11,389,969 $ 9,095,006
Interest income 450,015 450,015 1,350,040 1,350,040
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Earnings before
income taxes 4,696,040 3,795,720 12,740,009 10,445,046
Future income
taxes (note 6) (176,000) - (2,999,000) -
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Net earnings for
the period 4,520,040 3,795,720 9,741,009 10,445,046
Other comprehensive
income - - - -
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Comprehensive
income $ 4,520,040 $ 3,795,720 $ 9,741,009 $ 10,445,046
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Weighted average
units outstanding 12,750,922 10,996,700 12,436,062 10,746,822
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Basic and diluted
earnings per Fund
unit $ 0.35 $ 0.35 $ 0.78 $ 0.97
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Consolidated Statements of Retained Earnings (Deficit)
(Unaudited)
Three and nine months ended September 30, 2007, with comparative figures
for 2006
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Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2007 2006 2007 2006
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Retained earnings
(deficit), beginning
of period $ (1,632,418) $ 1,214,588 $ 248,883 $ 272,549
Net earnings for
the period 4,520,040 3,795,720 9,741,009 10,445,046
Distributions
declared to Fund
unitholders (4,322,562) (3,551,934) (11,424,832) (9,259,221)
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Retained earnings
(deficit), end of
period $ (1,434,940) $ 1,458,374 $ (1,434,940) $ 1,458,374
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See accompanying notes to consolidated financial statements.
BOSTON PIZZA ROYALTIES INCOME FUND
Consolidated Statements of Cash Flows
(Unaudited)
Three and nine months ended September 30, 2007, with comparative figures
for 2006
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Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2007 2006 2007 2006
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Cash provided by
(used in):
Operations:
Net earnings $ 4,520,040 $ 3,795,720 $ 9,741,009 $ 10,445,046
Items not
affecting cash:
Equity income (4,246,025) (3,345,705) (11,389,969) (9,095,006)
Future income taxes 176,000 - 2,999,000 -
Distributions
received from
Boston Pizza
Royalties Limited
Partnership 3,872,562 3,100,784 11,273,471 8,886,245
Accounts payable
and accrued
liabilities - (50) - (50)
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4,322,577 3,550,749 12,623,511 10,236,235
Financing:
Distributions paid
to Fund unitholders (4,322,562) (3,551,934) (12,623,466) (10,237,390)
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Increase in cash 15 (1,185) 45 (1,155)
Cash, beginning of
period 305 1,445 275 1,415
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Cash, end of period $ 320 $ 260 $ 320 $ 260
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Supplementary
information:
Non-cash financing
and investing
activities:
Issuance of Fund
units to acquire
additional interest
in Boston Pizza
Royalties Limited
Partnership $ - $ - $ 26,576,464 $ 21,776,860
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Equity and interest income earned by the Fund has been derived as follows:
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Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
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(in thousands of dollars, except number of restaurants in the Royalty Pool
and earnings per Fund unit)
Restaurants in the
Royalty Pool 266 226 266 226
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Franchise sales
reported by
restaurants in
the Royalty Pool $ 156,111 $ 128,280 $ 439,980 $ 362,134
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Royalty income - 4%
of Franchise sales $ 6,244 $ 5,131 $ 17,599 $ 14,485
Administrative and
interest expenses (215) (255) (859) (765)
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Partnership earnings
for the period
before undernoted 6,029 4,876 16,740 13,720
BPI's interest in
the earnings of the
Partnership (1,783) (1,530) (5,350) (4,625)
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Equity income related
to BPI royalties
earned by Fund 4,246 3,346 11,390 9,095
Interest income 450 450 1,350 1,350
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Net earnings before
income taxes $ 4,696 $ 3,796 $ 12,740 $ 10,445
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Balance as at December 31, 2005 $ 77,100,557
Acquisition of additional Partnership units by
issuing Fund units 21,776,860
Equity income 12,230,056
Distributions from the Partnership (12,252,633)
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Balance as at December 31, 2006 98,854,840
Acquisition of additional Partnership units by
issuing Fund units 26,576,464
Equity income 11,389,969
Distributions from the Partnership (10,224,833)
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Balance as at September 30, 2007 $ 126,596,440
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Summarized balance sheet of the Partnership is as follows:
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September 30, December 31,
2007 2006
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Current assets $ 7,666,376 $ 8,175,440
Long-term assets, consisting of
the BP Rights 191,193,591 160,047,787
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Total assets $ 198,859,967 $ 168,223,227
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Current liabilities $ 4,581,228 $ 7,155,972
Long term liabilities 5,000,000 5,000,000
Partners' surplus 189,278,739 156,067,255
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Total liabilities and surplus $ 198,859,967 $ 168,223,227
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Boston’s is both a family-friendly casual dining restaurant and an energetic sports bar, all under one roof.