Cara Announces First Quarter Results.Business Editors TORONTO--(BUSINESS WIRE)--July 26, 2001 Cara Operations Cara Operations Limited is a Canadian company that provides catering services to airlines and operates several restaurant and coffee shop chains including: Harvey's, Swiss Chalet, Kelsey's , Milestones and Montana's. The company is based across from Lester B. Limited ("Cara") (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CAO.)(TSE:CAO.A.) today announced its operating results for the First Quarter of 2002 being the 12 week period which ended June June: see month. 24, 2001 (the "First Quarter" or the "Quarter"). For the Quarter, system sales System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. were $346.5 million and gross revenues were $238 million. After adjusting for the sales and revenues of Beaver beaver, either of two large aquatic rodents, Castor fiber and Castor canadensis, known for their engineering feats. They were once widespread in N and central Eurasia except E Siberia, and in North America from the arctic tree line to the S United Foods Limited whose institutional food catering business was sold last year, system sales increased 11% and gross revenues increased 16.6% relative to last year. Net earnings were $8.1 million and earnings per share were 8.7 cents compared to $8.2 million and 8.9 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. reported last year. Net earnings for the Quarter reflect the proposed changes to the accounting rules for goodwill and other intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. amortization. "We are satisfied with the results of the First Quarter, and particularly so, when the current business conditions are taken into account. In the Quarter, all of our major divisions, as well as our strategic partners, reported year over year increases in system sales, including same restaurant sales growth at Swiss Chalet
Swiss Chalet is a chain of Canadian family restaurants originally founded in 1954 in Toronto, Ontario. , Harvey's This article is about the Canadian fast food chain. For other uses, see Harvey's (disambiguation). Harvey's is a fast food restaurant chain that operates in Canada, with locations concentrated in southern and eastern Ontario, southern Quebec, the Maritimes, and urban , Kelsey's and Montana's and all met or exceeded our earnings expectations as well, except for Airport Services, where the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in air travel produced only a modest increase in year over year sales and that coupled with the reduced productivity during the ramp-up phase of our new flight kitchen, as expected, resulted in significantly lower profitability than in the year ago period. "Looking forward, although we are somewhat concerned about the impact that a continued slowdown in air travel could have on the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. profitability of Airport Services, we are encouraged by the longer term growth trends in this industry in general and of our own opportunities in particular. The rest of our businesses have had a good start to the year and barring any further decline in the economic outlook, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that these businesses will continue to grow their sales and earnings during the balance of the year. As always, I would like to thank our teammates and also our guests and customers, for their continued dedication and contribution to Cara's success and support of our brands and businesses," commented Gabe Tsampalieros, Cara's President and Chief Executive Officer.
MANAGEMENT DISCUSSION & ANALYSIS OF OPERATIONS
CONSOLIDATED RESULTS
(In thousands of 1st Quarter ended 1st Quarter ended %
dollars except
for share data) June 24/01 June 25/00 Variance
--------------------------------------------------------------------
System Sales (Note 1) $346,523 $379,178 -8.6
--------------------------------------------------------------------
Gross Revenue $238,040 $271,817 -12.4
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EBITDA (Note 2) $24,626 $27,590 -10.7
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EBIT (Note 3) $15,044 $17,910 -16.0
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Net Earnings $8,087 $8,242 -1.9
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EPS (in cents) 8.7 8.9 -1.7
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Note 1: System sales include sales by Cara's franchisees and
franchise operators but exclude intercompany sales and sales
to Cara's franchise operators by Summit Food Service
Distributors Inc.
Note 2: EBITDA is earnings before interest, taxes, depreciation
and amortization.
Note 3: EBIT is earnings before interest, provision for taxes and
after-tax equity income.
System sales and gross revenue for the Quarter were $346.5 million and $238 million compared with last year's $379.2 million, and $271.8 million respectively. Last year's amounts included sales and revenues of $67.6 million related to the institutional catering business of Beaver Foods Limited which was sold at the end of last year's Third Quarter. Excluding the sales and revenues related to Beaver, system sales and gross revenues increased by 11% and 16.6% respectively. These increases were led by the growth in sales of the Kelsey's and Montana's restaurant brands and of Summit Food Service Distributors Inc. Consolidated net earnings were $8.1 million in the Quarter, $155,000 less than last year. In determining its results for the Quarter, the Corporation has interpreted the effect of applying a new Canadian New Canadian Noun Canad a recent immigrant to Canada Institute of Chartered Accountants char·tered accountant n. Chiefly British Abbr. CA A member of one of the institutes of accountants granted a royal charter. (CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) ) accounting standard pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to goodwill and other intangible assets. This new standard is expected to be issued in the weeks ahead and is in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with that of the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ) in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . This interpretation as it affects the Corporation's First Quarter results is based on information released by the CICA on the new accounting standard at the date of this press release. Under the new accounting standard, which can only be applied prospectively, goodwill and other intangible assets with indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those lives are no longer amortized, but are tested for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. upon adoption of the new standard and at least annually thereafter. In the unlikely event that this interpretation requires adjustment based on the requirements of the new accounting standard between the date of this press release and when the final standard is released by the CICA, that adjustment would be reflected in the Company's "final" financial statements for the First Quarter to be issued in August, 2001. The effect of this change in the current Quarter is a $585,000 increase in net income, or an increase of 0.6 cents per share. Last year's First Quarter included amortization of goodwill of $884,000. If that amount had not been deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from earnings, net earnings for the Quarter ended June 25, 2000 would have increased by $884,000 or 0.9 cents per share to $9.1 million or 9.8 cents per share. In addition, the results for the Quarter reflect the following: - A reduction in the profitability of the Airport Services Division due to the decline in air travel and the expected reduced productivity during the ramp-up period of our new flight kitchen. - Strong sales and earnings from the rest of the major operating divisions, particularly so, given the current economic climate. - Significantly lower interest expense than last year due to the interest income earned on the cash on hand remaining from the Beaver sale proceeds. The interest income earned on that cash on hand was lower than expected as a result of declining interest rates. The resulting overall lower interest expense, when compared to last year, helped to significantly offset last year's earnings contribution from Beaver. - A lower effective income tax rate, primarily as a result of legislated reductions in federal and certain provincial income tax rates. At the end of the Quarter, Cara's net debt stood at $117.3 million, up from $61.2 million at the beginning of the year. This level of debt is in line with expectations and reflects the impact of many factors including: - Cash flow of $17.8 million generated from operating activities before working capital. - Capital expenditures of $15.8 million of which $9.0 million was for new restaurant construction and restaurant renovations. - Additional known cash outflows including income taxes of $26.7 million primarily related to last year's gain on the sale of Beaver, dividends paid of $7.4 million and interest paid on the Company's Mid-Term Notes of $4.5 million. - Investment in working capital at Airline Services reflecting the seasonal increase in revenue and at Summit primarily for new business related to its new distribution centre. - $2.2 million to fund share purchases under the Corporation's Normal Course Issuer Bid. Set out below are some of the operating highlights of our major operating divisions: Swiss Chalet In the First Quarter, Swiss Chalet's system sales grew by $4.3 million or 5.1% to $90 million. Same restaurant sales increased 2.2% in the period, the seventh consecutive quarter of positive same restaurant sales growth. This was in addition to same restaurant sales growth of 6.4% achieved in the first fiscal quarter of last year. Pricing and menu realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. strategies were implemented to help address the margin pressures of higher food and energy costs and the Division experienced increases in traffic flow and average spend. During the Quarter, 3 new restaurants were opened, bringing the total number of restaurants in operation at Quarter end to 182 restaurants, operating in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and in the states of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and , as compared to 181 at this time last year. Harvey's Harvey's system sales increased by $1.3 million or 2% to $65.7 million. Same restaurant sales increased by 3.1%, the seventh consecutive quarter of positive same restaurant sales growth. This was in addition to same restaurant sales growth of 5.4% achieved in the first fiscal quarter of last year. During the Quarter, Harvey's ran their Light Moments and Teriyaki ter·i·ya·ki n. A Japanese dish of grilled or broiled slices of marinated meat or shellfish. [Japanese : teri, glaze + yaki, to broil.] Noun 1. Flavour (jargon) flavour - (US: flavor) 1. Variety, type, kind. "DDT commands come in two flavors." "These lights come in two flavors, big red ones and small green ones." See vanilla. 2. The attribute that causes something to be flavourful. programs, realigned some of its menu pricing and continued investing in restaurant rejuvenation Rejuvenation Aeson in extreme old age, restored to youth by Medea. [Rom. Myth.: LLEI, I: 322] apples of perpetual youth by tasting the golden apples kept by Idhunn, the gods preserved their youth. [Scand. Myth. programs. During the Quarter, 6 restaurants were opened and 5 were closed bringing the total number of restaurants in operation at the end of the Quarter to 369 compared to 371 a year ago. Air Terminal Restaurants Sales in the First Quarter increased 11.3% to $16.1 million from last year. With growth in passenger traffic slowing in the Quarter, the increase is due largely to the Division's continued focus on operating strategies to increase food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. spending and improved capture rates. In addition to the higher capture rate, increases in the average cheque have resulted in strong same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of growth of 9.9% in the Quarter. Kelsey's System sales in the First Quarter increased 23.2% to $70.1 million. The increase is attributable to the opening of 23 new restaurants operating this year versus last year and same restaurant sales growth of 2.4% for the Kelsey's brand and 0.4% for Montana's. During the Quarter, pricing and menu realignment were undertaken to address pressures on the cost side. In the Quarter, 4 Kelsey's, 1 Montana's and 1 Outback restaurants were opened bringing the total number of operating restaurants to 141. Airport Services Revenue for the First Quarter was $52.6 million, virtually unchanged from a year ago. Reduced load factors have had an adverse impact on revenue and on profitability. The operational efficiencies at the new Toronto New Toronto (tərŏn`tō), part of metropolitan Toronto, S Ont., Canada, on Lake Ontario. Flight Kitchen have shown steady improvement during the First Quarter. In addition, effective July 5th, Cara assumed the in-flight catering of former Canadian Airlines Canadian Airlines International Ltd. was, from 1987 until 2001, Canada's second largest airline after Air Canada, carrying more than 11.9 million passengers to over 160 destinations in 17 countries on five continents at its height in 1996. flights in Toronto and Dorval as they are integrated into the Air Canada schedule. Summit Foods Sales (including intercompany sales) in the First Quarter increased 38.2% to $90.1 million from $65.2 million a year ago. Most of the sales increase is attributable to the additional volume from the new Mississauga distribution centre which is now providing food distribution services to Swiss Chalet, Harvey's, Kelsey's, Montana's and the Outback restaurants in the Greater Toronto Area The Greater Toronto Area (widely abbreviated as the GTA) is the most populous metropolitan area in Canada. The GTA is a provincial planning area with a population of 5,555,912 at the 2006 Canadian Census. . As a result, intercompany sales have increased significantly. Summit also continues to penetrate and add additional "street business". Health Services health services Managed care The benefits covered under a health contract Revenue in the First Quarter showed sales growth of 15% over the previous year as the Division continued to develop its client base around its Self-Directed Solutions service model. Normal Course Issuer Bid On May 25, 2001, Cara announced that it renewed its Normal Course Issuer Bid permitting the Corporation to purchase up to a total of 2,149,225 Common shares and 2,474,221 Class "A" non-voting shares. This represents approximately 5% of the outstanding Common shares and Class "A" non-voting shares. In the First Quarter, an aggregate total of 375,700 Class "A" non-voting shares were repurchased for cancellation at prices ranging from $5.70 to $6.00. With annual system sales of in excess of $1.5 billion, Cara Operations Limited is one of Canada's leading foodservice companies, providing employment for more than 28,000 Canadians in its owned and franchised operations. Cara's wholly owned businesses include Harvey's, Swiss Chalet, Cara Air Terminal Restaurants, Cara Airport Services, Cara Health Services and Summit Food Service Distributors. Cara has a 61% ownership of Kelsey's International Inc. that operates Kelsey's Neighbourhood Bar & Grill Grill may refer to: In food:
Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbols, CAO - CAO.A, SKL SKL Conservative Peasants Party (Poland) SKL State Key Laboratory SKL Simple Key Loader SKL Svenska Kriminaltekniska Laboratoriet (Swedish National Criminal Forensics Laboratory) and SPA - SPA.A respectively.
CARA OPERATIONS LIMITED
Consolidated Statements of Earnings
Unaudited
(In thousands of dollars, except for share data)
12 Week 12 Week
Period Ended Period Ended %
June 24, 2001 June 25, 2000 Change
----------------------------------------------------------------
System Sales $ 346,523 $ 379,178 -8.6
----------------------------------------------------------------
----------------------------------------------------------------
Gross Revenue $ 238,040 $ 271,817 -12.4
----------------------------------------------------------------
----------------------------------------------------------------
Earnings before
the following: $ 24,626 $ 27,590 -10.7
Amortization of
property, plant
and equipment 9,289 8,529 8.9
Amortization of
goodwill and
other assets 293 1,151 -74.5
----------------------------------------------------------------
15,044 17,910 -16.0
Interest expense
(net of interest
income of $1,238)
(2000 - $248) 1,434 2,841 -49.5
Equity earnings (112) (56) 100.0
----------------------------------------------------------------
Earnings before income
taxes and non-controlling
shareholders' interest 13,722 15,125 -9.3
Provision for income
taxes 5,211 6,562 -20.6
Non-controlling
shareholders' interest 424 321 32.1
----------------------------------------------------------------
Net earnings for
the period $ 8,087 $ 8,242 -1.9
----------------------------------------------------------------
----------------------------------------------------------------
Shares Outstanding (000's)
Common 42,985 42,985 0.0
Class A, non - voting 49,558 49,852 -0.6
----------------------------------------------------------------
Total 92,543 92,836 -0.3
----------------------------------------------------------------
----------------------------------------------------------------
Earnings Per Share (cents)
Basic 8.7 8.9 -1.7
Diluted 8.6 8.9 -3.0
----------------------------------------------------------------
CARA OPERATIONS LIMITED
Segmented Information
(In thousands of dollars)
Unaudited
12 Week Period Ended
June 24, 2001
----------------------------------------------------------------
System Gross
Divisions Sales Revenue
----------------------------------------------------------------
Harvey's $ 65,705 $ 9,390
Swiss Chalet 90,004 28,470
Kelsey's 70,112 48,558
Air Terminal Restaurants 16,070 15,261
Airport Services 52,599 52,599
Health Services 5,842 5,842
Summit Foods 90,101 90,101
Intersegment sales (43,910) (12,181)
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$ 346,523 $ 238,040
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----------------------------------------------------------------
12 Week Period Ended
June 25, 2000
----------------------------------------------------------------
System Gross
Divisions Sales Revenue
----------------------------------------------------------------
Harvey's $ 64,403 $ 12,373
Swiss Chalet 85,676 27,152
Kelsey's 56,929 41,211
Air Terminal Restaurants 14,436 13,631
Airport Services 52,385 52,385
Beaver Foods 67,595 67,595
Health Services 5,099 5,099
Summit Foods 65,179 65,179
Intersegment sales (32,524) (12,808)
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$ 379,178 $ 271,817
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