PIZZA PIZZA LIMITED Consolidated Financial Statements
(Unaudited) For the thirteen weeks ended April 1, 2007
PIZZA PIZZA LIMITED INTERIM CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars) (Unaudited) April 1, 2007 ASSETS Current Assets Cash and cash equivalents Accounts receivable Inventories Prepaid expenses and sundry assets Income taxes recoverable Current maturity of notes receivable Recoverable franchisee expenses, net Total current assets Capital assets Notes receivable Advances to parent company (note 11) Cash flow hedge (note 13) Renovation funds Deferred charges Future income tax assets $ LIABILITIES AND SHAREHOLDERS' DEFICIENCY Current Liabilities Accounts payable and accrued liabilities Deposits from franchisees Advances from parent company (note11) Current maturities of long-term debt (note 5) Total current liabilities Long-term debt (note 5) Deferred revenue Loan payable to Pizza Pizza Holdings Trust Renovation funds Total liabilities Non-controlling interest (note 6) Commitments and contingencies (notes 7 and 8) SHAREHOLDERS' DEFICIENCY Common shares and special voting shares Accumulated other comprehensive income Deficit $ See accompanying notes to the financial statements (Signed) MICHAEL OVERS Director December 31, 2006
$
6,175 3,486 2,695 6,082 589 12,348 3,859 35,234 14,589 372 1,843 394 10,360 636 23,980 87,408
$
13,559 3,441 3,150 2,722 726 10,140 4,057 37,795 16,139 372 10,103 683 24,767 89,859
$
19,732 819 52 20,603 20,134 3,606 30,000 3,658 78,001 140,267
22,187 928 3 52 23,170 20,146 4,005 30,000 1,839 79,160 139,921
91 (130,951) (130,860) 87,408
$
(129,222) (129,222) 89,859
PIZZA PIZZA LIMITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (In Thousands of Dollars) (Unaudited)
For the 13-week period ended April 1, 2007 Revenue Food sales (note 9) Royalties, franchise fees and other related revenue (note 10) Interest and other income Expenses Cost of food sales and general and administrative Amortization of deferred charges Amortization of capital assets Interest on loan from Pizza Pizza Holdings Trust Interest on long-term debt Gain on sale of company stores Earnings before income taxes and non-controlling interest Provision for income taxes Current Future (recovery) Earnings before non-controlling interest Non-controlling interest in Partnership earnings Net earnings (loss) for the period Deficit - beginning of period, as originally stated Accounting adjustment Deficit - beginning of period, restated Deficit - end of period See accompanying notes to the financial statements $ $ 35,000 5,751 496 41,247 37,005 47 1,148 450 272 (427) 38,495 2,752 $ 33,649 5,719 277 39,645 34,016 23 1,259 450 284 (652) 35,380 4,265 For the 13-week period ended April 2, 2006 (restated)
170 787 957 1,795 3,524 (1,729) (129,222) (129,222) (130,951) $
831 (480) 351 3,914 3,235 679 (125,862) (405) (126,267) (125,588)
PIZZA PIZZA LIMITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of Dollars) (Unaudited)
For the 13-week period ended April 1, 2007 Net earnings (loss) for the period Other comprehensive income Gain on interest rate swap designated as cash flow hedge (notes 2 and 13) Non-controlling interest in Partnership’s other comprehensive income Other comprehensive income Comprehensive income (loss) $ $ (1,729) $ For the 13-week period ended April 2, 2006 679
7 (5) 2 (1,727) $
679
PIZZA PIZZA LIMITED INTERIM CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME (In Thousands of Dollars) (Unaudited)
For the 13-week period ended April 1, 2007 Accounting policy change (note 2) Other comprehensive income Balance, end of period, being Pizza Pizza Limited’s share of the fair value of a cash flow hedge $ 89 2 91
For the 13-week period ended April 2, 2006 $ -
$
$
PIZZA PIZZA LIMITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars) (Unaudited)
For the 13-week period ended April 1, 2007 Operating Activities Net earnings (loss) for the period Amortization of capital assets Amortization of deferred charges Non-controlling interest Amortization of deferred revenue Gain on sale of company stores Future income tax (recovery) expense Changes in non-cash operating elements of working capital (note 12) Cash provided by (used in) operating activities Investing Activities Additions to capital assets – maintenance Additions to capital assets – restaurants Proceeds from sale of company restaurants Proceeds from sale of capital assets Advances to parent Receipt of payments from parent Repayment of notes receivable Issuance of notes receivable Contributions to renovation funds Disbursement from renovation funds Deferred charges Cash provided by (used in) investing activities Financing Activities Repayment of advances from parent Repayments of long-term debt Distributions by Pizza Pizza Royalty Limited Partnership Cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period See supplementary cash flows information (note 12) See accompanying notes to the financial statements $ (1,729) 1,406 47 3,524 (399) (427) 787 3,209 (5,179) (1,970) $ For the 13-week period ended April 2, 2006 679 1,530 23 3,235 (425) (652) (480) 3,910 (6,231) (2,321)
(88) (47) 705 1 (2,134) 291 755 (2,963) 8,402 (6,840) (1,918)
(393) (289) 2,253 (800) 6,784 4,112 (2,201) 5,426 (5,742) (173) 8,977
(3) (12) (3,481) (3,496) (7,384) 13,559 6,175
(4) (3,268) (3,272) 3,384 9,222 12,606
$
$