- North American business stabilizing - Loss of $0.03 per share
after charges of $0.09 per share for unusual items and stock option
expense - Share growth continues in U.S. CSD category - Company
announces entry into Brazil TORONTO, April 20
/PRNewswire-FirstCall/ -- Cott Corporation (NYSE:COT; TSX:BCB)
today announced results for the first quarter ended April 1, 2006.
First quarter sales were in line with the prior year quarter at
$394.2 million, compared to $395.5 million. Excluding acquisitions
however, first quarter sales declined by 5%. Net loss for the
quarter was $2.1 million or $0.03 per diluted share, after charges
of $0.06 per diluted share for unusual items and $0.03 per diluted
share for stock option expense. "Our first quarter results reflect
the progress of our North American realignment in stabilizing the
business. The results are in line with our plan as we continue
taking aggressive action to position Cott for longer term
profitability," said John K. Sheppard, president and chief
executive officer. "As we have said previously, our focus during
2006 is to improve margins and take steps to increase Cott's
presence in non-carbonated beverage segments. I am pleased with the
progress of recent initiatives to support margin improvement,
including the achievement of our pricing objectives for 2006. In
the U.S., Cott continues to outperform the carbonated soft drink
category in our channels, posting a 0.2 share point gain in the
12-weeks ending March 18." FIRST QUARTER North American first
quarter sales declined 8% from the prior year quarter, due mainly
to a structural change in Cott's agreement with one of its
self-manufacturing customers. Cott continues to supply this
customer with filled beverages, however a portion of the business
is now in the form of concentrate sales, lowering Cott's revenue
but having minimal earnings impact. Additional factors impacting
North American sales in the quarter were product and packaging
rationalization, continued softness in the carbonated soft drink
category and lower bottled water shipments. U.K./Europe sales in
the quarter increased 50% compared to the prior year quarter due
principally to increases from the acquisition of Macaw (Soft
Drinks) Ltd. in August 2005, as well as base business growth.
Excluding the acquisition, U.K./Europe first quarter sales grew 4%
over the prior year quarter and by 12% when foreign exchange is
also excluded. International sales rose 14% from prior year
quarter, benefiting from both Mexico and Royal Crown International
increases. Excluding foreign exchange, international sales were up
10%. Gross margin as a percentage of sales in the quarter was
13.4%, compared to 14.2% in the prior year quarter due to higher
ingredients and packaging costs and increased capacity-related
fixed costs. The first quarter gross margin percentage showed solid
improvement from the 11.9% level experienced in the most recent
fourth quarter. Selling, general and administrative expenses
increased in the quarter mainly due to stock option expense. The
Company's cost control actions largely offset additional selling,
general and administrative expense related to Macaw. The Company
began recording expenses for stock options in 2006 under the
provisions of FAS 123(R). For the first quarter, stock option
expense amounted to $2.7 million before tax or $0.03 per diluted
share on an after tax basis. Interest expense increased $1.7
million in the quarter due to the Macaw acquisition. Unusual item
charges of $5.0 million on a pre-tax basis, or $0.06 per diluted
share after taxes, were recorded in the quarter. Of these charges,
$3.0 million relate to the North American realignment and the
balance are for legal and other fees associated with the review of
our Macaw acquisition by the U.K.'s Competition Commission. After
charges for unusual items of $0.06 per diluted share and stock
option expense of $0.03 per diluted share, net loss for the quarter
was $2.1 million or $0.03 per diluted share, compared to net income
of $8.3 million or $0.12 per diluted share in the first quarter of
2005. During the quarter, the Company announced that the
Competition Commission in the U.K. had provisionally cleared Cott's
acquisition of Macaw. The Company expects to receive final
clearance of the transaction by May 15, 2006. The Company also
announced today that it has begun shipments of retailer brand
carbonated soft drinks in Brazil, the world's fourth largest market
for carbonated soft drinks by per capita consumption. Cott is
working with a local bottler to supply its largest customer with a
retailer brand beverage program, initially launching in more than
100 stores. "Our agreement in Brazil gives us access to a market
with long-term growth potential for retailer brand carbonated soft
drinks, while limiting our investment in fixed assets," added
Sheppard. OUTLOOK The Company continues to expect 2006 EBITDA to be
relatively flat with 2005, excluding the impact of unusual items
and stock option expense. The Company also continues to expect net
income excluding unusual items and stock option expense to be
substantially lower in 2006 compared to 2005 due to significant
increases in depreciation, interest expense, and the effective tax
rate. Charges for unusual items during 2006, including pre-tax
asset impairment and restructuring charges, are expected to be
between $23 and $43 million, of which $3 million were recorded in
the first quarter. This amount is part of the previously announced
charges of $60 to $80 million. Stock option expense in 2006 is
expected to be $10 to $12 million on a pre-tax basis. In 2007, Cott
expects EBITDA excluding unusual items and stock option expense to
rebound to the 2004 level and to build further on that in 2008. The
Company's goal is to improve its gross margin as a percentage of
sales to 16% in 2008 through improved operating efficiencies,
product mix and pricing. Beyond 2008, the Company is targeting
longer-term annual sales growth of 5 to 7% and earnings per diluted
share growth of 8 to 12%. + + + FIRST QUARTER CONFERENCE CALL Cott
Corporation will host a conference call for investors and analysts
today, Thursday, April 20th 2006, at approximately 1 p.m. ET to
discuss the first quarter financial results. For those who wish to
listen to the presentation, there is a listen-only dial-in
telephone line, which can be accessed as follows: North America:
416-644-3427 International: 800-814-4890 ANNUAL GENERAL MEETING
Cott Corporation's Annual General and Special Meeting of
shareowners will take place today, Thursday, April 20, 2006 at 8:30
AM ET at the Glenn Gould Studio, Canadian Broadcasting Centre, 250
Front St. West, Toronto, Ontario. WEBCAST To access Cott's first
quarter conference call with analysts and today's Annual General
and Special Meeting over the Internet, please visit the Company's
website at http://www.cott.com/. Please log on 15 minutes early to
register, download, and install any necessary audio/video software.
For those who are unable to access the live broadcasts, a replay
will be available at Cott's website following these events until
Thursday, May 4, 2006. Quarterly results and supplementary
financial information for the conference call is available in the
Investor Relations/Financial Reports section of Cott's website.
ABOUT COTT CORPORATION Cott Corporation is one of the world's
largest retailer brand beverage suppliers whose principal markets
are North America, the United Kingdom and Mexico. The Company's
website is http://www.cott.com/. NON-GAAP MEASURES EBITDA is
defined as net income before interest, income taxes, depreciation
and amortization. Cott uses operating income as its primary measure
of performance and cash flow from operations as its primary measure
of liquidity. Nevertheless, Cott presents EBITDA in its filings for
several reasons. Cott uses multiples of EBITDA and discounted cash
flows in determining the value of its operations. In addition, Cott
uses "cash return on assets", a financial measure calculated by
dividing Cott's annualized EBITDA by its aggregate operating
assets, for the purposes of calculating performance-related bonus
compensation for its management employees, because that measure
reflects the ability of management to generate cash while
preserving assets. Finally, Cott includes EBITDA in its filings
because it believes that its current and potential investors use
multiples of EBITDA to make investment decisions about Cott.
Investors should not consider EBITDA an alternative to net income,
nor to cash provided by operating activities, nor any other
indicators of performance or liquidity which have been determined
in accordance with U.S. or Canadian GAAP. Cott's method of
calculating EBITDA may differ from the methods used by other
companies and, accordingly, Cott's EBITDA may not be comparable to
similarly titled measures used by other companies. A reconciliation
of the Non-GAAP financial measures is attached and also available
in the Investor Relations/Financial Reports section of Cott's
website. SAFE HARBOR STATEMENTS This press release contains
forward-looking statements reflecting management's current
expectations regarding future results of operations, economic
performance, financial condition and achievements of the Company.
Forward-looking statements, specifically those concerning future
performance such as those relating to the success of the Company's
measures to support margin improvement, stabilization of the
Company's North American business and the Company's views on
receipt of final clearance from the U.K. Competition Commission,
are subject to certain risks and uncertainties, and actual results
may differ materially. These risks and uncertainties are detailed
from time to time in the Company's filings with the appropriate
securities commissions, and include, without limitation, stability
of procurement costs for raw and packaging materials, the Company's
ability to restore plant efficiencies and lower logistics costs,
adverse weather conditions, competitive activities by national,
regional and retailer brand beverage manufacturers, the Company's
ability to develop new products that appeal to consumer tastes, the
Company's ability to identify acquisition candidates, successfully
consummate acquisitions and integrate acquired businesses into its
operations, fluctuations in currency versus the U.S. dollar, the
uncertainties of litigation and regulatory review, loss of key
customers and retailers' continued commitment to their retailer
brand beverage programs. The foregoing list of factors is not
exhaustive. The Company undertakes no obligation to publicly update
or revise any forward-looking statements. (Financial tables in
Exhibits 1-5 attached) COTT CORPORATION EXHIBIT 1 CONSOLIDATED
STATEMENTS OF (LOSS) INCOME (in millions of US dollars except per
share amounts, US GAAP) Unaudited For the three months ended
-------------------------------- April 1, 2006 April 2, 2005
--------------- --------------- Sales $ 394.2 $ 395.5 Cost of sales
341.5 339.5 --------------- --------------- Gross profit 52.7 56.0
Selling, general and administrative expenses 39.9 36.9 Loss (gain)
on disposal of property, plant & equipment 0.1 (0.7) Unusual
items Restructuring 1.6 (0.2) Asset impairments 1.4 - Other 2.0 -
--------------- --------------- Operating income 7.7 20.0 Other
(income) expense, net (0.2) 0.6 Interest expense, net 8.2 6.5
Minority interest 1.0 0.9 --------------- --------------- (Loss)
income before income taxes (1.3) 12.0 Income tax expense 0.8 3.7
--------------- --------------- Net (loss) income $ (2.1) $ 8.3
--------------- --------------- --------------- ---------------
Volume - 8 oz equivalent cases 295.0 272.3 - Filled Beverage 199.9
203.6 Net (loss) income per common share Basic $ (0.03) $ 0.12
Diluted $ (0.03) $ 0.12 COTT CORPORATION EXHIBIT 2 CONSOLIDATED
STATEMENTS OF CASH FLOWS (in millions of US dollars, US GAAP)
Unaudited For the three months ended
-------------------------------- April 1, 2006 April 2, 2005
--------------- --------------- Operating Activities Net (loss)
income $ (2.1) $ 8.3 Depreciation and amortization 19.3 16.8
Amortization of financing fees 0.3 - Stock option expense 2.7 -
Deferred income taxes 0.2 (0.2) Minority interest 1.0 0.9 Loss
(gain) on disposal of property, plant & equipment 0.1 (0.7)
Asset impairments 1.4 - Other non-cash items 0.3 0.4 Net change in
non-cash working capital (15.8) (4.2) ---------------
--------------- Cash provided by operating activities 7.4 21.3
--------------- --------------- Investing Activities Additions to
property, plant and equipment (8.3) (28.1) Proceeds from disposal
of property, plant & equipment 0.7 1.0 Other investing
activities (2.4) (1.5) --------------- --------------- Cash used in
investing activities (10.0) (28.6) --------------- ---------------
Financing Activities Payments of long-term debt (0.2) (0.2)
Short-term borrowings (7.0) (4.9) Distributions to subsidiary
minority shareowner (1.1) (1.1) Issue of common shares - 0.9
Financing costs - (2.1) Other financing activities (0.1) (0.1)
--------------- --------------- Cash used in financing activities
(8.4) (7.5) --------------- --------------- Effect of exchange rate
changes on cash 0.1 (0.4) --------------- --------------- Net
decrease in cash (10.9) (15.2) Cash, beginning of period 21.7 26.6
--------------- --------------- Cash, end of period $ 10.8 $ 11.4
--------------- --------------- --------------- ---------------
COTT CORPORATION EXHIBIT 3 CONSOLIDATED BALANCE SHEETS (in millions
of US dollars, US GAAP) Unaudited December 31, April 1, 2006 2005
--------------- --------------- ASSETS Current assets Cash $ 10.8 $
21.7 Accounts receivable 185.1 191.1 Inventories 171.6 144.2
Prepaid and other expenses 12.1 9.5 Deferred income taxes 8.6 7.3
--------------- --------------- 388.2 373.8 Property, plant and
equipment 384.1 394.2 Goodwill 150.5 150.3 Intangibles and other
assets 256.6 260.4 Deferred income taxes 0.3 0.4 ---------------
--------------- $ 1,179.7 $ 1,179.1 --------------- ---------------
--------------- --------------- LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities Short-term borrowings $ 151.6 $ 157.9 Current
maturities of long-term debt 0.8 0.8 Accounts payable and accrued
liabilities 187.9 182.5 Deferred income taxes 0.2 0.2
--------------- --------------- 340.5 341.4 Long-term debt 272.3
272.3 Deferred income taxes 62.5 61.0 ---------------
--------------- 675.3 674.7 Minority interest 22.4 22.5
Shareowners' equity Capital stock 273.0 273.0 Additional
paid-in-capital 21.1 18.4 Retained earnings 184.1 186.2 Accumulated
other comprehensive income 3.8 4.3 --------------- ---------------
482.0 481.9 --------------- --------------- $ 1,179.7 $ 1,179.1
--------------- --------------- --------------- ---------------
COTT CORPORATION EXHIBIT 4 SEGMENT INFORMATION (in millions of US
dollars, US GAAP) Unaudited For the three months ended
-------------------------------- April 1, 2006 April 2, 2005
--------------- --------------- Sales North America $ 309.5 $ 335.4
UK & Europe 65.4 43.6 International 17.9 15.7 Corporate 1.4 0.8
--------------- --------------- $ 394.2 $ 395.5 ---------------
--------------- --------------- --------------- Operating income
(loss) North America $ 12.5 $ 19.1 UK & Europe (0.2) 2.1
International 2.9 2.2 Corporate (7.5) (3.4) ---------------
--------------- $ 7.7 $ 20.0 --------------- ---------------
--------------- --------------- COTT CORPORATION EXHIBIT 5
SUPPLEMENTARY INFORMATION - NON GAAP MEASURES (in millions of US
dollars) Unaudited For the three months ended
-------------------------------- April 1, 2006 April 2, 2005
--------------- --------------- Net (loss) income $ (2.1) $ 8.3
Depreciation and amortization 19.3 16.8 Interest expense, net 8.2
6.5 Income tax expense 0.8 3.7 --------------- ---------------
EBITDA $ 26.2 $ 35.3 --------------- ---------------
--------------- --------------- NON-GAAP MEASURE EBITDA is defined
as net income before interest, income taxes, depreciation and
amortization. Cott uses operating income as its primary measure of
performance and cash flow from operations as its primary measure of
liquidity. Nevertheless, Cott presents EBITDA in its filings for
several reasons. Cott uses multiples of EBITDA and discounted cash
flows in determining the value of its operations. In addition, Cott
uses "cash return on assets," a financial measure calculated by
dividing Cott's annualized EBITDA by its aggregate operating
assets, for the purposes of calculating performance-related bonus
compensation for its management employees, because that measure
reflects the ability of management to generate cash while
preserving assets. Finally, Cott includes EBITDA in its filings
because it believes that its current and potential investors use
multiples of EBITDA to make investment decisions about Cott.
Investors should not consider EBITDA an alternative to net income,
nor to cash provided by operating activities, nor any other
indicators of performance or liquidity which have been determined
in accordance with U.S. or Canadian GAAP. Cott's method of
calculating EBITDA may differ from the methods used by other
companies and, accordingly, Cott's EBITDA may not be comparable to
similarly titled measures used by other companies. SAFE HARBOR
STATEMENTS This document contains forward-looking statements
reflecting management's current expectations regarding future
results of operations, economic performance, financial condition
and achievements of the Company. Forward- looking statements,
specifically those concerning future performance, are subject to
certain risks and uncertainties, and actual results may differ
materially. These risks and uncertainties are detailed from time to
time in the Company's filings with the appropriate securities
commissions, and include, without limitation, stability of
procurement costs for raw and packaging materials, the Company's
ability to restore plant efficiencies and lower logistics costs,
adverse weather conditions, competitive activities by national,
regional and retailer brand beverage manufacturers, the Company's
ability to develop new products that appeal to consumer tastes, the
Company's ability to identify acquisition candidates, successfully
consummate acquisitions and integrate acquired businesses into its
operations, fluctuations in currency versus the U.S. dollar, the
uncertainties of litigation and regulatory review, loss of key
customers and retailers' continued commitment to their retailer
brand beverage programs. The foregoing list of factors is not
exhaustive. The Company undertakes no obligation to publicly update
or revise any forward-looking statements. DATASOURCE: Cott
Corporation CONTACT: COTT: Media Relations, Kerry Morgan, Tel:
(416) 203-5613; Investor Relations, Edmund O'Keeffe, Tel: (416)
203-5617
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