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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 September 27, 2003
------------------------------------
Commission File Number 000-19914
----------------
COTT CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
CANADA None
- --------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
207 Queen's Quay West, Suite 340, Toronto, Ontario M5J 1A7
-------------------------------------------------------------
(Address of principal executive offices) (Postal Code)
(416) 203-3898
--------------------------------------------------------------
(Registrant's telephone number, including area code)
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 is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes X No ____
There were 70,162,093 shares of common stock outstanding as of October 31, 2003.
1
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income for the three and nine month periods ended
September 27, 2003 and September 28, 2002............................................. Page 3
Consolidated Balance Sheets as of September 27, 2003 and December 28, 2002................... Page 4
Consolidated Statements of Shareowners' Equity as of September 27, 2003
and September 28, 2002................................................................ Page 5
Consolidated Statements of Cash Flows for the three and nine month periods ended
September 27, 2003 and September 28, 2002............................................. Page 6
Notes to the Consolidated Financial Statements .............................................. Page 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations .................................................................................. Page 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk .................................. Page 22
Item 4. Controls and Procedures ..................................................................... Page 22
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings ........................................................................... Page 23
Item 6. Financial Statement Schedules, Exhibits and Reports on Form 8-K ............................. Page 23
Signatures ............................................................................................. Page 24
2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COTT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(in millions of U.S. dollars, except per share amounts)
Unaudited
For the three months ended For the nine months ended
-------------------------- --------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
--------- --------- ----------- ---------
SALES $ 389.8 $ 338.8 $ 1,073.2 $ 918.3
Cost of sales 314.7 272.1 864.8 738.4
--------- --------- ----------- ---------
GROSS PROFIT 75.1 66.7 208.4 179.9
Selling, general and administrative
expenses 29.1 27.6 93.2 83.6
Unusual items -- -- (0.8) --
--------- --------- ----------- ---------
OPERATING INCOME 46.0 39.1 116.0 96.3
Other expense (income), net -- note 3 (0.6) (0.3) 0.8 13.2
Interest expense, net 6.8 8.1 21.1 25.4
Minority interest 0.8 0.6 2.1 1.6
--------- --------- ----------- ---------
INCOME BEFORE INCOME TAXES AND EQUITY LOSS 39.0 30.7 92.0 56.1
Income taxes -- note 4 (13.3) (10.7) (31.1) (18.7)
Equity loss -- (0.2) (0.1) (0.4)
--------- --------- ----------- ---------
INCOME FROM CONTINUING OPERATIONS 25.7 19.8 60.8 37.0
Cumulative effect of change in accounting
principle -- note 5 -- -- -- (44.8)
--------- --------- ----------- ---------
NET INCOME (LOSS) -- note 6 $ 25.7 $ 19.8 $ 60.8 $ (7.8)
========= ========= =========== =========
PER SHARE DATA -- note 7
INCOME (LOSS) PER COMMON SHARE --
BASIC
Income from continuing operations $ 0.37 $ 0.29 $ 0.88 $ 0.58
Cumulative effect of change in
accounting principle $ -- $ -- $ -- $ (0.70)
Net income (loss) $ 0.37 $ 0.29 $ 0.88 $ (0.12)
INCOME (LOSS) PER COMMON SHARE --
DILUTED
Income from continuing operations $ 0.36 $ 0.28 $ 0.86 $ 0.52
Cumulative effect of change in
accounting principle $ -- $ -- $ -- $ (0.64)
Net income (loss) $ 0.36 $ 0.28 $ 0.86 $ (0.11)
The accompanying notes are an integral part of these consolidated financial
statements.
3
COTT CORPORATION
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(in millions of U.S. dollars)
SEPTEMBER 27, DECEMBER 28,
2003 2002
--------------- ---------------
Unaudited Audited
ASSETS
CURRENT ASSETS
Cash $ 9.4 $ 3.3
Accounts receivable 160.8 136.2
Inventories -- note 8 98.4 78.0
Prepaid expenses and other 5.1 7.2
--------------- ---------------
273.7 224.7
PROPERTY, PLANT AND EQUIPMENT -- note 9 302.0 273.0
GOODWILL -- note 10 80.5 77.0
INTANGIBLES AND OTHER ASSETS -- note 11 205.0 210.7
--------------- ---------------
$ 861.2 $ 785.4
=============== ===============
LIABILITIES
CURRENT LIABILITIES
Short-term borrowings $ 41.6 $ 21.3
Current maturities of long-term debt 2.0 16.5
Accounts payable and accrued liabilities 161.9 127.3
--------------- ---------------
205.5 165.1
LONG-TERM DEBT 277.4 339.3
OTHER LIABILITIES 45.6 36.2
--------------- ---------------
528.5 540.6
--------------- ---------------
MINORITY INTEREST 25.9 26.6
SHAREOWNERS' EQUITY
CAPITAL STOCK
Common shares -- 69,517,893 shares issued 257.8 248.1
RETAINED EARNINGS 66.7 5.9
ACCUMULATED OTHER COMPREHENSIVE LOSS (17.7) (35.8)
--------------- ---------------
306.8 218.2
--------------- ---------------
$ 861.2 $ 785.4
=============== ===============
The accompanying notes are an integral part of these consolidated financial
statements.
4
COTT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
- --------------------------------------------------------------------------------
(in millions of U.S. dollars)
Unaudited
NUMBER OF COMMON PREFERRED RETAINED ACCUMULATED TOTAL
COMMON SHARES SHARES EARNINGS OTHER EQUITY
SHARES (DEFICIT) COMPREHENSIVE
(in thousands) LOSS
------ -------- ------- ------- ------- --------
Balance at December 29, 2001 61,320 $ 199.4 $ 40.0 $ 2.0 $ (43.7) $ 197.7
Options exercised, including tax
benefit of $2.8 million 853 8.0 -- -- -- 8.0
Conversion of preferred shares into
common shares 6,286 40.0 (40.0) -- -- --
Comprehensive loss -- note 6
Currency translation adjustment -- -- -- -- 5.0 5.0
Net loss -- -- -- (7.8) -- (7.8)
------ -------- ------- ------- ------- --------
Balance at September 28, 2002 68,459 $ 247.4 $ -- $ (5.8) $ (38.7) $ 202.9
====== ======== ======= ======= ======= ========
Balance at December 28, 2002 68,559 $ 248.1 $ -- $ 5.9 $ (35.8) $ 218.2
Options exercised, including tax
benefit of $3.0 million 959 9.7 -- -- -- 9.7
Comprehensive income -- note 6
Currency translation adjustment -- -- -- -- 18.1 18.1
Net income -- -- -- 60.8 -- 60.8
------ -------- ------- ------- ------- --------
Balance at September 27, 2003 69,518 $ 257.8 $ -- $ 66.7 $ (17.7) $ 306.8
====== ======== ======= ======= ======= ========
The accompanying notes are an integral part of these consolidated financial
statements.
5
COTT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Unaudited
For the three months ended For the nine months ended
--------------------------------- ---------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------- --------- -------- --------
OPERATING ACTIVITIES
Income from continuing operations $ 25.7 $ 19.8 $ 60.8 $ 37.0
Depreciation and amortization 13.0 11.5 37.9 32.3
Amortization of financing fees 0.2 0.4 1.5 1.3
Deferred income taxes 3.6 4.5 10.1 3.8
Minority interest 0.8 0.6 2.1 1.6
Equity loss -- 0.2 0.1 0.4
Gain on disposal of investment -- -- -- (1.3)
Other non-cash items 0.4 0.4 -- 5.0
Net change in non-cash working capital
from continuing operations -- note 12 15.3 8.5 (4.5) (19.1)
------- --------- -------- --------
Cash provided by operating activities 59.0 45.9 108.0 61.0
------- --------- -------- --------
INVESTING ACTIVITIES
Additions to property, plant and
equipment -- note 9 (7.0) (8.5) (34.9) (27.1)
Acquisitions 1.0 0.4 0.5 (30.6)
Notes receivable (2.5) -- (2.5) --
Other (0.3) 0.7 (0.2) 2.1
------- --------- -------- --------
Cash used in investing activities (8.8) (7.4) (37.1) (55.6)
------- --------- -------- --------
FINANCING ACTIVITIES
Payments of long-term debt (38.5) (0.2) (88.2) (278.6)
Short-term borrowings (4.6) (34.5) 19.7 (17.6)
Issue of long-term debt -- 0.5 -- 0.5
Decrease in cash in trust -- -- -- 297.3
Distributions to subsidiary minority
shareowner (1.1) (1.7) (2.8) (3.4)
Issue of common shares 1.0 0.2 6.7 5.2
Other (0.1) -- (0.3) --
------- --------- -------- --------
Cash provided by (used in) financing
activities (43.3) (35.7) (64.9) 3.4
------- --------- -------- --------
Effect of exchange rate changes on cash
and cash equivalents 0.2 (0.1) 0.1 0.5
------- --------- -------- --------
NET INCREASE IN CASH 7.1 2.7 6.1 9.3
CASH, BEGINNING OF PERIOD 2.3 10.5 3.3 3.9
------- --------- -------- --------
CASH, END OF PERIOD $ 9.4 $ 13.2 $ 9.4 $ 13.2
======= ========= ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
6
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 1 -- BASIS OF PRESENTATION
The unaudited interim consolidated financial statements have been prepared in
accordance with United States ("U.S.") generally accepted accounting principles
("GAAP") for interim financial information. 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, the financial
statements reflect all adjustments that are necessary for a fair statement of
the results for the interim periods presented. All such adjustments are of a
normal recurring nature.
These financial statements should be read in conjunction with the most recent
annual consolidated financial statements. The accounting policies used in these
interim consolidated financial statements are consistent with those used in the
annual consolidated financial statements, except as described in Note 3.
Certain comparative amounts have been restated to conform to the financial
statement presentation adopted in the current year.
Consolidated financial statements in accordance with Canadian GAAP, in U.S.
dollars, are made available to all shareowners and filed with various Canadian
regulatory authorities.
NOTE 2 -- BUSINESS SEASONALITY
Cott's results from continuing operations for the three and nine month periods
ended September 27, 2003 are not necessarily indicative of the results that may
be expected for the full year due to business seasonality. Operating results are
significantly impacted by business seasonality, which arises from higher sales
in the second and third quarters versus the first and fourth quarters of the
year in contrast to fixed costs such as depreciation, amortization and interest
which are not significantly impacted by seasonal trends.
NOTE 3 -- OTHER EXPENSE (INCOME), NET
For the three months ended For the nine months ended
--------------------------------- ---------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------- --------- --------- ---------
(in millions of U.S. dollars) (in millions of U.S. dollars)
Foreign exchange loss (gain) $ (0.2) $ (0.3) $ 1.1 $ 0.4
Costs of extinguishment of
debt -- -- -- 14.1
Gain on disposal of
investment in Menu Foods Limited -- -- -- (1.3)
Other (0.4) -- (0.3) --
------- --------- --------- ---------
$ (0.6) $ (0.3) $ 0.8 $ 13.2
======= ========= ========= =========
7
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 3 -- OTHER EXPENSE (INCOME), NET (continued)
On January 22, 2002, Cott redeemed the $276.4 million remaining balance of its
senior unsecured notes maturing in 2005 and 2007 ("2005 & 2007 Notes") and paid
the related accrued interest and early redemption penalties using the funds
placed in an irrevocable trust for this purpose. A loss of $14.1 million was
recorded on the early extinguishment of the 2005 & 2007 Notes. The loss was
comprised of the early redemption penalty and the write off of the unamortized
financing fees.
In 2002, the Company recorded the $14.1 million loss on early extinguishment of
the 2005 & 2007 Notes net of a deferred tax recovery of $4.5 million and
classified it as an extraordinary item. In May 2002, the Financial Accounting
Standards Board issued SFAS 145 indicating that certain debt extinguishment
activities do not meet the criteria for classification as extraordinary items
and should no longer be classified as extraordinary items. Cott adopted the
standard retroactively in 2003 and reclassified the extinguishment costs to
other expense (income), net and the related tax effect to income taxes. This
restatement lowered income from continuing operations for the nine months ended
September 28, 2002 by $9.6 million, or $0.15 per basic share and $0.14 per
diluted share, to $37.0 million or $0.52 per diluted share. The restatement had
no impact on any other reported periods.
NOTE 4 -- INCOME TAXES
The following table reconciles income taxes calculated at the basic Canadian
corporate rates with the income tax provision:
For the three months ended For the nine months ended
--------------------------------- ----------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
--------- ---------- ------------- -------------
(in millions of U.S. dollars) (in millions of U.S. dollars)
Income tax provision based on
Canadian statutory rates $ (14.1) $ (11.8) $ (33.2) $ (21.5)
Foreign tax rate differential 0.5 0.1 1.8 (1.0)
Manufacturing and processing
deduction 0.1 0.1 0.2 0.4
Adjustment for change in enacted
rates -- 0.1 -- 0.5
Realization of benefit on carry
back of capital loss -- -- -- 1.8
Other items 0.2 0.8 0.1 1.1
--------- ---------- ------------- -------------
$ (13.3) $ (10.7) $ (31.1) $ (18.7)
========= ========== ============= =============
8
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 5 -- CHANGE IN ACCOUNTING PRINCIPLE
In the first quarter of 2002, Cott adopted SFAS No. 142, Goodwill and Other
Intangible Assets, for goodwill and other intangibles acquired prior to June 30,
2001. Cott adopted SFAS No. 142 for goodwill and other intangible assets
acquired subsequent to June 30, 2001 in 2001. Under this standard, goodwill and
intangible assets with indefinite lives are no longer amortized but are subject
to an annual impairment test. Other intangible assets continue to be amortized
over their estimated useful lives and are also tested for impairment.
Cott completed a goodwill impairment test as of the adoption date for the
standard and determined that unamortized goodwill of $44.8 million relating to
the United Kingdom and Europe reporting unit was impaired under the new rules.
The impairment write down has been recorded as a change in accounting principle.
No income tax recovery was recorded on the impairment write down.
NOTE 6 -- COMPREHENSIVE INCOME (LOSS)
For the three months ended For the nine months ended
---------------------------------- ---------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------------- ------------- ------------- -------------
(in millions of U.S. dollars) (in millions of U.S. dollars)
Net income (loss) $ 25.7 $ 19.8 $ 60.8 $ (7.8)
Foreign currency translation gain
(loss) (0.7) (2.9) 18.1 5.0
------------- ------------- ------------- -------------
$ 25.0 $ 16.9 $ 78.9 $ (2.8)
============= ============= ============= =============
9
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 7 -- INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted net income (loss) per share is calculated using the weighted
average of common shares outstanding adjusted to include the effect that would
occur if in-the-money stock options were exercised and preferred shares were
converted to common shares.
The following table reconciles the basic weighted average number of shares
outstanding to the diluted weighted average number of shares outstanding:
For the three months ended For the nine months ended
-------------------------------- ---------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------ ------ ------ ------
(in thousands) (in thousands)
Weighted average number of shares
outstanding -- basic 69,501 68,445 69,109 64,180
Dilutive effect of stock options 1,638 1,994 1,671 2,224
Dilutive effect of second preferred
shares -- -- -- 4,099
------ ------ ------ ------
Adjusted weighted average number
of shares outstanding -- diluted 71,139 70,439 70,780 70,503
====== ====== ====== ======
As of September 27, 2003, Cott had 69,517,893 common shares and 4,834,592 common
share options outstanding. Of the common share options outstanding, 2,117,132
options were exercisable as of September 27, 2003.
NOTE 8 -- INVENTORIES
SEPTEMBER 27, DECEMBER 28,
2003 2002
--------------- ---------------
(in millions of U.S. dollars)
Raw materials $ 37.8 $ 26.6
Finished goods 50.5 41.8
Other 10.1 9.6
--------------- ---------------
$ 98.4 $ 78.0
=============== ===============
10
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 9 -- PROPERTY, PLANT AND EQUIPMENT
SEPTEMBER 27, DECEMBER 28,
2003 2002
--------------- ---------------
(in millions of U.S. dollars)
Cost $ 525.3 $ 464.6
Accumulated depreciation (223.3) (191.6)
--------------- ---------------
$ 302.0 $ 273.0
=============== ===============
During 2003 Cott recorded $8.6 million of property, plant and equipment financed
through capital leases.
NOTE 10 -- GOODWILL
For the three months ended For the nine months ended
---------------------------------- ---------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------------- ------------- ------------- -------------
(in millions of U.S. dollars) (in millions of U.S. dollars)
Balance at beginning of period $ 80.6 $ 78.5 $ 77.0 $ 114.1
Impairment write down on change in
accounting principle - - - (44.8)
------------- ------------- ------------- -------------
80.6 78.5 77.0 69.3
Acquisitions - (0.2) 0.7 8.4
Foreign exchange (0.1) (0.7) 2.8 (0.1)
------------- ------------- ------------- -------------
Balance at end of period $ 80.5 $ 77.6 $ 80.5 $ 77.6
============= ============= ============= =============
11
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 11 -- INTANGIBLES AND OTHER ASSETS
SEPTEMBER 27, 2003 DECEMBER 28, 2002
---------------------------------------- ------------------------------------------
COST ACCUMULATED NET COST ACCUMULATED NET
AMORTIZATION AMORTIZATION
--------- ------------ --------- ----------- ------------ -----
(in millions of U.S. dollars) (in millions of U.S. dollars)
INTANGIBLES
Not subject to
amortization
Rights $ 80.7 $ -- $ 80.7 $ 80.4 $ -- $ 80.4
--------- ------------ --------- ----------- ------------ -----
Subject to amortization
Customer lists 108.3 19.1 89.2 108.3 13.5 94.8
Trademarks 25.8 5.0 20.8 25.7 3.7 22.0
Other 2.9 0.2 2.7 2.9 0.1 2.8
--------- ------------ --------- ----------- ------------ -----
137.0 24.3 112.7 136.9 17.3 119.6
--------- ------------ --------- ----------- ------------ -----
217.7 24.3 193.4 217.3 17.3 200.0
--------- ------------ --------- ----------- ------------ -----
OTHER ASSETS
Financing costs 5.6 3.8 1.8 5.6 2.3 3.3
Other 10.5 0.7 9.8 7.6 0.2 7.4
--------- ------------ --------- ----------- ------------ -----
16.1 4.5 11.6 13.2 2.5 10.7
--------- ------------ --------- ----------- ------------ -----
$ 233.8 $ 28.8 $ 205.0 $ 230.5 $ 19.8 $ 210.7
========= ============ ========= =========== ============ ========
Amortization expense of intangible assets was $7.0 million for the period ended
September 27, 2003 ($6.3 million -- September 28, 2002). The amortization
expense for intangible assets is estimated at about $9 million per year for the
next five years.
NOTE 12 -- NET CHANGE IN NON-CASH WORKING CAPITAL
The changes in non-cash working capital components, net of effects of unrealized
foreign exchange gains and losses, are as follows:
For the three months ended For the nine months ended
---------------------------------- ----------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------------- ------------- ------------- -------------
(in millions of U.S. dollars) (in millions of U.S. dollars)
Decrease (increase) in accounts
receivable $ 13.3 $ 6.6 $ (19.0) $ (11.9)
Decrease (increase) in inventories (5.3) (1.9) (17.2) (8.5)
Decrease (increase) in prepaid expenses (2.6) 0.6 (0.8) 0.7
Increase (decrease) in accounts
payable and accrued liabilities 9.9 3.2 32.5 0.6
----------- ----------- ------------ ------------
$ 15.3 $ 8.5 $ (4.5) $ (19.1)
=========== =========== ============ ============
12
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 13 -- STOCK OPTION PLANS
Pursuant to the SFAS No. 123, Accounting for Stock-Based Compensation, Cott has
elected to account for its stock option plan under APB opinion No. 25,
Accounting for Stock Issued to Employees. Accordingly, no compensation expense
has been recognized for stock options issued under these plans. Had compensation
expense for the plans been determined based on the fair value at the grant date
consistent with SFAS No. 123, Cott's net income and income per common share
would have been as follows:
For the three months ended For the nine months ended
--------------------------------- ----------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
------------- ------------ ------------ ------------
(in millions of U.S. dollars, (in millions of U.S. dollars,
except per share amounts) except per share amounts)
NET INCOME (LOSS)
As reported $ 25.7 $ 19.8 $ 60.8 $ (7.8)
Less: Compensation
expense 1.6 1.6 4.5 3.8
Pro forma 24.1 18.2 56.3 (11.6)
NET INCOME (LOSS) PER SHARE --
BASIC
As reported 0.37 0.29 0.88 (0.12)
Pro forma 0.35 0.27 0.81 (0.18)
NET INCOME (LOSS) PER SHARE --
DILUTED
As reported 0.36 0.28 0.86 (0.11)
Pro forma 0.34 0.26 0.80 (0.16)
The pro forma compensation expense has been tax adjusted to the extent it
relates to stock options granted in jurisdictions where the related benefits are
deductible for income tax purposes.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:
SEPTEMBER 27, SEPTEMBER 28,
2003 2002
------------- -------------
Risk-free interest rate 3.9% - 4.3% 3.8% - 4.7%
Average expected life (years) 4 4
Expected volatility 45.0% 45.0%
Expected dividend yield -- --
NOTE 14 -- CONTINGENCIES
Cott is subject to various claims and legal proceedings with respect to matters
such as governmental regulations, income taxes, 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 Cott's financial position or
results from operations.
13
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 15 -- SEGMENT REPORTING
Cott produces, packages and distributes retailer brand and branded bottled and
canned soft drinks to regional and national grocery, mass-merchandise and
wholesale chains in the United States, Canada, the United Kingdom & Europe and
International. The International segment includes the Mexican acquisitions of
June 2002 and the Royal Crown International business. The concentrate assets and
related expenses have been included in the Corporate & Other Segment for the
nine months ended September 27, 2003. For comparative purposes, the segmented
information for prior periods has been restated to conform to the way Cott
currently manages its beverage business by geographic segments as described
below:
BUSINESS SEGMENTS
FOR THE THREE UNITED
MONTHS ENDED UNITED KINGDOM & CORPORATE
SEPTEMBER 27, 2003 STATES CANADA EUROPE INTERNATIONAL & OTHER TOTAL
- --------------------- ----------- ----------- ---------- ------------- --------- -----------
(in millions of U.S. dollars)
External sales $ 274.4 $ 55.3 $ 47.6 $ 12.0 $ 0.5 $ 389.8
Intersegment sales -- 9.7 -- -- (9.7) --
Depreciation and
amortization 8.7 2.0 1.7 0.3 0.3 13.0
Operating income 34.6 6.2 3.9 1.3 -- 46.0
Total assets 470.1 132.2 127.4 73.6 57.9 861.2
Additions to property,
plant and equipment 1.8 1.4 3.2 (2.8) 3.4 7.0
----------- ----------- --------- ------------ --------- -----------
FOR THE THREE UNITED
MONTHS ENDED UNITED KINGDOM & CORPORATE
SEPTEMBER 28, 2002 STATES CANADA EUROPE INTERNATIONAL & OTHER TOTAL
- --------------------- ----------- ----------- --------- -------------- --------- -----------
(in millions of U.S. dollars)
External sales $ 247.9 $ 46.1 $ 37.9 $ 6.6 $ 0.3 $ 338.8
Intersegment sales -- 9.3 -- -- (9.3) --
Depreciation and
amortization 7.7 1.6 1.7 -- 0.5 11.5
Operating income (loss) 33.1 4.3 2.7 0.5 (1.5) 39.1
Total assets (as of
December 28, 2002) 452.8 107.9 101.6 61.7 61.4 785.4
Additions to property,
plant and equipment 5.0 0.9 0.9 -- 1.7 8.5
----------- ----------- --------- -------------- --------- -----------
14
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 15 -- SEGMENT REPORTING (continued)
FOR THE NINE UNITED
MONTHS ENDED UNITED KINGDOM & CORPORATE
SEPTEMBER 27, 2003 STATES CANADA EUROPE INTERNATIONAL & OTHER TOTAL
- -------------------- ----------- ---------- ----------- -------------- --------- -----------
(in millions of U.S. dollars)
External sales $ 779.0 $ 142.8 $ 120.7 $ 29.7 $ 1.0 $ 1,073.2
Intersegment sales 0.1 35.8 -- -- (35.9) --
Depreciation and
amortization 25.2 6.1 5.2 0.4 1.0 37.9
Operating income (loss) 95.8 13.1 6.6 4.5 (4.0) 116.0
Total assets 470.1 132.2 127.4 73.6 57.9 861.2
Additions to property,
plant and equipment 11.0 7.4 5.7 6.5 4.3 34.9
----------- ---------- ----------- -------------- --------- -----------
FOR THE NINE UNITED
MONTHS ENDED UNITED KINGDOM & CORPORATE
SEPTEMBER 28, 2002 STATES CANADA EUROPE INTERNATIONAL & OTHER TOTAL
- -------------------- ----------- ---------- ----------- -------------- --------- -----------
(in millions of U.S. dollars)
External sales $ 675.1 $ 128.3 $ 100.7 $ 13.9 $ 0.3 $ 918.3
Intersegment sales 0.8 20.4 -- -- (21.2) --
Depreciation and
amortization 21.6 4.7 5.0 -- 1.0 32.3
Operating income (loss) 86.4 12.9 0.1 2.3 (5.4) 96.3
Total assets (as of
December 28, 2002) 452.8 107.9 101.6 61.7 61.4 785.4
Additions to property,
plant and equipment 18.6 2.3 1.5 -- 4.7 27.1
----------- ---------- ----------- ----------- --------- -----------
Intersegment sales and total assets under the Corporate & Other caption include
the elimination of intersegment sales, receivables and investments.
Sales to one major customer accounted for 41% of Cott's total sales for the
three months ended September 27, 2003 and 42% for the nine month period then
ended. Sales to two major customers accounted for 38% and 9%, respectively, of
Cott's total sales for the three months ended September 28, 2002 and 40% and
10%, respectively for the nine month period then ended.
15
COTT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Unaudited
NOTE 15 -- SEGMENT REPORTING (continued)
REVENUES FOR THE THREE MONTHS ENDED REVENUES FOR THE NINE MONTHS ENDED
--------------------------------------- --------------------------------------
SEPTEMBER 27, SEPTEMBER 28, SEPTEMBER 27, SEPTEMBER 28,
2003 2002 2003 2002
-------------- -------------- --------------- ---------------
(in millions of U.S. dollars) (in millions of U.S. dollars)
United States $ 279.9 $ 251.0 $ 793.6 $ 685.5
Canada 55.3 46.1 142.8 128.3
United Kingdom 46.1 35.6 116.0 93.3
Other 8.5 6.1 20.8 11.2
-------------- -------------- --------------- ---------------
$ 389.8 $ 338.8 $ 1,073.2 $ 918.3
============== ============== =============== ===============
Revenues are attributed to countries based on the location of the plant.
PROPERTY, PLANT AND EQUIPMENT, GOODWILL,
AND INTANGIBLES AND OTHER ASSETS
-------------------------------------------
SEPTEMBER 27, DECEMBER 28,
2003 2002
-------------- ---------------
(in millions of U.S. dollars)
United States $ 423.1 $ 426.9
Canada 90.5 70.3
United Kingdom 63.4 61.3
Other 10.5 2.2
-------------- ---------------
$ 587.5 $ 560.7
============== =====+=========
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Cott Corporation is the world's largest retailer brand soft drink supplier, with
the leading take home carbonated soft drink shares in this segment in its core
markets of the U.S., Canada and the U.K.
RESULTS OF OPERATIONS
Cott reported income from continuing operations of $25.7 million or $0.36 per
diluted share for the third quarter ended September 27, 2003, up 30% as compared
with $19.8 million, or $0.28 per diluted share, for the third quarter of 2002.
For the first nine months of 2003, income from continuing operations increased
64% to $60.8 million or $0.86 per diluted share, from $37.0 million or $0.52 per
diluted share in the same period last year. Income from continuing operations in
the first nine months of 2002, excluding one-time costs of the high yield debt
refinancing of $9.6 million net of income taxes, was $46.6 million or $0.66 per
diluted share.
In the first quarter of 2002, a one time charge of $9.6 million, ($14.1 million
less income taxes of $4.5 million) was recorded as penalties and other costs
associated with the early redemption of the 9.375% and 8.5% senior notes
maturing in 2005 and 2007 ("2005 & 2007 Notes"). Under U.S. GAAP, this charge
was recorded as an extraordinary item in the first quarter of 2002. However, in
May 2002 the Financial Accounting Standards Board issued SFAS 145, which no
longer allowed certain debt extinguishment activities to be recorded as
extraordinary items. Cott retroactively adopted this standard in 2003 and, as a
result, reclassified this one-time charge to other expense.
Net income for the first nine months of 2003 was $60.8 million, or $0.86 per
diluted share, compared with a net loss of $7.8 million or $0.11 per diluted
share for the corresponding period in 2002. Cott adopted SFAS 142 in the first
quarter of 2002. This change in the method of valuing goodwill resulted in a
$44.8 million non-cash write down of the goodwill of the U.K. business in the
first quarter of 2002.
SALES -- Sales were up 15% to a record $389.8 million in the third quarter of
2003 compared to $338.8 million for the third quarter of 2002. Excluding the
impact of foreign exchange rates, sales increased by 13%. During the third
quarter of 2003, total volume in 8oz case equivalents was 293.0 million cases,
up 26% from 231.7 million cases in 2002. Excluding the impact of concentrate
sales, volume was up 8% in the third quarter of 2003.
Sales for the first nine months of 2003 increased to $1,073.2 million, 17%
higher than the same period last year. Excluding the impact of foreign exchange
and the acquisitions of Premium Beverage Packers, Inc. ("Wyomissing") and Cott's
Mexican business, Cott Embotelladores de Mexico, S.A. de C.V. ("CEMSA"), sales
were up 11%. During the first nine months of 2003, total volume in 8oz case
equivalents was 768.4 million cases, up 23% from 623.0 million cases in 2003.
Excluding the impact of the acquisitions and concentrate sales, volume was up
10% in the first nine months of 2003.
Sales in the U.S. during the third quarter of 2003 increased to $274.4 million,
up 11% from $247.9 million in 2002. In the first nine months of 2003, sales of
$779.0 million grew by 15% compared with the first nine months of last year. The
Wyomissing acquisition, which occurred in June of 2002 added $20.7 million to
sales for the first half of the year and excluding the acquisition the nine
month period sales increased 12%. The increase in sales for both the quarter and
the nine month period was attributable to additional promotional activity by
certain customers and increased sales of purified drinking water.
17
Sales in Canada were $55.3 million for the quarter, up 20% from $46.1 million in
2002. Excluding the impact of foreign exchange rates sales were 6% higher than
last year. For the first nine months of the year, sales of $142.8 million were
11% higher than $128.3 million for the same period last year, but up 1% when the
effect of foreign exchange rates is taken into account. The impact of the
strengthening of the Canadian dollar was partially offset by poor sales in
Western Canada.
Sales in the U.K. and Europe of $47.6 million in the third quarter of 2003
increased 26% from $37.9 million in the same period in 2002. Excluding the
impact of the strengthened U.K. pound, sales increased 21%. For the first nine
months of 2003, sales of $120.7 million were up 20% from the same period in
2002. Excluding the impact of foreign exchange rates, sales were up 10%. The
increase in the third quarter and the nine month period is primarily due to new
business and warmer than normal summer temperatures.
The International segment includes CEMSA and the R.C. International business.
Sales of this segment were $12.0 million for the third quarter and $29.7 million
for the first nine months of 2003 compared with $6.6 million and $13.9 million
during the same periods in 2002. CEMSA accounted for $6.9 million of the third
quarter sales in 2003, up from $3.8 million in 2002. For the first nine months
of 2003, CEMSA sales were $16.0 million, an increase of $12.2 million when
compared to the same period last year.
GROSS PROFIT -- Gross profit for the third quarter of 2003 was $75.1 million, or
19.3% of sales, down from 19.7% in the third quarter of 2002. This was primarily
a result of Cott incurring additional freight costs during the busy summer
season. The Company increased the volume of U.S. products made in its Canadian
plants and increased production by outside copackers in the U.S. For the first
nine months of 2003, gross profit was $208.4 million, 19.4% of sales, compared
to gross profit of $179.9 million, 19.6% of sales, in the first nine months of
2002. Increases in raw materials costs during the first nine months of 2003 were
offset by improved operating efficiencies.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") -- SG&A was $29.1 million
for the third quarter of 2003, an increase of $1.5 million from $27.6 million
for the third quarter of 2002, principally due to foreign exchange impacts in
the U.K. and Canadian business units. As a percentage of sales, SG&A declined to
7.5% during the third quarter of 2003, down from 8.1% for the same period last
year. For the first nine months of 2003, SG&A of $93.2 million was $9.6 million
higher than the same period in 2002. This increase was due to the effect of
foreign exchange (U.K. and Canada), the impact of the Wyomissing (U.S.) and
CEMSA (Mexico) acquisitions and from an increase in the number of employees to
meet the needs of Cott's growing business.
OTHER EXPENSE (INCOME) -- Other income for the third quarter of 2003 was $0.6
million, up from $0.3 million in the third quarter of 2002. Other
expense (income) consists primarily of foreign exchange losses. For the first
nine months of 2003 other expense was $0.8 million compared to $13.2 million
during the same period in 2002. The difference is primarily due to debt
extinguishment costs of $14.1 million recorded in the first quarter of 2002
partially offset by a gain on the sale of Cott's remaining interest in Menu
Foods Limited recorded in the second quarter of 2002.
18
INTEREST EXPENSE -- Net interest expense was $6.8 million for the third quarter
of 2003, down from $8.1 million in the third quarter of 2002. The $1.3 million
decrease in net interest expense in the third quarter was primarily due to lower
debt as well as lower effective interest rates on both the term debt and
revolving credit facility. For the first nine months of 2003, net interest
expense totaled $21.1 million, down $4.3 million from the same period last year.
The nine month period decrease of $4.3 million as compared to 2002 is also due
to Cott having had to pay interest on both the 2011 Notes issued in December
2001 and the 2005 & 2007 Notes that were redeemed on January 22, 2002. This
double interest payment resulted in an additional charge of $1.4 million in the
first quarter of 2002.
INCOME TAXES -- Cott recorded an income tax provision of $13.3 million for the
third quarter and $31.1 million for the first nine months of 2003 as compared
with $10.7 million and $18.7 million, respectively for the same periods last
year. For the first nine months of 2003, the overall effective tax rate was
33.8% compared with 33.3% for the same period last year. The prior year's income
tax expense was impacted by a $1.8 million tax recovery related to realizing the
benefit of a capital loss.
CHANGE IN ACCOUNTING PRINCIPLE -- In the first quarter of 2002, Cott adopted
SFAS 142. Under this standard, goodwill and intangible assets with indefinite
lives are no longer amortized but are subject to annual impairment tests based
on fair values rather than net recoverable amount. An impairment test of
goodwill was required upon adoption of this standard. Cott completed the
impairment test of its reporting units in the first quarter of 2002 under the
new rules and as a consequence recorded a non-cash charge of $44.8 million to
write down the entire goodwill of its U.K. business.
FINANCIAL CONDITION -- Cash provided by operating activities for the first nine
months of 2003 was $73.1 million, after capital expenditures of $34.9 million.
For the same period in 2002 cash provided by operating activities was $33.9
million, after capital expenditures of $27.1 million. Cott used cash from
operations along with $19.7 million in additional short-term borrowings to repay
$86.6 million of the term loan to take advantage of lower interest rates on its
revolving credit facilities.
INVESTING ACTIVITIES -- In January 2002, Cott made two investments totaling $1.8
million to strengthen its position in the spring water segment across Canada. At
that time, Cott acquired a 49% interest in Iroquois West Bottling Limited, which
operates a spring water bottling facility in Revelstoke, British Columbia and a
30% interest in Iroquois Water Ltd., which produces bottled water in Cornwall,
Ontario. On December 29, 2002, Cott acquired the remaining 51% interest in
Iroquois West Bottling Limited and changed its name to Cott Revelstoke Ltd.
CAPITAL EXPENDITURES -- Capital expenditures for the first nine months of 2003
were $34.9 million compared with $27.1 million in the same period last year.
Major expenditures to date in 2003 included $6.3 million for improvements to the
CEMSA plant in Mexico that was acquired in June 2002 and information technology
spending of $8.9 million. During the year Cott also recorded $8.6 million of
property, plant and equipment, which was financed by capital leases. Cott
expects capital expenditures for 2003 to be approximately $50.0 million.
CAPITAL RESOURCES AND LONG-TERM DEBT -- Cott's sources of capital include
operating cash flows, short term borrowings under current credit facilities,
issuance of public and private debt and issuance of equity securities.
Management believes Cott has adequate financial resources to meet its ongoing
cash requirements for operations and capital expenditures, as well as its other
financial obligations based on its operating cash flows and currently available
credit.
19
Cott's current credit facilities provide maximum credit of $99.9 million. At
September 27, 2003, approximately $44.8 million of the committed revolving
credit facility in the U.S. and Canada and $20.0 million of the demand revolving
credit facility in the U.K. were available. The weighted average interest rate
on outstanding borrowings under the credit facilities was 3.83% as of September
27, 2003. The U.K. demand facility was replaced effective February 27, 2003 with
a demand revolving credit facility providing maximum credit of (pound)15 million
($24.9 million U.S.) and expiring on March 31, 2004. Overdraft borrowings under
this facility bear interest at the bank's short term offered rate plus 1.00%
except for U.S. dollar borrowings where the margin is 0.20%. Term borrowings
under this facility include a margin of 0.75%.
As of September 27, 2003, Cott's total long-term debt totaled $279.4 million as
compared with $355.8 million at the end of 2002. At the end of the third
quarter, debt consisted of $268.6 million in 8% senior subordinated notes with a
face value of $275 million, and $10.8 million of other debt. In the third
quarter of 2003 Cott repaid its term loan.
CANADIAN GAAP -- Consolidated financial statements in accordance with Canadian
GAAP are made available to all shareowners and are filed with Canadian
regulatory authorities. Under Canadian GAAP in the first nine months of 2003,
Cott reported net income of $60.6 million and total assets of $862.6 million
compared to the net income and total assets under U.S. GAAP of $60.8 million and
$861.2 million, respectively. There are no material U.S./Canadian GAAP
differences for the first nine months of 2003. There were two primary
U.S./Canadian GAAP differences in the first nine months of 2002.
Under Canadian GAAP, the 2005 & 2007 Notes were considered discharged on
December 21, 2001 when the funds to redeem the notes were transferred to an
irrevocable trust. As a result, debt extinguishment costs were recorded in the
fourth quarter of 2001 under Canadian GAAP. Under U.S. GAAP, the 2005 & 2007
Notes were considered discharged on January 22, 2002 and the extinguishment
costs of $14.1 million, $9.6 million after the deferred income tax recovery,
were recorded in the first quarter of 2002.
Under Canadian GAAP, the impairment loss of $44.8 million relating to the change
in the method for valuing goodwill is charged to opening retained earnings for
the first quarter of 2002. Under U.S. GAAP, the change in accounting principle
is recorded as a charge to net income for the quarter ended March 30, 2002.
OUTLOOK -- At this point, Cott expects sales to grow between 13% and 16% for
2003 and earnings per diluted share to be between $1.03 and $1.07 for the year.
Cott's ongoing focus is to increase sales, market share and profitability for
Cott and its customers. Overall the carbonated soft drink industry in Cott's
core markets continues to show some growth, especially in the U.S. Facing
intense competition from heavily promoted global and regional brands, Cott's
major opportunity for growth depends on retailers' continued commitment to their
retailer brand soft drink programs. Cott continues to strive to expand the
business through growth with key customers, the pursuit of new customers and
channels and through new acquisitions and alliances. Additional financing may be
required to fund future acquisitions, and there can be no assurance that such
financing will be available on favorable terms.
Management believes there are significant opportunities for growth in the U.S.
market as retailer brand penetration is not currently as high as in other
markets. The Canadian division will focus on innovation and entry into new
channels. The U.K. business is stabilizing and continued efforts are expected to
further improve earnings performance. Cott believes that significant growth
opportunities exist in Mexico as, with a population of approximately 100
million, it is second only to the United States in per-capita consumption of
soft drinks.
20
RISKS AND UNCERTAINTIES -- Risks and uncertainties include national brand
pricing strategies, commitment of major customers to retailer brand programs,
stability of procurement costs for items such as sweetener, packaging materials
and other ingredients, the successful integration of new acquisitions,
seasonality of sales, the ability to protect intellectual property and
fluctuations in interest rates and foreign currencies versus the U.S. dollar.
Recently, Cott lost some spring water business in the U.S. The spring water was
being copacked for Cott by Iroquois Water Ltd. ("Iroquois Water"), a Canadian
company in which Cott has invested $5.1 million including equity and cash
advances. The business was lost principally due to the rise in value of the
Canadian dollar, which made it non-competitive. While this lost business has had
a significant adverse impact on Iroquois Water, management believes that the
efforts of both Iroquois and Cott to find new customers to replace it will be
successful.
Sales to Cott's top customer accounted for 42% of Cott's total sales for the
first nine months of 2003. For the first nine months of 2002 sales to two major
customers accounted for 40% and 10%, respectively, of Cott's total sales. Sales
to the top ten customers in the first nine months of 2003 and 2002 were about
71% of total sales. The loss of any significant customer, or customers which in
the aggregate represent a significant portion of Cott's sales, could have a
material adverse effect on the Company's operating results and cash flows.
FORWARD-LOOKING STATEMENTS -- In addition to historical information, this report
and the reports and documents incorporated by reference in this report contain
statements relating to future events and Cott's future results. These statements
are "forward-looking" within the meaning of the Private Securities Litigation
Reform Act of 1995 and 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 Cott's business
strategy, goals and expectations concerning its market position, future
operations, margins, profitability, liquidity and capital resources. Generally,
words such as "anticipate", "believe", "continue", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "should", "will" 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 are made as of the date of this report.
Although management believes 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 be incorrect. Cott's operations involve risks and uncertainties, many of
which are outside of its 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.
The following are some of the factors that could affect Cott's 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:
o loss of key customers, particularly Wal-Mart, and the commitment of
retailer brand beverage customers to their own retailer brand beverage
programs;
o increases in competitor consolidations and other market-place competition,
particularly among branded beverage products;
o Cott's ability to identify acquisition and alliance candidates and to
integrate into its operations the businesses and product lines that are
acquired or allied with;
o fluctuations in the cost and availability of beverage ingredients and
packaging supplies, and Cott's ability to maintain favorable arrangements
and relationships with its suppliers. For example, Cott obtains its cans
principally from one supplier. While the Company believes that it could
replace its can supplier if the need arose, it could incur higher prices
and transportation costs in doing so. Thus, the loss or deterioration of
its relationship with its principal can supplier could have a material
effect. The Company recently entered into a new agreement with its can
supplier, a copy of which is filed as an Exhibit to this Form 10-Q;
21
o unseasonably cold or wet weather, which could reduce demand for Cott's
beverages;
o Cott's ability to protect the intellectual property inherent in new and
existing products;
o adverse rulings, judgments or settlements in Cott's existing litigation,
and the possibility that additional litigation will be brought against
Cott;
o product recalls or changes in or increased enforcement of the laws and
regulations that affect Cott's business;
o currency fluctuations that adversely affect the exchange between the U.S.
dollar on one hand and the pound sterling, the Canadian dollar and other
currencies on the other hand;
o changes in interest rates;
o changes in tax laws and interpretations of tax laws;
o changes in consumer tastes and preference and market demand for new and
existing products;
o changes in general economic and business conditions; and
o increased acts of terrorism or war.
Many of these factors are described in greater detail in Cott's other filings
with the U.S. Securities and Exchange Commission. Cott undertakes 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 that Cott may become aware of after the date of this report. Undue
reliance should not be placed on forward-looking statements.
All future written and oral forward-looking statements attributable to
management or other persons acting on Cott's behalf are expressly qualified in
their entirety by the foregoing.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Item 7A: Quantitative and Qualitative Disclosures about
Market Risk described in Cott's Annual Report on Form 10-K for the fiscal year
ended December 28, 2002.
ITEM 4. CONTROLS AND PROCEDURES
Cott's Management, including Cott's Chief Executive Officer and Chief Financial
Officer, have concluded that its disclosure controls and procedures are
effective, based on their evaluation of these controls and procedures as of the
end of the period covered by this report. There have been no significant changes
in Cott's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.
22
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the legal proceedings described in Cott's Form 10-K for the
fiscal year ended December 28, 2002 and Cott's Form 10-Q for the quarter ended
March 29, 2003.
ITEM 6. FINANCIAL STATEMENT SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K
1. Financial Statement Schedules
Schedule III -- Consolidating Financial Statements
2. Exhibits
Number Description
------ -----------
3.1 Articles of Incorporation of Cott (incorporated by reference
to Exhibit 3.1 to Cott's Form 10-K dated March 31, 2000).
3.2 By-laws of Cott (incorporated by reference to Exhibit 3.2 to
Cott's Form 10-K dated March 8, 2002).
10.14 (*) Supply Agreement executed November 11, 2003 but
effective January 1, 2002 between Crown Cork & Seal Company,
Inc. and Cott Corporation.
31.1 Certification of the chairman, and chief executive officer
pursuant to section 302 of the Sarbanes-Oxley Act of 2002
for the quarterly period ended September 27, 2003.
31.2 Certification of the executive vice-president and chief
financial officer pursuant to section 302 of the
Sarbanes-Oxley Act of 2002 for the quarterly period ended
September 27, 2003.
32.1 Certification of the chairman, and chief executive officer
pursuant to section 906 of the Sarbanes-Oxley Act of 2002
for the quarterly period ended September 27, 2003.
32.2 Certification of the executive vice-president and chief
financial officer pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 for the quarterly period ended
September 27, 2003.
(*) Document is subject to a request for confidential treatment.
In accordance with SEC Release No. 33-8238, Exhibits 32.1 and 32.2 are
to be treated as "accompanying" this report rather than "filed" as
part of the report.
3. Reports on Form 8-K
1. Cott filed a Current Report on Form 8-K, dated October 16, 2003,
furnishing a press release that announced its financial results
for the three and nine months ended September 27, 2003.
23
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: November 11, 2003 /s/ Raymond P.Silcock
Raymond P. Silcock
Executive Vice President &
Chief Financial Officer
(On behalf of the Company)
Date: November 11, 2003 /s/ Tina Dell'Aquila
Tina Dell'Aquila
Vice President, Controller and Assistant
Secretary
(Principal accounting officer)
24
SCHEDULE III -- CONSOLIDATING FINANCIAL STATEMENTS
Cott Beverages Inc., a wholly owned subsidiary of Cott, has entered into
financing arrangements that are guaranteed by Cott and certain other wholly
owned subsidiaries of Cott (the "Guarantor Subsidiaries"). Such guarantees are
full, unconditional and joint and several.
The following supplemental financial information sets forth on an unconsolidated
basis, balance sheets, statements of income and cash flows for Cott Corporation,
Cott Beverages Inc., Guarantor Subsidiaries and Cott's other subsidiaries (the
"Non-guarantor Subsidiaries"). The supplemental financial information reflects
the investments of Cott and Cott Beverages Inc. in their respective subsidiaries
using the equity method of accounting. Consolidating financial statements for
the nine month period ended September 28, 2002 have been restated to reflect the
application of SFAS 145, which no longer allows early debt redemption costs to
be classified as extraordinary items.
COTT CORPORATION
CONSOLIDATING STATEMENTS OF INCOME
- -------------------------------------------------------------------------------
(in millions of U.S. dollars, unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 27, 2003
-------------------------------------------------------------------------------------
COTT
COTT BEVERAGES GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- --------- ------------ ------------- ----------- ------------
SALES $ 65.1 $ 253.3 $ 11.8 $ 72.2 $ (12.6) $ 389.8
Cost of sales 53.4 203.4 9.5 61.0 (12.6) 314.7
------- -------- ------- ------- -------- --------
GROSS PROFIT 11.7 49.9 2.3 11.2 -- 75.1
Selling, general and
administrative expenses 5.0 17.2 1.4 5.5 -- 29.1
------- -------- ------- ------- -------- --------
OPERATING INCOME 6.7 32.7 0.9 5.7 -- 46.0
Other expense (income), net (0.6) (0.2) -- 0.2 -- (0.6)
Interest expense (income), net (0.1) 7.9 (1.2) 0.2 -- 6.8
Minority interest -- -- -- 0.8 -- 0.8
------- -------- ------- ------- -------- --------
INCOME BEFORE INCOME TAXES AND
EQUITY INCOME 7.4 25.0 2.1 4.5 -- 39.0
Income taxes (2.5) (9.6) -- (1.2) -- (13.3)
Equity income 20.8 1.7 16.2 -- (38.7) --
------- -------- ------- ------- -------- --------
NET INCOME $ 25.7 $ 17.1 $ 18.3 $ 3.3 $ (38.7) $ 25.7
======= ======== ======= ======= ======== ========
25
COTT CORPORATION
CONSOLIDATING STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(in millions of U.S. dollars, unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 2003
---------------------------------------------------------------------------------
COTT
COTT BEVERAGES GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- -------- ------------ -------------- ------------ ------------
SALES $ 178.7 $ 719.8 $ 32.5 $ 185.3 $ (43.1) $ 1073.2
Cost of sales 148.5 573.9 27.2 158.3 (43.1) 864.8
-------- -------- ------- -------- ------- ---------
GROSS PROFIT 30.2 145.9 5.3 27.0 -- 208.4
Selling, general and
administrative expenses 16.9 55.6 4.1 16.6 -- 93.2
Unusual items -- (0.2) -- (0.6) -- (0.8)
-------- -------- ------- -------- ------- ---------
OPERATING INCOME 13.3 90.5 1.2 11.0 -- 116.0
Other expense (income), net 0.3 (0.1) -- 0.6 -- 0.8
Interest expense (income), net (0.1) 24.7 (3.4) (0.1) -- 21.1
Minority interest -- -- -- 2.1 -- 2.1
-------- -------- ------- -------- ------- ---------
INCOME BEFORE INCOME TAXES AND
EQUITY INCOME (LOSS) 13.1 65.9 4.6 8.4 -- 92.0
Income taxes (4.2) (24.7) -- (2.2) -- (31.1)
Equity income (loss) 51.9 3.4 43.4 -- (98.8) (0.1)
-------- -------- ------- -------- ------- ---------
NET INCOME $ 60.8 $ 44.6 $ 48.0 $ 6.2 $ (98.8) $ 60.8
======== ======== ======= ======== ======= =========
26
COTT CORPORATION
CONSOLIDATING BALANCE SHEETS
- --------------------------------------------------------------------------------
(in millions of U.S. dollars, unaudited)
AS OF SEPTEMBER 27, 2003
------------------------------------------------------------------------------------
COTT COTT GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION BEVERAGES INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- ------------- ------------ ------------- ----------- ------------
ASSETS
Current assets
Cash $ 2.4 $ 1.0 $ 0.1 $ 5.9 $ -- $ 9.4
Accounts receivable 41.1 88.5 7.4 42.8 (19.0) 160.8
Inventories 19.0 53.8 4.6 21.0 -- 98.4
Prepaid expenses and other 1.3 1.6 0.2 2.0 -- 5.1
-------- ------- -------- ------- ------- -------
63.8 144.9 12.3 71.7 (19.0) 273.7
Property, plant and equipment 59.0 144.6 20.9 77.5 -- 302.0
Goodwill 20.2 46.0 13.5 0.8 -- 80.5
Intangibles and other assets 9.4 132.0 12.8 50.8 -- 205.0
Due from affiliates 45.7 4.8 76.5 275.1 (402.1) --
Investments in subsidiaries 213.1 76.7 1.8 -- (291.6) --
-------- ------- -------- ------- ------- -------
$ 411.2 $ 549.0 $ 137.8 $ 475.9 $(712.7) $ 861.2
======== ======= ======== ======= ======= =======
LIABILITIES
CURRENT LIABILITIES
Short-term borrowings $ -- $ $36.1 $ 0.6 $ 4.9 $ -- $ 41.6
Current maturities of
long-term debt -- 1.4 -- 0.6 -- 2.0
Accounts payable and
accrued liabilities 37.6 76.7 6.2 60.3 (18.9) 161.9
-------- ------- -------- ------- ------- -------
37.6 114.2 6.8 65.8 (18.9) 205.5
Long-term debt -- 275.7 -- 1.7 -- 277.4
Due to affiliates 52.1 79.9 223.7 46.4 (402.1) --
Other liabilities 14.7 24.9 2.5 3.5 -- 45.6
-------- ------- -------- ------- ------- -------
104.4 494.7 233.0 117.4 (421.0) 528.5
-------- ------- -------- ------- ------- -------
Minority interest -- -- -- 25.9 -- 25.9
SHAREOWNERS' EQUITY
Capital stock
Common shares 257.8 275.8 127.7 451.4 (854.9) 257.8
Retained earnings (deficit) 66.7 (221.5) (222.9) (94.1) 538.5 66.7
Accumulated other
comprehensive loss (17.7) -- -- (24.7) 24.7 (17.7)
-------- ------- -------- ------- ------- -------
306.8 54.3 (95.2) 332.6 (291.7) 306.8
-------- ------- -------- ------- ------- -------
$ 411.2 $ 549.0 $ 137.8 $ 475.9 $(712.7) $ 861.2
======== ======= ======== ======= ======= =======
27
COTT CORPORATION
CONSOLIDATING STATEMENTS OF CASH FLOWS
(in millions of U.S. dollars, unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 2003
--------------------------------------------------------------------------------------
COTT COTT GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION BEVERAGES INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- ------------- ------------ ------------- ----------- ------------
OPERATING ACTIVITIES
Net income $ 60.8 $ 44.6 $ 48.0 $ 6.2 $(98.8) $ 60.8
Depreciation and amortization 6.0 18.6 4.4 8.9 -- 37.9
Amortization of financing fees -- 1.5 -- -- -- 1.5
Deferred income taxes 4.0 4.1 -- 2.0 -- 10.1
Minority interest -- -- -- 2.1 -- 2.1
Equity income (loss), net of
distributions (51.9) (0.5) (43.5) -- 96.0 0.1
Other non-cash items 0.7 (1.2) -- 0.5 -- --
Net change in non-cash
working capital from
continuing operations (6.1) 2.5 (4.9) 4.0 -- (4.5)
------ ------ ------ ------ ------ -------
Cash provided by operating
activities 13.5 69.6 4.0 23.7 (2.8) 108.0
------ ------ ------ ------ ------ -------
INVESTING ACTIVITIES
Additions to property, plant
and equipment (8.3) (13.0) (1.1) (12.5) -- (34.9)
Acquisitions -- -- -- 0.5 -- 0.5
Notes receivable (2.5) -- -- -- -- (2.5)
Advances to affiliates 2.9 (0.2) (8.3) (6.0) 11.6 --
Investment in subsidiary (8.0) -- -- -- 8.0 --
Other 0.2 (0.5) 0.1 -- -- (0.2)
------ ------ ------ ------ ------ -------
Cash provided by (used in)
investing activities (15.7) (13.7) (9.3) (18.0) 19.6 (37.1)
------ ------ ------ ------ ------ -------
FINANCING ACTIVITIES
Payments of long-term debt -- (87.7) -- (0.5) -- (88.2)
Short-term borrowings (2.6) 19.5 0.6 2.2 -- 19.7
Advances from affiliates 0.6 13.3 -- (2.2) (11.7) --
Distributions to subsidiary
minority shareowner -- -- -- (2.8) -- (2.8)
Issue of common shares 6.7 -- 5.0 3.0 (8.0) 6.7
Dividends paid -- -- -- (2.9) 2.9 --
Other -- -- (0.3) -- -- (0.3)
------ ------ ------ ------ ------ -------
Cash provided by (used in)
financing activities 4.7 (54.9) 5.3 (3.2) (16.8) (64.9)
------ ------ ------ ------ ------ -------
Effect of exchange rate
changes on cash (0.1) -- -- 0.2 -- 0.1
------ ------ ------ ------ ------ -------
NET INCREASE IN CASH 2.4 1.0 -- 2.7 -- 6.1
CASH, BEGINNING OF PERIOD -- -- 0.1 3.2 -- 3.3
------ ------ ------ ------ ------ -------
CASH, END OF PERIOD $ 2.4 $ 1.0 $ 0.1 $ 5.9 $ -- $ 9.4
====== ====== ====== ====== ====== =======
28
COTT CORPORATION
CONSOLIDATING STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(in millions of U.S. dollars, unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 28, 2002
-----------------------------------------------------------------------------------
COTT
COTT BEVERAGES GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- --------- ------------ ------------- ----------- ------------
SALES $ 55.4 $ 222.8 $ 32.4 $ 58.4 $(30.2) $338.8
Cost of sales 45.6 176.5 30.8 49.6 (30.4) 272.1
------- -------- ------- ------- ------- --------
GROSS PROFIT 9.8 46.3 1.6 8.8 0.2 66.7
Selling, general and
administrative expenses 5.6 15.3 1.6 5.1 -- 27.6
------- -------- ------- ------- ------- --------
OPERATING INCOME 4.2 31.0 -- 3.7 0.2 39.1
Other expense (income), net (0.2) -- 66.8 (0.2) (66.7) (0.3)
Interest expense (income), net 1.8 8.6 (2.6) 0.3 -- 8.1
Minority interest -- -- -- 0.6 -- 0.6
------- -------- ------- ------- ------- --------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY INCOME
(LOSS) 2.6 22.4 (64.2) 3.0 66.9 30.7
Income taxes (0.8) (3.9) -- (0.9) (5.1) (10.7)
Equity income (loss) 18.0 1.4 15.8 -- (35.4) (0.2)
------- -------- ------- ------- ------- --------
NET INCOME (LOSS) $ 19.8 $ 19.9 $ (48.4) $ 2.1 $ 26.4 $ 19.8
======= ======== ======= ======= ======= ========
29
COTT CORPORATION
CONSOLIDATING STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(in millions of U.S. dollars)
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 2002
--------------------------------------------------------------------------------
COTT
COTT BEVERAGES GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- --------- ------------ ------------- ----------- ------------
SALES $ 148.7 $ 630.2 $ 32.4 $ 150.1 $ (43.1) $ 918.3
Cost of sales 120.4 498.9 30.8 131.7 (43.4) 738.4
-------- -------- ------- -------- ------- --------
GROSS PROFIT 28.3 131.3 1.6 18.4 0.3 179.9
Selling, general and
administrative expenses 19.2 46.6 2.6 15.2 -- 83.6
-------- -------- ------- -------- ------- --------
OPERATING INCOME (LOSS) 9.1 84.7 (1.0) 3.2 0.3 96.3
Other expense (income), net 14.5 -- 66.8 (1.4) (66.7) 13.2
Interest expense (income), net (3.2) 24.4 3.5 0.7 -- 25.4
Minority interest -- -- -- 1.6 -- 1.6
-------- -------- ------- -------- ------- --------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY INCOME
(LOSS) (2.2) 60.3 (71.3) 2.3 67.0 56.1
Income taxes 3.2 (16.5) -- (0.3) (5.1) (18.7)
Equity income (loss) 36.0 2.4 42.1 -- (80.9) (0.4)
-------- -------- ------- -------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 37.0 46.2 (29.2) 2.0 (19.0) 37.0
Cumulative effect of change in
accounting principle -- -- -- (44.8) -- (44.8)
Equity loss on cumulative
effect of change in
accounting principle (44.8) -- -- -- 44.8 --
-------- -------- ------- -------- ------- --------
NET INCOME (LOSS) $ (7.8) $ 46.2 $ (29.2) $ (42.8) $ 25.8 $ (7.8)
======== ======== ======= ======== ======= ========
30
COTT CORPORATION
CONSOLIDATING BALANCE SHEETS
- --------------------------------------------------------------------------------
(in millions of U.S. dollars)
AS OF DECEMBER 28, 2002
-------------------------------------------------------------------------------------
COTT COTT GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION BEVERAGES INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- ------------- ------------ ------------- ----------- ------------
ASSETS
Current assets
Cash $ -- $ -- $ 0.1 $ 3.2 $ -- $ 3.3
Accounts receivable 36.7 84.3 4.4 32.7 (21.9) 136.2
Inventories 15.1 43.9 5.7 13.3 - 78.0
Prepaid expenses and other 1.4 1.3 0.7 3.8 - 7.2
-------- -------- -------- -------- -------- --------
53.2 129.5 10.9 53.0 (21.9) 224.7
Property, plant and equipment 49.7 138.3 23.7 61.3 - 273.0
Goodwill 17.5 46.0 13.5 - - 77.0
Intangibles and other assets 7.4 134.8 13.0 55.5 - 210.7
Due from affiliates 46.1 0.5 68.2 268.1 (382.9) -
Investments in subsidiaries 148.4 79.2 (41.6) - (186.0) -
-------- -------- -------- -------- -------- --------
$ 322.3 $ 528.3 $ 87.7 $ 437.9 $ (590.8) $ 785.4
======== ======== ======== ======== ======== ========
LIABILITIES
CURRENT LIABILITIES
Short-term borrowings $ 2.3 $ 16.5 $ -- $ 2.5 $ -- $ 21.3
Current maturities of
long-term debt -- 16.5 -- -- -- 16.5
Accounts payable and
accrued liabilities 40.0 63.0 9.4 36.8 (21.9) 127.3
-------- -------- -------- -------- -------- --------
42.3 96.0 9.4 39.3 (21.9) 165.1
Long-term debt - 339.3 -- -- -- 339.3
Due to affiliates 50.6 66.6 219.6 46.1 (382.9) --
Other liabilities 11.2 16.7 6.9 1.4 - 36.2
-------- -------- -------- -------- -------- --------
104.1 518.6 235.9 86.8 (404.8) 540.6
-------- -------- -------- -------- -------- --------
Minority interest -- -- -- 26.6 -- 26.6
SHAREOWNERS' EQUITY
Capital stock
Common shares 248.1 275.8 122.7 448.4 (846.9) 248.1
Retained earnings (deficit) 5.9 (266.1) (270.9) (97.4) 634.4 5.9
Accumulated other
comprehensive loss (35.8) -- -- (26.5) 26.5 (35.8)
-------- -------- -------- -------- -------- --------
218.2 9.7 (148.2) 324.5 (186.0) 218.2
-------- -------- -------- -------- -------- --------
$ 322.3 $ 528.3 $ 87.7 $ 437.9 $ (590.8) $ 785.4
======== ======== ======== ======== ======== ========
31
COTT CORPORATION
CONSOLIDATING STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(in millions of U.S. dollars, unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 2002
-------------------------------------------------------------------------------------
COTT COTT GUARANTOR NON-GUARANTOR ELIMINATION
CORPORATION BEVERAGES INC. SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
----------- ------------- ------------ ------------- ----------- ------------
OPERATING ACTIVITIES
Income (loss) from continuing
operations $ 37.0 $ 46.2 $ (29.2) $ 2.0 $ (19.0) $ 37.0
Depreciation and amortization 5.0 16.4 3.2 7.7 -- 32.3
Amortization of financing fees 0.1 1.2 -- -- -- 1.3
Deferred income taxes (3.3) 7.1 -- -- -- 3.8
Minority interest -- -- -- 1.6 -- 1.6
Equity income (loss), net of
distributions (35.6) 1.1 297.9 -- (263.0) 0.4
Gain on disposal of investment (1.3) -- -- -- -- (1.3)
Other non-cash items 5.7 (0.8) 66.0 0.1 (66.0) 5.0
Net change in non-cash
working capital from
continuing operations (7.7) (12.0) (2.3) (1.3) 4.2 (19.1)
------- ------- -------- ------- -------- --------
Cash provided by (used in)
operating activities (0.1) 59.2 335.6 10.1 (343.8) 61.0
------- ------- -------- ------- -------- --------
INVESTING ACTIVITIES
Additions to property, plant
and equipment (6.3) (18.0) (1.2) (1.6) -- (27.1)
Acquisitions (1.8) -- (26.8) (2.0) -- (30.6)
Advances to affiliates 214.0 283.5 (50.7) -- (446.8) --
Investment in subsidiary (228.7) (27.0) (76.0) -- 331.7 --
Other 3.3 (1.5) 0.3 -- -- 2.1
------- ------- -------- ------- -------- --------
Cash provided by (used in)
investing activities (19.5) 237.0 (154.4) (3.6) (115.1) (55.6)
------- ------- -------- ------- -------- --------
FINANCING ACTIVITIES
Payments of long-term debt (276.4) (2.2) -- -- -- (278.6)
Short-term borrowings (1.6) (16.0) -- -- -- (17.6)
Issue of long-term debt -- 0.5 -- -- -- 0.5
Decrease in cash in trust 297.3 -- -- -- -- 297.3
Advances from affiliates 0.5 50.7 (497.7) (0.3) 446.8 --
Distributions to subsidiary
minority shareowner -- -- -- (3.4) -- (3.4)
Issue of common shares 5.2 10.0 316.7 5.0 (331.7) 5.2
Dividends paid -- (339.9) (0.4) (3.5) 343.8 --
------- ------- -------- ------- -------- --------
Cash provided by (used in)
financing activities 25.0 (296.9) (181.4) (2.2) 458.9 3.4
------- ------- -------- ------- -------- --------
Effect of exchange rate
changes on cash and cash
equivalents 0.3 -- -- 0.2 -- 0.5
------- ------- -------- ------- -------- --------
NET INCREASE (DECREASE) IN
CASH 5.7 (0.7) (0.2) 4.5 -- 9.3
CASH, BEGINNING OF PERIOD -- 0.7 -- 3.2 -- 3.9
------- ------- -------- ------- -------- --------
CASH, END OF PERIOD $ 5.7 $ -- $ (0.2) $ 7.7 $ -- $ 13.2
======= ======= ======== ======= ======== ========
32