For Immediate Release Attention Business Editors: Pizza Pizza Limited Releases 2005, Fiscal Year-End Financial Statements Toronto December 30, 2005: Pizza Pizza Limited (“Pizza Pizza”) reported its annual consolidated financial results today for the fiscal year ended October 2, 2005. The annual financial statements and the related Management’s Discussion and Analysis are available at www.sedar.com, under the Pizza Pizza Royalty Income Fund company profile. This is the initial filing for Pizza Pizza Limited, a privately-held company, following the initial public offering by the Pizza Pizza Royalty Income Fund (the “Fund”). The Pizza Pizza consolidated financial statements consolidate Pizza Pizza Royalty Limited Partnership, in which the Fund holds an effective 80% interest. The Fund has previously filed quarterly financial statements for the period ended September 30, 2005, which are available at www.sedar.com and www.pizzapizzaroyaltyincomefund.com. Subsequent to this filing, Pizza Pizza Limited is changing its fiscal year date to end on the Sunday closest to December 31st. Pizza Pizza and the Fund will then have coterminous year end dates. Same store sales at Pizza Pizza restaurants grew by 6% for the quarter ended September 30, 2005, over the same quarter in 2004. These results are consistent with the 5.7% total same store sales growth for Pizza Pizza’s fiscal year 2005, when compared with 5.9% for the fiscal year 2004. Pizza Pizza opened six traditional and ten non-traditional locations during fiscal 2005; three traditional locations and one non-traditional location closed during the fiscal year. In 2006, management of Pizza Pizza expects to grow the number of restaurants in Ontario by 3% and to continue researching potential expansion opportunities outside its predominantly Ontario market, with potential expansion coming either through organic growth or acquisitions. Additionally, Pizza Pizza expects to continue franchising its company-owned restaurants. Pizza Pizza continues its innovative history by recently introducing the electronic Pizza Pizza Club Card, which allows customers to receive prizes and discount offerings in addition to loading the card for personal use or to give as a gift. The Club Card is part of Pizza Pizza’s strategy to encourage customers to visit our re-imaged restaurants. With over 90% of our traditional restaurants expanded or relocated within the last five years and the final 10% (approximately 35 locations) to be completed in 2006, Pizza Pizza offers expanded dine-in capacity, thereby targeting additional day-parts and allowing for additional product offerings to enable restaurants to increase same store sales. With this increased network capacity and a continued focus on our promotional campaigns, Pizza Pizza is well-positioned for continued growth and to strengthen its position as “Ontario’s #1 Pizza”.
Selected Financial Data The selected financial data set forth below should be read in conjunction with the consolidated financial statements and related notes of Pizza Pizza Limited for the fiscal year ended October 2, 2005, and should be read with reference to the related Management’s Discussion and Analysis. Pizza Pizza Limited Consolidated financial data and EBITDA (1) calculation
For the 53-week period ended For the 52-week period ended
October 2, 2005 September 26, 2004 (in thousands of dollars) System Sales (52 weeks)* Same store sales growth Restaurants: Traditional Non-traditional New restaurants opened Restaurants closed Revenue Food sales Royalties, franchise fees and other related revenue Other income Cost of food sales and general and administrative (net of amortization) EBITDA (1) $ 139,782 21,352 $ 140,407 7,659 21,063 1,009 161,134 19,764 429 148,066 139,062 127,873 341 165 16 4 338 156 18 7 $ 5.7% 334,677 $ 5.9% 315,983
Reconciliation of EBITDA to Net Earnings
EBITDA
Add (deduct) Charitable contribution Non-recurring employee and franchisee bonuses and retention payments Structuring costs Non-controlling interest in Partnership earnings Amortization Interest expense on loan from the Fund Interest on long-term debt Interest income Gain on sale of company stores Provision for income taxes Current Future Net earnings (loss) for the period
$
21,352
(20,000) (7,143) (11,850) 6,102 (6,773) (430) (182) 927 1,574 (21,200) 30,644
$
7,659
0 0
0 (7,005) 0 (304) 433 2,730 0 (1,281) $ 2,232
$
( 6,979)
*System sales reported are for the 52 weeks ended September 25, 2005 in order to be comparable to the prior year (1) ‘‘EBITDA’’ is not a recognized measure under Canadian generally accepted accounting principles. References to EBITDA are to earnings determined in accordance with generally accepted accounting principles applicable to the financial statements before amounts for interest, taxes and depreciation and amortization are included in the earnings. Pizza Pizza believes that, in addition to net income, EBITDA is a useful supplemental measure in evaluating its performance as it provides investors with an indication of cash available for debt service, working capital needs and capital expenditures. Investors are cautioned, however, that EBITDA should not be construed as an alternative to the statement of cash flows as a measure of liquidity and cash flows. The method of calculating EBITDA for the purposes of this annual report may differ from that used by other issuers and, accordingly, EBITDA in this annual report may not be comparable to EBITDA used by other issuers.
Pizza Pizza is one of Canada’s most popular and successful pizza restaurant operations. The company is guided by a mission to provide the “best food, made especially for you” and a focus on quality ingredients, customer service, community contribution and continual innovation. For further information: Media: Daniel Vukovich, Chief Operating Officer, Pizza Pizza Limited, 416967-1010, dvukovich@pizzapizza.ca Curtis Feltner, Chief Financial Officer, Pizza Pizza Limited, telephone (416) 967-1010, cfeltner@pizzapizza.ca
Investors:
Pizza Pizza’s trust units are listed on the Toronto Stock Exchange (PZA.UN). For further information, please visit www.pizzapizzaroyaltyincomefund.com or www.pizzapizza.ca.