Cara Announces Second Quarter Results.Business Editors TORONTO--(BUSINESS WIRE)--Oct. 29, 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 Second Fiscal Quarter of 2002 being the 12 week period ended September September: see month. 16, 2001 (the "Second 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 $373.9 million and gross revenues were $256.8 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 December December: see month. , system sales increased 11% and gross revenues increased 17%. Net earnings were $12.3 million and earnings per share were 13.3 cents compared to $9.8 million and 10.6 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. respectively reported last year. "Given the general economic environment and business conditions that existed during the summer months we remain satisfied with our results for the Quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . We were encouraged by the year-over-year increases in system sales experienced by all our major divisions, and in particular the positive same restaurant sales growth enjoyed by our 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 restaurant brands, and although our Airport Services division did not meet expectations in the Quarter, there were two positive developments; firstly, significant productivity improvements in the new Toronto New Toronto (tərŏn`tō), part of metropolitan Toronto, S Ont., Canada, on Lake Ontario. flight kitchen and secondly, effective July July: see month. 5, 2001, Cara assumed the in-flight in-flight adj. 1. Occurring, carried out, or present while in flight: in-flight refueling. 2. Provided or offered during a flight: in-flight meals. catering needs of the former Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Airlines' flights in Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing and Montreal Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. . "Regrettably, the events of September 11, 2001 have significantly changed the lives of many, and impacted the day-to-day day-to-day adj. 1. Occurring on a routine or daily basis: the day-to-day movements of the stock market. 2. behaviour of millions and millions more. These events also have overshadowed much of the progress made in our Airport Services division, which represents approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15% of Cara's system sales and 20% of gross revenues on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis and this will adversely affect our results for the balance of the year. That said, we have taken steps to decrease costs and align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. them with the lower revenue levels. In addition, since September 11, the rest of our businesses have continued to perform well, and we will continue to prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. manage and invest in these in the context of an uncertain economic environment. "On balance, while it remains difficult to assess the impact of recent events on the future, we expect earnings before unusual items for fiscal 2002 to be lower than those of last year. I would like to thank our teammates, guests and customers for their continued dedication and support of our brands and businesses in these difficult and uncertain times and extend our sympathy sympathy /sym·pa·thy/ (sim´pah-the) 1. compassion for another person's thoughts, feelings, and experiences. 2. an influence produced in any organ by disease, disorder, or other change in another part. 3. to all affected by the events of September 11," commented Gabe Tsampalieros, Cara's President and Chief Executive Officer.
MANAGEMENT DISCUSSION & ANALYSIS OF OPERATIONS
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CONSOLIDATED RESULTS
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2nd Quarter 2nd Quarter
(In thousands of dollars ended ended %
except for share data) Sept 16/01 Sept 17/00 Variance
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System Sales (Note 1) $373,889 $387,955 -3.6%
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Gross Revenue 256,812 271,297 -5.3%
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EBITDA (Note 2) 30,746 31,739 -3.1%
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EBIT (Note 3) 21,063 21,330 -1.3%
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Net Earnings 12,319 9,837 25.2%
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EPS (in cents) 13.3 10.6 25.7%
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24 Weeks 24 Weeks
(In thousands of dollars ended ended %
except for share data) Sept 16/01 Sept 17/00 Variance
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System Sales (Note 1) $720,412 $767,133 -6.1%
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Gross Revenue 494,852 543,114 -8.9%
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EBITDA (Note 2) 55,372 59,329 -6.7%
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EBIT (Note 3) 36,107 39,240 -8.0%
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Net Earnings 20,406 18,079 12.9%
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EPS (in cents) 22.0 19.5 13.2%
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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 (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Note 3: EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). is earnings before interest, provision for taxes and after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. equity income. System sales and gross revenues for the Quarter were $373.9 million and $256.8 million compared with last year's $387.9 million, and $271.3 million respectively. Last year's amounts included sales and revenues of $52.2 million related to the institutional catering business of Beaver Foods Limited which was sold at the end of last year's third fiscal quarter. Excluding the sales and revenues related to Beaver, system sales and gross revenues increased by 11% and 17% respectively. These increases were primarily led by the growth in sales of the Kelsey's and Montana's restaurant brands and of Summit Food Service Distributors Inc. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net earnings were $12.3 million in the Quarter, $2.5 million ahead of last year. Factors that should be taken into account when comparing the Quarterly results to those of the previous year include: -- Last year's second fiscal quarter net earnings included Cara's proportionate share of the $4.1 million write down taken by The Second Cup Ltd., on the disposition of shares in Diedrich's Coffee Co., which had the effect of reducing Cara's reported earnings by $1.6 million (1.7 cents per share). -- The adoption this year of the new Canadian Institute of Chartered Accountants (CICA) accounting standard pertaining to goodwill and other intangible assets. The effect of this change in the current Quarter is a $587,000 increase in net income, or an increase of 0.6 cents per share. Last year's second fiscal quarter included amortization of goodwill of $888,000. If that amount had not been deducted from earnings, net earnings for the quarter ended September 17, 2000 would have increased by $888,000 or 1.0 cents per share to $10.7 million or 11.6 cents per share. -- A reduction in the profitability of the Airport Services Division, primarily due to the slow down in air travel, the start-up costs of integrating the new in-flight catering needs of the former Canadian Airlines business in Montreal and Toronto, the impact of the tragic events of September 11, 2001, and although much improved from the First Quarter, reduced productivity during the ramp-up period of our new flight kitchen in Toronto. -- Lower interest expense than last year due to lower debt levels. -- 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 $109 million, which is in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with expectations and $8.4 million lower than at the end of the first fiscal quarter. This reflects the impact of many factors in the Quarter including: -- Making a 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. investment with surplus cash of approximately $75 million. -- Cash flow of $21.5 million generated from operating activities before changes in working capital. -- Capital expenditures of $13.3 million of which $7.8 million were for new restaurant construction and $2.1 million for restaurant renovations. -- Seasonal reduction in working capital primarily at Airport Services. Normal Course Issuer Bid In the current year, pursuant to its Normal Course Issuer Bid, Cara has purchased for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. 474,000 of its outstanding Class A non-voting non-voting adj non-voting shares → azioni fpl senza diritto di voto shares, at prices ranging from $5.70 to $6.23 at a cost of approximately $2.8 million and an average cost of $5.92 per share. Second Cup On August 13, 2001, the Corporation announced its intention to make a cash offer to purchase up to 3 million of the outstanding common shares of The Second Cup Ltd. (TSE:SKL SKL Conservative Peasants Party (Poland) SKL State Key Laboratory SKL Simple Key Loader SKL Svenska Kriminaltekniska Laboratoriet (Swedish National Criminal Forensics Laboratory) ) at a price of $7.00 per share. If successful this would increase the Corporation's ownership in Second Cup to 71%. Set out below are some of the operating highlights of our major operating divisions: Swiss Chalet In the Second Quarter, Swiss Chalet system sales grew by approximately 5.6% to $92 million. Growth in same restaurant sales remained positive increasing by 1.4%, marking the eighth consecutive fiscal quarter in which Swiss Chalet has achieved year-over-year growth in same restaurant sales. This growth is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a combination of increased traffic flow and average guest spend. During the Quarter, one restaurant was opened (4 year-to-date) bringing the total number of Swiss Chalet restaurants operating at the end of the Quarter 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 to 183. An additional 7 (5 net) restaurants are scheduled to be opened by year end. Harvey's System sales in the Second Quarter increased by 3.7% to $66.4 million. Same restaurant sales increased by 4.2%. Harvey's has now achieved year-over-year growth in same restaurant sales in each of the last eight fiscal quarters. This growth is attributable to increased traffic flow, as well as menu price adjustments. During the Quarter, two restaurants were opened (8 year-to-date) while three restaurants were closed (8 year-to-date) bringing the total number of Harvey's restaurants in operation at the end of the Quarter to 368. Air Terminal Restaurants System sales in the Second Quarter increased by 7.6% to $19.1 million and continued to grow faster than passenger traffic. During the same period, consolidated passenger traffic in the airports that ATR ATR Achilles tendon reflex, see Ankle reflex operates in is estimated to have grown by less than 2%. An aggressive focus on operating strategies that 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. spend and "capture rates" had a positive impact on same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. (5.8% in the Second Quarter). Given the events of September 11th and the conditions of economic uncertainty, an emphasis will be placed on cost reduction strategies as well as processes to increase capture rates and average spend. Since September 11th and despite the current decline in air travel, this division has not seen any substantial deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in its sales or profitability. Kelsey's System sales in the Second Quarter increased by 21.3% to $78 million. The increase is attributable to the addition of 20 new restaurants in the last twelve months, and same restaurant sales growth of 1.9% for the Kelsey's brand and 1.5% for Montana's. In the Quarter, 1 Kelsey's (5 year-to-date), 3 Montana's (4 year-to-date) and 1 Outback (2 year-to-date) restaurants were opened bringing the total number of restaurants operating under these brands to 146, consisting of 92 Kelsey's, 40 Montana's and 14 Outback restaurants. An additional 8 (5 net) Kelsey's, 11 Montana's and 2 Outback restaurants are scheduled to be opened by fiscal year end. Airport Services In the Second Quarter, sales increased by $4.3 million or 6.9% to $66.7 million. The increase is directly attributable to the assumption by Cara on July 5, 2001 of the in-flight catering requirements of former Canadian Airlines' flights in Toronto and Montreal, as they became integrated into the Air Canada schedule. Profitability in the Quarter however was adversely affected by, reduced load factors, start-up Start-up The earliest stage of a new business venture. difficulties associated with the absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. of the new business referred to above, and although much improved from the First Quarter, continuing operational inefficiencies at the new flight kitchen in Toronto. Events surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of air travel on September 11th also had a negative impact on the results of the Quarter. Although passenger travel since September 11th has been slowly increasing, many airlines continue to forecast year over year declines in passenger traffic for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. . Airlines have been reducing meal services and load factors remain low. As a result, the profitability of Airport Services for the balance of the year will be significantly lower than a year ago. In response to the situation, subsequent to the Quarter-end, the Division adjusted its cost structure to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the impact of the reduced levels of revenue on
profitability.Summit Foods Sales (including inter-company sales) for the quarter increased by 41% over a year ago to $93 million. This growth is attributable to the new business being serviced from Summit's new 128,000 square foot distribution centre in Mississauga, Ontario For the First Nation, see . Mississauga (pronounced: [ˌmɪsɪˈsɑgə] listen . The majority of the new business was internal and consists of Kelsey's and Montana's accounts taken over in April 2001 and additional Harvey's and Swiss Chalet accounts 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. . The division also reported sales growth in "Street" accounts including Compass Canada as a result of the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. agreement signed as part of the sale of Beaver Foods. Health Services health services Managed care The benefits covered under a health contract The Second Quarter showed sales growth of 12% to $5.5 million .The first half of the fiscal year has been quite encouraging for the Health Services Division as it continues to focus on its Self-Directed self-di·rect·ed adj. Directed or guided by oneself, especially as an independent agent: the self-directed study of a language. self Solutions(TM) service model which is gaining increased interest and acceptance in the Canadian health care industry. With annual system sales of in excess of $1.5 billion, Cara Operations Limited is one of Canada's leading foodservice The foodservice (or food service) industry (US English; catering industry in British English) encompasses those places, institutions, and companies responsible for any meal eaten away from home. companies, providing employment for more than 28,000 Canadians This is a list of Canadians. Architects
In food:
A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. coffee retail market and the largest shareholder (38%) of The Spectra Group of Great Restaurants Inc., a west Vancouver-based multi-concept restaurant operator, whose popular owned brands include the upscale casual chain of Milestones restaurants and the Bread Garden bakery/cafe concept. The shares of Cara, Second Cup and Spectra are listed on The Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbols, CAO - CAO.A, SKL and SPA Spa, commune (1991 pop. 10,140), Liège prov., E Belgium, in the Ardennes. Its therapeutic mineral springs and baths, frequented since the 16th cent., made it an internationally fashionable watering place. - SPA.A respectively.
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CARA OPERATIONS LIMITED
Consolidated Statements of Earnings and Retained Earnings
Unaudited 12 Week 12 Week 24 Week 24 Week
Period Period Period Period
(In thousands of dollars, Ended Ended Ended Ended
except earnings per Sept 16, Sept 17, Sept 16, Sept 17,
share data) 2001 2000 2001 2000
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System Sales $ 373,889 $ 387,955 $ 720,412 $ 767,133
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Gross Revenue $ 256,812 $ 271,297 $ 494,852 $ 543,114
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Earnings before the
following: $ 30,746 $ 31,739 $ 55,372 $ 59,329
Amortization of property,
plant and equipment 9,396 8,924 18,685 17,453
Amortization of goodwill
and other assets
(note 3) 287 1,485 580 2,636
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21,063 21,330 36,107 39,240
Net interest
expense (note 2) 1,655 2,701 3,089 5,542
Equity (earnings) loss (971) 355 (1,083) 299
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Earnings before income
taxes and non-controlling
shareholders' interest 20,379 18,274 34,101 33,399
Provision for income taxes 7,423 8,008 12,634 14,570
Non-controlling
shareholders' interest 637 428 1,061 749
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Net earnings for the
period $ 12,319 $ 9,837 $ 20,406 $ 18,079
Retained Earnings -
Beginning of Period 306,372 220,816 308,064 219,108
Share repurchase (776) - (3,114) (35)
Dividends - - (7,441) (6,499)
----------------------- ---------------------------------------------
Retained Earnings
- End of Period $ 317,915 $ 230,653 $ 317,915 $ 230,653
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Earnings Per Share (cents)
Basic 13.3 10.6 22.0 19.5
Diluted 13.2 10.6 21.8 19.5
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See accompanying notes to interim consolidated financial
statements.
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CARA OPERATIONS LIMITED
Consolidated Balance Sheets
As at Sept 16 As at April 1
2001 2001
(In thousands of
dollars) Unaudited Audited
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ASSETS
Current Assets
Cash $ 7,052 $ 106,429
Marketable
investment (note 2) 74,915 -
Accounts receivable 81,704 64,138
Inventories 30,255 28,768
Prepaid expenses and
other assets 2,078 5,866
Future income taxes 6,417 6,414
Current portion of
long-term
receivables 2,548 2,548
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204,969 214,163
Long-Term
Receivables 14,195 15,149
Property, Plant and
Equipment 369,846 363,716
Goodwill and Other
Assets (note 3) 57,217 57,715
Equity Investments
(note 4) 39,409 37,984
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$ 685,636 $ 688,727
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LIABILITIES
Current Liabilities
Bankers acceptances $ 25,000 $ -
Accounts payable and
accrued liabilities 102,535 117,553
Income taxes payable 1,474 25,253
Current portion of
long-term debt 4,420 4,420
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133,429 147,226
Long-Term Debt (note
5) 161,582 163,272
Other Long-Term
Liabilities 18,901 18,875
Future Income Taxes 15,052 15,052
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328,964 344,425
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Non-controlling
shareholders'
interest 8,011 5,800
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SHAREHOLDERS' EQUITY
Capital Stock
(note 6) 30,746 30,438
Retained Earnings 317,915 308,064
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348,661 338,502
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$ 685,636 $ 688,727
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See accompanying notes to interim consolidated financial
statements.
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CARA OPERATIONS LIMITED
Consolidated Statements of Cash Flows
Unaudited 12 Week 12 Week 24 Week 24 Week
Period Period Period Period
Ended Ended Ended Ended
(In thousands of Sept 16, Sept 17, Sept 16, Sept 17,
dollars) 2001 2000 2001 2000
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Cash Flows Provided
by (Used in)
Operating Activities
Net earnings for the
period $ 12,319 $ 9,837 $ 20,406 $ 18,079
Adjustments for:
Amortization of
property, plant
and equipment 9,396 8,924 18,685 17,453
Amortization of
goodwill and other
assets 287 1,485 580 2,636
Loss on disposal of
property, plant and
equipment 51 8 29 8
Equity loss
(earnings) (971) 355 (1,083) 299
Non-controlling
shareholders'
interest 637 428 1,061 749
Other non-cash items (173) 27 (342) (100)
Change in non-cash
operating working
capital 116 (8,225) (54,039) (12,030)
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21,662 12,839 (14,703) 27,094
Investing Activities
Acquisition of
marketable
investment $ (74,915) $ - $ (74,915) $ -
Purchase of
property, plant and
equipment (13,258) (27,341) (29,027) (44,010)
Dividends from The
Second Cup shares - - - 7,326
Proceeds on disposal
of property, plant
and equipment 595 1,521 4,183 4,205
Increase in other
assets (80) (296) (82) (673)
Decrease (increase)
in mortgages and
notes (180) 846 (279) 1,319
Repayment of
employee share
purchase loans 233 597 1,233 972
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$ (87,605) $ (24,673) $ (98,887) $ (30,861)
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Financing Activities
Bankers acceptances$ 25,000 $ - $ 25,000 $ -
Share repurchase (608) - (2,806) (41)
Increase (decrease)
in long-term debt (1,009) 13,116 (1,690) 11,540
Dividends paid - - (7,441) (6,499)
Issuance of capital
stock by subsidiary - - 1,150 -
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$ 23,383 $ 13,116 $ 14,213 $ 5,000
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Net Change in Cash (42,560) 1,282 (99,377) 1,233
Cash - Beginning of
Period 49,612 3,168 106,429 3,217
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Cash - End of Period $ 7,052 $ 4,450 $ 7,052 $ 4,450
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See accompanying notes to interim consolidated financial
statements.
Cara Operations Limited Notes to Interim Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge For the 24 week period ended September 16, 2001 and September 17, 2000 Unaudited 1. Basis of Presentation The Corporation prepares its interim financial statements 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 Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting on a basis consistent with those used and described in the annual consolidated financial statements. The disclosures contained in these interim consolidated financial statements do not include all requirements of generally accepted accounting principles for annual financial statements. These interim consolidated financial statements should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the annual consolidated financial statements for the year ended April 1, 2001. In fiscal 2002, the Corporation adopted the new recommendations issued by The Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. ("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) ") on interim financial statements. Also in fiscal 2002, the Corporation adopted the new recommendations issued by the CICA 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 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. . Under the new recommendation, 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 recommendation and at least annually thereafter. 2. Marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. Investment On August 2, 2001, the Corporation made an investment totaling US $48.5 million in a principal-protected forward contract to purchase marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has in July 2004. This forward contract can be converted at anytime into marketable securities at quoted market prices. This investment is carried as a current asset at market value and any unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses in value are included in net interest expense. To hedge the foreign exchange risk, the Corporation has entered into a forward contract to sell U.S. dollars at a rate approximating approximating, adj See approximal. the exchange rate at the time the investment was made. Should the investment remain outstanding until July 2004, the initial principal of U.S. $48.5 million invested in this forward contract would be fully recoverable in July 2004 through a put option held by the Corporation for the sale of the marketable securities. The put option is a direct obligation of a bank that has an AA - credit rating from Standard & Poor's. The Corporation has made this investment with surplus cash to earn investment returns in excess of those available from commercial paper or treasury bills with minimal incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. risk. 3. Goodwill and Other Assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. The effect of adopting the new accounting standard relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc goodwill and other assets in the current quarter is an increase of $587,000 in net earnings or an increase of 0.6 cents per share. Last year's Second Quarter results included amortization of goodwill of $888,000. 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 September 17, 2000 would have increased by $888,000 or 0.9 cents per share to $9.1 million or 9.8 cents per share. 4. Equity Investments On August 13, 2001, the Corporation announced its intention to make a cash offer to purchase up to 3 million of the outstanding common shares of The Second Cup Ltd. (TSE: SKL) at a price of $7.00 per share. The Corporation currently holds approximately 3.66 million shares (39%) and upon the successful completion of the offer, would hold 6.66 million shares (71%) of Second Cup. In accordance with the applicable securities regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. , the Corporation will mail its offer to all registered holders of Second Cup as soon as possible after an independent valuation has been completed by advisors engaged by the committee of independent directors of Second Cup, at Cara's expense, and the independent committee has reported to all members of the Board of Directors of Second Cup. 5. Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. On August 2, 2001, the Corporation entered into an interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. contract to convert the current 5.95% fixed rate of interest paid by the Corporation on its Mid-Term Notes to a floating variable short-term rate based on 3 month bankers acceptances. This contract extends to June June: see month. 12, 2008, the maturity date of the Mid-Term Notes, and is part of the Corporation's strategy to reduce interest cost in the context of current economic conditions. 6. Capital Stock The Corporation's authorized capital stock authorized capital stock The number of shares of capital stock that a business may issue. Authorized capital stock is stated in a firm's articles of incorporation; changes in it may occur only if approved by the stockholders. consists of an unlimited number of common shares, Class A non-voting shares and preference shares issuable in series. Shares issued are set out below:
Class A non-voting Common shares
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(In thousands of
dollars, except Number of Stated Number of Stated
number of shares) Shares Amount Shares Amount
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Balance at
April 1, 2001 49,851,952 $ 24,310 42,984,520 $ 6,128
Repurchase of shares
under Normal Course
Issuer Bid (474,000) (232) - -
Options exercised 131,490 540 - -
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Balance at
September 16, 2001 49,509,442 $ 24,618 42,984,520 $ 6,128
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7. Earnings Per Share
The components of basic and diluted earnings per share are as
follows:
12 Week 12 Week 24 Week 24 Week
Period Period Period Period
Ended Ended Ended Ended
Sept 16, Sept. 17, Sept 16, Sept. 17,
2001 2000 2001 2000
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Net earnings (In
thousands of
dollars) $12,319 $9,837 $20,406 $18,079
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Weighted average
outstanding shares 92,517,779 92,852,774 92,578,038 92,856,113
Dilutive effect of
options 971,118 134,992 949,036 81,687
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93,488,897 92,987,766 93,527,074 92,937,800
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Earnings per share
(In cents)
Basic 13.3 10.6 22.0 19.5
Diluted 13.2 10.6 21.8 19.5
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On May 29, 2001, 640,860 options were granted under the Executive Stock Option Plan at an exercise price of $6.10 per share. Options under this grant vest in 3 equal tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". on each of the first through third anniversaries of the date of the grant, provided that in order for the options to be exercisable, the Corporation's Class A non-voting shares must have traded on The Toronto Stock Exchange at no less than $7.62 per share for a period of 30 consecutive calendar days at anytime between the date of grant and the date of exercise. 8. Cash Flows
12 Week 12 Week 24 Week 24 Week
Period Period Period Period
Ended Ended Ended Ended
Sept. 16, Sept. 17, Sept. 16, Sept. 17,
(In thousands of dollars) 2001 2000 2001 2000
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Accounts receivable $ (4,192) $ (6,889) $(17,566) $(14,590)
Inventories (592) (1,053) (1,487) (3,226)
Prepaid expenses and
other assets 143 (14) 3,788 484
Accounts payable and
accrued liabilities (1,058) (2,975) (14,992) 8,883
Income taxes payable 5,815 2,706 (23,782) (3,581)
9. Segment Information
Set out below are system sales and gross revenue information for
each of the Corporation's significant brands or operating divisions:
12 Week Period Ended 12 Week Period Ended
September 16, 2001 September 17, 2000
(In thousands of System Gross System Gross
dollars) Sales Revenue Sales Revenue
--------------------------------------------------------------------
Harvey's $66,449 $7,879 $64,050 $11,200
Swiss Chalet 92,011 25,693 87,145 23,131
Kelsey's 77,955 53,226 64,287 44,121
Air Terminal
Restaurants 19,097 17,707 17,755 16,934
Airport Services 66,680 66,680 62,353 62,353
Beaver Foods - - 52,266 52,266
Health Services 5,509 5,509 4,894 4,894
Summit Foods 93,010 93,010 66,018 66,018
Interdivisional
sales (46,822) (12,892) (30,813) (9,620)
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$373,889 $256,812 $387,955 $271,297
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24 Week Period Ended 24 Week Period Ended
September 16, 2001 September 17, 2000
(In thousands of System Gross System Gross
dollars) Sales Revenue Sales Revenue
--------------------------------------------------------------------
Harvey's $132,154 $17,269 $128,453 $23,573
Swiss Chalet 182,014 53,752 172,821 50,283
Kelsey's 148,068 101,784 121,216 85,332
Air Terminal
Restaurants 35,167 32,968 32,191 30,565
Airport Services 119,279 119,279 114,739 114,739
Beaver Foods - - 119,861 119,861
Health Services 11,351 11,351 9,993 9,993
Summit Foods 183,111 183,111 131,197 131,197
Interdivisional
sales (90,732) (24,662) (63,338) (22,429)
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$720,412 $494,852 $767,133 $543,114
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10. Comparative Amounts
Certain comparative amounts have been reclassified to conform with
the current period's presentation.
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CARA OPERATIONS LIMITED - LOCATION STATISTICS
24 Weeks Ended 12 Weeks Ended 52 Weeks Ended
September 16, 2001 June 24, 2001 April 1, 2001
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Swiss Chalet 183 182 179
Harvey's 368 369 368
Kelsey's 92 91 88
Montana's 40 37 36
Outback 14 13 12
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Airport Services Division
Flight Kitchens 11 12 12
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Air Terminal Restaurants 90 92 90
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Summit Food Service
Distribution Centers 4 4 4
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For additional shareholder information please contact:
--------------------------------------
Michael Forsayeth
Senior V.P. & Chief
Financial Officer
Tel: 905-405-6905
Fax: 905-405-6777
E-Mail: mforsayeth@cara.com
Website: cara.com
6303 Airport Road
Mississauga, Ontario
Canada L4V 1R8
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On pourra se procurer le texte francais de ce rapport en
communiquant avec le Responsable des relations avec les investissuers
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Stock Exchange Listing
Toronto
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Transfer Agent and Registrar
Computershare Investor Services Inc.
c/o Montreal Trust Company
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Market Share Prices
September 16, 2001
Common Shares, CAO (2000 $4.75) $6.40
Class A Subordinated Voting
Shares, CAO.A (2000 $4.11) $5.70
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