Company Quick10K Filing
Cott
Price12.40 EPS-0
Shares136 P/E-325
MCap1,689 P/FCF14
Net Debt1,099 EBIT68
TEV2,788 TEV/EBIT41
TTM 2019-09-28, in MM, except price, ratios
10-Q 2020-03-28 Filed 2020-05-07
10-K 2019-12-28 Filed 2020-02-26
10-Q 2019-09-28 Filed 2019-11-07
10-Q 2019-06-29 Filed 2019-08-08
10-Q 2019-03-30 Filed 2019-05-09
10-K 2018-12-29 Filed 2019-02-27
10-Q 2018-09-29 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-07
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-30 Filed 2018-02-28
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-07-01 Filed 2017-08-10
10-Q 2017-04-01 Filed 2017-05-11
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-10-01 Filed 2016-11-10
10-Q 2016-07-02 Filed 2016-08-09
10-Q 2016-04-02 Filed 2016-05-09
10-K 2016-01-02 Filed 2016-02-29
10-Q 2015-10-03 Filed 2015-11-12
10-Q 2015-07-04 Filed 2015-08-05
10-Q 2015-04-04 Filed 2015-05-14
10-K 2015-01-03 Filed 2015-03-04
10-Q 2014-09-27 Filed 2014-11-04
10-Q 2014-06-28 Filed 2014-08-07
10-Q 2014-03-29 Filed 2014-05-08
10-K 2013-12-28 Filed 2014-02-24
10-Q 2013-09-28 Filed 2013-11-01
10-Q 2013-06-29 Filed 2013-08-02
10-Q 2013-03-30 Filed 2013-05-03
10-K 2012-12-29 Filed 2013-02-27
10-Q 2012-09-29 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-07
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-10-01 Filed 2011-11-04
10-Q 2011-07-02 Filed 2011-08-09
10-Q 2011-04-02 Filed 2011-05-11
10-K 2011-01-01 Filed 2011-03-15
10-Q 2010-10-02 Filed 2010-11-10
10-Q 2010-07-03 Filed 2010-08-04
10-Q 2010-04-03 Filed 2010-05-12
10-K 2010-01-02 Filed 2010-03-16
8-K 2020-06-11
8-K 2020-05-05
8-K 2020-03-31
8-K 2020-03-06
8-K 2020-03-02
8-K 2020-02-28
8-K 2020-02-20
8-K 2020-02-07
8-K 2020-01-30
8-K 2020-01-13
8-K 2020-01-13
8-K 2019-12-10
8-K 2019-11-06
8-K 2019-08-08
8-K 2019-05-02
8-K 2019-02-22
8-K 2018-11-08
8-K 2018-08-02
8-K 2018-08-01
8-K 2018-05-03
8-K 2018-05-01
8-K 2018-03-01
8-K 2018-01-30

COT 10Q Quarterly Report

Part I - Financial Information
Item 1.Financial Statements (Unaudited)
Note 1 - Business and Recent Accounting Pronouncements
Note 3 - Leases
Note 4 - Revenue
Note 5 - Acquisitions
Note 6 - Income Taxes
Note 7 - Common Shares and Net Income (Loss) per Common Share
Note 8 - Segment Reporting
Note 9 - Inventories
Note 10 - Property, Plant and Equipment, Net
Note 11 - Intangible Assets, Net
Note 12 - Debt
Note 13 - Accumulated Other Comprehensive (Loss) Income
Note 14 - Commitments and Contingencies
Note 15 - Fair Value Measurements
Note 16 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.6 amendmentno3totheamend.htm
EX-10.7 amendmentno1tothecottc.htm
EX-10.8 amendmentno2tothesever.htm
EX-31.1 exhibit3113302020.htm
EX-31.2 exhibit3123302020.htm
EX-32.1 exhibit3213302020.htm
EX-32.2 exhibit3223302020.htm

Cott Earnings 2020-03-28

Balance SheetIncome StatementCash Flow
4.53.62.71.80.90.02012201420172020
Assets, Equity
2.01.61.20.70.3-0.12012201420172020
Rev, G Profit, Net Income
0.90.50.1-0.2-0.6-1.02012201420172020
Ops, Inv, Fin

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United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q
 
 
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: March 28, 2020
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                       to                      l

Commission File Number: 001-31410
 

PRIMO WATER CORPORATION
(Exact name of registrant as specified in its charter)
 

Canada 98-0154711
(State or Other Jurisdiction of
Incorporation or Organization)
 (IRS Employer
Identification No.)
4221 West Boy Scout Boulevard 
Suite 400
Tampa,Florida33607
United States
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (813313-1732

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, no par value per sharePRMWNew York Stock Exchange
Toronto Stock Exchange

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  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filerý Accelerated filer
Non-accelerated filerSmaller reporting company
 Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding at May 4, 2020
Common Shares, no par value per share 159,843,106




TABLE OF CONTENTS
 

2


PART I – FINANCIAL INFORMATION
 

Item 1.Financial Statements (unaudited)

Primo Water Corporation
Consolidated Statements of Operations
(in millions of U.S. dollars, except share and per share amounts)
Unaudited
 For the Three Months Ended
 March 28, 2020March 30, 2019
Revenue, net$474.2  $427.7  
Cost of sales200.9  184.6  
Gross profit 273.3  243.1  
Selling, general and administrative expenses255.1  235.8  
Loss on disposal of property, plant and equipment, net1.4  1.9  
Acquisition and integration expenses20.8  4.7  
Operating (loss) income(4.0) 0.7  
Other expense, net7.0  5.5  
Interest expense, net19.7  19.3  
Loss from continuing operations before income taxes(30.7) (24.1) 
Income tax benefit(3.3) (1.4) 
Net loss from continuing operations$(27.4) $(22.7) 
Net income from discontinued operations, net of income taxes30.9  3.0  
Net income (loss)$3.5  $(19.7) 
Net income (loss) per common share
Basic:
Continuing operations$(0.19) $(0.17) 
Discontinued operations$0.22  $0.03  
Net income (loss)$0.02  $(0.14) 
Diluted:
Continuing operations$(0.19) $(0.17) 
Discontinued operations$0.22  $0.03  
Net income (loss)$0.02  $(0.14) 
Weighted average common shares outstanding (in thousands)
Basic141,139  135,948  
Diluted141,139  135,948  

The accompanying notes are an integral part of these consolidated financial statements.

3


Primo Water Corporation
Condensed Consolidated Statements of Comprehensive Loss
(in millions of U.S. dollars)
Unaudited
 For the Three Months Ended
 March 28, 2020March 30, 2019
Net income (loss)$3.5  $(19.7) 
Other comprehensive (loss) income:
    Currency translation adjustment(18.7) 10.6  
Loss on derivative instruments, net of tax 1, 2
(11.2) (5.5) 
Comprehensive loss$(26.4) $(14.6) 
______________________
1 Net of the effect of $3.0 million and $1.6 million tax benefit for the three months ended March 28, 2020 and March 30, 2019, respectively.
2 Net of $1.3 million of associated tax impact that resulted in a decrease to the gain on sale of discontinued operations for the three months ended March 28, 2020.


The accompanying notes are an integral part of these consolidated financial statements.
4


Primo Water Corporation
Consolidated Balance Sheets
(in millions of U.S. dollars, except share amounts)
Unaudited
March 28, 2020December 28, 2019
ASSETS
Current assets
Cash and cash equivalents$112.2  $156.9  
Accounts receivable, net of allowance of $14.1 ($8.8 as of December 28, 2019)
282.7  216.7  
Inventories75.3  62.9  
Prepaid expenses and other current assets23.9  19.1  
Current assets of discontinued operations  186.7  
Total current assets494.1  642.3  
Property, plant and equipment, net688.7  558.1  
Operating lease right-of-use-assets181.7  185.7  
Goodwill1,379.8  1,047.5  
Intangible assets, net947.5  597.0  
Other long-term assets, net27.3  20.5  
Long-term assets of discontinued operations  339.8  
Total assets$3,719.1  $3,390.9  
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings$127.4  $92.4  
Current maturities of long-term debt9.5  6.9  
Accounts payable and accrued liabilities459.5  370.6  
Current operating lease obligations37.5  36.5  
Current liabilities of discontinued operations  101.2  
Total current liabilities633.9  607.6  
Long-term debt1,270.9  1,259.1  
Operating lease obligations150.2  155.2  
Deferred tax liabilities124.8  90.6  
Other long-term liabilities58.6  58.7  
Long-term liabilities of discontinued operations  53.5  
Total liabilities2,238.4  2,224.7  
Shareholders' Equity
Common shares, no par value - 159,825,718 (December 28, 2019 - 134,803,211) shares issued
1,262.7  892.3  
Additional paid-in-capital71.5  77.4  
Retained earnings244.9  265.0  
Accumulated other comprehensive loss(98.4) (68.5) 
Total shareholders' equity1,480.7  1,166.2  
Total liabilities and shareholders' equity$3,719.1  $3,390.9  

The accompanying notes are an integral part of these consolidated financial statements.
5


Primo Water Corporation
Consolidated Statements of Cash Flows
(in millions of U.S. dollars)
Unaudited
 For the Three Months Ended
 March 28, 2020March 30, 2019
Cash flows from operating activities of continuing operations:
Net income (loss)$3.5  $(19.7) 
Net income from discontinued operations, net of income taxes30.9  3.0  
Net loss from continuing operations(27.4) (22.7) 
Adjustments to reconcile net loss from continuing operations to cash flows from operating activities:
Depreciation and amortization45.0  39.7  
Amortization of financing fees0.9  0.8  
Share-based compensation expense2.4  3.3  
Benefit for deferred income taxes(3.5) (5.2) 
Loss on sale of business  5.4  
Loss on disposal of property, plant and equipment, net1.4  1.9  
Other non-cash items6.0  0.2  
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable(28.9) (1.3) 
Inventories(0.6) (2.8) 
Prepaid expenses and other current assets(1.5) (1.6) 
Other assets0.7  0.6  
Accounts payable and accrued liabilities and other liabilities10.2  (3.2) 
Net cash provided by operating activities from continuing operations4.7  15.1  
Cash flows from investing activities of continuing operations:
Acquisitions, net of cash received(422.6) (3.7) 
Additions to property, plant and equipment(34.9) (22.0) 
Additions to intangible assets(3.0) (1.9) 
Proceeds from sale of property, plant and equipment0.3  1.1  
Proceeds from sale of business, net of cash sold  50.5  
Net cash (used in) provided by investing activities from continuing operations(460.2) 24.0  

6


Cash flows from financing activities of continuing operations:
Payments of long-term debt(2.7) (1.5) 
Proceeds from short-term borrowings135.9  25.0  
Payments on short-term borrowings(109.9) (52.8) 
Issuance of common shares0.6  0.4  
Common shares repurchased and canceled(31.9) (11.0) 
Financing fees(2.5)   
Equity issuance fees(1.1)   
Dividends paid to common shareholders(9.8) (8.2) 
Payment of deferred consideration for acquisitions(0.2)   
Other financing activities8.8  1.4  
Net cash used in financing activities from continuing operations(12.8) (46.7) 
Cash flows from discontinued operations:
Operating activities of discontinued operations(17.3) 8.5  
Investing activities of discontinued operations394.5  (19.1) 
Financing activities of discontinued operations(0.1)   
Net cash provided by (used in) discontinued operations377.1  (10.6) 
Effect of exchange rate changes on cash(2.1) 1.3  
Net decrease in cash, cash equivalents and restricted cash(93.3) (16.9) 
Cash and cash equivalents and restricted cash, beginning of period205.5  170.8  
Cash and cash equivalents and restricted cash, end of period112.2  153.9  
Cash and cash equivalents and restricted cash from discontinued operations, end of period  31.0  
Cash and cash equivalents and restricted cash from continuing operations, end of period$112.2  $122.9  
Supplemental Non-cash Investing and Financing Activities:
Shares issued in connection with business combination$377.6  $  
Accrued deferred financing fees0.8    
Dividends payable issued through accounts payable and accrued liabilities0.2    
Additions to property, plant and equipment through accounts payable and accrued liabilities and other liabilities11.5  14.8  
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest$15.7  $15.1  
Cash paid for income taxes, net2.4  1.0  


The accompanying notes are an integral part of these consolidated financial statements.

7


Primo Water Corporation
Consolidated Statements of Equity
(in millions of U.S. dollars, except share and per share amounts)
Unaudited

Number of
Common
Shares
(In thousands)
Common SharesAdditional Paid-in-CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal Shareholders' Equity
Balance at December 29, 2018136,195  $899.4  $73.9  $298.8  $(101.7) $1,170.4  
Cumulative effect of changes in accounting principle, net of taxes—  —  —  10.5  —  10.5  
Net loss—  —  —  (19.7) —  (19.7) 
Other comprehensive income, net of tax—  —  —  —  5.1  5.1  
Common shares dividends ($0.06 per common share)
—  —  —  (8.2) —  (8.2) 
Share-based compensation —  —  3.5  —  —  3.5  
Common shares repurchased and canceled(770) (6.9) —  (4.1) —  (11.0) 
Common shares issued - Equity Incentive Plan519  6.1  (6.1) —  —    
Common shares issued - Employee Stock Purchase Plan22  0.4  —  —  —  0.4  
Balance at March 30, 2019135,966  $899.0  $71.3  $277.3  $(96.6) $1,151.0  
Number of
Common
Shares
(In thousands)
Common SharesAdditional Paid-in-CapitalRetained
Earnings
Accumulated Other Comprehensive LossTotal Shareholders' Equity
Balance at December 28, 2019134,803  $892.3  $77.4  $265.0  $(68.5) $1,166.2  
Cumulative effect of changes in accounting principle, net of taxes—  —  —  (4.3) —  (4.3) 
Net income—  —  —  3.5  —  3.5  
Other comprehensive loss, net of tax—  —  —  —  (29.9) (29.9) 
Common shares dividends ($0.06 per common share)
—  —  —  (9.6) —  (9.6) 
Share-based compensation—  —  3.1  —  —  3.1  
Common shares issued in connection of business combination and assumed awards, net of equity issuance costs of $1.1 million
26,497  376.5  2.9  —  —  379.4  
Common shares repurchased and canceled(2,776) (22.2) —  (9.7) —  (31.9) 
Common shares issued - Equity Incentive Plan1,277  15.7  (11.8) —  —  3.9  
Common shares issued - Employee Stock Purchase Plan25  0.4  (0.1) —  —  0.3  
Balance at March 28, 2020159,826  $1,262.7  $71.5  $244.9  $(98.4) $1,480.7  



The accompanying notes are an integral part of these consolidated financial statements.
8


Primo Water Corporation
Notes to the Consolidated Financial Statements
Unaudited

Note 1—Business and Recent Accounting Pronouncements
Description of Business
        On March 2, 2020, Cott Corporation completed the acquisition of Primo Water Corporation (“Legacy Primo” and such transaction, the “Legacy Primo Acquisition”). In connection with the closing of the Legacy Primo Acquisition, Cott Corporation changed its corporate name to Primo Water Corporation and its ticker symbol on the New York Stock Exchange and Toronto Stock Exchange to “PRMW”. The Legacy Primo Acquisition is consistent with our strategy of transitioning to a pure-play water solutions provider.
As used herein, “Primo,” “the Company,” “our Company,” “Primo Water Corporation,” “we,” “us,” or “our” refers to Primo Water Corporation, together with its consolidated subsidiaries. Primo is a leading pure-play water solutions provider in North America, Europe and Israel. Primo operates largely under a recurring razor/razorblade revenue model. The razor in Primo’s revenue model is its industry leading line-up of sleek and innovative water dispensers, which are sold through major retailers and online at various price points or leased to customers. The dispensers help increase household penetration which drives recurring purchases of Primo’s razorblade offering. Primo’s razorblade offering is comprised of Water Direct, Water Exchange, and Water Refill. Through its market leading Water Direct business, Primo delivers sustainable hydration solutions across its 21-country footprint direct to the customer’s door, whether at home or to commercial businesses. Through its market leading Water Exchange and Water Refill businesses, Primo offers pre-filled and reusable containers at over 13,000 locations and water refill units at approximately 22,000 locations, respectively. Primo also offers water filtration units across its 21-country footprint representing a top five position.
Primo’s water solutions expand consumer access to purified, spring and mineral water to promote a healthier, more sustainable lifestyle while simultaneously reducing plastic waste and pollution. Primo is committed to its water stewardship standards and is proud to partner with the International Bottled Water Association in North America as well as with Watercoolers Europe, which ensure strict adherence to safety, quality, sanitation and regulatory standards for the benefit of consumer protection.
Basis of Presentation
The accompanying interim unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of our results of operations for the interim periods reported and of our financial condition as of the date of the interim balance sheet have been included. The Consolidated Balance Sheet as of December 28, 2019 included herein was derived from the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (our “2019 Annual Report”). This Quarterly Report on Form 10-Q should be read in conjunction with the annual audited Consolidated Financial Statements and accompanying notes in our 2019 Annual Report. The accounting policies used in these interim Consolidated Financial Statements are consistent with those used in the annual Consolidated Financial Statements.
        The presentation of these interim Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.
Changes in Presentation
        On February 28, 2020, we completed the sale of our coffee, tea and extract solutions business, S. & D. Coffee, Inc. (“S&D”) for $405.0 million in cash, subject to customary post-closing adjustments. As a result of this transaction representing a strategic shift in our operations, the Company has reclassified the financial results of our discontinued operations to net income from discontinued operations, net of income taxes in the Consolidated Statement of Operations for the three months ended March 30, 2019. The assets and liabilities associated with S&D have been reflected as current and long-term assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 28, 2019. Cash flows from our discontinued operations are presented in the Consolidated Statement of Cash Flows for the three months ended March 30, 2019. The Notes to Consolidated Financial Statements are presented on a continuing operations basis unless otherwise noted. See Note 2 to the Consolidated Financial Statements for additional information on discontinued operations.
9


On March 2, 2020, we completed the Legacy Primo Acquisition. This business was added to our existing Route Based Services reporting segment, which was renamed “Water Solutions” to reflect our strategy of transitioning to a pure-play water solutions provider. Other than the change in name, there was no impact on prior period results for this reporting segment.
        
Significant Accounting Policies
        Included in Note 1 of our 2019 Annual Report is a summary of the Company’s significant accounting policies. Provided below is a summary of additional accounting policies that are significant to the financial results of the Company.
Cost of sales
        We record costs associated with the manufacturing of our products in cost of sales. Shipping and handling costs incurred to store, prepare and move products between production facilities or from production facilities to branch locations or storage facilities are recorded in cost of sales. Shipping and handling costs incurred to deliver products from our Water Solutions reporting segment branch locations to the end-user consumer of those products are recorded in selling, general and administrative (“SG&A”) expenses. All other costs incurred in the shipment of products from our production facilities to customer locations are reflected in cost of sales. Shipping and handling costs included in SG&A expenses were $120.0 million and $115.0 million for the three months ended March 28, 2020 and March 30, 2019, respectively. Finished goods inventory costs include the cost of direct labor and materials and the applicable share of overhead expense chargeable to production.
Allowance for Credit Losses
We estimate an allowance for credit losses based on historical loss experience, adverse situations that may affect a customer's ability to pay, current conditions, reasonable and supportable forecasts and current economic outlook. Customer demographic, such as large commercial customers as compared to small businesses or individual customers, and the customer’s geographic market are also considered when estimating credit losses. Historical loss experience was based on actual loss rates over a one year period. Additionally, we evaluate current conditions and review third-party economic forecasts on a quarterly basis to determine the impact on the allowance for credit losses. The assumptions used in determining an estimate of credit losses are inherently subjective and actual results may differ significantly from estimated reserves.

Recently adopted accounting pronouncements
Update ASU 2016-13 – Financial Instruments—Credit Losses (Topic 326), Update ASU 2019-05 – Financial Instruments—Credit Losses—Targeted Transition Relief (Topic 326) and Update ASU 2019-11 – Codification Improvements to Financial Instruments—Credit Losses (Topic 326)
In June 2016, the Financial Accounting Standards Board (“FASB”) amended its guidance to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. The amended guidance also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. In May 2019, the FASB amended the original guidance by providing an option to irrevocably elect the fair value option for certain financial instruments previously measured at amortized cost basis. In November 2019, the FASB provided additional guidance around how to report expected recoveries. For public entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.
        Effective December 29, 2019, we adopted the guidance in this amendment using the modified retrospective transition method. The adoption of this new standard, with the impact being the increase in allowance for doubtful accounts related to our trade accounts receivable, resulted in a cumulative-effect adjustment of $4.3 million recognized to the opening balance of retained earnings. The Company will continue to actively monitor the impact of the recent coronavirus (“COVID-19”) pandemic on expected credit losses.
Update ASU 2018-13 – Fair Value Measurement (Topic 820)
        In August 2018, the FASB amended its guidance on disclosure requirements for fair value measurement. The update amends existing fair value measurement disclosure requirements by adding, changing, or removing certain disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this update while delaying adoption of the additional disclosures until their effective date. We adopted the guidance in this amendment effective December 29, 2019 prospectively. Adoption of the new standard did not have a material impact on our Consolidated Financial Statements.
10


Update ASU 2018-15 – Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)
        In August 2018, the FASB amended its guidance on a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. We adopted the guidance in this amendment effective December 29, 2019. Adoption of the new standard did not have a material impact on our Consolidated Financial Statements.
Update ASU 2019-04 – Codification Improvements to Topic 326—Financial Instruments—Credit Losses, Topic 815—Derivative and Hedging, and Topic 825—Financial Instruments
        In April 2019, the FASB amended its guidance to clarify and provide narrow-scope amendments for these three recent standards related to financial instruments accounting. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted the guidance in this amendment effective December 29, 2019. Adoption of the new standard did not have a material impact on our Consolidated Financial Statements.
Update ASU 2019-12 – Income Taxes—Simplifying the Accounting for Income Taxes (Topic 740)
        In December 2019, the FASB amended its guidance to remove certain exceptions to the general principles in Topic 740 and improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this update are effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We adopted the guidance in this amendment effective December 29, 2019. Adoption of the new standard did not have a material impact on our Consolidated Financial Statements.
Update ASU 2020-03 – Codification Improvements to Financial Instruments
        In March 2020, the FASB amended its guidance to clarify or improve the financial instrument topics in the existing guidance. These amendments make the guidance easier to understand and apply by eliminating inconsistencies and providing clarifications. Certain amendments in this update are effective upon issuance of this update. The remaining amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. We adopted the guidance in this amendment effective December 29, 2019. Adoption of the new standard did not have a material impact on our Consolidated Financial Statements.
Recently issued accounting pronouncements
Update ASU 2018-14 – Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)
In August 2018, the FASB amended its guidance on disclosure requirements for defined benefit plans. The update amends existing annual disclosure requirements applicable to all employers that sponsor defined benefit pension and other postretirement plans by adding, removing, and clarifying certain disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and are to be applied on a retrospective basis to all periods presented. We are currently assessing the impact of adoption of this standard on our Consolidated Financial Statements.
Update ASU 2020-04 – Reference Rate Reform (Topic 848)
In March 2020, the FASB issued guidance which provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or any other reference rates expected to be discontinued because of reference rate reform. This guidance is effective as of March 12, 2020 through December 31, 2022 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company has not adopted any of the optional expedients or exceptions through March 28, 2020, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

11


Note 2Discontinued Operations
On February 28, 2020, the Company completed the sale of S&D to Westrock Coffee Company, LLC, a Delaware limited liability company (“Westrock”), pursuant to which Westrock acquired all of the issued and outstanding equity of S&D from the Company (“S&D Divestiture”). The aggregate deal consideration was $405.0 million, paid at closing in cash, subject to adjustment for indebtedness, working capital and other customary post-closing adjustments.
The Company used the proceeds of the S&D Divestiture to finance a portion of the Legacy Primo Acquisition. See Note 5 to the Consolidated Financial Statements for additional information on the Legacy Primo Acquisition.
The major components of net income from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Operations include the following:

For the Three Months Ended
(in millions of U.S. dollars)March 28, 2020March 30, 2019
Revenue, net 1
$97.1  $148.0  
Cost of sales71.1  108.2  
Operating (loss) income from discontinued operations(0.5) 3.4  
Gain on sale of discontinued operations60.5    
Net income from discontinued operations, before income taxes59.8  3.4  
Income tax expense 2
28.9  0.4  
Net income from discontinued operations, net of income taxes$30.9  $3.0  
______________________
1 Includes $1.0 million and $1.6 million of related party sales to continuing operations for the three months ended March 28, 2020 and March 30, 2019, respectively.
2 The S&D Divestiture resulted in tax expense on the gain on sale of $28.5 million and will utilize a significant portion of the existing U.S. net operating loss carry forwards.


Note 3Leases
We have operating and finance leases for manufacturing and production facilities, branch distribution and warehouse facilities, vehicles and machinery and equipment. The remaining terms on our finance leases range from 1 year to 8 years while our operating leases range from 1 year to 22 years, some of which may include options to extend the leases generally between 1 year and 10 years, and some of which may include options to terminate the leases within 1 year.
The components of lease expense for the three months ended March 28, 2020 and March 30, 2019, respectively, is shown in the table below:
For the Three Months Ended
(in millions of U.S. dollars)March 28, 2020March 30, 2019
Operating lease cost$12.5  $11.6  
Short-term lease cost2.3  0.9  
Finance lease cost
Amortization of right-of-use assets$1.7  $0.7  
Interest on lease liabilities1.0  0.2  
Total finance lease cost$2.7  $0.9  
Sublease income$0.2  $0.3  


12


Supplemental cash flow information related to leases for the three months ended March 28, 2020 and March 30, 2019, respectively, is shown in the table below:

For the Three Months Ended
(in millions of U.S. dollars)March 28, 2020March 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$12.6  $12.9  
Operating cash flows from finance leases0.9  0.1  
Financing cash flows from finance leases1.4  0.7  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$7.3  $1.3  
Finance leases21.7  9.2  

        Supplemental balance sheet information related to leases as of March 28, 2020 and December 28, 2019, respectively, is shown in the table below:
(in millions of U.S. dollars, except lease term and discount rate)March 28, 2020December 28, 2019
Operating leases
Operating lease right-of-use assets$181.7  $185.7  
Current operating lease obligations37.5  36.5  
Operating lease obligations150.2  155.2  
Total operating lease obligations$187.7  $191.7  
Financing leases
Property, plant and equipment, net$50.1  $30.4  
Current maturities of long-term debt9.0  5.7  
Long-term debt40.5  23.7  
Total finance lease obligations$49.5  $29.4  

Weighted Average Remaining Lease TermMarch 28, 2020December 28, 2019
Operating leases8.58.7
Finance leases5.85.6
Weighted Average Discount Rate
Operating leases6.7 %6.2 %
Finance leases5.6 %6.3 %
        
13


Maturities of operating lease obligations were as follows:
(in millions of U.S. dollars)March 28, 2020December 28, 2019
Remainder of 2020  $37.7