Cara Announces Second Quarter Sales And Earnings Growth.Business Editors TORONTO--(BUSINESS WIRE)--Oct. 23, 2002 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")(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CAO.TO)(TSX:CAO.A.TO) today announced its operating results for the Second Fiscal Quarter of Fiscal 2003 being the 12-week period ended September September: see month. 15, 2002 (the "Second Quarter" or the "Quarter"). The Second Quarter results showed strong improvement over the comparable period a year ago with 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. rising 13.7% to $425 million; gross revenues increasing 7.8% to $277 million; net earnings growth of 12.6% to $13.9 million and earnings per share growth of 13.3% to 15.1 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. compared to $12.3 million and 13.3 cents per share respectively reported in the year-ago period. "We're we're Contraction of we are. we're we are quite pleased with the results of the Second Quarter and particularly so given that they constitute a very good improvement over the record results of the corresponding period last year, and the fact that they were achieved against the backdrop Backdrop may refer to:
Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. . The results are a tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. demonstration of the value creation potential that comes from being a focused integrated restaurant company. The results would have been better but for the extremely hot weather, certain changes in the non-smoking non-smoking non adj → non-fumeur by-laws BY-LAWS. Rules and ordinances made by a corporation for its own government. 2. The power to make by-laws is usually conferred by express terms of the charter creating the corporation, though, when not expressly granted, it is given by implication, and it is that adversely affected visits to some of our restaurants, and significantly reduced tourism, particularly 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. which combined, contributed to lower same restaurant sales at some of our concepts for the first time in 3 years. Having said that, with the end to the heat wave, we're pleased that most of our restaurant brands are once again showing positive growth, and our airline catering business has rebounded well from the challenges of last year's slowing economy and the impact of the tragic events of September 11, 2001. While it is difficult to assess the impact on Cara, if any, should there not be a peaceful resolution to the Middle East situation, under current economic conditions, we remain on track and expect continued sales and earnings growth for the balance of Fiscal 2003. As always, I would like to thank all of our teammates, guests and customers for their continued commitment and loyalty towards Cara's brands and businesses", commented Gabe Tsampalieros, Cara's President and Chief Executive Officer. MANAGEMENT DISCUSSION & ANALYSIS OF OPERATIONS 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: RESULTS As an integral part of its press release announcing quarterly financial results, Cara provides extensive disclosure, including consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , statements of earnings, retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. , cash flows and detailed accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. footnotes. All information is prepared 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 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. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . As supplemental information, Cara also provides information on an adjusted earnings basis including 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 , EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). and earnings before unusual items. These adjusted earnings, though commonly used and generally understood, do not have any standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meaning prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). under GAAP and, therefore, may not be necessarily comparable to similar measures presented by other issuers. The definitions of EBITDA, EBIT and earnings before unusual items are explained below and can also be specifically identified on the attached consolidated income statement consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. where such measures are reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to GAAP earnings. These adjusted earnings measures are considered useful information as they are used by Cara management to measure internal operating performance and are also used externally by most financial analysts in their assessment of the Company's financial condition, estimating future earnings and valuing the Company. CONSOLIDATED RESULTS
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2nd Quarter 2nd Quarter
(In thousands of dollars ended ended %
except for share data) Sept 15/02 Sept 16/01 Variance
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System Sales (Note 1) $ 425,127 $ 373,889 13.7%
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Gross Revenue 276,868 256,812 7.8%
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EBITDA (Note 2) 36,316 30,746 18.1%
EBIT (Note 3) 25,099 21,063 19.2%
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Net Earnings before Unusual
Items 13,873 12,319 12.6%
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Gain on sale of business
(Note 4) - - 0.0%
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Net Earnings 13,873 12,319 12.6%
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EPS before Unusual Items (in
cents) 15.1 13.3 13.3%
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EPS (in cents) 15.1 13.3 13.3%
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24 Weeks 24 Weeks
(In thousands of dollars ended ended %
except for share data) Sept 15/02 Sept 16/01 Variance
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System Sales (Note 1) $ 824,219 $ 720,412 14.4%
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Gross Revenue 525,605 494,852 6.2%
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EBITDA (Note 2) 65,362 55,372 18.0%
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EBIT (Note 3) 43,270 36,107 19.8%
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Net Earnings before Unusual
Items 24,688 20,406 21.0%
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Gain on sale of business
(Note 4) 17,769 - 100.0%
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Net Earnings 42,457 20,406 108.1%
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EPS before Unusual Items (in
cents) 26.9 22.0 21.9%
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EPS (in cents) 46.2 22.0 109.6%
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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. ($49.3 million and $51.1 million in the quarter for FY 2003 and FY 2002, respectively. Note 2: EBITDA 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 is earnings before interest, provision for taxes and income from equity investments. Note 4: The gain on sale of the Healthcare Services of $17.8 million is net of applicable taxes of $2.9 million. System sales and gross revenue for the Quarter were $425 million and $ 277 million, an increase of 13.7% and 7.8% respectively over last year. The addition of Second Cup's and Milestone's system sales of $39.1 million and $17.1 million respectively were the largest contributor to the year-over-year increase in system sales followed by the year-over-year growth in system sales of Montana's and Kelsey's. However, because Second Cup is almost entirely franchised, its inclusion contributed only $5.7 million to Cara's consolidated gross revenues. In the Quarter, consolidated net earnings on a GAAP basis increased to $13.9 million or 15.1 cents per share compared to $12.3 million and 13.3 cents per share respectively reported last year. When comparing the Fiscal 2003 Second Quarter results to those of the previous year, the following factors should be taken into account: -- The inclusion and consolidation of 100% of the operating results of Second Cup that contributed net earnings for the quarter in excess of last year's equity earnings pick up of $0.6 million. -- The inclusion of Milestone's results (net of minority interest) that contributed net earnings for the quarter in excess of last year's equity earnings pick up from The Spectra Group of Great Restaurants Inc. of $0.3 million. -- The improving profitability of the Airport Services Division that was due to a number of factors including; the significant steps taken in the Third Quarter of Fiscal 2002, to align the manpower and cost structure of the division to the reality of lower revenue levels and the economic pressures faced by our key customers; the fact that, at this time last year, the division was being adversely affected by the start-up costs related to the integration of the in-flight catering needs of the former Canadian Airlines flights in Toronto and Montreal; the reduced productivity during the ramp-up phase of our new Toronto flight kitchen; and the combined impact of the slowing economy and the tragic events of September 11, 2001. -- The decision to account for stock option grants as a compensation expense, and to have such an expense deducted from earnings. In the Quarter, the after-tax expense was $ 0.3 million or 0.3 cents per share. For the Fiscal Year the after-tax expense to earnings is expected to be $1.2 million or 1.3 cents per share. The expense was calculated using the Black-Scholes valuation model and includes the cost of options grants issued under the stock option plans of certain subsidiaries of the Company. There was no comparable expense in prior reporting periods. Cara has implemented this accounting practice on a retroactive basis without restatement of comparative amounts resulting in a one-time charge to opening retained earnings of $4.3 million in the First Quarter of Fiscal 2003. At the end of the Quarter, Cara's net debt stood at $ 104.9 million, which is approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $19.8 million lower than at the end of Fiscal 2002, and compares with $109.0 million at the end of the Second Quarter of last year. This level of net debt is in line with expectations. Cash flow generated in the Quarter was strong and reflects the following: -- Cash flow from operating activities of $25.8 million, before changes in working capital. -- Capital expenditures of $11.5 million; of which $4.6 million were for new restaurant construction and $3.0 million for restaurant renovations. -- Repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of bankers' acceptances A bankers' acceptance, or BA, is a time draft drawn on and accepted by a bank. Before acceptance, the draft is not an obligation of the bank; it is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the of $13 million to $31.5 million outstanding at the end of this Quarter. -- Proceeds of $3.2 million realized on the settlement of the 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. transaction. Set out below are some of the operating highlights of our major operating divisions: Swiss Chalet
Swiss Chalet is a chain of Canadian family restaurants originally founded in 1954 in Toronto, Ontario. In the Second Quarter, Swiss Chalet achieved system sales of $91 million, 1.1% lower than last year primarily due to a 3.1% decline in same restaurant sales and the closure of three under-performing restaurants. The decline is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a combination of factors including the unusually hot weather and lower tourism in Ontario, in particular, in the Greater Toronto Area and the closure of 3 under-performing restaurants. To the end of the Quarter, same restaurant sales were a negative 0.8%, however as a result of improving sales trends subsequent to the Quarter-end, same restaurant sales are now essentially even to last year. At Quarter-end, there were 183 Swiss Chalet 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 , unchanged from this time last year. Given the success of its new restaurants and its long-established reputation as the leader in wholesome whole·some adj. whole·som·er, whole·som·est 1. Conducive to sound health or well-being; salutary: simple, wholesome food; a wholesome climate. 2. family meals, Swiss Chalet is again aggressively pursuing growth through a heightened emphasis on new restaurant development. 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 In the Quarter, Harvey's system sales declined by 1.8% to $65.3 million primarily due to a 1.5% decline in same restaurant sales and the closure of a total of 14 (5 in the Quarter) under-performing restaurants versus 5 new restaurant openings. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. same restaurant sales were a negative 0.5%. The large multi-national competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in the Quick Service Restaurant segment continue to apply "deep discount" promotional strategies to drive sales and traffic. Harvey's has chosen not to compete on that basis but to rely on its value proposition of having the "best tasting hamburger" as well as on new menu innovations like the Grilled grill tr.v. grilled, grill·ing, grills 1. To broil on a gridiron. 2. To torture or afflict as if by broiling. 3. Informal To question relentlessly; cross-examine. 4. Chicken Pita "Pain in the ass." See digispeak. PITA - Pain in the arse/ass. which was promoted in the Quarter. The total number of restaurants in operation at the end of the Quarter was 359 (109 of which are "non-traditional") versus 367 (108 "non-traditional") at this time last year. As in the case of Swiss Chalet, following the success of its new restaurants, Harvey's is again focused on new restaurant development at an accelerated rate. Kelsey's Neighbourhood Bar & Grill Grill may refer to: In food:
System sales in the Quarter increased 6.6% to $49.2 million, due primarily to the sales generated by the 11 new restaurants added since this time last year. Same restaurant sales were a negative 1.6% in the Quarter and are tracking negative 0.5% for the year-to-date. The decline in same restaurant sales is attributable to the extreme hot weather and changes in the non-smoking by-laws in Ontario, as well as, significantly reduced tourism, particularly in the Greater Toronto Area. During the Quarter, 4 new restaurants were opened bringing the total number of operating restaurants at the end of the Quarter, to 103 compared to 92 at this time last year. Montana's Cookhouse Montana's Cookhouse is a Canadian restaurant headquartered in Mississauga, Ontario. There are restaurants located in Canada from coast to coast in addition to US locations in Michigan and New York State. System sales in the Quarter increased by 32.9% to $29.9 million, the result primarily of the addition of 9 new restaurants since this time last year. Same restaurant sales for the Quarter were a negative 0.7% but remain positive for the year-to-date at 0.8%. During the quarter, this brand was also impacted by the hot weather in Ontario and reduced tourism but mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the affect with their successful "All you can eat ribs on Wednesday Wednesday: see week. " promotion. With one new restaurant opened in the Quarter, there were 49 Montana's in operation at the end of the Quarter. Second Cup System sales were $39.1 million in the Quarter. Although 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 were negative at 0.7%, for the year-to-date same store sales remain positive at 1.0%. In the Quarter, Second Cup signed a Master Franchise Agreement with Bin Hendi Enterprises L.L.C. that permits Bin Hendi to open stores using The Second Cup trademark in Dubai Dubai (d  bī`), sheikhdom (1995 pop. 674,101), c.1,500 sq mi (3,890 sq km), part of the federation of seven United Arab Emirates, SE Arabia, on the Persian Gulf. , and
provides them first rights to open stores throughout the United Arab
Emirates United Arab Emirates, federation of sheikhdoms (2005 est. pop. 2,563,000), c.30,000 sq mi (77,700 sq km), SE Arabia, on the Persian Gulf and the Gulf of Oman. . During the Quarter, 4 cafes were closed and one new cafe was
opened to have 384 cafes operating at the end of the Quarter. The brand
will continue to focus on operational excellence and new unit
development to maintain its leadership position in the specialty A contract under seal.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 sector. Milestones Sales were $17.0 million in the Quarter. Overall, sales at Milestone's continue to meet expectations. Sales growth in restaurants in the West has more than offset the small declines in some of the GTA GTA Grand Theft Auto (legal) GTA Grand Theft Auto (video game) GTA Greater Toronto Area (Canada) GTA Graduate Teaching Assistant restaurants, which like many of our other full service brands were adversely affected by the change in the Ontario non-smoking laws. With most of Milestone's sales being generated from a strong British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography market it was able to report positive same restaurant sales growth of 2.1% in the Quarter. Milestone's currently has 20 restaurants operating in British Columbia and in the Greater Toronto Area, with two additional restaurants under construction in the 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 Area that will be opening next Quarter. Air Terminal Restaurants System sales in the Second Quarter were $19.1 million, unchanged from a year ago. This is a direct result of some offsetting changes in the business mix of this Division. Firstly, sales were negatively affected by lower passenger volume (estimated at 8%) and the loss of the Halifax Halifax, city, Canada Halifax, city (1991 pop. 114,455), provincial capital, S central N.S., Canada, on the Atlantic Ocean. It is the largest city in the Maritime Provinces and is one of Canada's principal ice-free Atlantic ports. airport account late last year. This has been offset by the addition of certain Air Canada employee cafeteria cafeteria: see restaurant. operations to the division's portfolio of operations earlier this year. During the year, this Division was awarded 10-year 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. contracts at the Calgary Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Ottawa Ottawa, city, Canada Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. and Saskatoon Saskatoon (săskət n`), city (1991 pop. 186,058), S central Sask., Canada, on the South Saskatchewan River. airports having an estimated aggregate
cumulative sales volume over their respective 10-year periods of $120
million.Airport Services Sales in the Quarter were 10.2% lower than a year ago at $59.9 million but were ahead of internal expectations as air passenger traffic and load factors continued to demonstrate better than expected trends. Profitability improved over last year due to a number of factors. Firstly, significant steps were taken in the Third Quarter of Fiscal 2002 to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. the manpower and cost structure of the division to the reality of lower revenue levels. Also, at this time last year, the Division was being adversely affected by the start-up Start-up The earliest stage of a new business venture. costs of integrating 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 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 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. , the reduced productivity during the ramp-up phase of our new Toronto New Toronto (tərŏn`tō), part of metropolitan Toronto, S Ont., Canada, on Lake Ontario. flight kitchen and, the impact of the tragic events of September 11, 2001. Recently, the division was awarded a new contract to supply food and services to Via Rail. Summit Foods Sales (including inter-company sales) in the Second Quarter declined 3.3% due mainly to the reduction in sales to both Cara brands and Summit's "street accounts". In the Quarter, the 20,000 square foot expansion to its London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. Distribution Centre's was completed and will provide operational efficiencies to enhance Summit's services to its Ontario customer base. Subsequent Event - Normal Course Issuer Bid Up to the end of the Second Quarter, no share purchases were made under the Normal Course Issuer Bid. Subsequent to the Quarter-end, 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. 415,900 of its Class A non-voting non-voting adj non-voting shares → azioni fpl senza diritto di voto shares at a cost of $2.5 million and an average cost of $5.92 per share. With annual system sales of in excess of $1.8 billion, Cara Operations Limited, based in Toronto, Ontario, Canada is one of Canada's leading integrated restaurant companies, and the largest operator of full service restaurants in Canada, providing employment for approximately 38,000 Canadians This is a list of Canadians. Architects
For further information, please contact Gabe Tsampalieros, President and Chief Executive Officer or Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Forsayeth, Chief Financial Officer at (905)405-6500. To find out more about Cara Operations Limited (CAO; CAO.A) visit our website, www.cara.com or send your inquiries to finance@cara.com. An analyst conference call to review the results of the First Quarter will be held at 8:45 am on October October: see month. 24, 2002. Those who wish to "listen-in" on the call may do so by calling (416) 641-6715. For more information and to arrange interviews with Mr. Tsampalieros, please contact Catherine Heroux at Strategic Objectives, TEL TEL Telephone TEL Telegram TEL Telugu (langauge) TEL Terrorist Exclusion List TEL Technology-Enhanced Learning TEL Transporter-Erector-Launcher TEL Tetra-Ethyl Lead TEL Team Deutsche Telekom : (416) 366-7735; FAX: (416) 366-2295; E-mail: cheroux@strategicobjectives.com 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 15, 2002 and September 16, 2001 Unaudited 1. Basis of Presentation The Corporation prepares its interim financial statements in accordance 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 March 31, 2002. In the first quarter of fiscal 2003, 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 stock-based compensation whereby the Corporation will account for stock options as a compensation expense to earnings. Under the new recommendations, a fair value-based method of accounting is required to be applied to all stock-based payments to non-employees and to employee awards that are direct awards of stock that call for settlement in cash or 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. , or are stock appreciation rights. These recommendations were applied retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin without restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior period consolidated financial statements. The cumulative effect of adoption was a decrease in opening retained earnings of $4.3 million, an increase in contributed surplus of $2.8 million which pertains to options issued by the Corporation and an increase in other long-term liabilities Other Long-Term Liabilities A balance sheet item that includes obligations that do not currently require interest payments. Notes: This would include items such as remaining leases, future employee benefits and deferred taxes. of $1.5 million which pertains to options issued by subsidiary corporations and has been recognized as a liability as the Corporation will be required to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. these options. The fair value of each option grant by the Corporation is estimated on the date of grant using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following assumptions: dividend yield of approximately 2.7%, expected volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of 23.5%, risk-free interest rate Risk-Free Interest Rate Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensataes the investor for the temporary sacrifice of consumption. ranging from 4.68% to 6.91%, and expected lives ranging from 4.5 to 8 years. The fair value of option grants by subsidiary corporations is determined by the formulas set out in their option plans. The Corporation's stock-based compensation plans are more fully described in Notes 12 and 16 of the annual report. 2. Business Acquisitions a. Milestone's Restaurant Inc. On June June: see month. 10, 2002, the Corporation, together with Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. Holm holm n. Chiefly British An island in a river. [Middle English, from Old Norse h ("Holm") completed the acquisition of the Milestone's restaurant business from The Spectra Group of Great Restaurants ("Spectra") in a cash and share transaction valued at $34.4 million, plus the assumption of related liabilities. Prior to this date the Corporation had a 38% equity interest in Spectra (Note 4). Under the agreement, the Corporation and Holm surrendered the shares of Spectra held by them for cancellation and made a cash payment funded by the Corporation of $15 million to Spectra. As a result, the Corporation and Holm ceased to be shareholders of Spectra. Milestone's Restaurant Inc., the new company established to own and operate the Milestone's business is owned approximately 74% by the Corporation and 26% by Holm, its President. The acquisition has been accounted for by the purchase method and the Corporation has included the results of operations in its consolidated financial statements, from the effective date of acquisition. Based on preliminary information, the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. consolidated at the date of acquisition were as follows:
(In thousands of dollars)
Current assets $ 1,800
Property, plant and equipment 22,143
Brands 13,457
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37,400
Liabilities 3,000
Non-controlling shareholder's interest 5,098
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Total acquisition cost $ 29,302
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Represented by: -------------
Cash consideration $ 15,000
Previously owned equity investment surrendered 14,302
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$ 29,302
-------------
-------------
b. Kelsey's International Inc. Under a Share Purchase Agreement dated April 5, 2002, the Corporation acquired 819,753 common shares of Kelsey's International Inc. ("KII") from the non-controlling shareholders at $5.00 per share. This acquisition increased the Corporation's ownership of KII from 61.6% to 65.3%. The purchase price of $4.1 million was allocated to tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. of $0.9 million and $3.2 million to Brands. 3. Sale of Business - Health Services health services Managed care The benefits covered under a health contract On April 30, 2002, the Corporation completed the sale of its Health Services Division for cash proceeds of $30.7 million. The sale resulted in an after tax gain of $17.8 million (19.3 cents per share). 4. Equity Investments Earnings from equity investments include a $3.3 million gain, realized as a result of the exchange of the Spectra shares owned by the Corporation for the shares of Milestone's Restaurant Inc. on June 10, 2002 since this transaction is considered to be a culmination in the earnings process. This amount has been reduced by $2.5 million being the Corporation's proportion share of the losses reported by Spectra prior to the share exchange date. Prior to the exchange date the Corporation had a 38% equity interest in Spectra. Taxes payable as a result of the share exchange transaction are estimated to be $0.5 million. 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 8, 2002, the Corporation settled the interest rate swap transaction and the gain will be amortized over the remaining term of the Corporation's medium term notes that are due in June 2008. 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 Total
------------------------------------------------------
(In
thousands
of dollars,
except Number Stated Number Stated Number Stated
number of of of
of shares) Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------
Balance
at
March
31,
2002 48,910,542 $ 24,580 42,984,520 $ 6,128 91,895,062 $30,708
Options
exercised 82,189 607 - - 82,189 607
--------------------------------------------------------------------
Balance
at
September
15,
2002 48,992,731 $ 25,187 42,984,520 $ 6,128 91,977,251 $31,315
Normal Course Issuer Bid On May 21, 2002, the Corporation approved and filed with the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. , a renewal Notice of Intention to make a Normal Course Issuer Bid permitting the Corporation to purchase through the facilities of the Exchange, up to a total of 2,149,225 Common shares and 2,445,527 Class A non-voting shares. This represents approximately 5% of the outstanding Common shares and Class A non-voting shares. 7. Stock-based Compensation The effect of expensing stock-based compensation under the new CICA accounting standard resulted in a compensation expense in the quarter of $0.3 million or 0.3 cents per share. On May 30, 2002, 477,575 options were granted under the Executive Stock Option Plan at an exercise price of $7.63 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 $9.54 per share for a period of 30 consecutive calendar days at any time between the date of grant and the date of exercise. 8. Earnings Per Share The components of basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of are as follows:
12 Week 12 Week 24 Week 24 Week
Period Ended Period Ended Period Ended Period Ended
Sept 15, Sept 16, Sept 15, Sept 16,
2002 2001 2002 2001
--------------------------------------------------------------------
Net earnings
(In
thousands
of dollars) $ 13,873 $ 12,319 $ 42,457 $ 20,406
--------------------------------------------------------------------
Weighted
average
outstanding
shares 91,929,582 92,517,779 91,924,679 92,578,038
Dilutive
effect
of
options 1,101,521 971,118 1,071,950 949,036
--------------------------------------------------------------------
93,031,103 93,488,897 92,996,629 93,527,074
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings
per share
(In cents)
Basic 15.1 13.3 46.2 22.0
Diluted 14.9 13.2 45.7 21.8
--------------------------------------------------------------------
9. Cash Flows
(In
thousands 12 Week 12 Week 24 Week 24 Week
of Period Ended Period Ended Period Ended Period Ended
dollars) Sept 15, Sept 16, Sept 15, Sept 16,
2002 2001 2002 2001
--------------------------------------------------------------------
Accounts
receivable $ (6,652) $ (4,192) $ (9,314) $ (17,566)
Inventories (1,165) (592) (2,616) (1,487)
Prepaid
expenses and
other
assets (261) 143 4,073 3,788
Accounts
payable
and
accrued
liabilities 2,885 (1,058) (9,886) (14,992)
Income
taxes
payable 792 5,815 847 (23,782)
--------------------------------------------------------------------
Net Change
in
Non-Cash
Working
Capital $ (4,401) $ 116 $ (16,896) $ (54,039)
--------------------------------------------------------------------
10. 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 15, 2002 September 16, 2001
(In thousands of System Gross System Gross
dollars) Sales Revenue Sales Revenue
--------------------------------------------------------------------
Harvey's $ 65,274 $ 11,364 $ 66,449 $ 7,879
Swiss
Chalet 91,012 28,765 92,009 25,693
Kelsey's 49,186 28,607 46,122 26,674
Montana's 29,914 20,713 22,505 17,216
Outback 10,342 10,342 9,330 9,330
Air Terminal
Restaurants 19,064 18,401 19,097 17,707
Second Cup 39,133 5,711 - -
Milestone's 17,073 17,073 - -
Airport Services 59,899 59,899 66,680 66,680
Summit Foods 89,898 89,898 93,010 93,010
Other 3,659 3,659 9,784 9,784
Interdivisional
sales (49,327) (17,564) (51,097) (17,161)
--------------------------------------------------------------------
$ 425,127 $ 276,868 $ 373,889 $ 256,812
--------------------------------------------------------------------
24 Week Period Ended 24 Week Period Ended
September 15, 2002 September 16, 2001
(In thousands of System Gross System Gross
dollars) Sales Revenue Sales Revenue
--------------------------------------------------------------------
Harvey's $ 130,107 $ 20,163 $ 132,154 $ 17,269
Swiss Chalet 186,120 58,409 182,013 53,752
Kelsey's 95,560 56,215 87,026 51,817
Montana's 57,135 40,485 43,199 32,117
Outback 20,022 20,022 17,844 17,844
Air Terminal
Restaurants 35,242 33,962 35,167 32,968
Second Cup 79,036 11,085 - -
Milestone's 19,573 19,573 - -
Airport Services 110,189 110,189 119,279 119,279
Summit Foods 180,945 180,945 183,111 183,111
Other 7,987 7,987 18,834 18,834
Interdivisional
sales (97,697) (33,430) (98,215) (32,139)
--------------------------------------------------------------------
$ 824,219 $ 525,605 $ 720,412 $ 494,852
--------------------------------------------------------------------
11. Interest Expense net of Investment Income
(In
thousands 12 Week 12 Week 24 Week 24 Week
of Period Ended Period Ended Period Ended Period Ended
dollars) Sept 15, Sept 16, Sept 15, Sept 16,
2002 2001 2002 2001
--------------------------------------------------------------------
Interest
expense
on long-term
debt $ 1,946 $ 2,183 $ 3,407 $ 4,602
Other
interest
expense 466 295 729 548
Investment
income on
marketable
securities (432) (353) (961) (353)
Interest income (300) (470) (918) (1,708)
--------------------------------------------------------------------
$ 1,680 $ 1,655 $ 2,257 $ 3,089
--------------------------------------------------------------------
--------------------------------------------------------------------
CARA OPERATIONS LIMITED
Consolidated Statements of Earnings and Retained Earnings
Unaudited
(In thousands
of dollars, 12 Week 12 Week 24 Week 24 Week
except Period Ended Period Ended Period Ended Period Ended
earnings per Sept 15, Sept 16, Sept 15, Sept 16,
share data) 2002 2001 2002 2001
--------------------------------------------------------------------
--------------------------------------------------------------------
System Sales $ 425,127 $ 373,889 $ 824,219 $ 720,412
--------------------------------------------------------------------
--------------------------------------------------------------------
Gross Revenue $ 276,868 $ 256,812 $ 525,605 $ 494,852
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings before
the following: $ 36,316 $ 30,746 $ 65,362 $ 55,372
Amortization of
property, plant
and equipment 10,926 9,396 21,516 18,685
Amortization of
intangible
assets 291 287 576 580
--------------------------------------------------------------------
25,099 21,063 43,270 36,107
Interest expense
net of investment
income (note 11) 1,680 1,655 2,257 3,089
Gain on sale
of business
(note 3) - - (20,697) -
Equity
investments
(note 4) - (971) (824) (1,083)
--------------------------------------------------------------------
Earnings before
income taxes
and
non-controlling
shareholders'
interest 23,419 20,379 62,534 34,101
Provision for
income taxes 8,786 7,423 18,743 12,634
Non-controlling
shareholders'
interest 760 637 1,334 1,061
--------------------------------------------------------------------
Net earnings
for the
period 13,873 12,319 42,457 20,406
Retained
Earnings -
Beginning of
Period 339,861 306,372 322,850 308,064
Adoption of
new accounting
recommendations
for stock-based
compensation
(notes 1 and 7) - - (4,342) -
Share
repurchase
under Normal
Course Issuer Bid - (776) - (3,114)
Dividends - - (7,231) (7,441)
--------------------------------------------------------------------
Retained
Earnings -
End of Period $ 353,734 $ 317,915 $ 353,734 $ 317,915
--------------------------------------------------------------------
--------------------------------------------------------------------
Earnings Per
Share (cents)
(note 8)
Basic 15.1 13.3 46.2 22.0
Diluted 14.9 13.2 45.7 21.8
--------------------------------------------------------------------
See accompanying notes to interim consolidated financial
statements.
--------------------------------------------------------------------
CARA OPERATIONS LIMITED
Consolidated Balance Sheets
As at Sept 15 As at March 31
2002 2002
(In thousands of dollars) Unaudited Audited
--------------------------------------------------------------------
--------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 12,348 $ 15,003
Marketable investment 76,688 75,710
Accounts receivable 78,030 68,793
Inventories 28,738 25,575
Prepaid expenses and other
assets 4,620 6,972
Future income taxes 9,500 9,500
Current portion of long-term
receivables 2,250 2,571
--------------------------------------------------------------------
212,174 204,124
Long-Term Receivables 12,038 12,704
Property, Plant and Equipment 392,009 376,041
Goodwill 49,166 49,166
Brands and Other Intangible
Assets (note 2) 103,698 90,309
Equity Investments
(notes 2 and 4) - 14,294
--------------------------------------------------------------------
$ 769,085 $ 746,638
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES
Current Liabilities
Bankers' acceptances $ 31,500 $ 51,500
Accounts payable and
accrued liabilities 119,551 123,740
Income taxes payable 8,205 3,890
Current portion of
long-term debt 3,739 3,880
--------------------------------------------------------------------
162,995 183,010
Long-Term Debt (note 5) 158,661 160,024
Other Long-Term
Liabilities (notes 1
and 5) 26,319 22,354
Future Income Taxes 18,607 18,382
--------------------------------------------------------------------
366,582 383,770
--------------------------------------------------------------------
--------------------------------------------------------------------
Non-Controlling Shareholders'
Interest (note 2) 14,934 9,310
--------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Capital Stock (note 6) 31,315 30,708
Contributed Surplus
(note 1) 2,520 -
Retained Earnings 353,734 322,850
--------------------------------------------------------------------
387,569 353,558
--------------------------------------------------------------------
$ 769,085 $ 746,638
--------------------------------------------------------------------
--------------------------------------------------------------------
See accompanying notes to interim consolidated financial
statements.
--------------------------------------------------------------------
CARA OPERATIONS LIMITED
Consolidated Statements of Cash Flows
Unaudited
12 Week 12 Week 24 Week 24 Week
(In thousands Period Ended Period Ended Period Ended Period Ended
of dollars) Sept 15, Sept 16, Sept 15, Sept 16,
2002 2001 2002 2001
--------------------------------------------------------------------
Cash Flows
Provided by
(Used in)
Operating Activities
Net earnings
for the
period $ 13,873 $ 12,319 $ 42,457 $ 20,406
Adjustments
for:
Amortization
of property,
plant and
equipment 10,926 9,396 21,516 18,685
Amortization
of intangible
assets 291 287 576 580
Loss (gain)
on disposal
of property,
plant and
equipment 543 51 (39) 29
Gain on sale
of business
(note 3) - - (20,697) -
Future income
taxes 83 - 225 -
Equity
investments
(note 4) - (971) (824) (1,083)
Non-controlling
shareholders'
interest 760 637 1,334 1,061
Other
non-cash
items (683) (173) 1,139 (342)
Change in
non-cash
operating
working
capital
(note 9) (4,401) 116 (16,896) (54,039)
--------------------------------------------------------------------
21,392 21,662 28,791 (14,703)
Investing Activities
Acquisition
of marketable
investment - (74,915) - (74,915)
Purchase of
property,
plant and
equipment (11,502) (13,258) (21,863) (29,027)
Proceeds on
sale of
business
(note 3) - - 30,685 -
Business
acquisitions
(note 2) - - (19,099) -
Proceeds on
disposal of
property,
plant and
equipment 69 595 4,554 4,183
Purchase of
intangible
assets (586) (80) (1,338) (82)
Collection
(issuance) of
long-term
receivables 106 53 986 954
--------------------------------------------------------------------
(11,913) (87,605) (6,075) (98,887)
--------------------------------------------------------------------
Financing Activities
Bankers'
acceptances
issued 31,500 25,000 76,000 25,000
Repayment of
bankers'
acceptances (44,500) - (96,000) -
Share
repurchase
under Normal
Course Issuer
Bid - (608) - (2,806)
Repayment of
long-term
debt (912) (1,009) (1,371) (1,690)
Proceeds on
settlement of
interest rate
swap
transaction
(note 5) 3,231 - 3,231 -
Dividends
paid - - (7,231) (7,441)
Issuance of
capital stock
by subsidiary - - - 1,150
--------------------------------------------------------------------
(10,681) 23,383 (25,371) 14,213
--------------------------------------------------------------------
Net Change in
Cash (1,202) (42,560) (2,655) (99,377)
Cash - Beginning
of Period 13,550 49,612 15,003 106,429
--------------------------------------------------------------------
Cash - End of
Period $ 12,348 $ 7,052 $ 12,348 $ 7,052
--------------------------------------------------------------------
--------------------------------------------------------------------
See accompanying notes to interim consolidated financial
statements.
--------------------------------------------------------------------
CARA OPERATIONS LIMITED - LOCATION STATISTICS
24 Weeks 12 Weeks 52 Weeks
Ended Ended Ended
September 15, June 23, March 31,
2002 2002 2002
--------------------------------------------------------------------
Swiss Chalet 183 186 186
Harvey's 359 364 363
Kelsey's 103 99 99
Montana's 49 48 47
Outback 16 15 14
Second Cup 384 387 388
Milestone's 20 20 20
--------------------------------------------------------------------
--------------------------------------------------------------------
Airport Services Division
Flight Kitchens 11 11 11
--------------------------------------------------------------------
--------------------------------------------------------------------
Air Terminal Restaurants 93 93 83
--------------------------------------------------------------------
--------------------------------------------------------------------
Summit Food Service
Distribution Centers 4 4 4
--------------------------------------------------------------------
--------------------------------------------------------------------
------------------------------------------
Stock Exchange Listing
Toronto
------------------------------------------
------------------------------------------
Transfer Agent and Registrar
Computershare Investor Services Inc.
Tel: 1-800-663-9097
------------------------------------------
------------------------------------------
Market Share Prices
September 15, 2002
Common Shares, CAO (2001 $6.40) $8.30
Class A Subordinated Voting
Shares, CAO.A (2001 $5.70) $6.95
------------------------------------------
------------------------------------------
On pourra se procurer le texte francais de ce rapport en
communiquant avec le Responsable des relations avec les investissuers
------------------------------------------
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