Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
This Managements Discussion and Analysis of Financial Condition and Results of Operations is intended to
further the readers understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with the financial statements included in this quarterly report on Form 10-Q and our annual
report on Form 10-K for the year ended December 29, 2012 (the 2012 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 2012 Annual Report.
Overview
We are one of the worlds
largest producers of beverages on behalf of retailers, brand owners and distributors. 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 sales are generally
higher during the warmer months and also can be influenced by the timing of holidays and weather fluctuations. The purchases of our raw materials and related accounts payable fluctuate based upon the demand for our products as well as the timing of
the fruit growing seasons. The seasonality of our sales volume combined with the seasonal nature of fruit growing causes our working capital needs to fluctuate throughout the year, with inventory levels increasing in the first half of the year in
order to meet high summer demand, and with fruit inventories peaking during the last quarter of the year when purchases are made after the growing season. In addition, our accounts receivable balances decline in the fall as customers pay their
higher-than-average outstanding balances from the summer deliveries.
We typically operate at low margins and therefore relatively small
changes in cost structures can materially affect our results.
Ingredient and packaging costs represent a significant portion of our cost
of sales. These costs are subject to global and regional commodity price trends. Our most significant commodities are aluminum, polyethylene terephthalate (PET) resin, corn, sugar, fruit and fruit concentrates. We attempt to manage our
exposure to fluctuations in ingredient and packaging costs by entering into fixed price commitments for a portion of our ingredient and packaging requirements and implementing price increases as needed.
In June of 2013, our United Kingdom (U.K.) reporting segment acquired 100 percent of the share capital of Cooke Bros Holdings
Limited, which includes the subsidiary companies Calypso Soft Drinks Limited and Mr. Freeze (Europe) Limited (together, Calypso Soft Drinks). Calypso Soft Drinks produces fruit juices, juice drinks, soft drinks, and freeze products
in the United Kingdom. The aggregate purchase price for the acquisition of Calypso Soft Drinks (the Calypso Soft Drinks Acquisition) was $12.1 million, which includes approximately $7 million paid at closing, deferred payments of
approximately $2.3 million and $3.0 million to be paid on the first and second anniversary of the closing date of the Calypso Soft Drinks Acquisition, respectively. The closing payment was funded from available cash.
In 2010, we completed the acquisition of substantially all of the assets and liabilities of Cliffstar Corporation (Cliffstar) and
its affiliated companies for approximately $503.0 million in cash, $14.0 million in deferred consideration payable in equal installments over three years and contingent consideration of up to $55.0 million (the Cliffstar Acquisition).
The first $15.0 million of the contingent consideration was paid upon the achievement of milestones in certain expansion projects in 2010. The remainder of the contingent consideration was to be calculated based on the achievement of certain
performance measures during the fiscal year ended January 1, 2011. In 2011, the seller of Cliffstar raised certain objections to the performance measures used to calculate the contingent consideration, and the parties commenced the dispute
resolution mechanism provided for in the asset purchase agreement. During 2011, we made interim payments to the seller equal to $29.6 million, which was net of a $4.7 million refund due to us and included $0.9 million in settlement of certain of the
sellers objections to the calculation of the contingent consideration. The sellers claims for an additional $12.1 million in contingent consideration were submitted to binding arbitration pursuant to the asset purchase agreement and
favorably resolved in February 2013 by our payment of $0.6 million to settle all claims.
We supply Walmart and its affiliated companies,
under annual non-exclusive supply agreements, with a variety of products in the United States, Canada, the United Kingdom, and Mexico, including carbonated soft drinks (CSDs), 100% shelf stable juice and juice-based products, clear,
still and sparkling flavored waters, energy products, sports products, new age beverages, and ready-to-drink teas. During the first nine months of 2013, 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 such products, our operating results could be materially adversely affected. Sales to Walmart for the nine months ended September 28, 2013 and
September 29, 2012 accounted for 29.9% and 31.3% of total revenue, respectively.
34
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 to separate the impact of currency exchange rate changes from our results of operations, and, in some cases, by excluding the impact of
the Calypso Soft Drinks Acquisition. We exclude these items to better understand trends in the business and the impact of the Calypso Soft Drinks Acquisition.
We also utilize earnings before interest expense, taxes, depreciation and amortization (EBITDA), which is GAAP earnings 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, which is EBITDA adjusted for inventory step-up (step-down), acquisition costs, and integration costs related to the Calypso Soft Drinks Acquisition or the Cliffstar Acquisition, as the case may be
(Adjusted EBITDA). We consider Adjusted EBITDA to be an indicator of our operating performance. Adjusted EBITDA excludes certain items to make more meaningful period-over-period comparisons of our ongoing core operations before material
charges.
We also utilize adjusted net income, which is GAAP earnings (loss) excluding purchase accounting adjustments, integration
expenses, restructuring expenses and asset impairments, as well as adjusted earnings per diluted share, which is adjusted net income divided by diluted weighted average outstanding shares. We consider these measures to be indicators of our operating
performance. These measures exclude certain items to make period-over-period comparisons of our ongoing core operations before material charges.
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, after the acquisition of property and equipment, can be used for strategic
opportunities, including investing in our business, making strategic acquisitions, paying dividends, and strengthening the balance sheet.
Because we use these adjusted financial results in the management of our business and to understand underlying business performance, we
believe this supplemental information is useful to investors for their independent evaluation and understanding of our business performance and the performance of our management. The non-GAAP financial measures described above are in addition to,
and not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this report reflect our judgment of particular items, and may be
different from, and therefore may not be comparable to, similarly titled measures reported by other companies.
Summary financial results
Our net income for the three months ended September 28, 2013 (the third quarter) and the nine months ended
September 28, 2013 (first nine months of 2013 or year to date) was $12.0 million or $0.13 per diluted share and $28.5 million or $0.30 per diluted share, respectively, compared to net income of $14.5 million or $0.15 per
diluted share and $45.5 million or $0.48 per diluted share for the three and nine months ended September 29, 2012, respectively.
The following
items of significance impacted our financial results for the third quarter and first nine months of 2013:
|
|
|
our revenue decreased 7.0% year to date from the comparable prior year period (8.1% excluding the impact of Calypso) due primarily to lower global volumes slightly offset by an increase in average price per case on a
global basis. Absent foreign exchange impact, revenue decreased 6.4% year to date from the comparable prior year period;
|
|
|
|
our gross profit as a percentage of revenue decreased to 12.0% and 12.3% for the third quarter and year to date, respectively, compared to 12.5% and 13.2%, respectively, from the comparable prior year period due
primarily to lower volumes which resulted in unfavorable fixed cost absorption;
|
|
|
|
our filled beverage 8-ounce equivalents (beverage case volume), which excludes concentrate sales, decreased 8.3% year to date due primarily to the general market decline in the North American CSD category
and increased promotional activity from the national brands;
|
|
|
|
our selling, general and administrative (SG&A) expenses for the first nine months decreased to $120.9 million from $134.4 million in the comparable prior year period due primarily to lower
employee-related expenses and a reduction in professional fees and similar costs;
|
35
|
|
|
our loss on disposal of property, plant and equipment was related to the disposal of approximately $1.4 million of equipment that was either replaced or no longer being used in our U.S. operating segment;
|
|
|
|
other income was $0.4 million year to date compared to other income of $2.2 million in the comparable prior year period due to insurance recoveries in excess of the loss incurred on a U.S. facility in the amount of $1.3
million and recording a bargain purchase of $0.9 million in the U.K. in the prior year compared to $0.4 million in income associated with foreign exchange effects in the current year;
|
|
|
|
our interest expense decreased by $1.2 million as a result of an amendment to our ABL facility to more favorable terms;
|
|
|
|
our income tax expense was $2.3 million year to date compared to $5.5 million in the comparable prior year period, due primarily to a reduction in pretax income.;
|
|
|
|
our Adjusted EBITDA decreased 9.4% to $154.3 million year to date from $170.4 million in the comparable prior year period due to the items listed above; and
|
|
|
|
our adjusted net income and adjusted earnings per diluted share were $33.5 million and $0.35 year to date, respectively, compared to $48.7 million and $0.51 in the prior year, respectively.
|
The following items of significance impacted our financial results for the third quarter and first nine months of 2012:
|
|
|
our revenue decreased 2.9% year to date from the comparable prior year period due primarily to a decline in North America volume resulting from our exit from certain low margin business and a product mix shift into
juice drinks and sports drinks from 100% shelf-stable juice. Absent foreign exchange impact, revenue decreased 1.9% year to date from the comparable prior year period;
|
|
|
|
our gross profit as a percentage of revenue increased to 12.5% and 13.2% for the third quarter and year to date, respectively, compared to 11.1% and 12.6%, respectively, from the comparable prior year periods due
primarily to increased pricing on products and our exit from lower margin business;
|
|
|
|
our beverage case volume decreased 8.7% year to date due primarily to the exit of certain low margin business and the continuing decline in the North America CSD industry;
|
|
|
|
our SG&A expenses for the first nine months of 2012 increased to $134.4 million from $128.3 million in the comparable prior year period due primarily to an increase in certain employee-related costs compared to a
lowering of the annual incentive and long-term incentive accruals in the prior year;
|
|
|
|
our loss on disposal of property, plant and equipment year to date was the result of the sale of a facility in each of Mexico and the U.K. and normal operational disposals;
|
|
|
|
our other income was $2.2 million year to date as a result of insurance recoveries in excess of the loss incurred on a U.S. facility in the amount of $1.3 million and recording a bargain purchase of $0.9 million in the
U.K. compared to other expense of $2.1 million in the comparable prior year period, which was the result of $1.2 million in foreign exchange effects and $0.9 million in adjustments to the contingent consideration associated with the Cliffstar
Acquisition;
|
|
|
|
our interest expense decreased by $2.8 million year to date as a result of decreased debt balances held throughout the period;
|
|
|
|
our income tax expense was $5.5 million year to date compared to a $1.7 million benefit in the comparable prior year period, due primarily to the recording of $4.3 million of allowances against deferred tax assets in
the U.S. that are uncertain to be realized and the lapping of a favorable tax settlement in the prior year; and
|
|
|
|
our Adjusted EBITDA increased 2.8% to $170.4 million year to date from $165.8 million in the comparable prior year period.
|
36
The following table summarizes our Consolidated Statements of Operations as a percentage of
revenue for the three and nine months ended September 28, 2013 and September 29, 2012, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
(in millions of U.S. dollars)
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
Revenue
|
|
|
543.2
|
|
|
|
100.0
|
|
|
|
583.8
|
|
|
|
100.0
|
|
|
|
1,612.4
|
|
|
|
100.0
|
|
|
|
1,733.4
|
|
|
|
100.0
|
|
Cost of sales
|
|
|
478.2
|
|
|
|
88.0
|
|
|
|
510.6
|
|
|
|
87.5
|
|
|
|
1,414.4
|
|
|
|
87.7
|
|
|
|
1,504.5
|
|
|
|
86.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
65.0
|
|
|
|
12.0
|
|
|
|
73.2
|
|
|
|
12.5
|
|
|
|
198.0
|
|
|
|
12.3
|
|
|
|
228.9
|
|
|
|
13.2
|
|
Selling, general, and administrative expenses
|
|
|
37.9
|
|
|
|
7.0
|
|
|
|
43.8
|
|
|
|
7.5
|
|
|
|
120.9
|
|
|
|
7.5
|
|
|
|
134.4
|
|
|
|
7.8
|
|
Loss on disposal of property, plant & equipment
|
|
|
1.1
|
|
|
|
0.2
|
|
|
|
0.8
|
|
|
|
0.1
|
|
|
|
1.4
|
|
|
|
0.1
|
|
|
|
1.7
|
|
|
|
0.1
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.0
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
26.0
|
|
|
|
4.8
|
|
|
|
28.6
|
|
|
|
4.9
|
|
|
|
73.7
|
|
|
|
4.6
|
|
|
|
92.8
|
|
|
|
5.4
|
|
Other income, net
|
|
|
(0.7
|
)
|
|
|
(0.1
|
)
|
|
|
(1.5
|
)
|
|
|
(0.3
|
)
|
|
|
(0.4
|
)
|
|
|
(0.0
|
)
|
|
|
(2.2
|
)
|
|
|
(0.1
|
)
|
Interest expense, net
|
|
|
13.3
|
|
|
|
2.4
|
|
|
|
13.1
|
|
|
|
2.2
|
|
|
|
39.4
|
|
|
|
2.4
|
|
|
|
40.6
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
13.4
|
|
|
|
2.5
|
|
|
|
17.0
|
|
|
|
2.9
|
|
|
|
34.7
|
|
|
|
2.2
|
|
|
|
54.4
|
|
|
|
3.1
|
|
Income tax expense
|
|
|
0.1
|
|
|
|
0.0
|
|
|
|
1.2
|
|
|
|
0.2
|
|
|
|
2.3
|
|
|
|
0.1
|
|
|
|
5.5
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
13.3
|
|
|
|
2.4
|
|
|
|
15.8
|
|
|
|
2.7
|
|
|
|
32.4
|
|
|
|
2.0
|
|
|
|
48.9
|
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to non-controlling interests
|
|
|
1.3
|
|
|
|
0.2
|
|
|
|
1.3
|
|
|
|
0.2
|
|
|
|
3.9
|
|
|
|
0.2
|
|
|
|
3.4
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributed to Cott Corporation
|
|
|
12.0
|
|
|
|
2.2
|
|
|
|
14.5
|
|
|
|
2.5
|
|
|
|
28.5
|
|
|
|
1.8
|
|
|
|
45.5
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
25.1
|
|
|
|
4.6
|
|
|
|
24.7
|
|
|
|
4.2
|
|
|
|
74.7
|
|
|
|
4.6
|
|
|
|
72.2
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes our revenue and operating income (loss) by reporting segment for the three and
nine months ended September 28, 2013 and September 29, 2012, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
383.3
|
|
|
$
|
439.3
|
|
|
$
|
1,194.6
|
|
|
$
|
1,323.1
|
|
United Kingdom
|
|
|
142.9
|
|
|
|
125.5
|
|
|
|
368.2
|
|
|
|
356.2
|
|
Mexico
|
|
|
7.5
|
|
|
|
9.7
|
|
|
|
22.6
|
|
|
|
29.0
|
|
RCI
|
|
|
9.5
|
|
|
|
9.3
|
|
|
|
27.0
|
|
|
|
25.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
543.2
|
|
|
$
|
583.8
|
|
|
$
|
1,612.4
|
|
|
$
|
1,733.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
14.6
|
|
|
$
|
18.9
|
|
|
$
|
49.3
|
|
|
$
|
67.4
|
|
United Kingdom
|
|
|
9.5
|
|
|
|
7.8
|
|
|
|
18.6
|
|
|
|
21.5
|
|
Mexico
|
|
|
(1.2
|
)
|
|
|
(1.0
|
)
|
|
|
(1.6
|
)
|
|
|
(3.2
|
)
|
RCI
|
|
|
3.1
|
|
|
|
2.9
|
|
|
|
7.4
|
|
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
26.0
|
|
|
$
|
28.6
|
|
|
$
|
73.7
|
|
|
$
|
92.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues are attributed to reporting segments based on the location of the customer.
37
The following table summarizes our beverage case volume by reporting segment for the three and
nine months ended September 28, 2013 and September 29, 2012, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
(in millions of physical cases)
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
Volume 8 oz equivalent cases Total Beverage (including concentrate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
165.3
|
|
|
|
190.1
|
|
|
|
512.9
|
|
|
|
573.9
|
|
United Kingdom
|
|
|
58.5
|
|
|
|
53.9
|
|
|
|
157.4
|
|
|
|
154.5
|
|
Mexico
|
|
|
4.5
|
|
|
|
6.4
|
|
|
|
14.2
|
|
|
|
19.0
|
|
RCI
|
|
|
64.1
|
|
|
|
77.5
|
|
|
|
194.8
|
|
|
|
220.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
292.4
|
|
|
|
327.9
|
|
|
|
879.3
|
|
|
|
967.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume 8 oz equivalent cases Filled Beverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
146.9
|
|
|
|
167.3
|
|
|
|
451.4
|
|
|
|
505.6
|
|
United Kingdom
|
|
|
55.8
|
|
|
|
50.5
|
|
|
|
145.9
|
|
|
|
143.1
|
|
Mexico
|
|
|
4.5
|
|
|
|
6.4
|
|
|
|
14.2
|
|
|
|
19.0
|
|
RCI
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
0.9
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
207.6
|
|
|
|
224.5
|
|
|
|
612.4
|
|
|
|
668.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize revenue and volume by product for the three and nine months ended
September 28, 2013 and September 29, 2012, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 28, 2013
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
148.1
|
|
|
$
|
46.7
|
|
|
$
|
2.4
|
|
|
$
|
|
|
|
$
|
197.2
|
|
Juice
|
|
|
117.4
|
|
|
|
11.2
|
|
|
|
0.1
|
|
|
|
0.5
|
|
|
|
129.2
|
|
Concentrate
|
|
|
2.9
|
|
|
|
0.5
|
|
|
|
|
|
|
|
7.1
|
|
|
|
10.5
|
|
All other products
|
|
|
114.9
|
|
|
|
84.5
|
|
|
|
5.0
|
|
|
|
1.9
|
|
|
|
206.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
383.3
|
|
|
$
|
142.9
|
|
|
$
|
7.5
|
|
|
$
|
9.5
|
|
|
$
|
543.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 28, 2013
|
|
(in millions of physical cases)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Volume 8 oz equivalent cases Total Beverage (including concentrate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
67.1
|
|
|
|
23.4
|
|
|
|
1.4
|
|
|
|
0.1
|
|
|
|
92.0
|
|
Juice
|
|
|
27.0
|
|
|
|
2.5
|
|
|
|
|
|
|
|
0.2
|
|
|
|
29.7
|
|
Concentrate
|
|
|
18.4
|
|
|
|
2.7
|
|
|
|
|
|
|
|
63.7
|
|
|
|
84.8
|
|
All other products
|
|
|
52.8
|
|
|
|
29.9
|
|
|
|
3.1
|
|
|
|
0.1
|
|
|
|
85.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
165.3
|
|
|
|
58.5
|
|
|
|
4.5
|
|
|
|
64.1
|
|
|
|
292.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 28, 2013
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
456.6
|
|
|
$
|
119.4
|
|
|
$
|
9.6
|
|
|
$
|
0.2
|
|
|
$
|
585.8
|
|
Juice
|
|
|
376.8
|
|
|
|
19.9
|
|
|
|
0.1
|
|
|
|
1.9
|
|
|
|
398.7
|
|
Concentrate
|
|
|
8.8
|
|
|
|
1.7
|
|
|
|
|
|
|
|
21.2
|
|
|
|
31.7
|
|
All other products
|
|
|
352.4
|
|
|
|
227.2
|
|
|
|
12.9
|
|
|
|
3.7
|
|
|
|
596.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,194.6
|
|
|
$
|
368.2
|
|
|
$
|
22.6
|
|
|
$
|
27.0
|
|
|
$
|
1,612.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 28, 2013
|
|
(in millions of physical cases)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Volume 8 oz equivalent cases Total Beverage (including concentrate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
206.0
|
|
|
|
61.1
|
|
|
|
5.9
|
|
|
|
0.2
|
|
|
|
273.2
|
|
Juice
|
|
|
86.5
|
|
|
|
4.8
|
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
91.8
|
|
Concentrate
|
|
|
61.5
|
|
|
|
11.5
|
|
|
|
|
|
|
|
193.9
|
|
|
|
266.9
|
|
All other products
|
|
|
158.9
|
|
|
|
80.0
|
|
|
|
8.2
|
|
|
|
0.3
|
|
|
|
247.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
512.9
|
|
|
|
157.4
|
|
|
|
14.2
|
|
|
|
194.8
|
|
|
|
879.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 29, 2012
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
182.3
|
|
|
$
|
43.1
|
|
|
$
|
5.1
|
|
|
$
|
0.3
|
|
|
$
|
230.8
|
|
Juice
|
|
|
133.7
|
|
|
|
3.7
|
|
|
|
0.3
|
|
|
|
0.4
|
|
|
|
138.1
|
|
Concentrate
|
|
|
3.3
|
|
|
|
0.5
|
|
|
|
|
|
|
|
8.5
|
|
|
|
12.3
|
|
All other products
|
|
|
120.0
|
|
|
|
78.2
|
|
|
|
4.3
|
|
|
|
0.1
|
|
|
|
202.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
439.3
|
|
|
$
|
125.5
|
|
|
$
|
9.7
|
|
|
$
|
9.3
|
|
|
$
|
583.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
September 29, 2012
|
|
(in millions of physical cases)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Volume 8 oz equivalent cases Total Beverage (including concentrate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
77.0
|
|
|
|
22.7
|
|
|
|
3.7
|
|
|
|
0.1
|
|
|
|
103.5
|
|
Juice
|
|
|
30.1
|
|
|
|
1.0
|
|
|
|
0.4
|
|
|
|
0.2
|
|
|
|
31.7
|
|
Concentrate
|
|
|
22.8
|
|
|
|
3.4
|
|
|
|
|
|
|
|
77.2
|
|
|
|
103.4
|
|
All other products
|
|
|
60.2
|
|
|
|
26.8
|
|
|
|
2.3
|
|
|
|
|
|
|
|
89.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
190.1
|
|
|
|
53.9
|
|
|
|
6.4
|
|
|
|
77.5
|
|
|
|
327.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 29, 2012
|
|
(in millions of U.S. dollars)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
$
|
533.3
|
|
|
$
|
121.8
|
|
|
$
|
16.4
|
|
|
$
|
0.3
|
|
|
$
|
671.8
|
|
Juice
|
|
|
406.9
|
|
|
|
10.5
|
|
|
|
0.7
|
|
|
|
1.1
|
|
|
|
419.2
|
|
Concentrate
|
|
|
9.6
|
|
|
|
1.8
|
|
|
|
|
|
|
|
23.6
|
|
|
|
35.0
|
|
All other products
|
|
|
373.3
|
|
|
|
222.1
|
|
|
|
11.9
|
|
|
|
0.1
|
|
|
|
607.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,323.1
|
|
|
$
|
356.2
|
|
|
$
|
29.0
|
|
|
$
|
25.1
|
|
|
$
|
1,733.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 29, 2012
|
|
(in millions of physical cases)
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
|
Total
|
|
Volume 8 oz equivalent cases Total Beverage (including concentrate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbonated soft drinks
|
|
|
235.2
|
|
|
|
63.8
|
|
|
|
11.6
|
|
|
|
0.1
|
|
|
|
310.7
|
|
Juice
|
|
|
92.6
|
|
|
|
2.8
|
|
|
|
0.7
|
|
|
|
0.2
|
|
|
|
96.3
|
|
Concentrate
|
|
|
68.3
|
|
|
|
11.4
|
|
|
|
|
|
|
|
219.9
|
|
|
|
299.6
|
|
All other products
|
|
|
177.8
|
|
|
|
76.5
|
|
|
|
6.7
|
|
|
|
|
|
|
|
261.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
573.9
|
|
|
|
154.5
|
|
|
|
19.0
|
|
|
|
220.2
|
|
|
|
967.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
Results of operations
The following tables summarize the change in revenue by reporting segment for the three and nine months ended September 28, 2013 and
September 29, 2012, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28, 2013
|
|
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
Change in revenue
|
|
$
|
(40.6
|
)
|
|
$
|
(56.0
|
)
|
|
$
|
17.4
|
|
|
$
|
(2.2
|
)
|
|
$
|
0.2
|
|
Impact of foreign exchange
1
|
|
|
4.7
|
|
|
|
2.0
|
|
|
|
2.9
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(35.9
|
)
|
|
$
|
(54.0
|
)
|
|
$
|
20.3
|
|
|
$
|
(2.4
|
)
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
7.0
|
%
|
|
|
12.7
|
%
|
|
|
13.9
|
%
|
|
|
22.7
|
%
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
6.1
|
%
|
|
|
12.3
|
%
|
|
|
16.2
|
%
|
|
|
24.7
|
%
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28, 2013
|
|
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
Change in revenue
|
|
$
|
(121.0
|
)
|
|
$
|
(128.5
|
)
|
|
$
|
12.0
|
|
|
$
|
(6.4
|
)
|
|
$
|
1.9
|
|
Impact of foreign exchange
1
|
|
|
9.2
|
|
|
|
2.9
|
|
|
|
7.3
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(111.8
|
)
|
|
$
|
(125.6
|
)
|
|
$
|
19.3
|
|
|
$
|
(7.4
|
)
|
|
$
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
7.0
|
%
|
|
|
9.7
|
%
|
|
|
3.4
|
%
|
|
|
22.1
|
%
|
|
|
7.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
6.4
|
%
|
|
|
9.5
|
%
|
|
|
5.4
|
%
|
|
|
25.5
|
%
|
|
|
7.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Impact of foreign exchange is the difference between the current years revenue translated utilizing the current years average foreign exchange rates to date less the current years revenue translated
utilizing the prior years average foreign exchange rates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 29, 2012
|
|
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
Change in revenue
|
|
$
|
(27.5
|
)
|
|
$
|
(28.8
|
)
|
|
$
|
1.0
|
|
|
$
|
(3.0
|
)
|
|
$
|
3.3
|
|
Impact of foreign exchange
1
|
|
|
5.5
|
|
|
|
1.6
|
|
|
|
2.9
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(22.0
|
)
|
|
$
|
(27.2
|
)
|
|
$
|
3.9
|
|
|
$
|
(2.0
|
)
|
|
$
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
4.5
|
%
|
|
|
6.2
|
%
|
|
|
0.8
|
%
|
|
|
23.6
|
%
|
|
|
55.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
3.6
|
%
|
|
|
5.8
|
%
|
|
|
3.1
|
%
|
|
|
15.7
|
%
|
|
|
55.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 29, 2012
|
|
|
|
Cott
|
|
|
North
America
|
|
|
United
Kingdom
|
|
|
Mexico
|
|
|
RCI
|
|
Change in revenue
|
|
$
|
(52.0
|
)
|
|
$
|
(65.1
|
)
|
|
$
|
19.4
|
|
|
$
|
(11.3
|
)
|
|
$
|
5.0
|
|
Impact of foreign exchange
1
|
|
|
17.2
|
|
|
|
5.0
|
|
|
|
8.3
|
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change excluding foreign exchange
|
|
$
|
(34.8
|
)
|
|
$
|
(60.1
|
)
|
|
$
|
27.7
|
|
|
$
|
(7.4
|
)
|
|
$
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue
|
|
|
2.9
|
%
|
|
|
4.7
|
%
|
|
|
5.8
|
%
|
|
|
28.0
|
%
|
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage change in revenue excluding foreign exchange
|
|
|
1.9
|
%
|
|
|
4.3
|
%
|
|
|
8.2
|
%
|
|
|
18.4
|
%
|
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Impact of foreign exchange is the difference between the current years revenue translated utilizing the current years average foreign exchange rates to date less the current years revenue translated
utilizing the prior years average foreign exchange rates.
|
40
The following table summarizes our EBITDA and Adjusted EBITDA for the three and nine months ended
September 28, 2013 and September 29, 2012, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28,
2013
|
|
|
September 29,
2012
|
|
|
September 28,
2013
|
|
|
September 29,
2012
|
|
|
|
|
|
|
Net income attributed to Cott Corporation
|
|
$
|
12.0
|
|
|
$
|
14.5
|
|
|
$
|
28.5
|
|
|
$
|
45.5
|
|
Interest expense, net
|
|
|
13.3
|
|
|
|
13.1
|
|
|
|
39.4
|
|
|
|
40.6
|
|
Income tax expense
|
|
|
0.1
|
|
|
|
1.2
|
|
|
|
2.3
|
|
|
|
5.5
|
|
Depreciation & amortization
|
|
|
25.1
|
|
|
|
24.7
|
|
|
|
74.7
|
|
|
|
72.2
|
|
Net income attributable to non-controlling interests
|
|
|
1.3
|
|
|
|
1.3
|
|
|
|
3.9
|
|
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
51.8
|
|
|
$
|
54.8
|
|
|
$
|
148.8
|
|
|
$
|
167.2
|
|
|
|
|
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
2.0
|
|
|
|
|
|
Foreign regulatory adjustments
|
|
|
0.5
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
Acquisition adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up
|
|
|
0.7
|
|
|
|
|
|
|
|
1.0
|
|
|
|
0.1
|
|
Acquisition costs
|
|
|
0.1
|
|
|
|
|
|
|
|
1.6
|
|
|
|
|
|
Integration costs
|
|
|
0.4
|
|
|
|
1.3
|
|
|
|
0.4
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
53.5
|
|
|
$
|
56.1
|
|
|
$
|
154.3
|
|
|
$
|
170.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes our adjusted net income and adjusted earnings per share for the three and nine
months ended September 28, 2013 and September 29, 2012, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28,
2013
|
|
|
September 29,
2012
|
|
|
September 28,
2013
|
|
|
September 29,
2012
|
|
|
|
|
|
|
Net income attributed to Cott Corporation
|
|
$
|
12.0
|
|
|
$
|
14.5
|
|
|
$
|
28.5
|
|
|
$
|
45.5
|
|
|
|
|
|
|
Restructuring, net of tax
|
|
|
|
|
|
|
|
|
|
|
1.9
|
|
|
|
|
|
Foreign regulatory adjustments, net of tax
|
|
|
0.5
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
Acquisition adjustments, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up
|
|
|
0.5
|
|
|
|
|
|
|
|
0.8
|
|
|
|
0.1
|
|
Acquisition costs
|
|
|
0.1
|
|
|
|
|
|
|
|
1.4
|
|
|
|
|
|
Integration costs
|
|
|
0.4
|
|
|
|
1.3
|
|
|
|
0.4
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income attributed to Cott Corporation
|
|
$
|
13.5
|
|
|
$
|
15.8
|
|
|
$
|
33.5
|
|
|
$
|
48.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per common share attributed to Cott Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
$
|
0.52
|
|
Diluted
|
|
$
|
0.14
|
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
|
|
|
|
|
Weighted average outstanding shares (millions) attributed to Cott Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
94.2
|
|
|
|
94.5
|
|
|
|
94.9
|
|
|
|
94.5
|
|
Diluted
|
|
|
94.8
|
|
|
|
95.6
|
|
|
|
95.8
|
|
|
|
95.6
|
|
The following unaudited financial information for the three and nine months ended September 28, 2013
represents the activity of Calypso Soft Drinks that has been combined with our United Kingdom operations as of the date of acquisition.
|
|
|
|
|
|
|
|
|
(in millions of U.S. dollars)
|
|
For the Three Months Ended
September 28, 2013
|
|
|
For the Nine Months Ended
September 28, 2013
|
|
Revenue
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
$
|
142.9
|
|
|
$
|
368.2
|
|
Less: Calypso Soft Drinks
|
|
|
(15.7
|
)
|
|
|
(19.9
|
)
|
|
|
|
|
|
|
|
|
|
United Kingdom excluding Calypso Soft Drinks
|
|
$
|
127.2
|
|
|
$
|
348.3
|
|
41
The following table summarizes our free cash flow for the three and nine months ended September 28, 2013 and
September 29, 2012, respectively.
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
87.4
|
|
|
$
|
58.0
|
|
Less: Capital expenditures
|
|
|
(10.2
|
)
|
|
|
(13.2
|
)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
77.2
|
|
|
$
|
44.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
62.9
|
|
|
$
|
53.0
|
|
Less: Capital expenditures
|
|
|
(44.7
|
)
|
|
|
(50.6
|
)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
18.2
|
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
|
Revenue
Revenue decreased $40.6 million or 7.0% and $121.0 million or 7.0% in the third
quarter and year to date, respectively, from the comparable prior year periods. Excluding the impact of foreign exchange, revenue decreased 6.1% and 6.4% in the third quarter and year to date, respectively, from the comparable prior year periods.
North America revenue decreased $56.0 million or 12.7% and $128.5 million or 9.7% in the third quarter and year to date, respectively,
from the comparable prior year periods due primarily to a 12.2% and 10.7% decrease in beverage case volume in the third quarter and year to date, respectively, from the comparable prior year periods. Net selling price per beverage case (which is net
revenue divided by beverage case volume) decreased 0.6% and increased 1.1% in the third quarter and year to date, respectively, from the comparable prior year periods. The declines were primarily due to the general market decline in the North
American carbonated soft drink (CSD) category and increased promotional activity from the national brands in North America.
U.K. revenue increased $17.4 million or 13.9% and $12.0 million or 3.4% in the third quarter and year to date, respectively, from the
comparable prior year periods. Absent foreign exchange impact, U.K. revenue increased 16.2% and 5.4% in the third quarter and year to date, respectively. Excluding the revenues associated with Calypso, U.K. revenue increased $1.7 million and
decreased $7.9 million in the third quarter and year to date, respectively, primarily due to the good weather experienced in the third quarter offset in part by narrowing price gaps associated with national brands, particularly in the energy and
sports drink categories as well as poor weather experienced during the first half of the year.
Mexico revenue decreased $2.2 million or
22.7% and $6.4 million or 22.1% in the third quarter and year to date, respectively, from the comparable prior year periods due primarily to the exiting of low gross margin business offset in part by a 10.0% and 4.3% increase in net selling price
per beverage case in the third quarter and year to date, respectively. Absent foreign exchange impact, Mexico revenue decreased 24.7% and 25.5% in the third quarter and year to date, respectively.
RCI revenue increased $0.2 million or 2.2% and $1.9 million or 7.6% in the third quarter and year to date, respectively, from the comparable
prior year periods due primarily to some business wins and an increase in average price per case.
Cost of Sales
Cost
of sales represented 88.0% and 87.7% of revenue in the third quarter and year to date, respectively, compared to 87.5% and 86.8% in the comparable prior year periods. The increase in cost of sales as a percentage of revenue in the periods was due
primarily to unfavorable fixed cost absorption associated with lower global volumes.
Gross Profit
Gross profit as a
percentage of revenue decreased to 12.0% and 12.3% in the third quarter and year to date, respectively, from 12.5% and 13.2% in the comparable prior year periods due primarily to lower global volumes which resulted in unfavorable fixed cost
absorption.
Selling, General and Administrative Expenses
SG&A expenses decreased $5.9 million or 13.5% and $13.5
million or 10.0% in the third quarter and year to date, respectively, from the comparable prior year periods. The decrease was due primarily to lower employee related expenses, reduced information technology costs and professional fees, and reduced
bad debt reserves as a result of lower revenues combined with higher historical collection rates, offset in part by increased consulting costs associated with acquisitions during the year. As a percentage of revenue, SG&A expenses decreased to
7.0% and 7.5% in the third quarter and year to date, respectively, from 7.5% and 7.8% in the comparable prior year periods, respectively.
42
Operating Income
Operating income was $26.0 million and $73.7 million in the
third quarter and year to date, respectively, compared to $28.6 million and $92.8 million, respectively, in the comparable prior year periods. The decrease in the periods was due to lower gross profit as a percentage of revenue partially offset by
lower SG&A.
Other (Income) Expense
Other income was $0.7 million and $0.4 million in the third quarter and year
to date, respectively, compared to other income of $1.5 million and $2.2 million, respectively, in the comparable prior year periods, due primarily to insurance recoveries in excess of the loss incurred on a U.S. facility in the amount of $1.3
million recorded in the third quarter of the prior year and recording a bargain purchase of $0.9 million in the U.K. in the second quarter of the prior year, offset by foreign exchange effects associated with each period.
Income Taxes
Income tax expense was $0.1 million and $2.3 million in the third quarter and year to date, respectively,
compared to an expense of $1.2 million and $5.5 million, respectively, in the comparable prior year periods. The decrease was due primarily to the reduction in pretax income.
Liquidity and Financial Condition
The
following table summarizes our cash flows for the three and nine months ended September 28, 2013 and September 29, 2012, respectively, as reported in our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial
Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
(in millions of U.S. dollars)
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
September 28, 2013
|
|
|
September 29, 2012
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
87.4
|
|
|
$
|
58.0
|
|
|
$
|
62.9
|
|
|
$
|
53.0
|
|
Net cash used in investing activities
|
|
|
(16.8
|
)
|
|
|
(15.9
|
)
|
|
|
(59.3
|
)
|
|
|
(61.0
|
)
|
Net cash used in financing activities
|
|
|
(12.9
|
)
|
|
|
(3.3
|
)
|
|
|
(54.9
|
)
|
|
|
(7.6
|
)
|
Effect of exchange rate changes on cash
|
|
|
1.3
|
|
|
|
2.2
|
|
|
|
(2.3
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)
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash & cash equivalents
|
|
|
59.0
|
|
|
|
41.0
|
|
|
|
(53.6
|
)
|
|
|
(12.8
|
)
|
Cash & cash equivalents, beginning of period
|
|
|
66.8
|
|
|
|
47.1
|
|
|
|
179.4
|
|
|
|
100.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & cash equivalents, end of period
|
|
$
|
125.8
|
|
|
$
|
88.1
|
|
|
$
|
125.8
|
|
|
$
|
88.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and Capital Resources and Liquidity
As of September 28, 2013, we had total debt of $608.1 million and $125.8 million of cash and cash equivalents compared to $606.1 million
of debt and $88.1 million of cash and cash equivalents as of September 29, 2012.
We believe that our level of resources, which
includes cash on hand, available borrowings under our asset-based lending credit facility (the ABL facility) and funds provided by operations, will be adequate to meet our expenses, capital expenditures, and debt service obligations for
the next twelve months. We have maintained adequate liquidity to meet current working capital requirements, fund capital expenditures and make scheduled principal and interest payments on debt. Absent deterioration of market conditions, we believe
that cash flows from operating activities and financing activities will provide adequate resources to satisfy working capital, scheduled principal and interest payments on debt, and anticipated capital expansion requirements for both short-term and
long-term capital needs, as well as the payment of future dividends. For periods extending beyond twelve months, we believe that our ability to generate cash to meet our expenses and debt service obligations and to otherwise reduce our debt as
anticipated will depend primarily on our ability to retain a substantial amount of volume from our key customers and maintain the profitability of our business. If we do not have enough cash to pay our debt service obligations, or if the ABL
facility, the 8.375% senior notes that are due on November 15, 2017 (the 2017 Notes), or the 8.125% senior notes that are due on September 1, 2018 (the 2018 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 2017 Notes and 2018 Notes, refinancing all or part of our existing debt, selling assets, incurring additional indebtedness
or raising equity. If we need to seek additional financing, there is no assurance that this additional financing will be available on favorable terms or at all.
Should we desire to consummate significant acquisition opportunities or undertake significant expansion activities, our capital needs would
increase and could result in a need for us to make borrowings under or increase the size of our ABL facility or access public or private debt and equity markets.
On October 22, 2013, we amended the ABL facility to, among other things, provide for an increase in the lenders commitments under the
ABL facility to $300 million, and to provide for certain adjustments to the PP&E Component (as defined in the ABL facility) of the borrowing base. Our total availability under the ABL facility was $282.5 million, which was based on our borrowing
base (accounts receivables, inventory, and fixed assets) delivered to the lenders on October 22, 2013 in connection with such amendment, and we had no outstanding borrowings under the ABL facility and $7.5 million in outstanding letters of
credit. As a result, our excess availability under the ABL facility was $275.0 million. Each months borrowing base is not effective until submitted to the lenders, which usually occurs on the fifteenth day of the following month.
43
We earned approximately 100% of our consolidated operating income in subsidiaries located outside
of Canada during the first nine months of 2013. 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 distribution of those earnings in the form of dividends or otherwise, we may be subject to additional Canadian income taxes and withholding taxes payable to
various foreign jurisdictions, where applicable. This alternative could result in a higher effective tax rate in the period in which such a determination is made to repatriate prior period foreign earnings.
We may, from time to time, depending on market conditions, including without limitation whether the 2017 Notes or 2018 Notes are then trading
at discounts to their respective face amounts, repurchase the 2017 Notes or 2018 Notes for cash and/or in exchange for shares of our common stock, warrants, preferred stock, debt or other consideration, in each case in open market purchases and/or
privately negotiated transactions. The amounts involved in any such transactions, individually or in aggregate, may be material. However, the covenants in our ABL facility subject such purchases to certain limitations and conditions.
On September 30, 2013, Cott Beverages Inc. notified Wells Fargo Bank, National Association, as successor trustee to HSBC Bank USA, N.A.
under the indenture dated as of November 13, 2009 governing the 2017 Notes (the Indenture), that Cott Beverages Inc. will, pursuant to the optional redemption provisions contained in the Indenture, redeem U.S. $200.0 million
aggregate principal amount of the 2017 Notes on November 15, 2013 at 104.118% of par. The redemption will include approximately $8 million in premium payments as well as approximately $4 million in deferred financing fee and discount
charges.
Operating activities
Cash
provided by operating activities was $62.9 million year to date compared to $53.0 million in the comparable prior year period. The $9.9 million increase was due primarily to a reduction in inventories and other assets partially offset by a reduction
in net income.
Investing activities
Cash used in investing activities was $59.3 million year to date compared to $61.0 million in the comparable prior year period. The $1.7
million decrease was due primarily to decreased capital expenditures, partially offset by an increase in acquisition related payments.
Financing
activities
Cash used in financing activities was $54.9 million year to date compared to $7.6 million in the comparable prior year
period. The $47.3 million increase was due primarily to payment of long term debt and the repurchase of common shares and the payment of dividends to shareholders. In connection with the Calypso Soft Drinks Acquisition we paid off outstanding debt
of the acquired companies of $18.5 million upon purchase.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as defined under Item 303(a)(4) of Regulation S-K as of September 28, 2013.
Contractual Obligations
We have no
material changes to the disclosure on this matter made in our 2012 Annual Report.
44
Debt
Asset-Based Lending Credit Facility
On
March 31, 2008, we entered into a credit agreement with JPMorgan Chase Bank N.A. as Agent that created an ABL facility to provide financing for our North America, U.K. and Mexico reporting segments. In connection with the Cliffstar Acquisition,
we refinanced the ABL facility on August 17, 2010 to, among other things, provide for the Cliffstar Acquisition, the issuance of the 2018 Notes and the application of net proceeds therefrom, the underwritten public offering of 13,340,000 common
shares at a price of $5.67 per share and the application of net proceeds therefrom and to increase the amount available for borrowings to $275.0 million. We drew down a portion of the indebtedness under the ABL facility in order to fund the
Cliffstar Acquisition. We incurred $5.4 million of financing fees in connection with the refinancing of the ABL facility.
On
July 19, 2012, we amended the ABL facility to, among other things, extend the maturity date to either July 19, 2017 or, if we have not redeemed, repurchased or refinanced the 2017 Notes by May 1, 2017, May 15, 2017. We
incurred $1.2 million of financing fees in connection with the amendment of the ABL facility.
On October 22, 2013, we amended the
ABL facility to, among other things, (1) provide for an increase in the lenders commitments under the ABL facility to $300 million, as well an increase to the accordion feature, which permits us to increase the lenders commitments
under the ABL facility to $350 million, subject to certain conditions, (2) extend the maturity date to the earliest of (i) October 22, 2018, (ii) May 15, 2017, if we have not redeemed, repurchased or refinanced the 2017
Notes by May 1, 2017, or (iii) March 1, 2018, if we have not redeemed, repurchased or refinanced the 2018 Notes by February 15, 2018, and (3) provide for greater flexibility under certain covenants. We incurred
approximately $0.6 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 on August 17, 2010, along with the financing fees incurred in connection with the amendment of the ABL facility on July 19, 2012 and on October 22, 2013, are being amortized using
the straight line method over the duration of the amended ABL facility.
As of September 28, 2013, we had no outstanding borrowings
under the ABL facility. The commitment fee was 0.375% per annum of the unused commitment, which, taking into account $7.5 million of letters of credit, was $239.0 million as of September 28, 2013.
8.375% Senior Notes due in 2017
On
November 13, 2009, we issued $215.0 million of the 2017 Notes. The 2017 Notes were issued at a $3.1 million discount. The issuer of the 2017 Notes 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 2017 Notes. The interest on the 2017 Notes is payable semi-annually on May 15
th
and November 15
th
of each year.
We incurred $5.1 million of financing fees in connection with the 2017 Notes. The financing fees are being amortized using
the effective interest method over an eight-year period, which represents the duration of the 2017 Notes.
On September 30, 2013,
Cott Beverages Inc. notified Wells Fargo Bank, National Association, as successor trustee to HSBC Bank USA, N.A. under the Indenture, that Cott Beverages Inc. will, pursuant to the optional redemption provisions contained in the Indenture, redeem
U.S. $200.0 million aggregate principal amount of the 2017 Notes on November 15, 2013 at 104.118% of par. The redemption will include approximately $8 million in premium payments as well as approximately $4 million in deferred financing fee and
discount charges.
8.125% Senior Notes due in 2018
On August 17, 2010, we issued $375.0 million of the 2018 Notes. The issuer of the 2018 Notes is our wholly-owned U.S. subsidiary Cott
Beverages Inc., and we and most of our U.S., Canadian and U.K. subsidiaries guarantee the 2018 Notes. The interest on the 2018 Notes is payable semi-annually on March 1
st
and September 1
st
of each year.
We incurred $8.6 million of financing fees in connection with the 2018
Notes. The financing fees are being amortized using the effective interest method over an eight-year period, which represents the duration of the 2018 Notes.
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 General Electric at 5.23% interest.
45
Credit Ratings and Covenant Compliance
Credit Ratings
We have no material
changes to the disclosure on this matter made in our 2012 Annual Report.
Covenant Compliance
8.375% Senior Notes due in 2017
Under the
indenture governing the 2017 Notes, we are subject to a number of covenants, including covenants that limit our and certain of our subsidiaries ability, subject to certain exceptions and qualifications, to (i) pay dividends or make
distributions, repurchase equity securities, prepay subordinated debt or make certain investments, (ii) incur additional debt or issue certain disqualified stock or preferred stock, (iii) create or incur liens on assets securing
indebtedness, (iv) merge or consolidate with another company or sell all or substantially all of our assets taken as a whole, (v) enter into transactions with affiliates and (vi) sell assets. We have been in compliance with all of the
covenants under the 2017 Notes and there have been no amendments to any such covenants since the 2017 Notes were issued.
8.125% Senior Notes due in
2018
Under the indenture governing the 2018 Notes, we are subject to a number of covenants, including covenants that limit our and
certain of our subsidiaries ability, subject to certain exceptions and qualifications, to (i) pay dividends or make distributions, repurchase equity securities, prepay subordinated debt or make certain investments, (ii) incur
additional debt or issue certain disqualified stock or preferred stock, (iii) create or incur liens on assets securing indebtedness, (iv) merge or consolidate with another company or sell all or substantially all of our assets taken as a
whole, (v) enter into transactions with affiliates and (vi) sell assets. We have been in compliance with all of the covenants under the 2018 Notes and there have been no amendments to any such covenants since the 2018 Notes were issued.
ABL Facility
Under the credit
agreement governing the ABL facility, Cott and its restricted subsidiaries are subject to a number of business and financial covenants, including a covenant requiring a minimum fixed charge coverage ratio of at least 1.1 to 1.0 effective when and if
excess availability is less than the greater of 10% of the lenders commitments under the ABL facility or $30.0 million. If excess availability is less than the greater of 12.5% of the lenders commitments under the ABL facility or $37.5
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 September 28, 2013.
46
Issuer Purchases of Securities
Common Share Repurchase Program
On
May 1, 2012, our board of directors authorized the repurchase of up to $35.0 million of our common shares in the open market or through privately negotiated transactions over a 12-month period through either a 10b5-1 automatic trading plan or
at managements discretion in compliance with regulatory requirements, and given market, cost and other considerations.
On
April 30, 2013, 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, 2013.
We repurchased 554,769 shares of common stock for approximately $4.5 million during the third quarter ended September 28, 2013 under the share repurchase program through open market transactions. We are unable to predict the number of shares
that ultimately will be repurchased under the share repurchase program, or the aggregate dollar amount of the shares actually purchased. We may discontinue purchases at any time, subject to compliance with applicable regulatory requirements.
Capital Structure
Since
December 29, 2012, our equity has increased by $0.8 million. The increase was the result of net income of $28.5 million and share-based compensation expense of $3.6 million, offset by dividends declared of $16.7 million, share repurchases of
$10.0 million, and other comprehensive loss of $4.6 million.
Dividend Payments
The board of directors has declared a quarterly dividend of CAD$0.06 per common share in each of the three completed quarters of 2013. On
October 29, 2013, our board of directors declared a dividend of CAD$0.06 per common share, payable in cash on December 12, 2013 to shareowners of record at the close of business on December 2, 2013. 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 2017 Notes and 2018 Notes, as well as other factors that our board of directors may deem relevant from time to time.
Critical Accounting Policies and Estimates
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 other assumptions that 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 2012 Annual Report.
Forward-looking Statements
In addition to historical information, this report may contain statements relating to future events and future results. These statements are
forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation and involve known and unknown risks, uncertainties, future expectations and other factors that may
cause actual results, performance or achievements of Cott Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements include, but are not
limited to, statements that relate to projections of sales, earnings, earnings per share, cash flows, capital expenditures or other financial items, discussions of estimated future revenue enhancements and cost savings. These statements also relate
to our business strategy, goals and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. Generally, words such as anticipate, believe, continue,
could, endeavor, estimate, expect, intend, may, will, plan, predict, project, should and similar terms and phrases
are used to identify forward-looking statements in this report and in the documents incorporated in this report by reference. These forward-looking statements reflect current expectations regarding future events and operating performance and are
made only as of the date of this report.
The forward-looking statements are not guarantees of future performance or events and, by their
nature, are based on certain estimates and assumptions regarding interest and foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective income tax rates, which are subject to
inherent risks and uncertainties. Material
47
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 2012 Annual Report, and those described from time to time in our future reports filed with the Securities and Exchange Commission (SEC) and Canadian securities regulatory authorities.
The following are some of the factors that could affect our financial performance, including but not limited to, sales, earnings and cash
flows, or could cause actual results to differ materially from estimates contained in or underlying the forward-looking statements:
|
|
|
our ability to compete successfully in the highly competitive beverage category;
|
|
|
|
changes in consumer tastes and preferences for existing products and our ability to develop and timely launch new products that appeal to such changing consumer tastes and preferences;
|
|
|
|
loss of or a reduction in business with key customers, particularly Walmart;
|
|
|
|
fluctuations in commodity prices and our ability to pass on increased costs to our customers, and the impact of those increased prices on our volumes;
|
|
|
|
our ability to manage our operations successfully;
|
|
|
|
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 we incurred and our ability to meet our obligations;
|
|
|
|
our ability to maintain compliance with the covenants and conditions under our debt agreements;
|
|
|
|
fluctuations in interest rates;
|
|
|
|
the impact of global financial events on our financial results;
|
|
|
|
our ability to fully realize the expected cost savings and/or operating efficiencies from our restructuring activities;
|
|
|
|
any disruption to production at our beverage concentrates or other manufacturing facilities;
|
|
|
|
our ability to protect our intellectual property;
|
|
|
|
compliance with product health and safety standards;
|
|
|
|
liability for injury or illness caused by the consumption of contaminated products;
|
|
|
|
liability and damage to our reputation as a result of litigation or legal proceedings;
|
|
|
|
changes in the legal and regulatory environment in which we operate;
|
|
|
|
the impact of proposed taxes on soda and other sugary drinks;
|
|
|
|
enforcement of compliance with the Ontario Environmental Protection Act;
|
|
|
|
unseasonably cold or wet weather, which could reduce demand for our beverages;
|
|
|
|
the impact of national, regional and global events, including those of a political, economic, business and competitive nature;
|
|
|
|
our ability to recruit, retain, and integrate new management;
|
|
|
|
our exposure to intangible asset risk;
|
|
|
|
our ability to renew our collective bargaining agreements on satisfactory terms;
|
|
|
|
disruptions in our information systems; or
|
|
|
|
volatility of our stock price.
|
We undertake no obligation to update any information contained
in this report or to publicly release the results of any revisions to forward-looking statements to reflect events or circumstances of which we may become aware of after the date of this report. Undue reliance should not be placed on forward-looking
statements, and all future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.
48