Cara Announces Third Quarter Results.Business Editors & Food/Restaurant Writers TORONTO--(BUSINESS WIRE)--Feb. 5, 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. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CAO) (TSE:CAO.A) Cara Operations Limited Report to Shareholders For the Third Quarter ended December December: see month. 9, 2001 with comparative figures for the Third Quarter ended December 10, 2000 Cara Operations Limited ("Cara") (TSE:CAO) (TSE:CAO.A) today announced its operating results for the Third Fiscal Quarter of 2002 being the 12 week period ended December 9, 2001 (the "Third 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 $352.8 million and gross revenues were $234.7 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 at the end of last year's third quarter for a $65.5 million 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. gain, system sales increased 9.5% and gross revenues increased 13.2%. Excluding unusual items, net earnings and earnings per share for the Quarter were $5.1 million and 5.6 cents respectively compared to $9.5 million and 10.3 cents respectively reported last year. "As expected, the aftershock af·ter·shock n. 1. A quake of lesser magnitude, usually one of a series, following a large earthquake in the same area. 2. of September September: see month. 11 had a significant adverse impact on the results of our Airline Services division in the Quarter and overshadowed much of the productivity improvements made in the new Toronto New Toronto (tərŏn`tō), part of metropolitan Toronto, S Ont., Canada, on Lake Ontario. flight kitchen. During the Quarter, this division experienced a decline in revenue and expensed a total of $3.5 million related to increases in its provision for bad debts and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs associated with the steps taken to reduce 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 business and revenue levels. Having said that, we are pleased and encouraged by the performance of our restaurant brands particularly, 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 which in the Quarter not only achieved growth in system sales but more importantly in same restaurant sales. With the cost reductions implemented at Airline Services, and the continued positive performance of our restaurants and other businesses, we expect our Fourth Quarter operating results to rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective to levels comparable to those achieved in last year's fourth quarter, and remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op for the period beyond that. Subsequent to the Quarter-end, Cara successfully acquired control of The Second Cup Ltd. ("Second Cup"), the leading 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. 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 retailer with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 390 cafes producing 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. system sales of $180 million. We wish to welcome our Second Cup franchisees and teammates to the Cara family and wish to thank our teammates, guests and customers for their continued dedication and support of our brands and businesses," commented Gabe Tsampalieros, Cara's President and Chief Executive Officer.
MANAGEMENT DISCUSSION & ANALYSIS OF OPERATIONS
CONSOLIDATED RESULTS
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(In thousands of dollars except for per share data)
3rd 3rd 36 36
Quarter Quarter % Weeks Weeks %
ended ended Variance ended ended Variance
Dec 9/01 Dec 10/00 Dec 9/01 Dec 10/00
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System Sales
(Note 1) $ 352,772 $408,867 -13.7% $1,073,184 $1,176,000 -8.7%
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Gross Revenue 234,749 294,005 -20.2% 729,601 837,119 -12.8%
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EBITDA (Note 2) 20,042 29,550 -32.2% 75,414 88,491 -14.8%
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EBIT (Note 3) 10,107 18,978 -46.7% 46,214 57,830 -20.1%
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Net Earnings
before Unusual
Items (Note 4) 5,148 9,551 -46.1% 25,554 29,237 -12.6%
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Gain on sale
of business
(Note 5) - 65,505 - 65,505
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Net Earnings 5,148 74,650 -93.1% 25,554 92,729 -72.4%
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EPS before
Unusual items
(in cents) 5.6 10.3 -45.6% 27.7 31.5 -12.0%
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EPS (in cents) 5.6 80.4 -93.0% 27.7 99.9 -72.3%
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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. ($46.6 million and $37.7 million in the quarter for FY 2002 and FY 2001, respectively; $144.1 million and $107.4 million year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. ). 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 equity income. Note 4: Earnings before unusual items exclude the gain on sale of Beaver Foods and Cara's share of The Second Cup's investment write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. . Note 5: The gain on sale of Beaver Foods of $65.5 million is net of applicable taxes of $26.2 million. System sales and gross revenues for the Quarter were $352.8 million and $234.7 million compared with last year's $408.9 million and $294.0 million respectively. Last year's amounts included sales and revenues of $86.6 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 9.5% and 13.2% respectively. These increases were primarily led by the growth in sales of the Kelsey's, Swiss Chalet and Montana's restaurant brands and of Summit Food Service Distributors Inc. In the Quarter 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 $5.1 million and earnings per share were 5.6 cents compared to $74.7 million and 80.4 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. (including the gain on the sale of Beaver Foods) respectively reported last year. The major factors that should be taken into account when comparing the Third Quarter results to those of the previous year include: -- The inclusion in last year's Third Quarter results of a $65.5 million (70.6 cents per share) after-tax gain on the sale of the institutional catering business of Beaver Foods Limited and Cara's proportionate share of the $1.1 million write down taken by Second Cup on the disposition of shares in Diedrich's Coffee Co., which had the effect of reducing Cara's reported earnings by $406,000 (0.4 cents per share). -- The lower revenues and therefore profitability of the Airport Services division, primarily due to the significant slow down in air travel following the impact of the events of September 11, 2001. In addition, this division incurred a $3.5 million pretax expense related to: (i) increasing its provision for bad debts; and (ii) severance costs associated with the necessary steps taken to align the manpower and cost structure of the division with the lower business activity and revenue levels. -- 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 $586,000 increase in net income, or an increase of 0.6 cents per share. Last year's Third Quarter included an amortization of goodwill of $884,000 or 0.9 cents per share. -- Lower interest expense than last year due to lower net debt levels and the interest rate swap implemented to take advantage of the low short-term rates. -- 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 $87.6 million, which is approximately $21.4 million lower than at the end of the Second Quarter. Cash flow generated in the Quarter was strong and reflects the impact of the following: -- Cash flow of $15.4 million before changes in working capital, generated from operating activities. -- Capital expenditures of $10.9 million of which $5.7 million were for new restaurant construction and $3.1 million for restaurant renovations. -- $3.0 million to fund share purchases under the Corporation's Normal Course Issuer bid. 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. 1,072,900 of its outstanding Class A non-voting non-voting adj non-voting shares → azioni fpl senza diritto di voto shares, at prices ranging from $4.25 to $6.23 at a cost of approximately $5.8 million and an average cost of $5.36 per share. Second Cup On January January: see month. 23, 2002 the Company mailed its revised offer to purchase all remaining outstanding common shares (the "shares") of the Second Cup Limited (SKL SKL Conservative Peasants Party (Poland) SKL State Key Laboratory SKL Simple Key Loader SKL Svenska Kriminaltekniska Laboratoriet (Swedish National Criminal Forensics Laboratory) ) at $8.00 cash. As of February February: see month. 5, 2002, over 95% of the shares were deposited under the offer. These shares will be acquired and paid for on or before February 8, 2002. The remaining shares will be acquired through a follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan transaction pursuant to applicable securities regulations, after which Second Cup will become a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Cara. Dividend On February 5, 2002 the Board of Directors of the Corporation approved a semi-annual dividend of 8 cents per share payable on February 28, 2002 to Common and Class A shareholders of record on February 18, 2002 bringing the total dividend paid in fiscal 2002 to 16 cents per share. Set out below are some of the operating highlights of our major operating divisions: Swiss Chalet In the Third Quarter, Swiss Chalet system sales grew by approximately 9% to $99.7 million. Supported by good weather and a successful start to the popular Festive fes·tive adj. 1. Of, relating to, or appropriate for a feast or festival. 2. Merry; joyous: a festive party. Special promotion, growth in same restaurant sales remained positive for the ninth consecutive quarter increasing by 4.5%. During the Quarter, 2 restaurants were opened (6 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 185. An additional 4 (2 net) restaurants are scheduled to be opened by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Since the end of the Quarter, same restaurant sales have continued their positive trend. Harvey's System sales in the Third Quarter increased by 2.2% to $65.7 million whilst same restaurant sales increased by 2.4%; the ninth consecutive quarter in which Harvey's also has achieved year-over-year growth in same restaurant sales (3.2% year-to-date on top of a prior year increase of 3.5% in the Quarter 4.1% year-to-date). This growth was supported by favourable weather conditions and a successful Swiss Mushroom mushroom, type of basidium fungus characterized by spore-bearing gills on the underside of the umbrella- or cone-shaped cap. The name toadstool is popularly reserved for inedible or poisonous mushrooms, but this classification has no scientific basis. Melt promotion. During the Quarter, four restaurants were opened (12 year-to-date) while four restaurants were closed (12 year-to-date) bringing the total number of Harvey's restaurants in operation at the end of the Quarter to 368, of which 111 are non-traditional. Since the end of the Quarter, same restaurant sales have continued their positive trend. Air Terminal Restaurants Although it is estimated that, following September 11, passenger traffic in the airports has decreased by approximately 10%, system sales in the Third Quarter increased by 3.9% to $15.5 million. The growth in the quarter is largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to higher capture rates, longer dwelling dwelling an abnormality of gait in a horse in which there is a momentary hesitation before the foot is placed on the ground. times in the airports and a reduction in 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. meal service. Since the end of the Quarter, passenger traffic in the airports has remained at the reduced levels and sales are beginning to show some deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. . Kelsey's System sales in the Third Quarter increased by 20.2% to $73 million. The increase is attributable to the addition of 25 new restaurants in the last twelve months, and same restaurant sales growth of 1.4% for the Kelsey's brand and .6% for Montana's. In the Quarter, 4 Kelsey's (8 year-to-date) and 3 Montana's (7 year-to-date) restaurants were opened bringing the total number of restaurants operating under these brands to 153, consisting of 96 Kelsey's, 43 Montana's and 14 Outback restaurants. An additional 4 (3 net) Kelsey's and 4 Montana's restaurants are scheduled to be opened by fiscal year end. Airport Services In the Third Quarter, sales decreased by $5.5 million or 10.7% to $45.9 million. The primary factors affecting the sales of this division in the Quarter and the year-over-year variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality included; (i) the general decrease in air travel prior to September 11th, (ii) the substantial decline in passenger travel following September 11th, (iii) reduced meal service and low load factors. Mitigating 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 sales decline to a limited extent was the assumption of the in-flight catering requirements of the former Canadian 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. . As a result of the revenue decline, profitability was significantly reduced. The division also incurred a $3.5 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern expense related to increasing its provision for bad debts and severance costs associated with the steps necessary to align the cost structure with the lower revenue levels. The increased bad debt provision was primarily related to the failure of Canada 3000. As a result of implementing the cost reductions, achieving operational efficiencies at the new flight kitchen in Toronto and evidence of higher load factors this division is positioned to have an improved operating performance in the Fourth Quarter. Summit Foods Sales (including inter-company sales) for the quarter increased by 32% over a year ago to $92 million. This growth is primarily 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 with Compass Canada. As a result of its continuing growth, Summit will be expanding 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. warehouse over the next four to six months. Health Services health services Managed care The benefits covered under a health contract The Third Quarter showed sales growth of 3.5% to $5.3 million. The Health Services Division is continuing 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:
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. Analyst conference call will be at 9:00 am on February 6, 2002 at phone number 416/641-6655.
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CARA OPERATIONS LIMITED
Consolidated Statements
of Earnings and Retained
Earnings
Unaudited 12 Week 12 Week 36 Week 36 Week
Period Period Period Period
(In thousands of Ended Ended Ended Ended
dollars, except earnings Dec 9, Dec 10, Dec 9, Dec 10,
per share data) 2001 2000 2001 2000
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System Sales $ 352,772 $ 408,867 $1,073,184 $1,176,000
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Gross Revenue $ 234,749 $ 294,005 $ 729,601 $ 837,119
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Earnings before the
following: $ 20,042 $ 29,550 $ 75,414 $ 88,491
Amortization of
property, plant and
equipment 9,648 9,211 28,333 26,664
Amortization of goodwill
and other assets (note
3) 287 1,361 867 3,997
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10,107 18,978 46,214 57,830
Net interest expense
(note 2) 1,288 2,275 4,377 7,430
Equity (earnings) loss (271) 66 (1,354) 365
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Earnings before income
taxes and
non-controlling
shareholders' interest 9,090 16,637 43,191 50,035
Provision for income
taxes 3,543 7,309 16,177 21,879
Non-controlling
shareholders' interest 399 183 1,460 932
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Earnings before: 5,148 9,145 25,554 27,224
Gain on sale of
business, net of tax - 65,505 - 65,505
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Net earnings for the
period $ 5,148 $ 74,650 $ 25,554 $ 92,729
Retained Earnings -
Beginning of Period 317,915 230,653 308,064 219,108
Share repurchase (2,655) - (5,769) (35)
Dividends - - (7,441) (6,499)
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Retained Earnings - End
of Period $ 320,408 $ 305,303 $ 320,408 $ 305,303
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Earnings Per Share
before unusual items
(cents) (note 6)
Basic 5.6 10.3 27.7 31.5
Diluted 5.6 10.3 27.4 31.4
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Earnings Per Share
(cents) (note 6)
Basic 5.6 80.4 27.7 99.9
Diluted 5.6 80.2 27.4 99.7
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See accompanying notes to interim consolidated financial
statements.
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CARA OPERATIONS LIMITED
Consolidated Balance Sheets
As at Dec 9 As at April 1
2001 2001
(In thousands of dollars) Unaudited Audited
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ASSETS
Current Assets
Cash $ 9,258 $ 106,429
Marketable investment
(note 2) 75,235 -
Accounts receivable 69,750 64,138
Inventories 27,937 28,768
Prepaid expenses and
other assets 2,916 5,866
Future income taxes 6,414 6,414
Current portion of
long-term receivables 2,223 2,548
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193,733 214,163
Long-Term Receivables 13,480 15,149
Property, Plant and Equipment 370,888 363,716
Goodwill and Other
Assets (note 3) 56,968 57,715
Equity Investments (note
9) 39,763 37,984
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$ 674,832 $ 688,727
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LIABILITIES
Current Liabilities
Bankers acceptances $ 7,500 $ -
Accounts payable and
accrued liabilities 106,811 117,553
Income taxes payable 2,629 25,253
Current portion of
long-term debt 4,439 4,420
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121,379 147,226
Long-Term Debt (note 4) 160,179 163,272
Other Long-Term Liabilities 18,955 18,875
Future Income Taxes 15,052 15,052
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315,565 344,425
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Non-controlling
shareholders' interest 8,410 5,800
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SHAREHOLDERS' EQUITY
Capital Stock (note 5) 30,449 30,438
Retained Earnings 320,408 308,064
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350,857 338,502
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$ 674,832 $ 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 36 Week 36 Week
Period Period Period Period
Ended Ended Ended Ended
(In thousands of dollars) Dec 9, Dec 10, Dec 9, Dec 10,
2001 2000 2001 2000
--------------------------------------------------------------------
Cash Flows Provided by
(Used in)
Operating Activities
Net earnings for the
period $ 5,148 $ 74,650 $ 25,554 $ 92,729
Adjustments for:
Amortization of
property, plant and
equipment 9,648 9,211 28,333 26,664
Amortization of
goodwill and
other assets 287 1,361 867 3,997
Gain on sale of
business, net of tax - (65,505) - (65,505)
Gain on disposal of
property, plant and
equipment (70) (22) (41) (14)
Equity (earnings)
loss (271) 66 (1,354) 365
Non-controlling
shareholders'
interest 399 183 1,460 932
Other non-cash items (403) (52) (1,058) (152)
Change in non-cash
operating working
capital 18,922 19,183 (35,117) 7,153
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33,660 39,075 18,644 66,169
Investing Activities
Acquisition of
marketable investment $ - $ - $ (74,602)$ -
Purchase of property,
plant and equipment (10,853) (34,631) (39,880) (78,641)
Dividends from The
Second Cup shares - - - 7,326
Proceeds on sale of
business - 151,293 - 151,293
Proceeds on disposal of
property, plant and
equipment 233 488 4,416 4,693
Increase in other assets (38) (95) (120) (768)
Decrease (increase) in
mortgages and notes 1,040 (7,124) 761 (5,805)
Repayment of employee
share purchase loans - 413 1,233 1,385
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$ (9,618)$ 110,344 $ (108,192)$ 79,483
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Financing Activities
Repayment of bankers
acceptances $ (25,000)$ - $ - $ -
Bankers acceptances
renewed 7,500 7,500
Share repurchase (2,952) - (5,758) (41)
Repayment of long-term
debt (1,384) (12,885) (3,074) (1,345)
Dividends paid - - (7,441) (6,499)
Issuance of capital
stock by subsidiary - - 1,150 -
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$ (21,836)$ (12,885)$ (7,623)$ (7,885)
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Net Change in Cash 2,206 136,534 (97,171) 137,767
Cash - Beginning of
Period 7,052 4,450 106,429 3,217
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Cash - End of Period $ 9,258 $ 140,984 $ 9,258 $ 140,984
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See accompanying notes to interim consolidated financial
statements.
Cara Operations Limited
Notes to Interim Consolidated Financial Statements
For the 36 week period ended December 9, 2001 and December 10, 2000
Unaudited
1. Basis of Presentation
The Corporation prepares its interim financial statements in
accordance with Canadian generally accepted accounting principles 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 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 ("CICA") on
interim financial statements.
Also in fiscal 2002, the Corporation adopted the new
recommendations issued by the CICA pertaining to goodwill and other
intangible assets. Under the new recommendation, which can only be
applied prospectively, goodwill and other intangible assets with
indefinite lives are no longer amortized, but are tested for
impairment upon adoption of the new recommendation and at least
annually thereafter.
2. Marketable 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 in July 2004. This forward contract can be
converted at any time into marketable securities at quoted market
prices. This investment is carried as a current asset at market value
and any unrealized gains 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 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 risk.
3. Goodwill and Other Assets
The effect of adopting the new accounting standard relating to
goodwill and other assets in the current quarter is an increase of
$586,000 in net earnings or an increase of 0.6 cents per share. Last
year's Third Quarter results included amortization of goodwill of
$884,000. If that amount had not been deducted from earnings, net
earnings for the quarter ended December 10, 2000 would have increased
by $884,000 or 0.9 cents per share to $10.4 million or 11.2 cents per
share before unusual items ($75.5 million or 81.3 cents per share
after unusual items).
4. Long-Term Debt
On August 2, 2001, the Corporation entered into an interest rate
swap 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 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.
5. Capital Stock
The Corporation's authorized capital stock 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
-------------------------------------------------
Number of Stated Number of Stated
(In thousands of Shares Amount Shares Amount
dollars, except
number of shares)
----------------------------------------------------------------------
Balance at
April 1, 2001 49,851,952 $ 24,310 42,984,520 $ 6,128
Repurchase of shares
under Normal Course
Issuer Bid (1,072,900) (529) - -
Options exercised 131,490 540 - -
----------------------------------------------------------------------
Balance at
December 9, 2001 48,910,542 $ 24,321 42,984,520 $6,128
----------------------------------------------------------------------
Total
-----------------------
Number of Stated
(In thousands of Shares Amount
dollars, except
number of shares)
--------------------------------------------
Balance at
April 1, 2001 92,836,472 $ 30,438
Repurchase of shares
under Normal Course
Issuer Bid (1,072,900) (529)
Options exercised 131,490 540
--------------------------------------------
Balance at
December 9, 2001 91,895,062 $ 30,449
--------------------------------------------
6. Earnings Per Share
The components of basic and diluted earnings per share are as
follows:
12 Week 12 Week 36 Week 36 Week
Period Period Period Period
Ended Ended Ended Ended
Dec. 9, Dec. 10, Dec. 9, Dec. 10,
2001 2000 2001 2000
-----------------------------------------------------------------------
Net earnings
before unusual
items ($000's) $ 5,148 $ 9,551(1) $ 25,554 $ 29,237 (1)
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Net
earnings
($000's) $ 5,148 $ 74,650 $ 25,554 $ 92,729
-----------------------------------------------------------------------
Weighted average
outstanding
shares 92,061,180 92,852,774 92,405,752 92,855,000
Dilutive effect
of options 541,503 265,930 788,251 133,500
-----------------------------------------------------------------------
92,602,683 93,118,704 93,194,003 92,988,500
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Earnings per
share before
unusual items
(In cents)
Basic 5.6 10.3 27.7 31.5
Diluted 5.6 10.3 27.4 31.4
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Earnings per
share (In cents)
Basic 5.6 80.4 27.7 99.9
Diluted 5.6 80.2 27.4 99.7
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(1) Earnings before unusual items exclude the gain on sale of
Beaver Foods and Cara's share of The Second Cup's investment write
down.
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 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.
7. Cash Flows
12 Week 12 Week 36 Week 36 Week
Period Period Period Period
Ended Ended Ended Ended
(In thousands of dollars) Dec. 9, Dec. 10, Dec. 9, Dec. 10,
2001 2000 2001 2000
--------------------------------------------------------------------
Accounts receivable $ 11,954 $ 7,474 $ (5,612)$ (7,116)
Inventories 2,318 (2,137) 831 (5,363)
Prepaid expenses and
other assets (838) (111) 2,950 373
Accounts payable and
accrued liabilities 4,330 10,464 (10,662) 19,347
Income taxes payable 1,158 3,493 (22,624) (88)
--------------------------------------------------------------------
Net Change in Non-Cash
Working Capital $ 18,922 $ 19,183 $ (35,117)$ 7,153
--------------------------------------------------------------------
8. 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
December 9, 2001 December 10, 2000
System Gross System Gross
(In thousands of dollars) Sales Revenue Sales Revenue
---------------------------------------------------------------------
Harvey's $ 65,664 $ 7,812 $ 64,258 $ 10,471
Swiss Chalet 99,665 28,851 91,415 27,989
Kelsey's 73,101 50,905 60,822 42,805
Air Terminal Restaurants 15,445 14,492 14,863 14,090
Airport Services 47,849 47,849 53,593 53,593
Beaver Foods - - 86,645 86,645
Health Services 5,318 5,318 5,139 5,139
Summit Foods 92,308 92,308 69,811 69,811
Interdivisional sales (46,578) (12,786) (37,679) (16,538)
---------------------------------------------------------------------
$ 352,772 $ 234,749 $ 408,867 $ 294,005
---------------------------------------------------------------------
36 Week Period Ended 36 Week Period Ended
December 9, 2001 December 10, 2000
System Gross System Gross
(In thousands of dollars) Sales Revenue Sales Revenue
---------------------------------------------------------------------
Harvey's $ 197,818 $ 25,081 $ 192,711 $ 34,044
Swiss Chalet 281,679 82,604 264,236 79,542
Kelsey's 221,169 152,689 182,038 128,137
Air Terminal Restaurants 50,612 47,460 47,054 44,655
Airport Services 173,900 173,900 174,683 174,683
Beaver Foods - - 206,506 206,506
Health Services 16,669 16,669 15,132 15,132
Summit Foods 275,419 275,419 201,008 201,008
Interdivisional sales (144,082) (44,221) (107,368) (46,588)
---------------------------------------------------------------------
$1,073,184 $ 729,601 $1,176,000 $ 837,119
---------------------------------------------------------------------
9. Subsequent Events
As of the end of the Third Quarter, the Corporation owned
approximately 39% of The Second Cup Ltd. ("Second Cup") which was
accounted for as an equity investment. Pursuant to the Corporation's
offer to all the remaining shareholders of Second Cup of $8.00 cash
per share, as of February 5, 2002, over 95% of those shares were
deposited under the offer. These shares will be acquired and paid for
on or before February 8, 2002. The remaining outstanding shares will
be acquired through a follow-up transaction pursuant to applicable
securities regulations, after which Second Cup will be delisted from
the Toronto Stock Exchange, taken private and become a wholly owned
subsidiary of the Corporation.
10. Comparative Amounts
Certain comparative amounts have been reclassified to conform with
the current period's presentation.
---------------------------------------------------------------------
CARA OPERATIONS LIMITED - LOCATION STATISTICS
36 Weeks 24 Weeks 12 Weeks 52 Weeks
Ended Ended Ended Ended
December 9, September 16, June 24, April 1,
2001 2001 2001 2001
---------------------------------------------------------------------
Swiss Chalet 185 183 182 179
Harvey's 368 368 369 368
Kelsey's 96 92 91 88
Montana's 43 40 37 36
Outback 14 14 13 12
---------------------------------------------------------------------
---------------------------------------------------------------------
Airport Services
Division
Flight Kitchens 11 11 12 12
---------------------------------------------------------------------
---------------------------------------------------------------------
Air Terminal
Restaurants 89 90 92 90
---------------------------------------------------------------------
---------------------------------------------------------------------
Summit Food Service
Distribution Centers 4 4 4 4
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------
Stock Exchange Listing
Toronto
---------------------------------------
---------------------------------------
Transfer Agent and Registrar
Computershare Investor Services Inc.
c/o Montreal Trust Company
Tel: 416/263-9487
---------------------------------------
---------------------------------------
Market Share Prices
December 9, 2001
Common Shares, CAO (2000 $5.50) $6.65
Class A Subordinated Voting
Shares, CAO.A (2000 $5.25) $5.35
---------------------------------------
---------------------------------------
On pourra se procurer le texte francais de ce rapport en
communiquant avec le Responsable des relations avec les investissuers
---------------------------------------
To find out more about Cara Operations Limited. (TSE:CAO), visit our website at www.cara.com. |
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