Boston Pizza Royalties Income Fund Announces Franchise Sales Records of $185 Million for the Fourth Quarter and $731 Million for

Boston Pizza Royalties Income Fund Announces Franchise Sales Records of $185 
Million for the Fourth Quarter and $731 Million for the Year 
Distributable Cash Increased 10.9% for the Fourth Quarter and 8.0%
for 2012 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/07/13 -- Boston
Pizza Royalties Income Fund (TSX:BPF.UN) and Boston Pizza
International Inc. - 
Highlights 


 
--  Record Franchise Sales(1) from royalty pool restaurants for the fourth
    quarter of $185.2 million and for the Year of $731.5 million compared to
    $177.5 million and $699.3 million, respectively, in 2011. 
    
--  Same store sales growth of 2.2% for the Period and 3.3% for the Year. 
    
--  Distributable Cash(2) increased 10.9% for the Period and 8.0% for the
    Year versus the same periods in 2011. 
    
--  Payout Ratio(3) of 98.7% for the Period and 99.3% for the Year. 
    
--  Trustees declare January distribution to unitholders of 9.8 cents per
    unit. 

 
Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza
International Inc. ("BPI") each reported today financial results for
the period from October 1, 2012 to December 31, 2012 (the "Period")
and from January 1, 2012 to December 31, 2012 (the "Year"). A copy of
this press release, the consolidated annual financial statements for
the Year and related Management's Discussion and Analysis of the Fund
and BPI are available at www.sedar.com and www.bpincomefund.com. The
Fund will host a conference call to discuss the results on February
7, 2013 at 8:30 a.m. Pacific Time (11:30 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 March 8, 2013 by dialling 1-800-319-6413 or
604-638-9010 and entering the pin code: 4452 followed by the # sign.  
Same store sales growth ("SSSG"), a key driver of distribution growth
for unitholders of the Fund, was 2.2% for the Period and 3.3% for the
Year compared to 6.4% and 4.9%, respectively, for the same periods in
2011. Franchise Sales(1), the basis upon which royalties are paid by
BPI to the Fund, exclude revenue from the sale of liquor, beer, wine
and tobacco and approved national promotions and discounts. On a
Franchise Sales(1) basis, SSSG was 3.0% for the Period and 3.4% for
the Year compa
red to 5.8% and 4.9%, respectively, for the same
periods in 2011. The positive SSSG in the Period and Year was
principally due to higher takeout and delivery sales resulting from
continued promotion of Boston Pizza's online ordering system and
higher chicken wing sales resulting from the introduction of "All
Meat Wings" earlier in 2012. Franchise Sales(1) of restaurants in the
royalty pool were a fourth quarter record of $185.2 million for the
Period and an annual record of $731.5 million for the Year compared
to $177.5 million and $699.3 million, respectively, in the same
periods in 2011. The increases in Franchise Sales(1) for the Period
and Year are attributed to the positive SSSG experienced in the
Period and Year and the addition of three net new restaurants to the
Fund's royalty pool on January 1, 2012.  
"2012 was another strong year for Boston Pizza with record top-line
sales and seven new restaurant openings," said Mark Pacinda,
President and CEO of BPI. "In addition, we were excited to reach some
significant milestones during the year such as our 125th consecutive
monthly distribution to unitholders, surpassing $150 million in total
distributions since the Fund's inception in 2002, our 15th increase
to the monthly distribution amount and the Fund's 10 year trading
anniversary on the Toronto Stock Exchange."  
The Fund's net income was $4.3 million for the Period and $2.0
million for the Year
 compared to net income of $0.3 million and of
$15.6 million, respectively, in the same periods in 2011. The changes
in net income for the Period and Year were mainly driven by the
changes in fair value adjustments on the Class B units of Boston
Pizza Royalties Limited Partnership (the "Class B Unit liability").
The Fund's net income under International Financial Reporting
Standards ("IFRS") contains non-cash items, such as the fair value
adjustment on the Class B Unit liability, that do not affect the
Fund's business operations or its ability to pay distributions to
unitholders. In the Fund's view, net income is not the only or most
meaningful measurement of the Fund's ability to pay distributions.
Consequently, the Fund has provided the non-IFRS metrics of
Distributable Cash(2) and Payout Ratio(3) to provide investors with
more meaningful information regarding the amount of cash that the
Fund has generated to pay distributions. Readers are cautioned that
Distributable Cash(2) and Payout Ratio(2) are non-IFRS financial
measures that do not have standardized meanings prescribed by IFRS
and therefore may not be comparable to similar measures presented by
other issuers. For a reconciliation between cash flow from operating
activities (the most directly comparable IFRS measure) and
Distributable Cash(2) and a detailed discussion on the Fund's
Distributable Cash(2) and Payout Ratio(3), please see the "Operating
Results - Distributable Cash / Payout Ratio" section in the Fund's
Management's Discussion and Analysis for the Period.  
The Fund's Distributable Cash(2) was $4.5 million or $0.303 per unit
of the Fund ("Unit") for the Period and $17.4 million or $1.184 per
Unit for the Year compared to $4.1 million or $0.281 per Unit and
$16.1 million or $1.104 per Unit for the same periods, respectively,
in 2011. This represents increases of 10.9% for the Period and 8.0%
for the Year compared to the same periods, respectively, one year
ago. These increases were mainly driven by higher royalty revenue.
Distributions for the Period and the Year were funded entirely by
cash flow from operations. No debt was incurred at any point during
the Period or the Year to fund distributions.  
The Fund's Payout Ratio(3) was 98.7% for the Period and 99.3% for the
Year compared to 98.3% and 95.7% in the same periods, respectively,
one year ago. The Fund's Payout Ratio(3) for the Period and the Year
increased compared to the same periods one year ago primarily due to
the distribution increase beginning with the February 2012
distribution to unitholders. The Fund strives to provide unitholders
with regular monthly distributions, and as a result, the Fund will
generally experience seasonal fluctuations in its Payout Ratio(3).
The Fund's Payout Ratio(3) is likely to be higher in the first and
fourth quarters compared to the second and third quarters since
Boston Pizza restaurants experience higher Franchise Sales(1) during
the summer months when restaurants open their patios and benefit from
increased tourist traffic. Higher Franchise Sales(1) generally result
in increases in Distributable Cash(2). A key feature of the Fund is
that it is a "top line" structure, in which BPI pays the Fund a
royalty equal to 4% of Franchise Sales(1) from restaurants in the
Fund's royalty pool. Accordingly, Fund unitholders are not directly
exposed to changes in the operating costs or profitability of BPI or
of individual Boston Pizza restaurants. Given this structure, and
that the Fund has no current mandate to retain capital for other
purposes, it is expected that the Fund will maintain a Payout
Ratio(3) close to 100% over time as the trustees of the Fund continue
to distribute all available cash in order to maximize returns to
unitholders. As the Payout Ratio(3) is calculated from a formula
which includes Distributable Cash(2), which is a non-IFRS measure, a
reconciliation of Payout Ratio(3) to an IFRS measure is not possible.
For a reconciliation of Distributable Cash(2) to its closest IFRS
measure, cash flows from operating activities, see the "Operating
Results - Distributable Cash / Payout Ratio" section in the Fund's
Management's Discussion and Analysis for the Period. 
The trustees of the Fund announced a cash distribution to unitholders
of 9.8 cents per Unit for January 2013. The distribution will be
payable to unitholders of record at the close of business on February
21, 2013 and will be paid on February 28, 2013. The Fund periodically
reviews distribution levels based on its policy of stable and
sustainable distribution flow to unitholders. Since the Fund's
initial public offering in 2002, unitholders have received 15
distribution increases. The most recent distribution increase of 6.5%
was effective for the February 2012 distribution payable in March
2012 and increased the monthly distribution amount from 9.2 cents per
Unit to 9.8 cents per Unit. Including the January 2013 distribution,
which will be paid in February 2013, the Fund will have paid out 127
consecutive monthly distributions totalling $159.1 million or $12.87
per Unit.  
FINANCIAL SUMMARY 
The tables below sets out selected information from the consolidated
financial statements of the Fund together with other data and should
be read in conjunction with the consolidated financial statements of
the Fund.  


 
----------------------------------------------------------------------------
                                         Q4 2012  Q4 2011     2012     2011 
----------------------------------------------------------------------------
(in thousands of dollars - except                                           
 restaurants, SSSG, Payout Ratio(3) and                                     
 per Unit items)                                                            
----------------------------------------------------------------------------
System-wide Gross Sales(4)               239,764  232,713  943,053  904,872 
Number of restaurants in Royalty Pool(5)     341      336      341      336 
Franchise Sales(1) reported by                                              
 restaurants in the Royalty Pool         185,197  177,465  731,455  699,329 
                                                                            
Revenues                                                                    
----------------------------------------                                    
Royalty revenue - 4% of Franchise                                           
 Sales(1)                                  7,408    7,098   29,258   27,973 
Interest income                              453      454    1,814    1,815 
----------------------------------------------------------------
------------
Total revenues                             7,861    7,552   31,072   29,788 
                                                                            
Expenses                                                                    
----------------------------------------                                    
Administrative expenses and interest on                                     
 bank debt                                  (462)    (432)  (2,067)  (1,894)
Interest expense on Class B Units and                                       
 Class C Units(6)                         (1,978)  (2,042)  (6,295)  (5,814)
Fair value adjustment on Class B Unit                                       
 liability(7)                                633   (3,308) (14,867)    (731)
Fair value adjustment on interest rate                                      
 swap                                         69        -      136        - 
----------------------------------------------------------------------------
Subtotal                                  (1,738)  (5,782) (23,093)  (8,439)
Current income tax expense                (1,421)  (1,396)  (5,423)  (5,474)
Deferred income tax expense                 (360)     (70)    (510)    (290)
----------------------------------------------------------------------------
Total expenses                            (3,519)  (7,248) (29,026) (14,203)
----------------------------------------------------------------------------
                                                                            
Net Income                                                                  
----------------------------------------                                    
Net income                                 4,342      304    2,046   15,585 
Basic earnings per Unit                     0.29     0.02     0.14     1.07 
Diluted earnings per Unit                   0.23     0.02     0.14     1.06 
                                                                            
Distributable Cash(2) / Distributions /                                     
 Payout Ratio(3)                                                            
----------------------------------------                                    
Cash flows from operating activities       6,006    7,037   18,175   27,490 
    Class C distributions to BPI            (450)    (450)  (1,800)  (1,800)
    Class B entitlement to BPI              (986)  (1,099)  (4,495)  (4,130)
  SIFT tax on Units(8)                       (31)  (1,396)   5,492   (5,474)
----------------------------------------------------------------------------
Distributable Cash(2)                      4,539    4,092   17,372   16,086 
Distributions payable(9)                   4,480    4,021   17,244   15,387 
Payout Ratio(3)                             98.7%    98.3%    99.3%    95.7%
Distributable Cash per Unit(2)             0.303    0.281    1.184    1.104 
Distributions payable per Unit(9)          0.294    0.276    1.170    1.056 
                                                                            
Other                                                                       
----------------------------------------                                    
Same store sales growth (SSSG)               2.2%     6.4%     3.3%     4.9%
Number of restaurants opened during the                                     
 period                                        4        2        7        7 
Number of restaurants closed during the                                     
 period                                        0        0        2        4 
----------------------------------------------------------------------------
                                                           Dec 31,  Dec 31, 
                                                              2012     2011 
----------------------------------------------------------------------------
Total assets                                               264,632  261,571 
Total liabilities                                           99,353   99,794 
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
                                              Q4       Q3       Q2       Q1 
                                            2012     2012     2012     2012 
----------------------------------------------------------------------------
(in thousands of dollars - except                                           
 restaurants, Payout Ratio(3) and per                                       
 Unit items)                                                                
System-wide Gross Sales(4)               239,764  239,269  237,955  226,065 
Number of restaurants in Royalty Pool(5)     341      341      341      342 
Franchise Sales(1) reported by                                              
 restaurants in the Royalty Pool         185,197  186,081  183,593  176,581 
                                                                            
Revenues                                                                    
----------------------------------------                                    
Royalty revenue - 4% of Franchise Sales    7,408    7,443    7,344    7,063 
Interest income                              453      453      453      455 
----------------------------------------------------------------------------
Total revenues                             7,861    7,896    7,797    7,518 
                                                                            
Expenses                                                                    
----------------------------------------                                    
Administrative expenses and interest on                                     
 bank debt                                  (462)    (616)    (512)    (477)
Interest on Class B Units and Class C                                       
 Units(6)                                 (1,978)  (1,628)  (1,628)  (1,061)
Fair value adjustment on Class B Unit                                       
 liability(7)                                633   (5,890)   1,953  (11,563)
Fair value adjustment on interest rate                                      
 swap                                         69       67        -        - 
----------------------------------------------------------------------------
Subtotal                                  (1,738)  (8,067)    (187) (13,101)
Current income tax expense                (1,421)  (1,350)  (1,351)  (1,301)
Deferred income tax expense                 (360)     (60)     (70)     (20)
----------------------------------------------------------------------------
Total expenses                            (3,519)  (9,477)  (1
,608) (14,422)
----------------------------------------------------------------------------
                                                                            
Net Income (loss)                                                           
----------------------------------------                                    
Net income (loss)                          4,342   (1,581)   6,189   (6,904)
Basic earnings (loss) per Unit              0.29    (0.11)    0.42    (0.47)
Diluted earnings (loss) per Unit            0.23    (0.11)    0.24    (0.47)
                                                                            
Distributable Cash(2) / Distributions /                                     
 Payout Ratio(3)                                                            
----------------------------------------                                    
Cash flows from operating activities       6,006    6,189    5,903       77 
    Class C distributions to BPI            (450)    (450)    (450)    (450)
    Class B entitlement to BPI              (986)  (1,211)  (1,178)  (1,154)
  SIFT tax on Units(8)                       (31)       -       (1)   5,524 
----------------------------------------------------------------------------
Distributable cash(2)                      4,539    4,528    4,274    3,997 
Distributions payable(9)                   4,480    4,284    4,284    4,196 
Payout Ratio(3)                             98.7%    94.6%   100.2%   105.0%
Distributable cash per Unit(2)             0.303    0.311    0.293    0.274 
Distributions payable per Unit(9)          0.294    0.294    0.294    0.288 
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
                                              Q4       Q3       Q2       Q1 
                                            2011     2011     2011     2011 
----------------------------------------------------------------------------
(in thousands of dollars - except                                           
 restaurants, Payout Ratio(3) and per                                       
 Unit items)                                                                
System-wide Gross Sales(4)               232,713  235,911  228,766  207,482 
Number of restaurants in Royalty Pool(5)     336      336      338      339 
Franchise Sales(1) reported by                                              
 restaurants in the Royalty Pool         177,465  183,163  175,568  163,133 
                                                                            
Revenues                                                                    
----------------------------------------                                    
Royalty revenue - 4% of Franchise Sales    7,098    7,327    7,023    6,525 
Interest income                              454      454      455      452 
----------------------------------------------------------------------------
Total revenues                             7,552    7,781    7,478    6,977 
                                                                            
Expenses                                                                    
----------------------------------------                                    
Administrative expenses and interest on                                     
 bank debt                                  (432)    (449)    (511)    (502)
Interest expense on Class B Units and                                       
 Class C Units(6)                         (2,042)  (1,447)  (1,388)    (937)
Fair value adjustment on Class B Unit                                       
 liability(7)                             (3,308)   1,148    2,707   (1,278)
----------------------------------------------------------------------------
Subtotal                                  (5,782)    (748)     808   (2,717)
Current income tax expense                (1,396)  (1,449)  (1,366)  (1,263)
Deferred income tax expense                  (70)    (100)     (70)     (50)
----------------------------------------------------------------------------
Total expenses                            (7,248)  (2,297)    (628)  (4,030)
----------------------------------------------------------------------------
                                                                            
Net Income                                                                  
----------------------------------------                                    
Net income                                   304    5,484    6,850    2,947 
Basic earnings per Unit                     0.02     0.38     0.47     0.20 
Diluted earnings per Unit                   0.02     0.24     0.23     0.20 
                                                                            
Distributable Cash(2) / Distributions /                                     
 Payout Ratio(3)                                                            
----------------------------------------                                    
Cash flows from operating activities       7,037    7,266    6,922    6,265 
    Class C distributions to BPI            (450)    (450)    (450)    (450)
    Class B entitlement to BPI            (1,099)  (1,077)  (1,023)    (952)
  SIFT tax on Units(8)                    (1,396)  (1,449)  (1,366)  (1,263)
----------------------------------------------------------------------------
Distributable cash(2)                      4,092    4,290    4,083    3,600 
Distributions payable(9)                   4,021    4,021    3,672    3,672 
Payout Ratio(3)                             98.3%    93.7%    89.9%   102.0%
Distributable cash per Unit(2)             0.281    0.294    0.280    0.247 
Distributions payable per Unit(9)          0.276    0.276    0.252    0.252 
----------------------------------------------------------------------------

 
OUTLOOK 
The Canadian Restaurant and Foodservices Association has forecast
average annual sales growth of 3.9% for the Canadian full-service
restaurant sector in 2013. BPI's management believes that Boston
Pizza is well positioned to continue outperforming this overall sales
growth rate by attracting a wide variety of guests into the
restaurant, sports bar and take-out/delivery parts of each location,
offering a compelling value proposition to our guests and continuing
to open new Boston Pizza locations across Canada.  
The two principal factors that affect SSSG are changes in customer
traffic and changes in average guest cheque. BPI's strategies to
drive high
er guest traffic include a larger marketing budget versus
the previous year along with a revised calendar of national and local
store promotions. Increased average cheque levels are expected to be
achieved through a combination of culinary innovation and annual menu
re-pricing. In addition, BPI's franchise agreement requires that each
Boston Pizza restaurant undergo a complete store renovation every
seven years. Restaurants typically close for two to three weeks to
complete the renovation and experience an incremental sales increase
in the year following the re-opening. 
Boston Pizza remains well positioned for future expansion as
evidenced by the seven new Boston Pizza restaurants that opened in
2012 and the five additional locations that are currently under
construction. BPI's management believe that Boston Pizza will
continue to strengthen its position as the number one casual dining
brand in Canada by pursuing further restaurant development
opportunities across the country. 
Certain information in this press release may constitute
"forward-looking information" that involves known and unknown risks,
uncertainties, future expectations and other factors which may cause
the actual results, performance or achievements of the Fund, Boston
Pizza Holdings Trust, the Partnership, Boston Pizza Holdings Limited
Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc.,
BPI, Boston Pizza restaurants, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking information. When used
in this press release, forward-looking information may include words
such as "anticipate", "estimate", "may", "will", "expect", "believe",
"plan" and other similar terminology. This information reflects
current expectations regarding future events and operating
performance and speaks only as of the date of this press release.
Except as required by law, the Fund and BPI assume no obligation to
update previously disclosed forward-looking information. 
For a complete list of the risks associated with forward-looking
information and our business, please refer to the "Risks and
Uncertainties" and "Note Regarding Forward-Looking Information"
sections included in the Fund's most recent Management's Discussion
and Analysis for the Period available at www.sedar.com and
www.bpincomefund.com. The trustees of the Fund have approved the
contents of this press release. 
(1) Franchise sales is the basis on which the royalty is payable; it
means the revenues of Boston Pizza restaurants in respect of which
the royalty is payable ("Franchise Sales"). The term "revenue" refers
to the gross revenue: (i) of the corporate Boston Pizza restaurants
in Canada owned by BPI; and (ii) reported to BPI by franchised Boston
Pizza restaurants in Canada, without audit or other form of
independent assurance, and in the case of both (i) and (ii), after
deducting revenue from the sale of liquor, beer, wine and tobacco and
revenue from BPI approved national promotions and discounts and
excluding applicable sales and similar taxes. Nevertheless, BPI
periodically conducts audits of the Franchise Sales reported to it by
its franchisees, and the Franchise Sales reported herein include
results from sales audits of earlier periods. 
(2) Distributable Cash is a non-IFRS financial measure that does not
have a standardized meaning prescribed by IFRS and therefore may not
be comparable to similar measures presented by other issuers. This
non-IFRS financial measure provides useful information to investors
regarding the amount of cash the Fund has generated for distribution
on the Units. Investors are cautioned that this should not be
construed as an alternative net income measure of profitability. The
related tables in the Fund's most Management Discussion and Analysis
for the Period provide a reconciliation from this non-IFRS financial
measure to cash flows from operating activities, which is the most
directly comparable IFRS measure. 
(3) Payout Ratio is calculated by dividing the interest /
distributions payable by the Fund in respect of the applicable period
by the Distributable Cash generated in that period. Payout Ratio is a
non-IFRS financial measure that does not have a standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measures presented by other issuers. This non-IFRS financial measure
provides investors with useful information regarding the extent to
which the Fund distributes cash on the Units. Investors are cautioned
that this should not be construed as an alternative net income
measure of profitability. 
(4) System-wide gross sales means the gross revenue: (i) of the
corporate Boston Pizza restaurants in Canada owned by BPI; and (ii)
reported to BPI by franchised Boston Pizza restaurants in Canada,
without audit or other form of independent assurance, and in the case
of both (i) and (ii), including revenue from the sale of liquor,
beer, wine and tobacco and revenue from BPI approved national
promotions and discounts and excluding applicable sales and similar
taxes ("System-wide Gross Sales"). 
(5) Number of restaurants in the Royalty Pool excludes restaurants
that permanently closed during the applicable period. 
(6) The Class B general partner units of the Partnership (the "Class
B Units") and the Class C general partner units of the Partnership
(the "Class C Units") are classified as financial liabilities under
IFRS, and as such, amounts paid by the Partnership to BPI in respect
of the Class B Units and Class C Units are classified as interest
expense and not distributions. 
(7) The Fund is required under IFRS to fair value the Class B Unit
liability at the end of each period and adjust for any increase or
decrease in the fair value of that liability as compared to the fair
value of that liability at the end of the immediately preceding
period. This adjustment has no impact on the Fund's Distributable
Cash. 
(8) Specified Investment Flow through tax ("SIFT Tax") on Units is
the SIFT Tax expense for the respective period (as a negative number)
plus the amount of SIFT Tax paid in the respective period. 
(9) Under the declaration of trust governing the Fund, the Fund pays
distributions on the Units in respect of any particular calendar
month not later than the last business day of the immediately
subsequent month. Accordingly, distributions on the Units in respect
of the calendar month of January are paid no later than the last
business day of February, distributions on the Units in respect of
the calendar month of February are paid no later than the last
business day of March and so forth. Consequently, distributions
payable by the Fund on the Units in respect of the Period (as defined
herein) were the October 2012 distribution (which was paid on
November 30, 2012), the November 2012 distribution (which was paid on
December 31, 2012) and the December 2012 distribution (which was paid
on January 31, 2013). Similarly, the distributions payable by the
Fund on the Units in respect of any other period are the
distributions paid in the immediately subsequent month of each month
comprising such other period.
Contacts:
Boston Pizza Royalties Income Fund
Jordan Holm
Vice President of Investor Relations
604-303-6083
investorrelations@bostonpizza.com
www.bpincomefund.com
 
 
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