☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
30-0278688
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
|
101 North Cherry Street, Suite 501, Winston-Salem, NC |
27101
|
|
(Address of principal executive office) |
(Zip code)
|
Large accelerated filer ☐
|
Accelerated filer ☑
|
Non-accelerated filer ☐
(Do not check if smaller reporting company)
|
Smaller reporting company ☐
|
Page number
|
||
PART 1. Financial Information
|
||
Item 1. |
3
|
|
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2. |
17
|
|
Item 3. |
24
|
|
Item 4. |
24
|
|
PART II. Other Information | ||
Item 1. |
25
|
|
Item 1A. |
25
|
|
Item 2. |
25
|
|
Item 3. |
25
|
|
Item 4. |
25
|
|
Item 5. |
25
|
|
Item 6. |
26
|
|
Signatures |
27
|
March 31,
2016
|
December 31,
2015
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
1,143
|
$
|
1,826
|
||||
Accounts receivable, net
|
14,301
|
11,098
|
||||||
Inventories
|
4,882
|
7,092
|
||||||
Prepaid expenses and other current assets
|
1,276
|
529
|
||||||
Total current assets
|
21,602
|
20,545
|
||||||
Bottles, net
|
3,715
|
3,688
|
||||||
Property and equipment, net
|
33,391
|
31,997
|
||||||
Intangible assets, net
|
8,014
|
8,074
|
||||||
Other assets
|
184
|
183
|
||||||
Total assets
|
$
|
66,906
|
$
|
64,487
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
13,058
|
$
|
11,994
|
||||
Accrued expenses and other current liabilities
|
2,600
|
3,748
|
||||||
Current portion of capital leases and notes payable
|
231
|
172
|
||||||
Total current liabilities
|
15,889
|
15,914
|
||||||
Long-term debt and capital leases, net of current portion and debt issuance costs
|
21,492
|
19,903
|
||||||
Liabilities of disposal group, net of current portion, and other long-term liabilities
|
2,524
|
2,535
|
||||||
Total liabilities
|
39,905
|
38,352
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.001 par value - 10,000 shares authorized,
none issued and outstanding
|
–
|
–
|
||||||
Common stock, $0.001 par value - 70,000 shares authorized,
25,895 and 25,810 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
|
26
|
26
|
||||||
Additional paid-in capital
|
281,126
|
281,476
|
||||||
Common stock warrants
|
7,492
|
7,492
|
||||||
Accumulated deficit
|
(260,416
|
)
|
(261,447
|
)
|
||||
Accumulated other comprehensive loss
|
(1,227
|
)
|
(1,412
|
)
|
||||
Total stockholders’ equity
|
27,001
|
26,135
|
||||||
Total liabilities and stockholders’ equity
|
$
|
66,906
|
$
|
64,487
|
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Net sales
|
$
|
32,296
|
$
|
29,213
|
||||
Operating costs and expenses:
|
||||||||
Cost of sales
|
22,947
|
21,557
|
||||||
Selling, general and administrative expenses
|
5,028
|
4,665
|
||||||
Non-recurring costs
|
207
|
22
|
||||||
Depreciation and amortization
|
2,408
|
2,585
|
||||||
Loss on disposal of property and equipment
|
193
|
64
|
||||||
Total operating costs and expenses
|
30,783
|
28,893
|
||||||
Income from operations
|
1,513
|
320
|
||||||
Interest expense, net
|
471
|
519
|
||||||
Income (loss) from continuing operations
|
1,042
|
(199
|
)
|
|||||
Loss from discontinued operations
|
(11
|
)
|
(38
|
)
|
||||
Net income (loss)
|
$
|
1,031
|
$
|
(237
|
)
|
|||
Basic earnings (loss) per common share:
|
||||||||
Income (loss) from continuing operations
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Loss from discontinued operations
|
(0.00
|
)
|
(0.00
|
)
|
||||
Net income (loss)
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Diluted earnings (loss) per common share:
|
||||||||
Income (loss) from continuing operations
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Loss from discontinued operations
|
(0.00
|
)
|
(0.00
|
)
|
||||
Net income (loss)
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Weighted average shares used in computing earnings (loss) per share:
|
||||||||
Basic
|
26,462
|
24,683
|
||||||
Diluted
|
29,211
|
24,683
|
Three months ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Net income (loss)
|
$
|
1,031
|
$
|
(237
|
)
|
|||
Other comprehensive income (loss):
|
||||||||
Foreign currency translation adjustments, net
|
185
|
(318
|
)
|
|||||
Comprehensive income (loss)
|
$
|
1,216
|
$
|
(555
|
)
|
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
1,031
|
$
|
(237
|
)
|
|||
Less: Loss from discontinued operations
|
(11
|
)
|
(38
|
)
|
||||
Income (loss) from continuing operations
|
1,042
|
(199
|
)
|
|||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,408
|
2,585
|
||||||
Loss on disposal of property and equipment
|
193
|
64
|
||||||
Stock-based compensation expense
|
560
|
635
|
||||||
Non-cash interest expense
|
28
|
28
|
||||||
Realized foreign currency exchange loss and other, net
|
(161
|
)
|
195
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(3,129
|
)
|
(1,861
|
)
|
||||
Inventories
|
2,237
|
974
|
||||||
Prepaid expenses and other assets
|
(743
|
)
|
(284
|
)
|
||||
Accounts payable
|
1,031
|
101
|
||||||
Accrued expenses and other liabilities
|
(751
|
)
|
(355
|
)
|
||||
Net cash provided by operating activities
|
2,715
|
1,883
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(2,938
|
)
|
(1,474
|
)
|
||||
Purchases of bottles, net of disposals
|
(571
|
)
|
(706
|
)
|
||||
Proceeds from the sale of property and equipment
|
3
|
5
|
||||||
Additions to and acquisitions of intangible assets
|
(16
|
)
|
(3
|
)
|
||||
Net cash used in investing activities
|
(3,522
|
)
|
(2,178
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings under Revolving Credit Facility
|
8,600
|
7,500
|
||||||
Payments under Revolving Credit Facility
|
(7,100
|
)
|
(6,800
|
)
|
||||
Note payable and capital lease payments
|
(74
|
)
|
(27
|
)
|
||||
Stock option and employee stock purchase activity, net
|
(1,351
|
)
|
27
|
|||||
Debt issuance costs and other
|
–
|
(6
|
)
|
|||||
Net cash provided by financing activities
|
75
|
694
|
||||||
Cash used in operating activities of discontinued operations
|
(32
|
)
|
(56
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
81
|
(51
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(683
|
)
|
292
|
|||||
Cash and cash equivalents, beginning of year
|
1,826
|
495
|
||||||
Cash and cash equivalents, end of period
|
$
|
1,143
|
$
|
787
|
1. | Description of Business and Significant Accounting Policies |
2. | Discontinued Operations |
3. | Debt and Capital Leases, net of Debt Issuance Costs |
March 31,
2016
|
December 31,
2015
|
|||||||
Revolving Credit Facility, net of debt issuance costs
|
$
|
1,361
|
$
|
(149
|
)
|
|||
Term Notes, net of debt issuance costs
|
19,780
|
19,763
|
||||||
Capital leases
|
582
|
461
|
||||||
21,723
|
20,075
|
|||||||
Less current portion
|
(231
|
)
|
(172
|
)
|
||||
Long-term debt and capital leases, net of current portion and debt issuance costs
|
$
|
21,492
|
$
|
19,903
|
4. | Stock-Based Compensation |
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Stock options
|
$
|
147
|
$
|
111
|
||||
Restricted stock
|
146
|
197
|
||||||
Value Creation Plan
|
254
|
315
|
||||||
Employee Stock Purchase Plan
|
13
|
12
|
||||||
$
|
560
|
$
|
635
|
$24,000 Adjusted
EBITDA Target Award
|
||||
Total fair value
|
$
|
7,730
|
||
Assumptions:
|
||||
March 11, 2016 closing stock price
|
$
|
9.39
|
||
Expected life of awards in years
|
1.7
|
|||
Risk-free interest rate
|
0.7
|
%
|
||
Expected volatility
|
37.5
|
%
|
||
Dividend yield
|
0.0
|
%
|
5. | Commitments and Contingencies |
6. | Income Taxes |
7. | Fair Value Measurements |
• | Level 1 — quoted prices in active markets for identical assets and liabilities. |
• | Level 2 — observable inputs other than quoted prices in active markets for identical assets and liabilities. |
• | Level 3 — unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. |
Total Fair
Value
|
Fair Value
Measurement
Using Level 1
|
|||||||
Current assets:
|
||||||||
Cash equivalents
|
$
|
695
|
$
|
695
|
||||
Total
|
$
|
695
|
$
|
695
|
8. | Earnings (Loss) Per Share |
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Basic:
|
||||||||
Income (loss) from continuing operations
|
$
|
1,042
|
$
|
(199
|
)
|
|||
Loss from discontinued operations
|
(11
|
)
|
(38
|
)
|
||||
Net income (loss)
|
$
|
1,031
|
$
|
(237
|
)
|
|||
Weighted average shares
|
26,462
|
24,683
|
||||||
Basic earnings (loss) per share from continuing operations
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Basic loss per share from discontinued operations
|
(0.00
|
)
|
(0.00
|
)
|
||||
Basic earnings (loss) per share
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Diluted:
|
||||||||
Income (loss) from continuing operations
|
$
|
1,042
|
$
|
(199
|
)
|
|||
Loss from discontinued operations
|
(11
|
)
|
(38
|
)
|
||||
Net income (loss)
|
$
|
1,031
|
$
|
(237
|
)
|
|||
Weighted average shares
|
26,462
|
24,683
|
||||||
Potential shares arising from stock options, restricted stock, warrants and contingently issuable shares under the VCP
|
2,749
|
–
|
||||||
Weighted average shares - diluted
|
29,211
|
24,683
|
||||||
Diluted earnings (loss) per share from continuing operations
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||
Diluted loss per share from discontinued operations
|
(0.00
|
)
|
(0.00
|
)
|
||||
Diluted earnings (loss) per share
|
$
|
0.04
|
$
|
(0.01
|
)
|
9. | Segments |
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Segment net sales
|
||||||||
Water
|
$
|
22,378
|
$
|
20,657
|
||||
Dispensers
|
9,918
|
8,556
|
||||||
$
|
32,296
|
$
|
29,213
|
|||||
Segment income (loss) from operations
|
||||||||
Water
|
$
|
7,730
|
$
|
6,428
|
||||
Dispensers
|
698
|
331
|
||||||
Corporate
|
(4,107
|
)
|
(3,768
|
)
|
||||
Non-recurring costs
|
(207
|
)
|
(22
|
)
|
||||
Depreciation and amortization
|
(2,408
|
)
|
(2,585
|
)
|
||||
Loss on disposal of property and equipment
|
(193
|
)
|
(64
|
)
|
||||
$
|
1,513
|
$
|
320
|
|||||
Depreciation and amortization expense:
|
||||||||
Water
|
$
|
2,283
|
$
|
2,359
|
||||
Dispensers
|
39
|
95
|
||||||
Corporate
|
86
|
131
|
||||||
$
|
2,408
|
$
|
2,585
|
|||||
Capital expenditures:
|
||||||||
Water
|
$
|
3,338
|
$
|
2,142
|
||||
Corporate
|
171
|
38
|
||||||
$
|
3,509
|
$
|
2,180
|
Identifiable assets:
|
At March 31,
2016
|
At December 31,
2015
|
||||||
Water
|
$
|
52,488
|
$
|
50,617
|
||||
Dispensers
|
13,227
|
12,843
|
||||||
Corporate
|
1,191
|
1,027
|
||||||
$
|
66,906
|
$
|
64,487
|
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Consolidated statements of operations data:
|
||||||||
Net sales
|
$
|
32,296
|
$
|
29,213
|
||||
Operating costs and expenses:
|
||||||||
Cost of sales
|
22,947
|
21,557
|
||||||
Selling, general and administrative expenses
|
5,028
|
4,665
|
||||||
Non-recurring costs
|
207
|
22
|
||||||
Depreciation and amortization
|
2,408
|
2,585
|
||||||
Loss on disposal of property and equipment
|
193
|
64
|
||||||
Total operating costs and expenses
|
30,783
|
28,893
|
||||||
Income from operations
|
1,513
|
320
|
||||||
Interest expense, net
|
471
|
519
|
||||||
Income (loss) from continuing operations
|
1,042
|
(199
|
)
|
|||||
Loss from discontinued operations
|
(11
|
)
|
(38
|
)
|
||||
Net income (loss)
|
$
|
1,031
|
$
|
(237
|
)
|
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Consolidated statements of operations data:
|
||||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
||||
Operating costs and expenses:
|
||||||||
Cost of sales
|
71.1
|
73.8
|
||||||
Selling, general and administrative expenses
|
15.6
|
16.0
|
||||||
Non-recurring costs
|
0.5
|
0.1
|
||||||
Depreciation and amortization
|
7.5
|
8.8
|
||||||
Loss on disposal of property and equipment
|
0.6
|
0.2
|
||||||
Total operating costs and expenses
|
95.3
|
98.9
|
||||||
Income from operations
|
4.7
|
1.1
|
||||||
Interest expense, net
|
1.5
|
1.8
|
||||||
Income (loss) from continuing operations
|
3.2
|
(0.7
|
)
|
|||||
Loss from discontinued operations
|
–
|
(0.1
|
)
|
|||||
Net income (loss)
|
3.2
|
%
|
(0.8
|
)%
|
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Segment net sales
|
||||||||
Water
|
$
|
22,378
|
$
|
20,657
|
||||
Dispensers
|
9,918
|
8,556
|
||||||
Total net sales
|
$
|
32,296
|
$
|
29,213
|
||||
Segment income from operations
|
||||||||
Water
|
$
|
7,730
|
$
|
6,428
|
||||
Dispensers
|
698
|
331
|
||||||
Corporate
|
(4,107
|
)
|
(3,768
|
)
|
||||
Non-recurring costs
|
(207
|
)
|
(22
|
)
|
||||
Depreciation and amortization
|
(2,408
|
)
|
(2,585
|
)
|
||||
Loss on disposal of property and equipment
|
(193
|
)
|
(64
|
)
|
||||
$
|
1,513
|
$
|
320
|
Three months ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Net cash provided by operating activities
|
$
|
2.7
|
$
|
1.9
|
||||
Net cash used in investing activities
|
$
|
(3.5
|
)
|
$
|
(2.2
|
)
|
||
Net cash provided by financing activities
|
$
|
0.1
|
$
|
0.7
|
Three Months Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Income (loss) from continuing operations
|
$
|
1,042
|
$
|
(199
|
)
|
|||
Depreciation and amortization
|
2,408
|
2,585
|
||||||
Interest expense, net
|
471
|
519
|
||||||
EBITDA
|
3,921
|
2,905
|
||||||
Non-cash, stock-based compensation expense
|
560
|
635
|
||||||
Non-recurring costs
|
207
|
22
|
||||||
Loss on disposal of property and equipment and other
|
233
|
102
|
||||||
Adjusted EBITDA
|
$
|
4,921
|
$
|
3,664
|
Exhibit
Number
|
Description
|
|
3.1
|
Sixth Amended and Restated Certificate of Incorporation of Primo Water Corporation (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-173554) filed on May 31, 2011)
|
|
3.2
|
Amended and Restated Bylaws of Primo Water Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed November 16, 2010)
|
|
Primo Water Corporation Amended and Restated Value Creation Plan (filed herewith)*
|
||
10.2
|
First Amendment to Note Purchase Agreement dated as of March 7, 2016 by and among the Company, Primo Products, LLC, Primo Direct, LLC, Primo Refill, LLC, Primo Ice, LLC, Primo Refill Canada Corporation, The Prudential Life Insurance Company of America and PICA Hartford Life Insurance Comfort Trust (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K filed March 9, 2016)
|
|
Certification of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
||
Certification of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
||
Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
||
101.INS
|
XBRL Instance Document
(1)
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
(1)
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
(1)
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
(1)
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
(1)
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
(1)
|
(1)
|
Included herewith
|
PRIMO WATER CORPORATION
|
||
(Registrant)
|
||
Date: May 4, 2016
|
By:
|
/s/ Billy D. Prim
|
Billy D. Prim
|
||
Chairman and Chief Executive Officer
|
||
Date: May 4, 2016
|
By:
|
/s/ Mark Castaneda
|
Mark Castaneda
|
||
Chief Financial Officer
|
● | The Company will issue to eligible Participants (as defined below) up to three separate equity/cash awards based on the Company’s achieving targets of at least $15 million, $24 million and $28 million in Adjusted EBITDA for any fiscal year between 2013 and 2019 (including fiscal 2019). Once the Company achieves the $15 million Adjusted EBITDA target level for a given fiscal year, the Adjusted EBITDA target level would increase to $24 million for subsequent fiscal years; and once the Company thereafter achieves the $24 million Adjusted EBITDA target level for a given fiscal year, the Adjusted EBITDA target level would increase to $28 million for subsequent fiscal years. The bonus issuance to the eligible Participants will be (a) 15% for the $15 million Adjusted EBITDA target level, (b) 17.5% for the $24 million Adjusted EBITDA target level and (c) 20% for the $28 million Adjusted EBITDA target level, in each case of the incremental market capitalization appreciation (excluding additional share issuances), with the allocation of the pool among Participants to be recommended by the Company’s CEO and determined and approved by the Company’s Compensation Committee (the “ Compensation Committee ”) in its sole discretion. Market capitalization appreciation would be determined based on (i) the Company’s closing stock price on the later to occur of May 11, 2012 or the third full trading day following the public announcement of financial results for the fiscal year in which the last Adjusted EBITDA threshold was achieved, (ii) the number of shares outstanding on May 11, 2012, and (iii) the Company’s closing stock price on the third full trading day following the public announcement of financial results for the fiscal year for which an award is being made. |
o | Example – $15 million Adjusted EBITDA is attained for the first time in fiscal 2014: |
5/11/12 Share price at start
|
|
$
|
1.39
|
|
3/17/15 Achieve $15 million Adjusted EBITDA for fiscal 2014
|
|
|
|
|
3/20/15 (closing share price on the third full trading day after announcing results)
|
|
$
|
3.00 (ex)
|
|
Number of shares outstanding at 5/11/12
|
|
|
23,749,212
|
|
Value created ($3.00 - $1.39 x shares) (millions)
|
|
$
|
38.2
|
|
15% bonus pool of value created (millions)
|
|
$
|
5.7
|
|
Bonus pool to be split among Participants
|
|
|
|
|
o | Example – Following attainment of $15 million Adjusted EBITDA for fiscal 2014, $24 million of Adjusted EBITDA is attained for the first time in fiscal 2016: |
Share price at start (since last incentive)
|
|
$
|
3.00
|
|
3/16/17 Achieve $24 million Adjusted EBITDA for fiscal 2016
|
|
|
|
|
3/21/17 (closing share price on the third full trading day after announcing results)
|
|
$
|
5.00 (ex)
|
|
Number of shares outstanding at 5/11/12
|
|
|
23,749,212
|
|
Incremental Value created ($5.00 - $3.00 x shares) (millions)
|
|
$
|
47.5
|
|
17.5% bonus pool of value created (millions)
|
|
$
|
8.3
|
|
Bonus pool to be split among Participants
|
|
|
|
|
o | Example – Following attainment of $24 million Adjusted EBITDA for fiscal 2016, $28 million of Adjusted EBITDA is attained for the first time in fiscal 2018: |
Share price at start (since last incentive)
|
|
$
|
5.00
|
|
3/16/19 Achieve $28 million Adjusted EBITDA for fiscal 2018
|
|
|
|
|
3/19/19 (closing share price on the third full trading day after announcing results)
|
|
$
|
8.00 (ex)
|
|
Number of shares outstanding at 5/11/12
|
|
|
23,749,212
|
|
Incremental Value created ($8.00 - $5.00 x shares) (millions)
|
|
$
|
71.3
|
|
20% bonus pool of value created (millions)
|
|
$
|
14.3
|
|
Bonus pool to be split among Participants
|
|
|
|
|
o | Example – $24 million Adjusted EBITDA is attained for the first time in fiscal 2015 (both the $15 million Adjusted EBITDA and $24 million EBITDA levels were attained in 2015 – no prior award under the Plan has been issued) |
5/11/12 Share price at start
|
|
$
|
1.39
|
|
3/17/16 Achieve $24 million Adjusted EBITDA for fiscal 2015
|
|
|
|
|
3/22/16 (closing share price on the third full trading day after announcing results)
|
|
$
|
6.00 (ex)
|
|
Number of shares outstanding at 5/11/12
|
|
|
23,749,212
|
|
Incremental Value created ($6.00 - $1.39 x shares) (millions)
|
|
$
|
109.5
|
|
17.5% bonus pool of value created (millions)
|
|
$
|
19.2
|
|
Bonus pool to be split among Participants
|
|
|
|
|
● | Award pool will be calculated effective at the market close on the third full trading day after public announcement of year-end financial results (after completion of the audited financial statements), upon attaining the targeted Adjusted EBITDA (as defined in the Company’s then current credit agreements). |
● | Awards will be paid as soon as practicable following the time the award pool is calculated, but in all events (except as provided below under “Change in Control”) during the year following the year of attainment of the applicable Adjusted EBITDA target. |
● | Awards may be paid in cash and/or equity in the sole discretion of the Compensation Committee. No fractional shares will be issued pursuant to this Plan. Any fractional shares resulting from a calculation under this Plan will be rounded down to the nearest whole share. |
● | Award is dependent on the Company being in compliance (including via a waiver) with all applicable loan agreements, as such may be amended. |
● | The Compensation Committee shall review and approve, in its sole discretion, individual awards under this Plan promptly after the award pool is established, as described above. |
● | All equity awards made under this Plan shall be valued for such purpose at the closing price on the third full trading day following the public announcement of the year-end financial results and issued under the Primo Water Corporation 2010 Omnibus Long-Term Incentive Plan (or any successor plan) (the “Omnibus Plan”) or, if so determined by the Compensation Committee, under another equity compensation plan maintained by the Company. |
● | A Participant who leaves the Company voluntarily, is dismissed for Cause (as defined in the Omnibus Plan), or is terminated by the Company shall forfeit all rights to his/her current-year award. |
● | A Participant who separates employment because of death, Disability (as defined in the Omnibus Plan), or retirement shall remain eligible for a current-year award (payable at the same time as awards for such year are paid to other Participants). In the event of a Participant’s retirement after June 30 of a given year, the Compensation Committee may in its discretion award the Participant a full current-year award based on the Company’s progress toward the applicable Adjusted EBITDA target at the time of such retirement. For example, if the retirement occurs 75% of the way through a given year and if the Company has earned 75% of a certain Adjusted EBITDA target on the date of such retirement, the Compensation Committee may pay out a full award, in its discretion, in connection therewith. In the case of a Participant’s death, any payments shall be made to the participant’s estate. |
● | In the event of a Change in Control (as defined in the Omnibus Plan) that occurs on or after June 30 of a given year, the Company shall, upon the Change in Control, make a full current-year award based on the Company’s successful progress toward the applicable Adjusted EBITDA target at the time of such Change in Control. For example, if a Change in Control occurs 75% of the way through a given year and if the Company has earned 75% of a certain Adjusted EBITDA target on the date of such Change in Control, the Company shall pay out a full award that would otherwise be payable in connection with the achievement of such Adjusted EBITDA target in connection with the Change in Control. |
● | “Participant” shall mean any employee eligible to participate in this Plan as determined by Compensation Committee. |
● | The Company’s Board of Directors (the “Board”) may add or remove employees in this Plan at any time without prior notice. |
● | Nothing contained in this Plan shall give any employee the right to be retained in the employment of the Company or affect the right of the Company to relocate, change the position of, or dismiss any employee. |
● | The Compensation Committee reserves the right, in its sole discretion, to make adjustments to this Plan or to individual awards when it believes the integrity, purpose and fairness of this Plan would be better served. Any decisions of the Board or the Compensation Committee shall be conclusive and binding on all parties. |
● | It is intended that this Plan be ongoing, however, it may be necessary for the Board to amend or terminate this Plan at any time without prior notification. |
● | This Plan will be in effect starting January 1, 2012 and will automatically terminate upon the earliest of (i) any payout based on the Company’s attaining $28 million in Adjusted EBITDA for any fiscal year including or prior to 2019 (which assumes previous payouts based on the Company’s attaining $24 million and $15 million in Adjusted EBITDA for previous fiscal years); (ii) any payout based on the Company’s achieving $24 million or more in Adjusted EBITDA for fiscal 2019 (which assumes a previous payout based on the Company’s attaining $15 million in Adjusted EBITDA for a previous fiscal year); (iii) any payout based on the Company’s achieving $15 million or more in Adjusted EBITDA for fiscal 2019, assuming there had been no previous payout under this Plan, or (iv) a final determination that the Company has not achieved the then-applicable Adjusted EBITDA target level under this Plan for fiscal 2019. |
● | To the extent the Company is subject to any tax deduction limits under Section 162(m) of the Internal Revenue Code, the compensation under this Plan is intended to qualify for the “performance-based compensation” exception under Section 162(m) and will be administered and interpreted accordingly. |
● | To the extent applicable, this Plan shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986. Notwithstanding any provision of this Plan to the contrary, in the event that the Company determines in good faith that any compensation or benefits payable under this Plan may not be either exempt from or compliant with Section 409A, the Company shall adopt such amendments to this Plan or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate (i) to preserve the intended tax treatment of the compensation and benefits payable hereunder, to preserve the economic benefits of such compensation and benefits, and/or to avoid less favorable accounting or tax consequences for the Company and/or (ii) to exempt the compensation and benefits payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder; provided, however, that this provision does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify any Participant for any failure to do so. |
● | The Company shall have the authority, duty, and power to withhold from any award under this Plan the amount of any applicable federal, state, and local tax required to be withheld by the Company pursuant to any applicable laws or regulations. |
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Primo Water Corporation
;
|
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Billy D. Prim
|
||
Billy D. Prim
|
||
Chairman and Chief Executive Officer
|
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Mark Castaneda
|
||
Mark Castaneda
|
||
Chief Financial Officer
|
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Billy D. Prim
|
/s/ Mark Castaneda
|
|
Billy D. Prim
|
Mark Castaneda
|
|
Chairman and Chief Executive Officer
|
Chief Financial Officer
|
|
May 4, 2016
|
May 4, 2016
|