Exhibit 13.1
Seizing the Future.
Cott Corporation : Driving Retailer Brand Power
Cott Corporation 2003 ANNUAL REPORT
Photo - silver bubble backdrop
FINANCIAL HIGHLIGHTS -- 2003
Look Inside: Cott Corporation 2003 milestones
Year Ending
[in millions of U.S. dollars, except per share amounts] 2003 2002 2001
Sales $ 1,417.8 $ 1,198.6 $ 1,090.1
Gross Profit 19.5% 19.4% 17.2%
Operating Income 148.9 122.7 93.3
Income from continuing operations (1) 77.4 58.3 39.9
Operating cash flow, after capital expenditure (1) 93.6 60.0 57.6
Working capital (2) 45.2 56.9 55.7
Net debt (3) 338.7 373.8 395.2
Income from continuing operations per
diluted share (1) 1.09 0.83 0.58
Income from Continuing Operation per 03 -- 1.09 [graphic of bar graphs]
Diluted Share (1) 02 -- 0.83 [U.S. dollars]
01 -- 0.58
Earnings Before Interest, Taxes 03 -- 196.0 [graphic of bar graphs]
Depreciation and Amortization *(1) 02 -- 164.2 [millions of U.S. dollars]
01 -- 135.5
Operating Cash Flow After 03 -- 93.6 [graphic of bar graphs]
Capital Expenditures (1) 02 -- 60.0 [millions of U.S. dollars]
01 -- 57.6
(1)The December 28, 2002 results are as reported in 2002 based on U.S. GAAP in
effect at that time. Cott adopted SFAS 145 retroactively in 2003. As a result of
SFAS 145, income from continuing operations decreased $9.6 million or $0.14 per
diluted share and operating cash flow decreased $10.6 million. For more
information about the impact of SFAS 145, see note 3 to the consolidated
financial statements of this annual report on Form 10-K.
(2)Comparative amounts in prior years have been reclassified to conform to the
financial statement presentation adopted in the current year.
(3)Net debt for the year ended December 29, 2001 was adjusted for the redemption
of 2005 and 2007 senior notes from cash in trust on January 22, 2002.
(*)As defined in the Management's Discussion and Analysis of Financial Condition
and Results of Operations.
TABLE OF CONTENTS [sidebar]: Company Profile, INSIDE FLAP, Shareholder's letter
1, Cott U.S.A. 8, Cott U.K. 12, Cott Canada 16, Cott Mexico, Innovation 24,
Board of Directors 26, Annual Report on Form 10-K 29, Investor Information,
INSIDE BACK COVER
COTT CORPORATION GROWING WITH A PURPOSE
Cott Corporation is the world's largest producer of retailer branded Carbonated
Soft Drinks (CSD). The Company has expanded in recent years through a series of
strategic acquisitions and by strong organic growth. Supermarkets, mass
merchandisers, drug stores and convenience stores are among Cott's largest
customer groups.
As a fully integrated supplier to customers, Cott creates beverage formulas,
makes concentrates, manufactures soft drinks and markets its products in many
countries of the world. Its core geographies - United States, Canada and United
Kingdom - account for the great majority of sales. Altogether, the Company
operates 19 manufacturing plants in four countries. Cott products include
carbonated soft drinks, juices and blends, seltzers, spring water and purified
drinking water, and clear sparkling flavored beverages.
Cott is headquartered in Toronto, Canada, with offices and operations in the US,
Canada, the U.K. and Mexico. Its 2,800 employees include professionals in
research, procurement, manufacturing, distribution, marketing and customer
service. The company's research and technology center is located in Columbus,
Georgia.
Focused principally on growing its retailer customers' brands, Cott also sells
beverages under Company registered trademarks such as Cott(R), Stars &
Stripes(R), Vess(R) and Vintage(R) and through a network of RC(R) International
bottlers in more than 60 countries outside North America.
COTT ANNUAL REPORT 2003 MILESTONES
IT HAPPENED IN 2003
SCHOLARSHIP PROGRAM FOUNDED - Dependents of Cott employees will be eligible for
financial help to further their education. At the request of CEO Frank Weise,
the board agreed to reduce his 2004 base salary to $1. The board then directed
an equivalent amount to fund a new program. Qualified graduating students are
encouraged to apply to the "Frank and Deborah Weise Scholarship Fund." [photo
and caption -- Scholarship program founded for dependants of Cott employees]
COTT EXPANDS IN MID-ATLANTIC USA - By acquiring the retail brand business of
North Carolina's Quality Beverage Brands, L.L.C. (QBB), Cott USA added prominent
new customers in a growing market. The move is expected to add approximately $45
million in annual sales. In a related transaction, long-term manufacturing
agreements were signed with QBB's affiliate Independent Beverage Corporation,
which will provide the Company with access to new production capacity.
WEISE NAMED "CEO OF THE YEAR" - Canada's leading national newspaper, The Globe
and Mail, selected Frank Weise as chief executive officer of the year. In a
major article in its respected "Report on Business" magazine, the newspaper's
editors cited Frank's leadership over a sustained period of remarkable
turnaround for the Company and then leading Cott's strategic drive for growth.
[photo: cover of ROB Magazine, and caption -- Frank Weise is cited for exemplary
leadership in Canada's respected "Report on Business"]
SIKESTON, MISSOURI PLANT SETS SAFETY RECORD - Thanks partly to a vigorous
awareness campaign, on September 26 this Cott USA plant marked its third
straight year without a loss-time incident. The promotion team from the "Show
Me" Missouri state rallied the 100 site employees around a direct message of
"Safety First" using posters, presentations and awards.
COTT STARS AT PLMA SHOW - Presented by the Private Label Manufacturers
Association, the PLMA Show held in Chicago each year gives manufacturers an
opportunity to highlight the newest in product and packaging innovation. Cott's
caffeine-free, sugar-free and calorie-free Fruit Refreshers(TM) attracted the
attention of numerous retailers. [photo: Cott's Booth at PLMA, and caption --
Cott booth at the 2003 PLMA Show attracts attention.]
WAL-MART AND COTT TEAMS SUPPORT FIRE-FIGHTERS - As October fires ravaged
southern California, the Bentonville office joined with Wal-Mart to donate
"Sam's Choice" water supplies to fire-fighters. The San Bernardino plant,
located close to the fire perimeter, provided additional water and soda to its
local fire department. [photo: fire truck, and caption -- Wal-Mart and Cott
teams aid firefighters in California]
"VINTAGE(R) BRAND CELEBRATES 25 YEARS" - The number one seltzer brand in the
United States is sporting a new banner on its label. It proclaims 25 years of
success in the Northeast as the champion for taste and quality. Vintage(R),
family made and marketed by Cott, now includes carbonated soft drinks, mixers
and new Fruit Refreshers(TM) as well as the popular seltzer. [photo and caption
- -- Vintage(R), the number one seltzer brand in the U.S., celebrates 25 years. ]
ANNUAL REPORT WINS "BEST IN INDUSTRY" HONOR - The National Association of
Investors, located in Michigan, awarded the Cott 2002 annual report its highest
distinction among beverage and soft drink companies. Through 25 years of this
competition, NAIC has placed emphasis on the viewpoint of individual investors.
The Cott report, titled "It Starts Inside" was cited for completeness of
information as well as readability. [photo: Cover of 2002 Report, and caption --
Cott Annual Report 2002 wins highest honours.]
PHILIP LIVINGSTON AND JOHN SHEPPARD ELECTED TO BOARD - Philip Livingston was
elected to Cott's Board of Directors at the Company's annual general meeting in
April. Livingston, having previously served as president and chief executive
officer of Financial Executives International (FEI), the pre-eminent membership
organization for chief financial officers, controllers and treasurers in North
America, brings insight into the regulatory environment. John Sheppard, Cott's
president and chief operating officer, joined the Board in July.
SEIZING THE FUTURE OF RETAILER BRANDS
[photo cover of Frank E. Weise, Chairman & CEO and John K. Shepard,
President & COO]
SHAREHOLDERS' LETTER
Fellow Owner,
From our vantage point, your company's future is bright with opportunity.
Our progress over the past five years has laid a foundation for long-term
success. Credit for that performance goes to Cott men and women across all
operations. The record results in 2003 now provide new confidence as we set
our sights on seizing the future.
THE TAKE-HOME CARBONATED SOFT DRINK MARKET -- 2003 [Bar Charts]
Total Take-Home Retailer Brand Cott Proportion of Retailer
CSD $ Volume Share Brand CSD Volume
U.S. $24B 11% 66%
Canada $ 2B 20% 97%
U.K. $ 5B 27% 40%
TOTAL $31B 14% 66%
Source: Cott Estimates
Going forward in 2004 and beyond, three major factors combine to define
Cott's unique business opportunity. Shareowners have heard us say on
previous occasions that we are in the right business at the right time . .
. ready to take advantage of the dynamics in a competitive marketplace.
1. Retailer brand products are winning consumer acceptance around the world.
In the US, one in five items bought in drug chains and mass merchandisers
is a retailer brand. In carbonated soft drinks, retailers' brands are
sharply outpacing the growth of the category. In 2003, the trend
accelerated as consumers recognized that quality and choice are readily
available.
2. The ongoing concentration of supermarket chains and mass merchandisers is
fueling the growth of retailer brands. Retailer brands add credibility and
power to retailers. In a number of North American and U.K. retail chains,
the retailer's own brand accounts for a high share of the total soft drink
sales volume.
3. The Cott team of experienced leaders and managers - from research and
logistics to customer service and category management - knows retailer
brand beverages intimately. The Company's full integration from formulae
development, concentrate manufacturing and production of finished goods, to
sales and marketing will enable us to deliver increased growth from current
as well as new customers in the years ahead.
SHAREHOLDER'S LETTER (CONTINUED)
FINANCIAL HIGHLIGHTS
Results in 2003 form a new benchmark to beat. These highlights tell the story of
your company's successful year:
- Income from continuing operations(1), per diluted share, increased by
31% to a record $1.09
- Sales rose to an all-time high, up 18% to $1.4 billion
- Operating income climbed 21% to a record $148.9 million
- Operating cash flow (less capital expenditures) reached a record $93.6
million
[bottom of page]: (1)The December 28, 2002 results are as reported in 2002 based
on U.S. GAAP in effect at that time. Cott adopted SFAS 145 retroactively in
2003. As a result of SFAS 145, income from continuing operations decreased $9.6
million or $0.14 per diluted share and operating cash flow decreased $10.6
million. For more information about the impact of SFAS 145, see note 3 to the
consolidated financial statements of this annual report on Form 10-K.
These results flow directly from the efforts of Cott employees who continue to
be the company's greatest asset, the difference-makers who breathe life into our
mission, values and strategies. By applying our strategies over the past five
years, they have embraced the license to innovate, to work in partnership with
customers and suppliers - and to focus relentlessly on providing superior
service. Reflecting on 2003, specific accomplishments stand out:
STRATEGY #1 - EXPAND THE CORE -- By entering Mexico and being able to serve
important customers in this market we have added important volume. Adding and
building with leading retailers gave impetus to this strategy. Innovation has
been a decisive weapon in gaining ground with many top accounts.
STRATEGY #2 - MAKE ACQUISITIONS AND ALLIANCES -- Acquiring the retailer brand
business of North Carolina's Quality Beverage Brands, L.L.C. at the close of the
year gave momentum to this strategy. This acquisition will enhance our presence
in the Mid-Atlantic region, a fast-growing area for Cott USA. Seen in the
context of our five other acquisitions and investments of more than $300 million
since 2000, this latest addition shows how our acquisition strategy has enabled
us to create new opportunities for profitable growth.
STRATEGY #3 - BUILD WORLD-CLASS TEAMS -- Our management team evolved further in
2003, with the new office of president and chief operating officer now in place.
Two other new appointments were announced: Paul Richardson became president of
Cott USA, our largest unit; and Andy Murfin became managing director of the UK
business. These experienced professionals, as you will read in this report, have
already brought focus and energy to their new leadership positions.
As part of this strategy, we have built world-class teams across all functions
of the organization. For example, plant personnel are working with their sales
counterparts to check store inventories and product replenishment needs. Other
initiatives in continuous improvement have leveraged "six sigma" techniques,
from plant operations to administrative functions.
STRATEGY #4 - DRIVE MARGINS AND CASH FLOW -- This strategy has special priority
because, simply put, it requires keeping our eye on the ball. Financial
discipline and clear-eyed business acumen are prime movers in driving
performance year after year. These forces have never been more evident than in
the turnaround of our UK business during 2003, where we recorded significant
growth in both sales and earnings.
[photos and captions: SENIOR FINANCE TEAM - Ray Silcock, executive vice
president and chief financial officer (second from right), is supported by Tina
Dell'Aquila, vice president and controller (left), Catherine Brennan, vice
president and treasurer (right), and Edmund O'Keeffe, vice president for
investor relations and corporate development (second from left).; EXPERIENCED
LEADERSHIP - Mark Benadiba, executive vice president Canada and Intenational
(left), with fellow members of Cott's Executive Council, Mark Halperin, senior
vice president, general counsel and secretary (right), and Colin Walker, senior
vice president corporate resources (center).
SHAREHOLDER'S LETTER (CONTINUED)
SEIZING THE FUTURE
When we talk about "Seizing the Future," we are describing a spirit that
permeates Cott. No one believes that success and growth will be automatic, but
we are determined to meet the challenges ahead of us. We see a secure place for
Cott in creating opportunities for retailer growth and consumer choice. Each
year, that role grows as the value of retailer brands strengthens in the minds
of consumers. In 2003, carbonated soft drinks ranked near the top of all
retailer brand categories in volume sales.
We are confident that the vision of our quality products on the shelves of
premium retailers will mean winning performance in 2004.
"Seizing the Future" takes different forms in every part of our business. For
2004 we intend to increase our in-house manufacturing capacity with new lines,
improved productivity and acquisitions and alliances in order to meet our
growing sales. We will continue to be vigilant about costs, whether in Sales,
General and Administrative expenses or in ingredients and packaging. This will
allow us to meet our goals for worldwide competitiveness.
In our laboratories and marketing groups, "Seizing the Future" means being
prepared to offer new flavors and package formats to our customers. We were
proud to host dozens of buyer groups at our Columbus, Georgia technology center
in 2003. Many customers were joined by members of their own Cott account teams -
often including representatives from sales, supply chain management,
distribution, category management, manufacturing and marketing. As one of our
team members said, " Cott will do whatever possible to exceed customer
expectations...today, tomorrow, always"
That's the spirit. That's how we intend to seize the future.
[signature] [signature]
Frank E. Weise John K. Sheppard
Chairman and Chief Executive Officer President and Chief Operating Officer
[sidebar graphic]: The Cott House - Framework for Growth...Vision, Goal,
Strategic Pillars, Purpose, Values
GOAL: Sustained double digit growth for the future
VISION: To be recognized as the retailer brand beverage supplier of the choice
by leading retailers everywhere
STRATEGIC PILLARS: Expand the Core; Make acquisitions and alliances; Build world
class teams; Drive margins and cash flow
PURPOSE: We market, create and supply high quality non-alcoholic, shelf-stable
retailer brand beverages to build category profitability and customers' brand
equity
VALUES: Customer-Centric; Diversity; Accountability / Integrity; Continuous
Improvement
MESSAGE FROM THE LEAD INDEPENDENT DIRECTOR
As our company moves into 2004, we have come to expect another strong
performance by Frank Weise and his management team. In five years of steady
progress, their leadership of Cott's 2,800 employees has become a beacon in the
beverage industry. The depth of experience among Cott's management is admired by
many, but equally essential to the Company's success has been their commitment
to solid values.
Hardly a month passed in 2003 when some scandal or malfeasance didn't headline
the financial news. I believe that Cott's values and internal discipline stand
as guardians against those kinds of violations to integrity. Your Board not only
supports that stance, but it takes very seriously its own responsibilities to
ensure compliance with all appropriate governance standards.
Beyond that, the Board sees its role as vital in setting the tone for such
values as accountability and quality in all facets of the Company. Our annual
review of the strategic plan receives the highest priority, along with our
ongoing focus on management succession.
This year, we welcomed Philip Livingston and John Sheppard to the Board. Phil's
varied background in finance, notably as past president of Financial Executives
International, will add valuable insights to our deliberations. In his new
capacity as Cott's president and chief operating officer, John becomes a strong
resource for the Board.
[signature and photo]
Serge Gouin
Lead Independent Director
COTT USA
- Headquartered in Tampa, Florida
- Company's largest geographic unit in sales and earnings
- Focused on growth in 2004
"KEEP THE IDEAS COMING!"
As I enter my 10th year with Cott, I see much that excites me. I also see the
stretch goals that we have set for our American business, and I know that 2004
will be a year that calls for the best.
We have a number of initiatives in full swing - all aimed at strengthening our
customer relationships. Thanks to emphasis on Continuous Improvement in our
operations, we have made progress a way of life. The "Six Sigma" tools now in
the hands of 56 black-belt leaders and being used by hundreds of employees from
San Bernardino, California to Wyomissing, Pennsylvania have given us a common
highway for traveling together. We speak a common language and measure our
performance using shared systems.
In our plants, we are well underway with a remarkable "Five S" program. It's
aimed at further standardizing and simplifying our workplaces - and at helping
us better meet our customers' needs. On a parallel track, we are re-designing
our marketing and sales teams to allow more time for Cott representatives to be
with our customers and in their operations. The goal: know your customer top to
bottom; use all Cott experience and skill to help the customer grow; and provide
service that exceeds the customer's expectations. We are moving ahead on this
path as evidenced by Wal-Mart's recent recognition again of Cott as a "Supplier
of the Quarter" -- this time for the fourth quarter of 2003.
These initiatives won't work without one powerful force - input from our people.
I am personally placing the highest priority on getting ideas from Cott men and
women who form the backbone of our plants, our staff and our account teams. It's
been said that there is nothing so powerful as an idea whose time has come.
That's why I have asked all employees to wear me down with ideas - and keep them
coming!
At Cott USA, we also depend a great deal on service groups. The only way I know
to optimize the connections among the staff that help us in packaging design,
flavor formulations and category management is by communicating. So, as we
embark on another winning year, we'll be ready to listen. We enforce only one
key rule: every idea must make a positive difference to our customers.
Ideas are more than welcome. They are the vital link between planning and
performing.
[photo]
Paul Richardson - President, Cott USA
HALFPAGE PHOTOs: Statue of Liberty, New York; USA product
PHOTOs: USA PRODUCT AND PEOPLE
[side text] With nine manufacturing sites and some 1,400 employees, Cott USA has
full-service capabilities. Bottling plants around the country serve hundreds of
customer locations. Overall, in the United States, retailer brand soft drinks
account for about 11% of the volume share in the take-home segment - less than
in the United Kingdom where retailers' own brands have about a 27% share and
Canada where they have about 21%.
MAGNIFICENT OBSESSION [photo and caption]: Cott's customer-centric approach has
a single purpose: to help the customer build its brands by winning consumers
every day. Our Boise-based account team works day-by-day with the Albertsons
Corporate Brands team to develop and drive the supermarket chain's carbonated
soft drinks line as it moves into full 27-state coverage.
GIVE ME AN "S"! [photo and caption]: At Wilson, North Carolina, plant manager
Michael Meredith conducts a weekly seminar in "The Five S's" - a system-wide
initiative to track improvements in productivity and overall performance. Mike's
team is actively installing the program throughout plant operations: "Sort...Set
In Order...Shine...Standardize...and Sustain."
SINGLE SERVE LEADERS [photo -- USA H-E-B product shot]: Among the first major
retailers to add a full line of 8-ounce cans to their store-brand selection is
H-E-B, a strong retail force in Texas. Five flavors stepped out in 2003 wearing
bright labels that promote the new convenient serving size and great taste to
consumers.
COTT - UNITED KINGDOM
HIGHLIGHTS:
- Headquartered in Kegworth, England
- Expanding presence with new products, new customers
- Exceptional customer service underlines our 2004 growth plans
SEIZING OPPORTUNITIES TO SOLIDIFY GROWTH
Like every sustainable turnaround in business, ours had to start inside with
clear goals and hard work. Over the past 18 months, our UK teams "dug in" to
bolster Cott's leading position in retailer brand carbonated soft drinks.
Foremost among those efforts was a training and incentive program that enrolled
virtually every employee - all committed to learning and applying "best
practices" from Company operations in North America.
The 2003 results were dramatic improvements: a four-fold increase in earnings
and an overall sales increase of 24% in year-over-year performance. For Cott in
the UK, this is a gateway performance, giving us confidence to drive new
strategies for customer growth and increased productivity.
Two highlights stand out in 2003 -- winning Cott's Pencer Award for Excellence
in Innovation and the special recognition by ASDA-Wal-Mart as a superior
supplier. Both show how our production and marketing resources can perform - and
inspire our UK teams to seize opportunities that will solidify our growth in
upcoming years.
Heading into 2004, of course, our charge is to build on that turnaround. My own
optimism is based on the winning attitude that I see every day. Every
partnership we have with both ongoing and new customers is driven by three
initiatives: product quality, customer service and tireless innovation. They
force us to set ambitious goals for both volume growth and improved return on
assets.
[photo]
-- Andy Murfin, Managing Director, Cott Beverages Ltd.
HALFPAGE PHOTOs: Houses of Parliament, London; UK product
PHOTOs: UK PRODUCT AND PEOPLE
[side text] Cott's business in the United Kingdom employs almost 400 people at
its headquarters in Kegworth, two plants and several distribution centers.
During a turnaround effort over the past two years, Cott UK has adopted a
rigorous program of production controls and customer-centric innovation. In
2003, this unit achieved an important milestone in performance - moving to
stronger sales and positive earnings.
ASDA CITES COTT FOR DOUBLE RECOGNITION [photo and caption]: For its record in
supplying Wal-Mart's ASDA unit in the UK, Cott teams led by Nick Whitley,
director of business development, garnered two prestigious awards in 2003: "Most
Innovative ASDA Brand Supplier" and "Best Support to Everyday Low Cost." The
EDLC award came to Cott UK for the second year running.
NICHOLS PARTNERS WITH COTT FOR WORLD-FAMOUS BRANDS [photo and caption]: For
manufacture of its Vimto(R) and Sunkist(R) beverages in the UK, Nichols plc
selected Cott as its contract supplier. Nichols' stature in Britain, and 65
other countries, is built on more than 95 years as an important beverage
marketer.
2003 AWARD-WINNING TEAM [photo -- USA H-E-B product shot]: The fifth annual
Gerald N. Pencer Award for Excellence in Innovation went to Kegworth's
commercial team for its extraordinary efforts in forecast accuracy.
Contributions from the team led to gains in plant efficiencies and to a $10,000
prize shared by the team.
COTT CANADA
HIGHLIGHTS:
- Headquartered in Mississauga, Ontario
- Country with largest Cott share of retailer brand segment
- Focused on growth with current customers and in new channels in 2004
RAISING THE STANDARD OF EXCELLENCE
When I am asked about the essential spirit that drives our business, I always
answer with one word - innovation. Growth is a challenge when you hold the #1
position in the retailer branded soft drinks segment - and only through
creativity on all fronts can Cott Canada reach new levels of excellence. I see
that spirit and initiative in our men and women across the country.
Last year, we again reported solid sales and earnings, as we managed to overcome
a number of challenges. I see opportunities for a breakout year in 2004. New
channels such as quick service restaurants, gas stations and convenience stores
could bring important new sales. We expect expanding sales with current
supermarket chains will come from new cola offerings, novel packaging and
updated line extensions. Several are already underway in the form of "minipop"
sizes and lightly carbonated beverages.
These initiatives owe their success to innovation. Hardly a month will go by in
early 2004 when we won't see a customer launch a new product. Concepts like
"dual cola" will roll out as large grocery chains offer consumers a choice to
meet individual taste preferences. New flavors will include Concord Grape, Pink
Grapefruit and Cranberry Raspberry.
One thing is for certain: Cott Canada is determined to seize every opportunity
to further build our leading position.
[photo]
-- Philip Lamb, President, Cott Canada
HALFPAGE PHOTOs: Chateau Frontenac, Quebec City
PHOTOs: CANADA PRODUCT AND PEOPLE
[side text] Cott Corporation traces its roots back 50 years in Canada. Since the
early 1990's, the Company has grown to a nationwide then international leader in
retailer-brand beverages. Today, Cott Canada has 800 employees in seven bottling
plants and a network of sales and administrative offices. In addition to its
primary business in carbonated soft drinks, Cott Canada makes a range of juices,
purified and spring drinking waters and flavored still beverages.
CHOOSE YOUR COLA [photo and caption]: In Montreal, shoppers can now select the
taste they prefer from Metro's cola range. Nancy Christiansen, marketing manager
of Cott reviews the supermarket chain's promotional signing with Jean-Louis
Charpentier, Metro's Vice-President of Private Label. The "dual cola" launch
rolled out in 2003.
QUICK SERVICE RESTAURANT SHOWS ITS BRAND [photo and caption]: Tim Hortons, the
highly successful chain with over 2,300 locations in Canada , launched its
own-label single serve beverages program, featuring iced tea and a
peach-flavored soft drink. These beverages are available for take-out or on-site
consumption as a single item purchase and are a great complement to their lunch
deal programs.
COTT MEXICO
HIGHLIGHTS:
- Headquartered in Puebla, Mexico
- Venture 90% owned by Cott Corporation
- Founded in 2002
"ISALUDOS DESDE PUEBLA!"
Achieving profitability in our start-up year brought a lot of cheers from our
200 member Cott team in Mexico. Month by month in 2003, we shared victories
large and small in plant reconstruction, installation of new bottling lines, and
the modernization of our distribution and customer service facilities. Along the
way, every target date was met or surpassed.
From day one we have set our standards high. We have secured new business with
major supermarket chains in Mexico, providing a platform for incremental growth
in coming years. To grow with neighborhood and convenience stores, we have
franchised the popular Jarritos(R) brand in 13 Mexican states.
Traditionally, Mexican shoppers have purchased their soft drinks at neighborhood
stores, but change is coming fast. Modern supermarkets and mass merchandisers
are gaining share as Mexicans follow shopping patterns of other North Americans.
I agree with analysts who predict that new flavors, new packages and new
promotions will accelerate this trend in 2004.
Our fellow citizens and the business community in Puebla have been great
supporters. As we approach the need to build new capacity and new locations, we
have a model that will always inspire us.
[photo]
-- Gil Arvizu - Managing Director, Cott Embotelladores de Mexico
HALFPAGE PHOTOs: Paseo de la Reforma, Mexico City
PHOTOs: MEXICO PRODUCT AND PEOPLE
[side text] This operation begins its second full year as a vital part of Cott's
strategic growth plan supplying a variety of international and local retailers.
The modern bottling plant in Puebla is located about 100 miles southeast of
Mexico City. Mexico, with a population of 100 million, has the second highest
per capita consumption rate for soft drinks in the world.
BIG TASTE IN THREE-LITER LINE [photo and caption]: Mexican consumers now enjoy
Soriana's new line of popular soft drinks in a 3-liter PET bottle...a first for
retailer branded beverages in the country. Edmundo Espinosa, director of sales
and business development, works in partnership with leading supermarket chains
to bring packaging innovations to Mexican shoppers.
NEW LOOK, NEW TASTE ATTRACT [photo and caption]: Comercial Mexicana, an
important national retailer, with Cott's help revamped its extensive line of
soft drinks. A bright new packaging design debuted along with new formulas as
Comercial Mexicana launched aggressive promotions to build its store-brand
position within the category.
INNOVATION
OUR FUTURE STARTS WITH IDEAS
Ask Prem Virmani, Cott's senior technical officer, to define innovation and he
is quick to say, "Innovation is a state of mind...it's more than coming up with
new ideas, more than looking for different ways to do something. Innovation is
what starts the creative process."
He adds, "In my 30 years in the soft drinks industry, there has never been a
time so alive with change. Whether it's new beverages fortified with minerals or
vitamins, or drinks that combine exotic and popular fruit flavors, the consumer
is demanding new tastes and new qualities. Whole new ranges such as
aquaceuticals loom ahead."
The reach of innovation spans the entire company, reflecting management's
commitment to growth. Examples abound: identifying the best ways to interface
Cott's information technology systems with customers' systems; developing new
go-to-market strategies to support customer account teams; implementing new
techniques for communicating with employees to share successes among all units;
or applying new computer-aided tools to speed packaging designs on-demand for
retailers. These and literally hundreds of other innovative programs are
underway.
[photo and caption]
Prem Virmani, vice president technical services, oversees a group of
professional scientists and technicians at the Technology Center. Blending a
creative passion with a keen eye for quality, he applies 30 years of experience
in the beverage industry.
[side text] Cott's Technology Center in Columbus, Georgia stands as a hub of
product innovation. Scientists and technicians apply their skill and experience
- - creating new concentrates, new flavors and new formulations. More than 100
beverage creations and updated formulations were tested with customers in 2003.
PROVIDING THE PREMIUM QUALITY LOOK [photo and caption]: Ivan Grimaldi, vice
president global procurement, joins Gwen Burnatowski, manager print production
group, as careful watch guards of our customers' packaging designs. The PPG team
works closely with Cott marketing and category management groups to provide an
attractive array of bottle and can facings.
SPREADING THE COTT MESSAGE [photo and caption]: Keeping 2,800 employees informed
about Company programs and successes in a timely manner requires a regular news
channel. With correspondents in every plant and office, the "Cott World"
newsletter gathers and sends the story every quarter around the world.
CAPABILITIES IN PLACE [photo and caption]: Independent bottlers in more than 60
countries use soft drink concentrates made by Cott. This active system holds
special promise for future growth. Cott's marketing knowledge and regional
expertise help link this network.
THE BOARD OF DIRECTORS
COMMITMENT BY THE BOARD
Three standing committees of the Cott Board of Directors play significant roles
in monitoring the achievements of management and setting expectations for future
performance: Human Resources and Compensation, Corporate Governance, and Audit
Committees. In addition, all 12 members of the full Board are active in setting
the tone for corporate governance and overall standards of integrity for the
Company.
Members of the Board bring an array of experiences in the business communities
of both the United States and Canada. Retail management, industry leadership,
creative design, financial and investment planning as well as legal backgrounds
are reflected on the Board - skills that blend well in handling its range of
responsibilities.
During 2003, the full Board convened ten times with two off-site meetings. In
July, the members held their meeting at the New York Stock Exchange, and in
October, they met at the Cott plant in Concordville, Pennsylvania. These
off-site meetings extended the Board's practice of meeting in venues that offer
opportunities for a close-up view of the business operations and investor
activities that affect the Company's future.
[photos and captions]
- HUMAN RESOURCES AND COMPENSATION [photo and caption]: David Harkins,
chairman, Christine Magee and Don Watt (pictured left to right)
comprise this committee. Decisions on an appropriate organizational
structure and pay-for-performance incentives are within its mandate.
Continuous attention is given to the Company's executive succession
plan.
- AUDIT COMMITTEE [photo and caption]: Philip Livingston, chairman, Serge
Gouin and John Bennett (pictured left to right) are members of this key
committee. Its special charge is oversight of the quality and integrity
of the Company's annual and quarterly reports. The annual review by
outside independent auditors is included in the scope of this
committee's responsibilities.
- CORPORATE GOVERNANCE [photo and caption]: Serge Gouin, chairman, Hunter
Boll, and Philip Livingston (left to right) serve on this committee.
Ensuring compliance with fast-changing guidelines set by the securities
regulatory authorities, the Toronto Stock Exchange and the New York
Stock Exchange comes under its purview. The committee is also
responsible for nominating new members to the Board.
- BOARD MEMBERS NOT ON COMMITTEES [photo and caption]: Colin Adair
(second from left), Thomas Hagerty (missing from photo) and Stephen
Halperin (left) are long-standing Board members who recently came off
of committees after years of service. John Sheppard, President and
Chief Operating Officer (second from right) is the newest member and
Frank Weise, Cott's Chief Executive Officer (right) serves as Chairman
of the Board. All of the above participate in the functions and duties
of the full Board.
SUMMARY TABLE OF CONTENTS FOR THE ANNUAL REPORT ON FORM 10-K
Forward-looking Statements
Description of Business
Quarterly Common Stock Information
Selected Financial Data
Management's Discussion & Analysis
Report of Management
Report of Independent Accountants
Consolidated Financial Statements
Quarterly Financial Information
CORPORATE OFFICERS AND BOARD OF DIRECTORS
BOARD OF DIRECTORS
Colin J. Adair
First Vice President
Investment Advisor
CIBC Wood Gundy
W. John Bennett (1)
Chairman, President and
Chief
Executive Officer
Benvest Capital Inc.
C. Hunter Boll (2)
Managing Director
Thomas H. Lee Partners
L.P.
Serge Gouin (1), (2)*
Lead Independent
Director
Vice Chairman
Salomon Smith Barney
Canada, Inc.
Thomas M. Hagerty
Managing Director
Thomas H. Lee Partners
L.P.
Stephen H. Halperin
Partner
Goodmans LLP
David V. Harkins (3)*
President
Thomas H. Lee Partners
L.P.
Philip Livingston (1)*, (2)
Chief Financial Officer
World Wrestling
Entertainment
Christine A. Magee (3)
President
Sleep Country Canada
John K. Sheppard
President & Chief
Operating Officer
Cott Corporation
Donald G. Watt (3)
Chairman & CEO
DW + Partners
Frank E. Weise III
Chairman & Chief
Executive Officer
Cott Corporation
CORPORATE OFFICERS
Frank E. Weise III
Chairman & Chief
Executive Officer
John K. Sheppard
President & Chief
Operating Officer
Mark Benadiba
Executive Vice President
Canada & International
Paul R. Richardson
Executive Vice President
Global Procurement &
U.K.
Raymond P. Silcock
Executive Vice President
& Chief Financial Officer
Mark R. Halperin
Senior Vice President,
General Counsel &
Secretary
Colin D. Walker
Senior Vice President,
Corporate Resources
Catherine M. Brennan
Vice President, Treasurer
Tina Dell'Aquila
Vice President, Controller
& Assistant Secretary
Ivano R. Grimaldi
Vice President,
Global Procurement
Edmund P. O'Keeffe
Vice President,
Investor Relations &
Corporate Development
Prem Virmani
Vice President,
Technical Services
(1) Member, Audit Committee
(2) Member, Corporate Governance Committee
(3) Member, Human Resources & Compensation Committee
* Committee Chairman
INVESTOR INFORMATION
CORPORATE HEADQUARTERS
207 Queen's Quay West
Suite 340
Toronto, Ontario
M5J 1A7
Tel: (416) 203-3898
Fax: (416) 203-8171
REGISTERED OFFICE
333 Avro Avenue
Pointe-Claire, Quebec
H9R 5W3
CANADIAN OFFICE
6525 Viscount Road
Mississauga, Ontario
L4V 1H6
MEXICO OFFICE
Calle de los Palos #35
San Pablo
Xochimehuacan
Puebla, Puebla. C.P.
72014
RC COLA INTERNATIONAL
1000 10th Avenue,
Columbus GA, 31901
UNITED KINGDOM AND
EUROPE OFFICE
Citrus Grove, Side Ley
Kegworth, Derbyshire
DE74 2FJ
UNITED STATES OFFICE
4211 W. Boy Scout Blvd.
Suite #290
Tampa, FL 33607
NORTHEAST RETAILER
BRANDS LLC
1001 Southbridge Street
Worcester,
Massachusetts 01620
PRINCIPAL OPERATIONS
Calgary, Alberta, Canada
Columbus, Georgia, U.S.
(Concentrate
Manufacturing)
Concordville,
Pennsylvania, USA
Kegworth, Derbyshire,
U.K.
Lachine, Quebec, Canada
Mississauga, Ontario,
Canada
Pointe-Claire, Quebec,
Canada
Pontefract, West
Yorkshire, U.K.
Puebla, Puebla, Mexico
Revelstoke, British
Columbia, Canada
San Antonio, Texas, USA
San Bernardino,
California, USA
Scoudouc, New
Brunswick, Canada
Sikeston, Missouri, USA
St. Louis, Missouri, USA
Surrey, British Columbia,
Canada
Tampa, Florida, USA
Wilson, North Carolina,
USA
Wyommising,
Pennsylvania, USA
RESEARCH AND
DEVELOPMENT CENTER
Columbus, Georgia, USA
INVESTOR INFORMATION
Tel: (416) 203-5662
(800) 793-5662
Email: investor_relations@cott.com
Website: www.cott.com
PUBLICATIONS
For copies of the Annual Report or the SEC Form 10-K, visit our website, or
contact us at (800) 793-5662.
QUARTERLY BUSINESS RESULTS/COTT NEWS
Current investor information is available on our website at www.cott.com
TRANSFER AGENT & REGISTRAR
Computershare Trust
Company of Canada
AUDITORS
PricewaterhouseCoopers
LLP
STOCK EXCHANGE LISTING
Toronto Stock Exchange:
BCB
New York Stock
Exchange: COT
ANNUAL GENERAL MEETING
Cott's 2004 Annual Meeting takes place on Tuesday, April 27, 2004 at 8:30 a.m.
at the Glenn Gould Studio CBC Building, 250 Front St. W., Toronto, Ontario,
Canada
La version francaise est disponible sur demande.
All trademarks are owned or licensed by Cott or its customers.
BACK COVER
[photo -- silver bubble backdrop]
Cott [logo]
Corporation
www.cott.com