United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
x |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended: April 4, 2015
¨ |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from
to
Commission File Number: 001-31410
COTT
CORPORATION
(Exact name of registrant as specified in its charter)
|
|
|
CANADA |
|
98-0154711 |
(State or Other Jurisdiction
of Incorporation or Organization) |
|
(IRS Employer
Identification No.) |
|
|
6525 VISCOUNT ROAD
MISSISSAUGA, ONTARIO, CANADA |
|
L4V 1H6 |
|
|
5519 WEST IDLEWILD AVENUE
TAMPA, FLORIDA, UNITED STATES |
|
33634 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants telephone number, including area code: (905) 672-1900 and (813) 313-1800
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:
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Large accelerated filer |
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x |
|
Accelerated filer |
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¨ |
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Non-accelerated filer |
|
¨ (Do not check if a smaller reporting company) |
|
Smaller reporting company |
|
¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
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Class |
|
Outstanding at May 7, 2015 |
|
Common Shares, no par value per share |
|
|
93,259,829 shares |
|
TABLE OF CONTENTS
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Cott Corporation
Consolidated Statements of Operations
(in millions of U.S. dollars, except share and per share amounts)
Unaudited
|
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For the Three Months Ended |
|
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|
April 4, 2015 |
|
|
March 29, 2014 |
|
Revenue, net |
|
$ |
709.8 |
|
|
$ |
475.1 |
|
Cost of sales |
|
|
508.5 |
|
|
|
418.9 |
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|
|
|
|
|
|
|
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Gross profit |
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201.3 |
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56.2 |
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Selling, general and administrative expenses |
|
|
188.5 |
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|
46.9 |
|
Loss on disposal of property, plant & equipment |
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|
1.4 |
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0.1 |
|
Restructuring |
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|
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2.2 |
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Asset impairments |
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1.6 |
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Acquisition and integration expenses |
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4.7 |
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1.1 |
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|
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|
|
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Operating income |
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6.7 |
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4.3 |
|
Other income, net |
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|
(10.4 |
) |
|
|
(2.3 |
) |
Interest expense, net |
|
|
27.7 |
|
|
|
9.8 |
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|
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|
|
|
|
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Loss before income taxes |
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|
(10.6 |
) |
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(3.2 |
) |
Income tax benefit |
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|
(9.4 |
) |
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(0.5 |
) |
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Net loss |
|
$ |
(1.2 |
) |
|
$ |
(2.7 |
) |
Less: Net income attributable to non-controlling interests |
|
|
1.3 |
|
|
|
1.4 |
|
Less: Accumulated dividends on convertible preferred shares |
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2.7 |
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|
Less: Accumulated dividends on non-convertible preferred shares |
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0.8 |
|
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|
|
|
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Net loss attributed to Cott Corporation |
|
$ |
(6.0 |
) |
|
$ |
(4.1 |
) |
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|
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Net loss per common share attributed to Cott Corporation |
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Basic |
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$ |
(0.06 |
) |
|
$ |
(0.04 |
) |
Diluted |
|
|
(0.06 |
) |
|
|
(0.04 |
) |
Weighted average outstanding shares (thousands) attributed to Cott Corporation |
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Basic |
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93,196 |
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|
94,319 |
|
Diluted |
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93,196 |
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|
94,319 |
|
Dividends declared per share |
|
$ |
0.06 |
|
|
$ |
0.06 |
|
The accompanying notes are an integral part of these consolidated financial statements.
3
Cott Corporation
Condensed Consolidated Statements of Comprehensive Loss
(in millions of U.S. dollars)
Unaudited
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For the Three Months Ended |
|
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April 4, 2015 |
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March 29, 2014 |
|
Net loss |
|
$ |
(1.2 |
) |
|
$ |
(2.7 |
) |
Other comprehensive loss: |
|
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|
|
|
|
|
|
Currency translation adjustment |
|
|
(25.9 |
) |
|
|
(1.6 |
) |
Pension benefit plan, net of tax 1 |
|
|
0.1 |
|
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|
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|
Unrealized loss on derivative instruments, net of tax 2 |
|
|
|
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
Total other comprehensive loss |
|
|
(25.8 |
) |
|
|
(1.7 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(27.0 |
) |
|
$ |
(4.4 |
) |
Less: Comprehensive income attributable to non-controlling interests |
|
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1.3 |
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1.4 |
|
Less: Accumulated dividends on convertible preferred shares |
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2.7 |
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Less: Accumulated dividends on non-convertible preferred shares |
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0.8 |
|
|
|
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|
|
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|
|
|
|
|
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|
Comprehensive loss attributed to Cott Corporation |
|
$ |
(31.8 |
) |
|
$ |
(5.8 |
) |
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1. |
Net of the effect of $0.2 million and $0.1 million tax expense for the three months ended April 4, 2015 and March 29, 2014, respectively. |
2. |
Net of the effect of nil tax expense for the three months ended April 4, 2015 and March 29, 2014, 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
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April 4, 2015 |
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January 3, 2015 |
|
ASSETS |
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Current assets |
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Cash & cash equivalents |
|
$ |
34.5 |
|
|
$ |
86.2 |
|
Accounts receivable, net of allowance of $10.2 ($6.5 as of January 3, 2015) |
|
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340.6 |
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305.7 |
|
Income taxes recoverable |
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1.2 |
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1.6 |
|
Inventories |
|
|
270.5 |
|
|
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262.4 |
|
Prepaid expenses and other current assets |
|
|
34.5 |
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59.3 |
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|
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Total current assets |
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681.3 |
|
|
|
715.2 |
|
Property, plant & equipment, net |
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|
845.2 |
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|
864.5 |
|
Goodwill |
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|
742.4 |
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|
743.6 |
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Intangibles and other assets, net |
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|
762.9 |
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|
781.7 |
|
Deferred income taxes |
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|
1.8 |
|
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|
2.5 |
|
Other tax receivable |
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0.2 |
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Total assets |
|
$ |
3,033.6 |
|
|
$ |
3,107.7 |
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LIABILITIES, PREFERRED SHARES AND EQUITY |
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Current liabilities |
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Short-term borrowings |
|
$ |
221.0 |
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$ |
229.0 |
|
Current maturities of long-term debt |
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4.1 |
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4.0 |
|
Accounts payable and accrued liabilities |
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|
422.0 |
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420.3 |
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|
|
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|
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|
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Total current liabilities |
|
|
647.1 |
|
|
|
653.3 |
|
Long-term debt |
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|
1,552.5 |
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|
1,565.0 |
|
Deferred income taxes |
|
|
105.3 |
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|
|
119.9 |
|
Other long-term liabilities |
|
|
67.1 |
|
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|
71.8 |
|
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|
|
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|
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Total liabilities |
|
|
2,372.0 |
|
|
|
2,410.0 |
|
Convertible preferred shares, $1,000 stated value, 116,054 (January 3, 2015 116,054) shares issued |
|
|
116.2 |
|
|
|
116.1 |
|
Non-convertible preferred shares, $1,000 stated value, 32,711 (January 3, 2015 32,711) shares issued |
|
|
32.7 |
|
|
|
32.7 |
|
Equity |
|
|
|
|
|
|
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|
Capital stock, no par 93,259,829 (January 3, 2015 93,072,850) shares issued |
|
|
389.5 |
|
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|
388.3 |
|
Additional paid-in-capital |
|
|
47.2 |
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|
46.6 |
|
Retained earnings |
|
|
146.6 |
|
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|
158.1 |
|
Accumulated other comprehensive loss |
|
|
(76.8 |
) |
|
|
(51.0 |
) |
|
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|
|
|
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|
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|
Total Cott Corporation equity |
|
|
506.5 |
|
|
|
542.0 |
|
Non-controlling interests |
|
|
6.2 |
|
|
|
6.9 |
|
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|
|
|
|
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|
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|
Total equity |
|
|
512.7 |
|
|
|
548.9 |
|
|
|
|
|
|
|
|
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|
Total liabilities, preferred shares and equity |
|
$ |
3,033.6 |
|
|
$ |
3,107.7 |
|
|
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|
|
|
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|
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|
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
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For the Three Months Ended |
|
|
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Operating Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1.2 |
) |
|
$ |
(2.7 |
) |
Depreciation & amortization |
|
|
57.4 |
|
|
|
25.1 |
|
Amortization of financing fees |
|
|
1.3 |
|
|
|
0.6 |
|
Amortization of senior notes premium |
|
|
(1.5 |
) |
|
|
|
|
Share-based compensation expense |
|
|
2.4 |
|
|
|
1.3 |
|
Decrease in deferred income taxes |
|
|
(11.7 |
) |
|
|
(0.7 |
) |
Write-off of financing fees and discount |
|
|
|
|
|
|
0.3 |
|
Loss on disposal of property, plant & equipment |
|
|
1.4 |
|
|
|
0.1 |
|
Asset impairments |
|
|
|
|
|
|
1.6 |
|
Other non-cash items |
|
|
(10.2 |
) |
|
|
(0.2 |
) |
Change in operating assets and liabilities, net of acquisition: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(41.3 |
) |
|
|
(33.3 |
) |
Inventories |
|
|
(11.0 |
) |
|
|
(16.5 |
) |
Prepaid expenses and other current assets |
|
|
30.3 |
|
|
|
0.2 |
|
Other assets |
|
|
(2.4 |
) |
|
|
0.2 |
|
Accounts payable and accrued liabilities, and other liabilities |
|
|
(15.2 |
) |
|
|
(28.5 |
) |
Income taxes recoverable |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(1.1 |
) |
|
|
(52.5 |
) |
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Additions to property, plant & equipment |
|
|
(27.3 |
) |
|
|
(8.8 |
) |
Additions to intangibles and other assets |
|
|
(2.1 |
) |
|
|
(1.5 |
) |
Proceeds from sale of property, plant & equipment |
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(29.0 |
) |
|
|
(10.3 |
) |
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
Payments of long-term debt |
|
|
(0.8 |
) |
|
|
(16.0 |
) |
Borrowings under ABL |
|
|
94.8 |
|
|
|
95.0 |
|
Payments under ABL |
|
|
(102.8 |
) |
|
|
(15.1 |
) |
Distributions to non-controlling interests |
|
|
(2.0 |
) |
|
|
(2.3 |
) |
Proceeds from the exercise of options for common shares, net |
|
|
0.1 |
|
|
|
|
|
Common shares repurchased and cancelled |
|
|
(0.7 |
) |
|
|
(0.4 |
) |
Dividends paid to common and preferred shareowners |
|
|
(9.0 |
) |
|
|
(5.1 |
) |
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(20.4 |
) |
|
|
56.1 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(1.2 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
Net decrease in cash & cash equivalents |
|
|
(51.7 |
) |
|
|
(6.6 |
) |
Cash & cash equivalents, beginning of period |
|
|
86.2 |
|
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period |
|
$ |
34.5 |
|
|
$ |
40.6 |
|
|
|
|
|
|
|
|
|
|
Supplemental Non-cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
Dividend payable issued through accounts payable and accrued liabilities |
|
|
0.1 |
|
|
|
|
|
DSS additional consideration accrued in accounts payable |
|
|
8.9 |
|
|
|
|
|
Additions to property, plant & equipment through accounts payable and accrued liabilities |
|
|
6.2 |
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
8.3 |
|
|
$ |
16.6 |
|
Cash paid for income taxes, net |
|
$ |
0.5 |
|
|
$ |
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
|
|
|
|
|
|
|
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|
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|
Cott Corporation Equity |
|
|
|
|
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|
|
|
|
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 28, 2013 |
|
|
94,238 |
|
|
$ |
392.8 |
|
|
$ |
44.1 |
|
|
$ |
174.8 |
|
|
$ |
(16.8 |
) |
|
$ |
9.5 |
|
|
$ |
604.4 |
|
Common shares repurchased and cancelled |
|
|
(54 |
) |
|
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.4 |
) |
Common shares issued Time-based RSUs |
|
|
141 |
|
|
|
1.2 |
|
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
Dividend payment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.1 |
) |
|
|
|
|
|
|
|
|
|
|
(5.1 |
) |
Distributions to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.3 |
) |
|
|
(2.3 |
) |
Comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.6 |
) |
|
|
|
|
|
|
(1.6 |
) |
Unrealized gain on derivative instruments, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1 |
) |
|
|
|
|
|
|
(0.1 |
) |
Net (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.1 |
) |
|
|
|
|
|
|
1.4 |
|
|
|
(2.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 29, 2014 |
|
|
94,325 |
|
|
$ |
393.6 |
|
|
$ |
44.2 |
|
|
$ |
165.6 |
|
|
$ |
(18.5 |
) |
|
$ |
8.6 |
|
|
$ |
593.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 3, 2015 |
|
|
93,073 |
|
|
$ |
388.3 |
|
|
$ |
46.6 |
|
|
$ |
158.1 |
|
|
$ |
(51.0 |
) |
|
$ |
6.9 |
|
|
$ |
548.9 |
|
Common shares repurchased and cancelled |
|
|
(87 |
) |
|
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.7 |
) |
Common shares issued Performance-based RSUs |
|
|
255 |
|
|
|
1.7 |
|
|
|
(1.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
|
|
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.4 |
|
Options exercised |
|
|
19 |
|
|
|
0.2 |
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Common shares dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.5 |
) |
|
|
|
|
|
|
|
|
|
|
(5.5 |
) |
Distributions to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
|
|
(2.0 |
) |
Comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25.9 |
) |
|
|
|
|
|
|
(25.9 |
) |
Pension benefit plan, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
Preferred shares dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.5 |
) |
|
|
|
|
|
|
|
|
|
|
(3.5 |
) |
Net (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.5 |
) |
|
|
|
|
|
|
1.3 |
|
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 4, 2015 |
|
|
93,260 |
|
|
$ |
389.5 |
|
|
$ |
47.2 |
|
|
$ |
146.6 |
|
|
$ |
(76.8 |
) |
|
$ |
6.2 |
|
|
$ |
512.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
7
Cott Corporation
Notes to the Consolidated Financial Statements
Unaudited
Note 1Business 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 and has one of the broadest home and office bottled water and
office coffee services distribution networks in the United States, with the ability to service approximately 90% of U.S. households, as well as national, regional and local offices. Our product lines include carbonated soft drinks
(CSDs), 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, purified, spring, artesian, distilled and fluoridated bottled water, energy drinks and shots, sports products, new age beverages,
ready-to-drink teas and alcoholic beverages, beverage concentrates, liquid enhancers and freezables, as well as hot chocolate, coffee, malt drinks, creamers/whiteners and cereals. In addition, Cott is now a national direct-to-consumer provider of
bottled water, office coffee and water filtration services offering a comprehensive portfolio of beverage products, equipment and supplies to approximately 1.5 million customer locations through its network of over 200 sales and distribution
facilities and daily operation of over 2,100 routes.
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 January 3, 2015. 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.
Certain prior year amounts
have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. For the three months ended March 29, 2014, the Company concluded that it was appropriate to
reclassify the amortization of customer list intangible assets to selling, general and administrative (SG&A) expenses. Previously, such amortization had been classified as cost of sales. Accordingly, the Company has revised the
classification to report these SG&A expenses in the Consolidated Statement of Operations for the three months ended March 29, 2014. Also, for the three months ended March 29, 2014, the Company concluded that it was appropriate to
reclassify acquisition and integration expenses separately. Previously, such expenses had been classified as SG&A expenses. Accordingly, the Company has revised the classification to report these expenses separately in the Consolidated Statement
of Operations for the three months ended March 29, 2014. Additionally, as of January 3, 2015, the Company concluded that it was appropriate to reclassify certain recently acquired assets in connection with the DSS Acquisition (see Note 3
to the Consolidated Financial Statements) from inventories to property, plant and equipment, net to be consistent with Cotts accounting treatment. Accordingly, the Company has revised the classification to report these assets under property,
plant and equipment, net in the Consolidated Balance Sheet as of January 3, 2015. The impacts of the reclassifications are shown in the tables below:
|
|
|
|
|
(in millions of U.S. dollars) |
|
For the three months ended March 29, 2014 |
|
Decrease to cost of sales |
|
$ |
(5.7 |
) |
Increase to selling, general and administrative expenses |
|
$ |
5.7 |
|
8
|
|
|
|
|
(in millions of U.S. dollars) |
|
For the three months ended March 29, 2014 |
|
Decrease to selling, general and administrative expenses |
|
$ |
(1.1 |
) |
Increase to acquisition and integration expenses |
|
$ |
1.1 |
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
January 3, 2015 |
|
Decrease to inventories |
|
$ |
(8.9 |
) |
Increase to property, plant and equipment, net |
|
$ |
8.9 |
|
These changes in classification did not affect net income attributable to Cott Corporation or total assets as
previously reported in the Consolidated Statement of Operations and Consolidated Balance Sheet for the periods presented.
Recent Accounting
Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of
Accounting Standards Updates (ASUs) or the issuance of new standards to the FASBs Accounting Standards Codification (ASC). The Company considers the applicability and impact of all ASUs. ASUs not listed below were
assessed and determined to be either not applicable or are expected to have minimal impact on these Consolidated Financial Statements.
Update ASU
2014-09 Revenue 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 practices across entities, industries, jurisdictions and capital markets. The core principle 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, 2017, 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 2014-12 Compensation Stock 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
9
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.
Update ASU 2015-03 Interest Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs
In April 2015, the FASB amended its guidance to simplify the presentation of debt issuance costs. The amendments
require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance
for debt issuance costs are not affected by these amendments. For public entities, the amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. We are
currently assessing the impact of adoption of this standard on our consolidated financial statements.
10
Note 2Revisions
The Company has revised its three months ended March 29, 2014 Consolidated Statement of Operations, Consolidated
Statement of Comprehensive Income, Consolidated Statement of Cash Flows, and Consolidated Statement of Equity to correct errors for an overstatement of historical property, plant and equipment, net, including a portion related to a prior
acquisition, and the related depreciation expense recorded during the period, and an overstatement of deferred tax liabilities. The overstatement of deferred tax liabilities overstated previously reported income tax benefit by $0.4 million for the
three months ended March 29, 2014. The remaining differences identified in the reconciliations below are attributable to the historical overstatement of property, plant and equipment, net of $0.2 million. The impact on the previously issued
financial statements is detailed in the reconciliations below. These adjustments were not considered to be material individually or in the aggregate to previously issued financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously filed |
|
|
As revised |
|
|
|
|
Consolidated Statements of Operations |
|
For the three months ended March 29, 2014 |
|
|
Difference |
|
(in millions of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales 1 |
|
$ |
424.8 |
|
|
$ |
424.6 |
|
|
$ |
(0.2 |
) |
Gross profit 1 |
|
$ |
50.3 |
|
|
$ |
50.5 |
|
|
$ |
0.2 |
|
Operating income |
|
$ |
4.1 |
|
|
$ |
4.3 |
|
|
$ |
0.2 |
|
(Loss) income before income taxes |
|
$ |
(3.4 |
) |
|
$ |
(3.2 |
) |
|
$ |
0.2 |
|
Income tax (benefit) expense |
|
$ |
(0.9 |
) |
|
$ |
(0.5 |
) |
|
$ |
0.4 |
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(2.7 |
) |
|
$ |
(0.2 |
) |
Net loss attributed to Cott Corporation |
|
$ |
(3.9 |
) |
|
$ |
(4.1 |
) |
|
$ |
(0.2 |
) |
1. |
The revised balances do not include the reclassification of the amortization of customer list intangible assets from cost of sales to SG&A expenses as presented in the Consolidated Statement of Operations for the
three months ended March 29, 2014 (see Note 1 to the Consolidated Financial Statements). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously filed |
|
|
As revised |
|
|
|
|
Consolidated Statements of Comprehensive Income |
|
For the three months ended March 29, 2014 |
|
|
Difference |
|
(in millions of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(2.7 |
) |
|
$ |
(0.2 |
) |
Comprehensive loss |
|
$ |
(4.2 |
) |
|
$ |
(4.4 |
) |
|
$ |
(0.2 |
) |
Comprehensive loss attributed to Cott Corporation |
|
$ |
(5.6 |
) |
|
$ |
(5.8 |
) |
|
$ |
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously filed |
|
|
As revised |
|
|
|
|
Consolidated Statements of Cash Flows |
|
For the three months ended March 29, 2014 |
|
|
Difference |
|
(in millions of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(2.7 |
) |
|
$ |
(0.2 |
) |
Depreciation & amortization |
|
$ |
25.3 |
|
|
$ |
25.1 |
|
|
$ |
(0.2 |
) |
Decrease in deferred income taxes |
|
$ |
(1.1 |
) |
|
$ |
(0.7 |
) |
|
$ |
0.4 |
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously filed |
|
|
As revised |
|
|
|
|
Consolidated Statements of Equity |
|
For the three months ended March 29, 2014 |
|
|
Difference |
|
(in millions of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings at December 28, 2013 |
|
$ |
176.3 |
|
|
$ |
174.8 |
|
|
$ |
(1.5 |
) |
Total equity at December 28, 2013 |
|
$ |
605.9 |
|
|
$ |
604.4 |
|
|
$ |
(1.5 |
) |
Retained earnings at March 29, 2014 |
|
$ |
167.3 |
|
|
$ |
165.6 |
|
|
$ |
(1.7 |
) |
Total equity at March 29, 2014 |
|
$ |
595.2 |
|
|
$ |
593.5 |
|
|
$ |
(1.7 |
) |
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(2.7 |
) |
|
$ |
(0.2 |
) |
Note 3Acquisitions
DSS Acquisition
In December 2014, we completed the acquisition by merger of DSS Group, Inc. (DSS Group), parent company to DS Services of America
Inc. (collectively DSS), a leading bottled water and coffee direct-to-consumer services provider in the United States (the DSS Acquisition). The DSS Acquisition was consummated pursuant to an Agreement and Plan of Merger (the
DSS Merger Agreement) dated November 6, 2014. Aggregate consideration was approximately $1.246 billion payable through a combination of incremental borrowings under the ABL facility (as defined below) of $180.0 million, the issuance
of $625.0 million of our 6.75% senior notes due January 1, 2020 (2020 Notes), assumption of existing $350.0 million senior notes due 2021 originally issued by DSS (DSS Notes), the issuance of Series A Convertible First
Preferred Shares (the Convertible Preferred Shares), having an aggregate value of approximately $116.1 million and Series B Non-Convertible First Preferred Shares (the Non-Convertible Preferred Shares and together with the
Convertible Preferred Shares, the Preferred Shares), having an aggregate value of approximately $32.7 million. A portion of the aggregate consideration is being held in escrow to secure the indemnification obligations of DSSs
former security holders under the DSS Merger Agreement.
The total consideration paid by us in the DSS Acquisition is summarized below:
|
|
|
|
|
(in millions of U.S. dollars) |
|
|
|
Cash paid to sellers |
|
$ |
449.7 |
|
Deferred consideration |
|
|
8.9 |
|
Cash paid on behalf of sellers for sellers expenses |
|
|
25.3 |
|
Cash paid to retire term loan on behalf of sellers |
|
|
317.3 |
|
Convertible Preferred Shares |
|
|
116.1 |
|
Non-Convertible Preferred Shares |
|
|
32.7 |
|
|
|
|
|
|
Total consideration |
|
$ |
950.0 |
|
|
|
|
|
|
The initial estimated merger consideration of $941.1 million was adjusted by $8.9 million for differences
between estimated working capital, net indebtedness and certain transaction related expenses and those amounts calculated by Cott and submitted to the former security holders of DSS for review and approval, and, if necessary, submitted to an
independent auditor for a final determination. The parties continue to work toward finalization of these amounts as of the filing date of this report.
Our primary reasons for the DSS Acquisition were to accelerate Cotts acquisition based diversification outside of CSDs and shelf stable
juices, extend our beverage portfolio into new and growing markets, including home and office bottled water delivery services, office coffee services and filtration services, while creating opportunities for revenue, cost synergies and growth
prospects, and broaden our distribution platform by adding a national direct-to-consumer distribution channel.
The DSS 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 valuation results. Estimated fair values recorded for deferred tax balances and working capital are also subject to change based on
finalization of the purchase price. The results of operations of DSS have been included in our operating results beginning as of the acquisition date. We allocated the purchase price in the DSS Acquisition 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.
12
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 DSS Acquisition. Included as part of these adjustments to the initial purchase price allocation is the correction of $6.2 million of certain balance sheet classification errors
previously identified at January 3, 2015. The allocation of the purchase price is based on a preliminary valuation that is expected to be completed by the end of 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
As reported at January 3, 2015 |
|
|
Adjustments |
|
|
As reported at April 4, 2015 |
|
Cash and cash equivalents |
|
$ |
74.5 |
|
|
$ |
|
|
|
$ |
74.5 |
|
Accounts receivable |
|
|
103.4 |
|
|
|
(0.8 |
) |
|
|
102.6 |
|
Inventories |
|
|
46.8 |
|
|
|
(0.4 |
) |
|
|
46.4 |
|
Prepaid expenses and other current assets |
|
|
8.8 |
|
|
|
|
|
|
|
8.8 |
|
Deferred income taxes |
|
|
2.8 |
|
|
|
1.3 |
|
|
|
4.1 |
|
Property, plant & equipment |
|
|
403.3 |
|
|
|
9.4 |
|
|
|
412.7 |
|
Goodwill |
|
|
556.9 |
|
|
|
2.9 |
|
|
|
559.8 |
|
Intangible and other assets |
|
|
417.2 |
|
|
|
|
|
|
|
417.2 |
|
Accounts payable and accrued liabilities |
|
|
(110.2 |
) |
|
|
(7.5 |
) |
|
|
(117.7 |
) |
Long-term debt |
|
|
(406.0 |
) |
|
|
|
|
|
|
(406.0 |
) |
Deferred income taxes liabilities |
|
|
(129.1 |
) |
|
|
6.2 |
|
|
|
(122.9 |
) |
Other long-term liabilities |
|
|
(27.3 |
) |
|
|
(2.2 |
) |
|
|
(29.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
941.1 |
|
|
$ |
8.9 |
|
|
$ |
950.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The principal factor that resulted in recognition of goodwill was that the purchase price for the DSS
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 DSS Acquisition was allocated to the DSS reporting segment, a portion of which is expected to be tax deductible.
Aimia Acquisition
In May
2014, 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 to as, Aimia). Aimia produces and distributes hot chocolate, coffee and powdered beverages primarily through food service, vending and retail channels, and produces hot and cold cereal products on a contract
manufacturing basis. 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 paid on September 15, 2014, and aggregate contingent consideration of up to £16.0 million ($23.7 million at exchange rates in effect on April 4, 2015), which is payable upon the achievement of
certain measures related to Aimias performance during the twelve months ending July 1, 2016. The closing payment was funded from ABL borrowings and available cash.
The total consideration paid by us for the Aimia Acquisition is summarized below:
|
|
|
|
|
(in millions of U.S. dollars) |
|
|
|
Cash paid to sellers |
|
$ |
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. |
13
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 was accounted for as a
business combination, which, among other things, required that assets acquired and liabilities assumed be measured at their acquisition date fair values. Identified intangible assets, goodwill and property, plant and equipment were recorded at their
estimated fair values per 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 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 sellers are entitled to contingent consideration of up to a maximum of £16.0 million ($23.7 million at exchange rates in effect
on April 4, 2015), based on the exchange rate on the acquisition date, which will become 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 ($15.7 million at exchange rates in effect on April 4, 2015) using a present value probability-weighted income approach. Key assumptions include
probability-adjusted EBITDA amounts with discount rates consistent with the level of risk achievement.
The following table summarizes the
allocation of the purchase price to fair value of the assets acquired and liabilities assumed in connection with the Aimia Acquisition.
|
|
|
|
|
(in millions of U.S. dollars) |
|
As reported at April 4, 2015 |
|
Cash |
|
$ |
9.5 |
|
Accounts receivable |
|
|
11.0 |
|
Inventories |
|
|
9.6 |
|
Prepaid expenses and other current assets |
|
|
1.9 |
|
Property, plant & equipment |
|
|
10.9 |
|
Goodwill |
|
|
54.5 |
|
Intangible and other assets |
|
|
86.2 |
|
Accounts payable and accrued liabilities |
|
|
(27.4 |
) |
Deferred tax liabilities |
|
|
(17.2 |
) |
|
|
|
|
|
Total |
|
$ |
139.0 |
|
|
|
|
|
|
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.
Supplemental
Pro Forma Data (unaudited)
The following unaudited financial information for the three months ended March 29, 2014 represent the
combined results of our operations as if the DSS Acquisition and Aimia Acquisition had occurred on December 30, 2012. 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 period.
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars, except share amounts) |
|
March 29, 2014 |
|
Revenue |
|
$ |
735.5 |
|
Net loss |
|
|
(14.2 |
) |
Net loss per common share, diluted |
|
$ |
(0.15 |
) |
14
Note 4Restructuring 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. We had no restructuring activities during the first quarter of 2015. During the first quarter of 2014, we
implemented a restructuring program that 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). For the first quarter of 2014, in
connection with the 2014 Restructuring Plan, we incurred charges of approximately $2.2 million related primarily to headcount reductions and $1.6 million related to asset impairments.
The following table summarizes restructuring charges for the three months ended March 29, 2014 in connection with the 2014 Restructuring
Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
North America |
|
|
U.K. |
|
|
Total |
|
Restructuring |
|
$ |
2.1 |
|
|
$ |
0.1 |
|
|
$ |
2.2 |
|
Asset impairments |
|
|
0.9 |
|
|
|
0.7 |
|
|
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.0 |
|
|
$ |
0.8 |
|
|
$ |
3.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize our restructuring liability as of March 29, 2014, along with charges to
costs and expenses and cash payments in connection with the 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 March 29, 2014 |
|
Severance liability restructuring |
|
$ |
|
|
|
$ |
2.1 |
|
|
$ |
(0.2 |
) |
|
$ |
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
2.1 |
|
|
$ |
(0.2 |
) |
|
$ |
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.K. |
|
(in millions of U.S. dollars) |
|
Balance at December 28, 2013 |
|
|
Charges to costs and expenses |
|
|
Cash payments |
|
|
Balance at March 29, 2014 |
|
Severance liability restructuring |
|
$ |
|
|
|
$ |
0.1 |
|
|
$ |
|
|
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
0.1 |
|
|
$ |
|
|
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 5Share-Based Compensation
The table below summarizes the share-based compensation expense for the three months ended April 4, 2015 and
March 29, 2014. This share-based compensation expense was recorded in SG&A 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 1986 Common Share Option Plan, as amended (the Option Plan), as the case may be.
15
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Stock options |
|
$ |
0.4 |
|
|
$ |
0.4 |
|
Performance-based RSUs |
|
|
1.5 |
|
|
|
0.2 |
|
Time-based RSUs |
|
|
0.5 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2.4 |
|
|
$ |
1.3 |
|
|
|
|
|
|
|
|
|
|
As of April 4, 2015, 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 April 4, 2015 |
|
|
Weighted average years expected to recognize compensation |
|
Stock options |
|
$ |
3.9 |
|
|
|
2.3 |
|
Performance-based RSUs |
|
|
9.8 |
|
|
|
2.6 |
|
Time-based RSUs |
|
|
4.2 |
|
|
|
2.0 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
17.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option activity for the three months ended April 4, 2015 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares (in thousands) |
|
|
Weighted average exercise price |
|
Balance at January 3, 2015 |
|
|
1,221 |
|
|
$ |
7.77 |
|
Awarded |
|
|
599 |
|
|
|
9.25 |
|
Exercised |
|
|
(19 |
) |
|
|
6.58 |
|
|
|
|
|
|
|
|
|
|
Outstanding at April 4, 2015 |
|
|
1,801 |
|
|
$ |
8.27 |
|
|
|
|
|
|
|
|
|
|
Exercisable at April 4, 2015 |
|
|
391 |
|
|
$ |
6.12 |
|
|
|
|
|
|
|
|
|
|
During the three months ended April 4, 2015, 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 January 3, 2015 |
|
|
1,782 |
|
|
$ |
7.01 |
|
|
|
664 |
|
|
$ |
8.63 |
|
Awarded |
|
|
279 |
|
|
|
9.25 |
|
|
|
185 |
|
|
|
9.25 |
|
Awarded in connection with modification |
|
|
55 |
|
|
|
7.90 |
|
|
|
|
|
|
|
|
|
Issued |
|
|
(255 |
) |
|
|
6.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at April 4, 2015 |
|
|
1,861 |
|
|
$ |
7.39 |
|
|
|
849 |
|
|
$ |
8.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In February 2013, our board of directors adopted an amendment and restatement of the 2010 Equity Incentive
Plan (the Amended and Restated Equity Plan). Awards made in 2011 and 2012 prior to the amendment and restatement are generally governed by the 2010 Equity Incentive Plan.
16
Certain outstanding stock options were granted under the Option Plan, which was subsequently
terminated in 2011. 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 6Income Taxes
Income tax benefit was $9.4 million on pretax loss of $10.6 million for the three months ended April 4, 2015, as
compared to an income tax benefit of $0.5 million on pretax loss of $3.2 million for the three months ended March 29, 2014.
With the
release of our federal tax valuation allowance in the United States during the fourth quarter of 2014, we are now able to realize tax benefits generated in the United States. As we have significant global permanent book to tax differences that
exceed our estimated income before taxes on an annual basis, small changes in our estimated income before taxes can cause material fluctuations in our estimated effective tax rate on a quarterly basis. We have therefore calculated our quarterly
income tax provision for the quarter ended April 4, 2015 on a discrete basis rather than using the estimated annual effective tax rate for the year, in accordance with Accounting Standards Codification 740.
Note 7Net Loss Per Common Share
Basic net loss per common share is calculated by dividing net loss attributed to Cott Corporation by the weighted average
number of common shares outstanding during the periods presented. Diluted net loss per common share is calculated by dividing diluted net income attributed to Cott Corporation by 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, Time-based RSUs and Convertible Preferred Shares during the periods presented. The dilutive effect of the Convertible Preferred Shares was
calculated using the if-converted method. In applying the if-converted method, the Convertible Preferred Shares are assumed to have been converted at the beginning of the period (or at the time of issuance, if later). Set forth below is a
reconciliation of the numerator and denominator for the diluted earnings per common share computations for the periods indicated:
Numerator
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Net loss attributed to Cott Corporation |
|
$ |
(6.0 |
) |
|
$ |
(4.1 |
) |
Plus: |
|
|
|
|
|
|
|
|
Accumulated dividends on convertible preferred shares 1 |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net loss attributed to Cott Corporation |
|
$ |
(3.3 |
) |
|
$ |
(4.1 |
) |
17
Denominator
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in thousands) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Weighted average number of shares outstanding basic |
|
|
93,196 |
|
|
|
94,319 |
|
Dilutive effect of stock options |
|
|
|
|
|
|
|
|
Dilutive effect of Performance-based RSUs |
|
|
|
|
|
|
|
|
Dilutive effect of Time-based RSUs |
|
|
|
|
|
|
|
|
Dilutive effect of Convertible Preferred Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average number of shares outstanding diluted |
|
|
93,196 |
|
|
|
94,319 |
|
|
|
|
|
|
|
|
|
|
1. |
The accumulated dividends on Convertible Preferred Shares were added back to the numerator to calculate diluted net loss per common share because the Convertible Preferred Shares were assumed to have been converted at
the time of issuance for purposes of this calculation. |
At April 4, 2015, we excluded 991,259 (March 29,
2014882,951) 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. In addition, we excluded the impact of the
remaining stock options, Performance-based RSUs, Time-based RSUs and Convertible Preferred Shares from the computation of diluted net loss per share as they were considered anti-dilutive for purposes of calculating loss per share.
Note 8Segment Reporting
Our product lines include CSDs, 100% shelf stable juice and juice-based products, clear, still and sparkling flavored
waters, purified, spring, artesian, distilled and fluoridated bottled water, energy drinks and shots, sports products, new age beverages, ready-to-drink teas and alcoholic beverages, beverage concentrates, liquid enhancers and freezeables, as well
as hot chocolate, coffee, malt drinks, creamers/whiteners and cereals. In addition, Cott is now a national direct-to-consumer provider of bottled water, office coffee and water filtration services offering a comprehensive portfolio of beverage
products, equipment and supplies to approximately 1.5 million customer locations through its network of over 200 sales and distribution facilities and daily operation of over 2,100 routes. During the first quarter of 2014, our business operated
through three reporting segmentsNorth America, U.K., 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. In December 2014, we added a fourth reporting segment, DSS, in connection
with the DSS Acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
North America |
|
|
DSS |
|
|
U.K. |
|
|
All Other |
|
|
Corporate |
|
|
Total |
|
For the Three Months Ended April 4, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue 1 |
|
$ |
324.3 |
|
|
$ |
240.3 |
|
|
|
132.2 |
|
|
$ |
13.0 |
|
|
$ |
|
|
|
$ |
709.8 |
|
Depreciation and amortization |
|
|
21.3 |
|
|
|
30.2 |
|
|
|
5.5 |
|
|
|
0.4 |
|
|
|
|
|
|
|
57.4 |
|
Operating income (loss) |
|
|
7.2 |
|
|
|
(1.5 |
) |
|
|
3.9 |
|
|
|
1.6 |
|
|
|
(4.5 |
) |
|
|
6.7 |
|
Additions to property, plant and equipment |
|
|
7.2 |
|
|
|
18.4 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
27.3 |
|
As of April 4, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
319.2 |
|
|
|
415.4 |
|
|
|
103.7 |
|
|
|
6.9 |
|
|
|
|
|
|
|
845.2 |
|
Goodwill |
|
|
122.0 |
|
|
|
559.9 |
|
|
|
56.0 |
|
|
|
4.5 |
|
|
|
|
|
|
|
742.4 |
|
Intangibles and other assets |
|
|
260.8 |
|
|
|
408.8 |
|
|
|
93.2 |
|
|
|
0.1 |
|
|
|
|
|
|
|
762.9 |
|
Total assets 2 |
|
|
1,035.8 |
|
|
|
1,548.0 |
|
|
|
418.0 |
|
|
|
31.8 |
|
|
|
|
|
|
|
3,033.6 |
|
1. |
Intersegment revenue between North America and the other reporting segments was $4.4 million for the three months ended April 4, 2015. |
2. |
Excludes intersegment receivables, investments and notes receivable. |
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
North America |
|
|
DSS |
|
|
U.K. |
|
|
All Other |
|
|
Corporate |
|
|
Total |
|
For the Three Months Ended March 29, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue 1 |
|
$ |
344.7 |
|
|
$ |
|
|
|
$ |
115.6 |
|
|
$ |
14.8 |
|
|
$ |
|
|
|
$ |
475.1 |
|
Depreciation and amortization |
|
|
20.7 |
|
|
|
|
|
|
|
4.0 |
|
|
|
0.4 |
|
|
|
|
|
|
|
25.1 |
|
Operating income (loss) |
|
|
2.5 |
|
|
|
|
|
|
|
2.2 |
|
|
|
2.5 |
|
|
|
(2.9 |
) |
|
|
4.3 |
|
Additions to property, plant and equipment |
|
|
5.8 |
|
|
|
|
|
|
|
3.0 |
|
|
|
|
|
|
|
|
|
|
|
8.8 |
|
As of January 3, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
331.9 |
|
|
|
415.4 |
|
|
|
109.9 |
|
|
|
7.3 |
|
|
|
|
|
|
|
864.5 |
|
Goodwill |
|
|
123.7 |
|
|
|
556.9 |
|
|
|
58.5 |
|
|
|
4.5 |
|
|
|
|
|
|
|
743.6 |
|
Intangibles and other assets |
|
|
266.8 |
|
|
|
415.5 |
|
|
|
99.2 |
|
|
|
0.2 |
|
|
|
|
|
|
|
781.7 |
|
Total assets 2 |
|
|
1,077.7 |
|
|
|
1,572.8 |
|
|
|
426.8 |
|
|
|
30.4 |
|
|
|
|
|
|
|
3,107.7 |
|
1. |
Intersegment revenue between North America and the other reporting segments was $6.1 million for the three months ended March 29, 2014. |
2. |
Excludes intersegment receivables, investments and notes receivable. |
For the three months
ended April 4, 2015, sales to Walmart accounted for 18.6% (March 29, 201428.6%) of our total revenue, 34.0% of our North America reporting segment revenue (March 29, 201434.7%), 11.6% of our U.K. reporting segment revenue (March 29,
201414.2%), 4.8% of our All Other reporting segment revenue (March 29, 20140.3%), and 2.6% of our DSS reporting segment revenue.
Credit risk arises from the potential default of a customer in meeting its financial obligations with 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.
19
Revenues for our DSS reporting segment from sales to external customers were located exclusively
in the United States. In our other reporting segments, revenues attributed to external customers located outside of Canada are displayed separately within the U.K. and All Other reporting segments above, with the exception of revenues attributed to
external customers located in the United States, which are reported within the North America reporting segment. Revenues generated from sales to external customers in the United States for the North America reporting segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
United States |
|
$ |
297.2 |
|
|
$ |
310.7 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
297.2 |
|
|
$ |
310.7 |
|
|
|
|
|
|
|
|
|
|
Revenues by channel by reporting segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
(in millions of U.S. dollars) |
|
North America |
|
|
DSS |
|
|
U.K. |
|
|
All Other |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private label retail |
|
$ |
267.2 |
|
|
$ |
15.6 |
|
|
$ |
60.5 |
|
|
$ |
1.2 |
|
|
$ |
344.5 |
|
Branded retail |
|
|
26.7 |
|
|
|
19.7 |
|
|
|
41.2 |
|
|
|
1.1 |
|
|
|
88.7 |
|
Contract packaging |
|
|
25.5 |
|
|
|
|
|
|
|
28.4 |
|
|
|
4.0 |
|
|
|
57.9 |
|
Home and office bottled water delivery |
|
|
|
|
|
|
149.6 |
|
|
|
|
|
|
|
|
|
|
|
149.6 |
|
Office coffee services |
|
|
|
|
|
|
32.0 |
|
|
|
|
|
|
|
|
|
|
|
32.0 |
|
Other |
|
|
4.9 |
|
|
|
23.4 |
|
|
|
2.1 |
|
|
|
6.7 |
|
|
|
37.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
324.3 |
|
|
$ |
240.3 |
|
|
$ |
132.2 |
|
|
$ |
13.0 |
|
|
$ |
709.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
(in millions of U.S. dollars) |
|
North America |
|
|
U.K. |
|
|
All Other |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private label retail |
|
$ |
299.5 |
|
|
$ |
64.4 |
|
|
$ |
1.0 |
|
|
$ |
364.9 |
|
Branded retail |
|
|
24.7 |
|
|
|
31.6 |
|
|
|
1.2 |
|
|
|
57.5 |
|
Contract packaging |
|
|
17.1 |
|
|
|
18.9 |
|
|
|
6.8 |
|
|
|
42.8 |
|
Other |
|
|
3.4 |
|
|
|
0.7 |
|
|
|
5.8 |
|
|
|
9.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
344.7 |
|
|
$ |
115.6 |
|
|
$ |
14.8 |
|
|
$ |
475.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net by geographic area as of April 4, 2015 and January 3, 2015 were
as follows:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
January 3, 2015 |
|
North America |
|
$ |
734.6 |
|
|
$ |
747.3 |
|
U.K. |
|
|
103.7 |
|
|
|
109.9 |
|
All Other |
|
|
6.9 |
|
|
|
7.3 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
845.2 |
|
|
$ |
864.5 |
|
|
|
|
|
|
|
|
|
|
20
Note 9Inventories
The following table summarizes inventories as of April 4, 2015 and January 3, 2015:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
January 3, 2015 |
|
Raw materials |
|
$ |
93.3 |
|
|
$ |
105.8 |
|
Finished goods 1 |
|
|
142.4 |
|
|
|
118.4 |
|
Resale items |
|
|
14.9 |
|
|
|
17.4 |
|
Other |
|
|
19.9 |
|
|
|
20.8 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
270.5 |
|
|
$ |
262.4 |
|
|
|
|
|
|
|
|
|
|
1. |
Recently acquired DSS finished goods inventory of $8.9 million were reclassified to property, plant and equipment, net as of January 3, 2015 (see Note 1 to the Consolidated Financial Statements) to be consistent
with Cotts accounting treatment. |
Note 10Intangibles and Other Assets
The following table summarizes intangibles and other assets as of April 4, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 4, 2015 |
|
(in millions of U.S. dollars) |
|
Cost |
|
|
Accumulated Amortization |
|
|
Net |
|
Intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
Not subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Rights |
|
$ |
45.0 |
|
|
$ |
|
|
|
$ |
45.0 |
|
DSS Trademarks |
|
|
183.1 |
|
|
|
|
|
|
|
183.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangibles not subject to amortization |
|
|
228.1 |
|
|
|
|
|
|
|
228.1 |
|
Subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships |
|
|
642.8 |
|
|
|
189.5 |
|
|
|
453.3 |
|
Trademarks |
|
|
33.1 |
|
|
|
27.2 |
|
|
|
5.9 |
|
Information technology |
|
|
52.7 |
|
|
|
25.9 |
|
|
|
26.8 |
|
Other |
|
|
7.5 |
|
|
|
3.8 |
|
|
|
3.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangibles subject to amortization |
|
|
736.1 |
|
|
|
246.4 |
|
|
|
489.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangibles |
|
|
964.2 |
|
|
|
246.4 |
|
|
|
717.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
|
37.4 |
|
|
|
9.7 |
|
|
|
27.7 |
|
Deposits |
|
|
7.2 |
|
|
|
|
|
|
|
7.2 |
|
Other |
|
|
11.6 |
|
|
|
1.4 |
|
|
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets |
|
|
56.2 |
|
|
|
11.1 |
|
|
|
45.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangibles and other assets |
|
$ |
1,020.4 |
|
|
$ |
257.5 |
|
|
$ |
762.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense of intangible and other assets was $19.2 million for the three months ended April 4,
2015 and $8.4 million for the three months ended March 29, 2014.
21
The estimated amortization expense for intangibles over the next five years is:
|
|
|
|
|
(in millions of U.S. dollars) |
|
|
|
Remainder of 2015 |
|
$ |
54.2 |
|
2016 |
|
|
66.3 |
|
2017 |
|
|
58.7 |
|
2018 |
|
|
51.6 |
|
2019 |
|
|
43.8 |
|
Thereafter |
|
|
215.1 |
|
|
|
|
|
|
Total |
|
$ |
489.7 |
|
|
|
|
|
|
Note 11Debt
Our total debt as of April 4, 2015 and January 3, 2015 was as follows:
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
January 3, 2015 |
|
6.750% senior notes due in 2020 |
|
|
625.0 |
|
|
|
625.0 |
|
10.000% senior notes due in 2021 1 |
|
|
394.2 |
|
|
|
405.6 |
|
5.375% senior notes due in 2022 |
|
|
525.0 |
|
|
|
525.0 |
|
ABL facility |
|
|
221.0 |
|
|
|
229.0 |
|
GE Term Loan |
|
|
7.7 |
|
|
|
8.2 |
|
Capital leases and other debt financing |
|
|
4.7 |
|
|
|
5.2 |
|
|
|
|
|
|
|
|
|
|
Total debt |
|
|
1,777.6 |
|
|
|
1,798.0 |
|
Less: Short-term borrowings and current debt: |
|
|
|
|
|
|
|
|
ABL facility |
|
|
221.0 |
|
|
|
229.0 |
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings |
|
|
221.0 |
|
|
|
229.0 |
|
GE Term Loan current maturities |
|
|
2.1 |
|
|
|
2.0 |
|
Capital leases and other financing current maturities |
|
|
2.0 |
|
|
|
2.0 |
|
|
|
|
|
|
|
|
|
|
Total current debt |
|
|
225.1 |
|
|
|
233.0 |
|
|
|
|
|
|
|
|
|
|
Total long-term debt |
|
$ |
1,552.5 |
|
|
$ |
1,565.0 |
|
|
|
|
|
|
|
|
|
|
1. |
The outstanding aggregate principal amount of the DSS Notes of $350.0 million was assumed by Cott at fair value of $406.0 million in connection with the DSS Acquisition. The premium of $56.0 million is being amortized
as an adjustment to interest expense using the effective interest method over the remaining contractual term of the DSS Notes. The effective interest rate is 7.515%. |
Asset-Based Lending Facility
In March
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. We refinanced
the ABL facility in August 2010 and have amended the ABL from time to time and incurred an aggregate of $7.5 million of financing fees in connection therewith.
Most recently, on December 12, 2014, in connection with the DSS Acquisition, we amended the ABL facility to, among other things,
(1) provide for an increase in the lenders commitments under the ABL facility to $400.0 million (which, with the accordion feature, if used, permits us to increase the lenders commitments under the ABL facility to $450.0 million,
subject to certain conditions), (2) extend the maturity date to the earliest of (i) December 12, 2019, (ii) June 12, 2019, if we have not redeemed, repurchased or refinanced the 2020 Notes by May 28, 2019, or
(iii) any earlier date on which the commitments under the ABL facility are reduced to zero or otherwise terminated, (3) include DSS and its subsidiaries as borrowers, (4) permit certain adjustments to the borrowing base calculation,
(5) permit the debt, liens and intercreditor arrangements contemplated by the supplemental indenture entered into in connection with the DSS Notes (described below), (6) permit certain other indebtedness that we intend to issue or assume
in connection with the DSS Acquisition, (7) permit certain other changes to dollar thresholds and limitations within our covenants generally reflecting the increased size of the facility. We incurred approximately $1.7 million of financing fees
in connection with the amendment of the ABL facility.
22
The financing fees incurred in connection with the refinancing of the ABL facility in August
2010, along with the financing fees incurred in connection with the amendments of the ABL facility, other than the May 2014 amendment, 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 May 2014 amendment, was considered to be a modification of the original agreement under GAAP.
As of
April 4, 2015, we had $221.0 million of outstanding borrowings under the ABL facility. The commitment fee was 0.375% per annum of the unused commitment, which, taking into account $42.0 million of letters of credit, was $137.0 million as
of April 4, 2015. As of April 4, 2015, our total availability under the ABL facility was $380.8 million, which was based on our borrowing base (accounts receivable, inventory, and fixed assets). As a result of our outstanding borrowings
under the ABL facility of $221.0 million and outstanding letters of credit of $42.0 million, our excess availability under the ABL facility was $117.8 million.
5.375% Senior Notes due in 2022
On
June 24, 2014, we issued $525.0 million of our 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, as amended (the
Securities Act). 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 $9.2 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.
10.000% Senior Notes due in 2021
On
August 30, 2013, DS Services of America, Inc. (formerly DS Waters of America, Inc.) issued $350.0 million of the DSS Notes to qualified purchasers in a private placement under Rule 144A and Regulation S under the Securities Act. Pursuant to a
consent solicitation statement dated November 13, 2014, as amended on November 25, 2014, and its accompanying consent letter, dated November 13, 2014, DSS solicited consent from the holders of the DSS Notes to certain modifications
and amendments to the August 30, 2013 indenture and related security documents. On December 2, 2014, the requisite consents from the holders of the DSS Notes were obtained, with a consent payment of approximately $19.2 million. At the DSS
Acquisition closing, we and most of our U.S., Canadian and U.K. subsidiaries executed a supplemental indenture to be added as guarantors to the DSS Notes. The interest on the DSS Notes is payable semi-annually on March 1st and September 1st of each year commencing on March 1, 2014.
The DSS Notes were recorded at their fair value of $406.0 million as part of the DSS Acquisition. The difference between the fair value and
the principal amount of $350.0 million is amortized as a component of interest expense over the remaining contractual term of the DSS Notes. We incurred approximately $26.5 million of consent solicitation fees and bridge financing commitment fees.
6.750% Senior Notes due in 2020
On
December 12, 2014, we issued the 2020 Notes to qualified purchasers in a private placement under Rule 144A and Regulation S under the Securities Act. The issuer of the 2020 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 2020 Notes. The interest on the 2020 Notes is payable semi-annually on January 1st and July 1st of each year commencing on July 1, 2015.
We incurred $14.4 million of financing fees in connection with the issuance of the 2020 Notes. The financing fees are being amortized using
the effective interest method over a five-year period, which represents the term to maturity of the 2020 Notes.
8.125% Senior Notes due in 2018
On August 17, 2010, we issued the 2018 Notes. The issuer of the 2018 Notes was our wholly-owned U.S. subsidiary Cott Beverages
Inc. 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, the write-off of approximately $3.0 million in deferred financing fees, and other costs of approximately $0.2 million.
23
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 the write-off of 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 our 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. 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, the write-off of approximately $4.0 million in deferred financing fees, and discount charges and other costs of approximately $0.5 million.
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 the write-off of 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 a 5.23% interest rate.
Note 12Accumulated Other Comprehensive (Loss) Income
Changes in accumulated other comprehensive (loss) income (AOCI) by component1 for the three months ended April 4, 2015 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 4, 2015 |
|
(in millions of U.S. dollars) |
|
Gains and Losses on Derivative Instruments |
|
|
Pension Benefit Plan Items |
|
|
Currency Translation Adjustment Items |
|
|
Total |
|
Beginning balance January 3, 2015 |
|
$ |
0.2 |
|
|
$ |
(12.4 |
) |
|
$ |
(38.8 |
) |
|
$ |
(51.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OCI before reclassifications |
|
|
0.2 |
|
|
|
|
|
|
|
(25.9 |
) |
|
|
(25.7 |
) |
Amounts reclassified from AOCI |
|
|
(0.2 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current-period OCI |
|
|
|
|
|
|
0.1 |
|
|
|
(25.9 |
) |
|
|
(25.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance April 4, 2015 |
|
$ |
0.2 |
|
|
$ |
(12.3 |
) |
|
$ |
(64.7 |
) |
|
$ |
(76.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
All amounts are net of tax. Amounts in parentheses indicate debits. |
The following table
summarizes the amounts reclassified from AOCI1 for the three months ended April 4, 2015 and March 29, 2014, respectively.
24
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
For the Three Months Ended |
|
|
|
Details About AOCI Components |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
|
Affected Line Item in the Statement Where Net Income Is
Presented |
Gains and losses on derivative instruments Foreign currency and commodity hedges |
|
$ |
0.3 |
|
|
$ |
0.1 |
|
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.3 |
|
|
$ |
0.1 |
|
|
Total before taxes |
|
|
|
(0.1 |
) |
|
|
|
|
|
Tax (expense) or benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.2 |
|
|
$ |
0.1 |
|
|
Net of tax |
|
|
|
|
|
|
|
|
|
|
|
Amortization of pension benefit plan items Prior service costs 2 |
|
$ |
(0.1 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1 |
) |
|
|
|
|
|
Total before taxes |
|
|
|
|
|
|
|
|
|
|
Tax (expense) or benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.1 |
) |
|
$ |
|
|
|
Net of tax |
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period |
|
$ |
0.1 |
|
|
$ |
0.1 |
|
|
Net of tax |
|
|
|
|
|
|
|
|
|
|
|
1. |
Amounts in parentheses indicate debits. |
2. |
These AOCI components are included in the computation of net periodic pension cost. |
Note 13Commitments 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, our U.K. reporting segment acquired 100% of the share capital of Cooke Bros. Holdings Limited (the Calypso Soft Drinks
Acquisition), which includes the subsidiary companies Calypso Soft Drinks Limited and Mr. Freeze (Europe) Limited. The Calypso Soft Drinks Acquisition included deferred payments 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 $42.0 million in standby letters of credit outstanding as of April 4, 2015 (March 29, 2014 $7.5 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 $0.5 million was collected in December 2014.
In May 2014, we completed the Aimia Acquisition, which included deferred consideration of £19.9 million ($33.5 million), which was
paid by us on September 15, 2014 and aggregate consideration of up to £16.0 million ($23.7 million at exchange rates in effect on April 4, 2015), which is payable upon achievement of certain measures related to Aimias
performance during the twelve months ending July 1, 2016.
Note 14Preferred Shares
As a portion of the consideration in the DSS Acquisition, we issued to certain former security holders of DSS approximately
$116.1 million of Convertible Preferred Shares and approximately $32.7 million of Non-Convertible Preferred Shares, which shares are redeemable at our option. At any time following the third anniversary of their issuance, at the option of the
holders, the Convertible Preferred Shares will be convertible into common shares of Cott Corporation. The conversion rate will initially be 159.24 common shares per $1,000 face value of Convertible Preferred Shares, which is equivalent to a
conversion price of approximately $6.28 per common share. The conversion rate is subject to adjustment upon certain events. Holders of the Convertible Preferred Shares and Non-Convertible Preferred Shares can require us to redeem such shares upon a
change of control of Cott or, with respect to the Non-Convertible Preferred Shares only, at any time on or after the ninth anniversary of the issue date.
25
Dividends
Holders of Convertible Preferred Shares are entitled to a quarterly fixed cumulative dividend in an amount equal to 9% per annum of the
redemption value of each Convertible Preferred Share, and such dividend shall increase by 1% on each of the first through fifth anniversaries of issuance. Holders of Non-Convertible Preferred Shares are entitled to a quarterly fixed cumulative
dividend in an amount equal to 10% per annum of the redemption value of each Non-Convertible Preferred Share, and such dividend shall increase by 1% on each of the first through fifth anniversaries of issuance.
Voting Rights
The Preferred
Shares have the right to approve certain actions by us, with each series of Preferred Shares voting separately as a series, as long as the Preferred Shares are outstanding. The Convertible Preferred Shares have the right to vote alongside our common
shares with respect to certain matters beginning on June 13, 2016 and unrestricted rights to vote alongside our common shares beginning on December 13, 2017. The Non-Convertible Preferred Shares do not have the right to vote alongside our
common shares.
Note 15Share Repurchase Program
On May 6, 2014, our board of directors renewed our share repurchase program for up to 5% of Cotts outstanding
common shares over a 12-month period commencing upon the expiration of the prior share repurchase program on May 21, 2014. In connection with the DSS Acquisition, we suspended our share repurchase program during the fourth quarter of 2014 and
do not expect to make further repurchases of our common shares under the share repurchase program prior to its expiration on May 21, 2015.
Note 16Hedging 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 foreign currency 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.
All derivatives are carried at fair value in the Consolidated Balance Sheets in the line item
accounts receivable, net or accounts payable and accrued liabilities. 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 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.
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.
26
We estimate the fair values of our derivatives based on quoted market prices or pricing models
using current market rates (see Note 17 to the Consolidated Financial Statements). 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. 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 promptly any downgrade in counterparty credit rating. 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 three months ended April 4, 2015 or March 29, 2014, 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 qualified for our foreign currency cash flow hedging program were $23.0 million and $22.5 million as of April 4, 2015 and January 3, 2015, respectively. Approximately $1.5 million and $0.1 million of
unrealized net of tax gains related to the foreign currency cash flow hedges were included in AOCI as of April 4, 2015 and March 29, 2014, respectively. The hedge ineffectiveness for these cash flow hedging instruments was not material
during the periods presented.
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 $56.8 million and $55.4 million as of April 4, 2015 and
January 3, 2015, respectively. Approximately $1.5 million and nil of unrealized net of tax losses related to the commodity swaps were included in AOCI as of April 4, 2015 and March 29, 2014, respectively. The cumulative hedge
ineffectiveness for these hedging instruments was approximately $0.9 million, of which $0.3 million was recognized as a decrease in cost of sales within the Consolidated Statements of Operations for the three months ended April 4, 2015. The
hedge ineffectiveness was not material during the comparable prior year period.
The fair value of the Companys derivative assets
included within other receivables as a component of accounts receivable, net was $2.2 million and $1.2 million as of April 4, 2015 and January 3, 2015, respectively. The fair value of the Companys derivative liabilities included in
accrued liabilities was $3.1 million and $2.3 million as of April 4, 2015 and January 3, 2015, respectively. Set forth below is a reconciliation of the Companys derivatives by contract type for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
January 3, 2015 |
|
Derivative Contract |
|
Assets |
|
|
Liabilities |
|
|
Assets |
|
|
Liabilities |
|
Foreign currency hedge |
|
$ |
2.0 |
|
|
$ |
|
|
|
$ |
1.0 |
|
|
$ |
|
|
Aluminum swaps |
|
|
0.2 |
|
|
|
(3.1 |
) |
|
|
0.2 |
|
|
|
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2.2 |
|
|
$ |
(3.1 |
) |
|
$ |
1.2 |
|
|
$ |
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Aluminum swaps subject to enforceable master netting arrangements are presented on a net basis in
the reconciliation above. The fair value of the aluminum swap assets and liabilities which are shown on a net basis are reconciled in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
January 3, 2015 |
|
|
|
Assets |
|
|
Liabilities |
|
|
Assets |
|
|
Liabilities |
|
Aluminum swap assets |
|
$ |
0.2 |
|
|
$ |
0.2 |
|
|
$ |
0.2 |
|
|
$ |
0.2 |
|
Aluminum swap liabilities |
|
|
|
|
|
|
(3.3 |
) |
|
|
|
|
|
|
(2.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset (liability) |
|
$ |
0.2 |
|
|
$ |
(3.1 |
) |
|
$ |
0.2 |
|
|
$ |
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The settlement of our derivative instruments resulted in a credit to cost of sales of $0.2 million for the
three months ended April 4, 2015 and $0.1 million for the comparable prior year period.
Note 17Fair 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 that
are required to be recorded at fair value on a recurring basis in accordance with U.S. GAAP.
Our derivative assets represent Level 2
instruments. 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 April 4, 2015 and January 3, 2015 was $2.2
million and $1.2 million, respectively. The fair value for the derivative liabilities as of April 4, 2015 and January 3, 2015 was $3.1 million and $2.3 million, 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 April 4, 2015 and January 3, 2015 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 4, 2015 |
|
|
January 3, 2015 |
|
(in millions of U.S. dollars) |
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
6.750% senior notes due in 2020 1 |
|
$ |
625.0 |
|
|
$ |
646.9 |
|
|
$ |
625.0 |
|
|
$ |
630.1 |
|
10.000% senior notes due in 2021 1, 2 |
|
|
394.2 |
|
|
|
409.5 |
|
|
|
405.6 |
|
|
|
403.4 |
|
5.375% senior notes due in 2022 1 |
|
|
525.0 |
|
|
|
504.0 |
|
|
|
525.0 |
|
|
|
481.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,544.2 |
|
|
$ |
1,560.4 |
|
|
$ |
1,555.6 |
|
|
$ |
1,515.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
2. |
The outstanding aggregate principal amount of the DSS Notes of $350.0 million was assumed by Cott at fair value of $406.0 million in connection with the DSS Acquisition. The premium of $56.0 million is being amortized
as an adjustment to interest expense using the effective interest method over the remaining contractual term of the DSS Notes. |
28
Fair Value of contingent consideration
We estimated the fair value of the Aimia Acquisition related contingent consideration based on financial projections of the acquired business
and estimated probabilities of achievement of certain EBITDA targets. The fair value was based on significant inputs not observable in the market and thus represented a Level 3 instrument. Level 3 instruments are valued based on unobservable inputs
that are supported by little or no market activity and reflect our own assumptions in measuring fair value. The acquisition date fair value of the contingent consideration was determined to be £10.6 million ($15.7 million at exchange
rates in effect on April 4, 2015) using a present valued probability-weighted income approach. We did not record any fair value adjustments to the contingent consideration as the key assumptions used to calculate the fair value at the
acquisition date remained consistent at April 4, 2015. Should our assumptions regarding probability of achievement of certain EBITDA targets change in future periods, the change in fair value of the contingent consideration will be recognized
as a gain or loss in the Consolidated Statement of Operations. The maximum potential payout is £16.0 million ($23.7 million at exchange rates in effect on April 4, 2015) on an undiscounted basis.
Note 18Guarantor Subsidiaries
The DSS Notes assumed as part of the DSS Acquisition are guaranteed on a senior basis pursuant to guarantees by Cott
Corporation and certain other 100% owned direct and indirect subsidiaries (the Guarantor Subsidiaries). DSS and each Guarantor Subsidiary is 100% owned by Cott Corporation. The guarantees of the DSS 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.
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 Securities and Exchange Commission interpretations governing reporting of subsidiary financial information.
The following supplemental financial information sets forth on a consolidating basis, our Balance Sheets, Statements of Operations and Cash
Flows for Cott Corporation, DSS, Guarantor Subsidiaries and our other subsidiaries (the Non-guarantor Subsidiaries). The supplemental financial information reflects our investments and those of DSS in their respective subsidiaries using
the equity method of accounting.
29
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
|
|
Cott Corporation |
|
|
DS Services of America, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Revenue, net |
|
$ |
30.0 |
|
|
$ |
240.3 |
|
|
$ |
418.3 |
|
|
$ |
31.4 |
|
|
$ |
(10.2 |
) |
|
$ |
709.8 |
|
Cost of sales |
|
|
27.0 |
|
|
|
100.4 |
|
|
|
365.4 |
|
|
|
25.9 |
|
|
|
(10.2 |
) |
|
|
508.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3.0 |
|
|
|
139.9 |
|
|
|
52.9 |
|
|
|
5.5 |
|
|
|
|
|
|
|
201.3 |
|
Selling, general and administrative expenses |
|
|
5.5 |
|
|
|
137.2 |
|
|
|
42.7 |
|
|
|
3.1 |
|
|
|
|
|
|
|
188.5 |
|
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
1.1 |
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
1.4 |
|
Acquisition and integration expenses |
|
|
|
|
|
|
3.0 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(2.5 |
) |
|
|
(1.4 |
) |
|
|
8.2 |
|
|
|
2.4 |
|
|
|
|
|
|
|
6.7 |
|
Other (income) expense, net |
|
|
(10.5 |
) |
|
|
(0.2 |
) |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
|
|
|
|
(10.4 |
) |
Intercompany interest (income) expense, net |
|
|
(3.0 |
) |
|
|
10.9 |
|
|
|
(7.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
0.1 |
|
|
|
7.3 |
|
|
|
20.3 |
|
|
|
|
|
|
|
|
|
|
|
27.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense (benefit) and equity (loss) income |
|
|
10.9 |
|
|
|
(19.4 |
) |
|
|
(4.4 |
) |
|
|
2.3 |
|
|
|
|
|
|
|
(10.6 |
) |
Income tax expense (benefit) |
|
|
1.2 |
|
|
|
(7.2 |
) |
|
|
(3.5 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
(9.4 |
) |
Equity (loss) income |
|
|
(12.2 |
) |
|
|
|
|
|
|
1.4 |
|
|
|
|
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(12.2 |
) |
|
$ |
0.5 |
|
|
$ |
2.2 |
|
|
$ |
10.8 |
|
|
$ |
(1.2 |
) |
Less: Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
|
|
|
|
|
|
1.3 |
|
Less: Accumulated dividends on convertible preferred shares |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.7 |
|
Less: Accumulated dividends on non-convertible preferred shares |
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8 |
|
Net (loss) income attributed to Cott Corporation |
|
$ |
(6.0 |
) |
|
$ |
(12.2 |
) |
|
$ |
0.5 |
|
|
$ |
0.9 |
|
|
$ |
10.8 |
|
|
$ |
(6.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributed to Cott Corporation |
|
$ |
(31.8 |
) |
|
$ |
(12.2 |
) |
|
$ |
(15.8 |
) |
|
$ |
0.6 |
|
|
$ |
27.4 |
|
|
$ |
(31.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
|
|
Cott Corporation |
|
|
DS Services of America, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Revenue, net |
|
$ |
37.2 |
|
|
$ |
|
|
|
$ |
417.4 |
|
|
$ |
32.3 |
|
|
$ |
(11.8 |
) |
|
$ |
475.1 |
|
Cost of sales |
|
|
34.2 |
|
|
|
|
|
|
|
369.9 |
|
|
|
26.6 |
|
|
|
(11.8 |
) |
|
|
418.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3.0 |
|
|
|
|
|
|
|
47.5 |
|
|
|
5.7 |
|
|
|
|
|
|
|
56.2 |
|
Selling, general and administrative expenses |
|
|
6.5 |
|
|
|
|
|
|
|
37.3 |
|
|
|
3.1 |
|
|
|
|
|
|
|
46.9 |
|
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Restructuring |
|
|
1.9 |
|
|
|
|
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
2.2 |
|
Asset impairments |
|
|
0.9 |
|
|
|
|
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
Acquisition and integration expenses |
|
|
|
|
|
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(6.3 |
) |
|
|
|
|
|
|
8.0 |
|
|
|
2.6 |
|
|
|
|
|
|
|
4.3 |
|
Other expense (income), net |
|
|
0.2 |
|
|
|
|
|
|
|
(2.6 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
(2.3 |
) |
Interest expense, net |
|
|
0.1 |
|
|
|
|
|
|
|
9.7 |
|
|
|
|
|
|
|
|
|
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax (benefit) expense and equity income (loss) |
|
|
(6.6 |
) |
|
|
|
|
|
|
0.9 |
|
|
|
2.5 |
|
|
|
|
|
|
|
(3.2 |
) |
Income tax (benefit) expense |
|
|
(1.0 |
) |
|
|
|
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
|
|
|
|
(0.5 |
) |
Equity income (loss) |
|
|
1.5 |
|
|
|
|
|
|
|
(5.5 |
) |
|
|
|
|
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4.1 |
) |
|
$ |
|
|
|
$ |
(5.0 |
) |
|
$ |
2.4 |
|
|
$ |
4.0 |
|
|
$ |
(2.7 |
) |
Less: Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.4 |
|
|
|
|
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation |
|
$ |
(4.1 |
) |
|
$ |
|
|
|
$ |
(5.0 |
) |
|
$ |
1.0 |
|
|
$ |
4.0 |
|
|
$ |
(4.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributed to Cott Corporation |
|
$ |
(5.8 |
) |
|
$ |
|
|
|
$ |
13.1 |
|
|
$ |
0.9 |
|
|
$ |
(14.0 |
) |
|
$ |
(5.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Consolidating Balance Sheets
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 4, 2015 |
|
|
|
Cott Corporation |
|
|
DS Services of America, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
$ |
0.3 |
|
|
$ |
14.8 |
|
|
$ |
14.8 |
|
|
$ |
4.6 |
|
|
$ |
|
|
|
$ |
34.5 |
|
Accounts receivable, net of allowance |
|
|
17.7 |
|
|
|
119.8 |
|
|
|
224.2 |
|
|
|
12.8 |
|
|
|
(33.9 |
) |
|
|
340.6 |
|
Income taxes recoverable |
|
|
|
|
|
|
0.6 |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
|
|
|
|
1.2 |
|
Inventories |
|
|
13.0 |
|
|
|
29.4 |
|
|
|
220.7 |
|
|
|
7.4 |
|
|
|
|
|
|
|
270.5 |
|
Prepaid expenses and other assets |
|
|
3.1 |
|
|
|
10.1 |
|
|
|
20.9 |
|
|
|
0.4 |
|
|
|
|
|
|
|
34.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
34.1 |
|
|
|
174.7 |
|
|
|
480.9 |
|
|
|
25.5 |
|
|
|
(33.9 |
) |
|
|
681.3 |
|
Property, plant & equipment, net |
|
|
34.7 |
|
|
|
415.4 |
|
|
|
387.7 |
|
|
|
7.4 |
|
|
|
|
|
|
|
845.2 |
|
Goodwill |
|
|
21.9 |
|
|
|
559.8 |
|
|
|
160.7 |
|
|
|
|
|
|
|
|
|
|
|
742.4 |
|
Intangibles and other assets, net |
|
|
0.6 |
|
|
|
408.8 |
|
|
|
347.8 |
|
|
|
5.7 |
|
|
|
|
|
|
|
762.9 |
|
Deferred income taxes |
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
1.8 |
|
Due from affiliates |
|
|
183.4 |
|
|
|
|
|
|
|
401.2 |
|
|
|
|
|
|
|
(584.6 |
) |
|
|
|
|
Investments in subsidiaries |
|
|
411.1 |
|
|
|
|
|
|
|
412.8 |
|
|
|
|
|
|
|
(823.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
687.5 |
|
|
$ |
1,558.7 |
|
|
$ |
2,191.1 |
|
|
$ |
38.7 |
|
|
$ |
(1,442.4 |
) |
|
$ |
3,033.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, PREFERRED SHARES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
|
|
|
$ |
|
|
|
$ |
221.0 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
221.0 |
|
Current maturities of long-term debt |
|
|
0.1 |
|
|
|
|
|
|
|
3.0 |
|
|
|
1.0 |
|
|
|
|
|
|
|
4.1 |
|
Accounts payable and accrued liabilities |
|
|
30.3 |
|
|
|
131.3 |
|
|
|
285.5 |
|
|
|
8.8 |
|
|
|
(33.9 |
) |
|
|
422.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
30.4 |
|
|
|
131.3 |
|
|
|
509.5 |
|
|
|
9.8 |
|
|
|
(33.9 |
) |
|
|
647.1 |
|
Long-term debt |
|
|
|
|
|
|
394.2 |
|
|
|
1,158.0 |
|
|
|
0.3 |
|
|
|
|
|
|
|
1,552.5 |
|
Deferred income taxes |
|
|
|
|
|
|
115.1 |
|
|
|
(9.8 |
) |
|
|
|
|
|
|
|
|
|
|
105.3 |
|
Other long-term liabilities |
|
|
0.5 |
|
|
|
28.8 |
|
|
|
36.5 |
|
|
|
1.3 |
|
|
|
|
|
|
|
67.1 |
|
Due to affiliates |
|
|
1.2 |
|
|
|
548.8 |
|
|
|
2.0 |
|
|
|
32.6 |
|
|
|
(584.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
32.1 |
|
|
|
1,218.2 |
|
|
|
1,696.2 |
|
|
|
44.0 |
|
|
|
(618.5 |
) |
|
|
2,372.0 |
|
Convertible preferred shares |
|
|
116.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116.2 |
|
Non-convertible preferred shares |
|
|
32.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.7 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, no par |
|
|
389.5 |
|
|
|
355.5 |
|
|
|
1,210.8 |
|
|
|
39.5 |
|
|
|
(1,605.8 |
) |
|
|
389.5 |
|
Additional paid-in-capital |
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47.2 |
|
Retained earnings (deficit) |
|
|
146.6 |
|
|
|
(15.1 |
) |
|
|
(694.9 |
) |
|
|
(55.9 |
) |
|
|
765.9 |
|
|
|
146.6 |
|
Accumulated other comprehensive (loss) income |
|
|
(76.8 |
) |
|
|
0.1 |
|
|
|
(21.0 |
) |
|
|
4.9 |
|
|
|
16.0 |
|
|
|
(76.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity |
|
|
506.5 |
|
|
|
340.5 |
|
|
|
494.9 |
|
|
|
(11.5 |
) |
|
|
(823.9 |
) |
|
|
506.5 |
|
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.2 |
|
|
|
|
|
|
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
506.5 |
|
|
|
340.5 |
|
|
|
494.9 |
|
|
|
(5.3 |
) |
|
|
(823.9 |
) |
|
|
512.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, preferred shares and equity |
|
$ |
687.5 |
|
|
$ |
1,558.7 |
|
|
$ |
2,191.1 |
|
|
$ |
38.7 |
|
|
$ |
(1,442.4 |
) |
|
$ |
3,033.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Consolidating Balance Sheets
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 3, 2015 |
|
|
|
Cott Corporation |
|
|
DS Services of America, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
$ |
6.2 |
|
|
$ |
34.4 |
|
|
$ |
38.2 |
|
|
$ |
7.4 |
|
|
$ |
|
|
|
$ |
86.2 |
|
Accounts receivable, net of allowance |
|
|
16.2 |
|
|
|
105.4 |
|
|
|
358.8 |
|
|
|
12.2 |
|
|
|
(186.9 |
) |
|
|
305.7 |
|
Income taxes recoverable |
|
|
|
|
|
|
0.6 |
|
|
|
0.6 |
|
|
|
0.4 |
|
|
|
|
|
|
|
1.6 |
|
Inventories |
|
|
12.4 |
|
|
|
34.2 |
|
|
|
210.3 |
|
|
|
5.5 |
|
|
|
|
|
|
|
262.4 |
|
Prepaid expenses and other assets |
|
|
3.2 |
|
|
|
10.3 |
|
|
|
45.4 |
|
|
|
0.4 |
|
|
|
|
|
|
|
59.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
38.0 |
|
|
|
184.9 |
|
|
|
653.3 |
|
|
|
25.9 |
|
|
|
(186.9 |
) |
|
|
715.2 |
|
Property, plant & equipment, net |
|
|
38.2 |
|
|
|
415.5 |
|
|
|
403.0 |
|
|
|
7.8 |
|
|
|
|
|
|
|
864.5 |
|
Goodwill |
|
|
23.4 |
|
|
|
556.9 |
|
|
|
163.3 |
|
|
|
|
|
|
|
|
|
|
|
743.6 |
|
Intangibles and other assets, net |
|
|
0.7 |
|
|
|
415.6 |
|
|
|
358.7 |
|
|
|
6.7 |
|
|
|
|
|
|
|
781.7 |
|
Deferred income taxes |
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.5 |
|
Other tax receivable |
|
|
0.1 |
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
0.2 |
|
Due from affiliates |
|
|
183.8 |
|
|
|
|
|
|
|
403.0 |
|
|
|
0.1 |
|
|
|
(586.9 |
) |
|
|
|
|
Investments in subsidiaries |
|
|
436.3 |
|
|
|
|
|
|
|
973.1 |
|
|
|
|
|
|
|
(1,409.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
723.0 |
|
|
$ |
1,572.9 |
|
|
$ |
2,954.5 |
|
|
$ |
40.5 |
|
|
$ |
(2,183.2 |
) |
|
$ |
3,107.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, PREFERRED SHARES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
|
|
|
$ |
|
|
|
$ |
229.0 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
229.0 |
|
Current maturities of long-term debt |
|
|
0.1 |
|
|
|
|
|
|
|
3.0 |
|
|
|
0.9 |
|
|
|
|
|
|
|
4.0 |
|
Accounts payable and accrued liabilities |
|
|
30.4 |
|
|
|
106.8 |
|
|
|
461.9 |
|
|
|
8.1 |
|
|
|
(186.9 |
) |
|
|
420.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
30.5 |
|
|
|
106.8 |
|
|
|
693.9 |
|
|
|
9.0 |
|
|
|
(186.9 |
) |
|
|
653.3 |
|
Long-term debt |
|
|
|
|
|
|
405.6 |
|
|
|
1,158.8 |
|
|
|
0.6 |
|
|
|
|
|
|
|
1,565.0 |
|
Deferred income taxes |
|
|
|
|
|
|
129.3 |
|
|
|
(9.4 |
) |
|
|
|
|
|
|
|
|
|
|
119.9 |
|
Other long-term liabilities |
|
|
0.4 |
|
|
|
29.6 |
|
|
|
40.5 |
|
|
|
1.3 |
|
|
|
|
|
|
|
71.8 |
|
Due to affiliates |
|
|
1.3 |
|
|
|
548.8 |
|
|
|
3.9 |
|
|
|
32.9 |
|
|
|
(586.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
32.2 |
|
|
|
1,220.1 |
|
|
|
1,887.7 |
|
|
|
43.8 |
|
|
|
(773.8 |
) |
|
|
2,410.0 |
|
Convertible preferred shares |
|
|
116.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116.1 |
|
Non-convertible preferred shares |
|
|
32.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.7 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, no par |
|
|
388.3 |
|
|
|
355.5 |
|
|
|
1,766.0 |
|
|
|
39.7 |
|
|
|
(2,161.2 |
) |
|
|
388.3 |
|
Additional paid-in-capital |
|
|
46.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46.6 |
|
Retained earnings (deficit) |
|
|
158.1 |
|
|
|
(2.8 |
) |
|
|
(694.5 |
) |
|
|
(55.1 |
) |
|
|
752.4 |
|
|
|
158.1 |
|
Accumulated other comprehensive (loss) income |
|
|
(51.0 |
) |
|
|
0.1 |
|
|
|
(4.7 |
) |
|
|
5.2 |
|
|
|
(0.6 |
) |
|
|
(51.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity |
|
|
542.0 |
|
|
|
352.8 |
|
|
|
1,066.8 |
|
|
|
(10.2 |
) |
|
|
(1,409.4 |
) |
|
|
542.0 |
|
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.9 |
|
|
|
|
|
|
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
542.0 |
|
|
|
352.8 |
|
|
|
1,066.8 |
|
|
|
(3.3 |
) |
|
|
(1,409.4 |
) |
|
|
548.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, preferred shares and equity |
|
$ |
723.0 |
|
|
$ |
1,572.9 |
|
|
$ |
2,954.5 |
|
|
$ |
40.5 |
|
|
$ |
(2,183.2 |
) |
|
$ |
3,107.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
|
|
Cott Corporation |
|
|
DS Services of America, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(12.2 |
) |
|
$ |
0.5 |
|
|
$ |
2.2 |
|
|
$ |
10.8 |
|
|
$ |
(1.2 |
) |
Depreciation & amortization |
|
|
1.2 |
|
|
|
30.2 |
|
|
|
24.6 |
|
|
|
1.4 |
|
|
|
|
|
|
|
57.4 |
|
Amortization of financing fees |
|
|
|
|
|
|
|
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
Amortization of bond premium |
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.5 |
) |
Share-based compensation expense |
|
|
0.1 |
|
|
|
0.6 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
2.4 |
|
Increase (decrease) in deferred income taxes |
|
|
0.4 |
|
|
|
(7.7 |
) |
|
|
(4.3 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
(11.7 |
) |
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
1.1 |
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
1.4 |
|
Equity loss (income), net of distributions |
|
|
12.2 |
|
|
|
|
|
|
|
(1.4 |
) |
|
|
|
|
|
|
(10.8 |
) |
|
|
|
|
Intercompany dividends |
|
|
2.1 |
|
|
|
|
|
|
|
2.1 |
|
|
|
|
|
|
|
(4.2 |
) |
|
|
|
|
Other non-cash items |
|
|
|
|
|
|
|
|
|
|
(10.2 |
) |
|
|
|
|
|
|
|
|
|
|
(10.2 |
) |
Net change in operating assets and liabilities, net of acquisition |
|
|
(9.1 |
) |
|
|
(9.9 |
) |
|
|
(18.2 |
) |
|
|
(1.8 |
) |
|
|
|
|
|
|
(39.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
4.4 |
|
|
|
0.6 |
|
|
|
(3.6 |
) |
|
|
1.7 |
|
|
|
(4.2 |
) |
|
|
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment |
|
|
(0.3 |
) |
|
|
(18.4 |
) |
|
|
(8.6 |
) |
|
|
|
|
|
|
|
|
|
|
(27.3 |
) |
Additions to intangibles and other assets |
|
|
|
|
|
|
(1.8 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
(2.1 |
) |
Proceeds from sale of property, plant & equipment |
|
|
|
|
|
|
|
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(0.3 |
) |
|
|
(20.2 |
) |
|
|
(8.5 |
) |
|
|
|
|
|
|
|
|
|
|
(29.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt |
|
|
|
|
|
|
|
|
|
|
(0.5 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
(0.8 |
) |
Borrowings under ABL |
|
|
|
|
|
|
|
|
|
|
94.8 |
|
|
|
|
|
|
|
|
|
|
|
94.8 |
|
Payments under ABL |
|
|
|
|
|
|
|
|
|
|
(102.8 |
) |
|
|
|
|
|
|
|
|
|
|
(102.8 |
) |
Distributions to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
|
|
|
|
|
|
(2.0 |
) |
Proceeds from the exercise of options for common shares, net |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Common shares repurchased and cancelled |
|
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.7 |
) |
Dividends paid to common and preferred shareowners |
|
|
(9.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.0 |
) |
Intercompany dividends |
|
|
|
|
|
|
|
|
|
|
(2.1 |
) |
|
|
(2.1 |
) |
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(9.6 |
) |
|
|
|
|
|
|
(10.6 |
) |
|
|
(4.4 |
) |
|
|
4.2 |
|
|
|
(20.4 |
) |
Effect of exchange rate changes on cash |
|
|
(0.4 |
) |
|
|
|
|
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash & cash equivalents |
|
|
(5.9 |
) |
|
|
(19.6 |
) |
|
|
(23.4 |
) |
|
|
(2.8 |
) |
|
|
|
|
|
|
(51.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period |
|
|
6.2 |
|
|
|
34.4 |
|
|
|
38.2 |
|
|
|
7.4 |
|
|
|
|
|
|
|
86.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period |
|
$ |
0.3 |
|
|
$ |
14.8 |
|
|
$ |
14.8 |
|
|
$ |
4.6 |
|
|
$ |
|
|
|
$ |
34.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
|
|
Cott Corporation |
|
|
DS Services of America, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4.1 |
) |
|
$ |
|
|
|
$ |
(5.0 |
) |
|
$ |
2.4 |
|
|
$ |
4.0 |
|
|
$ |
(2.7 |
) |
Depreciation & amortization |
|
|
1.5 |
|
|
|
|
|
|
|
22.1 |
|
|
|
1.5 |
|
|
|
|
|
|
|
25.1 |
|
Amortization of financing fees |
|
|
|
|
|
|
|
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
0.6 |
|
Share-based compensation expense |
|
|
0.2 |
|
|
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
(Decrease) increase in deferred income taxes |
|
|
(0.9 |
) |
|
|
|
|
|
|
0.5 |
|
|
|
(0.3 |
) |
|
|
|
|
|
|
(0.7 |
) |
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Asset impairments |
|
|
0.9 |
|
|
|
|
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
Write off of financing fees and discount |
|
|
|
|
|
|
|
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
0.3 |
|
Equity (income) loss, net of distributions |
|
|
(1.5 |
) |
|
|
|
|
|
|
5.5 |
|
|
|
|
|
|
|
(4.0 |
) |
|
|
|
|
Intercompany dividends |
|
|
2.3 |
|
|
|
|
|
|
|
2.4 |
|
|
|
|
|
|
|
(4.7 |
) |
|
|
|
|
Other non-cash items |
|
|
|
|
|
|
|
|
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
(0.2 |
) |
Net change in operating assets and liabilities |
|
|
10.3 |
|
|
|
|
|
|
|
(88.4 |
) |
|
|
0.2 |
|
|
|
|
|
|
|
(77.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
8.7 |
|
|
|
|
|
|
|
(60.3 |
) |
|
|
3.8 |
|
|
|
(4.7 |
) |
|
|
(52.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment |
|
|
(0.6 |
) |
|
|
|
|
|
|
(8.2 |
) |
|
|
|
|
|
|
|
|
|
|
(8.8 |
) |
Additions to intangibles and other assets |
|
|
|
|
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(0.6 |
) |
|
|
|
|
|
|
(9.7 |
) |
|
|
|
|
|
|
|
|
|
|
(10.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt |
|
|
|
|
|
|
|
|
|
|
(15.7 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
(16.0 |
) |
Borrowings under ABL |
|
|
|
|
|
|
|
|
|
|
95.0 |
|
|
|
|
|
|
|
|
|
|
|
95.0 |
|
Payments under ABL |
|
|
|
|
|
|
|
|
|
|
(15.1 |
) |
|
|
|
|
|
|
|
|
|
|
(15.1 |
) |
Distributions to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.3 |
) |
|
|
|
|
|
|
(2.3 |
) |
Common shares repurchased and cancelled |
|
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.4 |
) |
Dividends paid to shareholders |
|
|
(5.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.1 |
) |
Intercompany dividends |
|
|
|
|
|
|
|
|
|
|
(2.3 |
) |
|
|
(2.4 |
) |
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(5.5 |
) |
|
|
|
|
|
|
61.9 |
|
|
|
(5.0 |
) |
|
|
4.7 |
|
|
|
56.1 |
|
Effect of exchange rate changes on cash |
|
|
(0.1 |
) |
|
|
|
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash & cash equivalents |
|
|
2.5 |
|
|
|
|
|
|
|
(7.9 |
) |
|
|
(1.2 |
) |
|
|
|
|
|
|
(6.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period |
|
|
1.5 |
|
|
|
|
|
|
|
40.2 |
|
|
|
5.5 |
|
|
|
|
|
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period |
|
$ |
4.0 |
|
|
$ |
|
|
|
$ |
32.3 |
|
|
$ |
4.3 |
|
|
$ |
|
|
|
$ |
40.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
The 2022 Notes issued by our 100% owned subsidiary, Cott Beverages Inc. (CBI), are
guaranteed on a senior basis pursuant to guarantees by Cott Corporation and certain other 100% owned direct and indirect subsidiaries (the Guarantor Subsidiaries). CBI and each Guarantor Subsidiary is 100% owned by Cott Corporation. The
guarantees of the 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.
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 Securities and Exchange Commission interpretations governing reporting of
subsidiary financial information.
The following supplemental financial information sets forth on a consolidating basis, our Balance
Sheets, Statements of Operations and Cash Flows for Cott Corporation, CBI, Guarantor Subsidiaries and our other subsidiaries (the Non-guarantor Subsidiaries). The supplemental financial information reflects our investments and those of
CBI in their respective subsidiaries using the equity method of accounting.
36
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
|
|
Cott Corporation |
|
|
Cott Beverages, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Revenue, net |
|
$ |
30.0 |
|
|
$ |
170.0 |
|
|
$ |
488.6 |
|
|
$ |
31.4 |
|
|
$ |
(10.2 |
) |
|
$ |
709.8 |
|
Cost of sales |
|
|
27.0 |
|
|
|
145.8 |
|
|
|
320.0 |
|
|
|
25.9 |
|
|
|
(10.2 |
) |
|
|
508.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3.0 |
|
|
|
24.2 |
|
|
|
168.6 |
|
|
|
5.5 |
|
|
|
|
|
|
|
201.3 |
|
Selling, general and administrative expenses |
|
|
5.5 |
|
|
|
23.8 |
|
|
|
156.1 |
|
|
|
3.1 |
|
|
|
|
|
|
|
188.5 |
|
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
0.3 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
1.4 |
|
Acquisition and integration expenses |
|
|
|
|
|
|
1.5 |
|
|
|
3.2 |
|
|
|
|
|
|
|
|
|
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(2.5 |
) |
|
|
(1.4 |
) |
|
|
8.2 |
|
|
|
2.4 |
|
|
|
|
|
|
|
6.7 |
|
Other (income) expense, net |
|
|
(10.5 |
) |
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
(10.4 |
) |
Intercompany interest (income) expense, net |
|
|
(3.0 |
) |
|
|
(12.2 |
) |
|
|
15.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
0.1 |
|
|
|
20.1 |
|
|
|
7.5 |
|
|
|
|
|
|
|
|
|
|
|
27.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense (benefit) and equity (loss) income |
|
|
10.9 |
|
|
|
(9.3 |
) |
|
|
(14.5 |
) |
|
|
2.3 |
|
|
|
|
|
|
|
(10.6 |
) |
Income tax expense (benefit) |
|
|
1.2 |
|
|
|
(4.6 |
) |
|
|
(6.1 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
(9.4 |
) |
Equity (loss) income |
|
|
(12.2 |
) |
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(3.3 |
) |
|
$ |
(8.4 |
) |
|
$ |
2.2 |
|
|
$ |
10.8 |
|
|
$ |
(1.2 |
) |
Less: Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
|
|
|
|
|
|
1.3 |
|
Less: Accumulated dividends on convertible preferred shares |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.7 |
|
Less: Accumulated dividends on non-convertible preferred shares |
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8 |
|
Net (loss) income attributed to Cott Corporation |
|
$ |
(6.0 |
) |
|
$ |
(3.3 |
) |
|
$ |
(8.4 |
) |
|
$ |
0.9 |
|
|
$ |
10.8 |
|
|
$ |
(6.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributed to Cott Corporation |
|
$ |
(31.8 |
) |
|
$ |
(22.8 |
) |
|
$ |
(20.5 |
) |
|
$ |
0.6 |
|
|
$ |
42.7 |
|
|
$ |
(31.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Condensed Consolidating Statement of Operations
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
|
|
Cott Corporation |
|
|
Cott Beverages, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Revenue, net |
|
$ |
37.2 |
|
|
$ |
175.1 |
|
|
$ |
242.3 |
|
|
$ |
32.3 |
|
|
$ |
(11.8 |
) |
|
$ |
475.1 |
|
Cost of sales |
|
|
34.2 |
|
|
|
154.0 |
|
|
|
215.8 |
|
|
|
26.7 |
|
|
|
(11.8 |
) |
|
|
418.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
3.0 |
|
|
|
21.1 |
|
|
|
26.5 |
|
|
|
5.6 |
|
|
|
|
|
|
|
56.2 |
|
Selling, general and administrative expenses |
|
|
6.5 |
|
|
|
25.7 |
|
|
|
11.7 |
|
|
|
3.0 |
|
|
|
|
|
|
|
46.9 |
|
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Restructuring |
|
|
1.9 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
2.2 |
|
Asset impairments |
|
|
0.9 |
|
|
|
|
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
Acquisition and integration expenses |
|
|
|
|
|
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(6.3 |
) |
|
|
(4.9 |
) |
|
|
12.9 |
|
|
|
2.6 |
|
|
|
|
|
|
|
4.3 |
|
Other expense (income), net |
|
|
0.2 |
|
|
|
(2.6 |
) |
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
(2.3 |
) |
Intercompany interest (income) expense, net |
|
|
|
|
|
|
(3.5 |
) |
|
|
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
0.1 |
|
|
|
9.0 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax (benefit) expense and equity income (loss) |
|
|
(6.6 |
) |
|
|
(7.8 |
) |
|
|
8.7 |
|
|
|
2.5 |
|
|
|
|
|
|
|
(3.2 |
) |
Income tax (benefit) expense |
|
|
(1.0 |
) |
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
(0.5 |
) |
Equity income (loss) |
|
|
1.5 |
|
|
|
1.3 |
|
|
|
(6.8 |
) |
|
|
|
|
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4.1 |
) |
|
$ |
(6.8 |
) |
|
$ |
1.8 |
|
|
$ |
2.4 |
|
|
$ |
4.0 |
|
|
$ |
(2.7 |
) |
Less: Net income attributable to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.4 |
|
|
|
|
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributed to Cott Corporation |
|
$ |
(4.1 |
) |
|
$ |
(6.8 |
) |
|
$ |
1.8 |
|
|
$ |
1.0 |
|
|
$ |
4.0 |
|
|
$ |
(4.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributed to Cott Corporation |
|
$ |
(5.8 |
) |
|
$ |
(2.7 |
) |
|
$ |
15.8 |
|
|
$ |
0.9 |
|
|
$ |
(14.0 |
) |
|
$ |
(5.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
Consolidating Balance Sheets
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 4, 2015 |
|
|
|
Cott Corporation |
|
|
Cott Beverages, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
$ |
0.3 |
|
|
$ |
1.4 |
|
|
$ |
28.2 |
|
|
$ |
4.6 |
|
|
$ |
|
|
|
$ |
34.5 |
|
Accounts receivable, net of allowance |
|
|
17.7 |
|
|
|
149.1 |
|
|
|
353.2 |
|
|
|
12.8 |
|
|
|
(192.2 |
) |
|
|
340.6 |
|
Income taxes recoverable |
|
|
|
|
|
|
0.3 |
|
|
|
0.6 |
|
|
|
0.3 |
|
|
|
|
|
|
|
1.2 |
|
Inventories |
|
|
13.0 |
|
|
|
76.7 |
|
|
|
173.4 |
|
|
|
7.4 |
|
|
|
|
|
|
|
270.5 |
|
Prepaid expenses and other assets |
|
|
3.1 |
|
|
|
15.9 |
|
|
|
15.1 |
|
|
|
0.4 |
|
|
|
|
|
|
|
34.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
34.1 |
|
|
|
243.4 |
|
|
|
570.5 |
|
|
|
25.5 |
|
|
|
(192.2 |
) |
|
|
681.3 |
|
Property, plant & equipment, net |
|
|
34.7 |
|
|
|
172.4 |
|
|
|
630.7 |
|
|
|
7.4 |
|
|
|
|
|
|
|
845.2 |
|
Goodwill |
|
|
21.9 |
|
|
|
4.5 |
|
|
|
716.0 |
|
|
|
|
|
|
|
|
|
|
|
742.4 |
|
Intangibles and other assets, net |
|
|
0.6 |
|
|
|
103.9 |
|
|
|
652.7 |
|
|
|
5.7 |
|
|
|
|
|
|
|
762.9 |
|
Deferred income taxes |
|
|
1.7 |
|
|
|
30.8 |
|
|
|
|
|
|
|
0.1 |
|
|
|
(30.8 |
) |
|
|
1.8 |
|
Due from affiliates |
|
|
183.4 |
|
|
|
558.0 |
|
|
|
2.8 |
|
|
|
|
|
|
|
(744.2 |
) |
|
|
|
|
Investments in subsidiaries |
|
|
411.1 |
|
|
|
620.4 |
|
|
|
226.9 |
|
|
|
|
|
|
|
(1,258.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
687.5 |
|
|
$ |
1,733.4 |
|
|
$ |
2,799.6 |
|
|
$ |
38.7 |
|
|
$ |
(2,225.6 |
) |
|
$ |
3,033.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, PREFERRED SHARES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
|
|
|
$ |
212.1 |
|
|
$ |
8.9 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
221.0 |
|
Current maturities of long-term debt |
|
|
0.1 |
|
|
|
2.6 |
|
|
|
0.4 |
|
|
|
1.0 |
|
|
|
|
|
|
|
4.1 |
|
Accounts payable and accrued liabilities |
|
|
30.3 |
|
|
|
222.1 |
|
|
|
353.0 |
|
|
|
8.8 |
|
|
|
(192.2 |
) |
|
|
422.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
30.4 |
|
|
|
436.8 |
|
|
|
362.3 |
|
|
|
9.8 |
|
|
|
(192.2 |
) |
|
|
647.1 |
|
Long-term debt |
|
|
|
|
|
|
1,156.5 |
|
|
|
395.7 |
|
|
|
0.3 |
|
|
|
|
|
|
|
1,552.5 |
|
Deferred income taxes |
|
|
|
|
|
|
|
|
|
|
136.1 |
|
|
|
|
|
|
|
(30.8 |
) |
|
|
105.3 |
|
Other long-term liabilities |
|
|
0.5 |
|
|
|
3.9 |
|
|
|
61.4 |
|
|
|
1.3 |
|
|
|
|
|
|
|
67.1 |
|
Due to affiliates |
|
|
1.2 |
|
|
|
1.6 |
|
|
|
708.8 |
|
|
|
32.6 |
|
|
|
(744.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
32.1 |
|
|
|
1,598.8 |
|
|
|
1,664.3 |
|
|
|
44.0 |
|
|
|
(967.2 |
) |
|
|
2,372.0 |
|
Convertible preferred shares |
|
|
116.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116.2 |
|
Non-convertible preferred shares |
|
|
32.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.7 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, no par |
|
|
389.5 |
|
|
|
525.7 |
|
|
|
1,555.0 |
|
|
|
39.5 |
|
|
|
(2,120.2 |
) |
|
|
389.5 |
|
Additional paid-in-capital |
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47.2 |
|
Retained earnings (deficit) |
|
|
146.6 |
|
|
|
(363.0 |
) |
|
|
(411.6 |
) |
|
|
(55.9 |
) |
|
|
830.5 |
|
|
|
146.6 |
|
Accumulated other comprehensive (loss) income |
|
|
(76.8 |
) |
|
|
(28.1 |
) |
|
|
(8.1 |
) |
|
|
4.9 |
|
|
|
31.3 |
|
|
|
(76.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity |
|
|
506.5 |
|
|
|
134.6 |
|
|
|
1,135.3 |
|
|
|
(11.5 |
) |
|
|
(1,258.4 |
) |
|
|
506.5 |
|
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.2 |
|
|
|
|
|
|
|
6.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
506.5 |
|
|
|
134.6 |
|
|
|
1,135.3 |
|
|
|
(5.3 |
) |
|
|
(1,258.4 |
) |
|
|
512.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, preferred shares and equity |
|
$ |
687.5 |
|
|
$ |
1,733.4 |
|
|
$ |
2,799.6 |
|
|
$ |
38.7 |
|
|
$ |
(2,225.6 |
) |
|
$ |
3,033.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
Consolidating Balance Sheets
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 3, 2015 |
|
|
|
Cott Corporation |
|
|
Cott Beverages, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
$ |
6.2 |
|
|
$ |
8.6 |
|
|
$ |
64.0 |
|
|
$ |
7.4 |
|
|
$ |
|
|
|
$ |
86.2 |
|
Accounts receivable, net of allowance |
|
|
16.2 |
|
|
|
130.4 |
|
|
|
333.8 |
|
|
|
12.2 |
|
|
|
(186.9 |
) |
|
|
305.7 |
|
Income taxes recoverable |
|
|
|
|
|
|
0.6 |
|
|
|
0.6 |
|
|
|
0.4 |
|
|
|
|
|
|
|
1.6 |
|
Inventories |
|
|
12.4 |
|
|
|
72.5 |
|
|
|
172.0 |
|
|
|
5.5 |
|
|
|
|
|
|
|
262.4 |
|
Prepaid expenses and other assets |
|
|
3.2 |
|
|
|
39.5 |
|
|
|
16.2 |
|
|
|
0.4 |
|
|
|
|
|
|
|
59.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
38.0 |
|
|
|
251.6 |
|
|
|
586.6 |
|
|
|
25.9 |
|
|
|
(186.9 |
) |
|
|
715.2 |
|
Property, plant & equipment, net |
|
|
38.2 |
|
|
|
178.4 |
|
|
|
640.1 |
|
|
|
7.8 |
|
|
|
|
|
|
|
864.5 |
|
Goodwill |
|
|
23.4 |
|
|
|
4.5 |
|
|
|
715.7 |
|
|
|
|
|
|
|
|
|
|
|
743.6 |
|
Intangibles and other assets, net |
|
|
0.7 |
|
|
|
105.3 |
|
|
|
669.0 |
|
|
|
6.7 |
|
|
|
|
|
|
|
781.7 |
|
Deferred income taxes |
|
|
2.5 |
|
|
|
30.5 |
|
|
|
|
|
|
|
|
|
|
|
(30.5 |
) |
|
|
2.5 |
|
Other tax receivable |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2 |
|
Due from affiliates |
|
|
183.8 |
|
|
|
564.5 |
|
|
|
3.0 |
|
|
|
0.1 |
|
|
|
(751.4 |
) |
|
|
|
|
Investments in subsidiaries |
|
|
436.3 |
|
|
|
623.5 |
|
|
|
349.6 |
|
|
|
|
|
|
|
(1,409.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
723.0 |
|
|
$ |
1,758.4 |
|
|
$ |
2,964.0 |
|
|
$ |
40.5 |
|
|
$ |
(2,378.2 |
) |
|
$ |
3,107.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, PREFERRED SHARES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
|
|
|
$ |
229.0 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
229.0 |
|
Current maturities of long-term debt |
|
|
0.1 |
|
|
|
2.5 |
|
|
|
0.5 |
|
|
|
0.9 |
|
|
|
|
|
|
|
4.0 |
|
Accounts payable and accrued liabilities |
|
|
30.4 |
|
|
|
212.4 |
|
|
|
356.3 |
|
|
|
8.1 |
|
|
|
(186.9 |
) |
|
|
420.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
30.5 |
|
|
|
443.9 |
|
|
|
356.8 |
|
|
|
9.0 |
|
|
|
(186.9 |
) |
|
|
653.3 |
|
Long-term debt |
|
|
|
|
|
|
1,157.1 |
|
|
|
407.3 |
|
|
|
0.6 |
|
|
|
|
|
|
|
1,565.0 |
|
Deferred income taxes |
|
|
|
|
|
|
|
|
|
|
150.4 |
|
|
|
|
|
|
|
(30.5 |
) |
|
|
119.9 |
|
Other long-term liabilities |
|
|
0.4 |
|
|
|
5.8 |
|
|
|
64.3 |
|
|
|
1.3 |
|
|
|
|
|
|
|
71.8 |
|
Due to affiliates |
|
|
1.3 |
|
|
|
1.7 |
|
|
|
715.5 |
|
|
|
32.9 |
|
|
|
(751.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
32.2 |
|
|
|
1,608.5 |
|
|
|
1,694.3 |
|
|
|
43.8 |
|
|
|
(968.8 |
) |
|
|
2,410.0 |
|
Convertible preferred shares |
|
|
116.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116.1 |
|
Non-convertible preferred shares |
|
|
32.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.7 |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, no par |
|
|
388.3 |
|
|
|
525.7 |
|
|
|
1,595.8 |
|
|
|
39.7 |
|
|
|
(2,161.2 |
) |
|
|
388.3 |
|
Additional paid-in-capital |
|
|
46.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46.6 |
|
Retained earnings (deficit) |
|
|
158.1 |
|
|
|
(367.2 |
) |
|
|
(330.1 |
) |
|
|
(55.1 |
) |
|
|
752.4 |
|
|
|
158.1 |
|
Accumulated other comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss) income |
|
|
(51.0 |
) |
|
|
(8.6 |
) |
|
|
4.0 |
|
|
|
5.2 |
|
|
|
(0.6 |
) |
|
|
(51.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cott Corporation equity |
|
|
542.0 |
|
|
|
149.9 |
|
|
|
1,269.7 |
|
|
|
(10.2 |
) |
|
|
(1,409.4 |
) |
|
|
542.0 |
|
Non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.9 |
|
|
|
|
|
|
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
542.0 |
|
|
|
149.9 |
|
|
|
1,269.7 |
|
|
|
(3.3 |
) |
|
|
(1,409.4 |
) |
|
|
548.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, preferred shares and equity |
|
$ |
723.0 |
|
|
$ |
1,758.4 |
|
|
$ |
2,964.0 |
|
|
$ |
40.5 |
|
|
$ |
(2,378.2 |
) |
|
$ |
3,107.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
|
|
Cott Corporation |
|
|
Cott Beverages, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2.5 |
) |
|
$ |
(3.3 |
) |
|
$ |
(8.4 |
) |
|
$ |
2.2 |
|
|
$ |
10.8 |
|
|
$ |
(1.2 |
) |
Depreciation & amortization |
|
|
1.2 |
|
|
|
11.5 |
|
|
|
43.3 |
|
|
|
1.4 |
|
|
|
|
|
|
|
57.4 |
|
Amortization of financing fees |
|
|
|
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
Amortization of bond premium |
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.5 |
) |
Share-based compensation expense |
|
|
0.1 |
|
|
|
1.5 |
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
2.4 |
|
Increase (decrease) in deferred income taxes |
|
|
0.4 |
|
|
|
(5.2 |
) |
|
|
(6.8 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
(11.7 |
) |
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
0.3 |
|
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
1.4 |
|
Equity loss (income), net of distributions |
|
|
12.2 |
|
|
|
(1.4 |
) |
|
|
|
|
|
|
|
|
|
|
(10.8 |
) |
|
|
|
|
Intercompany dividends |
|
|
2.1 |
|
|
|
2.1 |
|
|
|
|
|
|
|
|
|
|
|
(4.2 |
) |
|
|
|
|
Other non-cash items |
|
|
|
|
|
|
(10.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.2 |
) |
Net change in operating assets and liabilities, net of acquisition |
|
|
(9.1 |
) |
|
|
21.8 |
|
|
|
(49.9 |
) |
|
|
(1.8 |
) |
|
|
|
|
|
|
(39.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
4.4 |
|
|
|
16.9 |
|
|
|
(19.9 |
) |
|
|
1.7 |
|
|
|
(4.2 |
) |
|
|
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment |
|
|
(0.3 |
) |
|
|
(6.9 |
) |
|
|
(20.1 |
) |
|
|
|
|
|
|
|
|
|
|
(27.3 |
) |
Additions to intangibles and other assets |
|
|
|
|
|
|
(0.3 |
) |
|
|
(1.8 |
) |
|
|
|
|
|
|
|
|
|
|
(2.1 |
) |
Proceeds from sale of property, plant & equipment |
|
|
|
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(0.3 |
) |
|
|
(6.8 |
) |
|
|
(21.9 |
) |
|
|
|
|
|
|
|
|
|
|
(29.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt |
|
|
|
|
|
|
(0.4 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
(0.8 |
) |
Borrowings under ABL |
|
|
|
|
|
|
85.9 |
|
|
|
8.9 |
|
|
|
|
|
|
|
|
|
|
|
94.8 |
|
Payments under ABL |
|
|
|
|
|
|
(102.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(102.8 |
) |
Distributions to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
|
|
|
|
|
|
(2.0 |
) |
Proceeds from the exercise of options for common shares, net |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Common shares repurchased and cancelled |
|
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.7 |
) |
Dividends paid to common and preferred shareowners |
|
|
(9.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.0 |
) |
Intercompany dividends |
|
|
|
|
|
|
|
|
|
|
(2.1 |
) |
|
|
(2.1 |
) |
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(9.6 |
) |
|
|
(17.3 |
) |
|
|
6.7 |
|
|
|
(4.4 |
) |
|
|
4.2 |
|
|
|
(20.4 |
) |
Effect of exchange rate changes on cash |
|
|
(0.4 |
) |
|
|
|
|
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash & cash equivalents |
|
|
(5.9 |
) |
|
|
(7.2 |
) |
|
|
(35.8 |
) |
|
|
(2.8 |
) |
|
|
|
|
|
|
(51.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period |
|
|
6.2 |
|
|
|
8.6 |
|
|
|
64.0 |
|
|
|
7.4 |
|
|
|
|
|
|
|
86.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period |
|
$ |
0.3 |
|
|
$ |
1.4 |
|
|
$ |
28.2 |
|
|
$ |
4.6 |
|
|
$ |
|
|
|
$ |
34.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
Consolidating Statements of Condensed Cash Flows
(in millions of U.S. dollars)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
|
|
Cott Corporation |
|
|
Cott Beverages, Inc. |
|
|
Guarantor Subsidiaries |
|
|
Non-Guarantor Subsidiaries |
|
|
Elimination Entries |
|
|
Consolidated |
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4.1 |
) |
|
$ |
(6.8 |
) |
|
$ |
1.8 |
|
|
$ |
2.4 |
|
|
$ |
4.0 |
|
|
$ |
(2.7 |
) |
Depreciation & amortization |
|
|
1.5 |
|
|
|
10.0 |
|
|
|
12.1 |
|
|
|
1.5 |
|
|
|
|
|
|
|
25.1 |
|
Amortization of financing fees |
|
|
|
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.6 |
|
Share-based compensation expense |
|
|
0.2 |
|
|
|
1.0 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
1.3 |
|
(Decrease) increase in deferred income taxes |
|
|
(0.9 |
) |
|
|
(0.1 |
) |
|
|
0.6 |
|
|
|
(0.3 |
) |
|
|
|
|
|
|
(0.7 |
) |
Loss on disposal of property, plant & equipment |
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
Asset impairments |
|
|
0.9 |
|
|
|
|
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
Write off of financing fees and discount |
|
|
|
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3 |
|
Equity (income) loss, net of distributions |
|
|
(1.5 |
) |
|
|
(1.3 |
) |
|
|
6.8 |
|
|
|
|
|
|
|
(4.0 |
) |
|
|
|
|
Intercompany dividends |
|
|
2.3 |
|
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
|
(4.7 |
) |
|
|
|
|
Other non-cash items |
|
|
|
|
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.2 |
) |
Net change in operating assets and liabilities |
|
|
10.3 |
|
|
|
(58.9 |
) |
|
|
(29.5 |
) |
|
|
0.2 |
|
|
|
|
|
|
|
(77.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
8.7 |
|
|
|
(52.9 |
) |
|
|
(7.4 |
) |
|
|
3.8 |
|
|
|
(4.7 |
) |
|
|
(52.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment |
|
|
(0.6 |
) |
|
|
(5.1 |
) |
|
|
(3.1 |
) |
|
|
|
|
|
|
|
|
|
|
(8.8 |
) |
Additions to intangibles and other assets |
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(0.6 |
) |
|
|
(6.6 |
) |
|
|
(3.1 |
) |
|
|
|
|
|
|
|
|
|
|
(10.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of long-term debt |
|
|
|
|
|
|
(15.6 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
(16.0 |
) |
Borrowings under ABL |
|
|
|
|
|
|
95.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95.0 |
|
Payments under ABL |
|
|
|
|
|
|
(15.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15.1 |
) |
Distributions to non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.3 |
) |
|
|
|
|
|
|
(2.3 |
) |
Common shares repurchased and cancelled |
|
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.4 |
) |
Dividends paid to shareholders and cancelled |
|
|
(5.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.1 |
) |
Intercompany dividends |
|
|
|
|
|
|
|
|
|
|
(2.3 |
) |
|
|
(2.4 |
) |
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(5.5 |
) |
|
|
64.3 |
|
|
|
(2.4 |
) |
|
|
(5.0 |
) |
|
|
4.7 |
|
|
|
56.1 |
|
Effect of exchange rate changes on cash |
|
|
(0.1 |
) |
|
|
|
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash & cash equivalents |
|
|
2.5 |
|
|
|
4.8 |
|
|
|
(12.7 |
) |
|
|
(1.2 |
) |
|
|
|
|
|
|
(6.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, beginning of period |
|
|
1.5 |
|
|
|
1.1 |
|
|
|
39.1 |
|
|
|
5.5 |
|
|
|
|
|
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period |
|
$ |
4.0 |
|
|
$ |
5.9 |
|
|
$ |
26.4 |
|
|
$ |
4.3 |
|
|
$ |
|
|
|
$ |
40.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Note 19Subsequent Events
On May 6, 2015, our board of directors declared a dividend of $0.06 per share on common shares, payable in cash on
June 17, 2015 to shareowners of record at the close of business on June 5, 2015.
43
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 January 3, 2015 (our 2014 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 2014 Annual Report.
Overview
We are one of the worlds largest producers of beverages on behalf of retailers, brand owners and distributors and have one of the
broadest home and office bottled water and office coffee services distribution networks in the United States with the ability to service approximately 90 percent of U.S. households, as well as national, regional and local offices. Our objective
of creating sustainable long-term growth in revenue and profitability is predicated on working closely with our customers to provide proven profitable products. As a fast follower of innovative products, our goal is to identify which new
products are succeeding in the marketplace and develop similar high quality products at a better value. This objective is increasingly relevant in more difficult economic times.
The beverage market is subject to some seasonal variations. Our beverage and water delivery sales are generally higher during the warmer
months, while sales of our coffee products are generally higher during the cooler 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.
Our traditional
Cott business typically operates 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 in the case of cans and ends, polyethylene terephthalate (PET) resin, high-density polyethylene (HDPE) and polycarbonate, corn in the case of high fructose corn
syrup (HFCS), 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 North America, the United Kingdom, and Mexico, including carbonated soft drinks (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 three months of 2015, 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 three months ended April 4, 2015 and March 29, 2014 accounted for 18.6% and 28.6% of total revenue, respectively.
We conduct operations in countries involving transactions denominated in a variety of currencies. We are subject to currency exchange risks to
the extent that our costs are denominated in currencies other than those in which we earn revenues. As our financial statements are denominated in U.S. dollars, change in currency exchange rates between the U.S. dollar and other currencies have had,
and will continue to have an impact on our results of operations.
Acquisition and Financing Transactions
In December 2014, we completed the acquisition by merger of DSS Group, Inc. (the DSS Group), parent company to DS Services of
America, Inc. (collectively DSS), a leading bottled water and coffee direct-to-consumer services provider in the United States (the DSS Acquisition). The DSS Acquisition was consummated pursuant to an Agreement and Plan of
Merger (the DSS Merger Agreement) dated November 6, 2014. Aggregate consideration was approximately $1.246 billion
44
payable through a combination of incremental borrowings under our asset based lending facility (ABL facility) of $180.0 million, the issuance of $625.0 million of our 6.75%
senior notes due January 1, 2020 (2020 Notes), the assumption of existing $350.0 million senior notes due 2021 originally issued by DSS (DSS Notes), and the issuance of Series A Convertible First Preferred Shares
(the Convertible Preferred Shares) having an aggregate value of approximately $116.1 million and Series B Non-Convertible First Preferred Shares (the Non-Convertible Preferred Shares, and together with the Convertible
Preferred Shares, the Preferred Shares) having an aggregate value of approximately $32.7 million.
In connection with the
DSS Acquisition, we amended the ABL facility on December 12, 2014 to, among other things, provide an increase in the lenders commitments under the ABL facility to $400.0 million, an increase to the accordion feature, which permits us to
increase the lenders commitments under the ABL facility to $450.0 million, subject to certain conditions, and an extension of the maturity date to the earliest of (i) December 12, 2019, (ii) June 12, 2019, if we have not
redeemed, repurchased or refinanced the 2020 Notes by May 28, 2019, or (iii) any earlier date on which the commitments under the ABL facility are reduced to zero or otherwise terminated.
We also issued $625.0 million of the 2020 Notes to qualified purchasers in a private placement under Rule 144A and Regulation S
under the Securities Act of 1933, as amended (the Securities Act) and used the proceeds from the issuance to partially finance the DSS Acquisition.
In June 2014, we issued $525.0 million of our 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. We used the proceeds to redeem $375.0 million aggregate principal amount of our 8.125% senior notes due 2018 (the 2018 Notes) and provide additional
funding for our operations.
In May 2014, our U.K. reporting segment acquired 100% of the share capital of Aimia Foods Holdings Limited
(the Aimia Acquisition), which includes its operating subsidiary company, Aimia Foods Limited (together referred to as Aimia). Aimia produces and distributes hot chocolate, coffee and powdered beverages primarily through food
service, vending and retail channels, and produces hot and cold cereal products on a contract manufacturing basis. 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 paid on September 15, 2014, and aggregate contingent consideration of up to £16.0 million
($23.7 million at exchange rates in effect on April 4, 2015), which is payable upon the achievement of certain measures related to Aimias performance during the twelve months ending July 1, 2016. The closing payment was funded
from ABL borrowings and available cash.
Forward-looking Statements
In addition to historical information, this report, and any documents incorporated in this report by reference, 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 any 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 2014 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.
45
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 a 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; |
|
|
|
a loss of or a reduction in business in our legacy Cott business with key customers, particularly Walmart; |
|
|
|
consolidation of retail customers; |
|
|
|
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; |
|
|
|
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 DSS Acquisition because of integration difficulties and other challenges; |
|
|
|
risks associated with the DSS Merger Agreement; |
|
|
|
changes resulting from our assessment of the system of internal control over financial reporting maintained by DSS; |
|
|
|
limited financial information on which to evaluate the combined company; |
|
|
|
the incurrence of substantial indebtedness to finance the DSS Acquisition; |
|
|
|
our exposure to intangible asset risk; |
|
|
|
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 under our debt agreements, and risks of further increases to our indebtedness; |
|
|
|
our ability to maintain compliance with the covenants and conditions under our debt agreements; |
|
|
|
our ability to maintain compliance with the covenants set forth in our Preferred Shares, and the limitations such covenants may place on our business; |
|
|
|
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 maintain access to our water sources; |
|
|
|
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; |
46
|
|
|
the seasonal nature of our business and the effect of adverse weather conditions; |
|
|
|
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 ability to renew our collective bargaining agreements on satisfactory terms; |
|
|
|
disruptions in our information systems; or |
|
|
|
our ability to securely maintain our customers confidential or credit card information, or other private data relating to our employees or our company. |
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 the impact of foreign exchange, the impact of energy surcharges, and, in some cases, the impact of DSS or Aimia, to separate the impact of currency exchange rate
changes, energy surcharges and recent acquisitions from our results of operations. We exclude these items to better understand trends in the business.
We also utilize earnings before interest expense, taxes, depreciation and amortization (EBITDA), on both a global and reporting
segment basis, which is GAAP earnings (loss) before interest expense, provision for income taxes, depreciation and amortization. We consider EBITDA to 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, on both a global and reporting segment basis, which is EBITDA excluding restructuring expenses and asset impairments, bond redemption and other financing costs,
certain tax reorganization and regulatory costs, unrealized (gain) loss on commodity hedging instruments, unrealized foreign exchange (gain) loss, loss on disposal of property, plant and equipment (excluding cash proceeds received), and acquisition
and integration costs related to the DSS Acquisition or the Aimia 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 restructuring expenses and asset impairments, bond redemption and other financing costs, certain tax reorganization and regulatory costs, acquisition and integration costs, unrealized (gain)
loss on commodity hedging instruments, unrealized foreign exchange (gain) loss, and loss on disposal of property, plant and equipment (excluding cash proceeds received), 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.
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, which management believes provides useful information to investors about the amount of cash generated by the business that, 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.
47
Summary Financial Results
Our net loss for the three months ended April 4, 2015 (the first quarter) was $6.0 million or $0.06 net loss per diluted
share, compared with net loss of $4.1 million or $0.04 per diluted share for the three months ended March 29, 2014.
The
following items of significance affected our financial results for the first quarter of 2015:
|
|
|
revenue increased 49.4% from the comparable prior year period due primarily to the Aimia Acquisition and DSS Acquisition, partially offset by a mix shift from private label to contract manufacturing in North America and
U.K. Excluding the impact of foreign exchange, revenue increased 52.8% from the comparable prior year period; |
|
|
|
gross profit as a percentage of revenue increased to 28.4% for the first quarter from 11.8% in the comparable prior year period due primarily to the addition of Aimia and DSS and cost and efficiency savings, partially
offset by increased costs in the U.K. reporting segment; |
|
|
|
selling, general and administrative (SG&A) expenses for the first quarter increased to $188.5 million from $46.9 million in the comparable prior year period due primarily to the DSS
Acquisition; |
|
|
|
other income, net was $10.4 million in the first quarter compared to $2.3 million in the comparable prior year period due primarily to net unrealized gains on translation of balances denominated in foreign
currencies; |
|
|
|
interest expense increased by $17.9 million, or 182.7%, as compared to the prior year period due primarily to the addition of our 2020 Notes, 2022 Notes and the assumption of the existing DSS Notes in connection
with the DSS Acquisition; |
|
|
|
income tax benefit was $9.4 million in the first quarter compared to $0.5 million in the comparable prior year period. This is due primarily to the recognition of tax benefits in the United States. In the first
quarter of 2014, a valuation allowance offset the tax benefits generated in the United States. |
|
|
|
Adjusted EBITDA increased to $73.7 million in the first quarter compared to $34.8 million in the comparable prior year period due to the items listed above; and |
|
|
|
adjusted net loss and adjusted net loss per diluted share were $7.7 million and $0.08, respectively, in the first quarter compared to adjusted net loss of $2.2 million and adjusted net loss per diluted share
of $0.02 in the comparable prior year period. |
The following items of significance affected our financial results for
the first quarter of 2014:
|
|
|
revenue decreased by 6.0% from the comparable prior year period due to lower North America volumes. Excluding the impact of foreign exchange, revenue decreased 6.6% from the comparable prior year period;
|
|
|
|
gross profit as a percentage of revenue decreased to 11.8% for the first quarter from 12.3% in the comparable prior year period due primarily the competitive environment and lower North America volume alongside
additional freight and operating costs caused by inclement weather in North America; |
|
|
|
SG&A expenses for the first quarter remained relatively flat at $46.9 million compared to $47.0 million in the comparable prior year period; |
|
|
|
other income, net was $2.3 million in the first quarter compared to other expense, net of $0.3 million in the comparable prior year period due primarily to a favorable legal settlement of $3.5 million
partially offset by bond redemption costs of $0.9 million, as well as other foreign exchange losses of approximately $0.3 million; |
|
|
|
income tax benefit was $0.5 million in the first quarter compared to an income tax expense of $0.5 million in the comparable prior year period due primarily to a reduction in pretax income; |
|
|
|
Adjusted EBITDA decreased to $34.8 million in the first quarter compared to $40.1 million in the comparable prior year period due to the items listed above; and |
|
|
|
adjusted net loss and adjusted net loss per diluted share were $2.2 million and $0.02, respectively, in the first quarter compared to adjusted net income of $0.4 million and adjusted earnings per diluted share
of nil in the comparable prior year period. |
48
The following table summarizes our Consolidated Statements of Operations as a percentage of
revenue for the three months ended April 4, 2015 and March 29, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
April 4, 2015 |
|
|
March 29, 2014 |
|
(in millions of U.S. dollars) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
Revenue, net |
|
|
709.8 |
|
|
|
100.0 |
|
|
|
475.1 |
|
|
|
100.0 |
|
Cost of sales |
|
|
508.5 |
|
|
|
71.6 |
|
|
|
418.9 |
|
|
|
88.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
201.3 |
|
|
|
28.4 |
|
|
|
56.2 |
|
|
|
11.8 |
|
Selling, general, and administrative expenses |
|
|
188.5 |
|
|
|
26.6 |
|
|
|
46.9 |
|
|
|
9.9 |
|
Loss on disposal of property, plant and equipment |
|
|
1.4 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
|
|
Restructuring |
|
|
|
|
|
|
|
|
|
|
2.2 |
|
|
|
0.5 |
|
Asset impairments |
|
|
|
|
|
|
|
|
|
|
1.6 |
|
|
|
0.3 |
|
Acquisition and integration expenses |
|
|
4.7 |
|
|
|
0.7 |
|
|
|
1.1 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
6.7 |
|
|
|
0.9 |
|
|
|
4.3 |
|
|
|
0.9 |
|
Other income, net |
|
|
(10.4 |
) |
|
|
(1.5 |
) |
|
|
(2.3 |
) |
|
|
(0.5 |
) |
Interest expense, net |
|
|
27.7 |
|
|
|
3.9 |
|
|
|
9.8 |
|
|
|
2.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(10.6 |
) |
|
|
(1.5 |
) |
|
|
(3.2 |
) |
|
|
(0.7 |
) |
Income tax benefit |
|
|
(9.4 |
) |
|
|
(1.3 |
) |
|
|
(0.5 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(1.2 |
) |
|
|
(0.2 |
) |
|
|
(2.7 |
) |
|
|
(0.6 |
) |
Less: Net income attributable to non-controlling interests |
|
|
1.3 |
|
|
|
0.2 |
|
|
|
1.4 |
|
|
|
0.3 |
|
Less: Accumulated dividends on preferred shares |
|
|
3.5 |
|
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributed to Cott Corporation |
|
|
(6.0 |
) |
|
|
(0.8 |
) |
|
|
(4.1 |
) |
|
|
(0.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization |
|
|
57.4 |
|
|
|
8.1 |
|
|
|
25.1 |
|
|
|
5.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes our revenue and operating income (loss) by reporting segment for the three
months ended April 4, 2015 and March 29, 2014:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Revenue |
|
|
|
|
|
|
|
|
North America |
|
$ |
324.3 |
|
|
$ |
344.7 |
|
DSS |
|
|
240.3 |
|
|
|
|
|
U.K. |
|
|
132.2 |
|
|
|
115.6 |
|
All Other |
|
|
13.0 |
|
|
|
14.8 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
709.8 |
|
|
$ |
475.1 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
|
|
|
|
|
|
North America |
|
$ |
7.2 |
|
|
$ |
2.5 |
|
DSS |
|
|
(1.5 |
) |
|
|
|
|
U.K. |
|
|
3.9 |
|
|
|
2.2 |
|
All Other |
|
|
1.6 |
|
|
|
2.5 |
|
Corporate |
|
|
(4.5 |
) |
|
|
(2.9 |
) |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6.7 |
|
|
$ |
4.3 |
|
|
|
|
|
|
|
|
|
|
Revenues are attributed to reporting segments based on the location of the customer.
49
The following tables summarize revenue by channel for the three months ended April 4, 2015
and March 29, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
(in millions of U.S. dollars) |
|
North America |
|
|
DSS |
|
|
U.K. |
|
|
All Other |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private label retail |
|
$ |
267.2 |
|
|
$ |
15.6 |
|
|
$ |
60.5 |
|
|
$ |
1.2 |
|
|
$ |
344.5 |
|
Branded retail |
|
|
26.7 |
|
|
|
19.7 |
|
|
|
41.2 |
|
|
|
1.1 |
|
|
|
88.7 |
|
Contract packaging |
|
|
25.5 |
|
|
|
|
|
|
|
28.4 |
|
|
|
4.0 |
|
|
|
57.9 |
|
Home and office bottled water delivery |
|
|
|
|
|
|
149.6 |
|
|
|
|
|
|
|
|
|
|
|
149.6 |
|
Office coffee services |
|
|
|
|
|
|
32.0 |
|
|
|
|
|
|
|
|
|
|
|
32.0 |
|
Other |
|
|
4.9 |
|
|
|
23.4 |
|
|
|
2.1 |
|
|
|
6.7 |
|
|
|
37.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
324.3 |
|
|
$ |
240.3 |
|
|
$ |
132.2 |
|
|
$ |
13.0 |
|
|
$ |
709.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
(in millions of U.S. dollars) |
|
North America |
|
|
U.K. |
|
|
All Other |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private label retail |
|
$ |
299.5 |
|
|
$ |
64.4 |
|
|
$ |
1.0 |
|
|
$ |
364.9 |
|
Branded retail |
|
|
24.7 |
|
|
|
31.6 |
|
|
|
1.2 |
|
|
|
57.5 |
|
Contract packaging |
|
|
17.1 |
|
|
|
18.9 |
|
|
|
6.8 |
|
|
|
42.8 |
|
Other |
|
|
3.4 |
|
|
|
0.7 |
|
|
|
5.8 |
|
|
|
9.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
344.7 |
|
|
$ |
115.6 |
|
|
$ |
14.8 |
|
|
$ |
475.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
Results of operations
The following tables summarize the change in revenue by reporting segment for the three months ended April 4, 2015 and March 29,
2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2015 |
|
(in millions of U.S. dollars, except percentage amounts) |
|
Cott |
|
|
North America |
|
|
DSS |
|
|
U.K. |
|
|
All Other |
|
Change in revenue |
|
$ |
234.7 |
|
|
$ |
(20.4 |
) |
|
$ |
240.3 |
|
|
$ |
16.6 |
|
|
$ |
(1.8 |
) |
Impact of foreign exchange 1 |
|
|
16.3 |
|
|
|
3.4 |
|
|
|
|
|
|
|
12.2 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange |
|
$ |
251.0 |
|
|
$ |
(17.0 |
) |
|
$ |
240.3 |
|
|
$ |
28.8 |
|
|
$ |
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue |
|
|
49.4 |
% |
|
|
(5.9 |
)% |
|
|
|
% |
|
|
14.4 |
% |
|
|
(12.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange |
|
|
52.8 |
% |
|
|
(4.9 |
)% |
|
|
|
% |
|
|
24.9 |
% |
|
|
(7.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of DSS Acquisition |
|
$ |
(240.3 |
) |
|
$ |
|
|
|
$ |
(240.3 |
) |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange and DSS Acquisition |
|
$ |
10.7 |
|
|
$ |
(17.0 |
) |
|
$ |
|
|
|
$ |
28.8 |
|
|
$ |
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange and DSS Acquisition |
|
|
2.3 |
% |
|
|
(4.9 |
)% |
|
|
|
% |
|
|
24.9 |
% |
|
|
(7.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 29, 2014 |
|
(in millions of U.S. dollars, except percentage amounts) |
|
Cott |
|
|
North America |
|
|
U.K. |
|
|
All Other |
|
Change in revenue |
|
$ |
(30.3 |
) |
|
$ |
(48.5 |
) |
|
$ |
18.2 |
|
|
$ |
|
|
Impact of foreign exchange 1 |
|
|
(3.3 |
) |
|
|
3.2 |
|
|
|
(6.7 |
) |
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange |
|
$ |
(33.6 |
) |
|
$ |
(45.3 |
) |
|
$ |
11.5 |
|
|
$ |
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue |
|
|
(6.0 |
)% |
|
|
(12.3 |
)% |
|
|
18.7 |
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange |
|
|
(6.6 |
)% |
|
|
(11.5 |
)% |
|
|
11.8 |
% |
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
51
The following table summarizes our EBITDA and Adjusted EBITDA for the three months ended
April 4, 2015 and March 29, 2014:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Net loss attributed to Cott Corporation |
|
$ |
(6.0 |
) |
|
$ |
(4.1 |
) |
Interest expense, net |
|
|
27.7 |
|
|
|
9.8 |
|
Income tax benefit |
|
|
(9.4 |
) |
|
|
(0.5 |
) |
Depreciation & amortization |
|
|
57.4 |
|
|
|
25.1 |
|
Net income attributable to non-controlling interests |
|
|
1.3 |
|
|
|
1.4 |
|
Accumulated dividends on preferred shares |
|
|
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
74.5 |
|
|
$ |
31.7 |
|
Restructuring and asset impairments |
|
|
|
|
|
|
3.8 |
|
Bond redemption costs |
|
|
|
|
|
|
0.9 |
|
Tax reorganization and regulatory costs |
|
|
|
|
|
|
0.1 |
|
Acquisition and integration costs, net |
|
|
4.7 |
|
|
|
1.1 |
|
Purchase accounting adjustments, net |
|
|
4.2 |
|
|
|
|
|
Other adjustments |
|
|
|
|
|
|
(3.5 |
) |
Unrealized commodity hedging gain, net |
|
|
(0.3 |
) |
|
|
|
|
Unrealized foreign exchange and other (gains) losses, net |
|
|
(10.9 |
) |
|
|
0.6 |
|
Loss on disposal of property, plant & equipment 1 |
|
|
1.5 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
73.7 |
|
|
$ |
34.8 |
|
|
|
|
|
|
|
|
|
|
1. |
Loss on disposal of property, plant & equipment excludes cash proceeds received. |
52
The following table summarizes our adjusted net (loss) income and adjusted earnings per share for
the three months ended April 4, 2015 and March 29, 2014:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Net loss attributed to Cott Corporation |
|
$ |
(6.0 |
) |
|
$ |
(4.1 |
) |
Restructuring and asset impairments, net of tax |
|
|
|
|
|
|
2.9 |
|
Bond redemption costs, net of tax |
|
|
|
|
|
|
0.9 |
|
Tax reorganization and regulatory costs, net of tax |
|
|
|
|
|
|
0.1 |
|
Acquisition and integration, net of tax |
|
|
3.0 |
|
|
|
1.0 |
|
Purchase accounting adjustments, net of tax |
|
|
2.7 |
|
|
|
|
|
Other adjustments, net of tax |
|
|
|
|
|
|
(3.5 |
) |
Unrealized commodity hedging gain, net of tax |
|
|
(0.2 |
) |
|
|
|
|
Unrealized foreign exchange and other (gains) losses, net of tax |
|
|
(8.1 |
) |
|
|
0.5 |
|
Loss on disposal of property, plant & equipment, net of tax 1 |
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss attributed to Cott Corporation |
|
$ |
(7.7 |
) |
|
$ |
(2.2 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net loss per common share attributed to Cott Corporation |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
(0.02 |
) |
Diluted |
|
$ |
(0.08 |
) |
|
$ |
(0.02 |
) |
Weighted average outstanding shares (millions) attributed to Cott Corporation |
|
|
|
|
|
|
|
|
Basic |
|
|
93.2 |
|
|
|
94.3 |
|
Diluted |
|
|
93.2 |
|
|
|
94.3 |
|
1. |
Loss on disposal of property, plant & equipment, net of tax, excludes cash proceeds received. |
The following table summarizes our free cash flow and adjusted free cash flow for the three months ended April 4, 2015 and March 29,
2014:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Net cash used in operating activities |
|
$ |
(1.1 |
) |
|
$ |
(52.5 |
) |
Less: Capital expenditures |
|
|
(27.3 |
) |
|
|
(8.8 |
) |
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
(28.4 |
) |
|
$ |
(61.3 |
) |
The following unaudited financial information for the three months ended April 4, 2015 represents the
activity of Aimia that has been combined with our U.K. operations:
|
|
|
|
|
(in millions of U.S. dollars) |
|
For the Three Months Ended April 4, 2015 |
|
Revenue |
|
|
|
|
U.K. |
|
$ |
132.2 |
|
Less: Aimia |
|
|
(25.9 |
) |
|
|
|
|
|
U.K. excluding Aimia |
|
$ |
106.3 |
|
|
|
|
|
|
53
The following unaudited financial information for the three months ended April 4, 2015
represents the activity of DSS that has been combined with our consolidated operations:
|
|
|
|
|
(in millions of U.S. dollars) |
|
For the Three Months Ended April 4, 2015 |
|
Revenue |
|
|
|
|
Cott Corporation |
|
$ |
709.8 |
|
Less: DSS |
|
|
(240.3 |
) |
|
|
|
|
|
Cott Corporation excluding DSS |
|
$ |
469.5 |
|
|
|
|
|
|
Revenue
Revenue increased $234.7 million, or 49.4%, in the first quarter from the comparable prior year period. Excluding the impact of DSS and
foreign exchange, revenue increased 2.3% in the first quarter from the comparable prior year period.
North America revenue decreased
$20.4 million, or 5.9%, in the first quarter from the comparable prior year period. Excluding the impact of foreign exchange, revenue decreased 4.9%, due primarily to an overall product mix shift into contract manufacturing.
U.K. revenue increased $16.6 million, or 14.4%, in the first quarter from the comparable prior year period due primarily to additional
revenues from the Aimia business. Excluding the impact of foreign exchange, U.K. revenue increased 24.9% in the first quarter. Excluding the revenues associated with Aimia, U.K revenue decreased $9.3 million in the first quarter.
All Other revenue decreased $1.8 million, or 12.2%, in the first quarter from the comparable prior year period due to a product mix shift
into concentrates which has a lower revenue per case when compared to finished goods.
Cost of Sales
Cost of sales represented 71.6% of revenue in the first quarter, compared to 88.2% in the comparable prior year period. The decrease in cost of
sales as a percentage of revenue was due primarily to the addition of the Aimia and DSS businesses and the growth in contract manufacturing.
Gross
Profit
Gross profit as a percentage of revenue increased to 28.4% in the first quarter from 11.8% in the comparable prior year
period due primarily to the addition of the higher margin businesses of Aimia and DSS and cost and efficiency savings, offset by increased costs in the U.K. reporting segment with the implementation of our new warehouse management system.
Selling, General and Administrative Expenses
SG&A expenses increased $141.6 million, or 301.9%, in the first quarter from the comparable prior year period. The increase in
SG&A expenses was due primarily to the addition of the DSS business. As a percentage of revenue, SG&A increased to 26.6% in the first quarter from 9.9% in the comparable prior year period.
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. We had no restructuring activities during the first quarter of 2015. During the first quarter of 2014, we implemented one such
program that 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). For the first quarter of 2014, in connection with the 2014
Restructuring Plan, we incurred charges of approximately $2.2 million related primarily to headcount reductions and $1.6 million related to asset impairments.
54
Operating Income
Operating income was $6.7 million in the first quarter compared to $4.3 million in the comparable prior year period. The increase was due
primarily to higher gross profit as a percentage of revenue and the reduction of restructuring and asset impairment charges incurred in the comparable prior year period, partially offset by higher SG&A expenses and losses on disposal of property
and equipment.
Other Income, Net
Other income, net was $10.4 million in the first quarter compared to $2.3 million in the comparable prior year period. The increase in
other income was due primarily to net unrealized gains on translation of balances denominated in foreign currencies.
Income Taxes
Income tax benefit was $9.4 million in the first quarter compared to $0.5 million in the comparable prior year period. With the
release of our federal tax valuation allowance in the United States during the fourth quarter of 2014, we are now able to realize tax benefits generated in the United States. The first quarters income tax rate was 88% compared to 25% in the
comparable prior year period. This is due primarily to significant permanent benefits that create additional losses for tax purposes that we have recognized a benefit for during the first quarter of 2015. In the comparable prior year period a
federal and partial state valuation allowance was recorded for United States losses.
Liquidity and Capital Resources
The following table summarizes our cash flows for the three months ended April 4, 2015 and March 29, 2014, as reported in
our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
(in millions of U.S. dollars) |
|
April 4, 2015 |
|
|
March 29, 2014 |
|
Net cash used in operating activities |
|
$ |
(1.1 |
) |
|
$ |
(52.5 |
) |
Net cash used in investing activities |
|
|
(29.0 |
) |
|
|
(10.3 |
) |
Net cash (used in) provided by financing activities |
|
|
(20.4 |
) |
|
|
56.1 |
|
Effect of exchange rate changes on cash |
|
|
(1.2 |
) |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
Net decrease in cash & cash equivalents |
|
|
(51.7 |
) |
|
|
(6.6 |
) |
Cash & cash equivalents, beginning of period |
|
|
86.2 |
|
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period |
|
$ |
34.5 |
|
|
$ |
40.6 |
|
|
|
|
|
|
|
|
|
|
Financial and Capital Resources and Liquidity
As of April 4, 2015, we had total debt of $1,777.6 million and $34.5 million of cash and cash equivalents compared to
$522.6 million of debt and $40.6 million of cash and cash equivalents as of March 29, 2014.
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, debt service obligations, and dividend payments on Preferred Shares
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
the 2020 Notes, the 2022 Notes, or the DSS 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 indentures governing our 2020 Notes, 2022
Notes, and DSS Notes, refinancing all or part of our existing debt, selling assets, incurring additional indebtedness or raising equity. The ABL facility and the DSS Notes are secured by substantially all of our assets and those of the respective
guarantor subsidiaries. If the ABL facility or the DSS Notes were to become currently due, the lenders or the trustee, as applicable, may have the right to foreclose on such assets subject to the terms of an intercreditor agreement that gives
priority to the rights of the ABL lender. If we need to seek additional financing, there is no assurance that this additional financing will be available on favorable terms or at all.
55
As of April 4, 2015, our total availability under the ABL facility was $380.8 million,
which was based on our borrowing base (accounts receivables, inventory, and fixed assets). We had $221.0 million of outstanding borrowings under the ABL facility and $42.0 million in outstanding letters of credit. As a result, our excess
availability under the ABL facility was $117.8 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.
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 the decision to repatriate
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.
In 2014, a dividend of $0.06 per
common share was declared each quarter for an aggregate dividend payment of approximately $22.0 million. During 2014, we repurchased 1,744,131 common shares for approximately $12.1 million through open market transactions through our share
repurchase program, which we suspended during the fourth quarter of 2014.
Note Redemptions/Repurchases
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.
On July 9, 2014 and July 24, 2014, we redeemed 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 the write off of approximately $0.8 million in deferred financing fees.
We may, from time to time, depending on market conditions, including without limitation whether the 2020 Notes, the 2022 Notes, or the DSS
Notes are then trading at a discount to their face amount, repurchase the 2020 Notes, the 2022 Notes, or the DSS Notes for cash and/or in exchange for our common shares, 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.
Note Issuances/Assumptions
On June 24, 2014, we issued $525.0 million of our 2022 Notes to qualified purchasers in a private placement under Rule 144A and
Regulation S under the Securities Act. We incurred $9.2 million of financing fees in connection with the issuance of the 2022 Notes.
On December 12, 2014, we issued $625.0 million of our 2020 Notes to qualified purchasers in a private placement under Rule 144A and
Regulation S under the Securities Act. We incurred $14.4 million of financing fees in connection with the issuance of the 2020 Notes.
In connection with the DSS Acquisition, we assumed $350.0 million of the DSS Notes. We incurred $26.5 million of consent
solicitation fees and bridge financing commitment fees related to the assumption of the DSS Notes.
56
Operating Activities
Cash used in operating activities was $1.1 million during the first quarter compared to $52.5 million in the comparable prior year
period. The $51.4 million decrease was due primarily to the timing of accounts receivable receipts and accounts payable payments relative to the prior year period, as well as the release of $29.4 million of cash collateral held by third
parties at January 3, 2015 in connection with self-insurance programs assumed as part of the DSS Acquisition.
Investing Activities
Cash used in investing activities was $29.0 million during the first quarter compared to $10.3 million in the comparable prior year
period. The $18.7 million increase was due primarily to an increase in fixed asset purchases, offset by the receipt of proceeds from the sale of property, plant and equipment.
Financing Activities
Cash used in
financing activities was $20.4 million during the first quarter compared to cash provided by financing activities of $56.1 million in the comparable prior year period. The $76.5 million increase was due primarily to an increase in
payments on outstanding borrowings under our ABL facility.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as defined under Item 303(a)(4) of Regulation S-K as of April 4, 2015.
Contractual Obligations
We have no
material changes to the disclosure on this matter made in our 2014 Annual Report.
Debt
Asset-Based Lending Facility
In March
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. We refinanced the ABL facility in August 2010 and have amended the
ABL from time to time to and incurred an aggregate of $7.5 million of financing fees in connection therewith.
Most recently, on
December 12, 2014, in connection with the DSS Acquisition, we amended the ABL facility to, among other things, (1) provide for an increase in the lenders commitments under the ABL facility to $400.0 million (which, with the
accordion feature, if used, permits us to increase the lenders commitments under the ABL facility to $450.0 million, subject to certain conditions), (2) extend the maturity date to the earliest of (i) December 12, 2019,
(ii) June 12, 2019, if we have not redeemed, repurchased or refinanced the 2020 Notes by May 28, 2019, or (iii) any earlier date on which the commitments under the ABL facility are reduced to zero or otherwise terminated,
(3) include DSS and its subsidiaries as borrowers, (4) permit certain adjustments to the borrowing base calculation, (5) permit the debt, liens and intercreditor arrangements contemplated by the supplemental indenture entered into in
connection with the DSS Notes, (6) permit certain other indebtedness that we intend to issue or assume in connection with the DSS Acquisition, (7) permit certain other changes to dollar thresholds and limitations within our covenants
generally reflecting the increased size of the facility. We incurred approximately $1.7 million of financing fees in connection with the amendment of the ABL facility.
The financing fees incurred in connection with the refinancing of the ABL facility in August 2010, along with the financing fees incurred in
connection with the amendments of the ABL facility, other than the May 2014 amendment, 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 May 2014
amendment, was considered to be a modification of the original agreement under GAAP.
As of April 4, 2015, we had $221.0 million
of outstanding borrowings under the ABL facility. The commitment fee was 0.375% per annum of the unused commitment, which, taking into account $42.0 million of letters of credit, was $137.0 million as of April 4, 2015.
57
5.375% Senior Notes due in 2022
On June 24, 2014, we issued the 2022 Notes to qualified purchasers in a private placement under Rule 144A and Regulation S under
the Securities Act. 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 $9.2 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.
10.000% Senior Notes due in 2021
On
August 30, 2013, DS Services of America, Inc. (formerly DS Waters of America, Inc.) issued $350.0 million of the DSS Notes to qualified purchasers in a private placement under Rule 144A and Regulation S under the Securities Act.
Pursuant to a consent solicitation statement dated November 13, 2014, as amended on November 25, 2014, and its accompanying consent letter, dated November 13, 2014, DSS solicited consent from the holders of the DSS Notes to certain
modifications and amendments to the August 30, 2013 indenture and related security documents. On December 2, 2014, the requisite consents from the holders of the DSS Notes were obtained, with a consent payment of approximately $19.2
million. At the DSS Acquisition closing, we and most of our U.S., Canadian and U.K. subsidiaries executed a supplemental indenture to be added as guarantors to the DSS Notes. The interest on the DSS Notes is payable semi-annually on March 1st and September 1st of each year commencing on March 1, 2014.
The DSS Notes were recorded at their fair value of $406.0 million as part of the DSS Acquisition. The difference between the fair value
and the principal amount of $350.0 million is amortized as a component of interest expense over the remaining contractual term of the DSS Notes. We incurred approximately $26.5 million of consent solicitation fees and bridge financing
commitment fees.
6.750% Senior Notes due in 2020
On December 12, 2014, we issued the 2020 Notes to qualified purchasers in a private placement under Rule 144A and Regulation S
under the Securities Act. The issuer of the 2020 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 2020 Notes. The interest on the 2020 Notes is payable
semi-annually on January 1st and July 1st of each year commencing on July 1, 2015.
We incurred $14.4 million of
financing fees in connection with the issuance of the 2020 Notes. The financing fees are being amortized using the effective interest method over a five-year period, which represents the term to maturity of the 2020 Notes.
8.125% Senior Notes due in 2018
On
August 17, 2010, we issued $375.0 million of 2018 Notes. The issuer of the 2018 Notes was our wholly-owned U.S. subsidiary Cott Beverages Inc. 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, the write-off of approximately $3.0 million in
deferred financing fees, and other costs of approximately $0.2 million.
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 the write-off of
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 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. We incurred $5.1 million of financing fees in connection with the 2017 Notes.
58
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, the write-off of approximately $4.0 million in deferred financing fees and discount charges and other costs of approximately
$0.5 million.
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 the write-off of 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 a 5.23% interest rate.
Credit Ratings and Covenant Compliance
Credit Ratings
We have no
material changes to the disclosure on this matter made in our 2014 Annual Report.
Covenant Compliance
Indentures governing 2022 Notes, DSS Notes and 2020 Notes
Under the indentures governing the 2022 Notes, the DSS Notes, and the 2020 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 April 4, 2015, we were in compliance with all of the covenants under each series of notes. There have been no amendments to any covenants
of the 2022 Notes, the DSS Notes or the 2020 Notes, since the date of their issuance or assumption, as applicable.
The 2018 Notes and the
2017 Notes have been redeemed in full and are no longer outstanding. At all times prior to such redemptions, we were in compliance with all of the covenants under the indentures governing the 2018 Notes and the 2017 Notes.
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 aggregate
availability is less than the greater of 10% of the lenders commitments under the ABL facility or $40.0 million. If excess availability is less than the greater of 12.5% of the aggregate availability under the ABL facility or
$50.0 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 April 4, 2015.
Issuer Purchases of Equity Securities
Common
Share Repurchase Program
On May 6, 2014, our board of directors renewed our share repurchase program for up to 5% of Cotts
outstanding common shares over a 12-month period commencing upon the expiration of the prior share repurchase program on May 21, 2014. In connection with the DSS Acquisition, we suspended our share repurchase program during the fourth quarter
of 2014 and do not expect to make further repurchases of our common shares under the share repurchase program prior to its expiration on May 21, 2015.
Tax Withholding
In the first quarter of
2015, 87,157 of our previously-issued common shares were withheld from delivery to our employees to satisfy their tax obligations related to share-based awards. In the first quarter of 2014, 46,897 of our previously-issued common shares were
withheld from delivery to our employees to satisfy their tax obligations related to share-based awards.
59
Capital Structure
Since January 3, 2015, equity has decreased by $36.2 million. The decrease was due primarily to a net loss of $1.2 million, dividend
payments of $9.0 million, common share repurchases of $0.7 million, foreign currency translation losses on the net assets of self-sustaining foreign operations of $25.9 million, and distributions to non-controlling interest of
$2.0 million, partially offset by share-based compensation expense of $2.4 million, pension benefit plan adjustments of $0.1 million, and proceeds from the exercise of options for common shares, net of $0.1 million.
Dividend Payments
Common Share Dividend
On February 19, 2015, the board of directors declared a dividend of $0.06 per share on common shares, payable in cash on March 27,
2015 to shareowners of record at the close of business on March 11, 2015. The dividend payment was approximately $5.5 million in the aggregate. 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 indentures governing the 2020
Notes, 2022 Notes and DSS Notes, the terms of the Preferred Shares, as well as other factors that the board of directors may deem relevant from time to time.
Preferred Share Dividend
The terms of
the Preferred Shares require us to pay a quarterly dividend to the holders of the Preferred Shares. On April 1, 2015, we paid dividends to holders of record of the Preferred Shares as of March 11, 2015. The aggregate dividend paid on the
Convertible Preferred Shares was approximately $2.7 million and the aggregate dividend paid on the Non-Convertible Preferred Shares was approximately $0.8 million.
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 2014 Annual Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
In the ordinary course of business, we are exposed to foreign currency, interest rate and commodity price risks. We hedge firm commitments or
anticipated transactions and do not enter into derivatives for speculative purposes. We do not hold financial instruments for trading purposes.
Currency Exchange Rate Risk
Our North
America and U.K. reporting segments purchase a portion of their inventory for our Canadian and European operations, respectively, through transactions denominated and settled in U.S. dollars and Euros, respectively, currencies different from the
functional currency of those operations. These inventory purchases are subject to exposure from movements in exchange rates. We use foreign exchange forward contracts to hedge operational exposures resulting from changes in these foreign currency
exchange rates. The intent of the foreign exchange contracts is to provide predictability in our overall cost structure. These foreign exchange contracts, carried at fair value, typically have maturities of less than eighteen months. We had
outstanding foreign exchange forward contracts with notional amounts of $23.0 million and $22.5 million as of April 4, 2015 and January 3, 2015, respectively.
60
Debt Obligations and Interest Rates
We have exposure to interest rate risk from the outstanding principal amounts of our short-term borrowings on our ABL facility. Interest rates
on our long-term debt are fixed and not subject to interest rate volatility. Our ABL facility is vulnerable to fluctuations in the U.S. short-term base rate and the LIBOR rate. Because we had $221.0 million of ABL borrowings outstanding as of
April 4, 2015, a 100 basis point increase in the current per annum interest rate for our ABL facility (excluding the $42.0 million of outstanding letters of credit) would result in additional interest expense of approximately
$2.2 million during the next year. The weighted average interest rate of outstanding debt under our ABL facility at April 4, 2015 was 2.1%.
Commodity Price Risk
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 certain commodities. The total notional values of derivatives that were designated and qualified for our commodity
cash flow hedging program were $56.8 million and $55.4 million as of April 4, 2015 and January
3, 2015, respectively.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The
Company maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The Companys management, under the supervision and with
the participation of the Companys Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Companys disclosure controls and procedures as of April 4,
2015. Based upon this evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that, as of April 4, 2015, the Companys disclosure controls and procedures are functioning effectively to ensure that
information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and accumulated and communicated to
the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
In addition, our management carried out an evaluation, as required by Rule 13a-15(d) of the Exchange Act, with the participation of our
Chief Executive Officer and our Chief Financial Officer, of changes in our internal control over financial reporting. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that there have been no changes in
our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the legal proceedings described in our 2014 Annual Report.
Item 1A. Risk Factors
There has been no material change in our risk factors since January 3, 2015. Please refer to our 2014 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Tax Withholdings
The following table contains information about shares of our previously-issued common shares that we withheld from delivering to
employees during the first quarter of 2015 to satisfy their tax obligations related to share-based awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Common Shares Purchased |
|
|
Average Price Paid per Common Share |
|
|
Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Maximum Approximate Dollar Value of Common Shares that May Yet Be Purchased Under the Plans or Programs |
|
January 2015 |
|
|
|
|
|
$ |
|
|
|
|
N/A |
|
|
|
N/A |
|
February 2015 |
|
|
87,157 |
|
|
|
7.90 |
|
|
|
N/A |
|
|
|
N/A |
|
March 2015 |
|
|
|
|
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
87,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
Item 6. Exhibits
|
|
|
Number |
|
Description |
|
|
3.1 |
|
Articles of Amalgamation of Cott Corporation (incorporated by reference to Exhibit 3.1 to our Form 10-K filed February 28, 2007)(file no. 001-31410). |
|
|
3.2 |
|
Articles of Amendment to Articles of Amalgamation of Cott Corporation (incorporated by reference to Exhibit 3.1 to our Form 8-K filed December 15, 2014). |
|
|
3.3 |
|
Second Amended and Restated By-laws of Cott Corporation, as amended (incorporated by reference to Exhibit 3.2 to our Form 10-Q filed May 8, 2014). |
|
|
10.1* |
|
Form of Restricted Share Unit Award Agreement with Performance-Based Vesting under the Amended and Restated Cott Corporation Equity Incentive Plan (filed herewith). |
|
|
31.1 |
|
Certification of the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (filed herewith). |
|
|
31.2 |
|
Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (filed herewith). |
|
|
32.1 |
|
Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (furnished herewith). |
|
|
32.2 |
|
Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (furnished herewith). |
|
|
101 |
|
The following financial statements from Cott Corporations Quarterly Report on Form 10-Q for the quarter ended April 4, 2015, filed May 14, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated
Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, (vi) Notes to the Consolidated Financial
Statements (filed herewith). |
* |
Indicates a management contract or compensatory plan. |
62
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
|
|
COTT CORPORATION
(Registrant) |
|
|
|
|
Date: May 14, 2015 |
|
|
|
|
|
/s/ Jay Wells |
|
|
|
|
|
|
Jay Wells |
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
(On behalf of the Company) |
|
|
|
|
Date: May 14, 2015 |
|
|
|
|
|
/s/ Gregory Leiter |
|
|
|
|
|
|
Gregory Leiter |
|
|
|
|
|
|
Senior Vice President, Chief Accounting Officer and Assistant Secretary |
|
|
|
|
|
|
(Principal Accounting Officer) |
63
|
|
|
Number |
|
Description |
|
|
3.1 |
|
Articles of Amalgamation of Cott Corporation (incorporated by reference to Exhibit 3.1 to our Form 10-K filed February 28, 2007). |
|
|
3.2 |
|
Articles of Amendment to Articles of Amalgamation of Cott Corporation (incorporated by reference to Exhibit 3.1 to our Form 8-K filed December 15, 2014). |
|
|
3.3 |
|
Second Amended and Restated By-laws of Cott Corporation, as amended (incorporated by reference to Exhibit 3.2 to our Form 10-Q filed May 8, 2014). |
|
|
10.1* |
|
Form of Restricted Share Unit Award Agreement with Performance-Based Vesting under the Amended and Restated Cott Corporation Equity Incentive Plan (filed herewith). |
|
|
31.1 |
|
Certification of the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (filed herewith). |
|
|
31.2 |
|
Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (filed herewith). |
|
|
32.1 |
|
Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (furnished herewith). |
|
|
32.2 |
|
Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 for the quarterly period ended April 4, 2015 (furnished herewith). |
|
|
101 |
|
The following financial statements from Cott Corporations Quarterly Report on Form 10-Q for the quarter ended April 4, 2015, filed May 14, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated
Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, (vi) Notes to the Consolidated Financial
Statements (filed herewith). |
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Indicates a management contract or compensatory plan. |
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Exhibit 10.1
AMENDED AND RESTATED
COTT CORPORATION
EQUITY
INCENTIVE PLAN
RESTRICTED SHARE UNIT AWARD AGREEMENT
(Performance-Based Vesting)
1. Performance-Based Share Unit Award Terms and Conditions. Under and subject to the provisions of the Amended and Restated Cott
Corporation Equity Incentive Plan (the Plan) and upon the terms and conditions set forth herein, Cott Corporation (the Company) has granted to
(the Grantee), effective (the Date of
Grant), a Restricted Share Unit Award (the Award) of performance-based restricted share units (such units, the
Performance Units), in respect of services to be provided in and thereafter. At all times, each Performance Unit shall be equal in value to one common share in the capital of the Company
(each, a Share). Such Award is subject to the terms and conditions of this Performance-Based Restricted Share Unit Agreement (the Agreement) and the Plan.
(a) Performance Period. For purposes of this Agreement, the Performance Period is the period beginning on
, which is the first day of the Companys fiscal year, and ending on the last day of the Companys fiscal year.
(b) Payout of Award. Provided the Award has not previously been forfeited, as soon as administratively practicable following the
expiration of the Performance Period, but in no event later than the later to occur of (i) sixty (60) days following the expiration of the Performance Period and (ii) the date that audited financial statements are available for the
Companys fiscal year, the Company shall issue to the Grantee in a single payment the number of Shares underlying the Performance Units to which the Grantee is entitled pursuant hereto. The Shares issued by the Company
hereunder may at the Companys option be either (i) evidenced by a certificate registered in the name of the Grantee or his or her designee; or (ii) credited to a book-entry account for the benefit of the Grantee maintained by the
Companys stock transfer agent or its designee.
(c) Satisfaction of Performance Objectives. The payout of the Award shall be
contingent upon the attainment during the Performance Period of the performance objectives set forth in Section 1(e) herein (the Performance Objectives). The payout of the Award shall be determined upon the expiration of the
Performance Period in accordance with the Performance Objectives. The final determination of the payout of the Award will be authorized by the Human Resources and Compensation Committee of the Companys Board of Directors (the
Committee).
(d) Rights During Performance Period. During the Performance Period, the Grantee shall not have any
rights as a shareholder with respect to the Shares underlying the Performance Units. Upon the expiration of the Performance Period and payout of the Award, the Grantee may exercise voting rights and shall be entitled to receive dividends and other
distributions with respect to the number of Shares to which the Grantee is entitled pursuant hereto.
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(e) Performance Objectives. Subject to Section 2 of this Agreement, the Performance
Units shall vest and become non-forfeitable as set forth in the chart below based on the Companys achievement of a specified level of cumulative Pre-Tax Income for the Performance Period:
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Pre-Tax Income |
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Percentage of Performance Units Vested |
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125% of Target or greater |
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200 |
% |
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100% of Target |
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100 |
% |
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70% of Target |
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40 |
% |
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Less than 70% of Target |
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0 |
% |
The applicable percentage of Performance Units vested will be interpolated on a linear basis between the
levels stated in the chart above, but only to the extent that Pre-Tax Income exceeds 70% of Target. The number of Performance Units that vest based on Performance Objectives will be determined by the Committee following the end of the Performance
Period (the Final Committee Determination) and payment of vested Performance Units will be made in the period provided for in Section 1(b) of this Agreement. Any Performance Units that do not vest based on the Performance Objectives
described herein (and which have not previously terminated pursuant to the terms of this Agreement) will automatically terminate as of the Final Committee Determination. Any such determination by the Committee shall be final and binding.
For purposes of this Section 1(e), the following definitions shall apply:
Pre-Tax Income shall mean, subject to Section 4, earnings before income taxes of the Company for the Performance Period based on the
Companys audited financial statements for such period.
Target shall mean cumulative Pre-Tax Income in the amount of
$ for the Performance Period.
2. Prohibition Against Transfer. Until
the expiration of the Performance Period and payout of the Award, the Award, the Performance Units subject to the Award, and any interest in Shares related thereto, and the rights granted under this Agreement are not transferable or assignable other
than for normal estate settlement purposes. Until the expiration of the Performance Period and payout of the award, the Award, the Performance Units and any interest in Shares related thereto, may not be sold, exchanged, assigned, transferred,
pledged, hypothecated, encumbered or otherwise disposed of, shall not be assignable by operation of law, and shall not be subject to execution, attachment, charge, alienation or similar process. Any attempt to effect any of the foregoing shall be
null and void and without effect.
3. Securities Law Requirements. The Company shall not be required to issue Shares pursuant
to the Award, to the extent required, unless and until (a) such Shares have been duly listed upon each stock exchange on which the Common Shares are then registered; and (b) a registration statement under the Securities Act of 1933 with
respect to such Shares is then effective.
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4. Adjustments. For purposes of calculating Pre-Tax Income, adjustments will be made for
items that are discretely disclosed in either the financial statements, footnotes thereto or Managements Discussion and Analysis sections of the Companys quarterly or annual filings with the U.S. Securities and Exchange
Commission. The following are the adjustments to Pre-Tax Income:
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a. |
The impact of changes to U.S. generally accepted accounting principles (US GAAP); |
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b. |
The impact of changes to tax laws or other regulations in any jurisdiction the Company operates in; |
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c. |
The impact of discontinued operations or items that are unusual or infrequently occurring as defined by US GAAP; |
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d. |
All expenses related to capital markets and M&A transactions authorized by the Board of Directors, including professional advisor fees, investment banking fees and gains or losses due to the repurchase of debt or
equity; |
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e. |
Gains or losses resulting from, or expenses incurred for the restructuring of the Companys legal and tax structure in place at the beginning of the 2010 fiscal period, including gains or losses due to intercompany
loans between the Companys subsidiaries; and |
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f. |
US GAAP purchase accounting adjustments in connection with the acquisition of DS Services of America Inc. by Crestview Partners and the Company. |
5. Incorporation of Plan Provisions. This Agreement is made pursuant to the Plan, the provisions of which are hereby incorporated
by reference. Capitalized terms not otherwise defined herein shall have the meanings set forth for such terms in the Plan. In the event of a conflict between the terms of this Agreement and the Plan, the terms of the Plan shall govern.
6. Compliance with Section 409A of the Code. To the extent applicable, it is intended that the Agreement and the Plan comply
with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Grantee. The Agreement and the Plan shall be administered and interpreted in a manner consistent
with this intent, and any provision that would cause the Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Section 409A of the Code (which amendment may be
retroactive to the extent permitted by Section 409A of the Code and may be made by the Corporation without the consent of the Grantee). Notwithstanding the foregoing, no particular tax result for the Grantee with respect to any income
recognized by the Grantee in connection with the Agreement is guaranteed, and the Grantee solely shall be responsible for any taxes, penalties or interest imposed on the Grantee in connection with the Agreement. Reference to Section 409A of the
Code will also include any regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.
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7. Tax Withholding.
(a) Grantees Other Than UK Grantees. The Grantee shall pay all applicable income and employment taxes (including taxes of any foreign
jurisdiction) which the Company or a Subsidiary is required to withhold at any time with respect to the Units. Such payment shall be made in full, at the Grantees election, in cash or check, by withholding from the Grantees next normal
payroll check, or by the relinquishment of Shares that otherwise would be issued to the Grantee pursuant to this Agreement. Shares tendered as payment of required withholding shall be valued at the closing price per share of the Companys
common stock on the date such withholding obligation arises.
(b) UK Grantees. By executing this Agreement, the Grantee agrees with
the Company (for itself and on behalf of the Grantees employing company (the Employer)) that the Company (or, if it is the secondary contributor in respect of the Grantee for the purposes of national insurance contributions, the
Employer) may recover from the Grantee (by deduction or otherwise) an amount equal to any secondary Class 1 contributions payable in respect of the acquisition by the Grantee of any Shares pursuant to this Agreement, together with any income tax and
primary Class 1 contributions due under the Pay As You Earn system in respect of any Shares acquired by the Grantee pursuant to this Agreement and the Grantee hereby agrees to indemnify the Company and the Employer for such amounts. For the
avoidance of doubt, a broker or trustee instructed by the Grantee shall be entitled to retain, out of the aggregate number of Shares issued in the name of the Grantee and to which the Grantee would otherwise be entitled pursuant to this Agreement,
and sell as agent for the Grantee, such number of Shares as in the opinion of the Company or the Employer will realize an amount equivalent to any amount due from the Grantee pursuant to this Section and to pay such proceeds to the Employer to
reimburse it for such amount.
8. Employment. The rights and obligations of the Grantee under the terms of his office or employment
with the Employer will not be affected by his participation in the Plan or any right which he may have under this Agreement and this Agreement does not form part of any contract of employment between the Grantee and the Employer. If the
Grantees office or employment is terminated for any reason whatsoever (and whether lawful or otherwise) he will not be entitled to claim any compensation for or in respect of any consequent diminution or extinction of his rights or benefits
(actual or prospective) under this Agreement or otherwise in connection with the Plan.
9. Beneficiary Designation. The Grantee
may, subject to compliance with all applicable laws, name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in the event of the Grantees death
before the Grantee receives any or all of such benefit. Each designation will revoke all prior designations by the Grantee, shall be in the form as may be prescribed by the Committee, and will be effective only when filed by the Grantee in writing
with the Committee during his or her lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantees death shall be paid to his or her estate.
10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida and the laws
of the United States applicable therein.
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11. Severability. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement.
12. Entire Agreement.
(a) The Grantee hereby acknowledges that he or she has received, reviewed and accepted the terms and conditions applicable to this Agreement,
and has not been induced to enter into this Agreement or acquire any Performance Units by expectation of employment or continued employment with the Company or any of its subsidiaries. The granting of the Award and the issuance of Performance Units
are subject to the terms and conditions of the Plan, all of which are incorporated into and form an integral part of this Agreement.
(b)
The Grantee hereby acknowledges that he or she is to consult with and rely upon only the Grantees own tax, legal, and financial advisors regarding the consequences and risks of this Agreement and the award of Performance Units.
(c) This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors
and legal representatives. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
13.
Counterparts. This Agreement may be executed in counterparts, which together shall constitute one and the same original.
[SIGNATURE
PAGE FOLLOWS]
5
IN WITNESS WHEREOF, Cott Corporation has caused this Agreement to be duly executed by one of its duly authorized
officers, and the Grantee has executed this Agreement, effective as of the day and year first above written.
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WITNESS: |
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COTT CORPORATION |
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By: |
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By: |
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Print Name: |
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Michael Creamer |
Print Name: |
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Title: |
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VP, Human Resources |
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GRANTEE: |
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By: |
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Print Name: |
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EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jerry Fowden, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Cott Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the
registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over
financial reporting; and
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and
material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants
internal control over financial reporting.
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/s/ Jerry Fowden |
Jerry Fowden |
Chief Executive Officer |
Dated: May 14, 2015 |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jay Wells, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Cott Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the
registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the
registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over
financial reporting; and
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and
material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants
internal control over financial reporting.
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/s/ Jay Wells |
Jay Wells |
Chief Financial Officer |
Dated: May 14, 2015 |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002.
The undersigned, Jerry Fowden, Chief Executive Officer of Cott Corporation (the Company), has executed this certification in
connection with the filing with the Securities and Exchange Commission of the Companys Quarterly Report on Form 10-Q for the quarter ended April 4, 2015 (the Report).
The undersigned hereby certifies that to the best of his knowledge:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification as of the 14th day of
May, 2015.
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/s/ Jerry Fowden |
Jerry Fowden |
Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002.
The undersigned, Jay Wells, Chief Financial Officer of Cott Corporation (the Company), has executed this certification in
connection with the filing with the Securities and Exchange Commission of the Companys Quarterly Report on Form 10-Q for the quarter ended April 4, 2015 (the Report).
The undersigned hereby certifies that to the best of his knowledge:
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1. |
The Report fully complies with the requirements of Section13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification as of the 14th day of
May, 2015.
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/s/ Jay Wells |
Jay Wells |
Chief Financial Officer |
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