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2010 Annual Report

An n u a l R e p ort Co n t e n t s Message from the Board


Message from the CEO


Board Governance


Meet the Executive Team


Report on Operations


Patronage Return and Member Reports


Officers’ Report


Auditors’ Report


Audited Financial Statements




2010 Annual Report

Our Vision: To be the premier shopping destination in the communities we serve.

Our Mission: To provide outstanding service, quality products, superior facilities and exceptional value.

Our Values: Integrity, Respect, Commitment, Leadership, Community. Calgary Co-op adheres to the seven internationally recognized Co-operative Principles upon which all co-operatives are modeled: • Voluntary and open membership. • Democratic member control. • Member economic participation. • Autonomy and independence. • Education, training and information. • Co-operation among co-operatives. • Concern for community. 2010 Annual Report


Message from the Board “...we will strengthen the overall shopping experience for our members and achieve the financial results necessary for the future.” On behalf of the Board of Directors, I would like to report that for the 2010 financial year that ended on October 30, 2010, Calgary Co-op members will share $29.6 million in patronage returns. This represents $20.3 million paid in cash and $9.3 million in share equity. On a percentage basis, this equates to an overall patronage return of 3.33 per cent for 2010 compared to 5.07 per cent in 2009.


2010 Annual Report

In 2010, your Board undertook a number of governance initiatives, including updating and strengthening its governance practices to ensure the Board’s overall effectiveness, reviewing policies, assessing the impact of changes to general accounting principles and practices, reviewing the director election and voting procedures, and approving changes necessary for delivering value to our members. A summary of the Board’s achievements over the past year are provided on pages 6 - 9 of this annual report. The past year continued to present a number of challenges for Calgary Co-op as the result of a slowly recovering economy, decreased consumer spending, and increasing competition to our retail food business. We are confident that the strategies and programs put into place in 2010 will strengthen the overall shopping experience for our members and achieve the financial results necessary for the future. The Board is honoured to represent the over 440,000 members of Calgary Co-op, and remains committed to representing their collective best interests in the years ahead. On behalf of the Board of Directors,

Stuart Cantrill, Board Chair

Back row L-R: Barry Ashton, Lisa Wise (Board Secretary), Roy Goodall, Randy Kott, Stuart Cantrill (Chair), Rick Smith. Front row L-R: Johanna Bates, Terry Geib (Vice Chair), Myra D’Souza Kormann.  

2010 Annual Report


Message from the CEO

Calgary Co-op achieved substantial growth in 2010 in many areas of the business including pharmacy, petroleum, home health care, and wines and spirits. However, it was a difficult year for our food business due to increased competition, a still-struggling local economy, and deflation. We continued to lower food prices to be more competitive every day in all areas of our food business. Financial results for the year ended October 30, 2010, saw an increase in sales to $1.023 billion compared to $1.002 billion in 2009. Assets were $413.4 million compared to $392.8 million in 2009. Membership grew to 440,643 in 2010 from 438,980 in 2009. A copy of the detailed financial statements for the 2010 financial year (November 1, 2009 to October 30, 2010) starts on page 20 of this report. Although the association continues to do well overall, in order to be able to grow our food business in the future, we know that we must do some things differently to ensure that our members can obtain the products and


2010 Annual Report

services that are important to them at a fair price, each and every day. In early 2010, we conducted important research that confirmed some things we already knew: customers believe we have the best meat in the market place, the best customer service, the cleanest stores, the best support for the community, and that our produce is of higher quality than most of our competitors. However, they also believe that our prices are higher than they actually are. To improve this price perception, we have been working hard to lower prices and, more importantly, we have been doing a better job at telling people about our great prices and sales. Today, we offer over 3,500 of the most commonly purchased products at prices that are either better or priced similarly to those offered by our main competitors. We have also introduced a vision and mission for our food stores that will give us a competitive advantage over the long term. Food Vision: We will be known as providing the freshest, best quality food and services to our Calgary community. Food Mission: Our members trust us to work hard every day to provide them the freshest, best quality food, with a smile.

We know that in order to sustain the success that Calgary Co-op has achieved over the past 55 years and to be able to continue lowering our food prices, we must continue to focus our efforts on reducing costs, reducing or eliminating discretionary spending, reducing waste, and increasing operational efficiencies and effectiveness. Our employees are committed to ensuring that we are operating at the top of our game in product quality and service delivery for our members. These are what distinguish Calgary Co-op as a great retailer and truly sets us apart from the competition. While our facilities and product offerings attract people to our stores, it is the friendly, professional service from our employees and our quality products that will keep them coming back. In 2011, we will continue to deliver on our brand promise to our members by delivering the freshest, best quality products at a fair price, while working to improve operations and achieving the financial results necessary for sustaining the business for the long term.

N. Deane Collinson, Chief Executive Officer

2010 Annual Report


2010 Board of Directors and Officers Stuart Cantrill, Chair Terry Geib, Vice Chair Lisa Wise, Board Secretary Barry Ashton Johanna Bates Roy Goodall Myra D’Souza Kormann Randy Kott Rick Smith


2010 Annual Report

Board Governance Each year, following the conclusion of the Annual General Meeting in March, the Board of Directors appoints its Board Officers and committee representatives for the coming year. This report highlights those appointments and Board and committee activities for the past year. In 2010, the Board held a planning session with Executive management, seven regular meetings, and six in-camera meetings. At the planning meeting, the Mission, Vision and Values were re-affirmed; adjustments were recommended to the three year strategic plan; and a review of market and operational information, development projects, member relations and human resources programs was undertaken. The following pages contain a summary of each committee’s key accomplishments throughout the past year.

Audit Committee Board committee members: Barry Ashton, Chair; Lisa Wise; Roy Goodall; Rick Smith, Randy Kott. Ex officio: Stuart Cantrill, Deane Collinson. Management resource: Barry Heinrich; Llyle Toews, Corporate Controller; Terry Anderson, Internal Audit Director. The external auditors may also attend meetings of the committee. Audit Committee members are independent and have, as a minimum, a basic understanding of financial statements, internal control and risk management. Of the five Audit Committee members, each has previous Audit Committee experience and skill. Committee members avail themselves of opportunities to improve their understanding of financial reporting and related issues and strive to maintain a current understanding of emerging issues, such as private enterprise generally accepted accounting principles. This committee assists the Board in ensuring that risk management and internal control systems are in place and it monitors their effective operation. It also monitors the quality and integrity of financial and management reporting processes; oversees the independence, qualifications and performance of the external auditor and the Internal Audit Director; ensures that environmental management policy and systems are in place and effective; and monitors compliance with all legislation and regulation. The committee also ensures that a code of conduct and conflict of interest guidelines are in place, monitors their effectiveness and provides an avenue of communication among the external auditors, management, the Internal Audit Department, members and the Board. During the 2009-2010 financial year, the committee met five times and addressed all of the items on its work plan. Of special note was an initial review of the potential impact of a transition to accounting standards for private enterprises. The committee also reviewed the structure, function and tasks of the Internal Audit Department, which now reports to the

Chief Executive Officer. This review will continue in 2011 as the committee reviews options for internal audit quality assurance. A copy of the Audit Committee Charter can be found on (Membership).

Governance Committee Board committee members: Terry Geib, Chair; Lisa Wise; Myra D’Souza Kormann; Roy Goodall. Ex officio: Stuart Cantrill. Management resource: Deane Collinson. The committee met four times during the year and held two additional meetings to work on various assignments, including reviewing and updating sections of the Directors’ Manual, developing a Board scorecard, developing and implementing an online Board document library, updating the Director Orientation Program and conducting an in-depth analysis of Board composition and succession planning.

Member Relations Committee Board committee members: Johanna Bates, Chair; Myra D’Souza Kormann. Members at large: Peggy LeSueur; Elaine Smith; Keith Peppinck; Clinton Robertson; Gordon Given. Ex officio: Stuart Cantrill; Deane Collinson. Management resource: Donna Burn; Sarah Boutron, MPR Manager. The Member Relations Committee includes Board members and up to twelve members-at-large. The purpose of the committee is to educate members about the democratic process and co-operatives, specifically Calgary Co-op, and to uphold the values of the co-operative movement by listening to member concerns and suggestions, and conveying them to the committee chair. The committee met four times. Tasks included learning about other co-operatives, discussing ways to involve members in the democratic process, and learning

2010 Annual Report


about the food industry and issues within the food industry. Committee members also participated in various Calgary Co-op events including Stampede Week breakfasts, Seniors’ Day and the grand opening of Quarry Park Centre.

Performance and Compensation Committee Board committee members: Rick Smith, Chair; Barry Ashton; Randy Kott; Roy Goodall. Ex officio: Stuart Cantrill; Deane Collinson. Management resource: Rick Noonan. The committee met ten times during the year to review Board compensation and prepare recommendations for consideration by members at the Annual General Meeting in March 2010. The committee also reviewed employee compensation programs, including the new collective agreement, and reviewed short and long term performance and compensation/incentive plans.

Other Representation Each year, Board members and senior management participate on a number of other committees and/or organizations on behalf of Calgary Co-op. These include:


Calgary Co-op Home Health Care Limited: Lisa Wise; Deane Collinson; Barry Heinrich; Jeff Ambrose; Rick Noonan.

Calgary Co-op Wines & Spirits Limited Board: Barry Ashton; Deane Collinson; Barry Heinrich; Jeff Ambrose; Rick Noonan.

Calgary Co-op Trust Fund: Trustees: Randy Kott; Rick Smith; Roy Goodall. Management Trustees: Barry Heinrich; Llyle Toews, Chair.

The Produce People Board of Directors: Stuart Cantrill; Deane Collinson.

The Alberta Community and Co-operative Association: Rick Smith; Terry Geib (alternate).

AGM Management Committee: Terry Geib; Donna Burn, Chair; Stuart Cantrill, Ex officio.

2010 Annual Report

Board Remuneration and Annual Purchases Board remuneration for the 2010 financial year (November 2009 through October 2010) was based on compensation recommendations approved by members at the 2007 and 2008 annual general meeting, as well as recommendations presented to and approved by members at the 53rd annual general meeting in March 2010. A copy of this presentation can be found in the Board of Directors section at Each Board member continues to maintain or surpass the $2,400 requirement in annual purchases at Calgary Co-op to be eligible for election to the Board. The following reflects remuneration paid to directors and the purchases made by each active director in the 2010 financial year. Director Annual Remuneration Purchases 2010 2009 2010 $ 35,672 $ 24,073 $ 31,622.44 Barry Ashton 30,237 19,873 5,306.66 Johanna Bates 81,785 76,640 8,914.46 Stuart Cantrill (Chair) 37,081 35,473 32,637.80 Terry Geib 23,507 8,604.23 Roy Goodall1 5,180 18,650 N/A3 Alex Ingram2 37,935 16,913 7,168.03 Myra D’Souza Kormann 22,548 4,341 17,741.28 Randy Kott 1 36,931 14,540 11,939.41 Rick Smith 7,027 20,698 N/A3 Laura Sullivan2 32,902 23,098 18,630.81 Lisa Wise $ 350,805 $ 254,299 Total Remuneration Less: FCL Conference (3,495) (5,359) Fee Reimbursement Total Remuneration $ 347,310 $ 248,940 from Calgary Co-op Notes: 1. Remuneration for period March 10 through October 2010. Director’s term commenced March 2010. 2. Remuneration for period November 2009 through March 2010. Director’s term ended March 2010. 3. The 2010 Annual Purchases are only reported for those Directors currently sitting on the Board.

CEO Deane Collinson and Board Member Barry Ashton at Draft Horse Town during the 2010 Calgary Stampede.

Community Investment Management Committee: Roy Goodall; Donna Burn, Chair.

Meet Your Directors Committee: Myra D’Souza Kormann; Cindy Drummond, Chair.

Stampede Management Committee: Randy Kott; Sarah Boutron, Chair.

Federated Co-operatives Board Representative for District 5: Johanna Bates.

Federated Co-operatives Resolutions Committee: Rick Smith; Terry Geib (alternate).

Delegates to Federated Co-operatives Limited 81st Annual General Meeting: Randy Kott; Rick Smith; Lisa Wise; Stuart Cantrill; Myra D’Souza Kormann; Terry Geib.

Observer to the Canadian Co-operative Association Annual Meeting: Myra D’Souza Kormann.

Report on Federated Co-operatives Limited Calgary Co-op owns approximately eleven percent of the equity in Federated Co-operatives Limited (FCL). FCL is the major grocery and petroleum supplier for Calgary Co-op, in addition to providing other commodities. The Grocery People (an FCL subsidiary) and Calgary Co-op jointly own The Produce People, which is the major supplier of produce to Calgary Co-op and other co-operatives in southern Alberta. Calgary Co-op elects one director to the FCL Board and appoints delegates and observers to its annual meeting and regional fall conference. FCL revenues for its 2009-2010 fiscal year were $7.1 billion; net savings were $498 million. This represents an increase in revenues of 9.2 percent over the previous year and a 1.3 percent increase in net savings. As reported in the financial statements in this annual report, Calgary Co-op received $33.3 million in patronage refunds from FCL for 2010 compared to $33.9 million in 2009.

2010 Annual Report


Meet the Executive Team

Top left to right: N. Deane Collinson, Chief Executive Officer Barry Heinrich, Chief Financial Officer Jeff Ambrose, Vice President, Operations and Merchandising Bottom left to right: Wilf Harms, Vice President, Facilities, Development and Real Estate Donna Burn, Vice President, Member and Public Relations Rick Noonan, Vice President, Human Resources (retired)

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2010 Annual Report

Report on Operations Calgary Co-op is proud of its co-operative heritage and local roots. Incorporated in Alberta and residing in the City of Calgary for almost 55 years, Calgary Co-op now has over 440,000 members and 3,600 employees who reside in Calgary and surrounding communities. Calgary Co-op is the only major food retailer that shares its annual profits with members, which means that Calgary Co-op not only provides jobs to thousands of people, it also contributes to the economic well-being of the community by providing members with an annual patronage return, instant rewards at its gas bars and more. Delivering what our members want when they want it is the foundation for our success and our plans for future.

Awards and Accolades Calgary Co-op has always made it a top priority to provide members with the freshest, best quality products and services. Our employees go the extra mile and it shows. For the 10th consecutive year, Calgarians chose Calgary Co-op as Best Grocery Store in the Calgary Herald Readers’ Choice Awards 2010. They also gave us top marks for Best Deli, Best Liquor Stores and Best Car Washes. As well, our Wine offerings and Travel department received secondary honours. Calgary Co-op also received an Achievement Award for our Waste Management Program in 2009 from Calgary-based Metro Waste Management Services.

2010 Annual Report

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Quarry Park Centre

Okotoks Wines & Spirits

Kingsland Gas Bar

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2010 Annual Report



In 2010, we celebrated the Grand Opening of our new Quarry Park Centre located in southeast Calgary and completed interior renovations on our Hamptons Food Centre. Planning continues for the construction of a new food centre in High River, Alberta, and 2011 will bring more plans to upgrade additional food centres.

Our new Kingsland Gas Bar on Macleod Trail South celebrated its grand opening in 2010 and offers 12 pumps and 24 fueling stations, a 3,000 square foot convenience store and a tunnel touchless car wash. Major fuel pump and storage tank upgrades were completed at our gas bars at the Strathmore, Eastfield, Crowfoot and Shawnessy locations and construction is underway on a new gas bar, convenience store and car wash in the northwest community of Panorama Hills. Planning continues for the construction of a new gas bar, convenience store and car wash in High River, Alberta, along with the upgrades of additional gas bars in 2011.

Our fresh meat program continues to be very popular among our members and was rated the best in the Calgary market by members and people who shop at our competitors when completing a survey earlier this year about products and services offered by Calgary Co-op and other food retailers in our marketplace. In the produce section, we continued to highlight fresh, local and Canadian grown products. We began a comprehensive marketing campaign to let shoppers know about the large variety of Canadian and locally grown produce carried in our food centres. We also introduced a new quality assurance program to ensure that our stores are carrying the freshest, best quality products every day. In-store, our deli offerings were improved by increasing the variety and selection of imported cheese, expanding the overall cheese program and lowering prices. A comprehensive study to find ways to further improve our delis will begin in early 2011. A similar study was completed in the fall of 2010 on our bakery operations, again to determine ways to reduce costs, introduce new products and enhance current product offerings to better meet the needs of our members. In grocery, we enhanced our Value Priced Every Day program, which now offers better or similar pricing as that of our competitors on over 3,500 commonly purchased products. We also continued to refine our pricing strategies to ensure that our products are priced competitively with those offered of similar format food retailers, and continued working with our major supplier to reduce pricing through improved purchasing practices and opportunities.

The popularity of our gas bars continued to increase, with over 323 million litres of fuel pumped in 2010. Our members continue to enjoy our Revved Up Rewards fuel program, which continues to offer the best fuel value in Calgary when combined with the annual patronage return paid to members on their fuel purchases.

Travel This department continued to face challenges in 2010 due to the continuing effects of the struggling economy, weather disasters, the closures of tour operators and other world events which resulted in reduced sales for the year. To encourage travel, industry suppliers offered a number of travel specials and promotions during the year and consumer response was increasing towards the latter part of the year.

Pharmacy Our pharmacies continued to offer a number of health and wellness clinics throughout the year, including blood pressure, heart health, asthma and other clinics. To date, 22 pharmacists have received training and certification to administer injections, further enhancing the services our pharmacists offer to our members.

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Home Health Care Earlier this year, we opened a second home health care medical supply centre at our Richmond Road Centre to better serve our members in the city’s southwest and northwest quadrants. The Macleod Trail South location continues to serve as the primary hub for our home health care operation, as well as the service centre. We closed the Quarry Park Centre home health care location due to slow sales, and moved this operation to the Macleod Trail South location so that we could continue to service our clients from this primary location.

Wines & Spirits A number of grand openings took place in 2010 at our wines and spirits stores. We celebrated the grand opening of our new Quarry Park Wines & Spirits store in southeast Calgary and the opening of a Wines & Spirits store at our Kingsland Gas Bar location on Macleod Trail South. An additional Wines & Spirits location was opened in Okotoks, Alberta, in October and a renovation and expansion occurred at the Taradale location. Construction of two new 10,000 square foot Wines & Spirits stores with tasting centres began during the year, with the Crowfoot location opening in late 2010 and the Oakridge location opening in January 2011. The Wines & Spirits store at our Beddington Centre began a major renovation and expansion to a 10,000 square foot tasting centre and will be completed in early 2011.

Health, Safety and Environment Considerable work was done during the year to ensure the continuing adherence to all health and safety programs resulting in the company achieving an 88 per cent overall safety audit rating by Occupational Health and Safety in 2010 as part of its Certificate of Recognition audit. Lost time accident claims decreased by 35 per cent over the previous year - a major accomplishment that reflects employee awareness about safe work practices and safety processes, procedures and standards.

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2010 Annual Report

Environmental programs were enhanced throughout the year, resulting in increased usage and efficiencies. Cardboard to wet waste generation was 43.1 per cent during the year, while cardboard recycling at our facilities steadily improved with over 3,837.6 tonnes going to recycling facilities instead of local landfills.

Finance and Information Technology Safeguarding assets, ensuring the financial health of the organization, and providing cost effective and efficient accounting, information technology and administrative systems to support the organization, remained the primary focus of this division. Ensuring proper systems of internal control and risk management are in place is critical to ensuring good governance. A preliminary review was undertaken of accounting standards for private enterprises (ASPE) rather than International Financial Reporting Standards (IFRS). A new budget and reporting program was also reviewed and is being considered for future use. Business requirements were completed and development work began on an online receiving initiative. Work continues on upgrades and enhancements to our time and attendance tracking and reporting system.

Human Resources Customer service training was a key focus in 2010. Sixty-three employees received internationally recognized certificates in customer service from City and Guilds. A number of other employees are working towards their certificate in 2011. Calgary Co-op is the first organization in Canada to be certified by City and Guilds. Since introducing the Cooking Methodology program in conjunction with the Southern Alberta Institute of Technology, there have been over 50 graduates. This hands-on interactive course focuses on the retail side of the meat cutting and preparation process, providing employees with the knowledge and skills they need to provide information and expert advice to customers about how to properly prepare meat and to make suggestions on meal pairings.

In November of 2009, Calgary Co-op became the first North American organization approved by the Chartered Management Institute to offer their International Management qualifications program. This program helps develop the management skills of employees and forms a critical part of the company’s management development and succession planning process. A new three year collective agreement was negotiated with the Union of Calgary Co-op Employees in 2010 (retroactive to October 2009 and expires in October 2012). The new agreement saw increases in pay rates for union employees and provides for greater flexibility in job functions and cross-departmental work and training.

Humane Society cheque presentation

There were 148 recipients for the 2010-2011 Employee Scholarship Awards Program with over $122,100 awarded to employees and the children of employees who met the eligibility and scholastic criteria.

Member and Public Relations Revised branding guidelines were introduced in 2010, and initiatives to enhance the flow and frequency of communications within the company and with members were undertaken. Development work began on new websites for Calgary Co-op and for our Wines & Spirits business.

2010 Charity Golf Classic Committee

Responses were provided to various media requests in respect to food safety and other industry matters such as plastic bags recycling, environmental programs, community involvement and other company-related matters of general interest. The department received an award from the Canadian Co-operative Association for its video on community and environmental initiatives. Donations, sponsorships and other support given to local charities, food banks, shelters, non-profits, community events and activities, youth, family, community and other programs was $2 million for 2010

STARS Air Ambulance cheque presentation

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Calgary Co-op Kids Zone at the Calgary Zoo Left to Right on carousel: Cindy Drummond, Donna Burn, Jeff Ambrose, Sarah Boutron, Wilf Harms, Terry Geib, Deane Collinson.

(and 2009). A new partnership was formed with the Calgary Zoo to construct a Calgary Co-op Kids Zone at the zoo, with the first handcrafted wildlife figurine of its kind in Canada. The new area opened in spring 2010. Other new programs included the Brown Bagging for Calgary Kids lunch program for “children in need” and exclusive sponsorship of the new Draft Horse Town exhibit at the Calgary Stampede. The 2010 Charity Golf Classic raised over $273,000 and all proceeds were donated to local charities including the Alberta Children’s Hospital, the Calgary Zoo, EMS Foundation, Kerby Food Services, Enviros Wilderness School, The Women’s Centre, and others. The Bags to Riches

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2010 Annual Report

shopping bag recycling program raised over $29,000 which was donated to STARS Air Ambulance, the Calgary Humane Society, Tom Baker Cancer Centre and the Heart and Stroke Foundation of Alberta. Donations were also provided to a number of other local charities, family and senior support programs, youth groups and teams during the year.

P a tronage Retur n and M e mber R eports

Patronage Returns Five year comparison 2006 - 2010.

Patronage Returns on a Comparative Basis Since 1956, Calgary Co-op member-owners have received $639 million in patronage returns. 2010 Patronage Return



9.3 29.9

2009 2008





A 2.5% patronage return paid in cash and shares to members based on retail purchases other than petroleum and travel.



20.0 $10



A 5.0¢ per litre patronage return paid in cash and shares to members based on petroleum purchases.

Report on Membership Membership continued to increase, growing from 438,980 in 2009, to 440,643 members as of October 30, 2010.




($ millions)






A 1.0% patronage return paid in cash and shares to members based on travel purchases.





Patronage Return History Cumulative totals since 1957. Five year comparison 2006 - 2010. 639

2010 2009

610 566
















Management Discussion and Analysis (MD&A) To review the MD&A for Calgary Co-op, visit

1.9 6.4 44.4

2009 420


How Earnings are Allocated

413 380


($ millions)



463 $0













2.0 6.2




51.9 33.0

2006 $0




3.6 10.2 4.2 11.1

3.4 7.4 $40





($ millions)

Patronage Return

Income Tax

2010 Annual Report

Retained Earnings

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Officers’ Report Preparing the accompanying financial statements and ensuring that all information in this annual report is consistent with these statements is the responsibility of Calgary Co-op management. This responsibility includes selecting appropriate accounting policies and making judgments and estimates consistent with Canadian generally accepted accounting principles. Management has developed and maintains an extensive system of internal controls that provide reasonable assurance that all transactions are accurately recorded, that the financial statements realistically report the Association’s operating and financial results, and that the Association’s assets are safeguarded against unauthorized use or disposition. The Audit Committee reviews and evaluates the adequacy of, and compliance with, the Association’s internal controls. It is the policy of the Association to maintain the highest ethical standard in all activities, and the Chief Executive Officer and the Chief Financial Officer have signed a Management Compliance Letter stipulating the Association’s compliance with all regulatory requirements. Management of Calgary Co-op have also signed a Letter of Representation to KPMG acknowledging that it is responsible for the fair presentation in the financial statements of the Association’s financial position and that all accounting, financial records and related data have been made available. The Association’s Board of Directors has approved the information contained in the financial statements based on the recommendation of the Audit Committee following its detailed review with the external auditor and management. At each annual general meeting, the Association’s members appoint an independent auditor to provide a professional opinion on the fairness with which the financial statements are presented. The members’ auditor has full access to the Board of Directors and all of the Association’s records.

Stuart Cantrill, Board Chair January 24, 2011

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2010 Annual Report

N. Deane Collinson, Chief Executive Officer January 24, 2011

Auditors’ Report To the Members of Calgary Co-operative Association Limited: We have audited the consolidated balance sheet of Calgary Co-operative Association Limited as at October 30, 2010, and the consolidated statements of earnings, comprehensive income and retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Association’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Association as at October 30, 2010, and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Chartered Accountants Calgary, Canada January 10, 2011

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Consolidated Balance Sheet October 30, 2010, with comparative figures as at October 31, 2009 (in thousands of dollars)



Assets Current assets: Cash and short-term investments (note 1(i)) Accounts receivable (note 2(b)) Income taxes receivable Inventories (note 1(e) and 7) Prepaid expenses and deposits Total Current Assets Investments (notes 2(b) and 3) Property and equipment (notes 1(f) and 4) Goodwill (notes 1(g) and 5) Future income taxes (note 8) Total Assets


11,290 36,236 274 57,451 3,370 108,621 96,279 200,198 6,775 1,523


11,504 35,891 – 52,483 2,570 102,448 89,614 192,361 6,850 1,556






103,065 2,225 – 8,918 114,208 9,751 1,071 162,193 126,173


95,432 575 4,036 9,557 109,600 7,350 1,129 156,677 118,073





Liabilities, Members’ Shares and Retained Earnings Current liabilities: Accounts payable and accrued liabilities (notes 2(a) and 6) Current portion of long-term debt (note 9(b)) Income taxes payable Future income taxes (note 8) Total Current Liabilities Long-term debt (note 9(b)) Deferred lease inducements (note 1(h)) Members’ shares (note 10) Retained earnings Commitments and guarantees (notes 4 and 13) Subsequent event (note 17) Total Liabilities, Members’ Shares and Retained Earnings See accompanying notes to financial statements. Approved on Behalf of the Board: Director Director

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2010 Annual Report

Consolidated Statement of Earnings, Comprehensive Income and Retained Earnings Year ended October 30, 2010, with comparative figures for the year ended October 31, 2009 (in thousands of dollars)

Sales (note 14) Expenses: Cost of sales, selling and administrative (note 7) Amortization Patronage refunds (note 2(b)) Other income (expenses): Rental income Rental expense Loss on disposal and write off of property and equipment (note 4) Write-down of goodwill (note 5) Interest income Interest expense Earnings before patronage returns and income taxes Patronage returns (note 6) Income tax expense (reduction) (note 8): Current Future Net earnings and comprehensive income Retained earnings, beginning of year Inactive members’ shares transferred to retained earnings Retained earnings, end of year

2010 $ 1,022,702

2009 $ 1,002,239

(1,006,618) (17,193) 33,328

(973,951) (15,369) 33,928

8,885 (2,550) (713) (75) 243 (125) 37,884 29,620

8,488 (2,497) (587) – 524 (167) 52,608 44,360

2,488 (606) 1,882 6,382 118,073 1,718 126,173

6,819 (4,759) 2,060 6,188 110,536 1,349 118,073



See accompanying notes to financial statements.

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Consolidated Statement of Cash Flows Year ended October 30, 2010, with comparative figures for the year ended October 31, 2009 (in thousands of dollars)

2010 Cash provided by (used in): Operations: Net earnings and comprehensive income Items not involving cash Amortization Patronage returns to be paid in shares Patronage refunds to be received in FCL shares Future income tax (reduction) Write-down of goodwill (note 5) Loss on disposal and write off of property and equipment (note 4) Lease inducement amortization (note 1(h))


Change in non-cash operating working capital (note 11) Financing: Repayment of long-term debt Shares redeemed for cash Shares issued for cash Investments: Expenditures on property and equipment (note 2(c)) Business acquisition Proceeds on disposal of property and equipment FCL shares redeemed for cash Other investments Leasehold inducement proceeds Change in non-cash working capital (note 11) Change in cash and short-term investments Cash and short-term investments, beginning of year Cash and short-term investments, end of year


Interest paid Income taxes paid See accompanying notes to financial statements.

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2010 Annual Report





17,193 9,350 (8,454) (606) 75

15,369 14,450 (8,421) (4,759) -

713 (133) 24,520 5,504 30,024

587 (128) 23,286 17,931 41,217

(2,425) (2,136) 20 (4,541)

(3,731) (2,117) 22 (5,826)

(19,339) – 72 1,791 (2) 75 (8,294) (25,697) (214) 11,504 11,290

(31,148) (6,898) 34 1,656 – – 2,915 (33,441) 1,950 9,554 11,504

124 6,797

$ $

157 3,898

Notes to the Consolidated Financial Statements Year ended October 30, 2010, with comparative figures for the year ended October 31, 2009 (tabular amounts in thousands of dollars) Calgary Co-operative Association Limited (the “Association”) is incorporated under the Cooperatives Act of Alberta. The primary business of the Association is operating retail food, pharmaceutical, petroleum, travel, home health care and liquor outlets in Calgary and area for the benefit of its members. As a percentage, 87% (2009 – 87%) of sales are to members. 1.

Summary of accounting policies: The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include the valuation of accounts receivable, the carrying value of property and equipment and its estimated useful life, the valuation of inventory, valuation of goodwill and the valuation of future taxes. Actual results could differ from these estimates. (a) Basis of presentation: The financial statements include the accounts of the Association, its wholly owned subsidiaries; Calgary Co-op Home Health Care Limited and Calgary Co-op Wines and Spirits Limited, and its proportionate share (50%) of the assets, liabilities, sales and expenses of The Produce People (“TPP”). TPP is a joint venture between the Association and The Grocery People, a wholly owned subsidiary of Federated Co-operatives Limited (“FCL”). (b) Definition of financial year: The Association’s financial year ends on the Saturday closest to October 31. Accordingly, the years ended October 30, 2010 and October 31, 2009 consist of 52 weeks of operations each. (c) Financial instruments: All financial assets are classified as one of the following: held for trading, available for sale, held to maturity or loans and receivables. Financial liabilities are classified as either held for trading or other liabilities.

The Association designates its cash and short term investments and investments as available for sale. These are measured at fair value with gains and losses, net of tax, being recognized in other comprehensive income until the asset is sold or there is a permanent impairment in value. Investments for which no fair market value can be determined have been measured at cost (note 3). Accounts receivable are designated as loans and receivables. Accounts payable, accrued liabilities and long-term debt are designated as other financial liabilities. Other financial liabilities and loans and receivables are measured at amortized cost and all transaction costs related to those assets or liabilities are recognized in net income when incurred.

An embedded derivative is a component of a contract that also includes a non-derivative host contract, with the effect that some of the cash flows from the combined instrument vary in a way similar to a stand alone derivative. Embedded derivatives are separated from the host contract and recognized at fair value in the balance sheet if certain predetermined conditions are met. The Association has evaluated and determined that it has no contracts with embedded derivatives.

Management has elected to treat utility service contracts as executory contracts, and thus are not required to be recognized at fair value in the balance sheet.

(d) Comprehensive income: Unrealized gains and losses on financial instruments that are held as available for sale are recognized in other comprehensive income and accumulated other comprehensive income, net of tax, until recognized in net income.

The Association had no other comprehensive income in the year ended October 30, 2010 and no opening balance for accumulated other comprehensive income.

(e) Inventories: Inventories are recorded at the lower of cost and net realizable value. Cost is determined using the retail method by discounting the retail value by normal profit margins.

2010 Annual Report

| 23


Summary of accounting policies (continued): (f) Property and equipment: Property and equipment are stated at cost net of grant funds received. Amortization is provided over the estimated useful lives of the assets using the following methods and rates: Buildings and parking lots Fixtures and equipment Computer Equipment

Declining Balance Declining Balance Straight Line

4-8% 20-100% 33%

Leasehold improvements and buildings on leased land are amortized on a straight-line basis over the shorter of the lease term and their estimated useful lives. Renovations to existing buildings and carwash equipment are amortized on a straight-line basis over ten years. Management assesses the carrying value of property and equipment on a periodic basis for indications of impairment. When an indication of impairment is present, a test for impairment is carried out by comparing the carrying value of the asset to its net fair value.

(g) Goodwill: Goodwill resulting from business combinations represents the portion of the purchase price that was in excess of the fair value of the net identifiable assets acquired. Goodwill is recorded at cost and is not subject to amortization. The carrying value of goodwill is subject to an impairment test annually, or more frequently if events or circumstances indicate impairment. If the carrying value of the reporting unit to which goodwill has been assigned exceeds it fair value, then, with respect to the reporting unit’s goodwill, any excess of its carrying value over its fair value is expensed. (h) Deferred lease inducements: Deferred lease inducements, representing the benefit of cash inducements, are amortized over the remaining term of the related lease. (i)

Cash and short-term investments: Cash and short-term investments are defined as cash and investments with a maturity of less than three months.


Revenue recognition: Sales include revenue from member-owners and other customers through stores operated by the Association. These sales are recognized at the point-of-sale.

(k) Store opening expenses: Store opening costs of new stores are expensed as incurred. (l)

Income taxes: The Association follows the liability method whereby income taxes reflect the expected future consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Future income tax assets and liabilities are determined for each temporary difference based on the tax rates which are expected to be in effect when the underlying items of income and expense are expected to be realized.

(m) Change in accounting policies: In the current year, the Association adopted revised Section 3862 “Financial Instruments - Disclosures”. The new disclosure requirements are intended to improve disclosures about fair value and liquidity risk. The amendments introduce a “fair value hierarchy” for disclosures which intends to provide information to financial statement users about the relative reliability of fair value measurements. In addition, the objective of the standard is to disclose the nature and extent of risks arising from financial instruments and how those risks are managed. Section 3862.27A requires that an entity classify each financial instrument into one of three fair value levels as follows: (i) Level 1 - for unadjusted quoted prices in active markets for identical assets or liabilities. (ii) Level 2 - for inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices), and (iii) Level 3 - for inputs that are based on unobservable market data.

24 |

The classification of a financial instrument is based on the lowest level of input that is significant to the determination of fair value. The presentation requirements are effective for the Association on November 1, 2009 and resulted in additional disclosure in note 15 to the consolidated financial statements.

2010 Annual Report


Summary of accounting policies (continued): (n) Future accounting pronouncement: Canada’s Accounting Standards Board has announced the approval of the new Generally Accepted Accounting Principles for Private Enterprises (“ASPE”). The Standards will be effective for fiscal years beginning on or after January 1, 2011, with early adoption permitted. International Financial Reporting Standards (“IFRS”) will be required for fiscal years beginning on or after January 1, 2011 for publicly accountable profit-oriented enterprises and is optional for private enterprises. Management is currently assessing the impact of the adoption of these standards.


Related party transactions: (a) Purchases: During financial year 2010, the Association made purchases from FCL in the amount of $616,385,000 (2009 – $588,720,000). These purchases represented 77% (2009 – 76%) of the Association’s total purchases and were transacted in the normal course of operations. Included in accounts payable and accrued liabilities are amounts owed to FCL of $45,461,000 at October 30, 2010 (2009 – $17,926,000).

During financial year 2010, the Association earned interest income at prime less 1.50% (2009 – prime less 1.75%) of $76,000 (2009 – $79,000) as a result of early payments on normal trade payable balances to FCL. The average early payment balance with FCL amounted to $9,638,000 (2009 – $7,258,000).

(b) Patronage refund: Subsequent to October 30, 2010, the FCL Board approved the payment of a patronage refund to the Association in the amount of $33,325,000 (2009 – $33,925,000). The portion of the patronage refund to be received in cash in the amount of $24,871,000 (2009 – $25,504,000) is included in accounts receivable and the portion to be received in FCL shares in the amount of $8,454,000 (2009 – $8,421,000) is included in investments. (c) Capital grants and interest-free loans: The Association receives interest-free loans and capital grants from FCL to assist in the construction of gas bars and related facilities. During financial year 2010, the Association received interest-free loans of $6,476,000 (2009 – $248,000) and capital grants of $7,359,000 (2009 – $616,000) from FCL for this purpose. See also note 9(b).

Included in property and equipment additions for the year is $19,110,000 (2009 – $1,116,000) which FCL paid on the Association’s behalf to assist in the construction of gas bars and related facilities.

(d) Short-term investments: During financial year 2010, the Association’s short-term investment with FCL earned interest revenue of $32,000 (2009 – $346,000), calculated at prime less 1.5% (2009 – prime less 1.75%). The balance of these investments was $nil at October 30, 2010 (2009 – $nil). (e) Leases: The Association has operating lease agreements in place with FCL for certain facilities which require payments of approximately $1,000,000 per year to October 2024 and $400,000 per year from November 2025 to October 2027. This commitment is disclosed as part of note 13(a).

The Association has capital leases with FCL for fixtures and equipment which require payments on November 1 of each year as follows. See also notes 4 and 9(b). 2011 $ 2012


– 1,100

Investments: 2010 Federated Co-operatives Limited Other


96,203 76

2009 $

89,540 74

$ 96,279 $ 89,614 As there is no ready market for the Association’s 11% (2009 – 11%) investment in FCL shares and the fair value cannot be determined, they have been measured at cost. The FCL shares are redeemable, at cost, at the option of FCL or, over a maximum period of five years, upon the Association terminating its membership with FCL.

2010 Annual Report

| 25


Property and equipment: Accumulated Cost Amortization Land $ 48,357 $ Buildings and parking lots 171,874 Fixtures and equipment 108,664 Leasehold improvements 11,009 Joint venture leasehold improvements and equipment 1,124 Assets under construction 4,104

$ 345,132

2010 Net Book Value

2009 Net Book Value

– $ 48,357 $ 66,570 105,304 72,322 36,342 4,936 6,073 1,106 18 – 4,104

$ 144,934

$ 200,198

50,802 97,812 35,565 5,302 26 2,854

$ 192,361

Included in fixtures and equipment are assets held under capital lease with an original cost of $2,636,000 (2009 – $2,636,000) and a net book value of $1,105,000 (2009 – $1,421,000). As at October 30, 2010, the Association had contractual commitments to spend approximately $10,916,000 (2009 – $21,965,000) on capital expansion projects. The loss on disposal and write-off of property and equipment for the year ended October 30, 2010 comprises the disposal of equipment and the write-down of obsolete assets in renovated shopping centres, liquor stores and gas bars. 5.

Goodwill: 2010 Balance, beginning of year Goodwill acquired Write-down of goodwill Balance, end of year

26 |



6,850 – (75) 6,775

2009 $


75 6,775 – 6,850


Patronage returns: Subsequent to October 30, 2010, the Board of Directors approved the payment of patronage returns in the amount of $29,620,000 (2009 – $44,360,000), which are to be paid subsequent to year end. The portion of the patronage returns to be paid in cash in the amount of $20,270,000 (2009 – $29,910,000) is included in accounts payable and accrued liabilities and the portion to be paid in shares in the amount of $9,350,000 (2009 – $14,450,000) is included in members’ shares.


Inventories: The cost of inventories recognized as an expense during the year ended October 30, 2010 was $797,436,000 (2009 – $770,334,000). The Association recorded $nil (2009 – $nil) as an expense for the write-down of inventories below cost to net realizable value for inventories recorded as at October 30, 2010. There was no reversal of inventories written down previously that are no longer estimated to sell below cost.

2010 Annual Report


Income taxes: Income tax expense differs from the expected expense at the statutory tax rate as follows: 2010


Statutory rate Expected expense at statutory rate Difference resulting from: Reduction of future tax balances due to enacted tax rate reductions Other

28.17% $ 2,328

29.08% $ 2,399

(472) 26

(438) 99

Income tax expense





The tax effects of temporary differences that give rise to future tax assets and future tax liabilities are presented below: 2010 Future tax assets: Deferred lease inducements – differences between accounting and tax base Property and equipment – differences in net book value and undepreciated capital cost Loss carry forwards Future tax liabilities: Patronage refund receivable 9.



302 917 304


321 1,235 –









Debt: (a) Operating loan:

The Association has available a $10,000,000 evergreen loan of which $nil had been drawn at October 30, 2010 (2009 – $nil), with interest charged at lender’s prime less 0.25%, with security as disclosed for the Credit Union Central facility, below. In addition, the Association has a $8,000,000 line of credit available, with interest charged at lender’s prime. The Association has provided letters of credit in the amount of $230,000 (2009 – $3,159,000) to support the purchase of certain inventory items. These letters of credit are charged against the $8,000,000 line of credit. Security for the line of credit is a general assignment of book debts.

(b) Long-term debt: 2010 Credit Union Central facility bearing interest at lender’s prime less 0.25% and is secured by a fixed charge debenture on certain shopping centres and a floating charge on the remainder of the Association’s assets, repayable in annual installments on November 1 of each year in the amount of $933, with a due date of November 1, 2015


Federated Co-operatives Limited unsecured interest-free loans, each payable in three equal annual payments with due dates to October 31, 2012 Obligation under capital lease is non-interest bearing and is repayable in annual installments ending November 1, 2012











Current portion of long-term debt $



575 $


2010 Annual Report

| 27


Debt (continued): Aggregate principal repayments of long-term debt for each of the Association’s next five financial years are as follows: 2011 2012 2013 2014 2015


2,225 6,977 933 933 908

10. Members’ shares: The Association is authorized to issue an unlimited number of shares with a par value of $1. Upon application to the Board of Directors, the par value of the member’s shares becomes payable when the member reaches age 65 or moves out of the trading area, or, at the request of the member’s estate, upon the member’s death. Changes in share capital are as follows: Balance, beginning of year Shares redeemed for cash Inactive members’ shares transferred to retained earnings Shares issued for cash



$ 156,677 (2,136) (1,718) 20

$ 145,671 (2,117) (1,349) 22





$ 162,193

$ 156,677



Current year’s patronage returns to be paid in shares Balance, end of year 11. Change in non-cash working capital: Operating activities: Accounts receivable Inventories Prepaid expenses and deposits Accounts payable and accrued liabilities Income taxes payable/recoverable Investing activities: Accounts payable for capital expenditures


(345) (4,968) (800) 15,927 (4,310)


13,173 (8,222) 6,944 3,115 2,921





$ (8,294)



12. Pension plans: The Association participates in a multi-employer defined contribution pension plan whereby the Association and participating employees contribute equal amounts to the maximum allowed under the Income Tax Act. The Association has no unfunded liability under this plan. During the year, the Association recorded $3,845,000 (2009 – $3,564,000) of expense relating to this plan. During the year, there were no significant changes to the rates of employer contributions. In addition, on January 1, 2003, the Association established a supplemental defined contribution employee retirement plan. For the financial year ended October 30, 2010, an expense of $84,100 (2009 – $123,200) has been recorded relating to this plan. The total liability at October 30, 2010, is $268,400 (2009 - $318,800).

28 |

2010 Annual Report

13. Commitments and guarantees: (a) Lease commitments:

The Association is committed to minimum lease payments under operating lease agreements for buildings and equipment over the next five years and beyond, as follows: 2011 2012 2013 2014 2015 Subsequently


11,524 10,683 10,441 10,219 9,304 79,547

$ 131,718 (b) Utility service commitment:

The Association has a commitment to purchase electricity at fixed rates per KWH of approximately $3,500,000 for the financial years 2011 to 2014 and of approximately $600,000 for financial year 2015.

The Association has a commitment to purchase natural gas at fixed rates per GJ to the end of December 2010 of approximately $300,000.

(c) Petroleum product purchase commitment:

Under the terms of the agreement with FCL, the Association has committed to purchase petroleum products, at market price, from FCL for gas bar operations over a ten-year period commencing from the date of gas bar completion. Failure to meet this commitment would require the Association to pay outstanding gas bar loan balances owed to FCL plus repay any gas bar grants received, as described in note 2(c), plus interest on the grants, compounded annually at 10% from the grant date. The total outstanding loan balances are disclosed in note 9(b). Total grants received over the prior ten year period amount to approximately $20,400,000 (2009 – $15,000,000).

(d) Lease revenues:

Minimum future revenues from operating leases on commercial real estate rentals are: 2011 2012 2013 2014 2015


2010 Annual Report

5,749 5,433 4,717 3,497 2,607

| 29

14. Segmented information: The Association’s business operations are grouped into three business segments, the principal activities of which are as follows: (a) Food, which consists of the sale and distribution of food and pharmaceutical products. (b) Petroleum, which consists of the sale of petroleum products and convenience store items. (c) Other, which consists of the provision of travel services, liquor products, home health care products and commercial real estate rentals. 2010 Sales: Food Petroleum Other


598,074 332,338 92,290

$ 1,022,702 Earnings before patronage returns and income taxes: Food Petroleum Other


13,663 13,545 10,676



2009 $

623,683 293,096 85,460

$ 1,002,239 $25,859 12,702 14,047 $


All sales are generated in Canada and all property and equipment is attributable to Canadian operations. All sales are to external customers and no single customer accounts for more than 10% of total sales. 15. Financial Instruments: Fair value disclosures: The following tables provide a comparison of carrying and fair values for each classification of financial instruments as at October 30, 2010 and October 31, 2009: Available Loans Other Total Total for sale and financial carrying fair 2010 instruments receivables liabilities amount value Cash and short-term investments Accounts receivable

$ 11,290 –


– 36,236


– –

$ 11,290 36,236

$ 11,290 36,236

Total financial assets

$ 11,290

$ 36,236


$ 47,526

$ 47,526

Accounts payable and accrued liabilities Interest bearing long-term debt


– –


– –

$ 103,065 4,641

$ 103,065 4,641

$ 103,065 4,641

Total financial liabilities



$ 107,706

$ 107,706

$ 107,706

Loans and receivables

Other financial liabilities

Total carrying amount

Total fair value

Available for sale instruments


30 |

Cash and short-term investments Accounts receivable

$ 11,504 –


– 35,891


– –

$ 11,504 35,891

$ 11,504 35,891

Total financial assets

$ 11,504

$ 35,891


$ 47,395

$ 47,395

Accounts payable and accrued liabilities Interest bearing long-term debt


– –


– –

$ 95,432 5,575

$ 95,432 5,575

$ 95,432 5,575

Total financial liabilities



$ 101,007

$ 101,007

$ 101,007

2010 Annual Report

15. Financial Instruments (continued): Investments are not included in financial assets in the tables above as there is no ready market for the Association’s investment in FCL shares. Accordingly, the fair value of this investment cannot be determined and therefore has been measured at cost. Non-interest bearing long-term debt is not included in financial liabilities in the tables above as the fair value of the interest free loans from FCL are not determinable due to the related party nature of the instruments. Accordingly, these debt instruments have been recorded at amortized cost. As at October 30, 2010, the Association has classified cash and short-term investments as a Level 1 financial instrument. There have been no transfers between levels during the year. All other financial instruments are carried at amortized cost, which approximates the fair value at October 30, 2010. Risk management: The Association is exposed to the following risks as a result of holding financial instruments: (a) Interest rate risk:

The Association’s sensitivity to fluctuations in interest rates is limited to certain of its cash and short-term investments and longterm debt. During the 2010 financial year, if interest rates had been 100 basis points higher relating to the long-term debt, net earnings would have been $55,000 lower (2009 – $65,000).

(b) Credit risk:

Management believes the credit risk associated with the FCL patronage refund is negligible based on the nature of the receivable.

Management believes that the credit risk relating to the remaining financial assets is normal for the business and is limited due to the following reasons: - there is a broad base of customers, and therefore no significant concentration of credit risk exists; - the ratio of bad debt write-offs to total revenue has been less than 0.04% for the last three years; - 89% (2009 – 90%) of trade receivables are current (less than 30 days)

(c) Liquidity risk:

Liquidity risk is the risk that the Association will not be able to meet its obligations as they become due. The Association has available credit facilities at levels sufficient to ensure funds are available to meet its medium term funding requirements.

In order to reduce liquidity risk, the Association has kept its financial leverage at low levels and maintained financial ratios that are conservative compared to the financial covenants within its credit facilities. As well, the Association has made additional voluntary payments on its outstanding long-term debt over the last several years. The following are the undiscounted contractual maturities of significant financial liabilities as at October 30, 2010 and October 31, 2009: 2010


Accounts payable and accrued liabilities Long-term debt

2009 Accounts payable and accrued liabilities Long-term debt



$ 103,065 2,225


– 6,977


$ 105,290








– 933





– 933 933 2014




– 908

$ 103,065 11,976



$ 115,041



$ 95,432 575


– 1,543


– 3,033


– 933


– 933


– 908

$ 95,432 7,925

$ 96,007











$ 103,357

2010 Annual Report

| 31

16. Capital management: The Association’s policy is to maintain a strong capital base so as to sustain the future cash requirements of the Association’s operations. The Association considers its capital structure to include members’ shares, retained earnings and long-term debt. The Association manages its capital and makes adjustments to it in light of the changes in economic conditions and growth opportunities available. In order to facilitate the management of its capital requirements, the Association prepares annual operating and capital expenditure budgets which are approved by the Board of Directors. The Association uses the following measures to monitor its capital:

Net debt to equity Return on equity



0.002:1 13.1%

(0.01):1 19.7%

For purposes of the net debt to equity ratio, net debt is defined as long and short-term debt, less cash and short term investments, and equity is defined as members’ shares and retained earnings. Management uses the net debt to equity ratio to identify the amount of financial leverage employed by the Association, and will use the ratio to help guide future capital management decisions. Return on equity is calculated as earnings before patronage return divided by opening members’ shares and opening retained earnings. Management uses the return on equity measure to gauge the amount of profit earned on each member’s investment. The Association issues an annual patronage return to its members based on its earnings. The cash and share portions of the annual patronage return are approved by the Board of Directors and may be adjusted in order to maintain the capital structure. The Association’s capital is not subject to any external restrictions, and there were no significant changes in the Association’s approach to capital management during the year. 17. Subsequent event: On October 31, 2010, the Association wound up its wholly owned subsidiaries Calgary Co-op Home Health Care Limited and Calgary Co-op Wines and Spirits Limited. As a result, from that date, the operations previously conducted by those entities will be incorporated directly into the operating results of the Association. In addition, all of the assets and liabilities of the subsidiary companies at the date of windup were assumed by the Association.

32 |

2010 Annual Report

C a l gary Co-op W ines & S p i r i ts Locations C a l gary Northwest Creekside Centre, 106, 11998 Symons Valley Road N.W. 403-299-4493 Crowfoot Centre, 39 Crowfoot Way N.W.


Dalhousie Centre, 5505 Shaganappi Trail N.W.


Hamptons Centre, 710, 1000 Hamptons Drive N.W.


Rocky Ridge Centre, 2002, 11595 Rockyvalley Drive N.W. 403-299-5490

C a l gary Northeast Beddington Centre, 8220 Centre Street N.E.


Taradale Centre, 300, 6520 Falconridge Blvd N.E.


C a l gary So uthwest Kingsland, 6907 Macleod Trail South


Midtown Market, 1110 – 11 Avenue S.W.


Oakridge Centre, 2570 Southland Drive S.W.


Richmond Road Centre, 4860 Richmond Road S.W.


West Springs Centre, 600, 917 – 85 Street S.W.


C a l gary So utheast Forest Lawn Centre,1A, 3200 – 17 Avenue S.E.


Heritage Towne Centre, 76 Heritage Gate S.E.


Macleod Trail Centre, 23, 8720 Macleod Trail S.E.


South Trail Crossing, 40, 4307 – 130 Avenue S.E.


Quarry Park Centre, 305, 163 Quarry Park Blvd S.E.


A i rdrie Airdrie Centre, 400, 2700 Main Street


O k otoks 1, 420 Big Rock Lane


S t r a thmore Strathmore Centre, 215A Second Avenue


2010 Annual Report

| 33

C a l gary Co-op Locations C a l gary Northwest Brentwood Centre, 4122 Brentwood Road NW


Calgary Southeast Copperfield Gas Bar, 15566 McIvor Blvd. SE


Creekside Centre, 12000 Symons Valley Road NW 403-299-4491

Deer Valley Centre, 1221 Canyon Meadows Drive SE 403-299-4350

Crowfoot Centre, 35 Crowfoot Way NW


Downtown Gas Bar, 1111 – 1 Street SE


Dalhousie Centre, 5505 Shaganappi Trail NW


Eastfield Gas Bar, 5250 – 50 Avenue SE


Hamptons Centre, 1000 Hamptons Drive NW


Forest Lawn Centre, 3330 – 17 Avenue SE


Montgomery Gas Bar, 4608 – 16 Avenue NW


Heritage Towne Centre Gas Bar, 6 Heritage Gate SE


Macleod Trail, 8818 Macleod Trail SE


Quarry Park, 163 Quarry Park Blvd. SE


South Trail Crossing, 4307 – 130 Avenue SE


Rocky Ridge Centre, 11595 Rockyvalley Drive NW 403-299-5450

C a l gary Northeast Beddington Centre, 8220 Centre Street NE


Monterey Centre, 2220 – 68 Street NE


North Hill Centre, 540 – 16 Avenue NE


Taradale Centre, 6520 Falconridge Boulevard NE 403-299-4012 Village Square Centre, 2520 – 52 Street NE


C a l gary Southwest Kingsland Gas Bar, 6905 Macleod Trail South


Midtown Market, 1130 – 11 Avenue SW


Oakridge Centre, 2580 Southland Drive SW


Richmond Road Centre, 4940 Richmond Road SW 403-299-4490 Shawnessy Centre, 250 Shawville Boulevard SW


West Springs Centre, 917 – 85 Street SW


A i rd r i e C e n t re 2700 Main Street


Okotoks Gas Bar, 111 – 31 Southridge Drive


S t r a t h m o re C e n t re Food Store, 320 Second Street


Gas Bar, 715 Wheatland Trail


H o m e H e a l t h C a re 9309 Macleod Trail South


Richmond Road, 4938 Richmond Road S.W





Calgary Co-operative Association Limited #110, 151 - 86 Avenue S.E., Calgary, Alberta T2H 3A5 Phone: 403 - 219 - 6025 | Fax: 403 - 299 - 5445

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