Welcome!

News Feed Item

Pizza Pizza Royalty Corp. Announces Annual Royalty Pool Increase

TORONTO, ONTARIO -- (Marketwire) -- 02/01/13 --

Attention: Business Editors

Pizza Pizza Royalty Corp. (the "Company") (TSX:PZA) and Pizza Pizza Limited ("PPL") today announced that effective January 1, 2013, the pool of restaurants (the "Royalty Pool"), on which royalties are paid to the Company by PPL, has been adjusted to reflect restaurant openings and closures.

Effective January 1, 2013, 21 new Pizza Pizza restaurants and one new Pizza 73 restaurant were added to the Royalty Pool. There were 18 non-traditional locations closed and removed from the Royalty Pool. Of the 21 new Pizza Pizza restaurants opened during 2012, ten were traditional restaurants and eleven were non-traditional locations. The one new Pizza 73 restaurant was a non-traditional location opened during the period from September 2, 2011 to September 1, 2012. Of the 18 non-traditional closures, 17 were Pizza Pizza locations and one was a Pizza 73 location.

After this annual adjustment, the 2013 Royalty Pool increases by a net of four restaurants to 694. In exchange for adding new restaurants to the Royalty Pool, PPL will be compensated in equivalent shares using an agreed-upon formula which includes estimating future royalties to be paid to the Company based on the new restaurant sales. Additional details about this formula are provided in the following paragraphs.

Annually, on January 1 (the "Adjustment Date"), the Royalty Pool is adjusted to include the forecasted system sales from new Pizza Pizza restaurants opened on or before December 31 of the prior year, less system sales from any Pizza Pizza restaurants that have been permanently closed during the year. Similarly, on the Adjustment Date, the Royalty Pool is adjusted to include the forecasted system sales from new Pizza 73 restaurants opened on or before September 1 of the prior year, less the system sales of any Pizza 73 restaurants permanently closed during the prior calendar year. These Pizza 73 forecasted system sales may also be reduced by any decrease in system sales attributable to certain Pizza 73 restaurants whose territory may have been adjusted during the year (an "adjusted restaurant" as defined in the License and Royalty Agreement for the Pizza 73 Royalty Pool restaurants).

PPL holds Class B and Class D units of Pizza Pizza Royalty Limited Partnership (the "Partnership"), which are exchangeable for a number of Company shares ("Shares") based on the Class B and Class D Exchange Multipliers (the "equivalent Shares"). At each annual Adjustment Date, the Class B and Class D Exchange Multipliers for the coming year are determined in accordance with the Partnership's limited partnership agreement. This, in turn, affects the number of equivalent Shares held by PPL. The formula for determining the Exchange Multipliers is based on the Determined Amounts which are calculated using the forecasted system sales from new restaurants less system sales from any closed and adjusted restaurants, multiplied by the applicable royalty rate, divided by the yield of the Shares, and discounted by 7.5%.

Beginning with last year's Adjustment Date on January 1, 2012 and going forward, the Determined Amounts are multiplied by a number equal to (1-Tax%) where "Tax%" is an estimate of the Company's effective entity level tax rate for the year. This maintains the accretive effect to shareholders of the annual Royalty Pool adjustment. This estimate of the effective tax rate will be subject to an adjustment when the year's actual tax rate of the Company is known.

From January 1 Adjustment Date, PPL is entitled to receive 80% of the calculated, additional equivalent Shares and distributions thereon resulting from a change in an Exchange Multiplier. The final equivalent Shares entitlement is determined following the year-end when the restaurants' actual sales performance is known with certainty. At that time, if the actual system sales exceeded 80% of the forecasted system sales, PPL would be entitled to additional equivalent Shares to reflect that difference. Conversely, if the actual system sales are less than 80% of the forecasted system sales, PPL must return a calculated portion of the equivalent Shares with which it was previously credited. In any given year, the calculated Exchange Multipliers cannot be less than at the end of the previous year.

Effective January 1, 2013, the Class B Exchange Multiplier is adjusted based on the 2013 forecasted system sales of $6.6 million from the 21 new Pizza Pizza restaurants, less sales of $3.4 million from 17 permanently closed Pizza Pizza non-traditional restaurants resulting in net, forecasted Pizza Pizza system sales of $3.2 million added to the Royalty Pool. The Class D Exchange Multiplier will not be adjusted at this time since the 2013 forecasted additional system sales from the one new Pizza 73 non-traditional restaurant, estimated at $100,000, is offset by $100,000 in sales from one permanently closed non-traditional restaurant, resulting in no estimated sales being added to the Royalty Pool.

In exchange for adding the forecasted Pizza Pizza system sales to the Royalty Pool, PPL has received 163,054 additional equivalent Shares (through the change to the Class B Exchange Multiplier). These represent 80% of the forecasted equivalent Shares entitlement to be received (203,817 equivalent Shares represent 100%), with the final equivalent Shares entitlement to be determined when the new restaurants' 2013 actual sales performance is known with certainty in early 2014.

On January 1, 2013, PPL added no Pizza 73 system sales to the Royalty Pool due to one non-traditional Pizza 73 restaurant opening and one closing. Therefore, PPL has received no additional Class D equivalent Shares. Final Class D equivalent Shares will be determined when the new restaurant's 2013 actual sales performance is known with certainty in early 2014.

After giving effect to these additional, equivalent Share entitlements at January 1, 2013, PPL now owns equivalent Shares representing 27.1% of the Company's fully diluted Shares.

Table 1 - Summary of the Company's Outstanding and Fully-Diluted Shares, including an analysis before and after the 20% entitlement holdback:

                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                Issued &    
                                                             Outstanding    
                                           Issued &              Shares,    
                                        Outstanding    Equivalent Shares    
Shares outstanding & issuable           Shares, and      and Holdback of    
 on December 31, 2012             Equivalent Shares    Equivalent Shares    
-------------------------------------------------------------------------   
Public float                             21,818,392           21,818,392    
                                                                            
Class B equivalent Shares held                                              
 by PPL                                   6,338,554            6,338,554 (1)
PPL Additional Class B                                                      
 equivalent Shares - 20%                                                    
 Holdback as of December 31,                                                
 2012                                             -               66,205 (1)
                                                                            
Class D equivalent Shares held                                              
 by PPL                                   1,547,131            1,547,131 (2)
PPL Additional Class D                                                      
 equivalent Shares - 20%                                                    
 Holdback as of December 31,                                                
 2012                                             -                  940 (2)
                                -----------------------------------------   
                                                                            
Fully-diluted Shares                     29,704,077           29,771,222    
-------------------------------------------------------------------------   
Percentage of fully-diluted                                                 
 Shares available for exchange                                              
 by PPL at December 31, 2012                   26.5%                26.7%   
-------------------------------------------------------------------------   
                                                                            
Shares outstanding & issuable after January 1, 2013 Annual Adjustment       
Public float                             21,818,392           21,818,392    
                                                                            
Class B equivalent Shares held                                              
 by PPL                                   6,404,759            6,404,759 (1)
                                                                            
Class D equivalent Shares held                                              
 by PPL                                   1,548,071            1,548,071 (2)
                                                                            
Additional PPL Class B                                                      
 equivalent Shares as of                                                    
 January 1, 2013 (80%)                      163,054              163,054 (3)
                                                                            
Additional PPL Class B                                                      
 equivalent Shares - 20%                                                    
 Holdback as of January 1, 2013                   -               40,763 (4)
                                                                            
Additional PPL Class D                                                      
 equivalent Shares as of                                                    
 January 1, 2013 (80%)                            -                    - (3)
Additional PPL Class D                                                      
 equivalent Shares - 20%                                                    
 Holdback as of January 1, 2013                   -                    - (4)
                                -----------------------------------------   
                                                                            
Number of fully-diluted Shares           29,934,276           29,975,039    
-------------------------------------------------------------------------   
                                                                            
Percentage of fully-diluted                                                 
 Shares available for exchange                                              
 by PPL at January 1, 2013                     27.1%                27.2%   
-------------------------------------------------------------------------   
(1) The final calculation of the equivalent Shares entitlement related to   
the six net Pizza Pizza restaurants that were removed from the Royalty Pool 
on January 1, 2012 was completed and independently reviewed in early 2013,  
and became effective as of January 1, 2012. Actual Additional System Sales  
of new restaurants for 2012 were greater than Forecasted Additional System  
Sales. As a result of the true-up, PPL's Class B equivalent Shares increased
by 66,205 and 2012 distributions thereon were paid to PPL in January 2013   
from the Partnership effective January 1, 2012.                             
                                                                            
(2) The final calculation of the equivalent Shares entitlement related to   
the one net Pizza 73 restaurant that was added to the Royalty Pool on       
January 1, 2012 was completed and independently reviewed in early 2013, and 
became effective as of January 1, 2012. Actual Additional System Sales of   
the new restaurant for 2012 was slightly higher than Forecasted Additional  
System Sales. As a result of the true-up, PPL's Class D equivalent Shares   
increased by 940 and 2012 distributions thereon were paid to PPL in January 
2013 from the Partnership effective January 1, 2012.                        
                                                                            
(3) Additional Class B and Class D equivalent Shares available January 1,   
2013 are shown in the table. The final equivalent Shares entitlement will be
determined in early 2014, effective January 1, 2013, once actual sales of   
the restaurants are known. Note that forecasted Pizza 73 system sales added 
to the Royalty Pool were zero due to one non-traditional Pizza 73 restaurant
opening and one closing. Therefore, PPL has received no additional Class D  
equivalent Shares on January 1, 2013.                                       
                                                                            
(4) A preliminary calculation of the 20% holdback of equivalent Shares      
entitlement was done as of January 1, 2013 using the net, positive,         
forecasted sales from the addition of 22 restaurants to the Royalty Pool    
less the closure of 18 non-traditional restaurants subtracted from the      
Royalty Pool on January 1, 2013. The final Class B and D equivalent Shares  
entitlement will be determined in early 2014, effective January 1, 2013 once
actual sales of the restaurants are known.                                  

Forward-Looking Statements

Certain statements in this press release, including those concerning forecasted sales performance of new restaurants and related adjustments to the Exchange Multipliers, may constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

When used in this press release, such statements include such words as "may", "will", "expect", "believe", "plan", and other similar meaning in conjunction with a discussion of future operating or financial performance. These statements reflect management's current expectations regarding future events and operating performance of the restaurants added to the Royalty Pool and speak only as of the date of this press release. Material factors or assumptions reflected in the presentation of Forecasted Additional System Sales include: demographic and competitive studies, historical sales performance of similar stores and economic forecasts for the retail industry. These forward-looking statements involve a number of risks and uncertainties. The following are some factors that could affect the forecasted performance of these restaurants, causing actual results to differ materially from those expressed in or underlying such forward-looking statements: competition, the store owner's performance, changes in demographic trends, changing consumer preferences and discretionary spending patterns, changes in national and local business and economic conditions, and legislation and governmental regulation. The foregoing list of factors is not exhaustive and should be considered in conjunction with the other risks and uncertainties described in the Fund's 2011 Annual Information Form. The Company assumes no obligation to update these forward looking statements, except as required by applicable securities laws.

Contacts:
Pizza Pizza Limited
Curtis Feltner
Chief Financial Officer
(416) 967-1010 extension 307
[email protected]

www.pizzapizza.ca
www.pizza73.com
www.sedar.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that's no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, explored how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He expla...
The past few years have brought a sea change in the way applications are architected, developed, and consumed—increasing both the complexity of testing and the business impact of software failures. How can software testing professionals keep pace with modern application delivery, given the trends that impact both architectures (cloud, microservices, and APIs) and processes (DevOps, agile, and continuous delivery)? This is where continuous testing comes in. D
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
"I focus on what we are calling CAST Highlight, which is our SaaS application portfolio analysis tool. It is an extremely lightweight tool that can integrate with pretty much any build process right now," explained Andrew Siegmund, Application Migration Specialist for CAST, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices t...
In his general session at 21st Cloud Expo, Greg Dumas, Calligo’s Vice President and G.M. of US operations, discussed the new Global Data Protection Regulation and how Calligo can help business stay compliant in digitally globalized world. Greg Dumas is Calligo's Vice President and G.M. of US operations. Calligo is an established service provider that provides an innovative platform for trusted cloud solutions. Calligo’s customers are typically most concerned about GDPR compliance, application p...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...