UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2010
Cott Corporation
(Exact name of registrant as specified in its charter)
Canada | 001-31410 | 98-0154711 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
6525 Viscount Road Mississauga, Ontario, Canada |
L4V1H6 | |
5519 West Idlewild Avenue Tampa, Florida, United States |
33634 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (905) 672-1900
(813) 313-1800
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On May 5, 2010, Cott Corporation (the Company) issued a press release reporting financial results for the fiscal quarter ended April 3, 2010. A copy of the press release is furnished herewith under the Securities Exchange Act of 1934, as amended, as Exhibit 99.1 to this Form 8-K and is incorporated by reference into this Item 2.02 as if fully set forth herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 4, 2010, the Board of Directors of the Company (the Board) approved an amendment (the Amendment) to the Companys 2010 Equity Incentive Plan (the 2010 Equity Plan). The Amendment provides that the maximum number of common shares that may be issued pursuant to awards shall not in the aggregate exceed 4,000,000 common shares. The Amendment also provides that the number of common shares issued upon the exercise of incentive stock options may not exceed 4,000,000 common shares. In addition, further shareowner approval is required prior to a grant to non-employee directors equal to or exceeding the lesser of (i) 1% of the Companys issued and outstanding common shares; and (ii) an annual equity award of $100,000 per non-employee director. Under the Amendment, neither the Board nor the Human Resources and Compensation Committee of the Board may extend the term of awards that benefit non-insiders without prior approval of the Companys shareowners. Finally, the Amendment provides that no award granted under the 2010 Equity Plan may be transferable or assignable other than for normal estate settlement purposes. Except as otherwise expressly provided in the Amendment, all of the terms, conditions and provisions of the 2010 Equity Plan continue in full force and effect.
The foregoing description of the Amendment is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 4.2 to the Companys Registration Statement on Form S-8 filed on May 4, 2010, and is incorporated herein by reference.
Item 5.07 Submission of Matters to a Vote of Security Holders.
The Annual and Special Meeting of Shareowners (the Meeting) of the Company was held at the Toronto Marriott Airport Hotel, Salons A, B, and C, 901 Dixon Road, Toronto, Ontario, Canada at 8:30 a.m. (Toronto time) on Tuesday, May 4, 2010. As at the record date of March 19, 2010, 81,331,330 common shares were outstanding and entitled to notice of and to vote at the Meeting.
Election of Directors
At the Meeting, shareowners approved the election of Mark Benadiba, George A. Burnett, Jerry Fowden, David T. Gibbons, Stephen H. Halperin, Betty Jane Hess, Gregory R. Monahan, Mario Pilozzi, Andrew Prozes, Eric S. Rosenfeld and Graham W. Savage to serve for the ensuing year and until their respective successors are elected.
For | Against | Withheld | Broker non-votes | |||||
Mark Benadiba |
49,430,657 | | 564,831 | 7,703,698 | ||||
George A. Burnett |
49,278,589 | | 716,900 | 7,703,697 | ||||
Jerry Fowden |
49,461,879 | | 533,610 | 7,703,697 | ||||
David T. Gibbons |
37,998,701 | | 11,996,787 | 7,703,698 | ||||
Stephen H. Halperin |
43,185,464 | | 6,810,025 | 7,703,697 | ||||
Betty Jane Hess |
49,256,939 | | 738,549 | 7,703,698 | ||||
Gregory R. Monahan |
49,441,209 | | 554,279 | 7,703,698 | ||||
Mario Pilozzi |
48,871,124 | | 1,124,365 | 7,703,697 | ||||
Andrew Prozes |
49,231,256 | | 764,232 | 7,703,698 | ||||
Eric S. Rosenfeld |
39,692,890 | | 10,302,598 | 7,703,698 | ||||
Graham W. Savage |
49,534,180 | | 461,309 | 7,703,697 |
Approval of Appointment of PricewaterhouseCoopers LLP as the Companys Independent Registered Public Accounting Firm
At the Meeting, shareowners approved the appointment of PricewaterhouseCoopers LLP to serve as the Companys independent registered public accounting firm for its 2010 fiscal year.
For |
Against |
Withheld |
Broker non-votes |
|||
57,540,710 | | 162,033 | |
Approval of 2010 Equity Plan
At the Meeting, shareowners approved the Companys 2010 Equity Plan.
For |
Against |
Withheld |
Broker non-votes |
|||
41,522,871 | 8,476,174 | | 7,703,698 |
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description |
|
4.1 | Amendment to 2010 Equity Incentive Plan, dated May 4, 2010 (incorporated by reference to Exhibit 4.2 of our Registration Statement on Form S-8 filed on May 4, 2010). | |
99.1 | Press Release of Cott Corporation, dated May 5, 2010 (filed herewith). |
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 hereunto duly authorized.
Cott Corporation | ||||
(Registrant) | ||||
May 5, 2010 | By: |
/s/ Marni Morgan Poe |
||
Marni Morgan Poe | ||||
Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit No. |
Description |
|
4.1 | Amendment to 2010 Equity Incentive Plan, dated May 4, 2010 (incorporated by reference to Exhibit 4.2 of our Registration Statement on Form S-8 filed on May 4, 2010). | |
99.1 | Press Release of Cott Corporation, dated May 5, 2010 (filed herewith). |
Exhibit 99.1
CONTACT:
Kimball Chapman
Investor Relations
Tel: (813) 313-1840
investorrelations@cott.com
DRAFT
COTT REPORTS FIRST QUARTER 2010 RESULTS
|
Revenue was $363 million, a decline of 1.1% |
|
Gross margin as a percentage of sales was 15.8% |
|
Operating income increased 13% to $25 million |
|
EBITDA was flat at $39 million (see accompanying reconciliation of GAAP net income to non-GAAP EBITDA and adjusted EBITDA) |
(All information in U.S. dollars; all first quarter 2010 comparisons
are relative to the first quarter of 2009.)
TORONTO, ON and TAMPA, FL May 5, 2010 Cott Corporation (NYSE:COT; TSX:BCB) today announced its results for the first quarter ended April 3, 2010. First quarter 2010 revenue was $363 million compared to $367 million, a decline of 1.1%, or 4.4% excluding the impact of foreign exchange. Operating income increased 13% to $25 million from $22 million. Net income and earnings per diluted share were $12 million and $0.14, respectively, compared to $20 million and $0.28, respectively. The decline in net income and earnings per diluted share was due to an income tax expense of $4 million in the first quarter of 2010 compared to an income tax benefit of $6 million in the first quarter of 2009.
I am pleased with another quarter of improvement in operating income which benefited from strong performances from the UK and Royal Crown International, commented Cotts Chief Executive Officer, Jerry Fowden. In what we had previously communicated would be a challenging quarter for volume comparisons, lower North America volumes were more than offset by strong contributions from our other operating segments and lower overhead expenses. Our North America volume comparisons become easier as the year progresses, and we were pleased to see a stronger North America volume performance in April, added Fowden.
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FIRST QUARTER 2010 PERFORMANCE SUMMARY
- |
Revenue declined 1.1%, or 4.4% excluding the impact of foreign exchange. Volume growth in the United Kingdom / Europe operating segment (U.K.), Mexico and Royal Crown International (RCI) more than offset lower volumes in North America. |
- |
Gross margin as a percentage of sales was 15.8% compared to 15.9%, driven by the ongoing benefit of operational efficiencies, cost savings and improved pricing from late 2008. |
- |
Selling, general and administrative (SG&A) expenses declined to 8.9% of sales from 9.5%, primarily as a result of lower information technology costs and reduced bad debt expense. |
- |
Operating income was $25 million compared to $22 million as higher operating income in the U.K., RCI and Mexico more than offset lower operating income in North America. |
- |
The Companys income tax expense was $4 million compared to a tax benefit of $6 million in 2009. |
FIRST QUARTER 2010 SEGMENT HIGHLIGHTS
- |
North America revenue declined 8.9%, or 10.8% excluding the impact of foreign exchange. North America filled beverage case volume declined 7.9% to 131 million cases. The volume decline was attributable to national brand promotional activity as well as the effect of competitive price increases late in 2008 which temporarily increased the price gap during the first and second quarters of 2009, creating an unfavourable volume comparison for the first quarter of 2010. Operating income declined to $21 million from $26 million, as the impact of lower volumes was partially offset by operational cost reductions and SG&A savings. |
We continue to focus on improving the volume trend in North America. We saw the results of this focus with an improved volume trend in April, commented Cotts Chief Financial Officer, Neal Cravens.
- |
U.K. revenue increased 24.5%, or 15.2% excluding the impact of foreign exchange. Filled beverage case volume increased 9.8% to 39 million cases. The volume increase was due to the continued growth in energy, sports and isotonic products as well as a weak prior year volume performance as a result of the timing of competitive price increases late in 2008. U.K. operating income increased by $6 million to $3 million from a loss of $3 million due to a more profitable sales mix and operational cost savings. |
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- |
Revenue in Mexico increased 20.4%, or 8.3% excluding the impact of foreign exchange. Mexico filled beverage case volume increased 48.2% to 8 million cases, primarily as a result of new business in the retail channel as well as the commencement of shipments to a new 2010 contract bottled water customer. Under this new contract, the Company receives a portion of final case revenue through a co-pack fee, resulting in a decline in average selling price per case in Mexico. |
- |
RCI revenue increased 95.2% to $8 million, primarily as a result of increased volume as well as ordering patterns in certain key geographies. RCI concentrate volumes increased 71.7% to 84 million cases compared to 49 million cases in the first quarter of 2010. |
First Quarter Conference Call
Cott Corporation will host a conference call today, May 5, 2010, at 10:00 a.m. ET, to discuss first quarter results, which can be accessed as follows:
North America: (877) 407-8031
International: (201) 689-8031
A live audio webcast will be available through the Companys website at http://www.cott.com . The earnings conference call will be recorded and archived for playback on the investor relations section of the website for a period of two weeks following the event.
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About Cott Corporation
Cott Corporation (Cott or the Company) is one of the worlds largest non-alcoholic beverage companies and the worlds largest retailer brand soft drink company. With approximately 2,800 employees, the Company operates bottling facilities in the United States, Canada, the United Kingdom and Mexico. Cott markets non-alcoholic beverage concentrates in over 50 countries around the world.
Non-GAAP Measures
Cott supplements its reporting of revenue determined in accordance with GAAP by excluding the impact of foreign exchange to separate the impact of currency exchange rate changes from the Companys results of operations. Additionally, Cott supplements its reporting of earnings before interest, taxes, depreciation & amortization in accordance with GAAP by excluding the impact of certain items to separate the impact of these items from underlying business. Since the Company uses these adjusted financial results in the management of its business, management believes this supplemental information is useful to investors for their independent evaluation and understanding of the performance of the Companys management and its core business performance. The non-GAAP financial measures described above are in addition to, and not meant to be considered superior to, or a substitute for, the Companys financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this earnings announcement reflect managements judgment of particular items, and may be different from, and therefore may not be comparable to, similarly titled measures reported by other companies.
Safe Harbor Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying managements expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve inherent risks and uncertainties and the Company cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include statements related to future financial operating results and related matters. The forward-looking statements are based on assumptions that volume and revenue will be consistent with recent historical trends, that interest rates will remain constant and debt levels will decline, and, in certain cases, on managements current plans and estimates. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate.
Factors that could cause actual results to differ materially from those described in this press release include, among others: the Companys ability to compete successfully; changes in consumer tastes and preferences for existing products and the Companys ability to develop and timely launch new products that appeal to
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such changing consumer tastes and preferences; a loss of or reduction in business with key customers, particularly Wal-Mart; fluctuations in commodity prices and the Companys ability to pass on increased costs to its customers, and the impact of those increased prices on the Companys volumes; the Companys ability to maintain favorable arrangements and relationships with its suppliers; the Companys ability to manage its operations successfully; currency fluctuations that adversely affect the exchange between the U.S. dollar and the pound sterling, the Euro, the Canadian dollar, the Mexican peso and other currencies; the Companys substantial debt levels and the Companys ability to service and reduce its debt; the Companys ability to maintain compliance with the covenants and conditions under its debt agreements; fluctuations in interest rates; credit rating changes; further deterioration of the capital markets; the Companys ability to fully realize the expected cost savings and/or operating efficiencies from its restructuring activities; any disruption to production at the Companys beverage concentrates or other manufacturing facilities; the Companys ability to protect its intellectual property; the impact of regulation and regulatory, investigative and legal actions; the impact of proposed taxes on soda and other sugary drinks; unseasonably cold or wet weather, which could reduce the demand for the Companys beverages; the impact of national, regional and global events, including those of a political, economic, business and competitive nature; the Companys ability to recruit, retain, and integrate new management and a new management structure; the Companys exposure to intangible asset risk; the volatility of the Companys stock price; the Companys ability to maintain compliance with the listing requirements of the New York Stock Exchange; the Companys ability to renew its collective bargaining agreements on satisfactory terms; and disruptions in the Companys information systems.
The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in the Companys Annual Report on Form 10-K for the year ended January 2, 2010 and its quarterly reports on Form 10-Q, as well as other periodic reports filed with the securities commissions. The Company does not undertake to update or revise any of these statements in light of new information or future events.
Website: www.cott.com
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COTT CORPORATION | EXHIBIT 1 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
(in millions of U.S. dollars except per share amounts, U.S. GAAP) | ||
Unaudited |
For the Three Months Ended | ||||||||
April 3, 2010 | March 28, 2009 | |||||||
Revenue, net |
$ | 362.9 | $ | 367.0 | ||||
Cost of sales |
305.7 | 308.8 | ||||||
Gross profit |
57.2 | 58.2 | ||||||
Selling, general and administrative expenses |
32.4 | 34.7 | ||||||
Loss (gain) on disposal of property, plant & equipment |
0.2 | (0.1 | ) | |||||
Restructuring and asset impairments |
||||||||
Restructuring |
(0.5 | ) | 1.2 | |||||
Asset impairments |
| 0.1 | ||||||
Operating income |
25.1 | 22.3 | ||||||
Other expense, net |
1.8 | 0.1 | ||||||
Interest expense, net |
6.2 | 7.6 | ||||||
Income before income taxes |
17.1 | 14.6 | ||||||
Income tax expense (benefit) |
4.4 | (6.2 | ) | |||||
Net income |
$ | 12.7 | $ | 20.8 | ||||
Less: Net income attributable to non-controlling interests |
1.2 | 0.9 | ||||||
Net income attributed to Cott Corporation |
$ | 11.5 | $ | 19.9 | ||||
Net income per common share attributed to Cott Corporation |
||||||||
Basic |
$ | 0.14 | $ | 0.28 | ||||
Diluted |
$ | 0.14 | $ | 0.28 | ||||
Weighted average outstanding shares (thousands) attributed to Cott Corporation |
||||||||
Basic |
80,374 | 70,472 | ||||||
Diluted |
80,840 | 70,472 |
6
COTT CORPORATION | EXHIBIT 2 | |
CONSOLIDATED BALANCE SHEETS | ||
(in millions of U.S. dollars, except share amounts U.S. GAAP) | ||
Unaudited |
7
COTT CORPORATION | EXHIBIT 3 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(in millions of U.S. dollars, U.S. GAAP) | ||
Unaudited |
For the Three Months Ended | ||||||||
April 3, 2010 | March 28, 2009 | |||||||
Operating Activities |
||||||||
Net income |
$ | 12.7 | $ | 20.8 | ||||
Depreciation and amortization |
15.9 | 17.0 | ||||||
Amortization of financing fees |
0.5 | 0.3 | ||||||
Share-based compensation expense |
0.5 | 0.1 | ||||||
(Decrease) increase in deferred income taxes |
(0.1 | ) | 2.2 | |||||
Decrease in other income tax liabilities |
| (7.8 | ) | |||||
Loss (gain) on disposal of property, plant & equipment |
0.2 | (0.1 | ) | |||||
Loss on buyback on notes |
0.1 | | ||||||
Asset impairments |
| 0.1 | ||||||
Lease contract termination gain |
(0.4 | ) | | |||||
Lease contract termination payments |
(3.9 | ) | (0.9 | ) | ||||
Other non-cash items |
3.0 | 0.6 | ||||||
Change in accounts receivable |
(21.9 | ) | (6.6 | ) | ||||
Change in inventories |
(12.7 | ) | (3.0 | ) | ||||
Change in prepaid expenses and other current assets |
0.8 | 2.7 | ||||||
Change in other assets |
(0.5 | ) | 0.1 | |||||
Change in accounts payable and accrued liabilities |
(3.4 | ) | (4.0 | ) | ||||
Change in income taxes receivable, net |
17.4 | (0.5 | ) | |||||
Net cash provided by operating activities |
8.2 | 21.0 | ||||||
Investing Activities |
||||||||
Additions to property, plant and equipment |
(7.6 | ) | (5.9 | ) | ||||
Additions to intangibles |
(1.1 | ) | | |||||
Proceeds from disposal of property, plant & equipment and held-for-sale assets |
0.1 | 1.2 | ||||||
Net cash used in investing activities |
(8.6 | ) | (4.7 | ) | ||||
Financing Activities |
||||||||
Payments of long-term debt |
(13.2 | ) | (1.8 | ) | ||||
Short-term borrowings, ABL |
58.6 | 344.4 | ||||||
Short-term repayments, ABL |
(50.8 | ) | (361.3 | ) | ||||
Distributions to non-controlling interests |
(1.9 | ) | (1.4 | ) | ||||
Deferred financing fees |
(0.2 | ) | | |||||
Other financing activities |
| (0.1 | ) | |||||
Net cash (used in) provided by financing activities |
(7.5 | ) | (20.2 | ) | ||||
Effect of exchange rate changes on cash |
0.2 | (0.2 | ) | |||||
Net increase (decrease) in cash & cash equivalents |
(7.7 | ) | (4.1 | ) | ||||
Cash & cash equivalents, beginning of period |
30.9 | 14.7 | ||||||
Cash & cash equivalents, end of period |
$ | 23.2 | $ | 10.6 | ||||
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COTT CORPORATION | EXHIBIT 4 | |
SEGMENT INFORMATION | ||
(in millions of U.S. dollars, U.S. GAAP) | ||
Unaudited |
For the Three Months Ended | ||||||||
April 3, 2010 | March 28, 2009 | |||||||
Revenue |
||||||||
North America |
$ | 263.2 | $ | 289.0 | ||||
United Kingdom |
79.7 | 64.0 | ||||||
Mexico |
11.8 | 9.8 | ||||||
RCI |
8.2 | 4.2 | ||||||
$ | 362.9 | $ | 367.0 | |||||
Operating income (loss) |
||||||||
North America |
$ | 20.9 | $ | 26.3 | ||||
United Kingdom |
3.0 | (2.6 | ) | |||||
Mexico |
(1.8 | ) | (2.3 | ) | ||||
RCI |
3.0 | 0.9 | ||||||
$ | 25.1 | $ | 22.3 | |||||
Volume - 8 oz equivalent cases - Total Beverage (including concentrate) |
||||||||
North America |
152.0 | 160.8 | ||||||
United Kingdom |
44.5 | 39.6 | ||||||
Mexico |
8.3 | 5.6 | ||||||
RCI |
84.3 | 49.1 | ||||||
289.1 | 255.1 | |||||||
Volume - 8 oz equivalent cases - Filled Beverage |
||||||||
North America |
130.6 | 141.8 | ||||||
United Kingdom |
39.2 | 35.7 | ||||||
Mexico |
8.3 | 5.6 | ||||||
RCI |
| | ||||||
178.1 | 183.1 | |||||||
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COTT CORPORATION | EXHIBIT 5 | |
Analysis of Revenue by Geographic Region | ||
(in millions of U.S. dollars, U.S. GAAP) | ||
Unaudited |
For the Three Months Ended | ||||||||||||||||||||
April 3, 2010 | ||||||||||||||||||||
(In millions of U.S. dollars) |
Cott 1 |
North
America |
United
Kingdom |
Mexico | RCI | |||||||||||||||
Change in revenue |
$ | (4.1 | ) | $ | (25.8 | ) | $ | 15.7 | $ | 2.0 | $ | 4.0 | ||||||||
Impact of foreign exchange |
(12.5 | ) | (6.2 | ) | (5.2 | ) | (1.1 | ) | | |||||||||||
Change excluding foreign exchange |
$ | (16.6 | ) | $ | (32.0 | ) | $ | 10.5 | $ | 0.9 | $ | 4.0 | ||||||||
Percentage change in revenue |
-1.1 | % | -8.9 | % | 24.5 | % | 20.4 | % | 95.2 | % | ||||||||||
Percentage change in revenue excluding foreign exchange |
-4.4 | % | -10.8 | % | 15.2 | % | 8.3 | % | 95.2 | % | ||||||||||
1 |
Cott includes the following operating segments: North America, United Kingdom, Mexico, RCI and All Other |
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COTT CORPORATION | EXHIBIT 6 | |
SUPPLEMENTARY INFORMATION - NON-GAAP - EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION (EBITDA) |
||
(in millions of U.S. dollars except per share amounts, U.S. GAAP) | ||
Unaudited |
For the Three Months Ended | ||||||||
April 3, 2010 | March 28, 2009 | |||||||
Net income (loss) |
$ | 11.5 | $ | 19.9 | ||||
Interest expense, net |
6.2 | 7.7 | ||||||
Income tax benefit |
4.4 | (6.2 | ) | |||||
Depreciation and amortization |
15.9 | 17.0 | ||||||
Net income attributable to non-controlling interests |
1.2 | 0.9 | ||||||
EBITDA |
$ | 39.2 | $ | 39.3 | ||||
Restructuring, goodwill and asset impairments, and loss on buyback of notes |
||||||||
Restructuring |
(0.5 | ) | 1.2 | |||||
Asset impairments |
| 0.1 | ||||||
Adjusted EBITDA |
$ | 38.7 | $ | 40.6 | ||||
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