COTT CORPORATION REPORTS RESULTS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 1996.TORONTO--(BUSINESS WIRE)--Dec. 7, 1995--Cott Corporation (NNM NNM Network Node Manager NNM NASDAQ National Market (financial) NNM National Nutrition Month (March; American Dietetic Association) NNM Naryan-Mar (Russia) NNM Net New Money :COTTF, TSE/ME:BCB BCB Banco Central do Brasil (Brazil's central bank) BCB Borland C++ Builder BCB Bangladesh Cricket Board BCB Benzocyclobutene (low loss dielectric substrate) BCB Bumiputra-Commerce Bank BCB Broadcast Band ) announced today a net loss for the third quarter of $9.8 million and net earnings for the first nine months of Fiscal 1996 of $15.2 million, as compared to net earnings of $9.9 million and $35.4 million respectively, for the comparable periods of F1995. Fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). were $(0.16) per share for the quarter and $0.25 per share for the first nine months, as compared with $0.16 and $0.58 for the respective periods of last year. Under U.S. GAAP fully diluted EPS were $(0.15) for the quarter and $0.25 for the first nine months, as compared with $0.15 and $0.55, respectively, for the comparable periods of Fiscal 1995. Sales for the quarter of $326.6 million were up $69.0 million from the $257.6 million of the third quarter of the prior year, an increase of 27%. As previously announced, the inability of the company's earnings growth to keep pace with the increases in sales, resulted in a thorough internal review of all aspects of the company's business. As a consequence of this review, the results for the third quarter include one time pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charges of $16.4 million comprised of a provision for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). in the amount of $8.0 million and a provision against inventory and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying of $8.4 million. (The provision for inventory and accounts receivable has been reflected as a reduction of gross margin and increase in SG&A expenses, respectively). The effect of these provisions was to reduce earning before taxes from $5.6 million to a loss before taxes of $10.8 million and to reduce net earnings by $0.18 per share. As also previously announced that the fourth quarter results will include an additional provision for restructuring in the pre tax amount of $32.0 million increasing the total cost of the restructuring plan to $40.0 million. The restructuring initiative will include a reorganization of the company's manufacturing, distribution and administrative operations as well as a rationalization rationalization, in psychology: see defense mechanism. of certain of the company's customers and will be focused on its business units in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , the United Kingdom, Europe and Canada. Management has estimated that, once fully implemented, the company's earnings from operations will improve by $25.0 million on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis as a direct result of the restructuring. The restructuring is expected to be fully implemented by the third quarter of the fiscal year commencing January 1996. The sales increase in the quarter of 27% was attributable to a 9% increase in unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. growth and an increase in the company's average net selling price per case which reflect price increases initiated early in fiscal 1996, to pass through the significant package material cost increases experienced in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Sales to United States based customers increased by $33 million or more than 22% compared to the prior year and represented 56% of the company's total sales. Sales in Canada during the quarter were up 2% compared to the prior year, although unit sales for the same period were down by 11%. The decline in Canadian unit sales reflects a continuation of very competitive conditions in the Canadian soft drink market. Internationally, sales increased by $31 million, or 75% and accounted for 22% of total sales, up from 16% in the prior year. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the quarter were 11.3%, down from the 15.6% of the third quarter of the prior year. 249 basis points of the decline in gross margin is attributable to the one time provision for inventory which was recorded during the quarter. The balance of the decline is attributable to the company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . During the third quarter the company's operations in South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , Japan, Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. and The Virgin Cola Virgin Cola is a carbonated cola soft drink produced by Princes limited. It was launched in 1994. History Virgin Cola was set up during the early 1990s in conjunction with Cott, a Canadian company that specialises in bottling own-label drinks. Company, incurred pre tax losses of approximately $3.5 million. These losses are attributable to the high costs of production and freight, combined with aggressive pricing to drive volume during the quarter which significantly reduced their gross margin. In addition, the continued reliance by our UK operation on high cost co-packing from competing private label manufacturers for PET products resulted lower gross margins than are being realized by our North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. . With the new addition of 2.0 litre LITRE. A French measure of capacity. It is of the size of a decimetre, or one-tenth part of a cubic metre. It is equal to 61.028 cubic inches. Vide Measure. manufacturing capability in our Pontefract facility, combined with the recently announced acquisition of Crystal Drinks Limited, the ongoing use of third party co-packers will decline and gross margins in the UK should be positively impacted. Management is continuing to explore ways to reduce the production costs in its other international operations. Selling, general and administrative expenses in the third quarter increased to $26.5 million or 8.1% of sales, from $17.4 million or 6.7% of sales in the prior year. The increase includes the above mentioned provision for accounts receivable as well as the company's ongoing investment in infrastructure for its international operations, the food business in the United States, and for The Virgin Cola Company, which due to its nature has much higher associated SG&A expenses. The initiatives undertaken as part of the above mentioned restructuring are intended to significantly reduce selling, general and administrative expenses as a percentage of sales. Amortization expense for the quarter of $6.6 million represents a 49.9% increase over the prior year and reflects the company's growth in physical and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. during the last twelve months. Interest expense for the quarter of $6.6 million represents a significant increase compared to the same quarter in the prior year and is attributable to the long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. added by the company during the previous quarter. During the formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation of the company's restructuring plan, a strategic evaluation of the company's overall business was undertaken following which it was determined that Cott's investment in Lakeport Brewing brewing: see beer. Corporation did not fit with the company's long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. . Accordingly, the decision was made to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose that business and to account for Lakeport as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Management has estimated a net loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $3.0 million, reflecting the anticipated operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. to be incurred by Lakeport over the next twelve month period. If at any time in the future management determines that it will not recover its remaining investment, then any additional provision for such loss in value would be charged to the profit and loss statement in the quarter in which that determination is made. In addition to its investment in Lakeport, the company is in discussions with regard to the disposition of its other non core businesses and assets including its minority stake in Menu Foods Limited its interest in Murphy's Potato Chips Inc. and certain real estate and other assets. One aspect of the company's strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. which is considered important to Cott's long-term success is our investment in the development of selected other premium private label food categories through our subsidiary, Destination Products International Inc. ("DPI (Dots Per Inch) The measurement of the resolution of display and printing systems. A typical CRT screen provides 96 dpi, which provides 9,216 dots per square inch (96x96). Flat panel displays from 110 to 200 dpi have also been developed. "), which is being operated under the direction of Cott President David Nichol. During the quarter DPI began sales of frozen entrees to both Safeway and Stop'n Shop in the U.S. The company recorded approximately $1.8 million of net expenses for DPI during the third quarter and $2.8 million for the year-to-date. It is expected that sales by DPI will continue to grow and management currently expects operating costs operating costs npl → gastos mpl operacionales to be fully covered by the end of the next fiscal year. Non-cash working capital increased approximately $20 million in the quarter. As previously described, the Company is continuing its practise prac·tise v. & n. Chiefly British Variant of practice. prac  tis·er n. of utilizing its surplus cash to pay suppliers on accelerated
payment terms. As part of the restructuring, management is reviewing
ways to permanently reduce the company's investment in inventory
and accounts receivable.The effective tax rate for the nine months declined to 35% compared to the 37.4% realized for the same period last year. The decline reflects the rising percentage of pre-tax earnings generated outside of North America, and the lower tax rates that apply to those earnings. -0- For additional information please contact: William M. Smith Treasurer, (416)-203-5662 -0- COTT CORPORATION CONSOLIDATED BALANCE SHEET (in thousands of Canadian dollars)
28-Oct-95 29-Oct-94
ASSETS
Cash and short-term investments $ 89,108 $ 24,407 Accounts receivable 151,882 138,295 Inventories 174,061 130,305 Income taxes receivable 0 1,218 Prepaid expenses 8,332 5,131 Capital assets 200,899 166,516 Goodwill, license & trademarks 74,174 74,138 Other assets 50,279 34,769 Long-term investments 12,900 13,264
$761,635 $588,043
LIABILITIES AND SHAREHOLDERS' EQUITY Bank indebtedness $ 25,572 $ 9,945 Accounts payable and accrued liabilities 107,030 118,303 Income taxes payable 14,859 0 Term debt 266,457 108,749 Deferred income taxes 7,632 12,237 Minority interest 9,787 20,334 Minority shareholders advances 0 3,596 Shareholders' equity 330,298 314,879
$761,635 $588,043
COTT CORPORATION CONSOLIDATED STATEMENT OF EARNINGS October 28, 1995 (in thousands of Canadian dollars except per share amounts)
3rd Quarter Year to Date
28-Oct-95 29-Oct-94 28-Oct-95 29-Oct-94
Sales $326,597 $257,595 $995,429 $791,055 Cost of goods sold 289,743 217,415 855,126 665,407 Gross profit 36,854 40,180 140,303 125,648 Selling, general and administrative expenses 26,486 17,382 72,247 51,669 Earnings before undernoted 10,368 22,798 68,056 73,979 Amortization 6,574 4,387 18,400 11,522 Interest 6,562 1,119 12,036 3,156 Restructuring costs 8,000 0 8,000 0 Earnings before taxes (10,768) 17,292 29,620 59,301 Income taxes 3,553 (6,359) (10,366) (22,152) Minority interest 19 (1,332) (546) (2,999) Equity in net earnings of long term investments 422 366 895 1,035 Earnings from continuing operations (6,774) 9,967 19,603 35,185 Loss from discontinued operations 3,000 77 4,388 (249) Net earnings ($9,774) $9,890 $15,215 $35,434 Canadian GAAP Earnings per common share from continuing operations Basic ($0.11) $0.17 $0.33 $0.59 Fully diluted ($0.11) $0.16 $0.32 $0.57 Net earnings per common share Basic ($0.16) $0.17 $0.26 $0.60 Fully diluted ($0.16) $0.16 $0.25 $0.58 US GAAP Earnings per common share from continuing operations Primary ($0.10) $0.15 $0.32 $0.55 Fully diluted ($0.10) $0.15 $0.32 $0.55 Net earnings per common share Primary ($0.15) $0.15 $0.25 $0.55 Fully diluted ($0.15) $0.15 $0.25 $0.55 The 1994 results have been restated to reflect a change in accounting policy for the treatment of a long-term investment previously accounted for by the equity method and currently proportionately consolidated. COTT CORPORATION STATEMENT OF CHANGES IN FINANCIAL POSITION October 28, 1995 (in thousands of Canadian dollars)
3rd Quarter Year to Date
28-Oct-95 29-Oct-94 28-Oct-95 29-Oct-94
Operating Activities
Net earnings from
operations ($9,774) $9,890 $15,215 $35,434
Items not affecting
working capital:
Deferred development
amortization 1,597 1,280 4,479 3,366
Prepaid contract
amortization 2,641 2,989 9,250 9,099
Other amortization 5,640 3,284 15,308 8,545
Non cash component
of restructuring 1,005 0 1,005 0
Deferred income taxes 1,589 1,102 (1,219) 3,412
Minority interest (19) 1,332 546 2,999
Net earnings of long-
term investments (422) (366) (895) (1,035)
----- ------ ------ ------
2,257 19,511 43,689 61,820
Net change in non-cash
working capital
components (19,706) (25,078) (93,760) (74,600)
------ ------ ------ ------
(17,449) (5,567) (50,071) (12,780)
Financing Activities
Change in long-term
debt 8,941 38,319 158,548 58,577
Cost of issuing long-
term debt (339) 0 (7,693) 0
Issue of common shares 464 0 5,452 205
Dividends (1,518) (1,491) (4,504) (3,876)
Dividends paid to
minority shareholders 0 0 (750) 0
Change in minority
shareholders advances (133) (45) (4,156) (99)
----- ---- ------ ----
7,415 36,783 146,897 54,807
Investing Activities
Business acquisitions 0 0 (13,218) (27,769)
Bank indebtedness of
acquired subsidiary 0 0 0 (4,201)
Additions to capital
assets (8,678) (25,288) (24,839) (53,115)
Change in goodwill,
licenses and
trademarks 549 (13) 4,180 (358)
Net change in other
assets:
Prepaid contract
costs (2,888) (3,791) (11,556) (11,219)
Deferred development
costs (1,562) (2,587) (6,649) (6,976)
Other (210) (1,397) (921) (1,428)
--- ----- --- -----
(12,789) (33,076) (53,003) (105,066)
Increase (decrease) in cash during the period (22,823) (1,860) 43,823 (63,039) Cash - beginning of period 86,359 16,322 19,713 77,501 Cash - end of period $63,536 $14,462 $63,536 $14,462 Cash is net of bank indebtedness CONTACT: Cott Corporation Bobbi Fincher (Investor Relations Investor relations The process by which the corporation communicates with its investors. Coordinator), (706) 327-6434 Fax: (706) 660-0428 |
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