Refer to the consolidated financial statements and notes of The Second Cup Ltd.
a) What was The Second Cup's long-term debt at June 24, 2000? What was the increase (decrease) in total long-term debt (excluding other deferred liabilities) from the pro forma figures presented for 1999?
b) Does The Second Cup separate the current portion due from its long-term debt? If so, how much of its long-term debt is currently due?
c) What kind of long-term debt does The Second Cup have?
d) Does The Second Cup have any leases? If so, are they capital or operating leases? What are the total minimum lease commitments for The Second Cup in the future?
Pro Forma (Note 1) (unaudited) 2000 1999 1909 ASSETS Current assets Cash and cash equivalents 822 $ 20.942 Accounts receivable (hate 3) 2.294 25.625 2,494 Inventories (Note () 107 103 103 Prepaid expenses and sundry assets (Note 13) 419 934 934 Income taxes receivable 1.150 517 5,416 27.384 24,990 Capital assets (hate .) 1,768 2.308 2.308 Deferred financing charges (Note ?) 125 235 2:35 Loans to directors and officers (Note 13) 674 753 Investment in Diedrich Coffee, Inc. (Note ]) 1,838 6.960 5.960 Investment in The Great Canadian Bagel, Ltd. (Note 5) 3,495 Future income taxes (Note 10) 295 700 700 Goodwill, less accumulated amortization of $3,304 (1999 - $3,004) 8 449 8.749 8.749 $ 18.565 $ 49.584 $ 43.695 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 2,718 $ 3.415 2,628 Current portion, long-term debt (Now ?) 3.000 0.500 3.000 Deposits 923 923 Income taxes payable 467 6.405 11,305 6.451 Long-term debt (Note ?) 10.250 19.300 19.300 Other deferred liabilities 212 219 219 SHAREHOLDERS' EQUITY Share capital (hate #) 62.355 61,670 61,670 Deficit (60.657) (42,910) (43.945) 1.698 18,760 17,725 $ 10,565 $ 49,584 $ 43,695 Approved by the Board7. LONG-TERM DEBT 2000 1999 Non-revolving term facility maturing June 7, 2004 $13,250 $25,000 $10 million revolvingon-revolving credit facility, maturing June 5, 2001 (June 30, 1999 - maturing June 6, 2000). 800 13.250 25,800 Less: Current portion (3,000) (6,500) $10,250 $19,300 The Company's non-revolving term facility requires quarterly payments of $750 plus the proceeds received from the liqui- dation of the Company's investment in The Great Canadian Bagel, Led. The revolvingon-revolving facility contains a convertible option whereby on each anniversary date, if the option is not extended, payment could be made in full or in installments equal to 21/2% of the outstanding balance on a quarterly basis. Any remaining balance would be due on June 7, 2004. On June 6, 2000 the option was extended for another year. These facilities are secured by the Company's investment in Diedrich Coffee, Inc. and provide that the Company may borrow using Prime, Bankers Acceptances or LIBOR based loans plus interest spreads which vary within a range depend- ing upon a ratio of total debt to EBITDA. Borrowings currently bear interest at the lender's cost of funds plus 1.375%. Deferred financing charges of $125 ($235 at June 30, 1999) incurred by the Company in securing these facilities will con- tinue to be amortized over the term of the loan based on the repayment of the facility. Management considers the carrying value of long-term debt to be fair market value.12. MINIMUM LEASE COMMITMENTS AND CONTINGENT LIABILITIES The Company has lease commitments for corporate-owned stores and office premises. The Company also, as the franchisor. is the lessee in most of the franchisees' lease agreements. The Company enters into sublease agreements with the individ- ual franchisee, whereby the franchisee assumes responsibility for and makes lease payments directly to the landlord. The Company's minimum lease commitments and contingent liabilities for any leases subject to a sublease agreement between the Company and a franchisee at June 24, 2000 are approximately as follows: Minimum Lease Contingent Commitments Liabilities 2001 $ 577 $14.070 2002 586 13.585 2003 535 12,868 2004 513 12.182 2005 511 10,945 Thereafter 1.039 32,109 $3,761 $95, 759
