Table of contents
Message to Shareholders
Page 3
Alain Bouchard
President & CEO
Operations Review
Brian Hannasch
Chief Operating Officer
Financial Review
Raymond Paré
Chief Financial Officer
Management’s Discussion
& Analysis
Page 6
Page 9
Page 12
Management’s Report
Page 49
Independent Auditor’s Report
Page 51
Consolidated Financial Statements
Page 53
Alain Bouchard
President & Chief Executive Officer
Growth and integration
This has been our fifth straight year of record earnings. It has also been a year of record travelling, both within
North America and further afield in Europe. All that travel has been for good reason, keeping us in touch with our
North American operations, exploring new cultures and markets, meeting new customers and coming to
understand our European operations better.
The integration of Statoil Fuel & Retail AS (“SFR”) - the biggest acquisition in our history - into our family has
created an exhilarating atmosphere. The process of becoming one corporation creates new opportunities and
breathes fresh new life into our organization on both sides of the Atlantic.
Let’s Start with the Numbers
Revenues were $35.5 billion, up by $12.6 billion or 54.7% over the previous year. This was attributable mainly to
acquisitions and to an increase in same-store merchandise revenues and road transportation fuel volumes.
Same-store merchandise revenues increased in both the United States and Canada, with particularly strong
performance in fresh products.
For the fifth year our net earnings have increased, amounting to
$572.8 million for fiscal 2013, up 25.2% over fiscal 2012. Excluding
restructuring costs and other non-recurring items, net earnings for fiscal
2013 would have been approximately $620.9 million or $3.32 per share
on a diluted basis - an increase of 39.6% compared with fiscal 2012.
Adjusted EBITDA for fiscal 2013 was $1,390.2 million, an increase of
including a
$549.1 million or 65.3% compared with
contribution from acquisitions (net of acquisition costs recorded to
earnings) of $435.4 million.
fiscal 2012,
in
On June 19 2012 SFR formally became part of the Alimentation Couche-
Tard Inc. (“Couche-Tard”) family. The acquisition was made for a total
cash consideration of NOK 15.36 billion, or $2.58 billion. In North
America
fiscal 2013 we added approximately 200 stores and
completed the construction of a further 47. In the last 12 months we have
taken
to about
12,500 sites (including licensed stores), grown our family from more than
60,000 to approximately 80,000 employees, and we now have our
brands on three continents.
the Couche-Tard network
from around 10,100
President & CEO Alain Bouchard (center) with
Group President Europe Jacob Schram (left)
and business unit leader Ilze Silina at the
launch of miles TM in Latvia
During fiscal 2013 we recorded synergies and cost savings from various
sources of approximately $28.0 million before income taxes. These savings were more than offset by expenses
incurred in SFR’s separation from its former parent company, for brand marketing to support our new initiatives
and in IT in the rollout of new Enterprise Resource Planning (ERP) systems. We view these expenses as
investments, as these new ERP systems are aimed at helping us gain efficiency and meet our cost savings and
synergies goals. SFR’s ERP replacement achieved its first major milestone in June 2013, “going live” to
customers and partners in Sweden. Initial indications are that the project is progressing according to plan.
Our work in the area of costs savings and synergies identification is far from over. We maintain our goal of
annual synergies ranging from $150.0 million to $200.0 million before the end of December 2015.
Annual Report © 2013 Alimentation Couche-Tard Inc.
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The Best of Both Worlds
Over the past year in North America and Europe we have made great strides in building mutual understanding
and respect, both culturally and professionally. The acquisition is bringing out the best in all our people. As
colleagues, we have demonstrated a “you have a good way too” and “let me learn your way” approach. This
enthusiasm for discovering and sharing best practice is creating a promising platform for the evolution of our
operations on both continents.
Personally, I have traveled to Europe more times than I can remember since the acquisition, getting to know our
operations there from the inside out. I am impressed by many of our European initiatives.
Food service is an important and growing category across all our markets. In Europe it is the biggest category in
our stores in Norway and Estonia. The absolute best and newest concepts – from salad and sushi bars to
dedicated station chefs and gourmet coffee – are showcased at selected “super” highway stations in Norway,
including our Minnesund station outside Oslo, which received international acclaim from the industry
organization, NACS, the Association for Fuel and Convenience Retailing.
Our European colleagues continued their impressive track record in Health, Safety and the Environment (HSE),
leading the industry in reducing job-related injuries and robberies, making HSE a competitive edge for our
operations in Europe. We can all learn from their performance.
We were proud to announce the world premiere of our first signature fuel brand, miles TM, in the fourth quarter.
This family of standard and premium fuel products promises to take our customers further for the same price and
to deliver improved engine performance. Miles TM drew significant positive media attention in its launch markets.
Merchandising and more
The European management, convenience and marketing teams have been visiting throughout the year to study
our operations in North America. A number of our merchandising activities were identified as having potential in
the European market - and it took less than a month for changes to start appearing in our Statoil-branded stores.
Impressive time-to-market from our European team!
In North America there has been a focus on our stores’ check-out zones, optimizing space and product displays
to improve our customers’ opportunities to make last-minute, impulsive purchases. This approach is showing
encouraging returns.
The process of identifying further synergies between Couche-Tard and SFR is well under way. The opportunity
to leverage our increased size and global presence is being explored with our biggest suppliers. Our enterprise
resource planning (ERP) replacement projects are on track and will enable further standardization and
simplification in the business.
We have worked hard on creating, for the first time, a business plan that incorporates Europe. We are well-
aligned on what we want to achieve in the year to come.
Stepping Up in North America
In North America, the retail environment has been fluctuating significantly from one month to the next and even
one day to the next. In the face of these challenging conditions, our North American leadership team kept
performance on track and continued to develop our culture of benchmarking and continuous improvement. They
have delivered steadily increased revenues and margins.
We achieved these improvements by continuing to offer our customers quality and value and by creating
innovative new products and services for them. We also strengthened our grip on the “micro-market” pricing of
convenience products and exercised tight control over our costs. During the year, all our business units carefully
monitored traffic per store and put together action plans to maintain and gain market share. This approach is well
Annual Report © 2013 Alimentation Couche-Tard Inc.
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supported by our decentralized structure, which enables us to implement tactics that are tailored to the varied
markets.
Social Engagement
Our growing store network serves millions of customers every day. That’s a powerful capability. It’s especially
powerful when the corner store is also a fixture of the community and has a major influence on mobilizing the
population around it. Couche-Tard believes there is a moral imperative requiring us to use that capability to
benefit the communities we operate in - and that, increasingly, our customers expect it of us. This past year, we
can be proud that dozens of organizations across North America and Europe have benefitted from the
combination of our corporate and customer contributions, awareness building activities and our employee
volunteers.
Senior Management Changes
After a decade as a member of the Board of Directors, Jean-Pierre Sauriol has resigned his position. Since
2003, Jean-Pierre has made a significant contribution to the further development of our company. I thank him for
his long and loyal service as a board member.
In line with our practice of maintaining a strong talent pool in the organization, we have made some adjustments
to our structure. Jacob Schram, formerly CEO of SFR, has been appointed Group President Europe.
Jean Bernier, formerly Executive Vice President of Valero Energy Corporation, joined us as Group President
Fuel Americas & Operations North-East. Darrell Davis has been promoted from Vice-President Operations,
Florida to Senior Vice President Operations. Each of them brings skills and experience derived from years of
retailing. I would like to welcome all three to our Executive Management Team.
Outlook
In the United States, the convenience store sector is fragmented and in a continuing consolidation phase. We
are participating in this process through our acquisitions, the market share we gain when competitors close sites
and by improving our offering.
In Europe and Canada, the convenience store sector is often dominated by a few major players, including
integrated oil companies. Some of these integrated oil companies are in the process of selling or intend to sell
their retail assets. We intend to study investment opportunities that might come to us through this process.
Whatever the context, we shall set out to continue concluding acquisitions only under conditions that create
value. Organic growth should continue to be important in the growth of our net earnings; and we anticipate that
the continual improvement of our offer, including fresh products, will remain a highlight. We intend to continue in
this direction.
Thank you
Merging two cultures, exploring synergies and finding new ways to work together is exciting, but it is also
stressful. I want to thank everybody on both continents for their support and understanding as we work to
become a stronger retailer. Their ability to keep an open mind, be flexible and remain positive is truly
appreciated. With a strong team, I believe we are well equipped to take on retail ventures in both new and
existing markets.
Finally, I would like to thank our shareholders for their trust.
Alain Bouchard
President & Chief Executive Officer
Annual Report © 2013 Alimentation Couche-Tard Inc.
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Brian Hannasch
Chief Operating Officer
Offering Greater Value to More Customers
Fiscal 2013 has been an exciting year dominated by two major themes: responding to the value-conscious
consumer and integrating our European operations. Though very different, these themes can be seen as
two sides of the same coin.
Consumer confidence figures1 showed a slow but steady increase in both North America and northern
Europe last year. That said, across the globe consumers have become much more value conscious in
response to the economic crisis that started five years ago. As retailers, we pride ourselves on being
sensitive to our consumers’ needs. Therefore, we focus on bringing them value for money.
Our expansion into Europe came at an opportune time on many levels. Although there are cultural
differences, we share a common passion and approach to retail which applies equally well in Oslo,
Ontario or Ohio. Over the past year, we have seen the combination of our organizations make our
customer offer even stronger.
Expansion on Both Sides of the Atlantic
The acquisition of SFR and its 2,300 sites – as significant as it is – is not the only network expansion we
engaged in last year. Altogether, approximately 200 additional stores were added to our network through
acquisitions and 29 new stores were built in North America during the fiscal year. Overall, this was our
biggest ever year of growth.
Three strategic transactions during the year were spread across
North America. The acquisition of 27 Sun Mart-branded stores in
Eastern Washington State enabled our US West Coast business
unit’s entry into this new market. The acquisition of 29 BP-branded
stores in Orlando, Florida has further strengthened our market share
in the region. And the addition to our network of 29 Philips 66 stores
in Illinois, Missouri and Oklahoma kept us on track with our
expansion and growth plans for the Midwest.
In addition, our International Franchise Group has enabled the
Circle K brand to be seen in new markets in Central America and the
Middle East, while at the same time a new joint venture in East Asia
promises to accelerate our brand licensing in that region.
Central to the success of Couche-Tard is the exchange of great
ideas and best practices. In one visible expression of this, current
Norwegian business unit leader and SVP Dag Roger Rinde will take
on the VP Operations role in the US Southeast. We see this as a
significant opportunity to leverage the experience of this talented
leader to expedite the exchange of best practice, benefiting the corporation and our customers.
Best practice sharing goes in both directions
across the Atlantic, with our most successful
innovations high on the wanted list.
1 The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by
Nielsen, a leading global provider of information and analytics around what consumers buy and watch.
Annual Report © 2013 Alimentation Couche-Tard Inc.
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Brands Built on Value
Understanding the customer is critical to retail on both sides of the Atlantic. We talk with them, survey them
and watch their actions and reactions. In short, we do all we can to understand what is important to our
customers and the opportunities we have to help them.
In North America, we have seen our business units effectively address our customers’ needs through
bundle deals, coupons and two-for-one deals. Perhaps the best examples are our Polar PopTM fountain
beverage offer - a great price for any size, successfully rolled out across all our North American markets in
both the US and Canada - and our value line tobacco offer, Crowns, which is proving popular in each of its
launch markets in the US.
In Europe, the new Statoil fuel brand miles TM is a great example of how to take a strong brand offer and
make it stronger. The miles TM family of fuels differentiates itself by promising to take our customers up to
3% further for the same price, while the miles PLUS TM premium offer takes them further and enhances
their engines’ performance. The world premiere of the miles TM brand in the fourth quarter attracted great
consumer and media interest, with Sweden’s leading independent motoring magazine validating our claims
for the benefits of our miles TM fuel. We look forward to seeing the overall results as the brand is rolled out
across all our European markets in the coming fiscal year.
Food
“Food is our common ground2”. The past year has taught us that food,
or rather food service, is a growth area with great potential in all our
markets. In the integration work with SFR, we have seen many
similarities when it comes to growing consumer demand for a fresh
food service that is convenient, friendly and good value.
SFR is a step ahead, demonstrating the potential of in-store bakeries
or coffee bars and a strong hot food service in several of their
markets. Our North American food sales continue to grow and we
have developed a prototype for a new category that we intend to pilot
in a number of North American markets in the coming year.
Merchandising
Meanwhile, our European operations are on a mission: to sharpen
their focus on their convenience business and boost customer traffic in
the coming year. To support them in this effort, one of Couche-Tard’s
leading Marketing Directors has joined SFR’s Market Development
team as Vice President, Convenience Merchandising. Their major
tasks will be to drive the “merchandising train” through Europe, to educate our business units there in
category management, and to support the development of local merchandising categories.
A fresh, Made To Go (own brand) sandwich
on offer at a Statoil store in Scandinavia
In the fourth quarter, a merchandising task force from SFR, made up of marketing and category
convenience managers, visited our US operations. Their task was to take as much inspiration as possible
from Couche-Tard’s stores and “copy with pride” whatever they felt would be transferrable to our European
customers.
2 James Beard, renowned chef, food critic and author
Annual Report © 2013 Alimentation Couche-Tard Inc.
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The task force has already identified improvements in the shopping experience and sales. Some of these
ideas have already been tested and initial results show an increase in units sold.
Reducing our carbon footprint
On both continents we have programs addressing energy consumption in our stores, offices, terminals,
depots, factories and warehouses as well as in our distribution networks. These programs focus both on
behavioural changes and on upgrading or installing new technical solutions at our facilities. Their overall
goal is to decrease our energy consumption by 5% by the end of Fiscal 2014 (on top of the almost 10%
reductions delivered in the previous two years). Our commitment to driving down emissions will reduce
costs as well as protecting the environment.
Social involvement
Our most important corporate responsibility is to provide our products and services in a socially,
environmentally and ethically responsible way. However, corporate responsibility does not end there. We
look to create win-win situations in the communities and markets in which we operate. This year, our
community efforts resulted in over $16 million dollars’ worth of donations for organizations ranging from
giant international bodies like the Red Cross to local centers for homeless children and programs for youth-
at-risk. Our company, our employees and our customers engaged in activities that ranged from fish fry
fundraisers in Florida to driver safety training courses in Denmark - not only raising money for good causes,
but also raising morale and building ever stronger relationships in our communities.
One team, one culture
In North America we have long had a culture of continuous improvement, making small changes every day
to improve our business operations. Although we come from different parts of the world, our European
colleagues share this same culture. Together, we are well positioned to make the best of both worlds when
it comes to consumer intelligence, retail processes and winning concepts.
Collaborating across continents and building on the best each has to offer can only make ours a stronger,
more effective business.
Brian Hannasch
Chief Operating Officer
Annual Report © 2013 Alimentation Couche-Tard Inc.
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Raymond Paré
Vice-President & Chief Financial Officer
Fifth Straight Year of Record Earnings
Our disciplined approach to profitable growth and optimization continues to play a central role in our
success. We can look back on a year of significant and steady development in our net earnings, against a
backdrop of challenging market conditions in North America and Europe. We have made the largest
acquisition in the history of our corporation, while continuing our focus on cost control, debt reduction and
restructuring. This is demonstrated by our particularly strong deleveraging performance since the closing of
our acquisition of SFR.
It has been a year growth on all fronts. Our acquisition in Europe was
a considerable part of that growth, but North America contributed its
share, too. Excluding the estimated impact of the 53rd week in
Fiscal 2012, merchandise and service sales increased by 5.2% in the
US and 1.5% in Canada. Road transportation fuel volume growth was
exceptional, with an increase of 11.9% in the US and 5.9% in
Canada. The growth in revenues was not at the expense of margin:
merchandise and service gross margin as a proportion of sales
increased by 0.1% in the US and 0.3% in Canada, thanks to the
growing contribution from our fresh food offering. Fuel margins also
increased and, once again, our teams were successful at keeping
costs under control. All of this, taken together, allowed us to record
an adjusted EBITDA of $1,390.2 million, an increase of $549.1 million
or 65.3% over Fiscal 2012. Last but not least, net cash from operating
activities was $1,161 million, an increase of 52% over Fiscal 2012,
reflecting our strong earnings as well as efficient management of
working capital.
One of Statoil Fuel & Retail’s franchise
holders in front of his store in Oslo, Norway.
With such strong operating metrics and cash flows, we were able to improve significantly our balance
sheet. In just about ten months since the acquisition of SFR, we were able to reduce our net debt by
$764 million - which is definitely in line with our objective of reducing our leverage.
The Art and Science of Integration
The most successful acquisitions are measured by the success of their integration. Being effective in this
realm demands a balance between planning and analysis, and delivering on the daily demands of
satisfying your customers. You cannot afford to compromise the operational momentum of the business
during the integration process.
The work to integrate SFR into our operations began as soon as the successful completion of the
US$2.58 billion deal became clear. Our goal was to improve performance through leveraging the benefits
of our new scale and using our benchmarking culture, while paying down and restructuring our debt to
quickly regain our financial flexibility. In that way, we would be able to continue our strategy of seizing new
opportunities as they arise.
Benchmarking our new, European operations against our existing North American network helped us to
identify areas from which to maximize results and cash flow. Many parts of the two organizations were
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 9
compared on both the operational and “back office” levels, identifying synergies as well as opportunities to
minimize costs.
A working capital initiative within SFR is one of the actions being executed to improve capital efficiency. It
aims to identify and release capital tied up in the business through minimizing accounts receivable,
maximizing accounts payable and optimizing inventories. Another significant action is improving capital
efficiency through the divestment of non-core strategic assets.
In its stores, SFR is focusing strongly on lean operations. Making operations leaner means eliminating
waste, looking again at labor utilization, focusing marketing spend and much more.
In March 2012, we opened a business center in Riga, Latvia, which in just nine months successfully
centralized a series of simplified, more cost-efficient HR and Finance routines for SFR. The Business
Centre continues to play an important role in redefining the business’ processes. In addition, we have
successfully implemented a new financial reporting process, aligned accounting policies, created a new
business plan process, and implemented a monthly business review process.
We still have our goal of $150-$200 million in cost savings. We should see the realization of these cost
savings, mainly over the next two years, in parallel with the implementation of our new ERP systems.
Leveraging Scale, Knowledge and Power
Further growth continues to be on our horizon. As a larger group we have greater intellectual capital.
Numerous activities aimed at making the most of best practice sharing between continents and improving
our customer offers are underway. As already described by Alain, this sharing of information between our
business units is continual.
Doing good is good for business
All four of our primary brands – Couche-Tard®, Mac’s®, Circle K® and Statoil – have long and proud
histories of commitment to the communities they serve. This is a tradition rooted in our business since its
beginnings, that runs through us from the shop floor to the boardroom and from formalized group activities
to individuals supporting local causes with their expertise. Such involvement has a positive impact on
employee morale, creates pride in our workplace, generates interest from potential employees and attracts
partners and customers with similar attitudes.
Regaining Financial Flexibility
We are well on our way to regaining our historical financial flexibility with the strong cash flow that we are
generating. In the second quarter we issued CAD $345 million in Class B shares and used the net
proceeds to pay down a portion of our long term debt. In the third quarter we carried out a CAD $1 billion
bond offering and used the proceeds to repay part of the shorter-term indebtedness outstanding under our
SFR acquisition facility. At the time of the bond issue, the bond market offered historically low interest rates
while, at the same time, allowing us to spread the maturity of our debt.
Our disciplined approach, strong and improving cash flow, healthy capital structure and well-structured
debt, all combined with releasing the potential of our larger group, has already helped us regain our usual
flexibility. Both our adjusted earnings per share and our share price continued to show positive
development, following the acquisition of SFR, the largest in Couche-Tard’s history and approximately
200 stores in North America coupled with internal and external growth factors. We believe this
demonstrates the effectiveness of our approach to integration. Our credit profile remains solid and our ratio
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 10
of adjusted net debt to adjusted EBITDAR (Earnings Before Interest, Tax, Depreciation, Amortization,
Impairment and Rent expense) is improving, from 3.58 shortly after the closing of the acquisition of SFR to
3.05 at the end of the fiscal year, which is ahead of the objective we had set ourselves at the time of the
acquisition. In addition, we currently have access to approximately $1.0 billion through our available cash
and revolving unsecured operating credit agreements, giving us the flexibility we need to fund our
investment opportunities, if needed. Overall our capital structure is in healthy condition - mature, yet quite
flexible. As usual, we remain committed to maintaining an adequate indebtedness level to preserve our
strong credit profile and keep our cost of capital as low as possible.
We look forward to another exciting year of prospects and opportunities.
Raymond Paré
Vice President & Chief Financial Officer
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 11
Management’s Discussion and Analysis
The purpose of this Management’s Discussion and Analysis (“MD&A”) is, as required by regulators, to explain management’s
point of view on Alimentation Couche-Tard Inc.’s (“Couche-Tard”) financial condition and results of operations as well as its
performance during the fiscal year ended April 28, 2013. More specifically, it aims to let the reader better understand our
development strategy, performance in relation to objectives, future expectations and how we address risk and manage our
financial resources. This MD&A also provides information to improve the reader’s understanding of the consolidated financial
statements and related notes. It should therefore be read in conjunction with those documents. By “we”, “our”, “us” and “the
Corporation”, we refer collectively to Couche-Tard and its subsidiaries.
Except where otherwise indicated, all financial information reflected herein is expressed in United States dollars
(“US dollars”) and determined on the basis of International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board (“IASB”). We also use measures in this MD&A that do not comply with IFRS. When
such measures are presented, they are defined and the reader is informed. This MD&A should be read in conjunction with
the annual consolidated financial statements and related notes included in our 2013 Annual Report, which, along with
additional information relating to Couche-Tard, including the most recent Annual Information Form, is available on SEDAR at
www.sedar.com and on our website at www.couche-tard.com/corporate.
Forward-Looking Statements
This MD&A includes certain statements that are ―forward-looking statements‖ within the meaning of the securities laws of
Canada. Any statement in this MD&A that is not a statement of historical fact may be deemed to be a forward-looking
statement. When used in this MD&A, the words ―believe‖, ―intend‖, ―expect‖, ―estimate‖ and other similar expressions are
generally intended to identify forward-looking statements. It is important to know that the forward-looking statements in this
MD&A describe our expectations as at July 9, 2013, which are not guarantees of future performance of Couche-Tard or its
industry, and involve known and unknown risks and uncertainties that may cause Couche-Tard’s or the industry’s outlook,
actual results or performance to be materially different from any future results or performance expressed or implied by such
statements. Our actual results could be materially different from our expectations if known or unknown risks affect our
business, or if our estimates or assumptions turn out to be inaccurate. A change affecting an assumption can also have an
impact on other interrelated assumptions, which could increase or diminish the effect of the change. As a result, we cannot
guarantee that any forward-looking statement will materialize and, accordingly, the reader is cautioned not to place undue
reliance on these forward-looking statements. Forward-looking statements do not take into account the effect that
transactions or special items announced or occurring after the statements are made may have on our business. For example,
they do not include the effect of sales of assets, monetizations, mergers, acquisitions, other business combinations or
transactions, asset write-downs or other charges announced or occurring after forward-looking statements are made.
Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise the
forward-looking statements, whether as a result of new information, future events or otherwise.
The foregoing risks and uncertainties include the risks set forth under ―Business Risks‖ in our 2013 Annual Report as well as
other risks detailed from time to time in reports filed by Couche-Tard with securities regulators in Canada.
Our Business
We are the leader in the Canadian convenience store industry. In the United States, we are the largest independent
convenience store operator in terms of number of company-operated stores. In Europe, we are a leader in convenience store
and road transportation fuel in Scandinavian countries and in the Baltic States while we have a growing presence in Poland.
As of April 28, 2013, our network comprises 6,094 convenience stores throughout North America, including 4,546 stores with
road transportation fuel dispensing. Our North-American network consists of 13 business units, including nine in the United
States covering 39 states and the District of Columbia and four in Canada covering all ten provinces. More than
60,000 people are employed throughout our network and at the service offices in North America.
Through our acquisition of Statoil Fuel & Retail, we operate a broad retail network across Scandinavia (Norway, Sweden,
Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania) and Russia with 2,292 stores as at April 28, 2013, the majority of
which offer road transportation fuel and convenience products while the others are unmanned automated service-stations
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 12
which offer road transportation fuel only. We also offer other products, including stationary energy, marine fuel, aviation fuel,
lubricants and chemicals. We operate key fuel terminals and fuel depots in eight countries. Including employees at Statoil
branded franchise stations, about 18,500 people work in our retail network, terminals and service offices across Europe.
In addition, under licensing agreements, about 4,190 stores are operated under the Circle K banner in ten other countries
worldwide (China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Mexico, Vietnam and United Arab Emirates).
Our mission is to offer our clients a quick and outstanding service by developing a customized and friendly relationship while
still finding ways to surprise them on a daily basis. In this regard, we strive to meet the demands and needs of our clientele
based on their regional requirements. To do so, we offer consumers food and beverage items, road transportation fuel and
other high-quality products and services designed to meet clients’ demands in a clean and welcoming environment. Our
positioning in the industry stems primarily from the success of our business model, which is based on a decentralized
management structure, an ongoing comparison of best practices and operational expertise that is enhanced by our
experience in the various regions of our network. Our positioning is also a result of our focus on in-store merchandise, as well
as our continued investments in our stores.
Value creation
In the United States, the convenience store sector is fragmented and in a consolidation phase. We are participating in this
process through our acquisitions and the market shares we gain when competitors close sites and by improving our offering.
In Europe and Canada, the convenience store sector is often dominated by a few major players, including integrated oil
companies. Some of these integrated oil companies are in the process of selling or are expected to sell their retail assets. We
intend to study investment opportunities that might come to us through this process.
However, despite this context, acquisitions have to be concluded at reasonable conditions in order to create value for our
Corporation and its shareholders. Therefore, we do not favour store count growth to the detriment of profitability. In addition
to our participation in the consolidation phase of our sector and in the selling by integrated oil companies of their retail assets,
it has to be noted that in recent years, organic contribution has played an important role in the growth of our net earnings.
The on-going improvement of our offer, including fresh products, supply terms and efficiency of our business has been a
highlight, especially with the absence of significant acquisitions and net growth in store count in the recent years, prior to the
acquisition of Statoil Fuel & Retail. Thus, all these elements contributed to the growth in net earnings and to value creation for
our shareholders and other stakeholders. We intend to continue in this direction.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 13
Exchange Rate Data
We use the US dollar as our reporting currency which provides more relevant information given the predominance of our
operations in the United States and our debt largely denominated in US dollars.
The following table sets forth information about exchange rates based upon closing rates expressed as US dollars per
comparative currency unit:
12-week period ended
April 28, 2013
13-week period ended
April 29, 2012
52-week period ended
April 28, 2013
53-week period ended
April 29, 2012
Average for period (1)
Canadian Dollar
Norwegian Krone (2)
Swedish Krone (2)
Danish Krone (2)
Zloty (2)
Euro (2)
Lats (2)
Litas (2)
Ruble (2)
Period end
Canadian Dollar
Norwegian Krone (3)
Swedish Krone (3)
Danish Krone (3)
Zloty (3)
Euro (3)
Lats (3)
Litas (3)
Ruble (3)
0.9821
0.1749
0.1554
0.1757
0.3156
1.3104
1.8703
0.3796
0.0325
0.9834
0.1734
0.1543
0.1766
0.3163
1.3170
1.8822
0.3814
0.0322
1.0053
-
-
-
-
-
-
-
-
1.0194
-
-
-
-
-
-
-
-
0.9966
0.1737
0.1513
0.1730
0.3117
1.2893
1.8481
0.3735
0.0320
0.9834
0.1734
0.1543
0.1766
0.3163
1.3170
1.8822
0.3814
0.0322
1.0051
-
-
-
-
-
-
-
-
1.0194
-
-
-
-
-
-
-
-
(1) Calculated by taking the average of the closing exchange rates of each day in the applicable period.
(2) Average rate for the period from February 1st, 2013 to April 30, 2013 for the 12-week period ended April 28, 2013 and from June 20, 2012 to April 30, 2013 for the 52-week
period ended April 28, 2013. Calculated using the average exchange rate at the close of each day for the stated period.
(3) As at April 30, 2013.
Considering we use the US dollar as our reporting currency, in our consolidated financial statements and in the present
document, unless indicated otherwise, results from our Canadian, European and corporate operations are translated into US
dollars using the average rate for the period. Unless otherwise indicated, variances and explanations related to variations in
the foreign exchange rate and the volatility of the Canadian dollar and European currencies which we discuss in the present
document are therefore related to the translation in US dollars of our Canadian, European and corporate operations results.
Fiscal 2013 Overview
Net earnings amounted to $572.8 million for fiscal 2013, up 25.2% over fiscal 2012 mainly due to the contribution from
acquisitions, the increased contribution of merchandise and service sales, higher road transportation fuel margins, a
decrease in the income tax rate, a non-recurring curtailment gain on pension plan obligation of $19.4 million, a non-recurring
income tax recovery of $34.7 million related to a reduction in the statutory tax rate in Sweden as well as a net foreign
exchange gain. These items, which contributed to the growth in net earnings, were partially offset by restructuring expenses
of $34.0 million, a loss of $102.9 million on foreign exchange forward contracts in relation to the acquisition of Statoil Fuel &
Retail, less favourable weather conditions in the fourth quarter of fiscal 2013 as well as by the effect of the additional week of
fiscal 2012.
Excluding from fiscal 2013 earnings the restructuring expense, the non-recurring curtailment gain on pension plan obligation,
the non-recurring income tax recovery, the non-recurring loss on foreign exchange forward contracts, the net foreign
exchange gain, acquisition costs as well as the negative goodwill and excluding from fiscal 2012 earnings the non-recurring
gain on foreign exchange forward contracts, acquisition costs and negative goodwill, fiscal 2013 net earnings would have
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 14
been approximately $620.9 million ($3.32 per share on a diluted basis) compared to $444.7 million ($2.42 per share on a
diluted basis) for fiscal 2012, an increase of $176.2 million, or 39.6%.
Acquisition of Statoil Fuel & Retail ASA (“Statoil Fuel & Retail”)
Acquisition of Statoil Fuel & Retail
On June 19, 2012, we acquired 81.2% of the 300,000,000 issued and outstanding shares of Statoil Fuel & Retail for a cash
consideration of 51.20 Norwegian Kroners (―NOK‖) per share for a total amount of NOK 12.47 billion or approximately
$2.10 billion through a voluntary public offer (the ―offer‖). From June 22, 2012 to June 29, 2012, we acquired
53,238,857 additional shares of Statoil Fuel & Retail for a cash consideration of NOK 51.20 per share, totalling
NOK 2.73 billion or approximately $0.45 billion, increasing our participation to 98.9%. Having reached a shareholding of more
than 90%, on June 29, 2012, in accordance with Norwegian laws, we initiated the compulsory acquisition of all of the
remaining Statoil Fuel & Retail shares not deposited under our offer from the holders thereof and, as a result, since such
date, we own 100% of the issued and outstanding shares of Statoil Fuel & Retail. The NOK 51.20 per share cash
consideration for the compulsory acquisition of all of the remaining shares of Statoil Fuel & Retail not deposited under our
offer was paid on July 11, 2012. The Oslo Børs Stock Exchange confirmed the delisting of the Statoil Fuel & Retail shares
effective as of the close of markets in Norway on July 12, 2012. The acquisition of the 300,000,000 issued and outstanding
shares of Statoil Fuel & Retail was therefore made for a total cash consideration of NOK 15.36 billion, or $2.58 billion. During
the 52-week periods ended April 28, 2013, we recorded to earnings transaction costs of $1.8 million, in connection with this
acquisition, which adds to transaction costs of $0.8 million recorded to fiscal 2012 earnings.
Statoil Fuel & Retail is a leading Scandinavian road transport fuel retailer with over 100 years of operations in the region.
Statoil Fuel & Retail operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics
(Estonia, Latvia, Lithuania) and Russia with approximately 2,300 sites, the majority of which offer road transportation fuel and
convenience products while the others are unmanned automated service-stations (road transportation fuel only). Statoil Fuel
& Retail has a leading position in several countries where it does business and owns the land for over 900 sites and buildings
for over 1,700 sites.
Statoil Fuel & Retail offers other products including stationary energy, marine fuel, aviation fuel, lubricants and chemicals. In
Europe, Statoil Fuel & Retail operates key fuel terminals as well as fuel depots in eight countries.
Including employees at Statoil branded franchise stations, about 18,500 people work in Statoil Fuel & Retail’s retail network
across Europe, in its corporate headquarters, in its eight regional offices, in its terminals and in its depots.
This transaction has been financed using our unsecured non-revolving acquisition credit facility (the ―acquisition facility‖)
Our results for the 12 and 52-week periods ended April 28, 2013 include those of Statoil Fuel & Retail for the period
beginning February 1st, 2013 and ending April 30, 2013 and for the period beginning June 20, 2012 and ending
April 30, 2013, respectively. Our consolidated balance sheet as of April 28, 2013 includes the balance sheet of Statoil Fuel &
Retail as of April 30, 2013, as adjusted for our purchase price allocation.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 15
The following table provides an overview of Statoil Fuel & Retail’s accounting periods that will be incorporated in our
upcoming consolidated financial statements:
Couche-Tard quarters
Statoil Fuel & Retail equivalent accounting periods
May and June 2013 and from July 1st to July 21, 2013 (1)
Statoil Fuel & Retail balance
sheet date (2)
June 30, 2013
12-week period that will end July 21, 2013
(1st quarter of fiscal 2014)
12-week period that will end October 13, 2013
(2nd quarter of fiscal 2014)
16-week period that will end February 2, 2014
(3rd quarter of fiscal 2014)
12-week period that will end April 27, 2014
(4th quarter of fiscal 2014)
From July 22 to July 31, 2013, August and September 2013 and from
October 1st to October 13, 2013 (1)
From October 14 to October 31, 2013, November and December 2013
and January 2014
February, March and April 2014
September 30, 2013
January 31, 2014
April 30, 2014
(1)
(2)
For the period from July 1st to July 21, 2013 and the period from October 1st to October 13, 2013, Statoil Fuel & Retail results will be determined according to management’s
best estimates based on the current budget and trends observed during the previous periods. Any difference between estimated results and actual results will be reported in
the next quarter results.
The consolidated balance sheet will be adjusted for significant transactions, if any, occurring between Statoil Fuel & Retail balance sheet date and Couche-Tard balance sheet
date.
We expect that the alignment of Statoil Fuel & Retail’s accounting periods with those of Couche-Tard should be made once
we have finalized replacing Statoil Fuel & Retail financial systems.
Foreign exchange forward contracts
As described above, the acquisition of Statoil Fuel & Retail was denominated in NOK whereas our acquisition facility is
denominated in US dollars. We had therefore determined that there was a risk related to fluctuations in the exchange rate
between the US dollar and the NOK as the hypothetical weakening of the US dollar against the NOK would have increased
our US dollars cash requirements in order to close the acquisition of Statoil Fuel & Retail. To mitigate this risk and because of
the lack of liquidity in the currency market for the NOK, we entered into foreign exchange forward contracts (hereinafter,
―forwards‖) with reputable financial institutions allowing us to predetermine a significant portion of the disbursement we
planned to make in US dollars for the acquisition of Statoil Fuel & Retail.
In total, from April 10, 2012 to June 12, 2012, we had entered into forwards requiring us to deliver US$3.47 billion in
exchange for NOK 20.14 billion, representing a weighted average rate of NOK 5.8082 per US dollar which was a favourable
rate compared to the rate of 5.75 in effect as at April 18, 2012, the date our offer was announced and comparable to the
average exchange rate for the last three years as demonstrated by the following graph:
Subsequently, we modified the original maturity dates of certain forwards to make them coincide with the actual disbursement
dates for the payment of Statoil Fuel & Retail shares and the repayment of certain of Statoil Fuel & Retail debts. Thus, from
June 15, 2012 to August 24, 2012, we settled all of the forwards to pay for Statoil Fuel & Retail shares and certain of its debts
(see details below).
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 16
Since, based on accounting standards, we could not apply hedge accounting, we recorded our investment in Statoil Fuel &
Retail in our consolidated balance sheet based on the exchange rates prevailing on the settlement dates of the acquisition
transaction while the changes in fair value of forwards were recorded to earnings. Cash flow wise, the sum of these two
amounts is equivalent, in all material respect, to the US dollars amount we would have paid, had the transaction taken place
on April 18, 2012, the date our offer was announced, or more specifically, at the average rate of NOK 5.8082 that we secured
with this strategy. The impact on cash is therefore the one we had predetermined by securing the exchange rate at a
favourable level compared to our modeling of the acquisition and compared to the rate at the time our offer was announced.
During fiscal 2013, we recorded to our earnings a loss of $102.9 million in relation with these forwards.
Taking into consideration the $17.0 million gain recorded in fiscal 2012 and the $102.9 million loss recorded in fiscal 2013, in
total, we realized a net loss of $85.9 million on these forwards.
Synergies and cost reduction initiatives
Since the acquisition of Statoil Fuel & Retail, we have been actively working on identifying and implementing available
synergies and cost reduction opportunities. Our analysis shows that opportunities are numerous and promising. Some can be
implemented immediately while others may take more time to implement since they require rigorous analysis and planning.
The goal is to find the right balance not to jeopardize ongoing activities and projects already underway.
During fiscal 2013, we recorded synergies and cost savings we estimate at approximately $28.0 million before income taxes.
These synergies and cost reductions mainly reduced cost of sales as well as operating, selling, administrative and general
expenses. The amount was determined by comparison with the reference period which was defined as Statoil Fuel & Retail’s
last full fiscal year previous to the acquisition (fiscal year 2011 ended December 31, 2011), but it does not necessarily
represent the full annual impact of these initiatives.
These synergies and cost reductions came from a variety of sources, such as cost reduction following the delisting of Statoil
Fuel & Retail, the renegotiation of certain agreements with our suppliers, the reduction in store costs, the restructuring of
certain departments, etc.
The synergies and costs savings we recorded during the fiscal year were more than offset by expenses incurred for projects
aimed at creating value in Europe, including the implementation of a new IT infrastructure, the rollout of an Enterprise
Resource Planning ("ERP") system and marketing costs. The implementation of the new IT infrastructure and ERP system
are aimed at making our operations more efficient and should therefore help us achieve our cost reduction goals. In June
2013, we successfully completed the first phase of the new ERP system rollout, going live in Sweden, one of our largest
business units in Europe. Preliminary results were very positive. We expect the rollout to be completed during fiscal year
2014 in all of our business units in Europe. Our IT costs, including service fees paid to Statoil ASA, Statoil Fuel & Retail’s
former parent company, should go down progressively along with the completion of these projects over the course of the next
quarters. As for marketing costs, they were incurred during the fourth quarter to support our new initiatives in Europe aimed
at boosting sales, including "milesTM", our new signature fuel brand as well as "Coin Offer", a new in-store program to
promote our value fresh food offering. The "milesTM" family of fuels differentiates itself by promising to take our customers up
to 3% further for the same price, while the "miles PLUS TM" premium offer takes them further and enhances their engines’
performance. "MilesTM" world premiere in Sweden and the Baltics in the fourth quarter attracted great consumer and media
interest, with Sweden’s leading independent motoring magazine validating our claims for the benefits of our "milesTM" fuel.
We look forward to seeing the overall results as the brand is rolled out across all our European markets during fiscal 2014.
Preliminary data show that these two these new programs seem to deliver the expected results.
Our work for the identification and implementation of available synergies and cost reduction opportunities is far from over.
Our teams continue to work actively on various projects that seem promising and which, along with the implementation of
new systems and marketing initiatives, should allow us to achieve our objectives. We therefore maintain our goal of annual
synergies ranging from $150.0 million to $200.0 million before the end of December 2015.
Restructuring
As part of our cost reduction initiatives and the search for synergies aimed at improving our efficiency, we made the decision
to proceed with the restructuring of certain activities of Statoil Fuel & Retail. As such, a restructuring provision of $34.0 million
was recorded to fiscal 2013 earnings in line with our plans and the budget process.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 17
Curtailment gain on certain defined benefits pension plans obligation
In connection with the planned restructuring of Statoil Fuel & Retail’s operations, we recorded to earnings a $19.4 million
non-recurring curtailment gain related to certain defined benefits pension plans with a corresponding offset to the defined
benefit pension plan obligation.
Foreign exchange gain
During fiscal 2013, in connection with the financing of the acquisition transaction of Statoil Fuel & Retail, we recorded a non-
recurring foreign exchange gain of $7.4 million due to NOK cash held by our U.S. operations in anticipation of the settlement
of the acquisition transaction and repayment of debts of Statoil Fuel & Retail.
Statoil Fuel & Retail debt
Change of control impact on Statoil Fuel & Retail’s bonds
At the time of the acquisition of Statoil Fuel & Retail, the later had issued and outstanding bonds amounting to
NOK 1,500.0 million (approximately $253.0 million as at June 19, 2012). According to Statoil Fuel & Retail’s bond
agreements dated February 21, 2012, the bondholders had an option to require pre-payment at par plus accrued interest
upon occurrence of a change of control event, for a period of two months. This condition was met on June 19, 2012, when we
gained control of more than 50% of Statoil Fuel & Retail. In case bondholders exercised the option to require pre-payment,
the settlement of the pre-payment had to occur within 30 business days following the date when the option was exercised.
The exercise period for the options to require pre-payment expired on August 20, 2012. We have subsequently extended the
option to require pre-payment until September 25, 2012. Since then, we have been actively working on redeeming the bonds
for which the holders have not exercised their option to require pre-payment.
As of April 28, 2013, we had redeemed Statoil Fuel & Retail’s bonds for a total of NOK 1,472.0 million (approximately
$250.0 million based on the average rate), leaving NOK 28.0 million (approximately $5.0 million) still outstanding. The
redemption of the bonds has been made using our acquisition facility, our revolving unsecured operating credit and our
available cash.
Change of control impact on Statoil Fuel & Retail’s bank facilities
According to Statoil Fuel & Retail’s bank facility agreement dated August 26, 2010, majority lenders had the right to cancel
their total commitments and declare all outstanding loans, together with accrued interest, immediately due and payable upon
occurrence of a change of control event. The cancellation had to be given by not less than 30 days’ notice to Statoil Fuel &
Retail. Majority lenders requested to have the total commitments cancelled as of August 7, 2012. Following this notification,
we had to repay the NOK 300.0 million (approximately $50.0 million) then outstanding under the revolving credit facility as
well as the NOK 2,650.0 million (approximately $448.0 million) then outstanding under the term loan at the cancellation date
on August 7, 2012. No additional drawdowns can be made under Statoil Fuel & Retail’s bank facility. Repayments have been
made using our acquisition facility and our available cash.
Disposal of the liquefied petroleum gas sales (“LPG”) operations
On December 7, 2012, we sold Statoil Fuel & Retail’s LPG operations for NOK 130.0 million (approximately $23.0 million)
before working capital adjustments. The transaction did not generate any gain or loss on disposal.
Purchase price allocation and adjustments to results previously reported
During the fourth quarter of fiscal 2013, we made adjustments to the purchase price allocation of Statoil Fuel & Retail. The
results of the first three quarters of fiscal 2013 have been adjusted assuming that the adjustments to the purchase price
allocation of Statoil Fuel & Retail had been completed at the acquisition date. In addition, we have made changes to the
classification of certain components of Statoil Fuel & Retail’s statements of earnings in order to conform to Couche-Tard’s
presentation. The following table summarizes the impact of these adjustments.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 18
Revenues – Merchandise and services – Europe
Revenues – Road transportation fuel – Europe
Revenues – Other – Europe
Total revenues
Cost of sales – Merchandise and services – Europe
Cost of sales – Road transportation fuel – Europe
Cost of sales – Other – Europe
Total cost of sales
Gross profit – Merchandise and services – Europe
Gross profit – Road transportation fuel – Europe
Gross profit – Other – Europe
Total gross profit
Operating, selling, administrative and general expenses
Depreciation, amortization and impairment of property
and equipment and other assets
Operating income
Net financial expenses
Earnings before income taxes
Income taxes
Net earnings
12-week period ended
July 22, 2012
12-week period ended
October 14, 2012
16-week period ended
February 3, 2013
Reported Adjustments
Adjusted
Reported Adjustments Adjusted
Reported Adjustments Adjusted
32.1
221.8
109.1
(0.6)
-
-
31.5
221.8
109.1
283.6
2,216.6
885.0
(30.8)
252.8
102.1
2,318.7
(90.4)
794.6
372.2
2,999.8
1,058.9
(36.9)
335.3
(65.9)
2,933.9
6.9
1,065.8
6,021.5
(0.6)
6,020.9
9,315.7
(19.1)
9,296.6
11,573.7
(95.9) 11,477.8
19.9
194.6
100.8
(0.6)
-
-
19.3
194.6
100.8
174.0
1,978.6
791.8
(28.3)
145.7
217.6
(30.8)
186.8
118.3
2 096.9
2,705.6
(45.6)
2,660.0
(96.5)
695.3
945.0
(3.5)
941.5
5,162.5
(0.6)
5,161.9
8,148.3
(6.5)
8,141.8
10,082.1
(79.9) 10,002.2
12.2
27.2
8.3
859.0
549.1
66.1
615.2
243.8
121.7
127.3
24.4
102.9
-
-
-
-
(0.1)
-
(0.1)
0.1
0.1
-
-
-
12.2
27.2
8.3
859.0
549.0
66.1
615.1
243.9
121.8
127.3
24.4
102.9
109.6
238.0
93.2
1,167.4
801.5
143.3
944.8
222.6
14.7
211.6
36.4
175.2
(2.5)
(16.2)
6.1
107.1
221.8
99.3
(12.6)
1,154.8
(12.3)
789.2
(9.0)
(21.3)
8.7
1.2
7.5
1.4
6.1
134.3
923.5
231.3
15.9
219.1
37.8
181.3
154.6
294.2
113.9
1,491.6
1,100.1
182.2
1,282.3
209.3
49.4
163.8
21.3
142.5
(6.1)
(20.3)
10.4
148.5
273.9
124.3
(16.0)
1,475.6
(16.0)
1,084.1
0.4
182.6
(15.6)
1,266.7
(0.4)
208.9
-
(0.4)
(0.1)
(0.3)
49.4
163.4
21.2
142.2
24-week period ended
October 14, 2012
40-week period ended
February 3, 2013
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
Revenues – Merchandise and services – Europe
315.7
(31.4)
284.3
682.4
(62.8)
619.6
Revenues – Road transportation fuel – Europe
2,438.4
102.1
2,540.5
5,535.3
(60.9)
5,474.4
Revenues – Other – Europe
Total revenues
994.1
(90.4)
903.7
1,955.9
13.6
1,969.5
15,337.2
(19.7)
15,317.5
26,905.4
(110.1)
26,795.3
Cost of sales – Merchandise and services – Europe
193.9
(28.9)
165.0
406.0
(54.2)
351.8
Cost of sales – Road transportation fuel – Europe
2,173.2
118.3
2,291.5
4,976.2
(24.7)
4,951.5
Cost of sales – Other – Europe
Total cost of sales
892.6
(96.5)
796.1
1,740.2
(2.6)
1,737.6
13,310.8
(7.1)
13,303.7
23,387.4
(81.5)
23,305.9
Gross profit – Merchandise and services – Europe
121.8
(2.5)
119.3
276.4
(8.6)
267.8
Gross profit – Road transportation fuel – Europe
265.2
(16.2)
249.0
559.1
(36.2)
522.9
Gross profit – Other – Europe
Total gross profit
101.5
6.1
107.6
215.7
16.2
231.9
2,026.4
(12.6)
2,013.8
3,518.0
(28.6)
3,489.4
Operating, selling, administrative and general expenses
1,350.6
(12.4)
1,338.2
2,451.0
(28.7)
2,422.3
Depreciation, amortization and impairment of property and
equipment and other assets
Operating income
Net financial expenses
209.4
(9.0)
200.4
382.4
0.6
383.0
1,560.0
(21.4)
1,538.6
2,833.4
(28.1)
2,805.3
466.4
8.8
475.2
684.6
(0.5)
684.1
136.4
1.3
137.7
187.0
0.1
187.1
Earnings before income taxes
338.9
7.5
346.4
510.4
(0.6)
509.8
Income taxes
Net earnings
60.8
1.4
62.2
83.5
(0.1)
83.4
278.1
6.1
284.2
426.9
(0.5)
426.4
We continue to work on some items, including the review of the remaining useful life of certain assets. Thus, the depreciation
of property and equipment could be subsequently adjusted to reflect the results of this work.
Network growth
Completed transactions
In May 2012, we acquired 20 company-operated stores operating in Texas, United States from Signature Austin Stores. We
lease the real estate for all sites.
In August 2012, we acquired, from Florida Holding LLC, 29 company-operated stores operating in Florida, United States. We
own the land and building for 24 sites while we lease the land and own the building for the other sites. In addition, one road
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 19
transportation fuel supply agreement for a store owned and operated by an independent operator was transferred to the
Corporation.
In November 2012, we acquired, from Sun Pacific Energy, 27 company-operated stores operating in Washington State,
United States. We own the land and building for 26 sites while we lease these assets for the other site.
In November 2012, we acquired, from Davis Oil Company, seven company-operated stores operating in Georgia, United
States. We own the land and building for all sites.
In December 2012, we acquired, from Kum & Go L.C., seven company-operated stores operating in Oklahoma, United
States. We lease the land and building for all sites.
In February 2013, we purchased 29 company-operated stores located in Illinois, Missouri and Oklahoma, United States from
Dickerson Petroleum Inc. We own the land and building for 25 sites while we lease the land and own the buildings for the
other sites. We were also transferred road transportation fuel supply agreements for 21 sites, of which 20 are owned and
operated by independent operators and one is leased by the Corporation and operated by an independent operator.
During fiscal 2013, under the June 2011 agreement with ExxonMobil, we acquired four stores operated by independent
operators for which we own the land and building. In addition, 23 road transportation fuel supply agreements were transferred
to us during this period.
In addition, during fiscal 2013, we acquired 32 additional company-operated stores through distinct transactions.
Subsequent to fiscal year 2013, under the June 2011 agreement with ExxonMobil, we acquired 60 stores operated by
independent operators along with the related road transportation fuel supply agreements and for which we own the real
estate. Additionally we were transferred six road transportation fuel supply agreements after.
Available cash was used for these acquisitions.
Store construction
During the fourth quarter of fiscal 2013, we completed the construction of eight new company-operated stores for a total of
47 new stores during fiscal 2013.
Summary of changes in our stores network during the fourth quarter and fiscal year ended April 28, 2013
The following table presents certain information regarding changes in our stores network over the 12-week period ended
April 28, 2013 (1):
Type of site
Number of sites, beginning of period
Acquisitions
Openings / constructions / additions
Closures / disposals / withdrawals
Conversions into Company-operated stores
Conversions into affiliated stores
Number of sites, end of period
Number of automated service stations included in the
period end figures (6)
Company-
operated (2)
6,216
31
8
(30)
13
(3)
6,235
921
12-week period ended April 28, 2013
CODO (3)
DODO (4)
Franchised and
other affiliated (5)
584
2
3
(1)
(11)
2
579
-
459
20
7
(6)
(2)
-
478
34
Total
8,467
53
71
1,208
-
53
(168)
(205)
-
1
-
-
1,094
8,386
-
955
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 20
The following table presents certain information regarding changes in our stores network over the 52-week period ended
April 28, 2013 (1):
Type of site
Number of sites, beginning of period
Acquisitions
Openings / constructions / additions
Closures / disposals / withdrawals
Conversions into Company-operated stores
Conversions into affiliated stores
Number of sites, end of period
52-week period ended April 28, 2013
Company-
operated (2)
CODO (3)
DODO (4)
Franchised and
other affiliated (5)
4,539
1,737
47
(114)
31
(5)
6,235
161
461
4
(25)
(24)
2
579
189
308
28
(42)
(7)
2
478
Total
6,153
2,506
225
(498)
-
-
1,264
-
146
(317)
-
1
1,094
8,386
(1) These figures include 50% of the stores operated through RDK, a joint venture.
(2) Sites for which the real estate is controlled by Couche-Tard (through ownership or lease agreements) and for which the stores (and/or the service-stations) are operated by
Couche-Tard or one of its commission agent.
(3) Sites for which the real estate is controlled by Couche-Tard (through ownership or lease agreements) and for which the stores (and/or the service-stations) are operated by an
independent operator in exchange for rent and to which Couche-Tard supplies road transportation fuel though supply contracts. Some of these sites are subject to a franchise
agreement, licensing or other similar agreement under one of our main or secondary banners.
(4) Sites controlled and operated by independent operators to which Couche-Tard supplies road transportation fuel through supply contracts. Some of these sites are subject to a
franchise agreement, licensing or other similar agreement under one of our main or secondary banners.
(5) Stores operated by an independent operator through a franchising, licensing or another similar agreement under one of our main or secondary banners.
(6) These sites sell road transportation fuel only.
In addition to the stores above, under licensing agreements, about 4,190 stores are operated under the Circle K banner in ten
other countries worldwide (China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Mexico, Vietnam and United
Arab Emirates), which brings to more than 12,500 the number of sites in our network.
Issuance of Canadian dollar denominated senior unsecured notes
On November 1st, 2012, we issued Canadian dollar denominated senior unsecured notes totalling CA$1.0 billion, divided into
three tranches:
Notional amount (millions)
Maturity
Coupon rate
Tranche 1
Tranche 2
Tranche 3
CA$300.0
CA$450.0
CA$250.0
November 1st, 2017
November 1st, 2019
November 1st, 2022
2.861%
3.319%
3.899%
Interest is payable semi-annually on May 1st and November 1st of each year and the notional amount will be reimbursed at
the maturity of each tranche.
In addition to allowing us to spread the maturities of a portion of our long-term debt, this issuance allows us to secure the
interest rate of a portion of our long-term debt at favourable rates.
The net proceeds from the issuance, which were approximately CA$995.0 million ($997.5 million), were used to repay a
portion of our acquisition facility.
Cross-currency interest rate swaps
On November 1st, 2012, in order to manage our currency risk, we entered into cross-currency interest rate swap agreements
for a total notional amount of CA$1.0 billion, allowing us to synthetically convert our Canadian dollar denominated senior
unsecured notes into US dollars as well as to exchange interest payments on the notional amounts, which, on a net basis,
provides us with financing at even more favourable conditions than those we secured through the issuance of the Canadian
dollar denominated senior unsecured notes.
Receive – Notional (millions)
CA$300.0
CA$125.0
CA$20.0
CA$305.0
CA$125.0
CA$125.0
Receive – Rate
2.861%
3.319%
3.319%
3.319%
3.899%
3.899%
Pay – Notional (millions)
US$300.7
US$125.4
US$20.1
US$305.9
US$125.4
US$125.4
Pay – Rate
2.0340%
2.7325%
2.7375%
2.7400%
3.4900%
3.4925%
Maturity
November 1st, 2017
November 1st, 2019
November 1st, 2019
November 1st, 2019
November 1st, 2022
November 1st, 2022
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 21
We have identified and documented the cross-currency interest rate swap agreements as foreign exchange hedges of our
net investment in our U.S. operations. According to the related accounting treatment, the changes in fair value of the swap
agreements as well as the difference between interests received and interests paid are included in other comprehensive
income rather than in the consolidated statement of earnings.
Income tax recovery
During the fourth quarter of fiscal 2013, we recorded a $34.7 million income tax recovery related to the effect on deferred
income taxes of a decrease in our statutory income tax rate in Sweden.
Share issuance
On August 14, 2012, we issued 7,302,500 Class B subordinate voting shares at a price of CA$47.25 per share, for gross
proceeds of approximately CA$345.0 million ($347.9 million).
The net proceeds of the issuance, CA$330.0 million ($333.4 million), were mainly used to repay a portion of our revolving
unsecured operating credits then outstanding.
Share repurchase programs
We had a share repurchase program which allowed us to repurchase up to 2,684,420 Class A multiple voting shares and up
to 11,126,400 Class B subordinate voting shares issued and outstanding as at October 11, 2011. The program expired on
October 24, 2012. We did not repurchase any share under this program during fiscal 2013.
Dividends
During its July 9, 2013 meeting, the Corporation’s Board of Directors declared a quarterly dividend of CA$0.075 per share for
the fourth quarter of fiscal 2013 to shareholders on record as at July 18, 2013 and approved its payment for August 1st, 2013.
This is an eligible dividend within the meaning of the Income Tax Act of Canada.
During fiscal 2013, the Board declared total dividends averaging CA$0.3 per share.
Outstanding shares and stock options
As at July 5, 2013, Couche-Tard had 49,367,280 Class A multiple voting shares and 138,214,034 Class B subordinate voting
shares issued and outstanding. In addition, as at the same date, Couche-Tard had 2,232,620 outstanding stock options for
the purchase of Class B subordinate voting shares.
Statement of Earnings Categories
Merchandise and Service Revenues. In-store merchandise revenues are comprised primarily of the sale of tobacco products,
fresh food offerings, including quick service restaurants, beer/wine, grocery items, candy, snacks and various beverages.
Merchandise sales in Europe also include wholesale of merchandise and goods to certain independent operators and
franchisees made from our distribution center. Service revenues include fees from automatic teller machines, sales of calling
cards and gift cards, revenues from car washes, the commission on sale of lottery tickets and issuance of money orders, fees
for cashing cheques as well as sales of postage stamps and bus tickets. Service revenues also include franchise fees,
license fees from affiliates and royalties from franchisees.
Road Transportation Fuel Revenues. We include in our revenues the total dollar amount of road transportation fuel sales,
including any imbedded taxes when they are included in the purchase price, if we take ownership of the road transportation
fuel inventory. In the United States and in Europe, in some instances, we purchase road transportation fuel and sell it to
certain independent store operators at cost plus a mark-up. We record the full value of these revenues (cost plus mark-up) as
road transportation fuel revenues. Where we act as a selling agent for a petroleum distributor, only the commission we earn
is recorded as revenue.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 22
Other Income. Other income includes the sale of stationary energy, marine and aviation fuel, lubricants and chemical
products. Other income also includes rent revenue from operating leases for certain land and buildings we own as well as car
rental revenues.
Gross Profit. Gross profit consists mainly of revenues less the cost of merchandise and road transportation fuel sold. Cost of
sales is mainly comprised of the specific cost of merchandise and road transportation fuel sold, including applicable freight
less vendor rebates. For in-store merchandise, the cost of inventory is generally determined using the retail method (retail
price less a normal margin), and for road transportation fuel, it is generally determined using the average cost method. The
road transportation fuel gross margin for stores generating commissions corresponds to the sales commission.
Operating, Selling, Administrative and General Expenses. The primary components of operating, selling, administrative and
general expenses are labour, net occupancy costs, electronic payment modes fees, commissions to dealers and overhead.
Key performance indicators used by management, which can be found under ―Analysis of consolidated results for the fiscal
year ended April 28, 2013 - Other Operating Data‖, are merchandise and service gross margin, growth of same-store
merchandise revenues, road transportation fuel gross margin and growth of same-store road transportation fuel volume,
return on equity and return on capital employed.
Summary analysis of consolidated results for the fourth quarter of
fiscal 2013
The following table highlights certain information regarding our operations for the 12 and 13-week periods ended
April 28, 2013 and April 29, 2012, respectively:
(In millions of US dollars, unless otherwise stated)
12-week period ended
April 28, 2013
13-week period ended
April 29, 2012
Revenues
Operating income
Net earnings
Selected Operating Data:
Merchandise and service gross margin (1):
Consolidated
United States
Europe
Canada
Growth of same-store merchandise revenues (2) (3) (4):
United States
Canada
Road transportation fuel gross margin (3):
United States (cents per gallon)
Europe (cents per litre)
Canada (CA cents per litre)
Growth (decrease) of same-store road transportation fuel volume (3) (4):
United States
Canada
8,776.0
154.6
146.4
34.6%
32.7%
46.2%
33.1%
0.1%
0.9%
19.30
9.83
6.01
1.1%
(1.4%)
6,055.7
138.0
117.8
32.8%
32.8%
-
32.9%
3.4%
5.4%
16.98
-
5.60
0.2%
0.1%
Change %
44.9
(2.0)
24.3
1.8
(0.1)
-
0.2
(3.3)
(4.5)
13.7
-
7.3
0.9
(1.5)
(1) Includes other revenues derived from franchise fees, royalties and rebates on some purchases made by franchisees and licensees.
(2) Does not include services and other revenues (as described in footnote 1 above). Growth in Canada is calculated based on Canadian dollars.
(3) For company-operated stores only.
(4) On a 12-week comparable basis.
Revenues
Our revenues were $8.8 billion in the fourth quarter of fiscal 2013, up $2.7 billion, an increase of 44.9%, mainly attributable to
acquisitions. This item contributing to the growth in revenues was partially offset by the unfavourable weather conditions in
several of our markets, the negative impact of the 13th week in the fourth quarter of 2012, a lower road transportation fuel
average retail price at the pump and by a weaker Canadian dollar.
More specifically, the growth of merchandise and service revenues for the fourth quarter of fiscal 2013 was $150.8 million or
9.3%, of which approximately $278.0 million was generated by acquisitions, partially offset by the impact of the 13th week in
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 23
the fourth quarter of 2012. As for internal growth, on a 12-week comparable basis, same-store merchandise revenues
increased by 0.1% in the United States and 0.9% in Canada despite the unfavourable weather conditions in several of our
markets. The increase in same-store merchandise sales is attributable to our merchandising strategies, to the economic
conditions in each of our markets as well as to the investments we made to enhance service and the offering of products in
our stores. More specifically, in the U.S., for the cigarettes category, the changes made to the supply terms of the industry
and to our pricing strategies as well as the competitive environment had an unfavourable impact on our sales for that product
category because of their deflationary effect. Thus, we estimate that excluding tobacco products sales, our same-store
merchandise revenues in the United States increased by 2.0% on a 12-week comparable basis. The negative impact in the
cigarettes category was offset by the nice performance in fresh products. As for the weaker Canadian dollar, it had an
unfavourable impact of approximately $12.0 million on merchandise and service revenues of the fourth quarter of fiscal 2013.
Road transportation fuel revenues increased by $1.9 billion or 42.1% in the fourth quarter of fiscal 2013, of which
approximately $2.2 billion stems from acquisitions, partially offset by the impact of the 13th week in the fourth quarter of
2012. In the United States, same-store road transportation fuel volume increased by 1.1% while it decreased by 1.4% in
Canada. Volume growth in the United States is satisfactory when compared with data from the U.S. Federal Highway
Administration’s Traffic Volume Trends reports which indicate that, in February and March 2013, traffic on the roads and
streets decreased by 1.4% and 1.5% respectively, compared with February and March 2012 while it increased by 1.2% in
April 2013 compared with April 2012.
The lower average retail price of road transportation fuel generated a decrease in revenues of approximately $128.0 million
as shown in the following table, starting with the first quarter of the fiscal year ended April 29, 2012:
Quarter
52-week period ended April 28, 2013
United States (US dollars per gallon)
Canada (CA cents per litre)
53-week period ended April 29, 2012
United States (US dollars per gallon)
Canada (CA cents per litre)
1st
2nd
3rd
4th
Weighted
average
3.49
112.62
3.67
114.08
3.65
117.41
3.49
112.90
3.35
110.43
3.31
109.88
3.61
115.65
3.73
117.05
3.51
113.77
3.54
113.27
As for the weaker Canadian dollar, it had an unfavourable impact of approximately $16.0 million on road transportation fuel
sales of the fourth quarter of fiscal 2013.
Other income showed an increase of $699.2 million for the fourth quarter of fiscal 2013, due entirely to acquisitions. Other
revenues include revenue from rental of assets, from sale of aviation and marine fuel, heating oil, kerosene, lubricants and
chemicals.
Gross profit
The consolidated merchandise and service gross margin grew by $81.6 million or 15.4% in the fourth quarter of fiscal 2013.
In the United States, the gross margin is down 0.1% to 32.7% while in Canada, it increased by 0.2% to 33.1%. This
performance reflects changes in the product-mix, the changes we brought to our supply terms as well as our merchandising
strategy in line with market competitiveness and economic conditions within each market. More specifically, in the United
States, the slight decrease in the margin as a percentage of sales reflects the impact of our pricing strategies in the cigarettes
category, partially offset by a shift in product mix towards higher margin categories, including fresh products. In Europe, the
margin was 46.2%, which is in line with our expectations and historical margins recorded by Statoil Fuel & Retail at this time
of the year. The higher merchandise and service gross margin as a percentage of sales in Europe reflects price and cost
structures as well as a revenue mix that are different from those in North America.
In the fourth quarter of fiscal 2013, the road transportation fuel gross margin for our company-operated stores in the United
States increased by 2.32¢ per gallon, from 16.98¢ per gallon last year to 19.30¢ per gallon this year. In Canada, the gross
margin increased to CA6.01¢ per litre compared with CA5.60¢ per litre for the fourth quarter of fiscal 2012. The road
transportation fuel gross margin of our company-operated stores in the United States as well as the impact of expenses
related to electronic payment modes for the last eight quarters, starting with the first quarter of fiscal year ended
April 29, 2012, were as follows:
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 24
(US cents per gallon)
Quarter
52-week period ended April 28, 2013
1st
2nd
3rd
4th
Weighted
average
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
53-week period ended April 29, 2012
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
23.20
4.97
18.23
19.95
5.29
14.66
15.20
5.15
10.05
17.04
5.20
11.84
17.80
4.79
13.01
14.84
4.74
10.10
19.30
18.77
5.03
4.97
14.27
13.80
16.98
5.06
11.92
16.99
5.04
11.95
Operating, selling, administrative and general expenses
For the fourth quarter of fiscal 2013, operating, selling, administrative and general expenses rose by 52.5% compared with
the fourth quarter of fiscal 2012, but they decreased by 5.5%, if we exclude certain items, as demonstrated by the following
table:
Total variance as reported
Subtract:
Increase from incremental expenses related to acquisitions
Decrease from lower electronic payment fees, excluding acquisitions
Negative goodwill recognized to earnings of fiscal 2012
Negative goodwill recognized to earnings of fiscal 2013
Decrease from the weaker Canadian dollar
Acquisition costs recognized to earnings of fiscal 2012
Acquisition costs recognized to earnings of fiscal 2013
Remaining variance, including the impact of the additional week in the fourth quarter of fiscal 2012
12-week period ended
April 28, 2013
52.5%
59.5%
(0.9%)
1.1%
(0.6%)
(0.7%)
(0.5%)
0.1%
(5.5%)
The decrease in electronic payment fees stems mainly from the decrease in the average retail price of road transportation
fuel. The remaining variance is mainly due to the impact of the additional week in the fourth quarter of fiscal 2012. We
continue to favour a tight control of our costs throughout the organization while making sure to maintain the quality of the
service we offer our clients.
In Europe, the decrease in expenses recorded in relation with our cost reduction initiatives were more than offset by costs
incurred for projects aimed at creating value, including the implementation of a new IT infrastructure and the rollout of an
Enterprise Resource Planning ("ERP") system. Our IT costs should go down progressively along with the completion of these
projects over the course of the next quarters. Expenses of the quarter also include marketing costs to support our sales
initiatives to boost sales in Europe, including "milesTM", our new signature fuel brand as well as "Coin Offer", a new in-store
program to promote our value fresh food offering.
Restructuring
In the fourth quarter of fiscal 2013, we recorded to earnings restructuring expenses of $34.0 million in line with the planned
restructuring of Statoil Fuel & Retail’s operations.
Curtailment gain on certain defined benefits pension plans obligation
During the fourth quarter of fiscal 2013, in connection with the planned restructuring of Statoil Fuel & Retail’s operations, we
recorded to earnings a $19.4 million non-recurring curtailment gain related to certain defined benefits pension plans with a
corresponding offset to the defined benefit plan accrued benefit obligation.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 25
Earnings before interests, taxes, depreciation, amortization and impairment (EBITDA)
and adjusted EBITDA
During the fourth quarter of fiscal 2013, EBITDA increased by 45.2% compared to the corresponding period of the previous
fiscal year, reaching $295.7 million. Net of acquisition costs recorded to earnings, acquisitions contributed $80.0 million to
EBITDA, while the exchange rate variation had a negative impact of approximately $1.0 million.
Excluding the restructuring expenses as well as the curtailment gain on certain defined benefits pension plans obligation
recorded during the fourth quarter of fiscal 2013, adjusted EBITDA increased by $106.7 million or 52.4% compared to the
corresponding period of the previous fiscal year, reaching $310.3 million.
It should be noted that EBITDA and adjusted EBITDA are not performance measures defined by IFRS, but we, as well as
investors and analysts, use these measures to evaluate the Corporation’s financial and operating performance. Note that our
definition of these measures may differ from the one used by other public corporations:
(in millions of US dollars)
Net earnings, as reported
Add:
Income taxes
Net financial expenses (revenues)
Depreciation and amortization and impairment of property and equipment and other assets
EBITDA
Add:
Restructuring costs
Curtailment gain on defined benefits pension plans obligation
Adjusted EBITDA
12-week period ended
April 28, 2013
13-week period ended
April 29, 2012
146.4
(9.5)
20.7
138.1
295.7
34.0
(19.4)
310.3
117.8
36.5
(12.9)
62.2
203.6
-
-
203.6
Depreciation, amortization and impairment of property and equipment and other assets
For the fourth quarter of fiscal 2013, depreciation, amortization and impairment expense increased due to the investments
made through acquisitions, replacement of equipment, addition of new stores and ongoing improvement of our network.
In addition, following the acquisition of Statoil Fuel & Retail, we have undertaken an analysis of the remaining useful lives of
Statoil Fuel & Retail property and equipment in order to modify the depreciation periods accordingly. Based on our
preliminary analysis, we concluded that the modification of depreciation periods would reduce the depreciation expense,
which was reflected in the depreciation expense for the fourth quarter of fiscal 2013. However, given the volume of assets to
process, our analytical work has not been completed yet. Additional changes to the depreciation expense could be made.
Net financial expenses
The fourth quarter of fiscal 2013 shows net financing expenses of $20.7 million, an increase of $33.6 million compared to the
fourth quarter of fiscal 2012. Excluding a net foreign exchange gain of $6.8 million recorded in the fourth quarter of 2013 and
excluding the non-recurring gain of $17.0 million recorded on foreign exchange forward contracts in the fourth quarter of
fiscal 2012, the increase in net financing expenses is $23.4 million. The increase is mainly due to the additional debt required
to finance the acquisition of Statoil Fuel & Retail and debt assumed through its acquisition. With respect to the net foreign
exchange gain of $6.8 million, it is mainly due to the impact of the exchange rate fluctuations on certain inter-company
balances as well as to the impact of exchange rates fluctuations on U.S. dollars denominated sales made by our European
operations.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 26
Income taxes
The fourth quarter of fiscal 2013 shows an income tax recovery of $9.5 million, compared to an income tax expense of
$36.5 million for the corresponding quarter of the previous year. The income tax recovery in the fourth quarter of fiscal 2013
stems mainly from the effect on deferred income taxes of a decrease in our statutory income tax rate in Sweden.
Excluding this item, the income tax rate for the fourth quarter of fiscal 2013 would have been 18.4% compared to a rate of
23.7% for the corresponding quarter of the previous year.
Net earnings
We closed the fourth quarter of fiscal 2013 with net earnings of $146.4 million, compared to $117.8 million the previous fiscal
year, an increase of $28.6 million or 24.3%. Diluted net earnings per share stood at $0.77 compared to $0.65 the previous
year, an increase of 18.5%. The exchange rate variation did not have a significant impact on net earnings of the fourth
quarter of fiscal 2013.
Excluding from net earnings of the fourth quarter of fiscal 2013 the restructuring expenses, the non-recurring curtailment gain
on defined benefits pension plans obligation, acquisition costs, the non-recurring income tax recovery, the negative goodwill
as well as the net foreign exchange gain and excluding from the fourth quarter of fiscal 2012 the non-recurring gain on
foreign exchange contracts, acquisition costs as well as the negative goodwill, net earnings for the fourth quarter 2013 would
have stood at approximately $115.5 million ($0.61 per share on a diluted basis) compared to $102.4 million ($0.57 per share
on a diluted basis) in the fourth quarter of fiscal 2012, up $13.1 million, or 12.8%, despite the negative impact of the
additional week in the fourth quarter of fiscal 2012.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 27
Analysis of consolidated results for the fiscal year ended April 28, 2013
The following table highlights certain information regarding our operations for the 52-week periods ended April 28, 2013 and
April 24, 2011 and for the 53-week period ended April 29, 2012:
(In millions of US dollars, unless otherwise stated)
2013 – 52 weeks
2012 – 53 weeks
2011 – 52 weeks
Statement of Operations Data:
Merchandise and service revenues (1):
United States
Europe
Canada
Total merchandise and service revenues
Road transportation fuel revenues:
United States
Europe
Canada
Total road transportation fuel revenues
Other revenues (2):
United States
Europe
Canada
Total other revenues
Total revenues
Merchandise and service gross profit (1):
United States
Europe
Canada
Total merchandise and service gross profit
Road transportation fuel gross profit:
United States
Europe
Canada
Total road transportation fuel gross profit
Other revenues gross profit (2):
United States
Europe
Canada
Total other revenues gross profit
Total gross profit
Operating, selling, administrative and general expenses
Restructuring costs
Curtailment gain on defined benefits pension plans obligation
Depreciation, amortization and impairment of property and equipment and other assets
Operating income
Net earnings
Other Operating Data:
Merchandise and service gross margin (1):
Consolidated
United States
Europe
Canada
Growth of same-store merchandise revenues (3) (4) (5):
United States
Canada
Road transportation fuel gross margin :
United States (cents per gallon) (4) (5)
Europe (cents per litre) (6)
Canada (CA cents per litre) (4) (5)
4,548.6
866.1
2,181.7
7,596.4
14,872.6
7,537.9
2,860.8
25,271.3
6.6
2,668.6
0.5
2,675.7
35,543.4
1,505.9
381.6
733.0
2,620.5
782.5
719.1
162.6
1,664.2
6.6
317.8
0.5
324.9
4,609.6
3,235.2
34.0
(19.4)
521.1
838.7
572.8
34.5%
33.1%
44.1%
33.6%
1.0%
2.0%
18.77
9.88
5.84
4,408.0
-
2,190.9
6,598.9
13,650.5
-
2,724.9
16,375.4
5.5
-
0.5
6.0
4,133.6
-
2,049.9
6,183.5
10,205.7
-
2,148.2
12,353.9
5.4
-
0.5
5.9
22,980.3
18,543.3
1,452.6
-
729.8
2,182.4
637.9
-
148.8
786.7
5.5
-
0.5
6.0
2,975.1
2,155.6
-
-
239.8
579.7
457.6
33.1%
33.0%
-
33.3%
2.7%
2.8%
16.99
-
5.45
1,369.8
-
702.9
2,072.7
537.3
-
135.7
673.0
5.4
-
0.5
5.9
2,751.6
2,033.3
-
-
213.7
501.6
369.2
33.5%
33.1%
-
34.3%
4.2%
1.8%
15.54
-
5.38
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 28
(In millions of US dollars, unless otherwise stated)
2013 – 52 weeks
2012 – 53 weeks
2011 – 52 weeks
Volume of road transportation fuel sold (6):
United States (millions of gallons)
Europe (millions of litres)
Canada (millions of litres)
Growth of (decrease in) same-store road transportation fuel volume (4):
United States
Canada
Per Share Data:
Basic net earnings per share (dollars per share)
Diluted net earnings per share (dollars per share)
Balance Sheet Data:
Total assets
Interest-bearing debt
Shareholders’ equity
Indebtedness Ratios:
Net interest-bearing debt/total capitalization (7)
Net interest-bearing debt/Adjusted EBITDA (8)
Adjusted net interest bearing debt/Adjusted EBITDAR (10)
Returns:
Return on equity (11)
Return on capital employed (12)
4,276.2
7,281.1
2,819.9
0.6%
0.0%
3.10
3.07
3,896.2
-
2,713.5
0.1%
(0.9%)
2.54
2.49
3,517.7
-
2,565.4
0.7%
3.9%
2.00
1.96
April 28, 2013
April 29, 2012
April 24, 2011
10,546.2
3,605.1
3,216.7
0.48 : 1
1.98 : 1 (9)
3.05 : 1 (9)
21.5% (9)
11.0% (9)
4,376.8
665.2
2,174.6
0.14 : 1
0.43 : 1
2.10 : 1
22.0%
19.0%
3,838.1
501.5
1,979.4
0.09 : 1
0.26 : 1
2.09 : 1
20.3%
18.1%
Includes revenues derived from franchise fees, royalties, suppliers rebates on some purchases made by franchisees and licensees as well as merchandise wholesale.
Includes revenues from rental of assets, from sale of aviation and marine fuel, liquefied petroleum gas ("LPG"), heating oil, kerosene, lubricants and chemicals.
Does not include services and other revenues (as described in footnote 1 above). Growth in Canada is calculated based on Canadian dollars.
For company-operated stores only.
(1)
(2)
(3)
(4)
(5) On a comparable 52-week basis.
(6)
(7)
Total road transportation fuel.
This ratio is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: long-
term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by the addition of shareholders’ equity and long-term debt, net of cash and cash
equivalents and temporary investments. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other
public corporations.
This ratio is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: long-
term interest-bearing debt, net of cash and cash equivalents and temporary investments divided by EBITDA (Earnings Before Interest, Tax, Depreciation, Amortization and
Impairment) adjusted for restructuring expenses and curtailment gain on certain defined benefits pension plans obligation. It does not have a standardized meaning prescribed by
IFRS and therefore may not be comparable to similar measures presented by other public corporations.
This ratio is presented on a pro forma basis. It includes Couche-Tard’s results for fiscal year ended April 28, 2013 as well as Statoil Fuel & Retail’s results for the 12-month period
ended April 30, 2013. Statoil Fuel & Retail balance sheet and earnings have been adjusted to make their presentation in line with Couche-Tard’s policies and for fair value adjustments
to assets acquired, including goodwill, and to liabilities assumed.
(8)
(9)
(10) This ratio is presented for information purposes only and represents a measure of financial condition used especially in financial circles. It represents the following calculation: long-
term interest-bearing debt plus the product of eight times rent expense, net of cash and cash equivalents and temporary investments divided by EBITDAR (Earnings Before Interest,
Tax, Depreciation, Amortization, Impairment and Rent expense) adjusted for restructuring costs as well as curtailment gain on certain defined benefits pension plans obligation. It
does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
(11) This ratio is presented for information purposes only and represents a measure of performance used especially in financial ci rcles. It represents the following calculation: net earnings
divided by average equity for the corresponding period. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures
presented by other public corporations.
(12) This ratio is presented for information purposes only and represents a measure of performance used especially in financial circles. It represents the following calculation: earnings
before income taxes and interests divided by average capital employed for the corresponding period. Capital employed represents total assets less short-term liabilities not bearing
interests. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
Revenues
Our revenues were $35.5 billion in fiscal 2013, up $12.6 billion, or 54.7%, mainly attributable to acquisitions and to the
increase in same-stores merchandise revenues and road transportation fuel volumes, partially offset by the effect of the
53rd week of fiscal year 2012, by the impact of a decrease in road transportation fuel sales due to lower average retail prices
at the pump, unfavourable weather conditions during the fourth quarter in many of our markets as well as by the weaker
Canadian dollar.
More specifically, the growth of merchandise and service revenues for fiscal 2013 was $997.5 million or 15.1%, of which
approximately $1,049.0 million was generated by acquisitions, partially offset by the negative impact of the additional week in
fiscal 2012. As for internal growth, on a 52-week comparable basis, same-store merchandise revenues increased by 1.0% in
the United States and 2.0% in Canada. For the Canadian and U.S. markets, the variance in same-store merchandise sales is
attributable to our merchandising strategies, to the economic conditions in each of our markets as well as to the investments
we made to enhance service and the offering of products in our stores. More specifically, in the U.S., for the cigarettes
category, the changes made to the supply terms of the industry and to our pricing strategies as well as the competitive
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 29
environment had an unfavourable impact on our sales for that product category because of their deflationary effect. Thus, we
estimate that excluding tobacco products sales, our same-store merchandise revenues in the United States increased by
3.4% on a 52-week comparable basis, the negative impact in the cigarettes category having been more than offset by the
strong performance in fresh products. The growth in sales was partially offset by the effect of the additional week in fiscal
year 2012. As for the weaker Canadian dollar, it had an unfavourable impact of approximately $19.0 million on merchandise
and service revenues of fiscal 2013.
Road transportation fuel revenues increased by $8.9 billion or 54.3% in fiscal 2013, of which approximately $9.1 billion stems
from acquisitions, partially offset by the negative impact of the additional week in fiscal 2012. The still fragile economy has
continued to put pressure on road transportation fuel consumption, which can explain the flat same-store road transportation
fuel volume in Canada as well as the modest increase of 0.6% in the United States. Volume growth in the United States is
satisfactory when compared with data from the U.S. Federal Highway Administration’s Traffic Volume Trends reports which
indicate that, from May 2012 to April 2013, traffic on the roads and streets decreased by 0.1% compared with the
corresponding prior period. These items contributing to the growth in revenues were partially offset by the impact of the
additional week in fiscal 2012 as well as by the lower average road transportation fuel price at the pump.
The lower average retail price of road transportation fuel generated a decrease in revenues of approximately $68.0 million as
shown in the following table, starting with the first quarter of the fiscal year ended April 29, 2012:
Quarter
52-week period ended April 28, 2013
United States (US dollars per gallon)
Canada (CA cents per litre)
53-week period ended April 29, 2012
United States (US dollars per gallon)
Canada (CA cents per litre)
1st
2nd
3rd
4th
Weighted
average
3.49
112.62
3.67
114.08
3.65
117.41
3.49
112.90
3.35
110.43
3.31
109.88
3.61
115.65
3.73
117.05
3.51
113.77
3.54
113.27
As for the weaker Canadian dollar, it had an unfavourable impact of approximately $23.0 million on road transportation fuel
sales of fiscal 2013.
Other income showed an increase of $2.7 billion for fiscal 2013, entirely due to acquisitions. Other revenues include
revenues derived from the rental of assets, the sale of aviation and marine fuel, the sale of liquid petroleum gas ("LPG"),
heating oil, kerosene, lubricants and chemicals. We sold our LPG operations in December 2012.
Gross profit
The consolidated merchandise and service gross margin grew by $438.1 million or 20.1% in fiscal 2013. In the United States,
the gross margin is up by 0.1% to 33.1% while in Canada, it increased by 0.3% to 33.6%. This performance reflects the shift
in our product-mix toward higher margin categories, including fresh products, the modifications we brought to our supply
terms as well as our merchandising strategy in line with market competitiveness and economic conditions within each market.
In the United States, the improvement in margin as a percentage of sales was partially offset by our price strategies in the
cigarettes category. In Europe, the margin was 44.1%, which is consistent with our expectations and historical margins
recorded by Statoil Fuel & Retail. The higher merchandise and services gross margin as a percentage of sales in Europe
reflects price and cost structures as well as a product-mix that are different from those in North America.
In fiscal 2013, the road transportation fuel gross margin for our company-operated stores in the United States increased by
1.78¢ per gallon, from 16.99¢ per gallon in fiscal 2012 to 18.77¢ per gallon in fiscal 2013. In Canada, the road transportation
fuel gross margin reached CA 5.84¢ per liter in fiscal 2013 compared to CA 5.45¢ in fiscal 2012. The road transportation fuel
gross margin of our company-operated stores in the United States as well as the impact of expenses related to electronic
payment modes for the last eight quarters, starting with the first quarter of fiscal year ended April 29, 2012, were as follows:
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 30
(US cents per gallon)
Quarter
52-week period ended April 28, 2013
1st
2nd
3rd
4th
Weighted
average
Before deduction of expenses related to electronic payment modes
23.20
15.20
17.80
19.30
18.77
Expenses related to electronic payment modes
4.97
5.15
4.79
5.03
4.97
After deduction of expenses related to electronic payment modes
18.23
10.05
13.01
14.27
13.80
53-week period ended April 29, 2012
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
19.95
5.29
14.66
17.04
5.20
11.84
14.84
4.74
10.10
16.98
5.06
11.92
16.99
5.04
11.95
Operating, selling, administrative and general expenses
For fiscal 2013, operating, selling, administrative and general expenses rose by 50.1% compared with fiscal 2012, but
decreased by 0.9% if we exclude certain items, as demonstrated by the following table:
Total variance as reported
Subtract:
Increase from incremental expenses related to acquisitions
Decrease from lower electronic payment fees (excluding acquisitions)
Decrease from the weakening of the Canadian dollar
Acquisition costs recognized to earnings of fiscal 2012
Acquisition costs recognized to earnings of fiscal 2013
Negative goodwill recognized to earnings of fiscal 2012
Negative goodwill recognized to earnings of fiscal 2013
Remaining variance, including the impact of the additional week in fiscal 2012
50.1%
51.4%
(0.1%)
(0.3%)
(0.3%)
0.2%
0.3%
(0.2%)
(0.9%)
The decrease in electronic payment fees stems mainly from the lower average retail price of road transportation fuel. The
remaining variance is mainly due to the impact of the 53rd week in fiscal 2012. We continue to favour a tight control of our
costs throughout the organization while making sure to maintain the quality of the service we offer our clients.
In Europe, the decrease in expenses recorded in relation with our cost reduction initiatives were more than offset by costs
incurred for projects aimed at creating value, including the implementation of a new IT infrastructure and the rollout of an
Enterprise Resource Planning ("ERP") system. Our IT costs should go down progressively along with the completion of these
projects over the course of the next quarters. Fiscal 2013 expenses also include marketing costs to support our sales
initiatives to boost sales, including "milesTM", our new signature fuel brand as well as "Coin Offer", a new in-store program to
promote our value fresh food offering.
Restructuring costs
During fiscal 2013, we recorded restructuring expenses of $34.0 million in line with the planned restructuring of Statoil Fuel &
Retail’s operations.
Curtailment gain on certain defined benefits pension plans obligation
During fiscal 2013, in connection with the planned restructuring of Statoil Fuel & Retail’s, we recorded to earnings a
$19.4 million non-recurring curtailment gain related to certain defined benefits pension plans with a corresponding offset to
the defined benefit plan obligation.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 31
Earnings before interests, taxes, depreciation, amortization and impairment (EBITDA)
and Adjusted EBITDA
During fiscal 2013, EBITDA increased by 63.5% compared to fiscal 2012, reaching $1,375.6 million. Net of acquisition costs
recorded to earnings, acquisitions contributed approximately $450.0 million to EBITDA while the exchange rate variation had
a negative impact of approximately $2.0 million.
Excluding from fiscal 2013 restructuring costs and the curtailment gain on certain defined benefits pension plans obligation,
adjusted EBITDA increased by $549.1 million or 65.3% compared to fiscal 2012, reaching $1,390.2 million.
It should be noted that EBITDA and Adjusted EBITDA are not performance measures defined by IFRS, but we, as well as
investors and analysts, use these measures to evaluate the Corporation’s financial and operating performance. Note that our
definition of these measures may differ from the one used by other public corporations:
(in millions of US dollars)
Net earnings, as reported
Add:
Income taxes
Net financial expenses (revenues)
Depreciation, amortization and impairment of property and equipment and other assets
EBITDA
Add:
Restructuring costs
Curtailment gain on defined benefits pension plans obligation
Adjusted EBITDA
52-week period ended
April 28, 2013
53-week period ended
April 29, 2012
572.8
73.9
207.8
521.1
1,375.6
34.0
(19.4)
1,390.2
457.6
146.3
(2.6)
239.8
841.1
-
-
841.1
Depreciation, amortization and impairment of property and equipment and other assets
For fiscal 2013, depreciation expense increased due to the investments made through acquisitions, replacement of
equipment, addition of new stores and ongoing improvement of our network.
In addition, following the acquisition of Statoil Fuel & Retail, we have undertaken an analysis of the remaining useful lives of
Statoil Fuel & Retail property and equipment in order to modify the depreciation periods accordingly. Based on our
preliminary analysis, we concluded that the modification of depreciation periods would reduce the depreciation expense,
which was reflected in the depreciation expense for fiscal 2013. However, given the volume of assets to process, our
analytical work has not been completed yet. Additional changes to the depreciation expense could be made.
Net financial expenses (revenues)
For fiscal 2013, we recorded net financial expenses of $207.8 million compared to net financial revenues of $2.6 million in
fiscal 2012. Excluding the non-recurring loss of $102.9 million on foreign exchange forwards contracts and the net foreign
exchange gain of $3.2 million recorded during fiscal 2013, as well as excluding the $17.0 million gain recorded on foreign
exchange forwards contracts in fiscal 2012, net financial expenses posted an increase of $93.7 million compared to fiscal
year 2012, mainly due to the additional debt required to finance the acquisition of Statoil Fuel & Retail and debt assumed
through its acquisition. With respect to the net foreign exchange gain of $3.2 million, it is mainly due to a gain from the impact
of the exchange rate fluctuations on certain inter-company balances, a non-recurring foreign exchange gain of $7.4 million
recorded on our NOK cash held by our U.S. operations in connection with the financing of the acquisition of Statoil Fuel &
Retail partially offset by the impact of exchange rates fluctuations on U.S. dollars denominated sales made by our European
operations.
Income taxes
The income tax rate for fiscal 2013 is 11.4%. The decrease is partly due to the effect on deferred income taxes of a decrease
in our statutory income tax rate in Sweden. Excluding this non-recurring item, the income tax rate for fiscal 2013 would have
been 16.8% compared to a rate of 24.2% for fiscal 2012.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 32
Net earnings
We closed fiscal 2013 with net earnings of $572.8 million, compared to $457.6 million the previous fiscal year, an increase of
$115.2 million or 25.2%. Diluted net earnings per share stood at $3.07 compared to $2.49 the previous year, an increase of
23.3%. The exchange rate variation did not have a significant impact on net earnings of fiscal 2013.
Excluding from fiscal 2013 net earnings the non-recurring loss on foreign exchange forward contracts, restructuring costs, the
non-recurring curtailment gain on certain defined benefits pension plan, the net foreign exchange gain, the non-recurring
income tax recovery, acquisition costs as well as the negative goodwill and excluding the non-recurring gain on foreign
exchange forward contracts, acquisition costs and the negative goodwill from earnings of fiscal 2012, net earnings for fiscal
2013 would have stood at approximately $620.9 million ($3.32 per share on a diluted basis) compared to $444.7 million
($2.42 per share on a diluted basis) for fiscal 2012, up $176.2 million, or 39.6%, despite the negative impact of the additional
week in fiscal 2012.
Financial Position as at April 28, 2013
As shown by our indebtedness ratios included in the ―Selected Consolidated Financial Information‖ section and our net cash
provided by operating activities, our financial position is excellent.
Our total consolidated assets amounted to $10.5 billion as at April 28, 2013, an increase of $6.2 billion over the balance as at
April 29, 2012. This increase stems primarily from the overall rise in assets resulting from the acquisitions we made during
fiscal year 2013, partially offset by the weakening of the Canadian dollar compared to the US dollar at the balance sheet
date.
For fiscal 2013, we recorded a return on capital employed of 11.0%1.
Shareholders’ equity amounted to $3.2 billion as at April 28, 2013, up $1.0 billion compared to April 29, 2012, mainly
reflecting net earnings of fiscal 2013 as well as the issuance of shares, partially offset by dividends declared and the
decrease in accumulated other comprehensive income following the weakening of the Canadian dollar as at the balance
sheet date. For fiscal 2013, we recorded a return on equity of 21.5%2.
Liquidity and Capital Resources
Our principal sources of liquidity are our net cash provided by operating activities and our credit facilities. Our principal uses
of cash are to finance our acquisitions and capital expenditures, pay dividends, meet debt service requirements as well as
provide for working capital. We expect that cash generated from operations and borrowings available under our revolving
unsecured credit facilities will be adequate to meet our liquidity needs in the foreseeable future.
On September 22, 2012, our term revolving unsecured operating credits A ($326.0 million), B ($154.0 million) and
C ($40.0 million) matured. On October 19, 2012, we increased by $275.0 million the maximum borrowings available under
our term revolving unsecured operating D, bringing to $1,275.0 million the maximum borrowings available under operating
credit D. As at April 28, 2013, $345.5 million of our revolving unsecured operating credit D had been used. As at the same
date, the weighted average effective interest rate was 1.75% and standby letters of credit in the amount of CA$2.2 million
and $28.4 million were outstanding.
On October 31, 2012, we entered into a new credit facility of a maximum amount of $50.0 million with an initial term of
50 months. The credit facility is available in the form of a revolving unsecured operating credit, available in US dollars ("Term
revolving unsecured operating credit E"). The amounts borrowed bear interest at variable rates based on the US base rate or
the LIBOR rate plus a variable margin. Standby fees, which vary based on a leverage ratio and on the utilization rate of the
1 This ratio is presented for information purposes only and represents a measure of performance used especially in financial ci rcles. It represents the following calculation: earnings before
income taxes and interests divided by average capital employed. Capital employed represents total assets less short-term liabilities not bearing interests. It does not have a standardized
meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations. This ratio is presented on a pro forma basis. It includes
Couche-Tard’s results for fiscal year ended April 28, 2013 as well as Statoil Fuel & Retail’s results for the 12-month period ended April 30, 2013. Statoil Fuel & Retail balance sheet and
earnings have been adjusted to make their presentation in line with Couche-Tard’s policies and for fair value adjustments to assets acquired, including goodwill, and to liabilities assumed.
2 This ratio is presented for information purposes only and represents a measure of performance used especially in financial circles. It r epresents the following calculation: net earnings
divided by average equity. It does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public corporations.
This ratio is presented on a pro forma basis. It includes Couche-Tard’s results for fiscal year ended April 28, 2013 as well as Statoil Fuel & Retail’s results for the 12-month period ended
April 30, 2013. Statoil Fuel & Retail balance sheet and earnings have been adjusted to make their presentation in line with Couche-Tard’s policies and for fair value adjustments to assets
acquired, including goodwill, and to liabilities assumed.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 33
credit facility, apply to the unused portion of the credit facility. The variable margin used to determine the interest rate
applicable to amounts borrowed is determined according to a leverage ratio of the Corporation. As at April 28, 2013, the term
revolving unsecured operating credit E was unused.
As at April 28, 2013, $948.9 million were available under the Corporation’s credit agreements and we were in compliance
with the restrictive covenants and ratios imposed by the credit agreements at that date. Thus, at the same date, we had
access to more than $1.6 billion through our available cash and revolving unsecured operating credit agreements.
Through our acquisition of Statoil Fuel & Retail, we have access to bank overdraft facilities totalling approximately
$336.0 million. As of April 28, 2013, the bank overdraft facility is unused.
Selected Consolidated Cash Flow Information
(In millions of US dollars)
Operating activities
Net cash provided by operating activities
Investing activities
Business acquisitions
Purchase of property and equipment and other assets, net of proceeds from the disposal of
property and equipment and other assets
Net settlement of foreign exchange forward contracts
Proceeds from sales and lease back transaction
Other
Net cash used in investing activities
Financing activities
Borrowings under the acquisition facility, net of financing costs
Issuance of Canadian dollar denominated senior unsecured notes, net of financing costs
Repayment of the acquisition facility
Repayment of non-current debt assumed on business acquisition
Net (decrease) increase in other debt
Issuance of shares on public offering, net of issuance costs
Issuance of shares upon exercise of stock-options
Share repurchase
Dividends
Net cash provided (used in) by financing activities
Credit rating
Standard and Poor’s
Operating activities
52-week period
ended
April 28, 2013
53-week period
ended
April 29, 2012
$
1,161.4
$
763.8
Variation
$
397.6
(2,644.6)
(380.3)
(2,264.3)
(486.9)
(86.4)
30.3
1.1
(3,186.5)
3,190.2
997.5
(995.5)
(800.5)
(314,5)
333.4
8.1
-
(55.6)
2,363.1
(288.8)
(198.1)
-
-
(22.7)
(691.8)
-
-
-
-
157.1
-
19.2
(201.1)
(49.8)
(74.6)
(86.4)
30.3
23.8
(2,494.7)
3,190.2
997.5
(995.5)
(800.5)
(471.6)
333.4
(11.1)
201.1
(5.8)
2,437.7
BBB-
BBB-
During fiscal 2013, net cash from the operation of our store’s network reached $1,161.4 million, up $397.6 million compared
to fiscal year 2012, mainly due to higher net earnings not taking into account non-cash items, including depreciation,
amortization and impairment of property and equipment and other assets.
Investing activities
During fiscal 2013, investing activities were primarily for the acquisition of Statoil Fuel & Retail and additional stores for a total
amount of $2,644.6 million as well as for net investment in property and equipment and other assets which amounted to
$486.9 million. Net investments in property and equipment and other assets were primarily for the replacement of equipment
in some of our stores in order to enhance our offering of products and services, the addition of new stores as well as the
ongoing improvement of our network. We also concluded a sale and lease back transaction for net proceeds of $30.3 million.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 34
Financing activities
During fiscal 2013, we borrowed an amount of $3,190.2 million under our acquisition facility, net of financing costs, we
received a net amount of $997.5 million following the issuance of Canadian dollars denominated unsecured senior notes and
we received a net amount of $333.4 million from the issuance of 7,302,500 class B subordinate voting shares. These funds
were used to finance the acquisition of Statoil Fuel & Retail for $2,583.3 million, to repay a portion of the debt assumed as
part of this acquisition for an amount of $800.5 million as well as to repay a portion of our operating credits. During the same
period, we paid $55.6 million in dividends.
Contractual Obligations and Commercial Commitments
Set out below is a summary of our material contractual obligations as at April 28, 2013 (1):
Long-term debt (2)
Finance lease obligations
Operating lease obligations
Total
2014
2015
2016
2017
2018
Thereafter
Total
(in millions of US dollars)
603.3
19.2
334.2
956.7
0.3
27.4
306.4
334.2
1,594.6
10.7
279.5
1,884.8
348.4
5.5
250.7
604.6
294.0
4.5
221.3
519.8
687.8
24.3
1,262.5
1,974.5
3,528.4
91.6
2,654.6
6,274.6
(1)
(2)
The summary does not include the payments required under defined benefit pension plans.
Does not include future interest payments.
Long-Term Debt. As at April 28, 2013, our long-term debt reached $2,984.3 million, the details of which are as follows:
i. Borrowing of $2,197.3 million under our acquisition facility denominated in US dollars, maturing in June 2015. The
effective interest rate was 2.37% as at April 28, 2013. We are required to make annual repayments in 2014 and
2015. The annual repayments are dependent on an adjusted leverage ratio reached at the date of the calculation
as well as on the amount of excess cash flows and are caped at a certain amount. For fiscal 2014, the repayment
will be $603.0 million. For fiscal 2015, the amount expected to be repaid cannot be reasonably estimated but the
maximum amount required to be repaid as per the agreement is $250.0 million.
ii. Canadian dollar denominated senior unsecured notes totalling $978.7 million, divided into three tranches:
a. Tranche 1 with a notional amount of CA$300.0 million, maturing on November 1st, 2017, bearing interest at
2.861%
b. Tranche 2 with a notional amount of CA$450.0 million, maturing on November 1st, 2019 bearing interest at
3.319%
c. Tranche 3 with a notional amount of CA$250.0 million, maturing on November 1st, 2022 bearing interest at
3.899%.
iii. US Dollar denominated borrowings of $345.5 million under our revolving unsecured operating credits denominated
in US dollars, maturing in December 2016. The weighted average effective interest rate was 1.75% as at April 28,
2013. Standby letters of credit in the amount of CA$2.2 million and $28.4 million were outstanding as at April 28,
2013.
iv. Floating-rate bonds denominated in NOK totalling $2.6 million maturing in February 2017. As at April 28, 2013, the
effective interest rate was 5.04%.
v. Fixed-rate bonds denominated in NOK totalling $2.3 million maturing in February 2019. As at April 28, 2013,
bearing interest at 5.75%.
vi. Other long-term debts of $78.7 million, including obligations related to building and equipment under finance
leases.
Finance Leases and Operating Leases Obligations. We lease an important portion of our real estate using conventional
operating leases and finance leases mainly for the rental of stores, land, equipment and office buildings. Generally our real
estate leases in Canada are for primary terms of five to ten years and in the United States, they are for ten to 20 years, in
both cases, usually with options to renew. In Europe, the lease terms range from short-term contracts to contracts with
maturities up to 100 years and most lease contracts include options to renew at market prices. When leases are determined
to be operating leases, obligations and related assets are not included in our consolidated balance sheets. Under certain of
the store leases, we are subject to additional rent based on store revenues as well as future escalations in the minimum
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 35
lease amount. When leases are determined to be finance leases, obligations and related assets are included in our
consolidated balance sheets.
Contingencies. Various claims and legal proceedings have been initiated against us in the normal course of our operations
and through acquisitions. Although the outcome of such matters is not predictable with assurance, we have no reason to
believe that the outcome of any such current matter could reasonably be expected to have a materially adverse impact on
our financial position, results of operations or the ability to carry on any of our business activities.
We are covered by insurance policies that have significant deductibles. At this time, we believe that we are adequately
covered through the combination of insurance policies and self-insurance. Future losses which exceed insurance policy limits
or, under adverse interpretations, are excluded from coverage would have to be paid out of general corporate funds. In
association with our workers' compensation policies, we issue letters of credit as collateral for certain policies.
Guarantees. We assigned a number of lease agreements for premises to third parties. Under some of these agreements, we
retain ultimate responsibility to the landlord for payment of amounts under the lease agreements should the sublessees fail to
pay. As at April 28, 2013, the total future lease payments under such agreements are approximately $1.0 million and the fair
value of the guarantee is not significant. Historically, we have not made any significant payments in connection with these
indemnification provisions. In Europe, we have issued guarantees to third parties and on behalf of third parties for maximum
undiscounted future payments totalling $21.7 million. These guarantees primarily relate to financial guarantee commitments
for car rental agreements and on behalf of retailers in Sweden. Guarantees on behalf of retailers in Sweden comprise items
such as guarantees towards retailer's car washes, store inventory, in addition to guarantees towards suppliers of electricity
and heating. The carrying amount and fair value of the guarantee commitments recognized in the balance sheet at
April 28, 2013 were not significant.
We also issue surety bonds for a variety of business purposes, including bonds for taxes, lottery sales, wholesale distribution
and alcoholic beverage sales. In most cases, a municipality or state governmental agency, as a condition of operating a store
in that area, requires the surety bonds.
Other commitments. In Europe, we have entered into contracts for the delivery of road transportation fuel. The contracts give
us the right to use and the obligation to pay some transport capacity over the life of these contracts, from July 1st, 2011 to
June 30, 2016. A binding commitment arises following the approval of a production plan for the coming month. Thus, as at
April 28, 2013, there was a commitment for one month totalling approximately $8.0 million.
We have reached an agreement with an oil company which gives us the right to use the JET trademark and the obligation to
pay for this trademark license. The agreement took effect on November 1st, 2010 and will end on December 31, 2015. The
annual license fees totalled $4.0 million.
We are conducting a project that includes the design and implementation of a new ERP system for our European operations.
The project was launched in 2011 and scheduled for completion in 2014. Contractual obligations under this project were
approximately $9.0 million as at April 28, 2013.
In June 2011, we entered into an agreement with ExxonMobil which, as at April 28, 2013, binds us to purchase 117 stores
subject to the results of ExxonMobil’s obligation to submit a bona fide offer to the independent operators. An amount of
$21.6 million is held in escrow for this transaction.
Off-Balance Sheet Arrangements
In the normal course of business, we finance some of our off-balance sheet activities through operating leases for properties
on which we conduct our retail business. Our future commitments are included under ―Operating Lease Obligations‖ in the
table above.
Annual Report © 2013 Alimentation Couche-Tard Inc.
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Selected Quarterly Financial Information
The Corporation’s 52-week reporting cycle is divided into quarters of 12 weeks each except for the third quarter, which
comprises 16 weeks. When a fiscal year, such as fiscal 2012, contains 53 weeks, the fourth quarter comprises 13 weeks.
The following is a summary of selected consolidated financial information derived from the Corporation’s interim consolidated
financial statements for each of the eight most recently completed quarters. The results of the first three quarters of fiscal
2013 have been adjusted to reflect the changes to the preliminary allocation of the purchase price of Statoil Fuel & Retail and
reclassification of certain items.
(In millions of US dollars except for per share
data)
Quarter
Weeks
Revenues
Operating income before depreciation,
amortization and impairment of property
and equipment and other assets
Depreciation, amortization and impairment of
property and equipment and other assets
Operating income
Share of earnings of joint ventures and
associated companies accounted for using
the equity method
Net financial expenses (revenues)
Net earnings
Net earnings per share
Basic
Diluted
52-week period ended April 28, 2013
53-week period ended April 29, 2012
4th
12 weeks
3rd
16 weeks
2nd
12 weeks
1st
12 weeks
4th
13 weeks
3rd
16 weeks
2nd
12 weeks
1st
12 weeks
8,776.0
11,467.0
9,287.7
6,012.6
6,055.7
6,597.3
5,151.2
5,176.1
292.7
391.4
365.6
310.0
200.1
186.5
200.6
232.3
138.1
154.6
3.0
20.7
146.4
$0.78
$0.77
182.5
208.9
3.9
49.4
142.2
$0.76
$0.75
134.3
231.3
3.7
15.9
181.3
$0.98
$0.97
66.1
243.9
5.2
121.8
102.9
$0.58
$0.57
62.2
137.9
3.4
(13.0)
117.8
$0.66
$0.65
75.7
110.8
7.0
4.6
86.8
$0.49
$0.48
52.4
148.2
49.5
182.8
5.2
2.5
6.0
3.3
113.5
139.5
$0.62
$0.61
$0.76
$0.75
The influence of the volatility of road transportation fuel gross margin and seasonality has an impact on the variability of our
quarterly net earnings. Given acquisitions made in recent years and higher retail prices at the pump, road transportation fuel
revenues have become a more significant segment of our business and therefore our quarterly results are more sensitive to
the volatility of road transportation fuel gross margins. However, road transportation fuel margins tend to be less volatile
when considered on an annual basis or a longer term. With that said, the majority of our operating income is still derived from
merchandise and service sales.
Analysis of consolidated results for the fiscal year ended April 29, 2012
Revenues
Our revenues were $23.0 billion in fiscal 2012, up $4.4 billion, or 23.9%, mainly attributable to an increase in road
transportation fuel sales due to higher average retail prices at the pump, to acquisitions, to the growth of same-store
merchandise and service sales in the United States and Canada, to the growth of same-store road transportation fuel volume
in the United States as well as the 53rd week in fiscal 2012.
More specifically, the growth of merchandise and service revenues for fiscal 2012 was $415.4 million or 6.7%, of which
approximately $84.0 million was generated by acquisitions. As for internal growth, on a 52-week comparable basis, same-
store merchandise revenues increased by 2.7% in the United States and 2.8% in Canada. For the Canadian and U.S.
markets, the variance in same-store merchandise sales is attributable to our merchandising strategies, to the economic
conditions in each of our markets as well as to the investments we made to enhance service and the offering of products in
our stores. In the United States, a cigarette manufacturer modified its supply terms and price structure, at the beginning of
the first quarter of fiscal 2012, in order to encourage retailers to decrease or maintain low unit prices on certain of its
products, which has put a deflationary pressure on our cigarettes sales. Thus, we estimate that excluding tobacco products
sales, our same-store merchandise sales in the United States increased by 5.3% on a 52-week comparable basis. As for the
stronger Canadian dollar, it had a favourable impact of approximately $40.0 million on merchandise and service revenues of
fiscal 2012.
Annual Report © 2013 Alimentation Couche-Tard Inc.
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Road transportation fuel revenues increased by $4.0 billion or 32.6% in fiscal 2012, of which approximately $1.1 billion stems
from acquisitions. The still fragile economy and higher retail prices at the pump have continued to put pressure on road
transportation fuel consumption, which can explain the almost flat same-store road transportation fuel volume growth on a
52-week comparable basis in the United States as well as the slight decrease of 0.9% in Canada.
The higher average retail price of road transportation fuel generated an increase in revenues of approximately $2.5 billion as
shown in the following table, starting with the first quarter of the fiscal year ended April 24, 2011:
Quarter
53-week period ended April 29, 2012
United States (US dollars per gallon)
Canada (CA cents per litre)
52-week period ended April 24, 2011
United States (US dollars per gallon)
Canada (CA cents per litre)
1st
2nd
3rd
4th
Weighted
average
3.67
114.08
2.72
91.46
3.49
112.90
2.67
90.47
3.31
109.88
2.89
97.76
3.73
117.05
3.44
108.53
3.54
113.27
2.92
96.91
As for the stronger Canadian dollar, it had a favourable impact of approximately $41.0 million on road transportation fuel
sales of fiscal 2012.
Gross profit
The consolidated merchandise and service gross margin grew by $109.7 million or 5.3% in fiscal 2012. The consolidated
margin was 33.1%, a reduction of 0.4% compared with fiscal 2011. In the United States, the gross margin is down by only
0.1% to 33.0% while in Canada, it fell by 1.0% to 33.3%. This performance reflects changes in the product-mix, the
improvements we brought to our supply terms as well as our merchandising strategy in line with market competitiveness and
economic conditions within each market. More precisely, these margin reductions reflect more aggressive promotions in
certain categories to protect store traffic as well as increases in the cost of certain of our products which we absorbed without
passing it on to consumers. However, in terms of absolute dollars, the increase in same-store merchandise sales more than
offset the decrease in margin percentage of these products, demonstrating that our strategies paid off.
In fiscal 2012, the road transportation fuel gross margin for our company-operated stores in the United States increased by
1.45¢ per gallon, from 15.54¢ per gallon in fiscal 2011 to 16.99¢ per gallon in fiscal 2012. However, taking into consideration
expenses related to electronic payment modes, the net margin per gallon increased by only 0.81¢ per gallon. In Canada, the
gross margin rose slightly to CA5.45¢ per litre compared with CA5.38¢ per litre for fiscal 2011. The road transportation fuel
gross margin of our company-operated stores in the United States as well as the impact of expenses related to electronic
payment modes for the last eight quarters, starting with the first quarter of fiscal year ended April 24, 2011, were as follows:
(US cents per gallon)
Quarter
53-week period ended April 29, 2012
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
52-week period ended April 24, 2011
Before deduction of expenses related to electronic payment modes
Expenses related to electronic payment modes
After deduction of expenses related to electronic payment modes
1st
2nd
3rd
4th
Weighted
average
19.95
5.29
14.66
18.83
4.15
14.68
17.04
5.20
11.84
16.84
4.16
12.68
14.84
4.74
10.10
13.12
4.36
8.76
16.98
5.06
11.92
14.06
4.93
9.13
16.99
5.04
11.95
15.54
4.40
11.14
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Operating, selling, administrative and general expenses
For fiscal 2012, operating, selling, administrative and general expenses rose by 6.0% compared with fiscal 2011, but
increased by only 1.8% if we exclude certain items, as demonstrated by the following table:
Total variance as reported
Subtract:
Increase from incremental expenses related to acquisitions
Increase from higher electronic payment fees
Increase from the strengthening of the Canadian dollar
Acquisition costs recognized to earnings of fiscal 2011
Acquisition costs recognized to earnings of fiscal 2012
Negative goodwill recognized to earnings of fiscal 2012
6.0%
2.1%
2.0%
0.6%
(0.5%)
0.3%
(0.3%)
Remaining variance, including the impact of the additional week in fiscal 2012
1.8%
The increase in electronic payment fees stems mainly from the rise in the average retail price of road transportation fuel. The
remaining variance is mainly due to the impact of the 53rd week in fiscal 2012 and, to a lesser extent, to additional expenses
necessary to support growth in same-store merchandise sales as well as to the normal increase in costs due to inflation.
Moreover, excluding expenses related to electronic payment modes and acquisitions costs for both comparable periods as
well as the negative goodwill recorded to earnings of fiscal 2012, expenses in proportion to merchandise and services sales
represented 28.8% of sales during fiscal 2012, compared to 29.4% during fiscal 2011.
Earnings before interests, taxes, depreciation and amortization (EBITDA)
During fiscal 2012, EBITDA increased by 14.4% compared to fiscal 2011, reaching $841.1 million. Net of acquisition costs
recorded to earnings, acquisitions contributed approximately $26.0 million to EBITDA while the exchange rate variation had a
positive impact of $4.5 million.
It should be noted that EBITDA is not a performance measure defined by IFRS, but we, as well as investors and analysts,
use this measure to evaluate the Corporation’s financial and operating performance. Note that our definition of this measure
may differ from the one used by other public corporations:
(in millions of US dollars)
Net earnings, as reported
Add:
Income taxes
Net financial (revenues) expenses
Depreciation and amortization of property and equipment and other assets
EBITDA
Fiscal 2012
53 weeks
457.6
Fiscal 2011
52 weeks
369.2
146.3
(2.6)
239.8
841.1
121.2
31.1
213.7
735.2
Depreciation and amortization of property and equipment and other assets
For fiscal 2012, depreciation expense increased due to the investments made through acquisitions, replacement of
equipment, addition of new stores and ongoing improvement of our network. Since the second quarter of fiscal 2012,
depreciation and amortization expense includes amortization of intangible assets related to the fuel supply contracts acquired
from ExxonMobil.
Net financial expenses (revenues)
For fiscal 2012, we recorded net financial revenues of $2.6 million compared to net financial expenses of $31.1 million in
fiscal 2011. Excluding the $17.0 million gain recorded on foreign exchange forward contracts, fiscal 2012 posted net financial
expenses of $14.4 million, down $16.7 million compared to fiscal 2011, mainly because of the early redemption of our
$350.0 million subordinated unsecured debt during the third quarter of fiscal 2011, which contributed to decrease the average
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 39
interest rate on our borrowings. Moreover, following the early redemption of our subordinated unsecured debt, we recorded a
non-recurring charge of $3.0 million to fiscal 2011 results. The reduction in financial expenses from the lower average interest
rate was partially offset by the slight increase in our indebtedness attributable to amounts disbursed for share repurchases
and acquisitions.
Income taxes
The income tax rate for fiscal 2012 is 24.2% compared to a rate of 24.7% for fiscal 2011.
Net earnings
We closed fiscal 2012 with net earnings of $457.6 million, compared to $369.2 million the previous fiscal year, an increase of
$88.4 million or 23.9%. Diluted net earnings per share stood at $2.49 compared to $1.96 the previous year, an increase of
27.0%. The exchange rate variation did not have a significant impact on net earnings of fiscal 2012.
Excluding from fiscal 2012 net earnings the non-recurring gain on forwards, acquisition costs as well as negative goodwill
and excluding acquisition costs from earnings of fiscal 2011, net earnings for fiscal 2012 would have stood at approximately
$444.7 million ($2.42 per share on a diluted basis) compared to $377.1 million ($2.00 per share on a diluted basis) for fiscal
2011, up $67.6 million, or 17.9%.
Internal Controls
We maintain a system of internal controls over financial reporting designed to safeguard assets and ensure that financial
information is reliable. We also maintain a system of disclosure controls and procedures designed to ensure the reliability,
completeness and timeliness of the information we disclose in this MD&A and other public disclosure documents, also taking
into account materiality. Disclosure controls and procedures are designed to ensure that information required to be disclosed
by the Corporation in reports filed with securities regulatory agencies is recorded and/or disclosed on a timely basis, as
required by law, and is accumulated and communicated to the Corporation’s management, including its Chief Executive
Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As at
April 28, 2013, our management, following their assessment, certifies the design and operating effectiveness of disclosure
controls and procedures.
We undertake ongoing evaluations of the effectiveness of internal controls over financial reporting and implement control
enhancements, when appropriate. As at April 28, 2013, our management and our external auditors reported that these
internal controls were effective.
Management and external auditors’ evaluation of the effectiveness of internal controls over financial reporting and reporting
procedures as at April 28, 2013 exclude controls, policies and procedures of Statoil Fuel & Retail which was acquired during
fiscal 2013. The design and evaluation of the control effectiveness for reporting procedures and internal control over financial
reporting of Statoil Fuel & Retail should be completed during fiscal 2014.
The audited financial information relating to Statoil Fuel & Retail and included in the consolidated financial statements as at
April 28, 2013 is as follows:
Consolidated Statement of Earnings
Revenues
Net earnings
Balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
$
11,072.6
98.4
%
57.0
54.0
48.0
18.0
Annual Report © 2013 Alimentation Couche-Tard Inc.
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Critical Accounting Policies and Estimates
Estimates. This MD&A is based on our consolidated financial statements, which have been prepared in accordance with
IFRS. These standards require us to make certain estimates and assumptions that affect our financial position and results of
operations as reflected in our consolidated financial statements. On an ongoing basis, we review our estimates, including
those relating to supplier rebates, useful life of tangible and intangible assets, environmental costs, income taxes, lease
accounting, employees future benefits and asset retirement obligations based on available information. These estimates are
based on our best knowledge of current events and actions that the Corporation may undertake in the future. Actual results
may differ from the estimates.
Inventory. Our inventory is comprised mainly of products purchased for resale including tobacco products, fresh goods, beer
and wine, grocery items, candies and snacks, other beverages and road transportation fuel. Inventories are valued at the
lesser of cost and net realizable value. Cost of merchandise is generally valued based on the retail price less a normal
margin and the cost of road transportation fuel inventory is generally determined according to the average cost method. The
cost of lubricant inventory and aviation fuel is determined using the first in first out method. Inherent in the determination of
margins are certain management judgments and estimates, which could affect ending inventory valuations and results of
operations.
Impairment of Long-lived Assets. Property and equipment are tested for impairment should events or circumstances indicate
that their book value may not be recoverable, as measured by comparing their net book value to their recoverable amount,
which corresponds to the higher of fair value less costs to sell and value in use. Should the carrying amount of long-lived
assets exceed their fair value, an impairment loss in the amount of the excess would be recognized. Our evaluation of the
existence of impairment indicators is based on market conditions and our operational performance. The variability of these
factors depends on a number of conditions, including uncertainty about future events. These factors could cause us to
conclude that impairment indicators exist and require that impairment tests be performed, which could result in determining
that the value of certain long-lived assets is impaired, resulting in a write-down of such long-lived assets.
Goodwill and Other Intangibles Assets. Goodwill and other intangibles assets with indefinite-life are evaluated for impairment
annually, or more often if events or changes in circumstances indicate that the value of certain goodwill or intangibles may be
impaired. For the purpose of this impairment test, management uses estimates and assumptions to establish the fair value of
our reporting units and intangible assets. If these assumptions and estimates prove to be incorrect, the carrying value of our
goodwill or other intangible assets may be overstated. Our annual impairment test is performed in the first quarter of each
fiscal year.
Asset retirement obligations. Asset retirement obligations relate to estimated future costs to remove underground road
transportation fuel storage tanks and are based on our prior experience in removing these tanks, estimated tank useful life,
lease terms for those tanks installed on leased properties, external estimates and governmental regulatory requirements. A
discounted liability is recorded for the present value of an asset retirement obligation with a corresponding increase to the
carrying value of the related long-lived asset at the time an underground storage tank is installed. To determine the initial
liability, the future estimated cash flows are discounted using a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The amount added to property and equipment is amortized and an
accretion expense is recognized in connection with the discounted liability over the remaining life of the tank or lease term for
leased properties.
Following the initial recognition of the asset retirement obligation, the carrying amount of the liability is increased to reflect the
passage of time and then adjusted for variations in the current market-based discount rate or the scheduled underlying cash
flows required to settle the liability.
Environmental Matters. We provide for estimated future site remediation costs to meet government standards for known site
contamination when such costs can be reasonably estimated. Estimates of the anticipated future costs for remediation
activities at such sites are based on our prior experience with remediation sites and consideration of other factors such as the
condition of the site contamination, location of sites and the experience of the contractors that perform the environmental
assessments and remediation work.
In each of the U.S. states in which we operate, with the exception of Michigan, Iowa, Florida, Arizona, Texas and Washington
State, there is a state fund to cover the cost of certain environmental remediation activities after applicable trust fund
deductible is met, which varies by State. These state funds provide insurance for road transportation fuel facilities operations
to cover some of the costs of cleaning up certain contamination to the environment caused by the usage of underground road
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 41
transportation fuel equipment. Underground road transportation fuel storage tank registration fees and/or a road
transportation fuel tax in each of the states finance the trust funds. We pay the annual registration fees and remit the sales
taxes to the applicable states where we are a member of the trust fund. Insurance coverage is different in the various states.
Income Taxes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable
to temporary differences between the financial statement carrying values of assets and liabilities and their respective income
tax bases. Deferred income tax assets or liabilities are measured using enacted or substantively enacted income tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The calculation of current and deferred income taxes requires management to make estimates and assumptions and
to exercise a certain amount of judgment regarding the financial statement carrying values of assets and liabilities which are
subject to accounting estimates inherent in those balances, the interpretation of income tax legislation across various
jurisdictions, expectations about future operating results and the timing of reversal of temporary differences and possible
audits of tax fillings by the regulatory authorities. Management believes it has adequately provided for income taxes based on
current available information.
Changes or differences in these estimates or assumptions may result in changes to the current or deferred income tax
balances on the consolidated balance sheets, a charge or credit to income tax expense in the consolidated statement of
earnings and may result in cash payments or receipts.
Employee future benefits. We accrue our obligations under employee pension plans and the related costs, net of plan assets.
We have adopted the following accounting policies with respect to the defined benefit plans:
The accrued benefit obligations and the cost of pension benefits earned by active employees are actuarially determined
using the projected unit credit method pro-rated on service and pension expense is recorded in earnings as the services
are rendered by active employees. The calculations reflect our best estimate of salary escalation and retirement ages of
employees;
The discount rate on the benefit obligation is equal to the yield at the measurement date on high quality corporate bonds
that have maturity dates approximating the terms of our obligations;
Plan assets are valued at fair value;
Actuarial gains and losses arise from increases or decreases in the present value of the defined benefit obligation
because of changes in actuarial assumptions and experience adjustments. Actuarial gains and losses are recognized
immediately in Other comprehensive income with no impact on net earnings;
Past service costs are recorded to earnings at the earlier of the following dates:
- When the plan amendment or curtailment occurs;
- When we recognizes related restructuring costs or termination benefits;
Net interest on the defined benefit liability (asset) represents the net defined benefit liability (asset), multiplied by the
discount rate and is recorded in financial expenses.
The pension cost recorded in net earnings for the defined contribution plans is equivalent to the contribution which we are
required to pay in exchange for services provided by the employees.
The present value of pension obligations depends on a number of factors that are determined on an actuarial basis using a
number of assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations. We
determine the appropriate discount rate at the end of each fiscal year. This is the rate that should be used to determine the
present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the
appropriate discount rate, we consider the interest rates of high-quality corporate bonds that are denominated in the currency
in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation.
Insurance and Workers' Compensation. We use a combination of insurance, self-insured retention, and self-insurance for a
number of risks including workers' compensation (in certain American states), property damages, and general liability claims.
Accruals for loss incidences are made based on our claims experience and actuarial assumptions followed in the insurance
industry. A material revision to our liability could result from a significant change to our claims experience or the actuarial
assumptions of our insurers. Actual losses could differ from accrued amounts. Workers' compensation is covered by
government-imposed insurance in Canada and in Europe and by third-party insurance in our United States operations,
except in certain states where we are self-insured. With respect to the third-party insurance in the United States, independent
Annual Report © 2013 Alimentation Couche-Tard Inc.
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actuarial estimates of the aggregate liabilities for claims incurred serve as a basis for our share of workers' compensation
losses.
Recently Issued Accounting Standards
Revised Standards
Financial Statement Presentation
In June 2011, the IASB issued amendments to International Accounting Standard (―IAS‖) 1, ―Presentation of Financial
Statements‖. The amendments govern the presentation of Other Comprehensive Income (―OCI‖) in the financial statements,
primarily by requiring OCI items that may be reclassified to the consolidated statements of earnings to be presented
separately from those that remain in equity.
These changes are applicable for fiscal years beginning on or after July 1, 2012. We will apply these changes for our first
quarter of fiscal year 2014 and do not expect that the adoption of these changes will have a material impact on our
consolidated financial statements.
Financial Instruments – Presentation and disclosure
In December 2011, the IASB issued revised versions of IFRS 7, ―Financial Instruments: Disclosures‖ and IAS 32, ―Financial
Instruments: Presentation‖. The modifications clarify the offsetting rules and state new disclosure requirements for offsetting
of financial assets and financial liabilities on the consolidated balance sheets.
The changes applied to IFRS 7 are applicable for fiscal years beginning on or after January 1, 2013 while changes applied to
IAS 32 are applicable for fiscal years beginning on or after January 1, 2014. We will apply these changes for our first quarters
of fiscal years 2014 and 2015 respectively and do not expect that the adoption of these changes will have a material impact
on our consolidated financial statements.
New standards
Financial Instruments
In November 2009, the IASB issued a new standard, IFRS 9, ―Financial Instruments‖, which is the first phase of the IASB’s
three-phase project to replace IAS 39, ―Financial Instruments: Recognition and Measurement‖. The standard provides
guidance on the classification and measurement of financial liabilities and requirements for the derecognition of financial
assets and financial liabilities.
IFRS 9 is applicable for fiscal years beginning on or after January 1, 2015. We will apply these new standards for our first
quarter of fiscal year 2016 and are still evaluating the impact on our consolidated financial statements.
Consolidated financial statements
In May 2011, the IASB issued a new standard, IFRS 10, ―Consolidated Financial Statements‖, which requires an entity to
consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an
entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS
10 replaces SIC-12, ―Consolidation—Special Purpose Entities‖ and parts of IAS 27, ―Consolidated and Separate Financial
Statements‖.
Joint Arrangements
In May 2011, the IASB issued a new standard, IFRS 11, ―Joint Arrangements‖, which requires a venturer to classify its
interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity
method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and
expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account
for interests in joint ventures. IFRS 11 supersedes IAS 31, ―Interests in Joint Ventures‖ and SIC-13, ―Jointly Controlled
Entities—Non-monetary Contributions by Venturers‖.
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Disclosure of Interest in Other Entities
In May 2011, the IASB issued a new standard, IFRS 12, ―Disclosure of Interest in Other Entities‖. IFRS 12 establishes
disclosure requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and
off balance sheet vehicles. The standard includes existing disclosures and also introduces significant additional disclosure
requirements that address the nature of, and risks associated with, an entity’s interests in other entities.
Fair Value Measurement
In May 2011, the IASB issued a new standard, IFRS 13, ―Fair Value Measurement‖. IFRS 13 is a comprehensive standard for
fair value measurement and disclosure requirements for use across all IFRS. The new standard clarifies that fair value is the
price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market
participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS,
guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value
measurements and in many cases does not reflect a clear measurement basis or consistent disclosures.
IFRS 10, 11, 12 and 13 are all applicable for fiscal years beginning on or after January 1, 2013. We will apply these new
standards for our first quarter of fiscal year 2014 and are still evaluating their impact on our consolidated financial statements.
Business Risks
We are constantly looking to control and improve our operations. In this perspective, identification and management of risks
are key components of such activities. We have identified and assessed key risk factors that could negatively impact the
Corporation’s objectives and its ensuing performance.
We manage risks on an ongoing basis and implement a series of measures designed to mitigate key risks described in the
above section and their financial impact.
Road Transportation Fuel. Our results are sensitive to the changes in road transportation fuel retail price and gross margin.
Factors beyond our control such as market-driven changes in supply terms, road transportation fuel price fluctuations due to,
amongst other things, general political and economic conditions, as well as the market’s limited ability to absorb road
transportation fuel retail price fluctuations, are all factors that could influence road transportation fuel retail price and related
gross margin. During fiscal 2013, road transportation fuel revenues accounted for approximately 71.1% of our total revenue,
yet the road transportation fuel gross margin represented only about 36.1% of our overall gross profits. In fiscal 2013, a
change of one cent per gallon would have resulted in a change of approximately $69.0 million in road transportation fuel
gross profit, with a corresponding impact on net earnings of approximately $0.25 per share on a diluted basis.
Electronic Payment Modes. We are exposed to significant fluctuations in expenses related to electronic payment modes
resulting from large changes in road transportation fuel retail prices, particularly in our U.S. markets, because the majority of
this expense is based on a percentage of the retail prices of road transportation fuel. For fiscal 2013, a variation of 10% in our
expenses associated with electronic payment modes would have had an impact on net earnings of approximately $0.10 per
share on a diluted basis.
Seasonality and Natural Disasters. Weather conditions can have an impact on our revenues as historical purchase patterns
indicate that our customers increase their transactions and also purchase higher margin items when weather conditions are
favourable. We have operations in the Southeast and West coast regions of the United States and, although these regions
are generally known for their mild weather, these regions are susceptible to severe storms, hurricanes, earthquakes and
other natural disasters.
Economic Conditions. Our revenues may be negatively influenced by changes in global, national, regional and/or local
economic variables and consumer confidence. Changes in economic conditions could adversely affect consumer spending
patterns, travel and tourism in certain of our market areas.
For several years, the global capital and credit markets and the global economy have experienced significant uncertainty,
characterized by the bankruptcy, failure, collapse or sale of various financial institutions, the European sovereign debt crisis
and a considerable level of intervention from governments around the world. These conditions may, in particular, adversely
affect the demand for our products. As the contraction of the global capital and credit markets spreads throughout the
broader economy, major markets around the world have experienced very weak or negative economic growth. Although
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Page 44
there may be signs of economic recovery, the markets remain fragile and could again enter periods of negative economic
growth. There can be no assurance that our business will not be adversely affected by adverse global economic conditions.
Tobacco Products. Tobacco products represent our largest product category of merchandise and service revenues. For fiscal
2013, revenues of tobacco products were approximately 38.0% of total merchandise and service revenues. Significant
increases in wholesale cigarette costs and a tax increase on tobacco products, as well as current and future legislation and
national and local campaigns to discourage smoking in the United States, Canada and Europe, may have an adverse impact
on the demand for tobacco products, and may therefore adversely affect our revenues and profits in light of the competitive
landscape and consumer sensitivity to the price of such products.
In addition, we sell brands of cigarettes that are manufactured to be sold by Couche-Tard on an exclusive basis and we could
be sued for health problems caused by the use of tobacco products. In fact, various health-related legal actions, proceedings
and claims arising out of the sale, distribution, manufacture, development, advertising and marketing of cigarettes have been
brought against vendors of tobacco products. Any unfavourable verdict against us in a health-related suit could adversely
affect our business, financial condition and results of operations. In conformity with accounting standards, we have not
established any reserves for the payment of expenses or adverse results related to any potential health-related litigation.
Competition. The industries and geographic areas in which we operate are highly competitive and marked by a constant
change in terms of the number and type of retailers offering the products and services found in our stores. We compete with
other convenience store chains, independent convenience stores, gas station operators, large and small food retailers, quick
service restaurants, local pharmacies and pharmacy chains and dollar stores. There can be no assurance that we will be able
to compete successfully against our competitors. Our business may also be adversely affected if we do not sustain our ability
to meet customer requirements relative to price, quality, customer service and service offerings.
Environmental Laws and Regulations. Our operations, particularly those relating to the storage, transportation and sale of
fuel products, are subject to numerous environmental laws and regulations in the countries in which we operate, including
laws and regulations governing the quality of fuel products, ground pollution and emissions and discharges into air and water,
the implementation of targets regarding the use of certain bio-fuel or renewable energy products, the handling and disposal of
hazardous wastes, the use of vapour reduction systems to capture fuel vapour, and the remediation of contaminated sites.
Our operations expose us to certain risks, particularly at our terminals and other storage facilities, where large quantities of
fuel are stored, and at our fuel stations. These risks include equipment failure, work accidents, fires, explosions, vapour
emissions, spills and leaks at storage facilities and/or in the course of transportation to or from our or a third party’s terminals,
fuel stations, airports or other sites. In addition, we are also exposed to the risk of accidents involving the tanker trucks used
in our fuel product distribution system. These types of hazards and accidents may cause personal injuries or the loss of life,
business interruptions and/or property, equipment and environmental contamination and damage. Further, we may be
subject to litigation, compensation claims, governmental fines or penalties or other liabilities or losses in relation to such
incidents and accidents and may incur significant costs as a result. Under various national, provincial, state and local laws
and regulations, we may, as the owner or operator, be liable for the costs of removal or remediation of contamination at our
current or former sites, whether or not we knew of, or caused, the presence of such contamination. Such incidents and
accidents may also affect our reputation or our brands, leading to a decline in the sales of our products and services and may
adversely impact our business, financial condition and results of operations.
Acquisitions. Acquisitions have been and will continue to be a significant part of our growth strategy. Our ability to identify
strategic acquisitions in the future may be limited by the number of attractive acquisition targets with motivated sellers,
internal demands on our resources and, to the extent necessary, our ability to obtain financing on satisfactory terms for larger
acquisitions, if at all.
Achieving anticipated benefits and synergies of an acquisition will depend in part on whether the operations, systems,
management and cultures of our corporation and the acquired business can be integrated in an efficient and effective manner
and whether the presumed bases or sources of synergies produce the benefits anticipated. We may not be able to achieve
anticipated synergies and cost savings for an acquisition for many reasons, including contractual constraints, an inability to
take advantage of expected synergistic savings and increased operating efficiencies, loss of key employees, or changes in
tax laws and regulations. The process of integrating an acquired business may lead to greater than expected operating costs,
significant one-time write-offs or restructuring charges, customer loss and business disruption (including, without limitation,
difficulties in maintaining relationships with employees, customers, or suppliers). Failure to successfully integrate an acquired
business may have an adverse effect on our business, financial condition and results of operations.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 45
Although we perform a due diligence investigation of the businesses or assets that we acquire, there may be liabilities or
expenses of the acquired business or assets that we do not uncover during our due diligence investigation and for which we,
as a successor owner, may be responsible. The discovery of any material liabilities relating to an acquisition could have a
material adverse effect on our business, financial condition and results of operations.
Legislative and Regulatory Requirements. As discussed above under ―Environmental Laws and Regulations‖, our operations
are subject to numerous environmental laws and regulations. In addition, convenience store operations are subject to
extensive regulations, including regulations relating to the sale of alcohol and tobacco products, various food safety and
product quality requirements, minimum wage laws, and tax laws and regulations. We currently incur substantial operating
and capital costs for compliance with existing health, safety, environmental and other laws and regulations applicable to our
operations. If we fail to comply with any laws and regulations or permit limitations or conditions, or fail to obtain any
necessary permits or registrations, or to extend current permits or registrations upon expiry of their terms, or to comply with
any restrictive terms contained in our current permits or registrations, we may be subject to, among other things, civil and
criminal penalties and, in certain circumstances, the temporary or permanent curtailment or shutdown of a part of our
operations. In addition, the laws and regulations applicable to our operations are subject to change and it is expected that,
given the nature of our business, we will continue to be subject to increasingly stringent health, safety, environmental laws
and regulations and other laws and regulations that may increase the cost of operating our business above currently
expected levels and require substantial future capital and other expenditures. As a result, there can be no assurance that the
effect of any future laws and regulations or any changes to existing laws and regulation, or their current interpretation, on our
business, financial condition and results of operations would not be material.
Our business may also be affected by laws and regulations addressing global climate change and the role in it played by
fossil fuel combustion and the resulting carbon emissions. Some jurisdictions in which we operate have enacted measures to
limit carbon emissions, and such measures increase the costs of petroleum-based fuels above what they otherwise would be
and may adversely affect the demand for road transportation fuel. Similarly, adoption of other environmental protection
measures affecting the petroleum supply chain, such as more stringent requirements applicable to the exploration, drilling,
and transportation of crude oil and to the refining and transportation of petroleum products, may also increase the costs of
petroleum-based fuels with similar effects on demand for road transportation fuel. The impact of such developments,
individually or in combination, could adversely affect our sales of road transportation fuel.
Interest Rates. We are exposed to interest rate fluctuations associated with changes in the short-term interest rate.
Borrowings under our credit facilities bear interest at variable rates, and other debt we incur could likewise be variable-rate
debt. As of April 28, 2013, we carried variable rate debt of approximately $2,545.0 million. Based on the amount of our
variable rate debt as at April 28, 2013, a one percentage point increase in interest rates would increase our total annual
interest expense by $25.0 million or $0.14 per share on a diluted basis. If market interest rates increase, variable-rate debt
will create higher debt service requirements, which could adversely affect our cash flow. We do not currently use derivative
instruments to mitigate this risk.
Liquidity. Liquidity risk is the risk that we will encounter difficulties in meeting our obligations associated with financial
liabilities and lease commitments. We are exposed to this risk mainly through our long-term debt, accounts payable and
accrued expenses and our lease agreements. Our liquidities are provided mainly by cash flows from operating activities and
borrowings available under our revolving credit facilities.
Litigation. In the ordinary course of business, we are a defendant in a number of legal proceedings, suits, and claims
common to companies engaged in our business and an adverse outcome in such proceedings could adversely affect our
business, financial condition and results of operations.
Insurance. We carry comprehensive liability, fire and extended coverage insurance on most of our facilities, with policy
specifications and insured limits customarily carried in our industry for similar properties. There can be no assurance that we
will be able to continue to obtain such insurance on favourable terms or at all. Some types of losses, such as losses resulting
from wars, acts of terrorism, or natural disasters, generally are not insured because they are either uninsurable or not
economically practical.
Acts of War or Terrorism. Acts of war and terrorism could impact general economic conditions and the supply and price of
crude oil. Such events could adversely impact our business, financial condition and results of operations.
Exchange Rate. Our functional currency is the Canadian dollar. As such, our investments in our U.S. and European
operations are exposed to net changes in currency exchange rates. Should changes in currency exchange rates occur, the
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 46
amount of our net investment in our U.S. and European operations could increase or decrease. From time to time, we use
cross-currency interest swap rate agreements to hedge a portion of this risk.
We are also exposed to foreign currency risk with respect to a portion of our long-term debt denominated in U.S. dollars. As
at April 28, 2013, all else being equal, a hypothetical variation of 5.0% of the U.S. dollar against the Canadian dollar would
have had a net impact of $4.6 million on net earnings. We do not currently use derivative instruments to mitigate this risk.
We use the U.S. dollar as our reporting currency. As such, changes in currency exchange rates could materially increase or
decrease our foreign currency-denominated net assets on consolidation which would increase or decrease, as applicable,
shareholders’ equity. In addition, changes in currency exchange rates will affect the translation of the revenue and expenses
of our Canadian and European operations and will result in lower or higher net earnings than would have occurred had the
exchange rate not changed.
In addition to currency translation risks, we incur a currency transaction risk, mostly in Europe, whenever one of our
subsidiaries enters into a revenue contract with a different currency than its functional currency. Given the volatility of
exchange rates, we may not be able to manage our currency transaction and/or translation risks effectively, and volatility in
currency exchange rates could have an adverse effect on our business, financial condition and results of operations.
Credit Risk. We are exposed to credit risk arising from our embedded total return swaps and cross-currency interest rate
swaps when these swaps result in a receivable from financial institutions. We do not currently use derivative instruments to
mitigate this risk.
Dependence on Third Party Suppliers. Our fuel business is dependent upon the supply of refined oil products from a
relatively limited number of suppliers and upon a distribution network serviced principally by third-party tanker trucks. In the
case of our key suppliers, an event causing disruptions to any of these suppliers’ supply chains or refineries could have a
significant effect on our ability to receive refined oil products for sale or raw materials for use in the production of our
lubricants, or result in us paying a higher cost to obtain such products.
Accounts Receivable. We are exposed to risk relating to the creditworthiness and performance of our customers, suppliers
and contract counterparties. At April 28, 2013, we had outstanding accounts receivable totaling $1,616.0 million. This
amount primarily consists of credit card receivables, vendor rebates due from our suppliers and receivables arising from the
sale of fuel to independent, franchised or licensed gas station operators as well as to other industrial and commercial clients.
Contracts with longer payment cycles or difficulties in enforcing contracts or collecting accounts receivables could lead to
material fluctuations in our cash flows and could adversely impact our business, financial condition and results of operations.
Long-Term Changes in Customer Behaviour. In the road transportation fuel and convenience business sector, customer
traffic is generally driven by consumer preferences and spending trends, growth rates for automobile and truck traffic and
trends in travel and tourism. A decline in the number of potential customers using our fuel stations and convenience stores
due to changes in consumer preferences, changes in discretionary consumer spending or modes of transportation could
adversely impact our business, financial condition and results of operations.
Global Operations. We have significant operations in multiple jurisdictions throughout the world. Some of the risks inherent in
the scope of our international operations include: the difficulty of enforcing agreements and collecting receivables through
certain foreign legal systems; more expansive legal rights of foreign labor unions and employees; foreign currency exchange
rate fluctuations; the potential for changes in local economic conditions; potential tax inefficiencies in repatriating funds from
foreign subsidiaries; and exchange controls and restrictive governmental actions, such as restrictions on transfer or
repatriation of funds and trade protection matters, including prohibitions or restrictions on acquisitions or joint ventures. Any
of these factors could materially and adversely affect our business, financial condition and results of operations.
Outlook
During fiscal year 2014, we expect to pursue our investments with caution in order to, amongst other things, improve our
network. We also intend to keep an ongoing focus on our sales, supply terms and operating expenses while keeping an eye
on growth opportunities that may be available to us.
We will continue to pay special attention to the integration of Statoil Fuel & Retail. To do this, we have formed a
multidisciplinary team whose objectives are to ensure an effective integration and to identify opportunities for improvement,
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 47
including available synergies. Within this framework, we also intend to put in place strategies that will enable us to reduce our
debt level in order to regain our financial flexibility and maintain the quality of our credit profile.
Finally, in line with our business model, we intend to continue to focus our resources on the sale of fresh products and on
innovation, including the introduction of new products and services, in order to satisfy the needs of our large clientele.
July 9, 2013
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 48
Management’s Report
The consolidated financial statements of Alimentation Couche-Tard Inc. and the financial information contained in this Annual
Report are the responsibility of management. This responsibility is applied through a judicious choice of accounting
procedures and principles, the application of which requires the informed judgment of management. The consolidated
financial statements were prepared according to generally accepted accounting principles in Canada as set out in the
Handbook of the Canadian Institute of Chartered Accountants – Part I, which incorporates International Financial Reporting
Standards (―IFRS’’), as issued by the International Accounting Standards Board (―IASB‖) and were approved by the Board of
Directors. In addition, the financial information included in the Annual Report is consistent with the consolidated financial
statements.
Alimentation Couche-Tard Inc. maintains accounting and administrative control systems which, in the opinion of
management, ensure reasonable accuracy, relevance and reliability of financial information and well-ordered, efficient
management of the Corporation’s affairs.
The Board of Directors is responsible for approving the consolidated financial statements included in this Annual Report,
primarily through its Audit Committee. This committee, which holds periodic meetings with members of management as well
as with the external auditors, reviewed the consolidated financial statements of Alimentation Couche-Tard Inc. and
recommended their approval to the Board of Directors.
The consolidated financial statements for the fiscal years ended April 28, 2013 and April 29, 2012 were audited by
PricewaterhouseCoopers LLP, chartered professional accountants, and their report indicates the extent of their audit and
their opinion on the consolidated financial statements.
July 9, 2013
/s/ Alain Bouchard
Alain Bouchard
President and
Chief Executive Officer
/s/ Raymond Paré
Raymond Paré
Vice-President and
Chief Financial Officer
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 49
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for
Alimentation Couche-Tard Inc, as such term is defined in Canadian securities regulations. With our participation management
carried out an evaluation of the effectiveness of our internal control over financial reporting, as of the end of our fiscal year
ended April 28, 2013. The framework on which such evaluation was based is contained in the report entitled Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (―COSO‖). This
evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the
operating effectiveness of controls and a conclusion on this evaluation. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate. On June 19, 2012, the Corporation acquired Statoil, Fuel &
Retail ASA (―SFR‖). Management excluded from its evaluation of the effectiveness of our internal control over financial
reporting, SFR’s internal control over financial reporting. SFR’s results since the acquisition date are included in the
Corporation’s consolidated financial statements and constituted approximately 55.0% of total consolidated assets as of
April 28, 2013, approximately 31.0% of consolidated revenues and 17.0% of consolidated net earnings for the fiscal year then
ended. Refer to note 4 to the consolidated financial statements for a discussion of this acquisition. Based on this evaluation,
management concluded that Alimentation Couche-Tard Inc.’s internal control over financial reporting was effective as at
April 28, 2013.
PricewaterhouseCoopers LLP, chartered professional accountants, audited the effectiveness of Alimentation Couche-Tard
Inc.’s internal control over financial reporting as at April 28, 2013 and have issued their unqualified opinion thereon, which is
included herein.
July 9, 2013
/s/ Alain Bouchard
Alain Bouchard
President and
Chief Executive Officer
/s/ Raymond Paré
Raymond Paré
Vice-President and
Chief Financial Officer
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 50
Independent Auditor’s Report
To the Shareholders of
Alimentation Couche-Tard Inc.
July 9, 2013
We have completed integrated audits of Alimentation Couche-Tard Inc. and its subsidiaries’ consolidated financial statements
for the fiscal year ended April 28, 2013 and April 29, 2012 and its internal control over financial reporting as at April 28, 2013.
Our opinions, based on our audits, are presented below.
Consolidated financial statements
We have audited the accompanying consolidated financial statements of Alimentation Couche-Tard Inc. and its subsidiaries,
which comprise the consolidated balance sheets as at April 28, 2013 and April 29, 2012 and the consolidated statements of
earnings, comprehensive income, changes in shareholders’ equity and cash flows for the fiscal years ended April 28, 2013 and
April 29, 2012, and the related notes, which comprise a summary of significant accounting policies and other explanatory
information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with International Financial Reporting Standards and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the company’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit
opinion on the consolidated financial statements.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Alimentation
Couche-Tard Inc. and its subsidiaries as at April 28, 2013 and April 29, 2012 and their financial performance and their cash flows
for fiscal years ended April 28, 2013 and April 29, 2012 in accordance with International Financial Reporting Standards.
Report on internal control over financial reporting
We have also audited the effectiveness of Alimentation Couche-Tard Inc. and its subsidiaries’ internal control over financial
reporting as at April 28, 2013.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 51
Management’s responsibility for internal control over financial reporting
Management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal
Control over Financial Reporting.
Auditor’s responsibility
Our responsibility is to express an opinion, based on our audit, on whether the company’s internal control over financial
reporting was effectively maintained in accordance with criteria established in Internal Control - Integrated Framework, issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We conducted our audit in accordance with the standard for audits of internal control over financial reporting set out in the
CICA Handbook – Assurance. This standard requires that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, based on the
assessed risk, and performing such other procedures as we consider necessary in the circumstances.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Statoil, Fuel & Retail ASA, which is included in the 2013 consolidated financial statements of Alimentation Couche-
Tard Inc., and constituted approximately 55.0% of total assets as of April 28, 2013, approximately 31.0% of revenue, and
approximately 17.0% of net earnings for the fiscal year ended April 28, 2013. Our audit of internal control over financial
reporting of Alimentation Couche-Tard Inc. also did not include an evaluation of the internal control over financial reporting of
Statoil, Fuel & Retail ASA.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. A
company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with Canadian generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Opinion
In our opinion, Alimentation Couche-Tard Inc. and its subsidiaries maintained, in all material respects, effective internal control
over financial reporting as at April 28, 2013 in accordance with criteria established in Internal Control - Integrated Framework,
issued by COSO.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP1
Montreal, Canada
1 CPA auditor, CA, public accountancy permit No. A119427
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 52
Consolidated Statements of Earnings
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars (Note 2), except per share amounts)
Revenues
Cost of sales
Gross profit
Operating, selling, administrative and general expenses (Note 6)
Restructuring costs (Note 22)
Curtailment gain on defined benefits pension plans obligation (Note 25)
Depreciation, amortization and impairment of property and equipment, intangible and other assets
Operating income
Share of earnings of joint ventures and associated companies accounted for using the equity
method (Note 5)
Financial expenses
Financial revenues
Loss (gain) on foreign exchange forward contracts (Note 26)
Foreign exchange gain from currency conversion
Net financial expenses (revenues) (Note 8)
Earnings before income taxes
Income taxes (Note 9)
Net earnings
Net earnings per share (Note 10)
Basic
Diluted
The accompanying notes are an integral part of the consolidated financial statements.
2013
(52 weeks)
$
35,543.4
30,933.8
4,609.6
3,235.2
34.0
(19.4)
521.1
3,770.9
838.7
2012
(53 weeks)
$
22,980.3
20,005.2
2,975.1
2,155.6
-
-
239.8
2,395.4
579.7
15.8
118.0
(9.9)
102.9
(3.2)
207.8
646.7
73.9
572.8
3.10
3.07
21.6
15.6
(1.2)
(17.0)
-
(2.6)
603.9
146.3
457.6
2.54
2.49
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 53
Consolidated Statements of Comprehensive Income
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars (Note 2), except per share amounts)
Net earnings
Other comprehensive income
Translation adjustments
Changes in cumulative translation adjustments (1)
Change in fair value of financial instruments designated as a hedge of the Corporation’s net investment in its U.S.
operations (2)
Net interest on financial instruments designated as a hedge of the Corporation’s net investment in its U.S.
operations (3)
Cash flow hedges
Change in fair value of financial instruments (4) (Note 26)
Gain realized on financial instruments transferred to earnings (5) (Note 26)
Available-for-sale financial instrument
Gain realized on the disposal of a financial instrument transferred to earnings (6)
Net actuarial gain (loss) (Note 25) (7)
Other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to:
Shareholders of the Corporation
Non-controlling interest
Comprehensive income
2013
(52 weeks)
$
572.8
2012
(53 weeks)
$
457.6
183.3
(16.9)
1.8
7.6
(7.8)
-
1.0
169.0
741.8
749.7
(7.9)
741.8
(26.4)
-
-
5.9
(5.1)
(0.6)
(4.9)
(31.1)
426.5
426.5
-
426.5
(1) For the fiscal years ended April 28, 2013 and April 29, 2012 these amounts include a gain of $20.7 and a loss of $10.5, respectively, arising from the translation of US dollar
denominated long-term debt which was previously designated as a foreign exchange hedge of the Corporation’s net investment in its US operations (net of income taxes of $3.2
and $1.6, respectively).
(2) This amount is net of income taxes of $3.4.
(3) This amount is net of income taxes of $0.8.
(4) For the fiscal years ended April 28, 2013 and April 29, 2012 these amounts are net of income taxes of $2.6 and $1.9, respectively.
(5) For the fiscal years ended April 28, 2013 and April 29, 2012 these amounts are net of income taxes of $2.8 and $1.6, respectively.
(6) This amount is net of income taxes.
(7) For the fiscal years ended April 28, 2013 and April 29, 2012 these amounts are net of income taxes of $0.3 and $1.7, respectively.
The accompanying notes are an integral part of the consolidated financial statements.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 54
Consolidated Statements of Changes in Shareholders’ Equity
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars (Note 2))
Capital
stock
$
321.0
Balance, beginning of year
Comprehensive income:
Net earnings
Other comprehensive income (loss)
Comprehensive income
Dividends
Acquisition of control of Statoil Fuel & Retail ASA (Note 4)
Acquisition of non-controlling interest in Statoil Fuel &
Retail ASA (Note 4)
Class B subordinate voting shares issued for cash on
public offering, net of transaction costs (2) (Note 23)
337.2
Stock option-based compensation expense (Note 24)
Initial fair value of stock options exercised
Cash received upon exercise of stock options
Balance, end of year
4.1
8.1
670.4
Attributable to shareholders of the Corporation
Accumulated
other
comprehensive
income (1)
Contributed
surplus
Retained
earnings
2013
(52 weeks)
Non-
controlling
Total
interest Total equity
$
$
17.9
1,826.8
$
$
$
$
8.9
2,174.6
2,174.6
572.8
(55.6)
2.7
(4.1)
176.9
572.8
176.9
749.7
(55.6)
-
(7.9)
(7.9)
487.2
572.8
169.0
741.8
(55.6)
487.2
-
(479.3)
(479.3)
337.2
2.7
-
8.1
337.2
2.7
-
8.1
16.5
2,344.0
185.8
3,216.7
-
3,216.7
(1) The year-end balance comprises a cumulative translation adjustment gain of $204.3, a cumulative loss of $16.9 on financial instruments designated as a hedge of the
Corporation’s net investment in its U.S. operations (net of income taxes of $3.5), a cumulative gain of $1.8 on net interest on financial instruments designated as a hedge of the
Corporation’s net investment in its U.S. operations (net of income taxes of $0.8), a cumulative gain of $1.7 on a financial instrument designated as a cash flow hedge (net of
income taxes of $0.4) and a cumulative net actuarial loss of $5.1 (net of income taxes of $2.0).
(2) This amount is net of transaction costs which are net of a related income tax benefit of $3.8.
Attributable to shareholders of the Corporation
Accumulated other
comprehensive
income (3)
$
40.0
(31.1)
Retained
earnings
$
1,596.3
457.6
(49.8)
Capital
stock
$
323.8
Contributed
surplus
$
19.3
0.4
(1.8)
1.8
19.2
(23.8)
2012
(53 weeks)
Shareholders’
equity
$
1,979.4
457.6
(31.1)
426.5
(49.8)
0.4
-
19.2
(23.8)
Balance, beginning of year
Comprehensive income:
Net earnings
Other comprehensive income (loss)
Total comprehensive income
Dividends
Stock option-based compensation expense (Note 24)
Initial fair value of stock options exercised
Cash received upon exercise of stock options
Repurchase and cancellation of shares (Note 23)
Excess of acquisition cost over book value of Class A
multiple voting shares and Class B subordinate voting
shares repurchased and cancelled
Balance, end of year
321.0
17.9
(177.3)
1,826.8
8.9
(177.3)
2,174.6
(1) The year-end balance comprises a cumulative translation adjustment gain of $13.1, a cumulative gain of $1.9 on a financial instrument designated as a cash flow hedge (net of
income taxes of $0.6) and a cumulative net actuarial loss of $6.1 (net of income taxes of $2.3).
The accompanying notes are an integral part of the consolidated financial statements.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 55
Consolidated Statements of Cash Flows
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars (Note 2))
Operating activities
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation, amortization and impairment of property and equipment, intangible and other assets, net of amortization
of deferred credits
Deferred income taxes
Loss (gain) on foreign exchange forward contracts (Note 26)
Restructuring costs (Note 22)
Curtailment gain on defined benefits pension plans obligation (Note 25)
Deferred credits
Share of earnings of joint ventures and associated companies accounted for using the equity method, net of dividends
received (Note 5)
Loss on disposal of property and equipment and other assets
Negative goodwill (Note 4)
Other
Changes in non-cash working capital (Note 11)
Net cash provided by operating activities
Investing activities
Business acquisitions (Note 4)
Purchases of property and equipment and other assets
Net settlement of foreign exchange forward contracts
Proceeds from disposal of property and equipment and other assets
Proceeds from sale and leaseback transactions
Restricted cash
Net cash used in investing activities
Financing activities
Borrowings under the unsecured non-revolving acquisition credit facility, net of financing costs (Note 19)
Issuance of Canadian dollar denominated senior unsecured notes, net of financing
costs (Note 19)
Repayment of the unsecured non-revolving acquisition credit facility (Note 19)
Repayment of non-current debt assumed on business acquisition
Net (decrease) increase in other debt (Note 19)
Issuance of shares on public offering, net of transaction costs (Note 23)
Issuance of shares upon exercise of stock-options
Repurchase of shares (Note 23)
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate fluctuations on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash, cash equivalents, end of year
Supplemental information:
Interest paid
Interest and dividends received
Income taxes paid
Cash and cash equivalents components:
Cash and demand deposits
Liquid investments
The accompanying notes are an integral part of the consolidated financial statements.
2013
(52 weeks)
$
2012
(53 weeks)
$
572.8
457.6
486.3
(122.1)
102.9
34.0
(19.4)
17.3
(9.6)
8.3
(4.4)
26.4
68.9
1,161.4
(2,644.6)
(537.3)
(86.4)
50.4
30.3
1.1
(3,186.5)
3,190.2
997.5
(995.5)
(800.5)
(314.5)
333.4
8.1
-
(55.6)
2,363.1
16.0
354.0
304.3
658.3
76.9
11.7
172.3
619.2
39.1
658.3
199.7
24.2
(17.0)
-
-
10.7
(16.8)
9.8
(6.9)
17.8
84.7
763.8
(380.3)
(316.6)
-
27.8
-
(22.7)
(691.8)
-
-
-
-
157.1
-
19.2
(201.1)
(49.8)
(74.6)
(2.8)
(5.4)
309.7
304.3
7.3
6.1
91.1
253.5
50.8
304.3
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 56
Consolidated Balance Sheets
As at April 28, 2013 and April 29, 2012
(in millions of US dollars (Note 2))
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable (Note 12)
Inventories (Note 13)
Prepaid expenses
Foreign exchange forward contracts (Note 26)
Income taxes receivable
Property and equipment (Note 14)
Goodwill (Note 15)
Intangible assets (Note 16)
Other assets (Note 17)
Investment in joint ventures and associated companies (Note 5)
Deferred income taxes (Note 9)
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 18)
Provisions (Note 22)
Income taxes payable
Current portion of long-term debt (Note 19)
Long-term debt (Note 19)
Provisions (Note 22)
Pension benefit liability (Note 25)
Financial liabilities (Note 20)
Deferred credits and other liabilities (Note 21)
Deferred income taxes (Note 9)
Shareholders’ equity
Capital stock (Note 23)
Contributed surplus
Retained earnings
Accumulated other comprehensive income
The accompanying notes are an integral part of the consolidated financial statements.
On behalf of the Board,
/s/ Alain Bouchard
Alain Bouchard
Director
/s/ Réal Plourde
Réal Plourde
Director
2013
$
658.3
21.6
1,616.0
846.0
57.8
-
81.6
3,281.3
5,079.9
1,081.0
834.7
136.3
84.2
48.8
10,546.2
2,351.1
96.5
70.0
620.8
3,138.4
2,984.3
358.8
109.7
20.4
156.7
561.2
7,329.5
670.4
16.5
2,344.0
185.8
3,216.7
10,546.2
2012
$
304.3
22.7
304.4
543.9
28.6
17.2
39.9
1,261.0
2,248.3
502.9
217.0
68.2
65.0
14.4
4,376.8
909.4
50.1
46.5
484.4
1,490.4
180.8
107.5
39.5
-
121.9
262.1
2,202.2
321.0
17.9
1,826.8
8.9
2,174.6
4,376.8
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 57
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
1. Governing statutes and nature of operations
Alimentation Couche-Tard Inc. (the ―Corporation‖) is incorporated under the Business Corporations Act (Quebec). The Corporation’s head
office is located in Laval, at 4204 Boulevard Industriel, Quebec, Canada.
As at April 28, 2013, the Corporation operates and licenses 8,386 convenience stores across North America, Scandinavia (Norway, Sweden
and Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania), and Russia, of which 6,235 are company-operated, and generates income
primarily from the sales of tobacco products, grocery items, beverages, fresh food offerings, including quick service restaurants, other retail
products and services, road transportation fuel, stationary energy, marine and aviation fuel, lubricants and chemicals.
2. Basis of presentation
Year-end date
The Corporation’s year-end is the last Sunday of April of each year. The fiscal years ended April 28, 2013 and April 29, 2012 are referred to
as 2013 and 2012. The fiscal year ended April 28, 2013 had 52 weeks (53 weeks in 2012).
Basis of presentation
The Corporation prepares its consolidated financial statements in accordance with generally accepted accounting principles in Canada as
set out in the Handbook of the Canadian Institute of Chartered Accountants – Part I, which incorporates International Financial Reporting
Standards (―IFRS’’), as issued by the International Accounting Standards Board (―IASB‖).
Reporting currency
The parent corporation’s functional currency is the Canadian dollar. However, the Corporation uses the US dollar as its reporting currency to
provide more relevant information considering its predominant operations in the United States and its debt largely denominated in US dollars.
Approval of the financial statements
The Corporation’s consolidated financial statements were approved on July 9, 2013 by the board of directors who also approved their
publication.
Comparative figures
Certain comparative figures of the consolidated financial statements have been reclassified to comply with the presentation adopted in the
fiscal year ended April 28, 2013:
Rental income from assets owned by the Corporation are now presented as revenue instead of a reduction of rent expense in Operating,
selling, administrative and general expenses resulting in an increase in revenues and accompanying increase in Operating, selling,
administrative and general expenses for fiscal 2013 of $7.1 ($6.0 for 2012);
Sales taxes on road transportation fuel in California, United States are now reported on a net basis in revenues instead of on a gross
basis in revenues and cost of sales resulting in a reduction in revenues and cost of sales for fiscal 2013 of $36.5 ($23.3 in 2012);
Income taxes receivable and payable are now presented on a gross basis depending on the various jurisdictions instead of net resulting
in an increase in income taxes receivable and income taxes payable of $70.0 as at April 28, 2013 ($46.5 as at April 29, 2012);
Accounts receivable and payable with the same counterparty where the Corporation has the legal right as well as the intention to settle
on a net basis, are now presented on a net basis instead of gross resulting in a decrease in accounts receivable and accounts payable
and accrued liabilities of $119.2 as at April 28, 2013 ($116.3 as at April 29, 2012).
These reclassifications had no impact on net earnings, comprehensive income or equity of the Corporation as of April 28, 2013 or
April 29, 2012.
3. Accounting policies
Change in accounting policy
On April 30, 2012, the Corporation early adopted the revised version of IAS 19, ―Employee Benefits‖, issued by the IASB, which retroactively
modifies accounting rules for defined benefit pension plans. The revised version of the standard contains multiple modifications, including the
elimination of the corridor approach, which allowed deferring part of the actuarial gains and losses, enhanced guidance on measurement of
plan assets and defined benefit obligations, streamlining the presentation of changes in assets and liabilities arising from defined benefit
plans as well as the introduction of enhanced disclosures for defined benefit plans.
Following the adoption of this revised standard, the Corporation also elected to present net interests on the net defined benefit liability (asset)
in Financial expenses rather than in Operating, selling, administrative and general expenses, as they were previously presented. The
increase in financial expenses and accompanying decrease in Operating, selling, administrative and general expenses for the fiscal year
ended April 28, 2013 is $2.8 ($2.1 for 2012).This adoption had no other significant impact on the Corporation’s consolidated financial
statements.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 58
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Use of estimates and judgments
The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management
reviews its estimates. These estimates are based on management’s best knowledge of current events and actions that the Corporation may
undertake in the future. Actual results could differ from those estimates. The most significant accounting judgments and estimates that the
Corporation has made in the preparation of the consolidated financial statements are discussed along with the relevant accounting policies
when applicable and relate primarily to the following topics: Vendor rebates, determination of the useful lives of tangible and intangible
assets, income taxes, leases, employee future benefits, provisions and business combinations.
Principles of consolidation
The consolidated financial statements include the accounts of the Corporation and its subsidiaries, all of which are wholly owned. They also
include the Corporation’s share of earnings of joint ventures and associated companies accounted for using the equity method. All
intercompany balances and transactions have been eliminated on consolidation.
Subsidiaries are entities over which the Corporation has control, where control is defined as the power to govern financial and operating
policies. The Corporation generally has directly or indirectly a shareholding of 100% of the voting rights in its subsidiaries. These criteria are
reassessed regularly and subsidiaries are fully consolidated from the date control is transferred to the Corporation, and are deconsolidated
from the date control ceases.
Foreign currency translation
Functional currency
The functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the
parent corporation and its Canadian operations is the Canadian dollar. The functional currency of foreign subsidiaries is generally their local
currency, mainly the US dollar for US operations and various other European currencies for operations in Europe.
Foreign currency transactions
Transactions denominated in foreign currencies are translated into the relevant functional currency as follows: Monetary assets and liabilities
are translated at the exchange rate in effect at the balance sheet date and revenues and expenses are translated at the average exchange
rate on a 4-week period basis. Non-monetary assets and liabilities are translated at historical rates or at the rate on the date they were
valued at fair value. Gains and losses arising from such translation, if any, are reflected in the consolidated statement of earnings except
when deferred in equity as qualifying net investment hedge.
Consolidation and foreign operations
The consolidated financial statements are consolidated in Canadian dollars using the following procedure: Assets and liabilities are
translated into Canadian dollars using the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the
average exchange rate on a 4-week period basis. Individual transactions with a significant impact on the consolidated statement of earnings
are translated using the transaction date exchange rate.
Gains and losses arising from such translation are included in Accumulated other comprehensive income in Shareholders’ equity. The
translation difference derived from each foreign subsidiary, associated company or joint venture is transferred to the consolidated statement
of earnings as part of the gain or loss arising from the divestment or liquidation of such a foreign entity when there is a loss of control, joint
control or significant influence, respectively.
Reporting currency
The Corporation has adopted the US dollar as its reporting currency. The Canadian dollar consolidated financial statements are translated
into the reporting currency using the procedure described above. Capital stock, Contributed surplus and Retained earnings are translated
using historical rates. Non-monetary assets at fair value are translated at the rate on the date on which their fair value was determined. Gains
and losses arising from translation are included in Accumulated other comprehensive income in Shareholders' equity.
Net earnings per share
Basic net earnings per share is calculated by dividing the net earnings available to Class A and Class B shareholders by the weighted
average number of Class A and Class B shares outstanding during the year. Diluted net earnings per share is calculated using the average
weighted number of shares outstanding plus the weighted average number of shares that would be issued upon the conversion of all
potential dilutive stock-options into common shares.
Revenue recognition
For its three major product categories, merchandise and services, road transportation fuel and other, the Corporation generally recognizes
revenue at point of sales for convenience operations Merchandise sales primarily comprise the sale of tobacco products, grocery items,
candy and snacks, beverages, beer, wine and fresh food offerings, including quick service restaurants. Merchandise sales in Europe also
include sale of merchandise and goods to certain independent operators and franchisees made from the Corporation’s distribution center
which are generally recognized according to delivery conditions.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 59
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Service revenues include the commission on sale of lottery tickets and issuance of money orders, fees from automatic teller machines, sales
of calling cards and gift cards, fees for cashing cheques, sales of postage stamps and bus tickets and car wash revenues. These revenues
are recognized at the time of the transaction. Service revenues also include franchise and license fees, which are recognized in revenues
over the period of the agreement to which the fees relate as well as royalties from franchisees and licensees, which are recognized
periodically based on sales reported by franchise and license operators.
In markets where refined oil products are purchased excluding excise duties, revenues from sales to customers are reported net of duties
taxes. In markets where refined oil products are purchased including excise duties, revenues and costs of goods sold are reported including
these duties.
Other revenues include sale of stationary energy, marine fuel, aviation fuel, lubricants and chemicals which are generally recognized
according to delivery conditions. Other revenues also include rental income from operating leases, which is recognized on a straight-line
basis, over the term of the lease.
Cost of sales and vendor rebates
Cost of sales mainly comprises the cost of finished goods, input materials and transportation costs when they are incurred to bring products
to the point of sale. For the Corporation's own production, such as production of lubricants, the cost of goods sold also includes direct labour
costs, production overheads, and production facility operating costs.
The Corporation records cash received from vendors related to vendor rebates as a reduction in the price of the vendors’ products and
reflects them as a reduction of cost of sales and related inventory in its consolidated statements of earnings and balance sheets when it is
probable that they will be received. The Corporation estimates the probability based on the consideration of a variety of factors, including
quantities of items sold or purchased, market shares and other conditions specified in the contracts. The accuracy of the Corporation’s
estimates can be affected by many factors, some of which are beyond its control, including changes in economic conditions and consumer
buying trends. Historically, the Corporation has not experienced significant differences in its estimates compared with actual results. Amounts
received but not yet earned are presented in deferred credits.
Operating, selling, administrative and general expenses
The main items comprising Operating, selling, administrative and general expenses are labour, net occupancy costs, credit and debit card
fees, overhead as well as transportation costs incurred to bring products to the final customer.
Cash and cash equivalents
Cash includes cash and demand deposits. Cash equivalents include highly liquid investments that can be readily converted into cash for a
fixed amount and that mature less than three months from the date of acquisition.
Restricted cash
Restricted cash comprises escrow deposits for pending acquisitions.
Inventories
Inventories are valued at the lesser of cost and net realizable value. The cost of merchandise is generally valued based on the retail price
less a normal margin. The cost of road transportation motor fuel inventory is generally determined according to the average cost method.
The cost of lubricant products and aviation fuel is determined according to the first-in, first-out method.
Income taxes
The income tax expense recorded to earnings is the sum of the deferred income taxes and current income taxes that are not recognized in
Other comprehensive income or directly to Shareholders’ equity.
The Corporation uses the balance sheet liability method to account for income taxes. Under this method, deferred tax assets and liabilities
are determined based on differences between the carrying amounts and tax bases of assets and liabilities using enacted or substantively
enacted tax rates and laws, as appropriate, at the date of the consolidated financial statements for the years in which the temporary
differences are expected to reverse. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and interests in joint
ventures, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to
utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Corporation intends to settle its current tax assets and
liabilities on a net basis.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 60
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The Corporation is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The
Corporation recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred
income tax assets and liabilities in the period in which such determination is made.
Property and equipment, depreciation, amortization and impairment
Property and equipment are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives using the
straight-line method based on the following periods:
Buildings and building components 3 to 40 years
3 to 40 years
Equipment
Lease term
Buildings under finance leases
Lease term
Equipment under finance leases
Building components include air conditioning and heating systems, plumbing and electrical fixtures. Equipment includes signage, fuel
equipment and in-store equipment.
Leasehold improvements and property and equipment on leased properties are amortized and depreciated over the lesser of their useful
lives and the term of the lease.
Property and equipment are tested for impairment should events or circumstances indicate that their book value may not be recoverable, as
measured by comparing their net book value to their recoverable amount which corresponds to the higher of fair value less costs to sell and
value in use of the asset or cash-generating unit. Should the carrying amount of property and equipment exceed their recoverable amount,
an impairment loss in the amount of the excess would be recognized.
The Corporation performs an annual evaluation of residual values, estimated useful lives and depreciation methods used for property and
equipment and any change resulting from this evaluation is applied prospectively by the Corporation.
Goodwill
Goodwill is the excess of the cost of an acquired business over the fair value of underlying net assets acquired from the business at the time
of acquisition. Goodwill is not amortized. Rather it is tested for impairment annually during the Corporation’s first quarter or more frequently
should events or changes in circumstances indicate that it might be impaired or if necessary due to the timing of acquisitions. Should the
carrying amount of a cash-generating unit’s goodwill exceed its recoverable amount, an impairment loss would be recognized.
Intangible assets
Intangible assets mainly comprise trademarks, franchise agreements, customer relationships, motor fuel supply agreements, software and
licenses. Licenses and trademarks that have indefinite lives since they do not expire, are recorded at cost, are not amortized and are tested
for impairment annually during the first quarter, or more frequently should events or changes in circumstances indicate that they might be
impaired or if necessary due to the timing of acquisitions. Motor fuel supply agreements, franchise agreements and trademarks with finite
lives are recorded at cost and are amortized using the straight-line method over the term of the agreements they relate to. Customer
relationships, software and other intangible assets are amortized using the straight-line method over a period of five to 15 years.
Deferred charges
Deferred charges are mainly expenses incurred in connection with the analysis and signing of the Corporation’s revolving unsecured
operating credits amortized using the straight-line method over the period of the corresponding contract. Deferred charges also include
expenses incurred in connection with the analysis and signing of operating leases which are deferred and amortized on a straight-line basis
over the lease term.
Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Corporation analyzes whether an arrangement is or contains a lease by assessing if:
fulfilment of the arrangement is dependent on the use of a specified asset or assets; and
the arrangement conveys a right to use the asset or assets.
The Corporation has assessed that some arrangements with franchisees contain embedded lease agreements and accordingly, accounts for
a portion of those agreements as lease agreement.
The Corporation distinguishes between lease contracts and capacity contracts. Lease contracts provide the right to use a specific asset for a
period of time. Capacity contracts confer the right to and the obligation to pay for availability of certain capacity volumes related primarily to
transportation. Such capacity contracts that do not involve specified single assets or that do not involve substantially all the capacity of an
undivided interest in a specific asset are not considered to qualify as leases for accounting purposes. Capacity payments are recognized in
the consolidated statements of earnings in Operating, selling, administrative and general expenses.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 61
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Lease arrangements in which the Corporation is a lessee
The Corporation accounts for finance leases in instances where it has acquired substantially all the benefits and risks incidental to ownership
of the leased property. In some cases, the characterisation of a lease transaction is not always evident, and management uses judgment in
determining whether the lease is a finance lease arrangement that transfers substantially all the risks and benefits incidental to ownership to
the Corporation. Judgement is required on various aspects that include, but are not limited to, the fair value of the leased asset, the
economic life of the leased asset, whether or not to include renewal options in the lease term and determining an appropriate discount rate to
calculate the present value of the minimum lease payments. The Corporation's activities involve a considerable number of lease agreements,
most of which are determined to be operational in nature. The cost of assets under finance leases represents the present value of minimum
lease payments or the fair value of the leased property, whichever is lower, and is amortized on a straight-line basis over the term of the
lease or useful life of the asset, whichever is shorter. Assets under finance leases are presented under Property and equipment in the
consolidated balance sheet.
Leases that do not transfer substantially all the benefits and risks incidental to ownership of the property are accounted for as operating
leases. When a lease contains a predetermined fixed escalation of the minimum rent, the Corporation recognizes the related rent expense
on a straight-line basis over the term of the lease and, consequently, records the difference between the recognized rental expense and the
amounts payable under the lease as deferred rent expense.
The Corporation also receives tenant allowances, which are amortized on a straight-line basis over the term of the lease or useful life of the
asset, whichever is shorter.
Gains and losses resulting from sale and leaseback transactions are recorded in the consolidated statements of earnings at the transaction
date except if:
the sale price is below fair value and the loss is compensated for by future lease payments below market price, in which case it shall be
deferred and amortized in proportion to the lease payments over the period during which the asset is expected to be used; or
the sale price is above fair value, in which case the excess shall be deferred and amortized over the period during which the asset is
expected to be used.
Lease arrangements in which the Corporation is a lessor
Leases in which the Corporation transfers substantially all the risks and rewards of ownership of an asset to a third party are classified as
finance leases. The Corporation recognizes assets held under a finance lease in the consolidated balance sheets and presents them as
accounts receivable. Lease payments received under finance leases are apportioned between the financial revenues and reduction of the
receivable.
Leases that do not transfer substantially all the benefits and risks incidental to ownership of the property are accounted for as operating
leases. When a lease contains a predetermined fixed escalation of the minimum rent, the Corporation recognizes the related rent revenue on
a straight-line basis over the term of the lease and, consequently, records the difference between the recognized rental revenue and the
amounts receivable under the lease as deferred rent revenue.
Financing costs
Financing costs related to term loans and debt securities are included in the initial carrying amount of the corresponding debt and are
amortized using the effective interest rate method that is based on the estimated cash flow over the expected life of the liability. Financing
costs related to revolving loans are included in other assets and are amortized using the straight-line method over the expected life of the
underlying agreement.
Stock-based compensation and other stock-based payments
Stock-based compensation costs are measured at the grant date of the award based on the fair value method for all transactions entered
into starting in fiscal year 2003.
The fair value of stock options is recognized over the vesting period of each respective vesting portion as compensation expense with a
corresponding increase in contributed surplus. When stock options are exercised, the corresponding contributed surplus is transferred to
capital stock.
The Phantom Stock Units (―PSU‖) compensation cost and the related liability are recorded on a straight-line basis over the corresponding
vesting period based on the fair market value of Class B shares and the best estimate of the number of PSUs that will ultimately be paid. The
recorded liability is adjusted periodically to reflect any variation in the fair market value of the Class B shares and revisions to the estimated
number of PSUs that will ultimately be paid.
Employee future benefits
The Corporation accrues its obligations under employee pension plans and the related costs, net of plan assets. The Corporation has
adopted the following accounting policies with respect to the defined benefit plans:
The accrued benefit obligations and the cost of pension benefits earned by active employees are actuarially determined using the
projected unit credit method pro-rated on service and pension expense is recorded in earnings as the services are rendered by active
employees. The calculations reflect management’s best estimate of salary escalation and retirement ages of employees;
Plan assets are valued at fair value;
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 62
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Actuarial gains and losses arise from increases or decreases in the present value of the defined benefit obligation because of changes in
actuarial assumptions and experience adjustments. Actuarial gains and losses are recognized immediately in Other comprehensive
income with no impact on net earnings;
Past service costs are recorded to earnings at the earlier of the following dates:
o When the plan amendment or curtailment occurs;
o When the Corporation recognizes related restructuring costs or termination benefits;
Net interest on the defined benefit liability (asset) represents the net defined benefit liability (asset), multiplied by the discount rate and is
recorded in financial expenses.
The pension cost recorded in net earnings for the defined contribution plans is equivalent to the contribution which the Corporation is
required to pay in exchange for services provided by the employees.
The present value of pension obligations depends on a number of factors that are determined on an actuarial basis using a number of
assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations. The Corporation determines the
appropriate discount rate at the end of each fiscal year. This is the rate that should be used to determine the present value of estimated
future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Corporation
considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that
have terms to maturity approximating the terms of the related pension obligation.
Provisions
Provisions are recognized when the Corporation has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Corporation will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. The amount
recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking
into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value of those cash flows.
The present value of provisions depends on a number of factors that are assessed on a regular basis using a number of assumptions,
including the discount rate, the expected cash flow to settle the obligation and the number of years until the realization of the provision. Any
changes in these assumptions or in governmental regulations will impact the carrying amount of provisions. Where the actual cash flows are
different from the amounts that were initially recorded, such differences will impact earnings in the period in which the payment is made.
Historically, the Corporation has not experienced significant differences in its estimates compared with actual results.
Environmental costs
The Corporation provides for estimated future site remediation costs to meet government standards for known site contaminations when
such costs can be reasonably estimated. Estimates of the anticipated future costs for remediation activities at such sites are based on the
Corporation’s prior experience with remediation sites and consideration of other factors such as the condition of the site contamination,
location of sites and experience with contractors that perform the environmental assessments and remediation work. In order to determine
the initial recorded liability, the present value of estimated future cash flows was calculated using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
Asset retirement obligations
Asset retirement obligations relate to estimated future costs to remove road transportation fuel storage tanks and are based on the
Corporation’s prior experience in removing these tanks, estimated tank useful life, lease terms for those tanks installed on leased properties,
external estimates and governmental regulatory requirements. A discounted liability is recorded for the present value of an asset retirement
obligation with a corresponding increase to the carrying value of the related long-lived asset at the time a storage tank is installed. To
determine the initial recorded liability, the future estimated cash flows are discounted using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The amount added to property and equipment is amortized and
an accretion expense is recognized in connection with the discounted liability over the remaining life of the tank or lease term for leased
properties.
Following the initial recognition of the asset retirement obligation, the carrying amount of the liability is increased to reflect the passage of
time and then adjusted for variations in the current market-based discount rate or the scheduled underlying cash flows required to settle the
liability.
Obligations related to general liability and workers’ compensation
In the United States, the Corporation is self-insured for certain losses related to general liability and workers’ compensation. The expected
ultimate cost for claims incurred as of the balance sheet date is discounted and is recognized as a liability. This cost is estimated based on
analysis of the Corporation’s historical data and actuarial estimates. In order to determine the initial recorded liability, the present value of
estimated future cash flows is calculated using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 63
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Restructuring
Restructuring provisions are recognized only when a detailed formal plan for the restructuring exists and the plan has either commenced or
the plan’s main features have been announced to those affected by it. In order to determine the initial recorded liability, the present value of
estimated future cash flows are calculated using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability.
A detailed formal plan usually includes:
identifying the concerned business or part of the business;
the principal locations affected;
details regarding the employees affected;
the restructuring’s timing; and
the expenditures that will have to be undertaken.
Financial instruments recognition and measurement
The Corporation has made the following classifications for its financial assets and financial liabilities:
Financial assets and financial liabilities
Cash and cash equivalents
Restricted cash
Accounts receivable
Investments in publicly-traded securities
Bank indebtedness and long-term debt
Accounts payable and accrued liabilities
Classification
Loans and receivables
Loans and receivables
Loans and receivables
Available for sale
Other financial liabilities
Other financial liabilities
Subsequent measurement (1)
Amortized cost
Amortized cost
Amortized cost
Fair value
Amortized cost
Amortized cost
Classification of gains and losses
Net earnings
Net earnings
Net earnings
Other comprehensive income
Net earnings
Net earnings
(1)
Initial measurement of all financial assets and financial liabilities is at fair value.
Hedging and derivative financial instruments
Embedded total return swap
The Corporation uses an investment contract which includes an embedded total return swap to manage current and forecasted risks related
to changes in the fair value of the PSUs granted by the Corporation. The embedded total return swap is recorded at fair value on the
consolidated balance sheets under other assets.
The Corporation has documented and designated the embedded total return swap as a cash flow hedge of the anticipated cash settlement
transaction related to the granted PSUs. The Corporation has determined that the embedded total return swap is an effective hedge at the
time of the establishment of the hedge and for the duration of the embedded total return swap. The changes in the fair value of the total
return swap are initially recorded in other comprehensive income and subsequently reclassified to consolidated net earnings in the same
period that the change in the fair value of the PSUs affects consolidated net earnings. Should it become probable that the hedged
transaction will not occur, any gains, losses, revenues or expenses associated with the hedging item that had previously been recognized in
Other comprehensive income as a result of applying hedge accounting will be recognized in the reporting period's net earnings under
Operating, selling, administrative and general expenses.
Hedge of the Corporation’s net investment in its US operations
Until November 1, 2012, the Corporation had designated its entire US dollar denominated long-term debt as a foreign exchange hedge of its
net investment in its U.S. operations. Accordingly, the portion of the gains or losses arising from the translation of the US dollar denominated
debt that was determined to be an effective hedge was recognized in Other comprehensive income, counterbalancing gains and losses
arising from translation of the Corporation’s net investment in its U.S. operations. Since November 1, 2012, the Corporation no longer
designates its US dollar denominated long-term debt as a foreign exchange hedge of its net investment in its U.S. operations. Accordingly,
the gains or losses arising from the translation of the US dollar denominated debt is now recorded in the consolidated statements of earnings
under Financial expenses.
As of November 1, 2012, the Corporation has documented and designated its cross-currency interest rate swap agreements (Note 20) as a
foreign exchange hedge of its net investment in its US operations. The Corporation has determined that the cross-currency interest rate
swap is an effective hedge at the time of the establishment of the hedge and for the duration of the cross-currency interest rate swap. The
gains or losses arising from the fair value variation of the cross-currency interest rate swaps are recognized in Other comprehensive income
along with the difference between interests received and interests paid. Should a portion of the hedging relationship become ineffective, the
ineffective portion would be recorded in the consolidated statements of earnings under Financial expenses.
Foreign exchange forward contracts
The Corporation, from time to time, uses foreign exchange forward contracts (―forwards‖) to manage the currency fluctuation risk associated
with forecasted cash disbursements denominated in foreign currencies. Forwards are recorded at fair value on the consolidated balance
sheets. Changes in the fair value of forwards are recorded in net financial (revenues) expenses.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 64
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Cross currency swaps
The Corporation, from time to time, uses cross currency swaps to manage the currency fluctuation risk associated with forecasted cash
disbursements in foreign currency. The Corporation is exposed to foreign currency risk with respect to a portion of its aviation fuel operations
for which purchases and sales are denominated in different currencies. Cross currency swaps are recorded at fair value on the consolidated
balance sheets. Changes in their fair value are recorded in net financial (revenues) expenses.
Guarantees
A guarantee is defined as a contract or an indemnification agreement contingently requiring a Corporation to make payments to a third party
based on future events. These payments are contingent on either changes in an underlying or other variables that are related to an asset,
liability, or an equity security of the indemnified party or the failure of another entity to perform under an obligating agreement. It could also
be an indirect guarantee of the indebtedness of another party. Guarantees are initially recognized at fair value and subsequently revaluated
when the loss becomes probable.
Business combinations
Business combinations are accounted for using the purchase method. The cost of a business combination is measured as the aggregate of
the fair values (at the date of acquisition) of assets given, liabilities incurred or assumed, and equity instruments issued by the Corporation in
exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3, ―Business Combinations‖, are recognized at their fair values at the acquisition date. Direct acquisition costs are
recorded in earnings when incurred.
Goodwill arising from business combinations is recognized as an asset and initially measured at cost, being the excess of the cost of the
business combination over the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment,
the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the
excess (―Negative goodwill‖) is recognized immediately to earnings.
Determination of the fair value of the acquired assets and liabilities requires judgement and the use of assumptions that, if changed, may
affect the consolidated statements of earnings and consolidated balance sheets.
Earnings from the businesses acquired are included in the consolidated statements of earnings from their respective dates of acquisition.
Recently issued accounting standards not yet implemented
Revised Standards
Financial Statement Presentation
In June 2011, the IASB issued amendments to International Accounting Standard (―IAS‖) 1, ―Presentation of Financial Statements‖. The
amendments govern the presentation of Other Comprehensive Income (―OCI‖) in the financial statements, primarily by requiring OCI items
that may be reclassified to the consolidated statements of earnings to be presented separately from those that remain in equity.
These changes are applicable for fiscal years beginning on or after July 1, 2012. The Corporation will apply these changes for its first quarter
of fiscal year 2014 and does not expect that the adoption of these changes will have a material impact on its consolidated financial
statements.
Financial Instruments – Presentation and disclosure
In December 2011, the IASB issued revised versions of IFRS 7, ―Financial Instruments: Disclosures‖ and IAS 32, ―Financial Instruments:
Presentation‖. The modifications clarify the offsetting rules and state new disclosure requirements for offsetting of financial assets and
financial liabilities on the consolidated balance sheets.
The changes applied to IFRS 7 are applicable for fiscal years beginning on or after January 1, 2013 while changes applied to IAS 32 are
applicable for fiscal years beginning on or after January 1, 2014. The Corporation will apply these changes for its first quarters of fiscal years
2014 and 2015 respectively and does not expect that the adoption of these changes will have a material impact on its consolidated financial
statements.
New standards
Financial Instruments
In November 2009, the IASB issued a new standard, IFRS 9, ―Financial Instruments‖, which is the first phase of the IASB’s three-phase
project to replace IAS 39, ―Financial Instruments: Recognition and Measurement‖. The standard provides guidance on the classification and
measurement of financial liabilities and requirements for the derecognition of financial assets and financial liabilities.
IFRS 9 is applicable for fiscal years beginning on or after January 1, 2015. The Corporation will apply these new standards for its first quarter
of fiscal year 2016 and is still evaluating the impact on its consolidated financial statements.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 65
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Consolidated financial statements
In May 2011, the IASB issued a new standard, IFRS 10, ―Consolidated Financial Statements‖, which requires an entity to consolidate an
investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12, ―Consolidation—Special Purpose Entities‖
and parts of IAS 27, ―Consolidated and Separate Financial Statements‖.
Joint Arrangements
In May 2011, the IASB issued a new standard, IFRS 11, ―Joint Arrangements‖, which requires a venturer to classify its interest in a joint
arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a
joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS,
entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, ―Interests
in Joint Ventures‖ and SIC-13, ―Jointly Controlled Entities—Non-monetary Contributions by Venturers‖.
Disclosure of Interest in Other Entities
In May 2011, the IASB issued a new standard, IFRS 12, ―Disclosure of Interest in Other Entities‖. IFRS 12 establishes disclosure
requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles.
The standard includes existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and
risks associated with, an entity’s interests in other entities.
Fair Value Measurement
In May 2011, the IASB issued a new standard, IFRS 13, ―Fair Value Measurement‖. IFRS 13 is a comprehensive standard for fair value
measurement and disclosure requirements for use across all IFRS. The new standard clarifies that fair value is the price that would be
received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also
establishes disclosures about fair value measurement. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed
among the specific standards requiring fair value measurements and in many cases does not reflect a clear measurement basis or consistent
disclosures.
IFRS 10, 11, 12 and 13 are all applicable for fiscal years beginning on or after January 1, 2013. The Corporation will apply these new
standards for its first quarter of fiscal year 2014 and is still evaluating their impact on its consolidated financial statements.
4. Business acquisitions
The Corporation has made the following business acquisitions:
2013
Acquisition of Statoil Fuel & Retail ASA (“Statoil Fuel & Retail”)
On June 19, 2012, the Corporation acquired 81.2% of the 300,000,000 issued and outstanding shares of Statoil Fuel & Retail for a cash
consideration of 51.20 Norwegian Kroners (―NOK‖) per share for a total amount of NOK 12.47 billion or approximately $2.10 billion through a
voluntary public offer (the ―offer‖). From June 22, 2012 to June 29, 2012, the Corporation acquired 53,238,857 additional shares of Statoil
Fuel & Retail for a cash consideration of 51.20 NOK per share, totalling NOK 2.73 billion or approximately $0.45 billion, increasing the
Corporation’s participation to 98.9%. Having reached a shareholding of more than 90%, on June 29, 2012, in accordance with Norwegian
laws, the Corporation initiated the compulsory acquisition of all of the remaining Statoil Fuel & Retail shares not deposited under the offer
from the holders thereof and, as a result, since such date, the Corporation owns 100% of the issued and outstanding shares of Statoil Fuel &
Retail. The 51.20 NOK per share cash consideration for the compulsory acquisition of all of the remaining shares of Statoil Fuel & Retail not
deposited under this offer was paid on July 11, 2012. The Oslo Børs Stock Exchange confirmed the delisting of the Statoil Fuel & Retail
shares effective as of the close of markets in Norway on July 12, 2012. The acquisition of the 300,000,000 issued and outstanding shares of
Statoil Fuel & Retail was therefore made for a total cash consideration of NOK 15.36 billion, or $2.58 billion. The Corporation determined the
acquisition date to be June 19, 2012.
Statoil Fuel & Retail is a leading Scandinavian road transportation fuel retailer with over 100 years of operations in the region. Statoil Fuel &
Retail operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania), and
Russia with approximately 2,300 sites, the majority of which offer road transportation fuel and convenience products while the others are
unmanned automated service-stations (offering road transportation fuel only). Statoil Fuel & Retail has a leading position in several countries
where it does business and owns the land for over 900 sites and buildings for over 1,700 sites.
Statoil Fuel & Retail's other products include stationary energy, marine and aviation fuel, lubricants and chemicals. In Europe, Statoil Fuel &
Retail operates key fuel terminals as well as fuel depots in eight countries.
During fiscal year 2013, the Corporation recorded transaction costs of $1.8 million, in Operating, selling, administrative and general
expenses, in connection with this acquisition, which adds to transaction costs of $0.8 million recorded in earnings for the year ended
April 29, 2012.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 66
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The Corporation financed this acquisition through borrowings under its acquisition facility (Note 19).
Purchase price allocation based on the estimated fair value on the date of acquisition is as follows:
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable
Inventories
Prepaid expenses
Income taxes receivable
Property and equipment
Identifiable intangible assets
Other assets
Investment in associated companies
Deferred income taxes
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Provisions
Income taxes payable
Bank loans and current portion of long-term debt
Long-term debt
Provisions
Pension benefit liability
Other liabilities
Deferred income taxes
Non-controlling interest
Net identifiable assets
Acquisition goodwill
Consideration paid in cash on June 19, 2012 for the acquisition of control (81.2%)
Consideration paid in cash for shares held by non-controlling shareholders
Cash and cash equivalents acquired
Bank overdraft assumed
Net cash flow for the acquisition
Fair value
accounted for at
the acquisition
date
$
193.7
0.8
1,597.3
283.4
10.4
3.7
2,089.3
2,576.8
616.5
36.6
7.4
22.1
5,348.7
1,680.1
25.2
17.6
845.3
2,568.2
53.6
197.8
80.1
5.5
346.2
3,251.4
487.2
1,610.1
493.9
2,104.0
479.3
(193.7)
34.1
2,423.7
The Corporation expects that the acquired goodwill will not be deductible for tax purposes.
The Corporation acquired Statoil Fuel & Retail with the aim of diversifying its operations geographically. This acquisition generated goodwill
in the amount of $493.9 mainly due to future growth potential of establishing a platform in Europe as well as an assembled and trained
workforce. Since the date of acquisition, Statoil Fuel & Retail’s revenues and net earnings amounted to $11,072.6 and $98.4, respectively.
The following summary presents the pro-forma consolidated results of the Corporation for fiscal year 2013 under the assumption that Statoil
Fuel & Retail was acquired on April 30, 2012. These amounts do not include the potential synergies that could result from the acquisition.
This information is provided for illustrative purposes only and does not necessarily reflect actual or future consolidated results of the
Corporation after the combination.
Revenues
Net earnings
$
37,348.2
578.1
Statoil Fuel & Retail’s fiscal year does not coincide with the Corporation’s fiscal year. The Corporation’s consolidated statements of earnings,
comprehensive income, changes in equity and cash flows for fiscal year 2013 include those of Statoil Fuel & Retail for the period beginning
June 20, 2012 and ending April 30, 2013. The Corporation’s consolidated balance sheet as at April 28, 2013 includes the balance sheet of
Statoil Fuel & Retail as at April 30, 2013.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 67
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The Corporation anticipates that the alignment of Statoil Fuel & Retail’s accounting period with those of the Corporation should be made
once the replacement of Statoil Fuel & Retail financial systems is finalized.
Other acquisitions
On May 8, 2012, the Corporation purchased 20 company-operated stores located in Texas, United States from Signature Austin Stores.
The Corporation leases the land and buildings for all sites.
On August 27, 2012, the Corporation purchased 29 company-operated stores located in Florida, United States from Florida Oil Holdings,
LLC. The Corporation owns the land and buildings for 24 sites while it leases the land and owns the buildings for the other sites. The
Corporation was also transferred a road transportation fuel supply agreement for one store owned and operated by an independent
operator.
On November 2, 2012, the Corporation acquired, from Sun Pacific Energy, 27 company-operated stores operating in Washington State,
United States. The Corporation owns the land and buildings for 26 sites while it leases these assets for the other site.
On November 28, 2012, the Corporation acquired, from Davis Oil Company, seven company-operated stores operating in Georgia,
United States. The Corporation owns the land and buildings for all sites.
On December 31, 2012, the Corporation acquired, from Kum & Go, L.C., seven company-operated stores operating in Oklahoma, United
States. The Corporation leases the land and buildings for all sites.
On February 11, 2013, the Corporation acquired 29 company-operated stores located in the states of Illinois, Missouri and Oklahoma in
the United States from Dickerson Petroleum Inc. The Corporation owns the land and building for 25 sites while it leases the land and
owns the buildings for the other sites. In addition, 21 road transportation fuel supply agreements were acquired by the Corporation, 20 of
which are for sites owned and operated by independent operators while one site is leased by the Corporation.
During fiscal year 2013, under the June 2011 agreement with ExxonMobil, the Corporation acquired four stores operated by independent
operators for which the real estate is owned by the Corporation along with the related road transportation fuel supply agreements.
Additionally, 23 road transportation fuel supply agreements were transferred to the Corporation during this period.
During fiscal year 2013, the Corporation also acquired 32 other stores through distinct transactions. The Corporation leases the land and
owns the building for one site, leases the land and buildings for ten sites and owns these same assets for the other sites.
Acquisition costs in connection with these acquisitions and other unrealized acquisitions of $2.3 are included in Operating, selling,
administrative and general expenses.
These acquisitions were settled for a total cash consideration of $220.9. Since the Corporation has not completed its fair value assessment
of the assets acquired, the liabilities assumed and goodwill for all transactions, the preliminary allocations of certain acquisitions are subject
to adjustments to the fair value of the assets, liabilities and goodwill until the process is completed. Purchase price allocations based on the
estimated fair value on the date of acquisition and available information as at the date of publication of these consolidated financial
statements is as follows:
Tangible assets acquired
Inventories
Property and equipment
Other assets
Total tangible assets
Liabilities assumed
Accounts payable and accrued liabilities
Provisions
Deferred credit and other liabilities
Total liabilities
Net tangible assets acquired
Intangible assets
Goodwill
Negative goodwill recorded to Operating, selling, administrative and general expenses
Total cash consideration paid
$
14.2
159.0
0.4
173.6
2.1
7.6
3.8
13.5
160.1
3.0
62.2
(4.4)
220.9
The Corporation expects that approximately $44.5 of the goodwill related to these transactions will be deductible for tax purposes.
These acquisitions were concluded in order to expand the Corporation’s market share, to penetrate new markets and to increase its
economies of scale. These acquisitions generated goodwill in the amount of $62.2 mainly due to the strategic location of stores acquired.
Since the date of acquisition, revenues and net earnings from these stores amounted to $633.5 and $6.9, respectively. Considering the
nature of these acquisitions, the available financial information does not allow for the accurate disclosure of pro-forma revenues and net
earnings had the Corporation concluded these acquisitions at the beginning of its fiscal year.
Disposal of the liquefied petroleum gas sales (“LPG”) operations
On December 7, 2012, the Corporation sold Statoil Fuel & Retail’s LPG operations for NOK 130.0 million (approximately $23.0 million) before
working capital adjustments. No gain or loss was generated from this disposal.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 68
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
2012
In May 2011, the Corporation purchased 11 company-operated stores located in Ontario, Manitoba, Saskatchewan, Alberta and British
Columbia from Shell Canada Products. The Corporation leases the land and buildings for four sites and owns both these assets for the
other sites.
In June 2011, the Corporation signed an agreement with ExxonMobil for 322 stores and motor fuel supply agreements for another 65
stores. All stores are operated in Southern California, United States. The transaction is scheduled to close in stages: the first stages
occurred during the month of August 2011. The transaction is subject to standard regulatory approvals and closing conditions. The
following is a summary of progress made during the 2012 fiscal year and steps that should be completed subsequently:
o
o
In August 2011, the Corporation purchased one company-operated store for which it owns the land and building and it acquired the
motor fuel supply agreements for 63 other stores;
In October 2011, the Corporation acquired one company-operated store for which it owns the land and building as well as 83 stores
operated by independent operators for which the Corporation owns the buildings and leases the land;
o At end of October 2011 and beginning of November 2011, the Corporation acquired 72 company-operated stores for which it owns
the land and buildings for 37 stores and leases the land and owns the building for the other stores;
o Between January 29, 2012 and April 29, 2012, the Corporation acquired eight stores operated by independent operators for which
the real estate is owned by the Corporation along with the related motor fuel supply agreements. Additionally, during this time period,
13 independent operators elected to accept ExxonMobil’s bona fide offer. Consequently, 13 fuel supply agreements were transferred
to the Corporation during this period;
On October 13, 2011, the Corporation acquired from Chico Enterprises Inc., 26 company-operated stores operating in northern West
Virginia, United States. The Corporation owns the real estate for 25 sites and owns the building and leases the land for the other site.
On November 16 and 17, 2011, the Corporation acquired from ExxonMobil, 33 company-operated stores operating under the "On the
Run" banner in Louisiana, United States. The Corporation owns the buildings for 33 sites as well as land for 25 sites and leases the land
for the other eight sites.
On December 12, 2011, the Corporation acquired from Neighbors Stores Inc., 11 company-operated stores operating under the
"Neighbors" banner in North Carolina, United States. The Corporation owns the buildings for eight sites as well as land for nine sites and
leases these same assets for the other sites.
On April 11, 2012, the Corporation acquired from Dead River Company, 17 company-operated stores operating in Maine, United States.
Two quick service restaurants were also transferred to the Corporation. The Corporation owns the buildings and land for 16 sites and
leases these same assets for the other three sites.
During fiscal year 2012, the Corporation also acquired 19 other stores through distinct transactions. The Corporation leases the land and
buildings for 11 sites and owns both these assets for the other sites.
Acquisition costs in the amount of $6.8 were included in Operating, selling, administrative and general expenses in connection with these
and other unrealized acquisitions.
These acquisitions were settled for a total cash consideration of $380.3. Purchase price allocations based on the estimated fair value on the
dates of acquisition are as follows:
Tangible assets acquired
Inventories
Property and equipment
Other assets
Total tangible assets
Liabilities assumed
$
19.2
281.4
5.5
306.1
Accounts payable and accrued liabilities
Provisions
Total liabilities
Net tangible assets acquired
Intangible assets
Goodwill
Negative goodwill recorded to Operating, selling, administrative and general expenses
Total consideration paid
1.3
30.9
32.2
273.9
45.8
67.5
(6.9)
380.3
Approximately $4.8 of the goodwill related to these transactions was deductible for tax purposes.
These acquisitions were concluded in order to expand the Corporation’s market share, to penetrate new markets and to increase its
economies of scale. These acquisitions generated goodwill in the amount of $67.5 mainly due to the strategic location of stores acquired.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 69
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
5. Interest in joint ventures and associated companies
Investment in joint ventures
Investment in associated companies
Investment in joint ventures
2013
$
81.7
2.5
84.2
2012
$
65.0
-
65.0
The Corporation owns a 50.01% interest in a joint venture, RDK Ventures LLC (―RDK‖), which operates convenience stores located in the
greater Chicago metropolitan area of the United States. The Corporation also owns varying interests in different joint ventures related
primarily to aviation fuel operations in Europe.
The Corporation’s investment in joint ventures is recorded according to the equity method. The following amounts represent the
Corporation’s share of the joint ventures’ assets, liabilities, revenues, expenses, net earnings and cash flows:
Balance sheets
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Statements of earnings
Revenues
Expenses
Net earnings
Statements of cash flows
Operating activities
Investing activities
Financing activities
2013
$
37.5
103.4
28.4
30.8
2012
$
25.1
81.7
22.9
18.9
2013
(52 weeks)
$
2012
(53 weeks)
$
623.0
606.8
15.8
21.0
(6.7)
(15.9)
546.1
524.5
21.6
25.1
(19.7)
(11.3)
On May 11, 2011, RDK, purchased four company-operated stores located in the Chicago area, United States, from Gas City, Ltd. RDK
leases the land and buildings for one site and owns both these assets for the other sites.
On November 8, 9 and 10, 2011, RDK, acquired from Supervalu Inc., 27 stores operating in the Chicago area, Illinois, United States. The
agreement also includes the transfer to RDK of two vacant land parcels. Out of the 27 stores, 14 are company-operated while the other 13
are operated by independent operators. RDK owns the real estate for 24 sites as well as the two vacant land parcels, owns the building and
leases the land for two sites and leases both these assets for the remaining site.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 70
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Investment in associated companies
The Corporation’s investment in associated companies is recorded according to the equity method. The following amounts represent the
Corporation’s share of its associates’ assets, liabilities, revenues and net earnings:
Balance sheets
Assets
Liabilities
Statements of earnings
Revenues
Net earnings
6. Supplementary information relating to expenses
Cost of sales
Selling expenses
Administrative expenses
Operating expenses
2013
$
9.1
6.5
2012
$
-
-
2013
(52 weeks)
$
2012
(53 weeks)
$
4.6
-
-
-
2013
(52 weeks)
$
30,933.8
2,506.0
619.2
110.0
34,169.0
2012
(53 weeks)
$
20,005.2
1,950.2
205.4
-
22,160.8
Includes rent expense of $322.7 ($243.1 in 2012), net of sub-leasing income of $31.6 ($20.5 in 2012).
Employee benefit charges
Salaries
Fringe benefits and other employer contributions
Employee future benefits (Note 25)
Termination benefits
Curtailment gain on defined benefits pension plans obligation (Note
25)
Stock-based compensation and other stock-based payments (Note
24)
7. Compensation of key management personnel
Salaries and other current benefits
Stock-based compensation and other stock-based payments
Employee future benefits (Note 25)
2013
(52 weeks)
$
2012
(53 weeks)
$
1,239.4
185.4
77.4
34.8
(19.4)
5.9
776.6
79.0
48,2
1.5
-
4.8
1,523.5
910,1
2013
(52 weeks)
$
9.9
2.7
3.1
15.7
2012
(53 weeks)
$
5.9
2.3
2.1
10.3
Key management personnel comprises Members of the Board of Directors and senior management.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 71
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
8. Net financial expenses (revenues)
Financial expenses
Interest expense
Interest on long-term debt
Interest on finance lease obligations
Interest on bank overdrafts and bank loans
Interest on defined benefit plans (Note 25)
Accretion of provisions (Note 22)
Other finance costs
Financial revenues
Interest on bank deposits
Other financial revenues
Foreign exchange gain
Loss (gain) on foreign exchange forward contracts
Net financial expenses (revenues)
9. Income taxes
Current income taxes
Deferred income taxes
2013
(52 weeks)
$
2012
(53 weeks)
$
85.8
3.2
3.1
2.8
13.1
10.0
118.0
0.5
9.4
9.9
(3.2)
102.9
207.8
5.5
0.6
-
2.1
5.9
1.5
15.6
0.2
1.0
1.2
-
(17.0)
(2.6)
2013
(52 weeks)
$
196.0
(122.1)
73.9
2012
(53 weeks)
$
122.1
24.2
146.3
The principal items which resulted in differences between the Corporation's effective income tax rates and the combined statutory rates in
Canada are detailed as follows:
Combined statutory income tax rate in Canada(a)
Impact of other jurisdictions’ tax rates
Impact of tax rate changes
Other permanent differences
Effective income tax rate
2013
%
26.90
(11.91)
(6.23)
2.67
11.43
2012
%
27.91
0.03
0.11
(3.82)
24.23
(a) The Corporation’s combined statutory income tax rate in Canada includes the appropriate provincial income tax rates.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 72
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The components of deferred income tax assets and liabilities are as follows:
Balance as
at April 29,
2012
$
Recognized
to earnings
$
Recognized
directly to other
comprehensive
income or
equity
$
Transfer
from income
taxes
payable
$
Recognized
through
business
acquisitions
$
Balance as at
April 28, 2013
$
2013
Deferred income tax assets
Property and equipment
Expenses deductible during the following years
Goodwill
Deferred charges
Tax attributes
Asset retirement obligations
Deferred credits
Unrealized exchange gain
Other
Deferred income tax liabilities
Property and equipment
Goodwill
Expenses deductible during the following years
Intangible assets
Asset retirement obligations
Tax attributes
Deferred charges
Deferred credits
Revenues taxable during the following years
Unrealized exchange gain
Other
(1.8)
11.5
(0.6)
3.3
2.3
1.5
(1.6)
(2.3)
2.1
14.4
254.0
26.2
(55.2)
68.0
(21.8)
(1.2)
2.3
(10.2)
3.9
1.9
(5.8)
262.1
4.3
(2.4)
(0.6)
3.3
1.2
2.2
(0.4)
3.7
(2.3)
9.0
(32.9)
(22.4)
17.6
(6.4)
(12.8)
(72.7)
26.6
(2.0)
(0.3)
(0.1)
(7.7)
(113.1)
0.7
3.4
(0.2)
-
-
-
(0.1)
(2.2)
1.7
3.3
17.6
3.8
(2.2)
3.0
(1.9)
(2.6)
-
-
-
(0.8)
5.6
22.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43.5
-
-
-
-
-
43.5
25.0
4.6
(8.2)
-
0.6
-
-
-
0.1
22.1
286.0
138.1
(48.1)
-
(28.1)
(13.7)
-
-
-
-
12.0
346.2
28.2
17.1
(9.6)
6.6
4.1
3.7
(2.1)
(0.8)
1.6
48.8
524.7
145.7
(87.9)
64.6
(64.6)
(46.7)
28.9
(12.2)
3.6
1.0
4.1
561.2
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 73
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Balance as at
April 24, 2011
$
Recognized to
earnings
$
Recognized
directly to other
comprehensive
income or equity
$
2012
Balance as at
April 29, 2012
$
Deferred income tax assets
Expenses deductible during the following years
Deferred charges
Tax attributes
Unrealized exchange gain
Property and equipment
Deferred credits
Asset retirement obligations
Goodwill
Other
Deferred income tax liabilities
Property and equipment
Intangible assets
Expenses deductible during the following years
Goodwill
Asset retirement obligations
Deferred credits
Revenues taxable during the following years
Deferred charges
Unrealized exchange gain
Tax attributes
Other
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax assets:
Deferred tax asset to be recovered in more than 12 months
Deferred tax asset to be recovered within 12 months
Deferred tax liabilities:
Deferred tax liabilities to be settled in more than 12 months
Deferred tax liabilities to be settled within 12 months
11.5
3.3
2.3
(2.3)
(1.8)
(1.6)
1.5
(0.6)
2.1
14.4
254.0
68.0
(55.2)
26.2
(21.8)
(10.2)
3.9
2.3
1.9
(1.2)
(5.8)
262.1
7.2
1.3
1.1
3.8
0.1
(0.8)
-
0.1
0.1
12.9
208.6
68.8
(49.0)
24.1
(21.5)
(10.3)
21.2
1.8
10.2
(4.2)
(5.4)
244.3
4.8
2.0
1.2
(9.3)
(1.9)
(0.8)
1.5
(0.7)
-
(3.2)
45.4
(0.8)
(6.2)
2.1
(0.3)
0.1
(17.3)
0.5
(5.1)
3.0
(0.4)
21.0
2013
$
45.6
3.2
48.8
581.5
(20.3)
561.2
(0.5)
-
-
3.2
-
-
-
-
2.0
4.7
-
-
-
-
-
-
-
-
(3.2)
-
-
(3.2)
2012
$
15.2
(0.8)
14.4
281.1
(19.0)
262.1
Deferred income tax liabilities that would be payable on the retained earnings of certain subsidiaries have not been recognized because such
amounts are not expected to materialize in the foreseeable future. Temporary differences related to these investments amounted to $709.0
($383.2 in 2012).
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 74
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
10. Net earnings per share
The following table presents the information for the computation of basic and diluted net earnings per share:
Net earnings available to Class A and B shareholders
Weighted average number of shares (in thousands)
Dilutive effect of stock options (in thousands)
Weighted average number of diluted shares (in thousands)
Basic net earnings per share available for Class A and B shareholders
Diluted net earnings per share available for Class A and B shareholders
2013
(52 weeks)
$
572.8
2012
(53 weeks)
$
457.6
185,028
1,828
186,856
3.10
3.07
180,420
3,163
183,583
2.54
2.49
In calculating diluted net earnings per share for 2013, 35,000 stock options are excluded due to their antidilutive effect (no excluded stock
options in 2012).
During fiscal 2013, the Board declared total dividends averaging CA$0.3 per share.
11. Supplementary information relating to the consolidated statements of cash flows
The changes in non-cash working capital are detailed as follows:
Accounts receivable
Inventories
Prepaid expenses
Accounts payable and accrued liabilities
Income taxes payable
12. Accounts receivable
2013
(52 weeks)
$
372.5
8.1
(17.2)
(319.1)
24.6
68.9
2012
(53 weeks)
$
3.7
(3.7)
(5.7)
58.8
31.6
84.7
Trade accounts receivable and vendor rebates receivable
Provision for doubtful accounts
Trade accounts receivable and vendor rebates receivable - net
Credit and debit cards receivable
Other accounts receivable
2013
$
966.5
(31.1)
935.4
572.5
108.1
1,616.0
The following details the aging of trade accounts receivable and vendor rebates receivable that are not impaired:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due 91 days and over
2013
$
827.2
80.2
6.7
7.8
13.5
935.4
2012
$
167.0
(1.6)
165.4
93.5
45.5
304.4
2012
$
151.1
7.8
4.1
2.2
0.2
165.4
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 75
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Movements in the Corporation’s provision for doubtful accounts are as follows:
Balance, beginning of year
Business acquisitions
Provision for doubtful accounts, net of unused beginning balance
Receivables written off during the year
Effect of exchange rate variations
Balance, end of year
2013
$
1.6
30.1
6.9
(9.2)
1.7
31.1
2013
$
446.4
329.5
34.9
31.6
3.6
846.0
2012
$
2.3
-
(0.4)
(0.3)
-
1.6
2012
$
382.9
161.0
-
-
-
543.9
13. Inventories
Merchandise
Road transportation fuel
Lubricant products
Aviation fuel
Other products
14. Property and equipment
Year ended April 28, 2013
Net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Depreciation, amortization and impairment
expense
Transfers
Effect of exchange rate variations
Net book amount, end
As at April 28, 2013
Cost
Accumulated depreciation, amortization and
impairment
Net book amount
Portion related to finance leases
Year ended April 29, 2012
Net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Depreciation and amortization expense
Transfers
Effect of exchange rate variations
Net book amount, end
As at April 29, 2012
Cost
Accumulated depreciation and amortization
Net book amount
Portion related to finance leases
Land
$
683.3
93.6
615.8
(46.5)
(0.4)
-
33.6
1,379.4
1,379.9
(0.5)
1,379.4
30.8
570.1
13.3
113.6
(12.3)
-
-
(1.4)
683.3
683.3
-
683.3
-
Building and
building
components
$
Equipment
$
Leasehold
improvements
$
434.5
169.4
1,247.9
(8.5)
(97.8)
0.4
60.0
1,805.9
2,095.9
(290.0)
1,805.9
32.1
396.5
22.8
63.1
(9.3)
(36.5)
-
(2.1)
434.5
631.7
(197.2)
434.5
0.1
925.0
180.6
870.2
(41.6)
(279.8)
(0.2)
37.9
1,692.1
2,808.1
(1,116.0)
1,692.1
41.4
785.1
218.0
88.6
(16.4)
(146.3)
0.7
(4.7)
925.0
1,812.4
(887.4)
925.0
12.1
205.5
42.5
1.9
(1.9)
(43.1)
(0.2)
(2.2)
202.5
481.0
(278.5)
202.5
-
183.7
50.6
16.1
(2.1)
(40.3)
(0.7)
(1.8)
205.5
454.4
(248.9)
205.5
-
Total
$
2,248.3
486.1
2,735.8
(98.5)
(421.1)
-
129.3
5,079.9
6,764.9
(1,685.0)
5,079.9
104.3
1,935.4
304.7
281.4
(40.1)
(223.1)
-
(10.0)
2,248.3
3,581.8
(1,333.5)
2,248.3
12.2
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 76
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
15. Goodwill
Net book amount, beginning of year
Business acquisitions (Note 4)
Effect of exchange rate variations
Net book amount, end of year
2013
$
502.9
556.1
22.0
1,081.0
2012
$
440.9
67.5
(5.5)
502.9
Trademarks
$
Franchise
agreements
$
Software (a)
$
Customer
relationships
$
Licenses
$
Fuel supply
agreements
$
16. Intangible assets
Year ended April 28, 2013
Net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Depreciation and amortization
expense
Effect of exchange rate variations
Net book amount, end
As at April 28, 2013
Cost
Accumulated depreciation and
amortization
Net book amount
Year ended April 29, 2012
Net book amount, beginning
Additions
Business acquisitions (Note 4)
Disposals
Depreciation and amortization
expense
Effect of exchange rate variations
Net book amount, end
As at April 29, 2012
Cost
Accumulated depreciation and
amortization
Net book amount
154.7
-
275.3
-
(15.8)
15.5
429.7
-
-
141.8
-
(15.9)
6.1
132.0
12.7
76.7
44.7
(0.2)
(5.6)
3.2
131.5
445.9
148.5
173.7
(16.2)
429.7
(16.5)
132.0
(42.2)
131.5
154.7
-
-
-
-
-
154.7
154.7
-
154.7
-
-
-
-
-
-
-
-
-
-
14.1
3.4
-
-
(4.6)
(0.2)
12.7
50.5
(37.8)
12.7
-
-
144.3
(11.6)
(39.3)
3.7
97.1
136.9
(39.8)
97.1
-
-
-
-
-
-
-
-
-
-
(a) The net book amount as at April 28, 2013 includes $113.7 related to a development in progress (none as at April 29, 2012).
17. Other assets
Pension benefit asset (Note 25)
Investment contract including an embedded total return swap (Note 26)
Environmental costs receivable (Note 22)
Deferred charges, net
Deposits
Other
Other
$
0.3
0.5
12.6
-
(0.9)
0.3
12.8
Total
$
217.0
77.4
619.5
(11.9)
(96.1)
28.8
834.7
29.9
-
0.8
(0.1)
(18.6)
-
12.0
45.9
15.8
986.3
(33.9)
12.0
(3.0)
12.8
(151.6)
834.7
0.5
-
-
(0.1)
(0.1)
-
0.3
188.6
3.6
45.8
(0.3)
(20.5)
(0.2)
217.0
1.2
271.3
(0.9)
0.3
(54.3)
217.0
-
-
45.8
(0.1)
(15.8)
-
29.9
45.5
(15.6)
29.9
2012
$
-
13.4
13.0
9.1
7.3
25.4
68.2
19.4
0.2
-
-
-
-
19.6
19.6
-
19.6
19.3
0.2
-
(0.1)
-
-
19.4
19.4
-
19.4
2013
$
22.1
19.1
11.7
8.1
7.7
67.6
136.3
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 77
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
18. Accounts payable and accrued liabilities
Accounts payable and accrued expenses
Sales and excise taxes
Salaries and related benefits
Deferred credits
Other
19. Long-term debt
2013
$
1,386.1
633.6
178.9
18.4
134.1
2,351.1
2012
$
696.4
91.1
74.3
14.7
32.9
909.4
Unsecured non-revolving acquisition credit facility, maturing in June 2015 (a)
Canadian dollar denominated senior unsecured notes (b)
US dollar term revolving unsecured operating credit D, maturing in December 2016 (c)
Canadian dollar term revolving unsecured operating credit D, maturing in December 2016 (c)
US dollar term revolving unsecured operating credit A, matured in September 2012 (d)
Canadian dollar term revolving unsecured operating credit A, matured in September 2012 (d)
US dollar term revolving unsecured operating credit B, matured in September 2012 (d)
Canadian dollar term revolving unsecured operating credit B, matured in September 2012 (d)
NOK fixed-rate bonds, 5.75%, maturing in February 2019
NOK floating-rate bonds, 5.04%, maturing in February 2017
Note payable, secured by the assets of certain stores, 8.75%, repayable in monthly instalments, maturing in 2019
Obligations related to buildings and equipment under finance leases, rates varying from 1.42% to 12.28%, payable on
various dates until 2080
Current portion of long-term debt
2013
$
2,197.3
978.7
345.5
-
-
-
-
-
2.3
2.6
2.0
76.7
3,605.1
620.8
2,984.3
2012
$
-
-
116.0
53.0
312.7
13.6
147.3
6.7
-
-
3.6
12.3
665.2
484.4
180.8
(a) Unsecured non-revolving acquisition credit facility
As at April 28, 2013, the Corporation has a credit agreement consisting of an unsecured non-revolving acquisition credit facility of an initial
maximum amount of $3,200.0 (―acquisition facility‖) with an initial term of three years. The acquisition facility was available exclusively to
finance, directly or indirectly, the acquisition of Statoil Fuel & Retail ASA and the related acquisition costs or the repayment of any of Statoil
Fuel & Retail ASA and its subsidiaries’ outstanding debt. The acquisition facility was available i) in Canadian dollars by the way of prime rate
loans or bankers’ acceptances, ii) in US dollars by the way of US base rate loans or LIBOR loans. Depending on the form and the currency
of the loan, the amounts borrowed bear interest at variable rates based on the Canadian prime rate, the bankers’ acceptance rate, the US
base rate or LIBOR plus a variable margin. Having reached the maximum amount that can be borrowed under the acquisition facility, and
given its non-revolving nature, the Corporation can no longer borrow additional amounts under this facility. Under the credit agreement, the
Corporation needs to maintain certain financial ratios and respect certain restrictive provisions.
Under this acquisition facility the Corporation is required to make annual repayments in fiscal 2014 and fiscal 2015. The annual repayments
are dependent on the level of an adjusted leverage ratio at the date of the calculation as well as on the amount of the Corporation’s excess
cash flows and are caped at a certain amount. For fiscal 2014, the repayment will be $603.0. For fiscal 2015, the amount expected to be
repaid cannot be reasonably estimated but the maximum amount required to be repaid as per the agreement is $250.0.
As at April 28, 2013, the effective interest rate is 2.37% (rate of 2.25% on borrowed amounts) and the Corporation was in compliance with
the restrictive provisions and ratios imposed by the credit agreement.
(b) Canadian dollar denominated senior unsecured notes
On November 1st, 2012, the Corporation issued Canadian dollar denominated senior unsecured notes totalling CA$ 1.0 billion, divided into
three tranches:
Tranche 1
Tranche 2
Tranche 3
Notional amount
CA$300.0
CA$450.0
CA$250.0
Maturity
November 1, 2017
November 1, 2019
November 1, 2022
Coupon rate
2.861%
3.319%
3.899%
Effective rate as at
April 28, 2013
3.0%
3.4%
4.0%
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 78
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The net proceeds from the issuance, which were approximately $997.5 (CA$995.0), were mainly used to repay a portion of the Corporation’s
unsecured non-revolving acquisition credit facility. The total amount of the notes is subject to cross-currency interest rate swaps (Note 20).
(c) Term revolving unsecured operating credit D
As at April 28, 2013, the Corporation has a credit agreement consisting of a revolving unsecured facility of a maximum amount of $1,275.0,
with an initial term of five years. The credit facility is available in the following forms:
A term revolving unsecured operating credit, available i) in Canadian dollars, ii) in US dollars, iii) in the form of Canadian dollar bankers’
acceptances, with stamping fees and iv) in the form of standby letters of credit not exceeding $100.0 or the equivalent in Canadian
dollars, with applicable fees. Depending on the form and the currency of the loan, the amounts borrowed bear interest at variable rates
based on the Canadian prime rate, the bankers’ acceptance rate, the US base rate or LIBOR plus a variable margin; and
An unsecured line of credit in the maximum amount of $50.0, available in Canadian or US dollars, bearing interest at variable rates
based, depending on the form and currency of the loan, on the Canadian prime rate, the US prime rate or the US base rate plus a
variable margin.
Standby fees, which vary based on a leverage ratio and on the utilization rate of the credit facility, apply to the unused portion of the credit
facility. Stamping fees, standby letters of credit fees and the variable margin used to determine the interest rate applicable to amount
borrowed are determined according to a leverage ratio of the Corporation.
Under the credit agreement, the Corporation must maintain certain financial ratios and respect certain restrictive provisions.
As at April 28, 2013, the effective interest is 1.75% (1.1% in 2012) for the US dollar portion and was 2.05% in 2012 for the Canadian dollar
portion. In addition, as at April 28, 2013, CA$2.2 (CA$1.4 in 2012) and $28.4 ($28.5 in 2012) are used for standby letters of credit. As at April
28, 2013 and April 29, 2012, the available line of credit was unused and the Corporation was in compliance with the restrictive provisions and
ratios imposed by the credit agreement.
(d) Term revolving unsecured operating credits A, B and C
As at April 29, 2012, the Corporation had credit agreements consisting of three revolving unsecured facilities of initial maximum amounts of
$326.0 (Operating credit A), $154.0 (Operating credit B) and $40.0 (Operating credit C) each, with initial terms of five years, 51 months and
42 months respectively.
The credit facilities were available in the form of a term revolving unsecured operating credit, available i) in Canadian dollars, ii) in US dollars,
iii) in the form of Canadian dollar bankers’ acceptances, with stamping fees and iv) in the form of standby letters of credit not exceeding
$50.0 or the equivalent in Canadian dollars, with applicable fees. Depending on the form and the currency of the loan, the amounts borrowed
bore interest at variable rates based on the Canadian prime rate, the bankers’ acceptance rate, the US base rate or the LIBOR rate plus a
variable margin.
Standby fees, which varied based on a leverage ratio and on the utilization rate of the credit facilities, applied to the unused portion of the
credit facilities. Stamping fees, standby letters of credit fees and the variable margin used to determine the interest rate applicable to
amounts borrowed were determined according to a leverage ratio of the Corporation. Under the credit agreements, the Corporation needed
to maintain certain financial ratios and respect certain restrictive provisions.
These operating credits matured in September 2012, were repaid and can no longer be used by the Corporation.
Term revolving unsecured operating credit E
As at April 28, 2013, the Corporation has a credit agreement consisting of a revolving unsecured facility of an initial maximum amount of
$50.0 with an initial term of 50 months. The credit facility is available in the form of a revolving unsecured operating credit, available in US
dollars. The amounts borrowed bear interest at variable rates based on the US base rate or the LIBOR rate plus a variable margin.
Standby fees, which vary based on a leverage ratio and on the utilization rate of the credit facility, apply to the unused portion of the credit
facility. The variable margin used to determine the interest rate applicable to amounts borrowed is determined according to a leverage ratio
of the Corporation.
Under the credit agreement, the Corporation must maintain certain financial ratios and respect certain restrictive provisions.
As at April 28, 2013, Operating credit E was unused.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 79
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Bank overdraft facilities
The Corporation has access to bank overdraft facilities totalling approximately $336.0. As of April 28, 2013, these were unused.
Instalments on obligations related to finance leases for the next fiscal years are as follows:
2014
2015
2016
2017
2018
2019 and thereafter
Interest expense included in minimum lease payments
Obligations related
to buildings and
equipment under
finance leases
$
19.2
27.4
10.7
5.5
4.5
24.3
91.6
14.9
76.7
20. Cross-currency interest rate swaps
On November 1, 2012, the Corporation entered into cross-currency interest rate swap agreements for a total notional amount of
CA$1.0 billion, allowing it to synthetically convert its Canadian dollar denominated debt into US dollars.
Receive – Notional
CA$300.0
CA$125.0
CA$20.0
CA$305.0
CA$125.0
CA$125.0
Total financial liabilities
Receive – Rate
2.861%
3.319%
3.319%
3.319%
3.899%
3.899%
Pay – Notional
US$300.7
US$125.4
US$20.1
US$305.9
US$125.4
US$125.4
Pay – Rate
2.0340%
2.7325%
2.7325%
2.7400%
3.4900%
3.4925%
Fair value as at
April 28, 2013
$5.1
$2.6
$0.4
$6.8
$2.9
$2.6
$20.4
Maturity
November 1, 2017
November 1, 2019
November 1, 2019
November 1, 2019
November 1, 2022
November 1, 2022
The cross-currency interest rate swap agreements were designated as a foreign exchange hedge of the Corporation’s net investment in its
U.S. operations.
21. Deferred credits and other liabilities
Deferred rent expense
Deferred branding credits
Deferred credits
Other liabilities
2013
$
47.4
16.2
16.4
76.7
156.7
2012
$
41.2
13.8
4.6
62.3
121.9
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 80
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
22. Provisions
The reconciliation of the Corporation’s main provisions is as follows:
Asset retirement
obligations
(a)
$
Provision for
site
restoration
costs
(b)
$
Restructuring
provision
(c)
$
Provision for
workers’
compensation
(d)
$
Provision for
general liability
(d)
$
Other
provisions
$
66.5
166.5
3.7
(3.3)
12.5
(0.1)
15.6
8.5
269.9
60.8
2.1
0.7
(1.5)
4.8
-
-
(0.4)
66.5
52.3
58.9
9.6
(19.6)
0.3
(4.2)
0.5
3.2
101.0
25.5
28.8
8.9
(7.8)
0.3
(3.1)
(0.2)
(0.1)
52.3
-
-
34.0
-
-
-
-
0.1
34.1
-
-
-
-
-
-
-
-
-
25.7
-
15.7
(14.6)
0.3
-
0.9
-
28.0
25.0
-
14.3
(14.3)
0.7
-
-
-
25.7
13.1
-
10.7
(8.8)
-
-
0.2
-
15.2
13.7
-
5.5
(6.3)
0.1
-
0.1
-
13.1
-
5.2
1.3
(0.2)
-
-
-
0.8
7.1
-
-
-
-
-
-
-
-
-
2013
Balance, beginning of year
Business acquisitions (Note 4)
Liabilities incurred
Liabilities settled
Accretion expense
Reversal of provisions
Change in estimates
Effect of exchange rate variations
Balance, end of year
Current portion of provisions
Long-term portion of provisions
2012
Balance, beginning of year
Business acquisitions (Note 4)
Liabilities incurred
Liabilities settled
Accretion expense
Reversal of provisions
Change in estimates
Effect of exchange rate variations
Balance, end of year
Current portion of provisions
Long-term portion of provisions
Total
$
157.6
230.6
75.0
(46.5)
13.1
(4.3)
17.2
12.6
455.3
96.5
358.8
125.0
30.9
29.4
(29.9)
5.9
(3.1)
(0.1)
(0.5)
157.6
50.1
107.5
(a)
The total undiscounted amount of estimated cash flows to settle the asset retirement obligations is approximately $519.0 and is expected to be incurred over the next 40 years.
Should changes occur in estimated future removal costs, tank useful lives, lease terms or governmental regulatory requirements, revisions to the liability could be made.
Site restoration costs should be disbursed over the next 20 years.
Restructuring costs should be settled over the next two years.
(b)
(c)
(d) Workers’ compensation and general liability indemnities should be disbursed over the next five years.
Environmental costs
The Corporation is subject to Canadian, US and European legislations governing the storage, handling and sale of road transportation fuel
and other petroleum-based products. The Corporation considers that it is compliant with all important aspects of the current environmental
legislations.
The Corporation has an ongoing training program for its employees on environmental issues and performs preventive site testing and site
restoration in cooperation with regulatory authorities. The Corporation also examines its motor fuel equipment annually.
In each of the US states in which the Corporation operates, with the exception of Michigan, Iowa, Florida, Arizona, Texas, West Virginia and
Washington State, there is a state fund to cover the cost of certain environmental remediation activities after the applicable trust fund
deductible is met, which varies by state. These state funds provide insurance for motor fuel facilities operations to cover some of the costs of
cleaning up certain contamination to the environment caused by the usage of road transportation fuel equipment. Road transportation fuel
storage tank registration fees and/or a motor fuel tax in each of the states finance the trust funds. The Corporation pays annual registration
fees and remits sales taxes to applicable states. Insurance coverage is different in the various states.
In order to provide for the above-mentioned restoration costs, the Corporation has recorded a $101.0 provision for environmental costs as at
April 28, 2013 ($52.3 as at April 29, 2012). Of this amount, $34.8 ($19.6 as at April 29, 2012) is included in current provisions and the
remainder is included in long-term provisions. Furthermore, the Corporation has recorded an amount of $13.9 for environmental costs
receivable from trust funds as at April 28, 2013 ($15.1 as at April 29, 2012), of which $2.2 ($2.1 as at April 29, 2012) is included in Accounts
receivable and the remainder is included in Other assets.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 81
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
23. Capital stock
Authorized
Unlimited number of shares without par value
First and second preferred shares issuable in series, non-voting, ranking prior to other classes of shares with respect to dividends and
payment of capital upon dissolution. The Board of Directors is authorized to determine the designation, rights, privileges, conditions and
restrictions relating to each series of shares prior to their issuance.
Class A multiple voting and participating shares, ten votes per share except for certain situations which provide for only one vote per
share, convertible into Class B subordinate voting shares on a share-for-share basis at the holder’s option. Under the articles of
amendment, no new Class A multiple voting shares may be issued.
Class B subordinate voting and participating shares, convertible automatically into Class A multiple voting shares on a share-for-share
basis upon the occurrence of certain events.
The order of priority for the payment of dividends is as follows:
first preferred shares;
second preferred shares; and
Class B subordinate voting shares and Class A multiple voting shares, ranking pari passu.
Issued and fully paid
The changes in number of outstanding shares are as follows:
Class A multiple voting shares
Balance, beginning of year
Repurchase and cancellation of shares (a)
Conversion into Class B shares
Balance, end of year
Class B subordinate voting shares
Balance, beginning of year
Repurchase and cancellation of shares (a)
Issued on public offering (b)
Issued as part of a previous acquisition
Issued on conversion of Class A shares
Stock options exercised
Balance, end of year
2013
2012
53,686,412
-
(4,319,132)
49,367,280
53,694,712
(3,700)
(4,600)
53,686,412
125,366,596
-
7,302,500
176
4,319,132
1,213,657
138,202,061
129,899,045
(6,969,200)
-
992
4,600
2,431,159
125,366,596
(a) Since October 25, 2011, the Corporation had a share repurchase program which expired on October 24, 2012. This program allowed the
Corporation to repurchase up to 2,684,420 of the 53,688,412 Class A multiple voting shares and up to 11,126,400 of the
111,264,009 Class B subordinate voting shares issued and outstanding as at October 11, 2011 (representing 5.0% of the Class A
multiple voting shares issued and outstanding and 10.0% of the Class B subordinate voting shares of the public float, as at that date,
respectively, as defined by applicable rules). In accordance with Toronto Stock Exchange requirements, the Corporation could
repurchase a daily maximum of 1,000 Class A multiple voting shares and of 82,118 Class B subordinate voting shares. When making
such repurchases, the number of Class A multiple voting shares and of Class B subordinate voting shares in circulation is reduced and
the proportionate interest of all remaining shareholders in the Corporation’s share capital is increased on a pro rata basis. All shares
repurchased under the share repurchase program were cancelled upon repurchase. The Corporation did not repurchase any shares
under this program during the year ended on April 28, 2013.
(b) On August 14, 2012, the Corporation issued 7,302,500 Class B subordinate voting shares at a price of CA$47.25 per share, for gross
proceeds of approximately CA$345.0 ($347.9). The net proceeds of the issuance, approximately CA$330.0 ($333.4), were mainly used
to repay a portion of the Corporation’s revolving unsecured operating credits then outstanding.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 82
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
24. Stock-based compensation and other stock-based payments
Stock option plan
The Corporation has a stock option plan (the ―Plan‖) under which it has authorized the grant of up to 16,892,000 stock options for the
purchase of its Class B subordinate voting shares.
Stock options have up to a ten-year term, vest 20.0% on the date of the grant and cumulatively thereafter on each anniversary date of the
grant and are exercisable at the designated market price on the date of grant. The grant price of each stock option shall not be set below the
weighted average closing price for a board lot of the Class B shares on the Toronto Stock Exchange for the five days preceding the grant.
Each stock option is exercisable into one Class B share of the Corporation at the price specified in the terms of the stock option. To allow
option holders to proceed with a cashless exercise of their options, the plan allows them to elect to receive a number of subordinate shares
equivalent to the difference between the total number of subordinate shares underlying the options exercised and the number of subordinate
shares required to settle the exercise of the options.
The table below presents the status of the Corporation’s stock option plan as at April 28, 2013 and April 29, 2012 and the changes therein
during the years then ended:
Outstanding, beginning of year
Granted
Exercised
Forfeited
Outstanding, end of year
Number of stock
options
3,488,504
35,000
(1,270,324)
(420)
2,252,760
2013
Weighted average
exercise price
CA$
13.42
47.60
8.99
16.57
16.45
Number of stock
options
5,957,180
-
(2,460,676)
(8,000)
3,488,504
2012
Weighted
average
exercise price
CA$
11.25
-
8.15
16.35
13.42
Exercisable stock options, end of year
2,180,230
16.02
3,352,964
13.29
For options exercised in fiscal 2013, the weighted average share price at the date of exercise was CA$48.16 (CA$30.25 in 2012).
The following table presents information on the stock options outstanding and exercisable as at April 28, 2013:
Range of
exercise prices
CA$
8 – 12
12 – 16
16 – 20
20 – 26
26 – 48
Number of
stock options
outstanding as at
April 28, 2013
Options outstanding
Weighted average
remaining contractual
life (years)
815,000
151,930
866,230
384,600
35,000
2,252,760
0.48
5.38
3.39
3.59
9.26
Weighted
average
exercise price
CA$
10.13
13.95
17.72
25.13
47.60
16.45
Number of
stock options
exercisable as at
April 28, 2013
815,000
148,930
824,700
384,600
7,000
2,180,230
Options exercisable
Weighted
average
exercise price
CA$
10.13
13.97
17.69
25.13
47.60
16.02
The fair value of stock options granted is estimated at the grant date using the Black-Scholes option pricing model on the basis of the
following weighted average assumptions for the stock options granted during the year:
Expected dividends (per share)
Expected volatility
Risk-free interest rate
Expected life
2013
CA$0.30
30.00%
1.55%
8 years
2012
-
-
-
-
The weighted average fair value of stock options granted was CA$16.70.
For 2013, compensation cost charged to the consolidated statements of earnings amounts to $0.5 ($0.4 in 2012).
Deferred Share Unit Plan
The Corporation has a Deferred Share Unit Plan for the benefit of its external directors allowing them, at their option, to receive all or a
portion of their annual compensation and directors’ fee in the form of Deferred Share Units (―DSU‖). A DSU is a notional unit, equivalent in
value to the Corporation’s Class B share. Upon leaving the Board of Directors, participants are entitled to receive the payment of their
cumulated DSUs either a) in the form of cash based on the price of the Corporation’s Class B shares as traded on the open market on the
date of payment, or b) in Class B shares bought by the Corporation on the open market on behalf of the participant.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 83
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The DSU expense and the related liability are recorded at the grant date. The liability is adjusted periodically to reflect any variation in the
market value of the Class B shares. As at April 28, 2013, the Corporation has a total of 67,325 DSUs outstanding (80,723 as at April 29,
2012) and an obligation of $4.0 ($3.5 as at April 29, 2012) is recorded in deferred credits and other liabilities. The compensation cost
amounts to $1.7 in 2013 ($1.8 in 2012).
Phantom Stock Units
The Corporation has a Phantom Stock Units (―PSU‖) Plan allowing the Board of Directors, through its Human Resources and Corporate
Governance Committee, to grant PSUs to the officers and selected key employees of the Corporation (the ―Participants‖). A PSU is a
notional unit whose value is based on the weighted average reported closing price for a board lot of the Corporation’s Class B subordinated
voting share (the ―Class B share‖) on the Toronto Stock Exchange for the five trading days immediately preceding the grant date. The PSU
provides the Participant with the opportunity to earn a cash award. Each PSU initially granted vests no later than one day prior to the third
anniversary of the grant date subject namely to the achievement of performance objectives of the Corporation, based on external and
internal benchmarks, over a three-year performance period. PSUs are not dilutive since they are payable solely in cash.
The table below presents the status of the Corporation’s PSU plan as at April 28, 2013 and April 29, 2012 and the changes therein during the
years then ended in number of units:
Outstanding, beginning of year
Granted
Paid
Cancelled
Outstanding, end of year
2013
2012
435,883
217,628
(135,121)
(15,745)
502,645
367,617
140,626
(11,103)
(61,257)
435,883
As at April 28, 2013, an obligation of $6.8 is recorded in accounts payable and accrued liabilities ($5.7 in 2012) and $7.7 is recorded in
Deferred credits and other liabilities ($6.4 as at April 29, 2012). The obligation is subject to an embedded total return swap (Note 17). For
2013, the compensation cost amounts to $3.7 ($2.6 for 2012).
25. Employee future benefits
The Corporation has a number of funded and unfunded defined benefit and defined contribution plans that provide retirement benefits to
certain employees.
Defined benefit plans
The Corporation measures its accrued defined benefit obligation and the fair value of plan assets for accounting purposes on the last Sunday
of April of each year.
The Corporation has defined benefits plans in Canada and in the United States. Those plans provide benefits based on average earnings at
retirement, or based on the years with the highest salaries, and the number of years of service. The most recent actuarial valuation of the
pension plans for funding purposes was as at December 31, 2012 and the next required valuation will be as at December 31, 2013.
Additionally, through its acquisition of Statoil Fuel & Retail on June 19, 2012, the Corporation now sponsors defined benefit plans in Norway
and Sweden. Those plans also provide benefits based on salary at retirement and number of years of service.
Some plans include benefits adjustments in line with the retail price index whereas most of them do not provide such adjustments. The
majority of the benefit payments are from trustee-administered funds; however, there are also a number of unfunded plans where the
Corporation meets the benefit payment obligation as it falls due. Plan assets held in trusts are governed by local regulations and practice in
each country, as is the nature of the relationship between the Corporation and the trustees and their composition. Responsibility for
governance of the plans, investment decisions and contribution schedules lies jointly with the plan committees and the Corporation.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 84
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
Information about the Corporation's defined benefit plans, in aggregate, is as follows:
Present value of accrued defined benefit obligation
Balance, beginning of year
Business acquisition
Current service cost
Interest cost
Benefits paid
Loss from change in demographic assumptions
(Gain) loss from change in financial assumptions
Experience gains
Curtailment gain
Effect of exchange rate fluctuations
Balance, end of year
Plans’ assets
Fair value, beginning of year
Business acquisition
Interest income
Return on asset (excluding amounts included in interest income)
Employer contributions
Benefits paid
Administrative expenses
Effect of exchange rate fluctuations
Fair value, end of year
2013
$
64.5
408.7
15.5
13.2
(20.3)
37.4
(52.6)
(2.8)
(19.4)
14.4
458.6
25.0
342.2
10.4
(16.7)
10.7
(14.2)
(0.6)
14.2
371.0
2012
$
58.0
-
1.1
3.3
(3.3)
-
3.1
3.8
-
(1.5)
64.5
25.5
-
1.2
0.3
0.9
(2.1)
(0.1)
(0.7)
25.0
Reconciliation of the funded status of the benefit plans to the amount recorded in the consolidated financial statements:
Present value of defined benefit obligation for funded pension plans
Fair value of plans’ assets
Funded status of plan – surplus (deficit)
Present value of defined benefit obligation for unfunded pension plans
Accrued pension benefit liability
2013
$
(352.4)
371.0
18.6
(106.2)
(87.6)
2012
$
(25.6)
25.0
(0.6)
(38.9)
(39.5)
The pension benefit asset of $22.1 (none as at April 29, 2012) is included in Other assets and the pension benefit liability of $109.7 ($39.5 as
at April 29, 2012) is presented separately in the consolidated balance sheets.
The defined benefit obligation and plan assets are composed by country as follows:
2013
Present value of defined benefit obligation
Fair value of plans’ assets
Funded status of plan – surplus (deficit)
2012
Present value of defined benefit obligation
Fair value of plans’ assets
Funded status of plan – surplus (deficit)
Canada
$
(65.9)
25.7
(40.2)
(60.9)
25.0
(35.9)
United
States
$
(5.7)
-
(5.7)
(3.6)
-
(3.6)
Norway
$
(263.9)
209.0
(54.9)
Sweden
$
(123.1)
136.3
13.2
-
-
-
-
-
-
Total
$
(458.6)
371.0
(87.6)
(64.5)
25.0
(39.5)
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 85
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
As at the measurement date, plans’ assets consist of:
Cash and cash equivalents
Equity securities
Debt instruments
Government
Corporate
Real estate
Other assets
Total
Quoted
$
8.0
87.3
Unquoted
$
-
6.5
106.6
93.5
-
14.9
310.3
5.9
10.9
30.1
7.3
60.7
Total
$
8.0
93.8
112.5
104.4
30.1
22.2
371.0
The Corporation’s pension benefit expense for the fiscal year is determined as follows:
2013
%
2.2
25.3
30.3
28.1
8.1
6.0
100.0
Quoted
$
0.6
7.7
Unquoted
$
-
-
11.9
4.8
-
-
25.0
-
-
-
-
-
Total
$
0.6
7.7
11.9
4.8
-
-
25.0
2012
%
2.4
30.8
47.6
19.2
-
-
100.0
Current service cost, net of employee contributions
Administrative expenses
Pension expense for the year
Net interest expense
Curtailment gain
Amount recognized in earnings for the year
2013
$
15.5
0.6
16.1
2.8
(19.4)
(0.5)
2012
$
1.1
0.1
1.4
2.1
-
3.5
The pension expense for the year is included in Operating, selling, administrative and general expenses in the consolidated statement of
earnings, the curtailment gain is presented separately in the consolidated statement of earnings while the net interest expense is included in
Financial expenses.
The amount recognized in Other comprehensive income for the fiscal year is determined as follows:
Loss (gain) from change in demographic assumptions
(Gain) loss from change in financial assumptions
Experience (gain) loss
Return on asset (excluding amounts included in interest income)
Amount recognized in Other comprehensive income
2013
$
37.4
(52.6)
(2.8)
16.7
(1.3)
2012
$
-
3.1
3.8
(0.3)
(6.6)
The Corporation expects to make a contribution of $15.4 to the defined benefit plans during the next financial year.
The significant weighted average actuarial assumptions which management considers the most likely to determine the accrued benefit
obligations and the pension expense are the following:
Canada
%
3.95
3.70
2.25
United
States
%
3.95
4.00
2.25
Norway
%
4.00
3.75
0.75
2013
Sweden
%
3.25
2.50
1.50
Canada
%
4.80
3.90
2.25
United
States
%
4.80
4.00
2.25
-
-
3.50
2.50
-
-
2012
Sweden
%
-
-
-
-
Norway
%
-
-
-
-
Discount rate
Rate of compensation
increase
Rate of benefit increase
Rate of social security base
amount increase (G-
amount)
The Corporation uses mortality tables provided by regulatory authorities and actuaries associations in each country. In 2013, a new mortality
table was issued by The Financial Supervisory Authority of Norway. This had an impact on the defined benefit obligation in Norway. The
mortality table previously used was the last available, which was issued in 2005. The G-amount is the expected increase of pensions paid
from the state. In some European countries, the Corporation is responsible for the difference between what the pensioners receive from the
state and the entitled pension based on their salary at the time of retirement.
The weighted average duration of the defined benefit obligation of the Corporation is 16 years.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 86
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The sensitivity of the defined benefit obligation to changes in the weighted principal actuarial assumptions is as follows:
Discount rate
Rate of compensation increase
Rate of benefit increase
Rate of social security base amount increase (G-amount)
Change in assumption
%
0.50
0.50
0.50
0.50
Increase in assumption
Decrease in assumption
Decrease by 7.9%
Increase by 3.2%
Increase by 6.6%
Increase by 0.2%
Increase by 9.1%
Decrease by 2.9%
Decrease by 6.2%
Decrease by 0.0%
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is
unlikely to occur, because changes in some of the assumptions may be correlated. When calculating the above sensitivity analyses, the
same method has been applied as when calculating the pension liability recognized in the consolidated balance sheet.
Through its defined benefit pension plans, the Corporation is exposed to the following risks:
Asset returns: The value of the plans defined benefit obligations is calculated using a discount rate set with reference to corporate bond
yields. If plan assets underperform this yield, this will create a deficit. All of the capitalized plans hold a significant proportion of equities,
which are expected to outperform corporate bonds in the long term. Furthermore, the Corporation actively monitors the performance of the
assets to ensure the expected return. To mitigate the risks of assets underperforming, investment policies require a diversified portfolio that
spreads risk across different types of instruments.
Changes in bond yields: A decrease in corporate bond yields will increase plan defined benefit obligations. However, this same decrease will
increase existing bond values held by the various plans.
Change in demographic assumptions: A change in demographic assumptions (rate of salary increase or pension increase, change in
mortality table) will increase or decrease the obligation.
For funded plans, the individual plans have investment policy objectives to have investment average length in line with the average expected
life of the obligation and scheduled benefits payments. The Corporation and the trustees, actively monitor that the duration and the expected
yield of the investments are matching the expected cash outflows arising from the pension benefits payments. Also, as presented above, to
mitigate the risks, the investments are well diversified. The Corporation does not use derivatives to offset its risk and has not changed the
processes from previous fiscal year.
In Europe, it is the Corporation’s responsibility to make contributions or not in the defined benefit plans. The Corporation contributes to these
plans except when they are overcapitalized. The majority of funded plans in Europe are currently in surplus position. For the other funded
plans, the Corporation makes payments based on the actuaries’ recommendations and existing regulations. In Canada, only one plan is
funded and currently runs a deficit. The Corporation is committed to make special payments in the coming years to eliminate the deficit.
These contributions have no significant impact on the cash flow of the Corporation. The Corporation does not have a funded plan in the
United States.
The Corporation recorded a curtailment gain on its pension obligation on some of its defined benefits pension plans. This planned
curtailment results from Statoil Fuel & Retail’s restructuring.
Defined contribution plans
The Corporation’s total pension expense under its defined contribution plans and mandatory governmental plans for 2013 is $61.9 ($46.8 in
2012).
Deferred compensation plan – United States operations
The Corporation sponsors a deferred compensation plan that allows certain employees in its US operations to defer up to 25.0% of their
base salary and 100.0% of their cash bonuses for any given year. Interest accrued on the deferral and amounts due to the participants are
generally payable on retirement, except in certain limited circumstances. Obligations under this plan amount to $18.3 as at April 28, 2013
($15.0 as at April 29, 2012) and are included in Deferred credits and other liabilities.
26. Financial instruments and capital risk management
Financial risk management objectives and policies
The Corporation’s activities expose it to a variety of financial risks: foreign currency risk, interest rate risk, credit risk, liquidity risk and price
risk. The Corporation uses forwards to hedge certain risk exposures, primarily foreign currency and price risk as well as a cross currency
interest rate swap to hedge its foreign currency risk on a portion of its long-term debt.
Foreign currency risk
A large portion of the Corporation’s consolidated revenues and expenses are received or denominated in the functional currency of the
markets in which it does business. Accordingly, the Corporation’s sensitivity to variations in foreign exchange rates is economically limited.
The Corporation is exposed to foreign currency risk with respect to a portion of its aviation fuel operations for which purchases and sales are
denominated in different currencies. To mitigate this risk, the Corporation holds cross currency swaps.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 87
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The Corporation is also exposed to foreign currency risk with respect to a portion of its long-term debt denominated in US dollars and certain
intercompany loans. As at April 28, 2013, with all other variables held constant, a hypothetical variation of 5.0% of the US dollar against the
Canadian dollar would have had a net impact of $4.6 on net earnings. As at April 28, 2013, the Corporation did not hold any other derivative
instruments to mitigate this risk.
The Corporation was also exposed to foreign currency risk with respect to its acquisition of Statoil Fuel & Retail for which the purchase price
was denominated in Norwegian kroners (―NOK‖) and was financed using the Corporation’s acquisition facility denominated in US dollars. The
hypothetical weakening of the US dollar against the NOK would have increased the Corporation’s US dollar cash requirements in order to
close the acquisition of Statoil Fuel & Retail. To mitigate this risk and because of the lack of liquidity in the currency market for the NOK, the
Corporation entered into foreign exchange forward contracts (hereinafter, ―forwards‖) with reputable financial institutions allowing it to
predetermine a significant portion of the disbursement it planned to make in US dollars for the acquisition of Statoil Fuel & Retail.
In total, from April 10, 2012 to June 12, 2012, the Corporation entered into forwards requiring it to deliver US$3.47 billion in exchange for
NOK 20.14 billion, representing a weighted average rate of NOK 5.8082 per US dollar which is a favorable rate compared to the rate of NOK
5.75 per US dollar in effect on April 18, 2012, date of the announcement of the offer to acquire Statoil Fuel & Retail.
Subsequently, the Corporation modified the original maturity dates of certain forwards to make them coincide with the actual disbursement
dates for the payment of Statoil Fuel & Retail shares and the repayment of certain of Statoil Fuel & Retail debts. Thus, from June 15, 2012 to
August 24, 2012, the Corporation settled all of the forwards to pay for Statoil Fuel & Retail shares and certain of its debts.
During fiscal 2013, the Corporation recorded to earnings losses of $102.9, in relation with these forwards (gain of $17.0 in 2012).
Interest rate risk
The Corporation’s fixed rate long-term debt is exposed to a risk of change in fair value due to changes in interest rates. As at April 28, 2013,
the Corporation did not hold any derivative instruments to mitigate this risk.
The Corporation is exposed to a risk of change in cash flows due to changes in interest rates on its variable rate long-term debt. As at
April 28, 2013, the Corporation did not hold any derivative instruments to mitigate this risk. The Corporation analyzes its cash flow exposure
on an ongoing basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative
financing and hedging. Based on these scenarios, the Corporation calculates the impact on net earnings of a defined interest rate shift.
Based on variable rate long-term debt balances as at April 28, 2013, the impact on net earnings of a 1.0% shift in interest rates would have
been $18.6.
Credit risk
The Corporation is exposed to credit risk with respect to Cash and cash equivalents, Trade accounts receivable and vendor rebates
receivable, Credit and debit cards receivable, the investment contract including an embedded total return swap and the cross-currency
interest rate swaps.
Key elements of the Corporation’s credit risk management approach include credit risk policies, credit mandates, an internal credit rating
process, credit risk mitigation tools and continuous monitoring and management of credit exposures. Prior to entering into transactions with
new counterparties, the Corporation's credit policy requires counterparties to be formally identified, approved, and assigned internal credit
ratings as well as exposure limits. Once established, counterparties are re-assessed according to policy and monitored continuously.
Counterparty risk assessments are based on a quantitative and qualitative analysis of recent financial statements, when available, and other
relevant business information. In addition, the Corporation evaluates any past payment performance, the counterparties' size and business
diversification, and the inherent industry risk. The internal credit ratings reflect the Corporation's assessment of the counterparties' credit risk.
The Corporation has maximum credit exposures for individual counterparties. The Corporation monitors outstanding balances and individual
exposures against limits on a regular basis.
Credit risk related to Trade accounts receivable and vendor rebates receivable related to convenience stores’ operations is limited
considering the nature of the Corporation’s activities and its counterparties. As at April 28, 2013, no single creditor accounted for over 10.0%
of total Trade accounts receivable and vendor rebates receivable and the related maximum credit risk exposure corresponds to their carrying
amount.
The Corporation mitigates the credit risk related to Cash and cash equivalents and Credit and debit cards receivable by dealing with major
financial institutions that have very low or minimal credit risk. As at April 28, 2013, the maximum credit risk exposure related to Cash and
cash equivalents and Credit and debit cards receivable corresponds to their carrying amount in addition to the credit risk exposure related to
the Statoil/MasterCard credit cards as described below.
The Corporation offers a variety of transportation fuel loyalty cards to its business-to-business and business-to-consumer customers as a
means of attracting and retaining customers. These cards provide for approximately 10-45 days delayed payment terms depending on
applicable credit criteria. The Corporation also offers various credit or delayed payment terms to its stationary energy, lubricants and aviation
fuel customers.
In some European markets, customers can settle their purchases by the use of a combined Statoil/MasterCard credit card. The Corporation
has entered into agreements whereby the risks and rewards related to the credit cards, such as fee income, administration expenses and
bad debt, are shared between the Corporation and external banks. Outstanding balances are charged to the customer monthly. The
Corporation’s exposure as at April 28, 2013 relates to receivables of $254.1, of which $125.9 was interest bearing. These receivables are not
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 88
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
recognized in the Corporation’s consolidated balance sheet. For fiscal 2013, the expensed losses were not significant. In light of accurate
credit assessments and continuous monitoring of outstanding balances, the Corporation believes that the credits do not represent any
significant risk. The income and risks related to these arrangements with the banks are reported, settled and accounted for on a monthly
basis.
The Corporation is exposed to credit risk arising from its embedded total return swap and cross-currency interest rate swaps when these
swaps result in a receivable from the financial institutions. In accordance with its risk management policy, to reduce this risk, the Corporation
has entered into these swaps with major financial institutions with a very low credit risk.
Liquidity risk
Liquidity risk is the risk that the Corporation will encounter difficulties in meeting its obligations associated with financial liabilities and lease
commitments. The Corporation is exposed to this risk mainly through its Long-term debt, Accounts payable and accrued expenses and lease
agreements. The Corporation’s liquidities are provided mainly by cash flows from operating activities and borrowings available under its
revolving credit facilities.
On an ongoing basis, the Corporation monitors rolling forecasts of its liquidity reserve on the basis of expected cash flows taking into account
operating needs, tax situation and capital requirements and ensures that it has sufficient flexibility under its available liquidity resources to
meet its obligations.
The contractual maturities of financial liabilities as at April 28, 2013 are as follows:
Non-derivative financial liabilities (1)
Accounts payable and accrued liabilities (2)
Unsecured non-revolving acquisition credit facility
Senior unsecured notes
Term revolving unsecured operating credit D
NOK fixed-rate bonds
NOK floating-rate bonds
Other long-term debt
Carrying
amount
$
Contractual
cash flows
$
Less than
one year
$
Between one
and two years
$
Between two
and five years
$
More than
five years
$
1,670.4
2,197.3
978.7
345.5
2.3
2.6
78.7
5,275.7
1,670.4
2,279.3
1,154.8
367.0
2.9
3.0
94.8
5,572.2
1,670.4
638.2
32.7
6.0
0.1
0.1
19.8
2,367.3
-
35.2
32.7
6.0
0.1
0.1
27.8
101.9
-
1,605.9
388.9
355.0
0.3
2.8
22.1
2,375.0
-
-
700.5
-
2.4
-
25.1
728.0
(1) Based on spot rates, as at April 28, 2013, for balances in Canadian dollars, in NOK and balances bearing interest at variable rates.
(2) Excludes deferred credits as well as statutory accounts payable and accrued liabilities such as sales taxes, excise taxes, property taxes and certain payroll benefits.
Price risk
The Corporation’s sales of refined oil products, which include road transportation fuel, stationary energy, aviation fuel and lubricants,
constitute a material share of its gross profit. As a result, its business, financial position, results of operation and cash flows are affected by
changes in the commodity prices of such products. The Corporation seeks to pass on any changes in purchase prices to its customers by
adjusting sales prices to reflect changes in refined oil products prices. The time lag between a change in refined oil products prices and a
change of prices of fuel sold by the Corporation can impact on the gross margin on sales of these products. As at April 28, 2013, the
Corporation did not hold any other derivative instruments to mitigate this risk.
The Corporation is exposed to price risk with respect to its obligation related to its PSU Plan which fluctuates in part with the fair value of the
Corporation’s Class B shares. To mitigate this risk, the Corporation has entered into a financial arrangement with an investment grade
financial institution which includes an embedded total return swap with an underlying representing Class B shares recorded at fair market
value on the consolidated balance sheet under Other assets. The financial arrangement is adjusted as needed to reflect new awards,
adjustments and/or settlements of PSUs. As at April 28, 2013, the impact on net earnings or shareholders’ equity of a 5.0% shift of the value
of the contract would not have been significant.
Fair values
The fair value of Trade accounts receivable and vendor rebates receivable, Credit and debit cards receivable and Accounts payable and
accrued liabilities is comparable to their carrying amount given their short maturity. The fair value of Obligations related to buildings and
equipment under finance leases is comparable to its carrying amount given that rent is generally at market value. The carrying value of the
Term revolving unsecured operating credits and Unsecured non-revolving acquisition credit approximates their fair value given that their
credit spread is similar to the credit spread the Corporation would obtain in similar conditions at the reporting date.
As at April 28, 2013, the fair value of the senior unsecured notes is $1,002.6.
The following methods and assumptions were used to determine the estimated fair value of each class of financial instruments:
The fair value of the investment contract including an embedded total return swap is based on the fair market value of the Corporation’s
Class B shares;
The fair value of the senior unsecured notes are based on comparable market prices;
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 89
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
The fair value of the cross-currency interest rate swaps is determined based on market rates obtained from the Corporation’s financial
institutions for similar financial instrument;
The fair value of the foreign currency forward contracts is determined by comparing the original rates of the contracts with rates
prevailing at the revaluation date for contracts having similar values and maturities.
Fair value hierarchy
Fair value measurements are categorized in accordance with the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 but that are observable for the asset or liability, either directly or indirectly;
and
Level 3: inputs for the asset or liability that are not based on observable market data.
The Corporation categorized the fair value measurement of the Instrument including an embedded total return swap, the cross currency
interest rate swap and the forwards in Level 2, as they are primarily derived from observable market inputs that are, quoted market prices.
Capital risk management
The Corporation’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce its cost of capital. The Corporation’s
capital comprises total Shareholders’ equity and net interest-bearing debt. Net interest-bearing debt refers to Long-term debt and its current
portion, net of Cash and cash equivalents and temporary investments, if any.
In order to maintain or adjust its capital structure, the Corporation may issue new shares, redeem its shares, sell assets to reduce debt or
adjust the amount of dividends paid to shareholders (Notes 19 and 23).
In its capital structure, the Corporation considers its stock option, PSU and DSU plans (Note 24). From time to time, the Corporation uses
share repurchase programs to achieve its capital management objectives (Note 23).
The Corporation monitors capital on the basis of the net interest-bearing debt to total capitalization ratio and also monitors its credit ratings
as determined by third parties. As at the consolidated balance sheet date, the net interest-bearing debt to total capitalization ratio was as
follows:
Current portion of long-term debt
Long-term debt
Less: Cash and cash equivalents
Net interest-bearing debt
Shareholders’ equity
Net interest-bearing debt
Total capitalization
2013
$
620.8
2,984.3
658.3
2,946.8
3,216.7
2,946.8
6,163.5
2012
$
484.4
180.8
304.3
360.9
2,174.6
360.9
2,535.5
Net interest-bearing debt to total capitalization ratio
47.8%
14.2%
Under its term revolving unsecured operating credits, the Corporation must meet the following ratios on a consolidated basis:
A leverage ratio, which is the ratio of total Long-term debt less Cash and cash equivalents to EBITDA for the four most recent quarters.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a non-IFRS measure;
A fixed charge coverage ratio, which is the ratio of EBITDAR for the four most recent quarters to the total interest expense and the rent
payments in the same periods. EBITDAR is a non-IFRS measure and is calculated as EBITDA plus rent payments.
The Corporation monitors these ratios regularly and is in compliance with these covenants.
The Corporation is not subject to any other significant externally imposed capital requirement.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 90
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
27. Contractual obligations
Minimum lease payments
As at April 28, 2013, the Corporation has entered into operating lease agreements expiring on various dates until 2040 which call for
aggregate minimum lease payments of $2,654.6 for the rental of commercial space, equipment and a warehouse. Several of these leases
contain renewal options and certain sites are subleased to third parties. The minimum lease payments for the next fiscal years are as follows:
Less than one year
One to five years
More than five years
$
334.2
1,057.9
1,262.5
As at April 28, 2013, the total amount of future minimum sublease payments expected to be received under sublease agreements related to
these operating leases is $58.5.
Purchase commitments
The Corporation has entered into various product purchase agreements which require it to purchase minimum amounts or quantities of
merchandise and road transportation fuel annually. The Corporation has generally exceeded such minimum requirements in the past and
expects to continue doing so for the foreseeable future. Failure to satisfy the minimum purchase requirements could result in termination of
the contracts, change in pricing of the products, payments to the applicable providers of a predetermined percentage of the commitments
and repayments of a portion of rebates received.
The Corporation entered into contracts for the delivery of road transportation fuel. The contracts give the Corporation the right to use and the
obligation to pay some transport capacity over the life of these contracts, from July 1, 2011 to June 30, 2016. A binding commitment arises
following the approval of a production plan for the coming month. Thus, as at April 28, 2013, there was a commitment for one month totaling
approximately $8.2.
The Corporation has an agreement with an oil company, which grants it the license to use and the obligation to pay for the use of the JET
trademark. The agreement commenced on November 1, 2010 and will expire in December 31, 2015. Annual license fee amounts to $4.0.
The Corporation has a project underway which comprises the development and implementation of a new Enterprise Resource Planning
solution for the organisation. The project was launched in calendar year 2011 and should be finalised in calendar year 2014. Contractual
commitments related to this project amounted to approximately $8.7 as at April 28, 2013.
In June 2011, the Corporation entered into an agreement with ExxonMobil which, as at April 28, 2013, binds it to purchase 117 stores when
a purchase price agreement is reached with the various independent operators who are part of this agreement. An amount of $21.6 is held in
escrow for this transaction.
28. Contingencies and guarantees
Contingencies
Various claims and legal proceedings have been initiated against the Corporation in the normal course of its operations and through
acquisitions. Although the outcome of such matters is not predictable with assurance, the Corporation has no reason to believe that the
outcome of any such current matter could reasonably be expected to have a materially adverse impact on the Corporation’s financial
position, results of operations or the ability to carry on any of its business activities.
Guarantees
The Corporation assigned a number of lease agreements for premises to third parties. Under some of these agreements, the Corporation
retains ultimate responsibility to the landlord for payment of amounts under the lease agreements should the sublessees fail to pay. As at
April 28, 2013, the total future lease payments under such agreements are approximately $1.3 and the fair value of the guarantee is not
significant. Historically, the Corporation has not made any significant payments in connection with these indemnification provisions.
Also, in Europe, the Corporation has issued guarantees to third parties and on behalf of third parties for maximum undiscounted future
payments totalling $21.7. These guarantees mainly relate to commitments under financial guarantees for car rental agreements and on
behalf of retailers in Sweden. Guarantees on behalf of retailers in Sweden comprise items such as guarantees towards retailers’ car washes
and store inventory, in addition to guarantees towards suppliers of electricity and heating. The carrying amount and fair value of the
guarantee commitments recognized in the consolidated balance sheet as at April 28, 2013 were not significant.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 91
Notes to the Consolidated Financial Statements
For the fiscal years ended April 28, 2013 and April 29, 2012
(in millions of US dollars, except share and stock option data)
29. Segmented information
The Corporation operates convenience stores in the United States, Europe and Canada. It essentially operates in one reportable segment,
the sale of goods for immediate consumption, road transportation fuel and other products mainly through corporate stores and franchise
operations. The Corporation operates its convenience store and road transportation fuel retailing chain under several banners, including
Circle K, Statoil, Couche-Tard and Mac’s. Revenues from external customers fall mainly into three categories: merchandise and services,
road transportation fuel and other.
Information on the principal revenue classes as well as geographic information is as follows:
External customer revenues(b)
Merchandise and services
Road transportation fuel
Other
Gross profit
Merchandise and services
Road transportation fuel
Other
US
$
Europe(a)
$
4,548.6
14,872.6
6.6
19,427.8
866.1
7,537.9
2,668.6
11,072.6
2013
(52 weeks)
Total
$
7,596.4
25,271.3
2,675.7
35,543.4
Canada
$
2,181.7
2,860.8
0.5
5,043.0
1,505.9
782.5
6.6
2,295.0
381.6
719.1
317.8
1,418.5
733.0
162.6
0.5
896.1
2,620.5
1,664.2
324.9
4,609.6
US
$
Europe
$
Canada
$
2012
(53 weeks)
Total
$
4,408.0
13,650.5
5.5
18,064.0
1,452.6
637.9
5.5
2,096.0
-
-
-
-
-
-
-
-
-
2,190.9
2,724.9
0.5
4,916.3
6,598.9
16,375.4
6.0
22,980.3
729.8
148.8
0.5
879.1
2,182.4
786.7
6.0
2,975.1
633.7
3,088.0
Total long-term assets(c)
2,678.3
3,861.0
635.6
7,174.9
2,454.3
(a) Comprises Statoil Fuel and Retail.
(b) Geographic areas are determined according to where the Corporation generates operating income (where the sale takes place) and according to the location of the long-term assets.
(c) Excluding financial instruments, deferred tax assets and post-employment benefit assets.
30. Subsequent events
Acquisition
Subsequent to fiscal year 2013, under the June 2011 agreement with ExxonMobil, the Corporation acquired 60 stores operated by
independent operators along with the related road transportation fuel supply agreements and for which the real estate is owned by the
Corporation. Additionally, six road transportation fuel supply agreements were transferred to the Corporation.
Dividends
During its July 9, 2013 meeting, the Corporation’s Board of Directors (the ―Board‖) declared a dividend of CA$0.075 per share to
shareholders on record as at July 18, 2013 and approved its payment for August 1st, 2013.
Annual Report © 2013 Alimentation Couche-Tard Inc.
Page 92
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