Segment Reporting

3 Months Ended

Mar. 31, 2013

Segment Reporting

NOTE 13 SEGMENT REPORTING

The Company operates exclusively in the quick service restaurant industry. Beginning in the first quarter of 2013, the chief decision maker views and evaluates the Company’s reportable segments as follows:

Canadian and U.S. business units. Each of the Canadian and U.S. business units include the results of substantially all restaurant-facing activities, such as: (i) rents and royalties; (ii) product sales through our supply chain as well as an allocation of supply chain income based on the unit’s respective systemwide sales; (iii) franchise fees; (iv) corporate restaurants; and (v) business-unit-related general and administrative expenses. The respective business units exclude the effect of VIEs, consistent with how the chief decision maker views and evaluates the business unit’s results.

Corporate services. Corporate services is comprised of services to support the Canadian and U.S. business units, including: (i) general and administrative expenses; (ii) manufacturing income, and manufacturing sales to third parties; and (iii) income related to our distribution services, including the timing of variances arising primarily from commodity costs and the related effect on pricing, which generally reverse within a year, associated with our supply chain management. Our supply chain management involves securing a stable source of supply to provide our restaurants owners with consistent, predictable pricing, which may extend beyond a quarter. Corporate services also includes the results of our International operations, which are currently not significant.

Previously, the results of manufacturing activities and distribution services were included within the respective geographic segment where the facility was located. Additionally, we have revised the allocation of shared restaurant services, such as restaurant technology and operations standards, between the Canadian and U.S. business units.

The Company has reclassified the segment data for the prior period to conform to the current period’s presentation.

	First quarter ended
	March 31, 2013			April 1, 2012
Revenues(1)
Canada	$	593,673		$	599,883
U.S.		44,448			38,429
Corporate services		4,125			4,471
Total reportable segments		642,246			642,783
VIEs		89,291			78,501
Total	$	731,537		$	721,284
Segment Operating Income (Loss)
Canada	$	145,821		$	147,226
U.S.		910			1,654
Corporate services		(10,665	)		(18,785	)
Total reportable segments		136,066			130,095
VIEs		1,326			1,528
Corporate reorganization expenses		(9,475	)		0
Consolidated Operating Income	$	127,917		$	131,623
Interest, Net		(7,735	)		(7,187	)
Income before income taxes	$	120,182		$	124,436

⁽¹⁾  There are no inter-segment revenues included in the above table.

	First quarter ended
	March 31, 2013		April 1, 2012
Capital expenditures
Canada	$	30,276	$	23,782
U.S.		15,361		7,992
Corporate services		1,842		2,495
Total reportable segments	$	47,479	$	34,269

The following table provides a reconciliation of reportable segment Property and equipment, net and Total assets to consolidated Property and equipment, net and consolidated Total assets, respectively:

	As at
	March 31, 2013		December 30, 2012
Total Property and equipment, net
Canada(1)	$	926,564	$	915,733
U.S. (1)		389,856		378,457
Corporate services(2)		182,295		184,938
Total reportable segments		1,498,715		1,479,128
VIEs		72,054		74,180
Consolidated Property and equipment, net	$	1,570,769	$	1,553,308
Total Assets
Canada	$	1,231,250	$	1,175,552
U.S.		415,550		400,231
Corporate services		286,124		281,043
Total reportable segments		1,932,924		1,856,826
VIEs		133,139		139,462
Unallocated assets(3)		193,315		287,891
Consolidated Total assets	$	2,259,378	$	2,284,179

⁽¹⁾  Includes primarily restaurant-related assets such as land, building and leasehold improvements.

⁽²⁾  Includes property and equipment related to distribution services, manufacturing activities, and other corporate assets.

⁽³⁾  Includes Cash and cash equivalents, Restricted cash and cash equivalents, Deferred income taxes and Prepaids, except as related to VIEs.

Consolidated Sales and Cost of sales comprise the following:

	First quarter ended
	March 31, 2013		April 1, 2012
Sales
Distribution sales	$	431,151	$	439,728
Company-operated restaurant sales		5,976		5,560
Sales of VIEs		86,760		78,014
Total Sales	$	523,887	$	523,302
Cost of sales
Distribution cost of sales	$	375,553	$	389,948
Company-operated restaurant cost of sales		7,010		6,080
Cost of sales of VIEs		78,791		68,892
Total Cost of sales	$	461,354	$	464,920