Financial Glossary

Financial Definitions

Fiscal Year - the Company's fiscal year ends on the Sunday nearest to December 31.

Sales - primarily includes sales of products, supplies and restaurant equipment (except for initial equipment packages sold to franchisees as part of the establishment of their restaurant's business - see "Franchise Fees") that are shipped directly from the Company's warehouses or by third party distributors to the restaurants, which we refer to as warehouse or distribution sales. Sales include canned coffee sales through the grocery channel. Sales also include sales from Company-operated restaurants and sales from restaurants that are consolidated in accordance with FIN 46R.

Rent and Royalties - includes franchisee royalties and rental revenues.

Franchise Fees - includes the sales revenue from initial equipment packages, as well as fees for various costs and expenses related to establishing a franchisee's business.

Costs of Sales - includes costs associated with the Company's distribution business, including cost of goods, direct labour, and depreciation, as well as the cost of goods delivered by third-party distributors to the restaurants and for canned coffee sold through grocery stores. Cost of sales also includes food, paper and labour costs for Company-operated restaurants and restaurants that are consolidated in accordance with FIN 46R.

Operating Expenses - includes rent expense related to properties leased to franchisees and other property-related costs (including depreciation).

Franchise Fee Costs - includes costs of equipment sold to franchisees as part of the commencement of their restaurant business, as well as training and other costs necessary to ensure a successful restaurant opening.

General and Administrative - includes costs that cannot be directly related to generating revenue, including expenses associated with the Company's corporate and administrative functions, allocation of expenses related to corporate functions, depreciation of office equipment, the majority of the Company's information technology systems, and head office real estate.

Equity Income - includes income from equity investments in joint ventures and other minority investments over which we exercise significant influence. Equity income from theses investments is considered to be an integrated part of the Company's business operations and is, therefore, included in operating income. Income amounts are shown as reductions to total costs and expenses.

Other Income and Expense - includes expenses (income) that are not directly derived from the Company's primary businesses. Items include restaurant closure costs, currency adjustments, real estate sales, minority interest related to the consolidation of restaurants pursuant to FIN 46R, and other asset write-offs.

Goodwill and Asset Impairment - represents non-cash charges relating to the impairment of goodwill and other long-lived assets.

Comprehensive Income - represents the change in the Company's net assets during the reporting period from transactions and other events and circumstances from non-owner sources. It includes net income and other comprehensive income such as foreign currency translation adjustments and the impact of cash flow hedges.

Financial Performance Measures

Basic Earnings Per Share (EPS) of our Common Stock - the portion of profit or net income allocated to each outstanding share of common stock. EPS serves as an indicator of profitability. It is calculated by dividing net income by the weighted average number of shares outstanding for the period.

Diluted Earnings Per Share (EPS) of our Common Stock - computations are based on the treasury stock method and include assumed issuances of outstanding restricted stock, as prescribed in SFAS No. 128. It is a metric used to determine the quality of the Company's EPS.

Systemwide Sales Growth - includes restaurant-level sales at both franchise and company-operated restaurants, although greater than 99% of our system is franchised. The amount of systemwide sales impacts our franchisee royalties and rental income, as well as our distribution sales. Changes in systemwide sales are driven by changes in average same-store sales and changes in the number of restaurants. We believe systemwide sales and average same-store sales provide meaningful information to investors concerning the size of our system, the overall health and financial performance of the system, and the strength of our brand and franchisee base, which ultimately impacts our consolidated and segmented financial performance.

Same-Store Sales - provides information on total retail sales at restaurants operating systemwide (both franchised and company-operated restaurants) throughout the relevant period and provides a useful comparison between periods. The Company's average same-store sales growth is attributable to several key factors, including new product introductions, improvements in restaurant speed of service and other operational efficiencies, more frequent customer visits, expansion into broader menu offerings and pricing. Same-store sales are based on restaurants that have been open for a minimum of one calendar year and are included in our same-store sales beginning in the 13th month following the restaurant's opening.

EBITDA - defined as earnings before interest, taxes, depreciation and amortization and is used by management as a performance measure for benchmarking against our peers and our competitors. EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry. EBITDA is not a recognized term under US GAAP, and should not be viewed in isolation and does not purport to be an alternative to net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity.

Share Related Data

Market Capitalization - refers to the market value of the Company's outstanding shares. It is calculated by multiplying the share price on the TSX in Canadian dollars by the total number of shares outstanding.

Liquidity Measures

Current Ratio - measures the ability to cover short-term obligations. It is calculated by dividing current assets by current liabilities.

Quick Ratio - measures the ability to meet short-term obligations with the most liquid assets. It is calculated by dividing cash and cash equivalents (excluding restricted cash and restricted investments) plus accounts receivable net by current liabilities.

Total Debt to Equity Ratio - indicates the proportion of short-term debt (as compared to equity) that is used to finance assets or company's business needs. It is calculated by dividing current portion of long-term obligations (short-term debt) and capital leases by total shareholders equity.

Valuation Measures

Price to Earnings - valuation ratio of the current share price compared to earnings per share. It is calculated by dividing the closing share price on the TSX in Canadian dollars on the last day of the quarter by earnings per share for the trailing four quarters.

Price to Revenue - values a stock relative to past performance, other companies or the market itself. It is calculated by multiplying the closing share price on the TSX in Canadian dollars on the last day of the quarter by the weighted average number of shares of common stock outstanding (diluted) and then dividing by total revenue for the trailing four quarters.

Price to Book - compares a stock's market value to its book value. It is calculated by dividing the closing share price on the TSX in Canadian dollars on the last day of the quarter, after multiplying by the weighted average number of shares of common stock outstanding (diluted) by total shareholders' equity.

Price to Cash Flow - measures the market's expectations for future financial health. It is calculated by multiplying the closing share price on the TSX in Canadian dollars on the last day of the quarter by the weighted average number of shares of common stock outstanding (diluted) then dividing by operating income (EBIT) plus depreciation and amortization less income taxes for the trailing four quarters.

Profitability Measures

Operating Margin - measures a company's operating efficiency. It represents operating income (EBIT) expressed as a percentage of total revenue.

Net Profit Margin - measures the proportion of revenue that finds its way into earnings. It represents net income expressed as a percentage of total revenue.

Return on Equity - measures the extent of profit generated with the money shareholders have invested. It is calculated as follows: trailing four quarters net income, is divided by average shareholder's equity, which is average of current year quarter and previous year same quarter shareholders' equity.

Return on Invested Capital (ROIC) - the return on invested capital measures how efficient the company's capital investments are at generating returns. It is calculated by dividing trailing four quarters net operating income after tax, by average long term assets, which is average of current year quarter and previous year same quarter long-term assets, plus average net working capital. Long-term assets are calculated by total assets less total current assets. Average net working capital is calculated by current assets less current liabilities.

Return on Assets (ROA) - indicates profitability relative to total assets. ROA gives an idea as to how efficient the company's assets are at generating earnings. It is calculated by dividing net operating income after tax, trailing four quarters, by average total assets, which is average of current year quarter and previous year same quarter total assets.