Item 1.
|
Financial Statements (unaudited)
|
Cott Corporation
Consolidated Statements of Operations
(in millions of U.S. dollars, except share and per share amounts)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
550.9
|
|
|
$
|
563.8
|
|
|
$
|
1,026.0
|
|
|
$
|
1,069.2
|
|
Cost of sales
|
|
|
477.1
|
|
|
|
487.2
|
|
|
|
901.9
|
|
|
|
936.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
73.8
|
|
|
|
76.6
|
|
|
|
124.1
|
|
|
|
133.0
|
|
Selling, general and administrative expenses
|
|
|
46.9
|
|
|
|
41.7
|
|
|
|
89.2
|
|
|
|
83.0
|
|
Loss on disposal of property, plant & equipment
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
0.5
|
|
|
|
0.3
|
|
Restructuring and asset impairments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
0.1
|
|
|
|
2.0
|
|
|
|
2.3
|
|
|
|
2.0
|
|
Asset impairments
|
|
|
0.3
|
|
|
|
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
26.1
|
|
|
|
32.6
|
|
|
|
30.2
|
|
|
|
47.7
|
|
Other expense, net
|
|
|
19.8
|
|
|
|
|
|
|
|
17.5
|
|
|
|
0.3
|
|
Interest expense, net
|
|
|
8.4
|
|
|
|
12.8
|
|
|
|
18.2
|
|
|
|
26.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(2.1
|
)
|
|
|
19.8
|
|
|
|
(5.5
|
)
|
|
|
21.3
|
|
Income tax expense
|
|
|
2.5
|
|
|
|
1.7
|
|
|
|
1.6
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(4.6
|
)
|
|
$
|
18.1
|
|
|
$
|
(7.1
|
)
|
|
$
|
19.1
|
|
Less: Net income attributable to non-controlling interests
|
|
|
1.4
|
|
|
|
1.6
|
|
|
|
2.8
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation
|
|
$
|
(6.0
|
)
|
|
$
|
16.5
|
|
|
$
|
(9.9
|
)
|
|
$
|
16.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share attributed to Cott Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.06
|
)
|
|
$
|
0.17
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.17
|
|
Diluted
|
|
|
(0.06
|
)
|
|
|
0.17
|
|
|
|
(0.11
|
)
|
|
|
0.17
|
|
|
|
|
|
|
Weighted average outstanding shares (thousands) attributed to Cott Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
94,234
|
|
|
|
95,159
|
|
|
|
94,276
|
|
|
|
95,265
|
|
Diluted
|
|
|
94,234
|
|
|
|
95,981
|
|
|
|
94,276
|
|
|
|
96,048
|
|
|
|
|
|
|
Dividends declared per share
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
The accompanying notes are an integral part of these consolidated financial statements.
3
Cott Corporation
Condensed Consolidated Statements of Comprehensive Income
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(4.6
|
)
|
|
$
|
18.1
|
|
|
$
|
(7.1
|
)
|
|
$
|
19.1
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment
|
|
|
8.4
|
|
|
|
(4.4
|
)
|
|
|
6.8
|
|
|
|
(16.8
|
)
|
Pension benefit plan, net of tax
1
|
|
|
(0.3
|
)
|
|
|
0.2
|
|
|
|
(0.3
|
)
|
|
|
0.4
|
|
Unrealized gain (loss) on derivative instruments, net of tax
2
|
|
|
0.3
|
|
|
|
(0.1
|
)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss)
|
|
|
8.4
|
|
|
|
(4.3
|
)
|
|
|
6.7
|
|
|
|
(16.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
3.8
|
|
|
$
|
13.8
|
|
|
$
|
(0.4
|
)
|
|
$
|
2.7
|
|
Less: Comprehensive income attributable to non-controlling interests
|
|
|
1.4
|
|
|
|
1.7
|
|
|
|
2.8
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributed to Cott Corporation
|
|
$
|
2.4
|
|
|
$
|
12.1
|
|
|
$
|
(3.2
|
)
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Net of the effect of nil and $0.1 million tax expense for the three and six months ended June 28, 2014, respectively, and net of the effect of $0.1 million and $0.2 million tax expense for the three and six months
ended June 29, 2013, respectively.
|
2.
|
Net of the effect of $0.1 million and $0.1 million tax expense for the three and six months ended June 28, 2014, respectively, and net of the effect of $0.1 million and a nil tax benefit for the three and six
months ended June 29, 2013, respectively.
|
The accompanying notes are an integral part of these consolidated financial
statements.
4
Cott Corporation
Consolidated Balance Sheets
(in millions of U.S. dollars, except share amounts)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
June 28,
2014
|
|
|
December 28,
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
90.9
|
|
|
$
|
47.2
|
|
Accounts receivable, net of allowance of $5.3 ($5.8 as of December 28, 2013)
|
|
|
285.0
|
|
|
|
204.4
|
|
Income taxes recoverable
|
|
|
1.0
|
|
|
|
1.1
|
|
Inventories
|
|
|
251.4
|
|
|
|
233.1
|
|
Prepaid expenses and other current assets
|
|
|
23.4
|
|
|
|
19.3
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
651.7
|
|
|
|
505.1
|
|
Property, plant & equipment, net
|
|
|
479.2
|
|
|
|
483.7
|
|
Goodwill
|
|
|
191.1
|
|
|
|
137.3
|
|
Intangibles and other assets, net
|
|
|
379.2
|
|
|
|
296.2
|
|
Deferred income taxes
|
|
|
5.7
|
|
|
|
3.6
|
|
Other tax receivable
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,707.1
|
|
|
$
|
1,426.1
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
35.8
|
|
|
$
|
50.8
|
|
Current maturities of long-term debt
|
|
|
83.4
|
|
|
|
3.9
|
|
Accounts payable and accrued liabilities
|
|
|
356.9
|
|
|
|
298.2
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
476.1
|
|
|
|
352.9
|
|
Long-term debt
|
|
|
536.5
|
|
|
|
403.5
|
|
Deferred income taxes
|
|
|
62.3
|
|
|
|
41.5
|
|
Other long-term liabilities
|
|
|
41.6
|
|
|
|
22.3
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,116.5
|
|
|
|
820.2
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Capital stock, no par - 94,081,120 (December 28, 2013 - 94,238,190) shares issued
|
|
|
392.1
|
|
|
|
392.8
|
|
Additional paid-in-capital
|
|
|
46.6
|
|
|
|
44.1
|
|
Retained earnings
|
|
|
154.5
|
|
|
|
176.3
|
|
Accumulated other comprehensive loss
|
|
|
(10.1
|
)
|
|
|
(16.8
|
)
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity
|
|
|
583.1
|
|
|
|
596.4
|
|
Non-controlling interests
|
|
|
7.5
|
|
|
|
9.5
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
590.6
|
|
|
|
605.9
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,707.1
|
|
|
$
|
1,426.1
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
5
Cott Corporation
Consolidated Statements of Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(4.6
|
)
|
|
$
|
18.1
|
|
|
$
|
(7.1
|
)
|
|
$
|
19.1
|
|
Depreciation & amortization
|
|
|
26.0
|
|
|
|
24.9
|
|
|
|
51.3
|
|
|
|
49.6
|
|
Amortization of financing fees
|
|
|
0.6
|
|
|
|
0.8
|
|
|
|
1.2
|
|
|
|
1.5
|
|
Share-based compensation expense
|
|
|
2.1
|
|
|
|
1.8
|
|
|
|
3.4
|
|
|
|
2.5
|
|
Increase in deferred income taxes
|
|
|
2.6
|
|
|
|
1.6
|
|
|
|
1.5
|
|
|
|
1.6
|
|
Write-off of financing fees and discount
|
|
|
3.0
|
|
|
|
|
|
|
|
3.3
|
|
|
|
|
|
Loss on disposal of property, plant & equipment
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
0.5
|
|
|
|
0.3
|
|
Asset impairments
|
|
|
0.3
|
|
|
|
|
|
|
|
1.9
|
|
|
|
|
|
Other non-cash items
|
|
|
(0.5
|
)
|
|
|
(0.1
|
)
|
|
|
(0.7
|
)
|
|
|
0.2
|
|
Change in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(33.0
|
)
|
|
|
(29.6
|
)
|
|
|
(66.3
|
)
|
|
|
(57.8
|
)
|
Inventories
|
|
|
8.9
|
|
|
|
2.4
|
|
|
|
(7.6
|
)
|
|
|
(10.8
|
)
|
Prepaid expenses and other current assets
|
|
|
(1.2
|
)
|
|
|
(1.4
|
)
|
|
|
(1.0
|
)
|
|
|
(2.0
|
)
|
Other assets
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
Accounts payable and accrued liabilities, and other liabilities
|
|
|
25.8
|
|
|
|
15.2
|
|
|
|
(2.7
|
)
|
|
|
(28.9
|
)
|
Income taxes recoverable
|
|
|
(0.4
|
)
|
|
|
0.1
|
|
|
|
(0.4
|
)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
29.6
|
|
|
|
34.1
|
|
|
|
(22.9
|
)
|
|
|
(24.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash received
|
|
|
(80.8
|
)
|
|
|
(6.5
|
)
|
|
|
(80.8
|
)
|
|
|
(6.5
|
)
|
Additions to property, plant & equipment
|
|
|
(11.8
|
)
|
|
|
(14.6
|
)
|
|
|
(20.6
|
)
|
|
|
(34.5
|
)
|
Additions to intangibles and other assets
|
|
|
(1.3
|
)
|
|
|
(1.7
|
)
|
|
|
(2.8
|
)
|
|
|
(1.9
|
)
|
Proceeds from insurance recoveries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(93.9
|
)
|
|
|
(22.8
|
)
|
|
|
(104.2
|
)
|
|
|
(42.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(296.5
|
)
|
|
|
(19.1
|
)
|
|
|
(312.5
|
)
|
|
|
(19.6
|
)
|
Issuance of long-term debt
|
|
|
525.0
|
|
|
|
|
|
|
|
525.0
|
|
|
|
|
|
Borrowings under ABL
|
|
|
188.2
|
|
|
|
|
|
|
|
283.2
|
|
|
|
|
|
Payments under ABL
|
|
|
(284.3
|
)
|
|
|
|
|
|
|
(299.4
|
)
|
|
|
|
|
Distributions to non-controlling interests
|
|
|
(2.5
|
)
|
|
|
(0.7
|
)
|
|
|
(4.8
|
)
|
|
|
(2.8
|
)
|
Financing fees
|
|
|
(7.9
|
)
|
|
|
|
|
|
|
(7.9
|
)
|
|
|
|
|
Common shares repurchased and cancelled
|
|
|
(2.7
|
)
|
|
|
(5.5
|
)
|
|
|
(3.1
|
)
|
|
|
(8.4
|
)
|
Dividends to shareholders
|
|
|
(5.7
|
)
|
|
|
(11.2
|
)
|
|
|
(10.8
|
)
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
113.6
|
|
|
|
(36.5
|
)
|
|
|
169.7
|
|
|
|
(42.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
1.0
|
|
|
|
(1.0
|
)
|
|
|
1.1
|
|
|
|
(3.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash & cash equivalents
|
|
|
50.3
|
|
|
|
(26.2
|
)
|
|
|
43.7
|
|
|
|
(112.6
|
)
|
Cash & cash equivalents, beginning of period
|
|
|
40.6
|
|
|
|
93.0
|
|
|
|
47.2
|
|
|
|
179.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
90.9
|
|
|
$
|
66.8
|
|
|
$
|
90.9
|
|
|
$
|
66.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related deferred consideration
|
|
|
51.4
|
|
|
|
5.1
|
|
|
|
51.4
|
|
|
|
5.1
|
|
Financing fees
|
|
|
1.8
|
|
|
|
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
8.4
|
|
|
$
|
9.2
|
|
|
$
|
25.0
|
|
|
$
|
25.1
|
|
Cash (received) paid for income taxes, net
|
|
$
|
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
The accompanying notes are an integral part of these consolidated financial statements.
6
Cott Corporation
Consolidated Statements of Equity
(in millions of U.S. dollars, except share amounts)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cott Corporation Equity
|
|
|
|
|
|
|
|
|
|
Number of
Common
Shares
(In thousands)
|
|
|
Common
Shares
|
|
|
Additional
Paid-in-
Capital
|
|
|
Retained
Earnings
|
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
|
|
Non-
Controlling
Interests
|
|
|
Total
Equity
|
|
Balance at December 29, 2012
|
|
|
95,371
|
|
|
$
|
397.8
|
|
|
$
|
40.4
|
|
|
$
|
186.0
|
|
|
$
|
(12.4
|
)
|
|
$
|
11.1
|
|
|
$
|
622.9
|
|
|
|
|
|
|
|
|
|
Common shares issued - Director Share Awards
|
|
|
87
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
Common shares repurchased and cancelled
|
|
|
(692
|
)
|
|
|
(2.9
|
)
|
|
|
|
|
|
|
(2.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(5.5
|
)
|
Common shares issued - Time-based RSUs
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.7
|
|
Dividend payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(11.2
|
)
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.8
|
)
|
|
|
(2.8
|
)
|
Comprehensive (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16.8
|
)
|
|
|
|
|
|
|
(16.8
|
)
|
Pension benefit plan, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
0.4
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.5
|
|
|
|
|
|
|
|
2.6
|
|
|
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 29, 2013
|
|
|
94,773
|
|
|
$
|
394.9
|
|
|
$
|
42.9
|
|
|
$
|
188.7
|
|
|
$
|
(28.8
|
)
|
|
$
|
10.9
|
|
|
$
|
608.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 28, 2013
|
|
|
94,238
|
|
|
$
|
392.8
|
|
|
$
|
44.1
|
|
|
$
|
176.3
|
|
|
$
|
(16.8
|
)
|
|
$
|
9.5
|
|
|
$
|
605.9
|
|
|
|
|
|
|
|
|
|
Common shares issued - Director Share Awards
|
|
|
112
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
Common shares repurchased and cancelled
|
|
|
(430
|
)
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
(1.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(3.1
|
)
|
Common shares issued - Time-based RSUs
|
|
|
161
|
|
|
|
1.3
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.0
|
|
Dividend payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.8
|
)
|
|
|
(4.8
|
)
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.8
|
|
|
|
|
|
|
|
6.8
|
|
Pension benefit plan, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
(0.3
|
)
|
Unrealized gain on derivative instruments, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
0.2
|
|
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.9
|
)
|
|
|
|
|
|
|
2.8
|
|
|
|
(7.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 28, 2014
|
|
|
94,081
|
|
|
$
|
392.1
|
|
|
$
|
46.6
|
|
|
$
|
154.5
|
|
|
$
|
(10.1
|
)
|
|
$
|
7.5
|
|
|
$
|
590.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
7
Cott Corporation
Notes to the Consolidated Financial Statements
Unaudited
Note 1
Business and Recent Accounting Pronouncements
Description of Business
Cott Corporation, together with its consolidated subsidiaries (Cott, the Company, our Company, Cott
Corporation, we, us, or our), is one of the worlds largest producers of beverages on behalf of retailers, brand owners and distributors. Our product lines include carbonated soft drinks
(CSDs), 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, energy drinks and shots, sports products, new age beverages, ready-to-drink teas, beverage concentrates, liquid enhancers, freezables
and ready-to-drink alcoholic beverages, as well as hot chocolate, coffee, malt drinks, creamers/whiteners and cereals.
Basis of Presentation
The accompanying interim unaudited consolidated financial statements have been prepared in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X and in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting. Accordingly, they do not include all information and notes presented in the annual
consolidated financial statements in conformity with U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of our results of operations for the interim periods
reported and of our financial condition as of the date of the interim balance sheet have been included. This Quarterly Report on Form 10-Q should be read in conjunction with the annual audited consolidated financial statements and accompanying notes
in our Annual Report on Form 10-K for the year ended December 28, 2013. The accounting policies used in these interim consolidated financial statements are consistent with those used in the annual consolidated financial statements.
The presentation of these interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
During the six months ended
June 28, 2014, we recorded out-of-period adjustments which decreased net income by approximately $0.7 million, which related to 2013 and were primarily associated with fixed assets and accrued liabilities. We evaluated the total out-of-period
adjustments in relation to the current period, which is when the adjustments were recorded, as well as the period in which they originated and concluded these adjustments are not material to either the consolidated quarterly or annual financial
statements for all impacted periods.
Recent Accounting Pronouncements
Update ASU 2013-11Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or
a Tax Credit Carryforward Exists
In July 2013, the Financial Accounting Standards Board (FASB) amended its guidance
regarding the information provided in relation to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit, or a
portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating
loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax
position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements
as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made
presuming disallowance of the tax position at the reporting date. For public entities, the amendments are effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We have adopted this
guidance and incorporated it into the presentation of our consolidated financial statements.
Update ASU 2014-09Revenue from Contracts with
Customers (Topic 606)
In May 2014, the FASB amended its guidance regarding revenue recognition and created a new Topic 606, Revenue
from Contracts with Customers. The objectives for creating Topic 606 were to remove inconsistencies and weaknesses in revenue recognition, provide a more robust framework for addressing revenue issues, provide more useful information to users of the
financial statements through improved disclosure requirements, simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer, and improve comparability of revenue recognition
8
practices across entities, industries, jurisdictions and capital markets. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, an entity should apply the following steps: 1) identify the
contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) recognize revenue when (or as) the
entity satisfies a performance obligation. For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The amendments may be applied
retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the amendment recognized at the date of initial application. We are currently assessing the impact of adoption of this
standard on our consolidated financial statements.
Update ASU 2014-12CompensationStock Compensation (Topic 718): Accounting for
Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period
In June 2014, the FASB amended its guidance regarding accounting for share-based payments when the terms of an award provide that a performance
target could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting
entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of
the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has
already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service
period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite
service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The stated vesting period (which includes the period in which the performance target could be
achieved) may differ from the requisite service period. For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The amendments may
be applied prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial
statements and to all new or modified awards thereafter. We believe that the adoption of these amendments will not have a material impact on our consolidated financial statements.
Note 2
Acquisitions
Aimia Acquisition
On
May 30, 2014 (the Acquisition Date), our United Kingdom (U.K.) reporting segment acquired 100 percent of the share capital of Aimia Foods (Holdings) Limited (the Aimia Acquisition), which includes its
operating subsidiary company, Aimia Foods Limited (together referred as Aimia) pursuant to a Share Purchase Agreement dated May 30, 2014. Aimia produces and distributes hot chocolate, coffee and cold cereal products primarily
through food service, vending and retail channels. The aggregate purchase price for the Aimia Acquisition was £52.1 million ($87.6 million) payable in cash, which included a payment for estimated closing balance sheet working capital,
£19.9 million ($33.5 million) in deferred consideration to be paid by September 30, 2014, and aggregate contingent consideration of up to £16.0 million ($26.9 million), which is payable upon the achievement of certain
performance measures during the twelve months ending July 1, 2016 (the Earn Out Period).
The total consideration paid by
us for the Aimia Acquisition, subject to final working capital adjustments, is summarized below:
|
|
|
|
|
(in millions of U.S. dollars)
|
|
|
|
Cash
|
|
$
|
80.4
|
|
Deferred consideration
|
|
|
33.5
|
|
Contingent consideration
1
|
|
|
17.9
|
|
Working capital payment
|
|
|
7.2
|
|
|
|
|
|
|
Total consideration
|
|
$
|
139.0
|
|
|
|
|
|
|
1.
|
Represents the estimated present value of the contingent consideration based on probability of achievement of performance targets recorded at fair value.
|
9
Our primary reasons for the Aimia Acquisition were to diversify Cotts product portfolio,
packaging formats and channel mix, and enhance our customer offering and growth prospects.
The Aimia Acquisition is being accounted for
as a business combination which, among other things, requires that assets acquired and liabilities assumed be measured at their acquisition date fair values. Identified intangible assets, goodwill and property, plant and equipment are recorded at
their estimated fair values per preliminary valuations and may change based on the final valuations. The results of operations of Aimia have been included in our operating results beginning as of the Acquisition Date. We allocated the total purchase
price exchanged for Aimia to tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over the aggregate fair values was recorded as goodwill. The fair value
assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. Intangible assets are amortized using a method that reflects the pattern in which economic benefits of the intangible asset are consumed
using a straight-line amortization method.
The sellers are entitled to contingent consideration of up to a maximum of
£16.0 million ($26.9 million), based on the exchange rate on the Acquisition Date, which will be due by us if Aimia meets certain targets relating to net income plus interest, income taxes, depreciation and amortization
(EBITDA) for the twelve months ending July 1, 2016. We estimated the fair value of the contingent consideration based on financial projections of the acquired business and estimated probabilities of achievement of the EBITDA
targets. We believe that our estimates and assumptions are reasonable, but there is significant judgment involved. Changes in the fair value of contingent consideration liabilities subsequent to the acquisition will be recorded in our Consolidated
Statements of Operations. The fair value of the contingent consideration was determined to be £10.6 million ($17.9 million) using a present valued probability-weighted income approach. Key assumptions include probability-adjusted EBITDA
amounts with discount rates consistent with the level of risk of achievement.
The following table summarizes the estimated allocation of
the purchase price to the fair value of the assets acquired and liabilities assumed in connection with the Aimia Acquisition. The allocation of the purchase price is based on a preliminary valuation that is expected to be completed by the end of
2014. Any adjustment may affect the total purchase price and amount of goodwill.
|
|
|
|
|
(in millions of U.S. dollars)
|
|
Acquired Value
|
|
Cash
|
|
$
|
9.5
|
|
Accounts receivable
|
|
|
11.0
|
|
Inventories
|
|
|
9.6
|
|
Prepaid expenses and other assets
|
|
|
1.9
|
|
Property, plant & equipment
|
|
|
10.5
|
|
Goodwill
|
|
|
52.8
|
|
Intangibles and other assets
|
|
|
86.2
|
|
Accounts payable and accrued liabilities
|
|
|
(25.4
|
)
|
Deferred tax liabilities
|
|
|
(17.1
|
)
|
|
|
|
|
|
Total
|
|
$
|
139.0
|
|
|
|
|
|
|
The Company recognized $1.8 million of acquisition related costs associated with the Aimia Acquisition that
were expensed during the three and six month period ended June 28, 2014. These costs are included in the selling, general, and administrative expenses of our Consolidated Statements of Operations in accordance with ASC 805, Business
Combinations.
10
Intangible Assets
In our preliminary determination of the fair value of the intangible assets, we considered, among other factors, the best use of acquired
assets, analysis of historical financial performance and estimates of future performance of Aimias products. The estimated fair values of identified intangible assets were calculated considering market participant expectations and using an
income approach and estimates and assumptions provided by Aimias and our management. The following table sets forth the components of identified intangible assets associated with the Aimia Acquisition and their estimated weighted average
useful lives:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
Estimated Fair
Market Value
|
|
|
Estimated
Useful Life
|
|
Customer relationships
|
|
$
|
76.5
|
|
|
|
15 years
|
|
Trademarks and trade names
|
|
|
1.5
|
|
|
|
20 years
|
|
Non-competition agreements
|
|
|
2.9
|
|
|
|
5 years
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
80.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships represent future projected revenue that will be derived from sales to existing
customers of Aimia.
Trademarks and trade names represent the future projected cost savings associated with the premium and brand image
obtained as a result of owning the trademark or trade name as opposed to obtaining the benefit of the trademark or trade name through a royalty or rental fee.
In conjunction with the closing of the Aimia Acquisition, certain key employees of Aimia executed non-competition agreements, which prevent
those employees from competing with us in the specified restricted territories for a period of time from the Acquisition Date. The value of the Aimia business could be materially diminished without these noncompetition agreements.
Goodwill
The principal
factor that resulted in recognition of goodwill was that the purchase price for the Aimia Acquisition was based in part on cash flow projections assuming the reduction of administration costs and the integration of acquired customers and products
into our operations, which is of greater value than on a standalone basis. The goodwill recognized as part of the Aimia Acquisition was allocated to the U.K. reporting segment, none of which is expected to be tax deductible.
Selected Financial Data (unaudited)
The
following unaudited financial information from the Acquisition Date through June 28, 2014 represents the activity of Aimia that has been combined with our operations as of the Acquisition Date.
|
|
|
|
|
(in millions of U.S. dollars)
|
|
For the period
from
May 30, 2014
through
June 28, 2014
|
|
Revenue
|
|
$
|
7.0
|
|
Net loss
|
|
|
(1.2
|
)
|
Calypso Acquisition
In June 2013, our U.K. reporting segment acquired 100 percent of the share capital of Cooke Bros. Holdings Limited (the Calypso
Acquisition), which includes its subsidiary companies Calypso Soft Drinks Limited and Mr. Freeze (Europe) Limited (together, Calypso). Calypso produces fruit juices, juice drinks, soft drinks, and freeze products in the United
Kingdom. The aggregate purchase price for the acquisition of Calypso was $12.1 million, which includes approximately $7.0 million paid at closing, a deferred payment of approximately $2.3 million paid on the first anniversary of the closing date,
and a deferred payment of approximately $3.0 million to be paid on the second anniversary of the closing date. In connection with the Calypso Acquisition, we paid $18.5 million of outstanding debt of the acquired companies. The closing payment and
the first deferred payment were funded from available cash.
The total consideration paid by us in the Calypso Acquisition is summarized
below:
|
|
|
|
|
(in millions of U.S. dollars)
|
|
|
|
Cash
|
|
$
|
7.0
|
|
Deferred consideration
1
|
|
|
5.1
|
|
|
|
|
|
|
Total consideration
|
|
$
|
12.1
|
|
|
|
|
|
|
1.
|
Principal amount of $5.3 million discounted to present value.
|
11
Our primary reasons for the Calypso Acquisition were to expand Cotts product portfolio and
enhance our customer offering and growth prospects.
Supplemental Pro Forma Data (unaudited)
The following unaudited pro forma financial information for the three and six months ended June 28, 2014 and June 29, 2013 represent
the combined results of our operations as if the Aimia Acquisition and the Calypso Acquisition had occurred on December 30, 2012. The unaudited pro forma results reflect certain adjustments related to these acquisitions such as increased
amortization expense on acquired intangible assets resulting from the preliminary fair valuation of assets acquired. The unaudited pro forma financial information does not necessarily reflect the results of operations that would have occurred had we
operated as a single entity during such periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions of U.S. dollars, except share amounts)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
Revenue
|
|
$
|
567.8
|
|
|
$
|
599.7
|
|
|
$
|
1,072.7
|
|
|
$
|
1,140.8
|
|
Net (loss) income
|
|
|
(4.6
|
)
|
|
|
18.9
|
|
|
|
(6.0
|
)
|
|
|
20.6
|
|
Net (loss) income per common share, diluted
|
|
$
|
(0.05
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.21
|
|
Cliffstar Acquisition
On August 17, 2010, we completed the acquisition of substantially all of the assets and liabilities of Cliffstar Corporation
(Cliffstar) and its affiliated companies (the Cliffstar Acquisition) for approximately $503.0 million in cash, $14.0 million in deferred consideration payable in equal installments over three years and contingent
consideration of up to $55.0 million. Contingent consideration of $34.9 million was ultimately paid to the seller of Cliffstar, and all claims for contingent consideration have been resolved as of December 28, 2013.
12
Note 3Restructuring and Asset Impairments
We implement restructuring programs from time to time that are designed to improve operating effectiveness and lower costs.
When we implement these programs, we incur various charges, including severance, asset impairments, and other employment related costs. During the first quarter of 2014, we implemented one such program, which involved the closure of two of our
smaller plants, one located in North America and another one located in the United Kingdom (the 2014 Restructuring Plan). The plant closures are expected to be completed by the end of our 2014 fiscal year and will result in cash charges
associated with employee redundancy costs and relocation of assets, and non-cash charges related to asset impairments and accelerated depreciation on property, plant and equipment. In connection with the 2014 Restructuring Plan, we expect to incur
total charges of approximately $5.0 million to $6.0 million. We also implemented a plan in June 2013, which consisted primarily of headcount reductions.
The following table summarizes restructuring charges for the three and six months ended June 28, 2014 and June 29, 2013,
respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
North America
|
|
$
|
0.1
|
|
|
$
|
1.0
|
|
|
$
|
2.2
|
|
|
$
|
1.0
|
|
United Kingdom
|
|
|
|
|
|
|
0.7
|
|
|
|
0.1
|
|
|
|
0.7
|
|
Mexico
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.1
|
|
|
$
|
2.0
|
|
|
$
|
2.3
|
|
|
$
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no asset impairment charges for the three and six months ended June 29, 2013. The following
table summarizes asset impairment charges for the three and six months ended June 28, 2014:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
For the Three Months Ended
June 28, 2014
|
|
|
For the Six Months Ended
June 28, 2014
|
|
North America
|
|
$
|
|
|
|
$
|
0.9
|
|
United Kingdom
|
|
|
0.3
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.3
|
|
|
$
|
1.9
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize our restructuring liability as of June 28, 2014, along with charges to
costs and expenses and cash payments:
2014 Restructuring Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
(in millions of U.S. dollars)
|
|
Balance at
December 28,
2013
|
|
|
Charges to costs
and expenses
|
|
|
Cash payments
|
|
|
Balance at
June 28,
2014
|
|
|
|
|
|
|
Restructuring liability
|
|
$
|
|
|
|
$
|
2.2
|
|
|
$
|
(2.2
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
2.2
|
|
|
$
|
(2.2
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
(in millions of U.S. dollars)
|
|
Balance at
December 28,
2013
|
|
|
Charges to costs
and expenses
|
|
|
Cash payments
|
|
|
Balance at
June 28,
2014
|
|
|
|
|
|
|
Restructuring liability
|
|
$
|
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
Note 4
Share-Based Compensation
The table below summarizes the share-based compensation expense for the three and six months ended June 28, 2014 and
June 29, 2013, respectively. This share-based compensation expense was recorded in selling, general, and administrative expenses in our Consolidated Statements of Operations. As used below: (i) Performance-based RSUs mean
restricted share units with performance-based vesting granted under the Companys 2010 Equity Incentive Plan (the 2010 Equity Incentive Plan) or Amended and Restated Equity Plan (as defined below), as the case may be,
(ii) Time-based RSUs mean restricted share units with time-based vesting granted under the 2010 Equity Incentive Plan or Amended and Restated Equity Plan, as the case may be, and (iii) Stock options mean
non-qualified stock options granted under the Amended and Restated Equity Plan, the 2010 Equity Incentive Plan, or the Restated 1986 Common Share Option Plan, as amended (the Option Plan), as the case may be, and (iv) Director
share awards mean common shares issued in consideration of the annual board retainer fee to non-management members of our board of directors under the 2010 Equity Incentive Plan or Amended and Restated Equity Plan, as the case may be.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
Stock options
|
|
$
|
0.4
|
|
|
$
|
0.3
|
|
|
$
|
0.8
|
|
|
$
|
0.4
|
|
Performance-based RSUs
|
|
|
0.6
|
|
|
|
0.2
|
|
|
|
0.8
|
|
|
|
0.4
|
|
Time-based RSUs
|
|
|
0.7
|
|
|
|
0.5
|
|
|
|
1.4
|
|
|
|
0.9
|
|
Director share awards
|
|
|
0.4
|
|
|
|
0.8
|
|
|
|
0.4
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2.1
|
|
|
$
|
1.8
|
|
|
$
|
3.4
|
|
|
$
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 28, 2014, the unrecognized share-based compensation expense and years we expect to recognize
it as compensation expense were as follows:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars, except years)
|
|
Unrecognized share-based
compensation expense
as of June 28, 2014
|
|
|
Weighted average years
expected to recognize
compensation
|
|
|
|
|
Stock options
|
|
$
|
2.5
|
|
|
|
2.0
|
|
Performance-based RSUs
|
|
|
2.1
|
|
|
|
2.3
|
|
Time-based RSUs
|
|
|
4.5
|
|
|
|
2.0
|
|
Director share awards
|
|
|
0.4
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option activity for the six months ended June 28, 2014 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares
(in thousands)
|
|
|
Weighted average
exercise price
|
|
Balance at December 28, 2013
|
|
|
830
|
|
|
$
|
8.17
|
|
Awarded
|
|
|
441
|
|
|
|
8.00
|
|
Forfeited or expired
|
|
|
(50
|
)
|
|
|
16.45
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 28, 2014
|
|
|
1,221
|
|
|
$
|
7.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 28, 2014
|
|
|
113
|
|
|
$
|
4.94
|
|
|
|
|
|
|
|
|
|
|
14
During the six months ended June 28, 2014, Performance-based RSU and Time-based RSU activity
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Performance-
based RSUs
(in thousands)
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
|
Number of
Time-based
RSUs
(in thousands)
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
Balance at December 28, 2013
|
|
|
534
|
|
|
$
|
7.81
|
|
|
|
831
|
|
|
$
|
8.04
|
|
Awarded
|
|
|
274
|
|
|
|
8.00
|
|
|
|
368
|
|
|
|
8.00
|
|
Issued
|
|
|
|
|
|
|
|
|
|
|
(161
|
)
|
|
|
8.20
|
|
Forfeited
|
|
|
(26
|
)
|
|
|
7.94
|
|
|
|
(53
|
)
|
|
|
8.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 28, 2014
|
|
|
782
|
|
|
$
|
7.87
|
|
|
|
985
|
|
|
$
|
7.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On February 14, 2013, our board of directors adopted an amendment and restatement of the 2010 Equity
Incentive Plan (the Amended and Restated Equity Plan), pursuant to which the 2010 Equity Incentive Plan was amended and restated to, among other things, increase the number of shares that may be issued under the plan to 12,000,000 shares
and to provide that the number of shares available for issuance will be reduced 2.0 shares for each share issued pursuant to a full-value award (i.e., an award other than an option or stock appreciation right) after the effective date of
the amendment and restatement. The Amended and Restated Equity Plan was approved by Cotts shareowners on April 30, 2013. Awards made in 2011 and 2012 prior to the amendment and restatement are generally governed by the 2010 Equity
Incentive Plan without giving effect to these restrictions.
Certain outstanding stock options were granted under the Option Plan. Our
board of directors terminated the Option Plan as of February 23, 2011, and no further awards will be granted under it. In connection with the termination of the Option Plan, outstanding options will continue in accordance with the terms of the
Option Plan until exercised, forfeited or terminated, as applicable.
Note 5
Income Taxes
Income tax expense was $1.6 million on pre-tax loss of $5.5 million for the six months ended June 28, 2014, as compared
to an income tax expense of $2.2 million on pre-tax income of $21.3 million for the six months ended June 29, 2013. This is the result of pre-tax income in certain jurisdictions that is not offset by pre-tax losses in other jurisdictions that
have valuation allowances.
Note 6
Net (Loss) Income Per Common Share
Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of common
shares outstanding during the period. Diluted net income per common share is calculated using the weighted average number of common shares outstanding adjusted to include the effect, if dilutive, of the exercise of in-the-money stock options,
Performance-based RSUs and Time-based RSUs. Diluted net loss per common share is equivalent to basic net loss per common share.
A
reconciliation of the denominators of the basic and diluted net income per common share computations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in thousands)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
Weighted average number of shares outstanding - basic
|
|
|
94,234
|
|
|
|
95,159
|
|
|
|
94,276
|
|
|
|
95,265
|
|
Dilutive effect of stock options
|
|
|
|
|
|
|
62
|
|
|
|
|
|
|
|
55
|
|
Dilutive effect of Performance-based RSUs
|
|
|
|
|
|
|
275
|
|
|
|
|
|
|
|
266
|
|
Dilutive effect of Time-based RSUs
|
|
|
|
|
|
|
485
|
|
|
|
|
|
|
|
462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average number of shares outstanding - diluted
|
|
|
94,234
|
|
|
|
95,981
|
|
|
|
94,276
|
|
|
|
96,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 28, 2014, we excluded 832,951 (June 29, 2013442,131) stock options from the computation of
diluted net (loss) income per share because the options exercise price was greater than the average market price of the common shares.
15
In addition, we excluded the impact of the remaining stock options, Performance-based RSUs and Time-based RSUs from the computation of diluted net loss per share for the three and six
months ended June 28, 2014 as they were considered anti-dilutive for purposes of calculating loss per share.
Note 7
Segment Reporting
Our product lines include CSDs, 100% shelf stable juice and juice-based products, clear, still and sparkling flavored
waters, energy drinks and shots, sports products, new age beverages, ready-to-drink teas, beverage concentrates, liquid enhancers, freezables and ready-to-drink alcoholic beverages, as well as hot chocolate, coffee, malt drinks, creamers/whiteners
and cereal. Our business operates through three reporting segmentsNorth America (which includes our U.S. operating segment and Canada operating segment), U.K. (which includes our United Kingdom operating segment and our Continental European
operating segment), and All Other (which includes our Mexico operating segment, our Royal Crown International (RCI) operating segment and other Miscellaneous Expenses). Our corporate oversight function (Corporate) is not
treated as a segment; it includes certain general and administrative costs that are not allocated to any of the reporting segments. The primary measures used in evaluating our reporting segments are revenues, operating income (loss), and additions
to property, plant and equipment, which have been included as part of our segment disclosures listed below. During the fourth quarter of 2013, management reviewed our reporting segments and subsequently combined our Mexico and RCI reporting segments
with the segment previously classified as All Other into one segment classified as All Other. Prior year information has been updated to reflect the change in our reporting segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All
Other
|
|
|
Corporate
|
|
|
Total
|
|
|
|
|
|
|
|
For the Three Months Ended June 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue
1
|
|
$
|
373.5
|
|
|
$
|
159.1
|
|
|
$
|
18.3
|
|
|
$
|
|
|
|
$
|
550.9
|
|
Depreciation and amortization
|
|
|
20.6
|
|
|
|
4.9
|
|
|
|
0.5
|
|
|
|
|
|
|
|
26.0
|
|
Operating income (loss)
|
|
|
15.1
|
|
|
|
10.8
|
|
|
|
3.1
|
|
|
|
(2.9
|
)
|
|
|
26.1
|
|
Additions to property, plant and equipment
|
|
|
7.2
|
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
11.8
|
|
|
|
|
|
|
|
For the Six Months Ended June 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue
1
|
|
$
|
718.2
|
|
|
$
|
274.7
|
|
|
$
|
33.1
|
|
|
$
|
|
|
|
$
|
1,026.0
|
|
Depreciation and amortization
|
|
|
41.5
|
|
|
|
8.9
|
|
|
|
0.9
|
|
|
|
|
|
|
|
51.3
|
|
Operating income (loss)
|
|
|
17.4
|
|
|
|
13.0
|
|
|
|
5.6
|
|
|
|
(5.8
|
)
|
|
|
30.2
|
|
Additions to property, plant and equipment
|
|
|
13.0
|
|
|
|
7.6
|
|
|
|
|
|
|
|
|
|
|
|
20.6
|
|
|
|
|
|
|
|
As of June 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
347.2
|
|
|
|
123.0
|
|
|
|
9.0
|
|
|
|
|
|
|
|
479.2
|
|
Goodwill
|
|
|
123.9
|
|
|
|
62.7
|
|
|
|
4.5
|
|
|
|
|
|
|
|
191.1
|
|
Intangibles and other assets
|
|
|
265.2
|
|
|
|
113.8
|
|
|
|
0.2
|
|
|
|
|
|
|
|
379.2
|
|
Total assets
2
|
|
|
1,147.8
|
|
|
|
523.2
|
|
|
|
36.1
|
|
|
|
|
|
|
|
1,707.1
|
|
1.
|
Intersegment revenue between North America and the other reporting segments was $6.1 million and $12.2 million for the three and six months ended June 28, 2014, respectively.
|
2.
|
Excludes intersegment receivables, investments and notes receivable.
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All
Other
|
|
|
Corporate
|
|
|
Total
|
|
|
|
|
|
|
|
For the Three Months Ended June 29, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue
1
|
|
$
|
418.1
|
|
|
$
|
127.9
|
|
|
$
|
17.8
|
|
|
$
|
|
|
|
$
|
563.8
|
|
Depreciation and amortization
|
|
|
21.1
|
|
|
|
3.3
|
|
|
|
0.5
|
|
|
|
|
|
|
|
24.9
|
|
Operating income (loss)
|
|
|
23.8
|
|
|
|
9.1
|
|
|
|
2.6
|
|
|
|
(2.9
|
)
|
|
|
32.6
|
|
Additions to property, plant and equipment
|
|
|
10.4
|
|
|
|
3.7
|
|
|
|
0.5
|
|
|
|
|
|
|
|
14.6
|
|
|
|
|
|
|
|
For the Six Months Ended June 29, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue
1
|
|
$
|
811.3
|
|
|
$
|
225.3
|
|
|
$
|
32.6
|
|
|
$
|
|
|
|
$
|
1,069.2
|
|
Depreciation and amortization
|
|
|
42.1
|
|
|
|
6.5
|
|
|
|
1.0
|
|
|
|
|
|
|
|
49.6
|
|
Operating income (loss)
|
|
|
40.5
|
|
|
|
9.1
|
|
|
|
3.9
|
|
|
|
(5.8
|
)
|
|
|
47.7
|
|
Additions to property, plant and equipment
|
|
|
24.9
|
|
|
|
8.3
|
|
|
|
1.3
|
|
|
|
|
|
|
|
34.5
|
|
|
|
|
|
|
|
As of December 28, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
363.3
|
|
|
|
111.0
|
|
|
|
9.4
|
|
|
|
|
|
|
|
483.7
|
|
Goodwill
|
|
|
124.0
|
|
|
|
8.8
|
|
|
|
4.5
|
|
|
|
|
|
|
|
137.3
|
|
Intangibles and other assets
|
|
|
268.2
|
|
|
|
27.7
|
|
|
|
0.3
|
|
|
|
|
|
|
|
296.2
|
|
Total assets
2
|
|
|
1,089.5
|
|
|
|
296.3
|
|
|
|
40.3
|
|
|
|
|
|
|
|
1,426.1
|
|
1.
|
Intersegment revenue between North America and the other reporting segments was $5.4 million and $9.2 million for the three and six months ended June 29, 2013, respectively.
|
2.
|
Excludes intersegment receivables, investments and notes receivable.
|
For the six months ended
June 28, 2014, sales to Walmart accounted for 27.0% (June 29, 201330.7%) of our total revenue, 33.3% of our North America reporting segment revenue (June 29, 201336.1%), 13.3% of our U.K. reporting segment revenue (June 29,
201314.8%) and 2.2% of our All Other reporting segment revenue (June 29, 20135.4%).
Credit risk arises from the potential
default of a customer in meeting its financial obligations to us. Concentrations of credit exposure may arise with a group of customers that have similar economic characteristics or that are located in the same geographic region. The ability of such
customers to meet obligations would be similarly affected by changing economic, political or other conditions. We are not currently aware of any facts that would create a material credit risk.
Revenues are attributed to operating segments based on the location of the customer. Revenues by operating segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
United States
|
|
$
|
340.4
|
|
|
$
|
367.8
|
|
|
$
|
664.5
|
|
|
$
|
722.6
|
|
Canada
|
|
|
49.7
|
|
|
|
62.1
|
|
|
|
87.0
|
|
|
|
109.6
|
|
United Kingdom
|
|
|
159.1
|
|
|
|
127.9
|
|
|
|
274.7
|
|
|
|
225.3
|
|
All Other
|
|
|
18.3
|
|
|
|
17.8
|
|
|
|
33.1
|
|
|
|
32.6
|
|
Elimination
1
|
|
|
(16.6
|
)
|
|
|
(11.8
|
)
|
|
|
(33.3
|
)
|
|
|
(20.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
550.9
|
|
|
$
|
563.8
|
|
|
$
|
1,026.0
|
|
|
$
|
1,069.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Represents intersegment revenue among our operating segments, of which $6.1 million and $12.2 million represents intersegment revenue between the North America reporting segment and our other operating segments for the
three and six months ended June 28, 2014, respectively, compared to $5.4 million and $9.2 million for the three and six months ended June 29, 2013, respectively.
|
17
During the second quarter of 2014, we reclassified certain products in our North America
reporting segment which impacts revenue by product but does not impact total revenue. Prior year reported revenue by product for our North America reporting segment has been revised to reflect this reclassification. Revenues by product by reporting
segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 28,
2014
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All
Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
133.7
|
|
|
$
|
47.9
|
|
|
$
|
2.4
|
|
|
$
|
184.0
|
|
Juice and drinks
|
|
|
106.8
|
|
|
|
13.7
|
|
|
|
1.0
|
|
|
|
121.5
|
|
Concentrate
|
|
|
4.0
|
|
|
|
0.5
|
|
|
|
7.6
|
|
|
|
12.1
|
|
Sparkling Waters/Mixers
|
|
|
78.5
|
|
|
|
21.6
|
|
|
|
0.8
|
|
|
|
100.9
|
|
Energy
|
|
|
6.7
|
|
|
|
34.1
|
|
|
|
2.9
|
|
|
|
43.7
|
|
All other products
|
|
|
43.8
|
|
|
|
41.3
|
|
|
|
3.6
|
|
|
|
88.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
373.5
|
|
|
$
|
159.1
|
|
|
$
|
18.3
|
|
|
$
|
550.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 28,
2014
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All
Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
254.2
|
|
|
$
|
86.0
|
|
|
$
|
3.6
|
|
|
$
|
343.8
|
|
Juice and drinks
|
|
|
225.8
|
|
|
|
25.5
|
|
|
|
1.7
|
|
|
|
253.0
|
|
Concentrate
|
|
|
7.6
|
|
|
|
1.2
|
|
|
|
13.5
|
|
|
|
22.3
|
|
Sparkling Waters/Mixers
|
|
|
144.1
|
|
|
|
38.2
|
|
|
|
1.6
|
|
|
|
183.9
|
|
Energy
|
|
|
13.3
|
|
|
|
61.1
|
|
|
|
4.6
|
|
|
|
79.0
|
|
All other products
|
|
|
73.2
|
|
|
|
62.7
|
|
|
|
8.1
|
|
|
|
144.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
718.2
|
|
|
$
|
274.7
|
|
|
$
|
33.1
|
|
|
$
|
1,026.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 29,
2013
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All
Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
168.8
|
|
|
$
|
40.0
|
|
|
$
|
3.8
|
|
|
$
|
212.6
|
|
Juice and drinks
|
|
|
108.6
|
|
|
|
5.6
|
|
|
|
0.9
|
|
|
|
115.1
|
|
Concentrate
|
|
|
2.8
|
|
|
|
0.6
|
|
|
|
7.3
|
|
|
|
10.7
|
|
Sparkling Waters/Mixers
|
|
|
79.9
|
|
|
|
18.4
|
|
|
|
1.0
|
|
|
|
99.3
|
|
Energy
|
|
|
8.3
|
|
|
|
36.8
|
|
|
|
1.5
|
|
|
|
46.6
|
|
All other products
|
|
|
49.7
|
|
|
|
26.5
|
|
|
|
3.3
|
|
|
|
79.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
418.1
|
|
|
$
|
127.9
|
|
|
$
|
17.8
|
|
|
$
|
563.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 29,
2013
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All
Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
319.7
|
|
|
$
|
72.7
|
|
|
$
|
7.4
|
|
|
$
|
399.8
|
|
Juice and drinks
|
|
|
225.8
|
|
|
|
8.7
|
|
|
|
1.4
|
|
|
|
235.9
|
|
Concentrate
|
|
|
5.9
|
|
|
|
1.2
|
|
|
|
14.1
|
|
|
|
21.2
|
|
Sparkling Waters/Mixers
|
|
|
149.3
|
|
|
|
33.1
|
|
|
|
2.3
|
|
|
|
184.7
|
|
Energy
|
|
|
14.4
|
|
|
|
64.8
|
|
|
|
3.1
|
|
|
|
82.3
|
|
All other products
|
|
|
96.2
|
|
|
|
44.8
|
|
|
|
4.3
|
|
|
|
145.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
811.3
|
|
|
$
|
225.3
|
|
|
$
|
32.6
|
|
|
$
|
1,069.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
Property, plant and equipment, net by geographic area as of June 28, 2014 and
December 28, 2013 were as follows:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
December 28,
2013
|
|
United States
|
|
$
|
306.0
|
|
|
$
|
319.5
|
|
Canada
|
|
|
41.2
|
|
|
|
43.8
|
|
United Kingdom
|
|
|
123.0
|
|
|
|
111.0
|
|
All Other
|
|
|
9.0
|
|
|
|
9.4
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
479.2
|
|
|
$
|
483.7
|
|
|
|
|
|
|
|
|
|
|
Note 8
Inventories
The following table summarizes inventories as of June 28, 2014 and December 28, 2013:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
December 28,
2013
|
|
Raw materials
|
|
$
|
91.5
|
|
|
$
|
89.0
|
|
Finished goods
|
|
|
141.3
|
|
|
|
126.3
|
|
Other
|
|
|
18.6
|
|
|
|
17.8
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
251.4
|
|
|
$
|
233.1
|
|
|
|
|
|
|
|
|
|
|
Note 9
Intangibles and Other Assets
The following table summarizes intangibles and other assets as of June 28, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2014
|
|
(in millions of U.S. dollars)
|
|
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
Not subject to amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights
|
|
$
|
45.0
|
|
|
$
|
|
|
|
$
|
45.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subject to amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
458.2
|
|
|
|
181.1
|
|
|
|
277.1
|
|
Trademarks
|
|
|
34.4
|
|
|
|
26.3
|
|
|
|
8.1
|
|
Information technology
|
|
|
53.7
|
|
|
|
32.2
|
|
|
|
21.5
|
|
Other
|
|
|
9.3
|
|
|
|
4.2
|
|
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
555.6
|
|
|
|
243.8
|
|
|
|
311.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600.6
|
|
|
|
243.8
|
|
|
|
356.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing costs
|
|
|
24.0
|
|
|
|
8.6
|
|
|
|
15.4
|
|
Deposits
|
|
|
1.1
|
|
|
|
|
|
|
|
1.1
|
|
Other
|
|
|
6.0
|
|
|
|
0.1
|
|
|
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
8.7
|
|
|
|
22.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Intangibles & Other Assets
|
|
$
|
631.7
|
|
|
$
|
252.5
|
|
|
$
|
379.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our only intangible asset with an indefinite life relates to the 2001 acquisition of intellectual property
from Royal Crown Company, Inc., including the right to manufacture our concentrates, with all related inventions, processes, technologies, technical and manufacturing information, know-how and the use of the Royal Crown brand outside of North
America and Mexico.
19
Amortization expense of intangible and other assets was $8.8 million and $17.2 million for the
three and six months ended June 28, 2014, respectively, compared to $8.7 million and $17.3 million for the comparable prior year periods.
The estimated amortization expense for intangibles over the next five years is:
|
|
|
|
|
(in millions of U.S. dollars)
|
|
|
|
Remainder of 2014
|
|
$
|
18.6
|
|
2015
|
|
|
37.8
|
|
2016
|
|
|
33.4
|
|
2017
|
|
|
26.9
|
|
2018
|
|
|
26.1
|
|
Thereafter
|
|
|
169.0
|
|
|
|
|
|
|
Total
|
|
$
|
311.8
|
|
|
|
|
|
|
Note 10
Debt
Our total debt as of June 28, 2014 and December 28, 2013 was as follows:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
June 28, 2014
|
|
|
December 28, 2013
|
|
8.375% senior notes due in 2017
1
|
|
$
|
|
|
|
$
|
15.0
|
|
8.125% senior notes due in 2018
|
|
|
79.1
|
|
|
|
375.0
|
|
5.375% senior notes due in 2022
|
|
|
525.0
|
|
|
|
|
|
ABL facility
|
|
|
35.8
|
|
|
|
50.8
|
|
GE Term Loan
|
|
|
9.4
|
|
|
|
10.3
|
|
Capital leases and other debt financing
|
|
|
6.4
|
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
655.7
|
|
|
|
458.3
|
|
Less: Short-term borrowings and current debt:
|
|
|
|
|
|
|
|
|
ABL facility
|
|
|
35.8
|
|
|
|
50.8
|
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings
|
|
|
35.8
|
|
|
|
50.8
|
|
GE Term Loan - current maturities
|
|
|
2.0
|
|
|
|
1.9
|
|
Capital leases and other financing - current maturities
|
|
|
2.3
|
|
|
|
2.0
|
|
8.125% senior notes due in 2018 - current maturities
|
|
|
79.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current debt
|
|
|
119.2
|
|
|
|
54.7
|
|
Long-term debt before discount
|
|
|
536.5
|
|
|
|
403.6
|
|
Less discount on 8.375% notes
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
536.5
|
|
|
$
|
403.5
|
|
|
|
|
|
|
|
|
|
|
1.
|
Our 8.375% senior notes were issued at a discount of 1.425% on November 13, 2009.
|
Asset-Based Lending
Facility
On March 31, 2008, we entered into a credit agreement with JPMorgan Chase Bank, N.A. as Agent that created an
asset-based lending credit facility (the ABL facility) to provide financing for our North America, U.K. and Mexico operations. In connection with the Cliffstar Acquisition, we refinanced the ABL facility on August 17, 2010 to, among
other things, provide for the Cliffstar Acquisition, the issuance of $375.0 million of 8.125% senior notes that are due on September 1, 2018 (the 2018 Notes) and the application of net proceeds therefrom, the underwritten public
offering of 13,340,000 common shares at a price of $5.67 per share and the application of net proceeds therefrom and to increase the amount available for borrowings to $275.0 million. We drew down a portion of the indebtedness under the ABL facility
in order to fund the Cliffstar Acquisition. We incurred $5.4 million of financing fees in connection with the refinancing of the ABL facility.
On July 19, 2012, we amended the ABL facility to, among other things, extend the maturity date to July 19, 2017. We incurred $1.2
million of financing fees in connection with the amendment of the ABL facility.
20
On October 22, 2013, we amended the ABL facility to, among other things, (1) provide
for an increase in the lenders commitments under the ABL facility to $300.0 million, as well as to increase the accordion feature, which permits us to increase the lenders commitments under the ABL facility to $350.0 million, subject to
certain conditions, (2) extend the maturity date to October 22, 2018, and (3) provide for greater flexibility under certain covenants. We incurred approximately $0.7 million of financing fees in connection with the amendment of the
ABL facility.
On May 28, 2014, we amended the ABL facility to increase our ability to incur certain unsecured debt and earnout
consideration for permitted acquisitions, as well as to allow us to add additional borrowers and to designate additional guarantors to be included in the borrowing base calculation. We incurred approximately $0.2 million of financing fees in
connection with the amendment of the ABL facility. These costs are included in the selling, general, and administrative expenses of our Consolidated Statements of Operations.
The financing fees incurred in connection with the refinancing of the ABL facility on August 17, 2010, along with the financing fees
incurred in connection with the amendments of the ABL facility, other than the amendment on May 28, 2014, are being amortized using the straight-line method over the duration of the amended ABL facility. Each of the amendments, with the
exception of the amendment on May 28, 2014, was considered to be a modification of the original agreement under GAAP.
As of
June 28, 2014, we had $35.8 million of outstanding borrowings under the ABL facility. The commitment fee was 0.375% per annum of the unused commitment, which, taking into account $6.9 million of letters of credit, was $251.8 million as of
June 28, 2014.
5.375% Senior Notes due in 2022
On June 24, 2014, we issued $525.0 million of the 5.375% senior notes due 2022 (the 2022 Notes) to qualified purchasers in a
private placement under Rule 144A and Regulation S under the Securities Act of 1933. The issuer of the 2022 Notes is our wholly-owned U.S. subsidiary Cott Beverages Inc., and we and most of our U.S., Canadian and United Kingdom subsidiaries
guarantee the 2022 Notes. The interest on the 2022 Notes is payable semi-annually on January 1st and July 1st of each year commencing on January 1, 2015.
We incurred $9.7 million of financing fees in connection with the issuance of the 2022 Notes. The financing fees are being amortized using the
effective interest method over an eight-year period, which represents the term to maturity of the 2022 Notes.
8.125% Senior Notes due in 2018
On August 17, 2010, we issued the 2018 Notes. The issuer of the 2018 Notes is our wholly-owned U.S. subsidiary Cott Beverages Inc., and we
and most of our U.S., Canadian and United Kingdom subsidiaries guarantee the 2018 Notes. The interest on the 2018 Notes is payable semi-annually on March 1st and September 1st of each year. We incurred $8.6 million of financing fees in
connection with the issuance of the 2018 Notes.
On June 24, 2014, we used a portion of the proceeds from our issuance of the 2022
Notes to purchase $295.9 million aggregate principal amount of our 2018 Notes in a cash tender offer. The tender offer included approximately $16.2 million in premium payments as well as accrued interest of $7.5 million and approximately $3.2
million in deferred financing fees and other costs.
On July 9, 2014 and July 24, 2014, we redeemed all of the remaining $79.1
million aggregate principal amount of our 2018 Notes. The redemption included approximately $3.8 million in premium payments as well as accrued interest of approximately $2.5 million and approximately $0.8 million in deferred financing fees.
8.375% Senior Notes due in 2017
On
November 13, 2009, we issued $215.0 million of the 8.375% senior notes due 2017 (the 2017 Notes). The 2017 Notes were issued at a $3.1 million discount. The issuer of the 2017 Notes was our wholly-owned U.S. subsidiary Cott
Beverages Inc., and we and most of our U.S., Canadian and United Kingdom subsidiaries guaranteed the 2017 Notes. The interest on the 2017 Notes was payable semi-annually on May 15th and November 15th of each year. We incurred $5.1 million
of financing fees in connection with the 2017 Notes.
On November 15, 2013, we redeemed $200.0 million aggregate principal amount of
our 2017 Notes at 104.118% of par. The redemption included approximately $8.2 million in premium payments as well as approximately $4.5 million in deferred financing fees, discount charges and other bond redemption costs.
21
On February 19, 2014, we redeemed all of the remaining $15.0 million aggregate principal
amount of the 2017 Notes at 104.118% of par. The redemption included approximately $0.6 million in premium payments as well as approximately $0.3 million in deferred financing fees and discount charges.
GE Term Loan
In January 2008, we entered
into a capital lease finance arrangement with General Electric Capital Corporation (GE Capital) for the lease of equipment. In September 2013, we purchased the equipment subject to the lease for an aggregate purchase price of $10.7
million, with the financing for such purchase provided by GE Capital at 5.23% interest.
Note 11
Accumulated Other Comprehensive (Loss) Income
Changes in accumulated other comprehensive (loss) income by component
1
for the six months ended June 28, 2014 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2014
|
|
(in millions of U.S. dollars)
|
|
Gains and Losses
on Derivative
Instruments
|
|
|
Pension
Benefit
Plan Items
|
|
|
Currency
Translation
Adjustment Items
|
|
|
Total
|
|
|
|
|
|
|
Beginning balance December 28, 2013
|
|
$
|
0.2
|
|
|
$
|
(8.4
|
)
|
|
$
|
(8.6
|
)
|
|
$
|
(16.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OCI before reclassifications
|
|
|
0.4
|
|
|
|
(0.5
|
)
|
|
|
6.8
|
|
|
|
6.7
|
|
Amounts reclassified from AOCI
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current-period OCI
|
|
|
0.2
|
|
|
|
(0.3
|
)
|
|
|
6.8
|
|
|
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance June 28, 2014
|
|
$
|
0.4
|
|
|
$
|
(8.7
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(10.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
All amounts are net of tax. Amounts in parentheses indicate debits.
|
The following table
summarizes the amounts reclassified from accumulated other comprehensive (loss) income
1
for the three and six months ended June 28, 2014 and June 29, 2013, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
Affected Line Item in
the Statement Where
Net Income Is Presented
|
Details About AOCI Components
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
|
|
|
|
Gains and losses on derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency hedges
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Total before taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax (expense) or benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of pension benefit plan items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service costs
2
|
|
$
|
(0.2
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.3
|
)
|
|
|
Actuarial adjustments
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
Actuarial (losses)/gains
2
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
|
|
(0.2
|
)
|
|
|
(0.5
|
)
|
|
Total before taxes
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
(0.2
|
)
|
|
Tax (expense) or benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.2
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(0.7
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period
|
|
$
|
(0.1
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
|
|
|
$
|
(0.5
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Amounts in parentheses indicate debits.
|
2.
|
These AOCI components are included in the computation of net periodic pension cost.
|
22
Note 12
Commitments and Contingencies
We are subject to various claims and legal proceedings with respect to matters such as governmental regulations, and other
actions arising out of the normal course of business. Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flow.
In June 2013, we completed the Calypso Acquisition, which included a deferred payment of approximately $2.3 million paid on the first
anniversary of the closing date, and a deferred payment of approximately $3.0 million to be paid on the second anniversary of the closing date.
We had $6.9 million in standby letters of credit outstanding as of June 28, 2014 (June 29, 2013$11.5 million).
In March 2014, we had a favorable legal settlement in the amount of $3.5 million, of which $3.0 million was collected in April 2014 and the
remaining $0.5 million is due in January 2015.
In May 2014, we completed the Aimia Acquisition, which included deferred consideration of
£19.9 million ($33.5 million) to be paid by September 30, 2014 and aggregate contingent consideration of up to £16.0 million ($26.9 million), which is payable upon achievement of certain performance measures during the
twelve months ending July 1, 2016.
Note 13
Share Repurchase Program
On May 6, 2014, our board of directors approved the renewal of our share repurchase program for up to 5% of Cotts
outstanding common shares over a 12-month period commencing upon the expiration of Cotts then-effective share repurchase program on May 21, 2014. During the second quarter ended June 28, 2014, we repurchased 366,670 common shares for
approximately $2.6 million through open market transactions. We are unable to predict the number of shares that ultimately will be repurchased under the share repurchase program, or the aggregate dollar amount of the shares actually purchased. We
may discontinue purchases at any time, subject to compliance with applicable regulatory requirements. Shares purchased under the share repurchase program are cancelled.
Note 14
Hedging Transactions and Derivative Financial Instruments
We are directly and indirectly affected by changes in foreign currency market conditions. These changes in market conditions
may adversely impact our financial performance and are referred to as market risks. When deemed appropriate by management, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks.
We use various types of derivative instruments including, but not limited to, forward contracts and swap agreements for certain commodities.
Forward contracts are agreements to buy or sell a quantity of a currency at a predetermined future date, and at a predetermined rate or price. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying
notional amounts, assets and/or indices. We do not enter into derivative financial instruments for trading purposes.
All derivatives are
carried at fair value in the Consolidated Balance Sheets in the line item other receivables or other payables. The carrying values of the derivatives reflect the impact of legally enforceable agreements with the same counterparties. These allow us
to net settle positive and negative positions (assets and liabilities) arising from different transactions with the same counterparty.
The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives
have been designated and qualify as hedging instruments and the types of hedging relationships. Derivatives can be designated as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. The changes in the fair values
of derivatives that have been designated and qualify for fair value hedge accounting are recorded in the same line item in our Consolidated Statements of Operations as the changes in the fair value of the hedged items attributable to the risk being
hedged. The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) (AOCI) and are reclassified into the line item in the Consolidated
Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, fluctuations in
the value of the derivative instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. The changes in fair values of derivatives that were not designated and/or did not qualify as hedging
instruments are immediately recognized into earnings.
23
For derivatives that will be accounted for as hedging instruments, we formally designate and
document, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, we formally assess both at the inception and at least
quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial
instruments change in fair value is immediately recognized into earnings. Ineffectiveness was not material for all periods presented.
We estimate the fair values of our derivatives based on quoted market prices or pricing models using current market rates (refer to Note 15).
The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are
calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates or other financial indices. We do not view the fair values of our derivatives in isolation, but rather in
relation to the fair values or cash flows of the underlying hedged transactions or other exposures. All of our derivatives are straight-forward over-the-counter instruments with liquid markets.
Credit Risk Associated with Derivatives
We have established strict counterparty credit guidelines and enter into transactions only with financial institutions of investment grade or
better. We monitor counterparty exposures regularly and review any downgrade in credit rating immediately. We mitigate pre-settlement risk by being permitted to net settle for transactions with the same counterparty. To minimize the concentration of
credit risk, we enter into derivative transactions with a portfolio of financial institutions. Based on these factors, we consider the risk of the counterparty default to be minimal.
Cash Flow Hedging Strategy
We use cash
flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in foreign currency exchange rates and commodity prices. The changes in fair values of hedges that are determined to be
ineffective are immediately reclassified from AOCI into earnings. We did not discontinue any cash flow hedging relationships during the six months ended June 28, 2014 or June 29, 2013, respectively. These foreign exchange contracts
typically have maturities of less than eighteen months.
We maintain a foreign currency cash flow hedging program to reduce the risk that
our procurement activities will be adversely affected by changes in foreign currency exchange rates. We enter into forward contracts to hedge certain portions of forecasted cash flows denominated in foreign currencies. The total notional values of
derivatives that were designated and qualify for our foreign currency cash flow hedging program were $3.8 million and $3.6 million as of June 28, 2014 and December 28, 2013, respectively.
We have entered into commodity swaps on aluminum to mitigate the price risk associated with forecasted purchases of materials used in our
manufacturing process. These derivative instruments have been designated and qualify as a part of our commodity cash flow hedging program. The objective of this hedging program is to reduce the variability of cash flows associated with future
purchases of aluminum. The total notional values of derivatives that were designated and qualified for our commodity cash flow hedging program were $29.9 million and nil as of June 28, 2014 and December 28, 2013, respectively.
The fair value of the Companys derivative assets was $0.6 million and $0.3 million as of June 28, 2014 and December 28, 2013,
respectively. The fair value of the Companys derivative liabilities was $0.2 million and nil as of June 28, 2014 and December 28, 2013, respectively.
The settlement of our derivative instruments resulted in a credit to cost of sales of approximately $0.1 million and $0.2 million for the
three and six months ended June 28, 2014, respectively, compared to a credit to cost of sales of approximately $0.3 million and $0.4 million for the comparable prior year periods.
24
Note 15
Fair Value Measurements
Accounting Standards Codification No. 820 defines fair value as the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair
value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair value are as follows:
|
|
|
Level 1Quoted prices in active markets for identical assets or liabilities.
|
|
|
|
Level 2Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
|
|
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow
methodologies and similar techniques that use significant unobservable inputs.
|
We have certain assets and liabilities such
as our derivative instruments that are required to be recorded at fair value on a recurring basis in accordance with U.S. GAAP.
The fair
value of our derivative instruments represents a Level 2 instrument. Level 2 instruments are valued based on observable inputs for quoted prices for similar assets and liabilities in active markets. The fair value for the derivative assets as of
June 28, 2014 and December 28, 2013 was $0.6 million and $0.3 million, respectively. The fair value for the derivative liabilities as of June 28, 2014 and December 28, 2013 was $0.2 million and nil, respectively.
Fair Value of Financial Instruments
The
carrying amounts reflected in the Consolidated Balance Sheets for cash and cash equivalents, receivables, payables, short-term borrowings and long-term debt approximate their respective fair values, except as otherwise indicated. The carrying values
and estimated fair values of our significant outstanding debt as of June 28, 2014 and December 28, 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 28, 2014
|
|
|
December 28, 2013
|
|
(in millions of U.S. dollars)
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
8.375% senior notes due in 2017
1
|
|
|
|
|
|
|
|
|
|
|
15.0
|
|
|
|
15.6
|
|
8.125% senior notes due in 2018
1
|
|
|
79.1
|
|
|
|
83.0
|
|
|
|
375.0
|
|
|
|
404.1
|
|
5.375% senior notes due in 2022
1
|
|
|
525.0
|
|
|
|
528.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
604.1
|
|
|
$
|
611.0
|
|
|
$
|
390.0
|
|
|
$
|
419.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
The fair values were based on the trading levels and bid/offer prices observed by a market participant and are considered Level 1 financial instruments.
|
Note 16
Guarantor Subsidiaries
The 2022 Notes issued by our 100% owned subsidiary, Cott Beverages Inc., are, and the 2017 Notes and 2018 Notes prior to
their retirement were, guaranteed on a senior basis pursuant to guarantees by Cott Corporation and certain other 100% owned direct and indirect subsidiaries (the Guarantor Subsidiaries). Cott Beverages Inc. and each Guarantor Subsidiary
is 100% owned by Cott Corporation. The guarantees of the 2017 Notes, 2018 Notes and 2022 Notes by Cott Corporation and the Guarantor Subsidiaries are full and unconditional, and all such guarantees are joint and several. The guarantees of the
Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
25
We have not presented separate financial statements and separate disclosures have not been
provided concerning Guarantor Subsidiaries due to the presentation of condensed consolidating financial information set forth in this Note, consistent with the Securities and Exchange Commission (the SEC) interpretations governing
reporting of subsidiary financial information.
The following supplemental financial information sets forth on an unconsolidated basis,
our Balance Sheets, Statements of Operations and Cash Flows for Cott Corporation, Cott Beverages Inc., Guarantor Subsidiaries and our other subsidiaries (the Non-guarantor Subsidiaries). The supplemental financial information reflects
our investments and those of Cott Beverages Inc. in their respective subsidiaries using the equity method of accounting.
We reclassified
certain intercompany dividends and advances to affiliates previously reported in the Condensed Consolidating Statement of Cash Flows for the six months ended June 29, 2013 included in our Quarterly Report on Form 10-Q. The intercompany
dividends represented transactions between Cott Corporation, Cott Beverages, Inc., the Guarantors and Non-Guarantors and the cash flows related to these transactions should have been classified as financing activities. The advances to affiliates
represented activity between Cott Corporation and Non-Guarantors that should not have impacted the Condensed Consolidating Statement of Cash Flow because they represented non-cash charges. These reclassifications do not change the total cash flows
reported in each column presented in the Condensed Consolidating Statement of Cash Flows. We assessed the materiality of these items on our previously issued annual report and quarterly financial statements in accordance with SEC Staff Accounting
Bulletin No. 99, and concluded that the errors were not material to the consolidated financial statements taken as a whole. The statements of cash flows presented below for the three and six months ended June 28, 2014 and June 29,
2013 as revised, reflect the correct classification of these items.
26
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 28, 2014
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
49.8
|
|
|
$
|
199.8
|
|
|
$
|
278.3
|
|
|
$
|
36.0
|
|
|
$
|
(13.0
|
)
|
|
$
|
550.9
|
|
Cost of sales
|
|
|
41.3
|
|
|
|
169.4
|
|
|
|
248.7
|
|
|
|
30.7
|
|
|
|
(13.0
|
)
|
|
|
477.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
8.5
|
|
|
|
30.4
|
|
|
|
29.6
|
|
|
|
5.3
|
|
|
|
|
|
|
|
73.8
|
|
Selling, general and administrative expenses
|
|
|
6.1
|
|
|
|
25.4
|
|
|
|
13.1
|
|
|
|
2.3
|
|
|
|
|
|
|
|
46.9
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Restructuring and asset impairments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Asset impairments
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
2.3
|
|
|
|
4.6
|
|
|
|
16.2
|
|
|
|
3.0
|
|
|
|
|
|
|
|
26.1
|
|
Other (income) expense, net
|
|
|
(9.7
|
)
|
|
|
19.7
|
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
19.8
|
|
Intercompany interest (income) expense, net
|
|
|
|
|
|
|
(3.9
|
)
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (income), net
|
|
|
|
|
|
|
8.5
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax (benefit) expense and equity (loss) income
|
|
|
12.0
|
|
|
|
(19.7
|
)
|
|
|
2.6
|
|
|
|
3.0
|
|
|
|
|
|
|
|
(2.1
|
)
|
Income tax (benefit) expense
|
|
|
(0.4
|
)
|
|
|
2.6
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
2.5
|
|
Equity (loss) income
|
|
|
(18.4
|
)
|
|
|
1.4
|
|
|
|
13.8
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6.0
|
)
|
|
$
|
(20.9
|
)
|
|
$
|
16.1
|
|
|
$
|
3.0
|
|
|
$
|
3.2
|
|
|
$
|
(4.6
|
)
|
Less: Net income attributable to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.4
|
|
|
|
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation
|
|
$
|
(6.0
|
)
|
|
$
|
(20.9
|
)
|
|
$
|
16.1
|
|
|
$
|
1.6
|
|
|
$
|
3.2
|
|
|
$
|
(6.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributed to Cott Corporation
|
|
$
|
2.4
|
|
|
$
|
(3.8
|
)
|
|
$
|
37.3
|
|
|
$
|
0.9
|
|
|
$
|
(34.4
|
)
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 28, 2014
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
87.0
|
|
|
$
|
374.9
|
|
|
$
|
520.6
|
|
|
$
|
68.3
|
|
|
$
|
(24.8
|
)
|
|
$
|
1,026.0
|
|
Cost of sales
|
|
|
75.5
|
|
|
|
324.8
|
|
|
|
468.1
|
|
|
|
58.3
|
|
|
|
(24.8
|
)
|
|
|
901.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
11.5
|
|
|
|
50.1
|
|
|
|
52.5
|
|
|
|
10.0
|
|
|
|
|
|
|
|
124.1
|
|
Selling, general and administrative expenses
|
|
|
12.6
|
|
|
|
49.9
|
|
|
|
22.3
|
|
|
|
4.4
|
|
|
|
|
|
|
|
89.2
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Restructuring and asset impairments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
2.0
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
2.3
|
|
Asset impairments
|
|
|
0.9
|
|
|
|
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(4.0
|
)
|
|
|
(0.5
|
)
|
|
|
29.1
|
|
|
|
5.6
|
|
|
|
|
|
|
|
30.2
|
|
Other (income) expense, net
|
|
|
(9.5
|
)
|
|
|
17.1
|
|
|
|
9.8
|
|
|
|
0.1
|
|
|
|
|
|
|
|
17.5
|
|
Intercompany interest (income) expense, net
|
|
|
|
|
|
|
(7.4
|
)
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
0.1
|
|
|
|
17.5
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
18.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax (benefit) expense and equity (loss) income
|
|
|
5.4
|
|
|
|
(27.7
|
)
|
|
|
11.3
|
|
|
|
5.5
|
|
|
|
|
|
|
|
(5.5
|
)
|
Income tax (benefit) expense
|
|
|
(1.4
|
)
|
|
|
2.9
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
1.6
|
|
Equity (loss) income
|
|
|
(16.7
|
)
|
|
|
2.7
|
|
|
|
7.0
|
|
|
|
|
|
|
|
7.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(9.9
|
)
|
|
$
|
(27.9
|
)
|
|
$
|
18.3
|
|
|
$
|
5.4
|
|
|
$
|
7.0
|
|
|
$
|
(7.1
|
)
|
Less: Net income attributable to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.8
|
|
|
|
|
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation
|
|
$
|
(9.9
|
)
|
|
$
|
(27.9
|
)
|
|
$
|
18.3
|
|
|
$
|
2.6
|
|
|
$
|
7.0
|
|
|
$
|
(9.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributed to Cott Corporation
|
|
$
|
(3.2
|
)
|
|
$
|
(6.7
|
)
|
|
$
|
42.7
|
|
|
$
|
1.8
|
|
|
$
|
(37.8
|
)
|
|
$
|
(3.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 29, 2013
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
50.4
|
|
|
$
|
212.6
|
|
|
$
|
266.1
|
|
|
$
|
41.5
|
|
|
$
|
(6.8
|
)
|
|
$
|
563.8
|
|
Cost of sales
|
|
|
41.5
|
|
|
|
181.4
|
|
|
|
235.3
|
|
|
|
35.8
|
|
|
|
(6.8
|
)
|
|
|
487.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
8.9
|
|
|
|
31.2
|
|
|
|
30.8
|
|
|
|
5.7
|
|
|
|
|
|
|
|
76.6
|
|
Selling, general and administrative expenses
|
|
|
8.4
|
|
|
|
18.7
|
|
|
|
12.6
|
|
|
|
2.0
|
|
|
|
|
|
|
|
41.7
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Restructuring
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.7
|
|
|
|
0.3
|
|
|
|
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
11.7
|
|
|
|
17.5
|
|
|
|
3.4
|
|
|
|
|
|
|
|
32.6
|
|
Other (income) expense, net
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
0.3
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
Intercompany interest (income) expense, net
|
|
|
|
|
|
|
(2.8
|
)
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
12.7
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
12.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense (benefit) and equity income
|
|
|
0.2
|
|
|
|
1.8
|
|
|
|
14.3
|
|
|
|
3.5
|
|
|
|
|
|
|
|
19.8
|
|
Income tax expense (benefit)
|
|
|
0.4
|
|
|
|
1.7
|
|
|
|
(0.5
|
)
|
|
|
0.1
|
|
|
|
|
|
|
|
1.7
|
|
Equity income
|
|
|
16.7
|
|
|
|
1.5
|
|
|
|
1.5
|
|
|
|
|
|
|
|
(19.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
16.5
|
|
|
$
|
1.6
|
|
|
$
|
16.3
|
|
|
$
|
3.4
|
|
|
$
|
(19.7
|
)
|
|
$
|
18.1
|
|
Less: Net income attributable to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.6
|
|
|
|
|
|
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributed to Cott Corporation
|
|
$
|
16.5
|
|
|
$
|
1.6
|
|
|
$
|
16.3
|
|
|
$
|
1.8
|
|
|
$
|
(19.7
|
)
|
|
$
|
16.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributed to Cott Corporation
|
|
$
|
12.1
|
|
|
$
|
3.0
|
|
|
$
|
16.7
|
|
|
$
|
3.5
|
|
|
$
|
(23.2
|
)
|
|
$
|
12.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 29, 2013
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
89.4
|
|
|
$
|
407.9
|
|
|
$
|
505.9
|
|
|
$
|
78.6
|
|
|
$
|
(12.6
|
)
|
|
$
|
1,069.2
|
|
Cost of sales
|
|
|
75.3
|
|
|
|
349.6
|
|
|
|
454.6
|
|
|
|
69.3
|
|
|
|
(12.6
|
)
|
|
|
936.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
14.1
|
|
|
|
58.3
|
|
|
|
51.3
|
|
|
|
9.3
|
|
|
|
|
|
|
|
133.0
|
|
Selling, general and administrative expenses
|
|
|
15.5
|
|
|
|
38.9
|
|
|
|
24.5
|
|
|
|
4.1
|
|
|
|
|
|
|
|
83.0
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Restructuring
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.7
|
|
|
|
0.3
|
|
|
|
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(1.9
|
)
|
|
|
18.6
|
|
|
|
26.1
|
|
|
|
4.9
|
|
|
|
|
|
|
|
47.7
|
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Intercompany interest (income) expense, net
|
|
|
|
|
|
|
(5.7
|
)
|
|
|
5.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income) expense, net
|
|
|
(0.1
|
)
|
|
|
26.0
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
26.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax expense (benefit) and equity income (loss)
|
|
|
(1.8
|
)
|
|
|
(1.7
|
)
|
|
|
19.9
|
|
|
|
4.9
|
|
|
|
|
|
|
|
21.3
|
|
Income tax expense (benefit)
|
|
|
0.7
|
|
|
|
1.6
|
|
|
|
(0.3
|
)
|
|
|
0.2
|
|
|
|
|
|
|
|
2.2
|
|
Equity income (loss)
|
|
|
19.0
|
|
|
|
2.6
|
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
(21.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
16.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
19.6
|
|
|
$
|
4.7
|
|
|
$
|
(21.0
|
)
|
|
$
|
19.1
|
|
Less: Net income attributable to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.6
|
|
|
|
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributed to Cott Corporation
|
|
$
|
16.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
19.6
|
|
|
$
|
2.1
|
|
|
$
|
(21.0
|
)
|
|
$
|
16.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributed to Cott Corporation
|
|
$
|
0.1
|
|
|
$
|
(31.0
|
)
|
|
$
|
2.7
|
|
|
$
|
4.1
|
|
|
$
|
24.2
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
Consolidating Balance Sheets
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 28, 2014
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
7.2
|
|
|
$
|
32.9
|
|
|
$
|
44.1
|
|
|
$
|
6.7
|
|
|
$
|
|
|
|
$
|
90.9
|
|
Accounts receivable, net of allowance
|
|
|
22.2
|
|
|
|
141.9
|
|
|
|
256.1
|
|
|
|
16.9
|
|
|
|
(152.1
|
)
|
|
|
285.0
|
|
Income taxes recoverable
|
|
|
0.4
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.0
|
|
Inventories
|
|
|
17.3
|
|
|
|
77.9
|
|
|
|
148.9
|
|
|
|
7.3
|
|
|
|
|
|
|
|
251.4
|
|
Prepaid expenses and other assets
|
|
|
2.7
|
|
|
|
11.4
|
|
|
|
9.2
|
|
|
|
0.1
|
|
|
|
|
|
|
|
23.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
49.8
|
|
|
|
264.7
|
|
|
|
458.3
|
|
|
|
31.0
|
|
|
|
(152.1
|
)
|
|
|
651.7
|
|
Property, plant & equipment, net
|
|
|
45.2
|
|
|
|
183.8
|
|
|
|
240.9
|
|
|
|
9.3
|
|
|
|
|
|
|
|
479.2
|
|
Goodwill
|
|
|
25.6
|
|
|
|
4.5
|
|
|
|
161.0
|
|
|
|
|
|
|
|
|
|
|
|
191.1
|
|
Intangibles and other assets, net
|
|
|
1.3
|
|
|
|
94.0
|
|
|
|
275.2
|
|
|
|
8.7
|
|
|
|
|
|
|
|
379.2
|
|
Deferred income taxes
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
5.7
|
|
Other tax receivable
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Due from affiliates
|
|
|
40.5
|
|
|
|
181.1
|
|
|
|
3.0
|
|
|
|
|
|
|
|
(224.6
|
)
|
|
|
|
|
Investments in subsidiaries
|
|
|
448.2
|
|
|
|
281.1
|
|
|
|
742.2
|
|
|
|
|
|
|
|
(1,471.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
615.6
|
|
|
$
|
1,009.3
|
|
|
$
|
1,880.6
|
|
|
$
|
49.8
|
|
|
$
|
(1,848.2
|
)
|
|
$
|
1,707.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
|
|
|
$
|
|
|
|
$
|
35.8
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
35.8
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
81.5
|
|
|
|
0.6
|
|
|
|
1.3
|
|
|
|
|
|
|
|
83.4
|
|
Accounts payable and accrued liabilities
|
|
|
30.8
|
|
|
|
176.5
|
|
|
|
290.2
|
|
|
|
11.5
|
|
|
|
(152.1
|
)
|
|
|
356.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
30.8
|
|
|
|
258.0
|
|
|
|
326.6
|
|
|
|
12.8
|
|
|
|
(152.1
|
)
|
|
|
476.1
|
|
Long-term debt
|
|
|
0.1
|
|
|
|
533.5
|
|
|
|
1.9
|
|
|
|
1.0
|
|
|
|
|
|
|
|
536.5
|
|
Deferred income taxes
|
|
|
|
|
|
|
34.5
|
|
|
|
26.5
|
|
|
|
1.3
|
|
|
|
|
|
|
|
62.3
|
|
Other long-term liabilities
|
|
|
0.1
|
|
|
|
6.3
|
|
|
|
35.2
|
|
|
|
|
|
|
|
|
|
|
|
41.6
|
|
Due to affiliates
|
|
|
1.5
|
|
|
|
1.6
|
|
|
|
183.4
|
|
|
|
38.1
|
|
|
|
(224.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
32.5
|
|
|
|
833.9
|
|
|
|
573.6
|
|
|
|
53.2
|
|
|
|
(376.7
|
)
|
|
|
1,116.5
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, no par
|
|
|
392.1
|
|
|
|
509.4
|
|
|
|
1,633.2
|
|
|
|
40.9
|
|
|
|
(2,183.5
|
)
|
|
|
392.1
|
|
Additional paid-in-capital
|
|
|
46.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46.6
|
|
Retained earnings (deficit)
|
|
|
154.5
|
|
|
|
(379.2
|
)
|
|
|
(354.7
|
)
|
|
|
(52.5
|
)
|
|
|
786.4
|
|
|
|
154.5
|
|
Accumulated other comprehensive (loss) income
|
|
|
(10.1
|
)
|
|
|
45.2
|
|
|
|
28.5
|
|
|
|
0.7
|
|
|
|
(74.4
|
)
|
|
|
(10.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity
|
|
|
583.1
|
|
|
|
175.4
|
|
|
|
1,307.0
|
|
|
|
(10.9
|
)
|
|
|
(1,471.5
|
)
|
|
|
583.1
|
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.5
|
|
|
|
|
|
|
|
7.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
583.1
|
|
|
|
175.4
|
|
|
|
1,307.0
|
|
|
|
(3.4
|
)
|
|
|
(1,471.5
|
)
|
|
|
590.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
615.6
|
|
|
$
|
1,009.3
|
|
|
$
|
1,880.6
|
|
|
$
|
49.8
|
|
|
$
|
(1,848.2
|
)
|
|
$
|
1,707.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Consolidating Balance Sheets
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 28, 2013
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
1.5
|
|
|
$
|
1.1
|
|
|
$
|
39.1
|
|
|
$
|
5.5
|
|
|
$
|
|
|
|
$
|
47.2
|
|
Accounts receivable, net of allowance
|
|
|
19.0
|
|
|
|
114.1
|
|
|
|
229.8
|
|
|
|
15.5
|
|
|
|
(174.0
|
)
|
|
|
204.4
|
|
Income taxes recoverable
|
|
|
0.4
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.1
|
|
Inventories
|
|
|
16.2
|
|
|
|
77.0
|
|
|
|
132.9
|
|
|
|
7.0
|
|
|
|
|
|
|
|
233.1
|
|
Prepaid expenses and other assets
|
|
|
2.1
|
|
|
|
10.1
|
|
|
|
7.0
|
|
|
|
0.1
|
|
|
|
|
|
|
|
19.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
39.2
|
|
|
|
203.0
|
|
|
|
408.8
|
|
|
|
28.1
|
|
|
|
(174.0
|
)
|
|
|
505.1
|
|
Property, plant & equipment, net
|
|
|
47.9
|
|
|
|
190.2
|
|
|
|
235.7
|
|
|
|
9.9
|
|
|
|
|
|
|
|
483.7
|
|
Goodwill
|
|
|
25.8
|
|
|
|
4.5
|
|
|
|
107.0
|
|
|
|
|
|
|
|
|
|
|
|
137.3
|
|
Intangibles and other assets, net
|
|
|
1.3
|
|
|
|
88.0
|
|
|
|
196.2
|
|
|
|
10.7
|
|
|
|
|
|
|
|
296.2
|
|
Deferred income taxes
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.6
|
|
Other tax receivable
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Due from affiliates
|
|
|
39.6
|
|
|
|
125.7
|
|
|
|
2.9
|
|
|
|
41.9
|
|
|
|
(210.1
|
)
|
|
|
|
|
Investments in subsidiaries
|
|
|
507.8
|
|
|
|
246.7
|
|
|
|
697.7
|
|
|
|
|
|
|
|
(1,452.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
665.2
|
|
|
$
|
858.3
|
|
|
$
|
1,648.3
|
|
|
$
|
90.6
|
|
|
$
|
(1,836.3
|
)
|
|
$
|
1,426.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
|
|
|
$
|
16.2
|
|
|
$
|
34.6
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
50.8
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
2.4
|
|
|
|
0.6
|
|
|
|
0.9
|
|
|
|
|
|
|
|
3.9
|
|
Accounts payable and accrued liabilities
|
|
|
25.5
|
|
|
|
214.4
|
|
|
|
225.6
|
|
|
|
6.7
|
|
|
|
(174.0
|
)
|
|
|
298.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
25.5
|
|
|
|
233.0
|
|
|
|
260.8
|
|
|
|
7.6
|
|
|
|
(174.0
|
)
|
|
|
352.9
|
|
Long-term debt
|
|
|
0.1
|
|
|
|
399.6
|
|
|
|
2.2
|
|
|
|
1.6
|
|
|
|
|
|
|
|
403.5
|
|
Deferred income taxes
|
|
|
|
|
|
|
32.0
|
|
|
|
9.1
|
|
|
|
0.4
|
|
|
|
|
|
|
|
41.5
|
|
Other long-term liabilities
|
|
|
0.1
|
|
|
|
2.8
|
|
|
|
19.4
|
|
|
|
|
|
|
|
|
|
|
|
22.3
|
|
Due to affiliates
|
|
|
43.1
|
|
|
|
1.6
|
|
|
|
128.1
|
|
|
|
37.3
|
|
|
|
(210.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
68.8
|
|
|
|
669.0
|
|
|
|
419.6
|
|
|
|
46.9
|
|
|
|
(384.1
|
)
|
|
|
820.2
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, no par
|
|
|
392.8
|
|
|
|
509.4
|
|
|
|
1,557.5
|
|
|
|
82.5
|
|
|
|
(2,149.4
|
)
|
|
|
392.8
|
|
Additional paid-in-capital
|
|
|
44.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44.1
|
|
Retained earnings (deficit)
|
|
|
176.3
|
|
|
|
(344.1
|
)
|
|
|
(322.1
|
)
|
|
|
(49.8
|
)
|
|
|
716.0
|
|
|
|
176.3
|
|
Accumulated other comprehensive (loss) income
|
|
|
(16.8
|
)
|
|
|
24.0
|
|
|
|
(6.7
|
)
|
|
|
1.5
|
|
|
|
(18.8
|
)
|
|
|
(16.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity
|
|
|
596.4
|
|
|
|
189.3
|
|
|
|
1,228.7
|
|
|
|
34.2
|
|
|
|
(1,452.2
|
)
|
|
|
596.4
|
|
Non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.5
|
|
|
|
|
|
|
|
9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
596.4
|
|
|
|
189.3
|
|
|
|
1,228.7
|
|
|
|
43.7
|
|
|
|
(1,452.2
|
)
|
|
|
605.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
665.2
|
|
|
$
|
858.3
|
|
|
$
|
1,648.3
|
|
|
$
|
90.6
|
|
|
$
|
(1,836.3
|
)
|
|
$
|
1,426.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 28, 2014
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6.0
|
)
|
|
$
|
(20.9
|
)
|
|
$
|
16.1
|
|
|
$
|
3.0
|
|
|
$
|
3.2
|
|
|
$
|
(4.6
|
)
|
Depreciation & amortization
|
|
|
1.6
|
|
|
|
10.2
|
|
|
|
12.8
|
|
|
|
1.4
|
|
|
|
|
|
|
|
26.0
|
|
Amortization of financing fees
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.6
|
|
Share-based compensation expense
|
|
|
0.6
|
|
|
|
1.3
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
(Decrease) increase in deferred income taxes
|
|
|
(0.4
|
)
|
|
|
2.7
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
2.6
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
Asset impairments
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Write-off of financing fees and discount
|
|
|
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.0
|
|
Equity loss (income), net of distributions
|
|
|
18.4
|
|
|
|
(1.4
|
)
|
|
|
(13.8
|
)
|
|
|
|
|
|
|
(3.2
|
)
|
|
|
|
|
Intercompany dividends
|
|
|
15.9
|
|
|
|
2.6
|
|
|
|
9.3
|
|
|
|
|
|
|
|
(27.8
|
)
|
|
|
|
|
Other non-cash items
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.5
|
)
|
Net change in operating assets and liabilities, net of acquisitions
|
|
|
(18.3
|
)
|
|
|
(78.0
|
)
|
|
|
93.5
|
|
|
|
2.5
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
11.7
|
|
|
|
(79.7
|
)
|
|
|
118.2
|
|
|
|
7.2
|
|
|
|
(27.8
|
)
|
|
|
29.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash received
|
|
|
|
|
|
|
|
|
|
|
(80.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(80.8
|
)
|
Additions to property, plant & equipment
|
|
|
(0.3
|
)
|
|
|
(7.1
|
)
|
|
|
(4.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(11.8
|
)
|
Additions to intangibles and other assets
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(0.3
|
)
|
|
|
(8.4
|
)
|
|
|
(85.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(93.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(0.1
|
)
|
|
|
(296.6
|
)
|
|
|
(0.1
|
)
|
|
|
0.3
|
|
|
|
|
|
|
|
(296.5
|
)
|
Issuance of long-term debt
|
|
|
|
|
|
|
525.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
525.0
|
|
Borrowings under ABL
|
|
|
|
|
|
|
188.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
188.2
|
|
Payments under ABL
|
|
|
|
|
|
|
(284.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(284.3
|
)
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
|
|
|
|
(2.5
|
)
|
Financing fees
|
|
|
|
|
|
|
(7.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7.9
|
)
|
Common shares repurchased and cancelled
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.7
|
)
|
Dividends paid to shareholders
|
|
|
(5.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.7
|
)
|
Intercompany dividends
|
|
|
|
|
|
|
(9.3
|
)
|
|
|
(15.9
|
)
|
|
|
(2.6
|
)
|
|
|
27.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(8.5
|
)
|
|
|
115.1
|
|
|
|
(16.0
|
)
|
|
|
(4.8
|
)
|
|
|
27.8
|
|
|
|
113.6
|
|
Effect of exchange rate changes on cash
|
|
|
0.3
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash & cash equivalents
|
|
|
3.2
|
|
|
|
27.0
|
|
|
|
17.7
|
|
|
|
2.4
|
|
|
|
|
|
|
|
50.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period
|
|
|
4.0
|
|
|
|
5.9
|
|
|
|
26.4
|
|
|
|
4.3
|
|
|
|
|
|
|
|
40.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
7.2
|
|
|
$
|
32.9
|
|
|
$
|
44.1
|
|
|
$
|
6.7
|
|
|
$
|
|
|
|
$
|
90.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 28, 2014
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(9.9
|
)
|
|
$
|
(27.9
|
)
|
|
$
|
18.3
|
|
|
$
|
5.4
|
|
|
$
|
7.0
|
|
|
$
|
(7.1
|
)
|
Depreciation & amortization
|
|
|
3.1
|
|
|
|
20.4
|
|
|
|
24.9
|
|
|
|
2.9
|
|
|
|
|
|
|
|
51.3
|
|
Amortization of financing fees
|
|
|
0.1
|
|
|
|
1.0
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
1.2
|
|
Share-based compensation expense
|
|
|
0.8
|
|
|
|
2.3
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
(Decrease) increase in deferred income taxes
|
|
|
(1.3
|
)
|
|
|
2.6
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
1.5
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Asset impairments
|
|
|
0.9
|
|
|
|
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
1.9
|
|
Write-off of financing fees and discount
|
|
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
Equity loss (income), net of distributions
|
|
|
16.7
|
|
|
|
(2.7
|
)
|
|
|
(7.0
|
)
|
|
|
|
|
|
|
(7.0
|
)
|
|
|
|
|
Intercompany dividends
|
|
|
18.2
|
|
|
|
5.0
|
|
|
|
9.3
|
|
|
|
|
|
|
|
(32.5
|
)
|
|
|
|
|
Other non-cash items
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.7
|
)
|
Net change in operating assets and liabilities, net of acquisitions
|
|
|
(8.0
|
)
|
|
|
(136.9
|
)
|
|
|
64.0
|
|
|
|
2.7
|
|
|
|
|
|
|
|
(78.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
20.4
|
|
|
|
(132.6
|
)
|
|
|
110.8
|
|
|
|
11.0
|
|
|
|
(32.5
|
)
|
|
|
(22.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash received
|
|
|
|
|
|
|
|
|
|
|
(80.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(80.8
|
)
|
Additions to property, plant & equipment
|
|
|
(0.9
|
)
|
|
|
(12.2
|
)
|
|
|
(7.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(20.6
|
)
|
Additions to intangibles and other assets
|
|
|
|
|
|
|
(2.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(0.9
|
)
|
|
|
(15.0
|
)
|
|
|
(88.3
|
)
|
|
|
|
|
|
|
|
|
|
|
(104.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(0.1
|
)
|
|
|
(312.2
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(312.5
|
)
|
Issuance of long-term debt
|
|
|
|
|
|
|
525.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
525.0
|
|
Borrowings under ABL
|
|
|
|
|
|
|
283.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283.2
|
|
Payments under ABL
|
|
|
|
|
|
|
(299.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(299.4
|
)
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.8
|
)
|
|
|
|
|
|
|
(4.8
|
)
|
Financing fees
|
|
|
|
|
|
|
(7.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7.9
|
)
|
Common shares repurchased and cancelled
|
|
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.1
|
)
|
Dividends paid to shareholders
|
|
|
(10.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
Intercompany dividends
|
|
|
|
|
|
|
(9.3
|
)
|
|
|
(18.2
|
)
|
|
|
(5.0
|
)
|
|
|
32.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(14.0
|
)
|
|
|
179.4
|
|
|
|
(18.4
|
)
|
|
|
(9.8
|
)
|
|
|
32.5
|
|
|
|
169.7
|
|
Effect of exchange rate changes on cash
|
|
|
0.2
|
|
|
|
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash & cash equivalents
|
|
|
5.7
|
|
|
|
31.8
|
|
|
|
5.0
|
|
|
|
1.2
|
|
|
|
|
|
|
|
43.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period
|
|
|
1.5
|
|
|
|
1.1
|
|
|
|
39.1
|
|
|
|
5.5
|
|
|
|
|
|
|
|
47.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
7.2
|
|
|
$
|
32.9
|
|
|
$
|
44.1
|
|
|
$
|
6.7
|
|
|
$
|
|
|
|
$
|
90.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 29, 2013
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
16.5
|
|
|
$
|
1.6
|
|
|
$
|
16.3
|
|
|
$
|
3.4
|
|
|
$
|
(19.7
|
)
|
|
$
|
18.1
|
|
Depreciation & amortization
|
|
|
1.5
|
|
|
|
9.8
|
|
|
|
12.1
|
|
|
|
1.5
|
|
|
|
|
|
|
|
24.9
|
|
Amortization of financing fees
|
|
|
0.1
|
|
|
|
0.6
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
Share-based compensation expense
|
|
|
0.9
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.8
|
|
Increase (decrease) in deferred income taxes
|
|
|
0.1
|
|
|
|
2.4
|
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
1.6
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Equity loss, net of distributions
|
|
|
(16.7
|
)
|
|
|
(1.5
|
)
|
|
|
(1.5
|
)
|
|
|
|
|
|
|
19.7
|
|
|
|
|
|
Intercompany dividends
|
|
|
11.7
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
(12.4
|
)
|
|
|
|
|
Other non-cash items
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
Net change in operating assets and liabilities
|
|
|
2.2
|
|
|
|
(3.7
|
)
|
|
|
(12.8
|
)
|
|
|
1.0
|
|
|
|
|
|
|
|
(13.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
16.1
|
|
|
|
11.3
|
|
|
|
13.2
|
|
|
|
5.9
|
|
|
|
(12.4
|
)
|
|
|
34.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
(6.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(6.5
|
)
|
Additions to property, plant & equipment
|
|
|
(3.2
|
)
|
|
|
(7.3
|
)
|
|
|
(3.6
|
)
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
(14.6
|
)
|
Additions to intangibles and other assets
|
|
|
|
|
|
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(3.2
|
)
|
|
|
(9.0
|
)
|
|
|
(10.1
|
)
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
(22.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(0.1
|
)
|
|
|
(0.3
|
)
|
|
|
(18.5
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
(19.1
|
)
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
(0.7
|
)
|
Common shares repurchased and cancelled
|
|
|
(5.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.5
|
)
|
Dividends paid to shareholders
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.2
|
)
|
Intercompany dividends
|
|
|
|
|
|
|
|
|
|
|
(11.7
|
)
|
|
|
(0.7
|
)
|
|
|
12.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(16.8
|
)
|
|
|
(0.3
|
)
|
|
|
(30.2
|
)
|
|
|
(1.6
|
)
|
|
|
12.4
|
|
|
|
(36.5
|
)
|
Effect of exchange rate changes on cash
|
|
|
(1.1
|
)
|
|
|
|
|
|
|
0.2
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash & cash equivalents
|
|
|
(5.0
|
)
|
|
|
2.0
|
|
|
|
(26.9
|
)
|
|
|
3.7
|
|
|
|
|
|
|
|
(26.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period
|
|
|
38.3
|
|
|
|
11.5
|
|
|
|
39.5
|
|
|
|
3.7
|
|
|
|
|
|
|
|
93.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
33.3
|
|
|
$
|
13.5
|
|
|
$
|
12.6
|
|
|
$
|
7.4
|
|
|
$
|
|
|
|
$
|
66.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 29, 2013
|
|
|
|
Cott
Corporation
|
|
|
Cott
Beverages Inc.
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
Entries
|
|
|
Consolidated
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
16.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
19.6
|
|
|
$
|
4.7
|
|
|
$
|
(21.0
|
)
|
|
$
|
19.1
|
|
Depreciation & amortization
|
|
|
3.1
|
|
|
|
19.4
|
|
|
|
24.1
|
|
|
|
3.0
|
|
|
|
|
|
|
|
49.6
|
|
Amortization of financing fees
|
|
|
0.1
|
|
|
|
1.3
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
1.5
|
|
Share-based compensation expense
|
|
|
0.9
|
|
|
|
1.4
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
2.5
|
|
Increase (decrease) in deferred income taxes
|
|
|
0.5
|
|
|
|
1.8
|
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
1.6
|
|
Loss on disposal of property, plant & equipment
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Equity (income) loss, net of distributions
|
|
|
(19.0
|
)
|
|
|
(2.6
|
)
|
|
|
0.6
|
|
|
|
|
|
|
|
21.0
|
|
|
|
|
|
Intercompany dividends
|
|
|
22.5
|
|
|
|
2.9
|
|
|
|
|
|
|
|
|
|
|
|
(25.4
|
)
|
|
|
|
|
Other non-cash items
|
|
|
(0.1
|
)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
Net change in operating assets and liabilities
|
|
|
(4.5
|
)
|
|
|
(25.9
|
)
|
|
|
(70.2
|
)
|
|
|
1.3
|
|
|
|
|
|
|
|
(99.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
20.0
|
|
|
|
(1.8
|
)
|
|
|
(26.3
|
)
|
|
|
9.0
|
|
|
|
(25.4
|
)
|
|
|
(24.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
(6.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(6.5
|
)
|
Additions to property, plant & equipment
|
|
|
(4.9
|
)
|
|
|
(20.0
|
)
|
|
|
(8.3
|
)
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
(34.5
|
)
|
Additions to intangibles and other assets
|
|
|
|
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.9
|
)
|
Proceeds from insurance recoveries
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(4.9
|
)
|
|
|
(21.5
|
)
|
|
|
(14.8
|
)
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
(42.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(0.1
|
)
|
|
|
(0.7
|
)
|
|
|
(18.5
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
(19.6
|
)
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.8
|
)
|
|
|
|
|
|
|
(2.8
|
)
|
Common shares repurchased and cancelled
|
|
|
(8.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8.4
|
)
|
Dividends paid to shareholders
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.2
|
)
|
Intercompany dividends
|
|
|
|
|
|
|
|
|
|
|
(22.5
|
)
|
|
|
(2.9
|
)
|
|
|
25.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(19.7
|
)
|
|
|
(0.7
|
)
|
|
|
(41.0
|
)
|
|
|
(6.0
|
)
|
|
|
25.4
|
|
|
|
(42.0
|
)
|
Effect of exchange rate changes on cash
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(3.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash & cash equivalents
|
|
|
(6.5
|
)
|
|
|
(24.0
|
)
|
|
|
(83.8
|
)
|
|
|
1.7
|
|
|
|
|
|
|
|
(112.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period
|
|
|
39.8
|
|
|
|
37.5
|
|
|
|
96.4
|
|
|
|
5.7
|
|
|
|
|
|
|
|
179.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
33.3
|
|
|
$
|
13.5
|
|
|
$
|
12.6
|
|
|
$
|
7.4
|
|
|
$
|
|
|
|
$
|
66.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Note 17
Subsequent Events
On July 9, 2014 and July 24, 2014, we redeemed all of the remaining $79.1 million principal amount of our 2018 Notes. The redemption
included approximately $3.8 million in premium payments as well as accrued interest of approximately $2.5 million and approximately $0.8 million in deferred financing fees.
On July 29, 2014, our board of directors declared a dividend of $0.06 per share on common shares, payable in cash on September 10,
2014 to shareowners of record at the close of business on August 28, 2014.
37
Item 2.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations
|
This Managements Discussion and Analysis of Financial Condition and Results of Operations is intended to further the readers
understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with the financial statements included in this quarterly report on Form 10-Q and our annual report on Form 10-K for the
year ended December 28, 2013 (the 2013 Annual Report). These historical financial statements may not be indicative of our future performance. This discussion contains a number of forward-looking statements, all of which are based on
our current expectations and could be affected by the uncertainties and risks referred to under Risk Factors in Item 1A in our 2013 Annual Report and in Item 1A in this report.
Overview
We
are one of the worlds largest producers of beverages on behalf of retailers, brand owners and distributors. We market or supply over 500 retail, licensed and Company-owned brands in the United States, the United Kingdom/Europe, Canada and
Mexico. Our product lines include carbonated soft drinks (CSDs), 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, energy drinks and shots, sports products, new age beverages, ready-to-drink
teas, beverage concentrates, liquid enhancers, freezables and ready-to-drink alcoholic beverages, as well as hot chocolate, coffee, malt drinks, creamers/whiteners and cereals.
The beverage market is subject to some seasonal variations. Our beverage sales are generally higher during the warmer months and also can be
influenced by the timing of holidays and weather fluctuations. Our purchases of raw materials and related accounts payable fluctuate based upon the demand for our products as well as the timing of the fruit growing seasons. The seasonality of our
sales volume combined with the seasonal nature of fruit growing causes our working capital needs to fluctuate throughout the year, with inventory levels increasing in the first half of the year in order to meet high summer demand, and with fruit
inventories peaking during the last quarter of the year when purchases are made after the growing season. In addition, our accounts receivable balances decline in the fall as customers pay their higher-than-average outstanding balances from the
summer deliveries.
We typically operate at low margins and therefore relatively small changes in cost structures can materially affect
results.
Ingredient and packaging costs represent a significant portion of our cost of sales. These costs are subject to global and
regional commodity price trends. Our most significant commodities are aluminum, polyethylene terephthalate (PET) resin, corn, sugar, fruit and fruit concentrates. We attempt to manage our exposure to fluctuations in ingredient and
packaging costs by entering into fixed price commitments for a portion of our ingredient and packaging requirements and implementing price increases as needed.
We supply Walmart and its affiliated companies, under annual non-exclusive supply agreements, with a variety of products in the United States,
Canada, the United Kingdom, and Mexico, including CSDs, 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, energy drinks, sports products, new age beverages, and ready-to-drink teas. During the first six
months of 2014, we supplied Walmart with all of its private-label CSDs in the United States. In the event Walmart were to utilize additional suppliers to fulfill a portion of its requirements for CSDs, our operating results could be materially
adversely affected. Sales to Walmart for the six months ended June 28, 2014 and June 29, 2013 accounted for 27.0% and 30.7% of total revenue for those periods, respectively.
On May 30, 2014 (the Acquisition Date), our United Kingdom (U.K.) reporting segment acquired 100 percent of the
share capital of Aimia Foods (Holdings) Limited (the Aimia Acquisition), which includes its operating subsidiary company, Aimia Foods Limited (together referred as Aimia) pursuant to a Share Purchase Agreement dated
May 30, 2014. Aimia produces and distributes hot chocolate, coffee and cold cereal products primarily through food service, vending and retail channels. The aggregate purchase price for the Aimia Acquisition was £52.1 million ($87.6
million) payable in cash, which included a payment for estimated closing balance sheet working capital, £19.9 million ($33.5 million) in deferred consideration to be paid by September 30, 2014, and aggregate contingent consideration
of up to £16.0 million ($26.9 million), which is payable upon the achievement of certain performance measures during the twelve months ending July 1, 2016 (the Earn Out Period).
With the Aimia Acquisition, we have further diversified our product portfolio to include food and beverage products that are typically
measured for consumption on an individual serving size basis rather than in the 8 oz. equivalent measurement that we have used historically to report our volumes. As a result, we have determined to report our volumes on an individual serving size
basis by converting our volume into servings based on the U.S. Food and Drug Administration guidelines for single-serving sizes of our products. Previously reported volumes in prior periods have been adjusted to conform to this new measurement
standard. This change had no impact on previously reported amounts in our consolidated financial statements.
38
In June 2013, our U.K. reporting segment acquired 100 percent of the share capital of Cooke Bros.
Holdings Limited (the Calypso Acquisition), which includes the subsidiary companies Calypso Soft Drinks Limited and Mr. Freeze (Europe) Limited (together, Calypso). Calypso produces fruit juices, juice drinks, soft
drinks, and freeze products in the United Kingdom. The aggregate purchase price for the acquisition of Calypso was $12.1 million, which includes approximately $7.0 million paid at closing, a deferred payment of approximately $2.3 million paid on the
first anniversary of the closing date, and a deferred payment of approximately $3.0 million to be paid on the second anniversary of the closing date. The closing payment and first deferred payment were funded from available cash.
In 2010, we completed the acquisition of substantially all of the assets and liabilities of Cliffstar Corporation (Cliffstar) and
its affiliated companies (the Cliffstar Acquisition) for approximately $503.0 million in cash, $14.0 million in deferred consideration payable in equal installments over three years and contingent consideration of up to $55.0 million.
Contingent consideration of $34.9 million was ultimately paid to the seller of Cliffstar, and all claims for contingent consideration have been resolved.
Forward-looking Statements
In addition
to historical information, this report may contain statements relating to future events and future results. These statements are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable
Canadian securities legislation and involve known and unknown risks, uncertainties, future expectations and other factors that may cause actual results, performance or achievements of Cott Corporation to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements. Such statements include, but are not limited to, statements that relate to projections of sales, earnings, earnings per share, cash flows, capital
expenditures or other financial items, discussions of estimated future revenue enhancements and cost savings. These statements also relate to our business strategy, goals and expectations concerning our market position, future operations, margins,
profitability, liquidity and capital resources. Generally, words such as anticipate, believe, continue, could, endeavor, estimate, expect, intend,
may, will, plan, predict, project, should and similar terms and phrases are used to identify forward-looking statements in this report and in the documents incorporated in this
report by reference. These forward-looking statements reflect current expectations regarding future events and operating performance and are made only as of the date of this report.
The forward-looking statements are not guarantees of future performance or events and, by their nature, are based on certain estimates and
assumptions regarding interest and foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective income tax rates, which are subject to inherent risks and uncertainties. Material
factors or assumptions that were applied in drawing a conclusion or making an estimate set out in forward-looking statements may include, but are not limited to, assumptions regarding managements current plans and estimates, our ability to
remain a low cost supplier, and effective management of commodity costs. Although we believe the assumptions underlying these forward-looking statements are reasonable, any of these assumptions could prove to be inaccurate and, as a result, the
forward-looking statements based on those assumptions could prove to be incorrect. Our operations involve risks and uncertainties, many of which are outside of our control, and any one or any combination of these risks and uncertainties could also
affect whether the forward-looking statements ultimately prove to be correct. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. Risk Factors in our 2013 Annual Report, and those
described from time to time in our future reports filed with the Securities and Exchange Commission (SEC) and Canadian securities regulatory authorities.
The following are some of the factors that could affect our financial performance, including but not limited to, sales, earnings and cash
flows, or could cause actual results to differ materially from estimates contained in or underlying the forward-looking statements:
|
|
|
our ability to compete successfully in the highly competitive beverage category;
|
|
|
|
changes in consumer tastes and preferences for existing products and our ability to develop and timely launch new products that appeal to such changing consumer tastes and preferences;
|
|
|
|
loss of or a reduction in business with key customers, particularly Walmart;
|
|
|
|
fluctuations in commodity prices and our ability to pass on increased costs to our customers, and the impact of those increased prices on our volumes;
|
|
|
|
our ability to manage our operations successfully;
|
39
|
|
|
our ability to fully realize the potential benefit of acquisitions or other strategic opportunities that we pursue;
|
|
|
|
our ability to realize the expected benefits of the Aimia Acquisition because of integration difficulties and other challenges;
|
|
|
|
risks associated with the purchase agreement in connection with the Aimia Acquisition;
|
|
|
|
the effectiveness of Aimias system of internal control over financial reporting;
|
|
|
|
currency fluctuations that adversely affect the exchange between the U.S. dollar and the British pound sterling, the Euro, the Canadian dollar, the Mexican peso and other currencies;
|
|
|
|
our ability to maintain favorable arrangements and relationships with our suppliers;
|
|
|
|
our substantial indebtedness and our ability to meet our obligations, and risks of further increases to our indebtedness;
|
|
|
|
our ability to maintain compliance with the covenants and conditions under debt agreements;
|
|
|
|
fluctuations in interest rates which could increase our borrowing costs;
|
|
|
|
the impact of global financial events on our financial results;
|
|
|
|
our ability to fully realize the expected cost savings and/or operating efficiencies from our restructuring activities;
|
|
|
|
any disruption to production at our beverage concentrates or other manufacturing facilities;
|
|
|
|
our ability to protect our intellectual property;
|
|
|
|
compliance with product health and safety standards;
|
|
|
|
liability for injury or illness caused by the consumption of contaminated products;
|
|
|
|
liability and damage to our reputation as a result of litigation or legal proceedings;
|
|
|
|
changes in the legal and regulatory environment in which we operate;
|
|
|
|
the impact of proposed taxes on soda and other sugary drinks;
|
|
|
|
enforcement of compliance with the Ontario Environmental Protection Act;
|
|
|
|
unseasonably cold or wet weather, which could reduce demand for our beverages;
|
|
|
|
the impact of national, regional and global events, including those of a political, economic, business and competitive nature;
|
|
|
|
our ability to recruit, retain, and integrate new management;
|
|
|
|
our exposure to intangible asset risk;
|
|
|
|
our ability to renew our collective bargaining agreements on satisfactory terms;
|
|
|
|
disruptions in our information systems; or
|
|
|
|
volatility of our stock price.
|
We undertake no obligation to update any information contained
in this report or to publicly release the results of any revisions to forward-looking statements to reflect events or circumstances of which we may become aware of after the date of this report. Undue reliance should not be placed on forward-looking
statements, and all future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.
Non-GAAP Measures
In this report, we
supplement our reporting of financial measures determined in accordance with U.S. generally accepted accounting principles (GAAP) by utilizing certain non-GAAP financial measures. We exclude these items to better understand trends in the
business. We exclude the impact of foreign exchange to separate the impact of currency exchange rate changes from our results of operations.
We also utilize earnings before interest expense, taxes, depreciation and amortization (EBITDA), which is GAAP earnings (loss)
before interest expense, provision for income taxes, depreciation and amortization. We consider EBITDA to
40
be an indicator of operating performance. We also use EBITDA, as do analysts, lenders, investors and others, because it excludes certain items that can vary widely across different industries or
among companies within the same industry. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We also utilize adjusted EBITDA, which is
EBITDA excluding bond redemption costs, restructuring expenses and asset impairments, acquisition costs, and integration costs related to the Aimia Acquisition, the Calypso Acquisition or the Cliffstar Acquisition, as the case may be (Adjusted
EBITDA). We consider Adjusted EBITDA to be an indicator of our operating performance. Adjusted EBITDA excludes certain items to make more meaningful period-over-period comparisons of our ongoing core operations before material charges.
We also utilize adjusted net income (loss), which is GAAP earnings (loss) excluding bond redemption costs, acquisition costs, integration
expenses, restructuring expenses and asset impairments, as well as adjusted earnings (loss) per diluted share, which is adjusted net income (loss) divided by diluted weighted average outstanding shares. We consider these measures to be indicators of
our operating performance. These measures exclude certain items to make period-over-period comparisons of our ongoing core operations before material charges.
We also utilize adjusted gross profit as a percentage of revenue, which is GAAP gross profit excluding purchase accounting inventory step-up
divided by GAAP revenue. We consider adjusted gross profit as a percentage of revenue to be an indicator of our operating performance.
We
also utilize adjusted selling, general and administrative expenses (SG&A), which is GAAP SG&A excluding acquisition and integration costs. We consider adjusted SG&A expenses to be an indicator of our performance.
Additionally, we supplement our reporting of net cash provided by operating activities determined in accordance with GAAP by excluding capital
expenditures to present free cash flow and adjusted free cash flow (which is free cash flow excluding bond redemption cash costs), which management believes provides useful information to investors about the amount of cash generated by the business
that, after the acquisition of property and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, paying dividends, and strengthening the balance sheet.
Because we use these adjusted financial results in the management of our business and to understand underlying business performance, we
believe this supplemental information is useful to investors for their independent evaluation and understanding of our business performance and the performance of our management. The non-GAAP financial measures described above are in addition to,
and not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this report reflect our judgment of particular items, and may be
different from, and therefore may not be comparable to, similarly titled measures reported by other companies.
Summary Financial Results
Our net loss for the three months ended June 28, 2014 (the second quarter) and the six months ended June 28,
2014 (first half of 2014 or year to date) was $6.0 million or $0.06 per diluted share and $9.9 million or $0.11 per diluted share, respectively, compared to net income of $16.5 million or $0.17 per diluted share and $16.5
million or $0.17 per diluted share for the three and six months ended June 29, 2013, respectively.
The following items of
significance affected our financial results for the first half of 2014:
|
|
|
Servings in equivalent cases, excluding Aimia and concentrate servings, increased 4.4% due primarily to a combination of increased juice and drinks volume with additional contract manufacturing business wins and volume
from the Calypso business partially offset by the prolonged aggressive CSD promotional activity from the national brands in North America, the general market decline in the North America CSD category, as well as a reduction in case pack water in
both North America and the U.K.;
|
|
|
|
revenue decreased 4.0% from the comparable prior year period due primarily to adverse CSD volume due to continued aggressive promotional activity from the national brands as well as an overall mix shift toward contract
manufacturing. Excluding the impact of foreign exchange, revenue decreased 5.3% from the comparable prior year period;
|
|
|
|
gross profit as a percentage of revenue decreased to 12.1% compared to 12.4% from the comparable prior year period due primarily to the competitive environment and lower North America volume alongside additional freight
and operating costs caused by inclement weather in North America as well as increased freight costs from internal transfers associated with the initial start-up and expansion of contract manufacturing volume, offset in part by a product mix shift
into higher margin products; adjusted gross profit as a percentage of revenue decreased to 12.2% compared to 12.5% from the comparable prior year period;
|
41
|
|
|
SG&A expenses for the period increased to $89.2 million from $83.0 million in the comparable prior year period due primarily to higher employee-related incentive costs in the current year and higher
acquisition-related expenses as well as the addition of the Calypso and Aimia businesses; adjusted selling, general and administrative expenses for the period increased to $86.3 million from $81.5 million in the comparable prior year period;
|
|
|
|
other expense, net was $17.5 million for the period compared to other expense of $0.3 million in the comparable prior year period due primarily to the purchase of $295.9 million aggregate principal amount of our 8.125%
Senior Notes due 2018 (2018 Notes) in a cash tender offer in the second quarter partially offset by a favorable legal settlement;
|
|
|
|
interest expense decreased by $7.9 million, or 30.3%, as compared to the prior year period due primarily to the redemption of our 8.375% Senior Notes due 2017 (the 2017 Notes) and the amendment to our asset
based lending (ABL) facility to more favorable terms in the prior year;
|
|
|
|
income tax expense was $1.6 million compared to an income tax expense of $2.2 million in the comparable prior year period due primarily to both a reduction from pre-tax income in the prior year period to a pre-tax loss
in the current year period as well as current year period pre-tax income in certain jurisdictions that is not offset by losses in other jurisdictions that have valuation allowances;
|
|
|
|
Adjusted EBITDA decreased to $89.6 million from $100.8 million in the comparable prior year period due to the items listed above. Reported EBITDA decreased to $64.0 million from $97.0 million in the comparable prior
year period; and
|
|
|
|
Adjusted net income and adjusted net income per diluted share were $14.0 million and $0.15, respectively, compared to adjusted net income of $20.0 million and adjusted earnings per diluted share of $0.21 in the
comparable prior year period, respectively.
|
The following items of significance affected our financial results for
the first half of 2013:
|
|
|
filled beverage case volume decreased 8.7% during the period due primarily to lower case pack water sales in North America, the general market decline in the North American CSD category, increased promotional activity
from the national brands in North America, and inclement weather in the United Kingdom and Canada;
|
|
|
|
revenue decreased 7.0% from the comparable prior year period due primarily to lower global volumes, slightly offset by an increase in average price per case in North America. Absent foreign exchange impact, revenue
decreased 6.6% from the comparable prior year period;
|
|
|
|
gross profit as a percentage of revenue declined to 12.4% compared to $13.5% from the comparable prior year period due primarily to lower global volumes which resulted in unfavorable fixed cost absorption;
|
|
|
|
SG&A expenses for the period decreased to $83.0 million from $90.6 million in the comparable prior year period due primarily to lower employee-related costs compared to a higher annual incentive accrual in the prior
year, lower legal expenses and reduced costs associated with our information technology strategy;
|
|
|
|
our loss on disposal of property, plant and equipment was related to the disposal of approximately $0.3 million of machinery and equipment that was no longer being used in our U.S. and U.K. operating segments;
|
|
|
|
other expense was $0.3 million during the period compared to other income of $0.7 million in the comparable prior year period due primarily to a gain on bargain purchase in the amount of $0.9 million recognized in the
prior year period;
|
|
|
|
interest expense decreased by $1.4 million as a result of favorable terms associated with amending our ABL facility;
|
|
|
|
income tax expense was $2.2 million compared to $4.3 million in the comparable prior year period, due primarily to a reduction in pretax income;
|
|
|
|
Adjusted EBITDA decreased 11.7% to $100.8 million from $114.2 million in the comparable prior year period due to the items listed above. Reported EBITDA decreased to $97.0 million from $112.4 million in the comparable
prior year period; and
|
|
|
|
Adjusted net income and adjusted earnings per diluted share were $20.0 million and $0.21, respectively, compared to $32.8 million and $0.34 in the prior year, respectively.
|
42
The following table summarizes our Consolidated Statements of Operations as a percentage of
revenue for the three and six months ended June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 28, 2014
|
|
|
June 29, 2013
|
|
|
June 28, 2014
|
|
|
June 29, 2013
|
|
(in millions of U.S. dollars)
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
Revenue, net
|
|
|
550.9
|
|
|
|
100.0
|
|
|
|
563.8
|
|
|
|
100.0
|
|
|
|
1,026.0
|
|
|
|
100.0
|
|
|
|
1,069.2
|
|
|
|
100.0
|
|
Cost of sales
|
|
|
477.1
|
|
|
|
86.6
|
|
|
|
487.2
|
|
|
|
86.4
|
|
|
|
901.9
|
|
|
|
87.9
|
|
|
|
936.2
|
|
|
|
87.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
73.8
|
|
|
|
13.4
|
|
|
|
76.6
|
|
|
|
13.6
|
|
|
|
124.1
|
|
|
|
12.1
|
|
|
|
133.0
|
|
|
|
12.4
|
|
Selling, general, and administrative expenses
|
|
|
46.9
|
|
|
|
8.5
|
|
|
|
41.7
|
|
|
|
7.4
|
|
|
|
89.2
|
|
|
|
8.7
|
|
|
|
83.0
|
|
|
|
7.8
|
|
Loss on disposal of property, plant and equipment
|
|
|
0.4
|
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
0.5
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
Restructuring and asset impairments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
0.1
|
|
|
|
|
|
|
|
2.0
|
|
|
|
0.4
|
|
|
|
2.3
|
|
|
|
0.2
|
|
|
|
2.0
|
|
|
|
0.2
|
|
Asset impairments
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
1.9
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
26.1
|
|
|
|
4.7
|
|
|
|
32.6
|
|
|
|
5.8
|
|
|
|
30.2
|
|
|
|
2.9
|
|
|
|
47.7
|
|
|
|
4.5
|
|
Other expense, net
|
|
|
19.8
|
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
17.5
|
|
|
|
1.7
|
|
|
|
0.3
|
|
|
|
|
|
Interest expense, net
|
|
|
8.4
|
|
|
|
1.5
|
|
|
|
12.8
|
|
|
|
2.3
|
|
|
|
18.2
|
|
|
|
1.8
|
|
|
|
26.1
|
|
|
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(2.1
|
)
|
|
|
(0.4
|
)
|
|
|
19.8
|
|
|
|
3.5
|
|
|
|
(5.5
|
)
|
|
|
(0.5
|
)
|
|
|
21.3
|
|
|
|
2.0
|
|
Income tax expense
|
|
|
2.5
|
|
|
|
0.5
|
|
|
|
1.7
|
|
|
|
0.3
|
|
|
|
1.6
|
|
|
|
0.2
|
|
|
|
2.2
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(4.6
|
)
|
|
|
(0.8
|
)
|
|
|
18.1
|
|
|
|
3.2
|
|
|
|
(7.1
|
)
|
|
|
(0.7
|
)
|
|
|
19.1
|
|
|
|
1.8
|
|
Less: Net income attributable to non-controlling interests
|
|
|
1.4
|
|
|
|
0.3
|
|
|
|
1.6
|
|
|
|
0.3
|
|
|
|
2.8
|
|
|
|
0.3
|
|
|
|
2.6
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation
|
|
|
(6.0
|
)
|
|
|
(1.1
|
)
|
|
|
16.5
|
|
|
|
2.9
|
|
|
|
(9.9
|
)
|
|
|
(1.0
|
)
|
|
|
16.5
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
26.0
|
|
|
|
4.7
|
|
|
|
24.9
|
|
|
|
4.4
|
|
|
|
51.3
|
|
|
|
5.0
|
|
|
|
49.6
|
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes our revenue and operating income (loss) by reporting segment for the three and
six months ended June 28, 2014 and June 29, 2013, respectively (for purposes of the table below, our Corporate oversight function (Corporate) is not treated as a segment; it includes certain general and administrative costs
that are not allocated to any of the reporting segments):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28, 2014
|
|
|
June 29, 2013
|
|
|
June 28, 2014
|
|
|
June 29, 2013
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
373.5
|
|
|
$
|
418.1
|
|
|
$
|
718.2
|
|
|
$
|
811.3
|
|
United Kingdom
|
|
|
159.1
|
|
|
|
127.9
|
|
|
|
274.7
|
|
|
|
225.3
|
|
All Other
|
|
|
18.3
|
|
|
|
17.8
|
|
|
|
33.1
|
|
|
|
32.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
550.9
|
|
|
$
|
563.8
|
|
|
$
|
1,026.0
|
|
|
$
|
1,069.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
15.1
|
|
|
$
|
23.8
|
|
|
$
|
17.4
|
|
|
$
|
40.5
|
|
United Kingdom
|
|
|
10.8
|
|
|
|
9.1
|
|
|
|
13.0
|
|
|
|
9.1
|
|
All Other
|
|
|
3.1
|
|
|
|
2.6
|
|
|
|
5.6
|
|
|
|
3.9
|
|
Corporate
|
|
|
(2.9
|
)
|
|
|
(2.9
|
)
|
|
|
(5.8
|
)
|
|
|
(5.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
26.1
|
|
|
$
|
32.6
|
|
|
$
|
30.2
|
|
|
$
|
47.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
An equivalent case represents a case of twenty four single servings. The following table
summarizes our servings in equivalent cases by reporting segment, excluding Aimia, for the three and six months ended June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions)
|
|
June 28, 2014
|
|
|
June 29, 2013
|
|
|
June 28, 2014
|
|
|
June 28, 2014
|
|
Servings in equivalent cases - including concentrate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
176.0
|
|
|
|
175.0
|
|
|
|
333.9
|
|
|
|
347.6
|
|
United Kingdom
|
|
|
69.4
|
|
|
|
66.8
|
|
|
|
125.7
|
|
|
|
121.4
|
|
All Other
|
|
|
101.2
|
|
|
|
93.2
|
|
|
|
189.6
|
|
|
|
161.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
346.6
|
|
|
|
335.0
|
|
|
|
649.2
|
|
|
|
630.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Servings in equivalent cases - excluding concentrate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
151.1
|
|
|
|
156.5
|
|
|
|
286.3
|
|
|
|
304.5
|
|
United Kingdom
|
|
|
66.1
|
|
|
|
62.4
|
|
|
|
119.5
|
|
|
|
112.6
|
|
All Other
|
|
|
28.4
|
|
|
|
26.3
|
|
|
|
62.3
|
|
|
|
31.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
245.6
|
|
|
|
245.2
|
|
|
|
468.1
|
|
|
|
448.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues are attributed to reporting segments based on the location of the customer.
During the second quarter of 2014, we reclassified certain products in our North America reporting segment which impacts revenue and servings
in equivalent cases by product but does not impact total revenue or total servings in equivalent cases. Prior year reported revenue and servings in equivalent cases by product for our North America reporting segment has been revised to reflect this
reclassification. The following tables summarize revenue and servings in equivalent cases by product by reporting segment, excluding Aimia, for the three and six months ended June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 28,
2014
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
133.7
|
|
|
$
|
47.9
|
|
|
$
|
2.4
|
|
|
$
|
184.0
|
|
Juice and drinks
|
|
|
106.8
|
|
|
|
13.7
|
|
|
|
1.0
|
|
|
|
121.5
|
|
Concentrate
|
|
|
4.0
|
|
|
|
0.5
|
|
|
|
7.6
|
|
|
|
12.1
|
|
Sparkling Waters/Mixers
|
|
|
78.5
|
|
|
|
21.6
|
|
|
|
0.8
|
|
|
|
100.9
|
|
Energy
|
|
|
6.7
|
|
|
|
34.1
|
|
|
|
2.9
|
|
|
|
43.7
|
|
All other products
|
|
|
43.8
|
|
|
|
41.3
|
|
|
|
3.6
|
|
|
|
88.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
373.5
|
|
|
$
|
159.1
|
|
|
$
|
18.3
|
|
|
$
|
550.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 28,
2014
|
|
(in millions)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
|
|
|
|
|
Servings in equivalent cases - including concentrate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
62.2
|
|
|
|
21.6
|
|
|
|
1.3
|
|
|
|
85.1
|
|
Juice and drinks
|
|
|
29.7
|
|
|
|
2.7
|
|
|
|
0.3
|
|
|
|
32.7
|
|
Concentrate
|
|
|
24.9
|
|
|
|
3.3
|
|
|
|
72.8
|
|
|
|
101.0
|
|
Sparkling Waters/Mixers
|
|
|
35.0
|
|
|
|
10.9
|
|
|
|
0.5
|
|
|
|
46.4
|
|
Energy
|
|
|
1.3
|
|
|
|
7.0
|
|
|
|
1.9
|
|
|
|
10.2
|
|
All other products
|
|
|
22.9
|
|
|
|
23.9
|
|
|
|
24.4
|
|
|
|
71.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
176.0
|
|
|
|
69.4
|
|
|
|
101.2
|
|
|
|
346.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 28,
2014
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
254.2
|
|
|
$
|
86.0
|
|
|
$
|
3.6
|
|
|
$
|
343.8
|
|
Juice and drinks
|
|
|
225.8
|
|
|
|
25.5
|
|
|
|
1.7
|
|
|
|
253.0
|
|
Concentrate
|
|
|
7.6
|
|
|
|
1.2
|
|
|
|
13.5
|
|
|
|
22.3
|
|
Sparkling Waters/Mixers
|
|
|
144.1
|
|
|
|
38.2
|
|
|
|
1.6
|
|
|
|
183.9
|
|
Energy
|
|
|
13.3
|
|
|
|
61.1
|
|
|
|
4.6
|
|
|
|
79.0
|
|
All other products
|
|
|
73.2
|
|
|
|
62.7
|
|
|
|
8.1
|
|
|
|
144.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
718.2
|
|
|
$
|
274.7
|
|
|
$
|
33.1
|
|
|
$
|
1,026.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 28,
2014
|
|
(in millions)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
|
|
|
|
|
Servings in equivalent cases - including concentrate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
118.0
|
|
|
|
39.7
|
|
|
|
1.8
|
|
|
|
159.5
|
|
Juice and drinks
|
|
|
61.3
|
|
|
|
4.9
|
|
|
|
0.4
|
|
|
|
66.6
|
|
Concentrate
|
|
|
47.6
|
|
|
|
6.2
|
|
|
|
127.3
|
|
|
|
181.1
|
|
Sparkling Waters/Mixers
|
|
|
64.4
|
|
|
|
20.0
|
|
|
|
1.0
|
|
|
|
85.4
|
|
Energy
|
|
|
2.6
|
|
|
|
12.7
|
|
|
|
2.9
|
|
|
|
18.2
|
|
All other products
|
|
|
40.0
|
|
|
|
42.2
|
|
|
|
56.2
|
|
|
|
138.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
333.9
|
|
|
|
125.7
|
|
|
|
189.6
|
|
|
|
649.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 29,
2013
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
168.8
|
|
|
$
|
40.0
|
|
|
$
|
3.8
|
|
|
$
|
212.6
|
|
Juice and drinks
|
|
|
108.6
|
|
|
|
5.6
|
|
|
|
0.9
|
|
|
|
115.1
|
|
Concentrate
|
|
|
2.8
|
|
|
|
0.6
|
|
|
|
7.3
|
|
|
|
10.7
|
|
Sparkling Waters/Mixers
|
|
|
79.9
|
|
|
|
18.4
|
|
|
|
1.0
|
|
|
|
99.3
|
|
Energy
|
|
|
8.3
|
|
|
|
36.8
|
|
|
|
1.5
|
|
|
|
46.6
|
|
All other products
|
|
|
49.7
|
|
|
|
26.5
|
|
|
|
3.3
|
|
|
|
79.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
418.1
|
|
|
$
|
127.9
|
|
|
$
|
17.8
|
|
|
$
|
563.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 29,
2013
|
|
(in millions)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
|
|
|
|
|
Servings in equivalent cases - including concentrate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
73.6
|
|
|
|
20.3
|
|
|
|
2.2
|
|
|
|
96.1
|
|
Juice and drinks
|
|
|
26.1
|
|
|
|
1.5
|
|
|
|
0.2
|
|
|
|
27.8
|
|
Concentrate
|
|
|
18.5
|
|
|
|
4.4
|
|
|
|
66.9
|
|
|
|
89.8
|
|
Sparkling Waters/Mixers
|
|
|
33.4
|
|
|
|
11.0
|
|
|
|
1.2
|
|
|
|
45.6
|
|
Energy
|
|
|
1.5
|
|
|
|
8.4
|
|
|
|
0.9
|
|
|
|
10.8
|
|
All other products
|
|
|
21.9
|
|
|
|
21.2
|
|
|
|
21.8
|
|
|
|
64.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
175.0
|
|
|
|
66.8
|
|
|
|
93.2
|
|
|
|
335.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 29,
2013
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
319.7
|
|
|
$
|
72.7
|
|
|
$
|
7.4
|
|
|
$
|
399.8
|
|
Juice and drinks
|
|
|
225.8
|
|
|
|
8.7
|
|
|
|
1.4
|
|
|
|
235.9
|
|
Concentrate
|
|
|
5.9
|
|
|
|
1.2
|
|
|
|
14.1
|
|
|
|
21.2
|
|
Sparkling Waters/Mixers
|
|
|
149.3
|
|
|
|
33.1
|
|
|
|
2.3
|
|
|
|
184.7
|
|
Energy
|
|
|
14.4
|
|
|
|
64.8
|
|
|
|
3.1
|
|
|
|
82.3
|
|
All other products
|
|
|
96.2
|
|
|
|
44.8
|
|
|
|
4.3
|
|
|
|
145.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
811.3
|
|
|
$
|
225.3
|
|
|
$
|
32.6
|
|
|
$
|
1,069.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 29,
2013
|
|
(in millions)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
|
Total
|
|
|
|
|
|
|
Servings in equivalent cases - including concentrate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
141.2
|
|
|
|
37.7
|
|
|
|
4.6
|
|
|
|
183.5
|
|
Juice and drinks
|
|
|
55.1
|
|
|
|
2.3
|
|
|
|
0.3
|
|
|
|
57.7
|
|
Concentrate
|
|
|
43.1
|
|
|
|
8.8
|
|
|
|
130.2
|
|
|
|
182.1
|
|
Sparkling Waters/Mixers
|
|
|
62.8
|
|
|
|
20.0
|
|
|
|
2.6
|
|
|
|
85.4
|
|
Energy
|
|
|
2.5
|
|
|
|
14.7
|
|
|
|
1.7
|
|
|
|
18.9
|
|
All other products
|
|
|
42.9
|
|
|
|
37.9
|
|
|
|
22.2
|
|
|
|
103.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
347.6
|
|
|
|
121.4
|
|
|
|
161.6
|
|
|
|
630.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations
The following tables summarize the change in revenue by reporting segment for the three and six months ended June 28, 2014 and
June 29, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
June 28, 2014
|
|
(in millions of U.S. dollars, except percentage amounts)
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
Change in revenue
|
|
$
|
(12.9
|
)
|
|
$
|
(44.6
|
)
|
|
$
|
31.2
|
|
|
$
|
0.5
|
|
Impact of foreign exchange
1
|
|
|
(10.6
|
)
|
|
|
3.0
|
|
|
|
(13.9
|
)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(23.5
|
)
|
|
$
|
(41.6
|
)
|
|
$
|
17.3
|
|
|
$
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
(2.3
|
)%
|
|
|
(10.7
|
)%
|
|
|
24.4
|
%
|
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
(4.2
|
)%
|
|
|
(9.9
|
)%
|
|
|
13.5
|
%
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 28, 2014
|
|
(in millions of U.S. dollars, except percentage amounts)
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
Change in revenue
|
|
$
|
(43.2
|
)
|
|
$
|
(93.1
|
)
|
|
$
|
49.4
|
|
|
$
|
0.5
|
|
Impact of foreign exchange
1
|
|
|
(13.9
|
)
|
|
|
6.2
|
|
|
|
(20.6
|
)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(57.1
|
)
|
|
$
|
(86.9
|
)
|
|
$
|
28.8
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
(4.0
|
)%
|
|
|
(11.5
|
)%
|
|
|
21.9
|
%
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
(5.3
|
)%
|
|
|
(10.7
|
)%
|
|
|
12.8
|
%
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
1.
|
Impact of foreign exchange is the difference between the current years revenue translated utilizing the current years average foreign exchange rates less the current years revenue translated utilizing
the prior years average foreign exchange rates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
June 29, 2013
|
|
(in millions of U.S. dollars, except percentage amounts)
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
Change in revenue
|
|
$
|
(62.0
|
)
|
|
$
|
(57.6
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(0.8
|
)
|
Impact of foreign exchange
1
|
|
|
3.9
|
|
|
|
0.8
|
|
|
|
3.7
|
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(58.1
|
)
|
|
$
|
(56.8
|
)
|
|
$
|
0.1
|
|
|
$
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
(9.9
|
)%
|
|
|
(12.1
|
)%
|
|
|
(2.7
|
)%
|
|
|
(4.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
(9.3
|
)%
|
|
|
(11.9
|
)%
|
|
|
0.1
|
%
|
|
|
(7.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 29, 2013
|
|
(in millions of U.S. dollars, except percentage amounts)
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
All Other
|
|
Change in revenue
|
|
$
|
(80.4
|
)
|
|
$
|
(72.5
|
)
|
|
$
|
(5.4
|
)
|
|
$
|
(2.5
|
)
|
Impact of foreign exchange
1
|
|
|
4.5
|
|
|
|
0.9
|
|
|
|
4.4
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(75.9
|
)
|
|
$
|
(71.6
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(3.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
(7.0
|
)%
|
|
|
(8.2
|
)%
|
|
|
(2.3
|
)%
|
|
|
(7.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
(6.6
|
)%
|
|
|
(8.1
|
)%
|
|
|
(0.4
|
)%
|
|
|
(9.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Impact of foreign exchange is the difference between the current years revenue translated utilizing the current years average foreign exchange rates less the current years revenue translated utilizing
the prior years average foreign exchange rates.
|
The following table summarizes our EBITDA and Adjusted EBITDA for the
three and six months ended June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation
|
|
$
|
(6.0
|
)
|
|
$
|
16.5
|
|
|
$
|
(9.9
|
)
|
|
$
|
16.5
|
|
Interest expense, net
|
|
|
8.4
|
|
|
|
12.8
|
|
|
|
18.2
|
|
|
|
26.1
|
|
Income tax expense
|
|
|
2.5
|
|
|
|
1.7
|
|
|
|
1.6
|
|
|
|
2.2
|
|
Depreciation & amortization
|
|
|
26.0
|
|
|
|
24.9
|
|
|
|
51.3
|
|
|
|
49.6
|
|
Net income attributable to non-controlling interests
|
|
|
1.4
|
|
|
|
1.6
|
|
|
|
2.8
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
32.3
|
|
|
$
|
57.5
|
|
|
$
|
64.0
|
|
|
$
|
97.0
|
|
|
|
|
|
|
Restructuring and asset impairments
|
|
|
0.4
|
|
|
|
2.0
|
|
|
|
4.2
|
|
|
|
2.0
|
|
Bond redemption and other financing costs
|
|
|
19.6
|
|
|
|
|
|
|
|
20.5
|
|
|
|
|
|
Tax reorganization and regulatory costs
|
|
|
0.2
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
Acquisition and integration
|
|
|
3.0
|
|
|
|
1.2
|
|
|
|
0.6
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
55.5
|
|
|
$
|
60.7
|
|
|
$
|
89.6
|
|
|
$
|
100.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
The following table summarizes our adjusted net income and adjusted earnings per share for the
three and six months ended June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation
|
|
$
|
(6.0
|
)
|
|
$
|
16.5
|
|
|
$
|
(9.9
|
)
|
|
$
|
16.5
|
|
|
|
|
|
|
Restructuring and asset impairments, net of tax
|
|
|
0.3
|
|
|
|
1.9
|
|
|
|
3.2
|
|
|
|
1.9
|
|
Bond redemption and other financing costs, net of tax
|
|
|
19.6
|
|
|
|
|
|
|
|
20.5
|
|
|
|
|
|
Tax reorganization and regulatory costs, net of tax
|
|
|
0.2
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
Acquisition and integration, net of tax
|
|
|
2.4
|
|
|
|
1.1
|
|
|
|
(0.1
|
)
|
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributed to Cott Corporation
|
|
$
|
16.5
|
|
|
$
|
19.5
|
|
|
$
|
14.0
|
|
|
$
|
20.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per common share attributed to Cott Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.18
|
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.21
|
|
Diluted
|
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.21
|
|
|
|
|
|
|
Weighted average outstanding shares (millions) attributed to Cott Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
94.2
|
|
|
|
95.2
|
|
|
|
94.3
|
|
|
|
95.3
|
|
Diluted
|
|
|
94.9
|
|
|
|
96.0
|
|
|
|
95.2
|
|
|
|
96.0
|
|
The following unaudited financial information for the three and six months ended June 28, 2014 represents
the activity of Calypso and Aimia for such periods. Calypso and Aimia were combined with our United Kingdom operations as of their respective dates of acquisition:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
For the Three
Months Ended
June 28, 2014
|
|
|
For the Six
Months Ended
June 28, 2014
|
|
Revenue
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
$
|
159.1
|
|
|
$
|
274.7
|
|
Less:
|
|
|
|
|
|
|
|
|
Calypso
|
|
|
(21.3
|
)
|
|
|
(35.5
|
)
|
Aimia
|
|
|
(7.0
|
)
|
|
|
(7.0
|
)
|
|
|
|
|
|
|
|
|
|
United Kingdom excluding Calypso and Aimia
|
|
$
|
130.8
|
|
|
$
|
232.2
|
|
|
|
|
|
|
|
|
|
|
48
The following table summarizes our free cash flow for the three and six months ended
June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
29.6
|
|
|
$
|
34.1
|
|
Less: Capital expenditures
|
|
|
(11.8
|
)
|
|
|
(14.6
|
)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
17.8
|
|
|
$
|
19.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(22.9
|
)
|
|
$
|
(24.5
|
)
|
Less: Capital expenditures
|
|
|
(20.6
|
)
|
|
|
(34.5
|
)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
(43.5
|
)
|
|
$
|
(59.0
|
)
|
|
|
|
|
|
|
|
|
|
The following table summarizes our adjusted free cash flow for the three and six months ended June 28,
2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Free Cash Flow
|
|
$
|
17.8
|
|
|
$
|
19.5
|
|
Plus: Bond redemption cash costs
|
|
|
16.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
$
|
34.2
|
|
|
$
|
19.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Free Cash Flow
|
|
$
|
(43.5
|
)
|
|
$
|
(59.0
|
)
|
Plus: Bond redemption cash costs
|
|
|
17.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
$
|
(26.5
|
)
|
|
$
|
(59.0
|
)
|
|
|
|
|
|
|
|
|
|
The following table summarizes our adjusted selling, general and administrative expenses for the three and six
months ended June 28, 2014 and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Selling, general and administrative expenses
|
|
$
|
46.9
|
|
|
$
|
41.7
|
|
Less: Acquisition and integration costs
|
|
|
1.8
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses
|
|
$
|
45.1
|
|
|
$
|
40.8
|
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29
2013
|
|
|
|
|
Selling, general and administrative expenses
|
|
$
|
89.2
|
|
|
$
|
83.0
|
|
Less: Acquisition and integration costs
|
|
|
2.9
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses
|
|
$
|
86.3
|
|
|
$
|
81.5
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes our adjusted gross profit for the three and six months ended June 28, 2014
and June 29, 2013, respectively:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars, except percentage amounts)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Revenue, net
|
|
$
|
550.9
|
|
|
$
|
563.8
|
|
|
|
|
Gross profit
|
|
$
|
73.8
|
|
|
$
|
76.6
|
|
Plus: Inventory step-up
|
|
|
1.2
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
|
|
$
|
75.0
|
|
|
$
|
76.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit as a percentage of revenue
|
|
|
13.6
|
%
|
|
|
13.6
|
%
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
Revenue, net
|
|
$
|
1,026.0
|
|
|
$
|
1,069.2
|
|
|
|
|
Gross profit
|
|
|
124.1
|
|
|
|
133.0
|
|
Plus: Inventory step-up
|
|
|
1.2
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit
|
|
$
|
125.3
|
|
|
$
|
133.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit as a percentage of revenue
|
|
|
12.2
|
%
|
|
|
12.5
|
%
|
Revenue
Revenue decreased $12.9 million, or 2.3%, and $43.2 million, or 4.0%, in the second quarter and year to date, respectively, from the comparable
prior year periods. Excluding the impact of foreign exchange, revenue decreased 4.2% and 5.3% in the second quarter and year to date, respectively, from the comparable prior year periods.
North America revenue decreased $44.6 million, or 10.7%, and $93.1 million, or 11.5%, in the second quarter and year to date, respectively,
from the comparable prior year periods due primarily to lower CSD volumes and revenue as a result of prolonged aggressive promotional activity from the national brands, as well as a reduction in case pack water volume, offset in part by a
combination of increased juice and drinks volume with additional contract manufacturing business wins. Excluding the impact of foreign exchange, revenue decreased 9.9% and 10.7% in the second quarter and year to date, respectively.
U.K. revenue increased $31.2 million, or 24.4%, and $49.4 million, or 21.9%, in the second quarter and year to date, respectively, from the
comparable prior year periods due primarily to additional revenues from a full quarter of operations of Calypso and Aimia operations from the acquisition date through June 28, 2014. Absent foreign exchange impact, U.K. revenue increased 13.5%
and 12.8% in the second quarter and year to date, respectively. Excluding the revenues associated with Calypso and Aimia, U.K revenue increased $7.1 million and $11.1 million in the second quarter and year to date, respectively.
All Other revenue increased $0.5 million, or 2.8%, and $0.5 million, or 1.5%, in the second quarter and year to date, respectively, from the
comparable prior year periods.
50
Cost of Sales
Cost of sales represented 86.6% and 87.9% of revenue in the second quarter and year to date, respectively, compared to 86.4% and 87.6% in the
comparable prior year periods. The increase in cost of sales as a percentage of revenue was due primarily to the competitive environment and lower North America volume alongside additional freight and operating costs caused by inclement weather in
North America as well as increased freight costs from internal transfers associated with the initial start-up and expansion of contract manufacturing volume, offset in part by fixed costs absorption associated with increased juice and drinks volume
and additional contract manufacturing wins.
Gross Profit
Gross profit as a percentage of revenue decreased to 13.4% and 12.1% in the second quarter and year to date, respectively, from 13.6% and 12.4%
in the comparable prior year periods due primarily to the competitive environment and lower North America volume alongside additional freight and operating costs caused by inclement weather in North America as well as increased freight costs from
internal transfers associated with the initial start-up and expansion of contract manufacturing volume, offset in part by a product mix shift into higher margin products.
Selling, General and Administrative Expenses
SG&A expenses increased $5.2 million, or 12.5%, and $6.2 million, or 7.5%, in the second quarter and year to date, respectively, from the
comparable prior year periods. The increase was due primarily to higher employee-related incentive costs in the current year and an increase in acquisition-related expenses as well as the addition of the Calypso and Aimia businesses. As a percentage
of revenue, SG&A increased to 8.5% and 8.7% in the second quarter and year to date, respectively, from 7.4% and 7.8% in the comparable prior year periods, respectively.
Restructuring and Asset Impairments
We implement restructuring programs from time to time that are designed to improve operating effectiveness and lower costs. When we implement
these programs, we incur various charges, including severance, asset impairments, and other employment related costs. During the first quarter of 2014, we implemented one such program, which involved the closure of two of our smaller plants, one
located in North America and another one located in the United Kingdom (the 2014 Restructuring Plan) and expect to incur total pre-tax charges of approximately $5.0 million to $6.0 million during fiscal year 2014. For the six months
ended June 28, 2014, in connection with the 2014 Restructuring Plan, we incurred charges of approximately $2.3 million related primarily to headcount reductions and $1.9 million related to asset impairments. We recorded restructuring charges of
approximately $2.0 million related to headcount reductions in the comparable prior year period.
Operating Income
Operating income was $26.1 million and $30.2 million in the second quarter and year to date, respectively, compared to $32.6 million and $47.7
million in the comparable prior year periods, respectively. The decrease was due primarily to higher SG&A expenses and restructuring and asset impairment charges absent in the comparable prior year period.
Other Expense, Net
Other expense
was $19.8 million and $17.5 million in the second quarter and year to date, respectively, compared to other expense of nil and $0.3 million, respectively, in the comparable prior year periods. The increase in other expense during the second quarter
was due primarily to $19.4 million in costs related to the purchase of $295.9 million aggregate principal amount of our 2018 Notes in a cash tender offer.
Income Taxes
Income tax expense
was $2.5 million and $1.6 million in the second quarter and year to date, respectively, compared to income tax expense of $1.7 million and $2.2 million, respectively, in the comparable prior year periods. This is the result of pre-tax income in
certain jurisdictions that is not offset by pre-tax losses in other jurisdictions that have valuation allowances.
51
Liquidity and Capital Resources
The following table summarizes our cash flows for the three and six months ended June 28, 2014 and June 29, 2013, as reported in our
Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
(in millions of U.S. dollars)
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
June 28,
2014
|
|
|
June 29,
2013
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
29.6
|
|
|
$
|
34.1
|
|
|
$
|
(22.9
|
)
|
|
$
|
(24.5
|
)
|
Net cash used in investing activities
|
|
|
(93.9
|
)
|
|
|
(22.8
|
)
|
|
|
(104.2
|
)
|
|
|
(42.5
|
)
|
Net cash provided by (used in) financing activities
|
|
|
113.6
|
|
|
|
(36.5
|
)
|
|
|
169.7
|
|
|
|
(42.0
|
)
|
Effect of exchange rate changes on cash
|
|
|
1.0
|
|
|
|
(1.0
|
)
|
|
|
1.1
|
|
|
|
(3.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash & cash equivalents
|
|
|
50.3
|
|
|
|
(26.2
|
)
|
|
|
43.7
|
|
|
|
(112.6
|
)
|
Cash & cash equivalents, beginning of period
|
|
|
40.6
|
|
|
|
93.0
|
|
|
|
47.2
|
|
|
|
179.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
90.9
|
|
|
$
|
66.8
|
|
|
$
|
90.9
|
|
|
$
|
66.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and Capital Resources and Liquidity
As of June 28, 2014, we had total debt of $655.7 million and $90.9 million of cash and cash equivalents compared to $606.6 million of debt
and $66.8 million of cash and cash equivalents as of June 29, 2013.
We believe that our level of resources, which includes cash on
hand, available borrowings under the ABL facility and funds provided by operations, will be adequate to meet our expenses, capital expenditures, and debt service obligations for the next twelve months. Our ability to generate cash to meet our
current expenses and debt service obligations will depend on our future performance. If we do not have enough cash to pay our debt service obligations, or if the ABL facility, or our 5.375% senior notes due 2022 (the 2022 Notes) were to
become currently due, either at maturity or as a result of a breach, we may be required to take actions such as amending our ABL facility or the indenture governing our 2022 Notes, refinancing all or part of our existing debt, selling assets,
incurring additional indebtedness or raising equity. If we need to seek additional financing, there is no assurance that this additional financing will be available on favorable terms or at all.
Should we desire to consummate significant acquisition opportunities or undertake significant expansion activities, our capital needs would
increase and could result in our need to increase available borrowings under our ABL facility or access public or private debt and equity markets.
As of June 28, 2014, our total availability under the ABL facility was $294.5 million, which was based on our borrowing base (accounts
receivables, inventory, and fixed assets) as of July 15, 2014 (the June month-end under the terms of the credit agreement governing our ABL facility). We had $35.8 million of outstanding borrowings under the ABL facility and $6.9 million in
outstanding letters of credit. As a result, our excess availability under the ABL facility was $251.8 million. Each months borrowing base is not effective until submitted to the lenders, which usually occurs on the fifteenth day of the
following month.
We earn approximately 100% of our consolidated operating income in subsidiaries located outside of Canada. All of these
foreign earnings are considered to be indefinitely reinvested in foreign jurisdictions where we have made, and will continue to make, substantial investments to support the ongoing development and growth of our international operations. Accordingly,
no Canadian income taxes have been provided for on these foreign earnings. Cash and cash equivalents held by our foreign subsidiaries are readily convertible into other foreign currencies, including Canadian dollars. We do not intend, nor do we
foresee a need, to repatriate these funds into Canada.
We expect existing domestic cash, cash equivalents, cash flows from operations and
the issuance of domestic debt to continue to be sufficient to fund our domestic operating, investing and financing activities. In addition, we expect existing foreign cash, cash equivalents, and cash flows from operations to continue to be
sufficient to fund our foreign operating and investing activities.
In the future, should we require more capital to fund significant
discretionary activities in Canada than is generated by our domestic operations and is available through the issuance of domestic debt or stock, we could elect to repatriate future periods earnings from foreign jurisdictions. This alternative
could result in a higher effective tax rate during the period of repatriation. While the likelihood is remote, we could also elect to repatriate earnings from foreign jurisdictions that have previously been considered to be indefinitely reinvested.
Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to additional Canadian income taxes and withholding taxes payable to various foreign jurisdictions, where applicable. This alternative could result in a
higher effective tax rate in the period in which such a determination is made to repatriate prior period foreign earnings.
52
A dividend has been declared during each quarter of 2014 for an aggregate dividend payment of
approximately $10.8 million. In the first six months of 2014, we repurchased 429,462 common shares for approximately $3.1 million through open market transactions of which 373,123 were repurchased under our share repurchase program.
On June 24, 2014, we issued $525.0 million of 2022 Notes. We used a portion of the proceeds from our issuance of the 2022 Notes to
purchase $295.9 million aggregate principal amount of our 2018 Notes in a cash tender offer. The tender offer included approximately $16.2 million in premium payments as well as accrued interest of $7.5 million and approximately $3.2 million in
deferred financing fees and other costs.
On July 9, 2014 and July 24, 2014, we redeemed all of the remaining $79.1 million
aggregate principal amount of our 2018 Notes. The redemption included approximately $3.8 million in premium payments as well as accrued interest of approximately $2.5 million and approximately $0.8 million in deferred financing fees.
We may, from time to time, depending on market conditions, including without limitation whether the 2022 Notes are then trading at a discount
to their face amount, repurchase the 2022 Notes for cash and/or in exchange for shares of our common stock, warrants, preferred stock, debt or other consideration, in each case in open market purchases and/or privately negotiated transactions. The
amounts involved in any such transactions, individually or in aggregate, may be material. However, the covenants in our ABL facility subject such purchases to certain limitations and conditions.
Operating Activities
Cash used in
operating activities was $22.9 million year to date compared to $24.5 million in the comparable prior year period. The $1.6 million decrease in cash used in operating activities was due primarily to the decrease in net income almost entirely offset
by the timing of accounts receivable receipts and accounts payable payments relative to the prior year period.
Investing Activities
Cash used in investing activities was $104.2 million year to date compared to $42.5 million in the comparable prior year period. The $61.7
million increase in cash used in investing activities was due primarily to the Aimia Acquisition, partially offset by a reduction in fixed asset purchases.
Financing Activities
Cash provided by
financing activities was $169.7 million year to date compared to cash used of $42.0 million in the comparable prior year period. The $211.7 million increase in cash provided by financing activities was due primarily to the proceeds received from the
issuance of the 2022 Notes, partially offset by the purchase of a portion of the 2018 Notes and financing fees associated with the 2022 Notes.
Off-Balance Sheet Arrangements
We have
no off-balance sheet arrangements as defined under Item 303(a)(4) of Regulation S-K as of June 28, 2014.
Contractual Obligations
Other than the retirement of the 2017 Notes and the 2018 Notes, and the issuance of the 2022 Notes, each discussed below under the heading
Debt, we have no material changes to the disclosure on this matter made in our 2013 Annual Report.
Debt
Asset-Based Lending Facility
On
March 31, 2008, we entered into a credit agreement with JPMorgan Chase Bank N.A. as Agent that created an ABL facility to provide financing for our North America, U.K. and Mexico operations. In connection with the Cliffstar Acquisition, we
refinanced the ABL facility on August 17, 2010 to, among other things, provide for the Cliffstar Acquisition, the issuance of the 2018 Notes and the application of net proceeds therefrom, the underwritten public offering of 13,340,000 common
shares at a price of $5.67 per share and the application of net proceeds therefrom and to increase the amount available for borrowings to $275.0 million. We drew down a portion of the indebtedness under the ABL facility in order to fund the
Cliffstar Acquisition. We incurred $5.4 million of financing fees in connection with the refinancing of the ABL facility.
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On July 19, 2012, we amended the ABL facility to, among other things, extend the maturity
date to July 19, 2017. We incurred $1.2 million of financing fees in connection with the amendment of the ABL facility.
On
October 22, 2013, we amended the ABL facility to, among other things, (1) provide for an increase in the lenders commitments under the ABL facility to $300.0 million, as well as to increase the accordion feature, which permits us to
increase the lenders commitments under the ABL facility to $350.0 million, subject to certain conditions, (2) extend the maturity date to October 22, 2018, and (3) provide for greater flexibility under certain covenants. We
incurred approximately $0.7 million of financing fees in connection with the amendment of the ABL facility.
On May 28, 2014, we
amended the ABL facility to increase our ability to incur certain unsecured debt and earnout consideration for permitted acquisitions, as well as to allow us to add additional borrowers and to designate additional guarantors to be included in the
borrowing base calculation. We incurred approximately $0.2 million of financing fees in connection with the amendment of the ABL facility. These costs are included in the selling, general, and administrative expenses of our Consolidated Statements
of Operations.
The financing fees incurred in connection with the refinancing of the ABL facility on August 17, 2010, along with the
financing fees incurred in connection with the amendments of the ABL facility, other than the amendment on May 28, 2014, are being amortized using the straight-line method over the duration of the amended ABL facility. Each of the amendments,
with the exception of the amendment on May 28, 2014, was considered to be a modification of the original agreement under GAAP.
As of
June 28, 2014, we had $35.8 million of outstanding borrowings under the ABL facility. The commitment fee was 0.375% per annum of the unused commitment, which, taking into account $6.9 million of letters of credit, was $251.8 million as of
June 28, 2014.
5.375% Senior Notes due in 2022
On June 24, 2014, we issued $525.0 million of the 2022 Notes to qualified purchasers in a private placement under Rule 144A and Regulation
S under the Securities Act of 1933. The issuer of the 2022 Notes is our wholly-owned U.S. subsidiary Cott Beverages Inc., and we and most of our U.S., Canadian and U.K. subsidiaries guarantee the 2022 Notes. The interest on the 2022 Notes is payable
semi-annually on January 1st and July 1st of each year commencing on January 1, 2015.
We incurred $9.7 million of
financing fees in connection with the issuance of the 2022 Notes. The financing fees are being amortized using the effective interest method over an eight-year period, which represents the term to maturity of the 2022 Notes.
8.125% Senior Notes due in 2018
On
August 17, 2010, we issued $375.0 million of the 2018 Notes. The issuer of the 2018 Notes is our wholly-owned U.S. subsidiary Cott Beverages Inc., and we and most of our U.S., Canadian and U.K. subsidiaries guarantee the 2018 Notes. The
interest on the 2018 Notes is payable semi-annually on March 1st and September 1st of each year. We incurred $8.6 million of financing fees in connection with the issuance of the 2018 Notes.
On June 24, 2014, we used a portion of the proceeds from our issuance of the 2022 Notes to purchase $295.9 million aggregate principal
amount of our 2018 Notes in a cash tender offer. The tender offer included approximately $16.2 million in premium payments as well as accrued interest of $7.5 million and approximately $3.2 million in deferred financing fees and other costs.
On July 9, 2014 and July 24, 2014, we redeemed all of the remaining $79.1 million aggregate principal amount of our 2018 Notes. The
redemption included approximately $3.8 million in premium payments as well as accrued interest of approximately $2.5 million and approximately $0.8 million in deferred financing fees.
8.375% Senior Notes due in 2017
On
November 13, 2009, we issued $215.0 million of the 2017 Notes. The 2017 Notes were issued at a $3.1 million discount. The issuer of the 2017 Notes was our wholly-owned U.S. subsidiary Cott Beverages Inc., and we and most of our U.S., Canadian
and U.K. subsidiaries guaranteed the 2017 Notes. The interest on the 2017 Notes was payable semi-annually on May 15th and November 15th of each year. We incurred $5.1 million of financing fees in connection with the 2017 Notes.
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On November 15, 2013, we redeemed $200.0 million aggregate principal amount of our 2017
Notes at 104.118% of par. The redemption included approximately $8.2 million in premium payments as well as approximately $4.5 million in deferred financing fees, discount charges and other bond redemption costs.
On February 19, 2014, we redeemed all of the remaining $15.0 million aggregate principal amount of 2017 Notes at 104.118% of par. The
redemption included approximately $0.6 million in premium payments as well as approximately $0.3 million in deferred financing fees and discount charges.
GE Term Loan
In January 2008, we entered
into a capital lease finance arrangement with General Electric Capital Corporation (GE Capital) for the lease of equipment. In September 2013, we purchased the equipment subject to the lease for an aggregate purchase price of $10.7
million, with the financing for such purchase provided by GE Capital at 5.23% interest.
Credit Ratings and Covenant Compliance
Credit Ratings
On June 10,
2014, Moodys assigned a B3 rating to the 2022 Notes and affirmed the B2 corporate family rating and the rating outlook at stable.
On June 10, 2014, S&P assigned a B+ rating to the 2022 Notes, affirmed the B+ long-term corporate credit rating, and changed the
rating outlook from watch developing to negative.
Covenant Compliance
5.375% Senior Notes due in 2022
Under the
indenture governing the 2022 Notes, we are subject to a number of covenants, including covenants that limit our and certain of our subsidiaries ability, subject to certain exceptions and qualifications, to (i) pay dividends or make
distributions, repurchase equity securities, prepay subordinated debt or make certain investments, (ii) incur additional debt or issue certain disqualified stock or preferred stock, (iii) create or incur liens on assets securing
indebtedness, (iv) merge or consolidate with another company or sell all or substantially all of our assets taken as a whole, (v) enter into transactions with affiliates and (vi) sell assets. As of June 28, 2014, we were in
compliance with all of the covenants under the 2022 Notes and there have been no amendments to any such covenants since the 2022 Notes were issued.
8.125% Senior Notes due in 2018
Under
the indenture governing the 2018 Notes, we are subject to a number of covenants, including covenants that limit our and certain of our subsidiaries ability, subject to certain exceptions and qualifications, to (i) pay dividends or make
distributions, repurchase equity securities, prepay subordinated debt or make certain investments, (ii) incur additional debt or issue certain disqualified stock or preferred stock, (iii) create or incur liens on assets securing
indebtedness, (iv) merge or consolidate with another company or sell all or substantially all of our assets taken as a whole, (v) enter into transactions with affiliates and (vi) sell assets. On June 24, 2014, we purchased $295.9
million aggregate principal amount of our 2018 Notes in a cash tender offer. On July 9, 2014 and July 24, 2014, we redeemed all of the remaining $79.1 million aggregate principal amount of our 2018 Notes. As of June 28, 2014, we were
in compliance with all of the covenants under the 2018 Notes and there have been no amendments to any such covenants since the 2018 Notes were issued. At all times prior to the retirement of the remaining outstanding 2018 Notes, we were in
compliance with all of the covenants under the 2018 Notes.
8.375% Senior Notes due in 2017
Under the indenture governing the 2017 Notes, we are subject to a number of covenants, including covenants that limit our and certain of our
subsidiaries ability, subject to certain exceptions and qualifications, to (i) pay dividends or make distributions, repurchase equity securities, prepay subordinated debt or make certain investments, (ii) incur additional debt or
issue certain disqualified stock or preferred stock, (iii) create or incur liens on assets securing indebtedness, (iv) merge or consolidate with another company or sell all or substantially all of our assets taken as a whole,
(v) enter into transactions with affiliates and (vi) sell assets. On February 19, 2014, we redeemed the remaining 2017 Notes, which had an aggregate principal amount of $15.0 million. At all times prior to the redemption of the
remaining outstanding 2017 Notes, we were in compliance with all of the covenants under the 2017 Notes.
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ABL Facility
Under the credit agreement governing the ABL facility, Cott and its restricted subsidiaries are subject to a number of business and financial
covenants, including a covenant requiring a minimum fixed charge coverage ratio of at least 1.1 to 1.0 effective when and if excess availability is less than the greater of 10% of the lenders commitments under the ABL facility or $27.5
million. If excess availability is less than the greater of 12.5% of the lenders commitments under the ABL facility or $34.375 million, the lenders will take dominion over the cash and will apply excess cash to reduce amounts owing under the
facility. We were in compliance with all of the applicable covenants under the ABL facility as of June 28, 2014.
Issuer Purchases of Equity
Securities
Common Share Repurchase Program
On May 6, 2014, our board of directors approved the renewal of our share repurchase program for up to 5% of Cotts outstanding common
shares over a 12-month period commencing upon the expiration of Cotts then-effective share repurchase program on May 21, 2014. During the second quarter ended June 28, 2014, we repurchased 366,670 common shares for approximately $2.6
million through open market transactions. See Part II. Item 2 of this Quarterly Report on Form 10-Q. We are unable to predict the number of shares that ultimately will be repurchased under the share repurchase program, or the aggregate dollar
amount of the shares actually purchased. We may discontinue purchases at any time, subject to compliance with applicable regulatory requirements.
Tax
Withholding
During the second quarter ended June 28, 2014, 9,442 shares of our previously-issued common stock were withheld from
delivery to our employees to satisfy their tax obligations related to stock-based awards.
Capital structure
Since December 28, 2013, equity has decreased by $15.3 million. The decrease was primarily the result of a net loss of $9.9 million,
dividend payments of $10.8 million, common share repurchases of $3.1 million, and distributions to non-controlling interest of $4.8 million, partially offset by other comprehensive income of $6.7 million, share-based compensation expense of $3.0
million, director share awards issued of $0.8 million, of which $0.4 million are reflected in our Consolidated Statements of Operations, and non-controlling interest income of $2.8 million.
Dividend payments
On May 6, 2014,
our board of directors declared a dividend of $0.06 per share on our common shares, payable in cash on June 18, 2014 to shareowners of record at the close of business on June 6, 2014. On July 29, 2014, our board of directors declared
a dividend of $0.06 per share on our common shares, payable in cash on September 10, 2014 to shareowners of record at the close of business on August 28, 2014.
Cott intends to pay a regular quarterly dividend on its common shares subject to, among other things, the best interests of its shareowners,
Cotts results of operations, cash balances and future cash requirements, financial condition, statutory regulations and covenants set forth in the ABL facility and indenture governing the 2022 Notes, as well as other factors that our board of
directors may deem relevant from time to time.
Critical Accounting Policies
Our critical accounting policies require management to make estimates and assumptions that affect the reported amounts in the consolidated
financial statements and the accompanying notes. These estimates are based on historical experience, the advice of external experts or on other assumptions management believes to be reasonable. Where actual amounts differ from estimates, revisions
are included in the results for the period in which actual amounts become known. Historically, differences between estimates and actual amounts have not had a significant impact on our consolidated financial statements.
Critical accounting policies and estimates used to prepare the financial statements are discussed with our Audit Committee as they are
implemented and on an annual basis.
We have no material changes to our Critical Accounting Policies and Estimates disclosure as filed in
our 2013 Annual Report.
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