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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-1489747
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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395 Oyster Point Boulevard, Suite 415
South San Francisco, CA
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94080
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
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ITEM 1.
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FINANCIAL STATEMENTS
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September 30,
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December 31,
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2016
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2015
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Assets
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Current assets:
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Cash and cash equivalents
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$
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22.9
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$
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12.5
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Restricted cash
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8.1
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8.5
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Accounts receivable, net of allowance for doubtful accounts of $7.4 and $10.9 as of September 30, 2016 and December 31, 2015, respectively
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356.3
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272.7
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Other receivables, net
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108.9
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69.4
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Inventories, net (Note 4)
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495.6
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407.4
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Deposits and prepayments
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92.8
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65.0
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Deferred income taxes
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1.8
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1.8
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Total current assets
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1,086.4
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837.3
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Property and equipment, net
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191.2
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159.5
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Goodwill
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29.2
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22.9
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Other intangible assets, net
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47.8
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29.5
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Other non-current assets, net
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29.2
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28.1
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Total assets
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$
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1,383.8
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$
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1,077.3
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$
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104.5
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$
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129.6
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Book overdrafts
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43.0
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29.2
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Cigarette and tobacco taxes payable
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231.8
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193.6
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Accrued liabilities
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145.9
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106.9
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Deferred income taxes
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0.2
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0.3
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Total current liabilities
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525.4
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459.6
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Long-term debt (Note 5)
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274.1
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60.4
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Deferred income taxes
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22.2
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18.6
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Other long-term liabilities
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11.6
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10.6
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Claims liabilities
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28.1
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26.6
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Pension liabilities
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6.1
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7.5
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Total liabilities
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867.5
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583.3
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Contingencies (Note 6)
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Stockholders’ equity:
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Common stock, $0.01 par value (100,000,000 shares authorized, 52,221,054 and 51,953,354 shares issued; 46,196,244 and 46,116,670 shares outstanding at September 30, 2016 and December 31, 2015, respectively)
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0.5
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0.3
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Additional paid-in capital
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274.7
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271.8
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Treasury stock at cost (6,024,810 and 5,836,684 shares of common stock at September 30, 2016 and December 31, 2015, respectively)
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(69.0
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)
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(61.8
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)
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Retained earnings
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324.3
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300.0
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Accumulated other comprehensive loss
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(14.2
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)
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(16.3
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)
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Total stockholders’ equity
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516.3
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494.0
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Total liabilities and stockholders’ equity
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$
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1,383.8
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$
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1,077.3
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2016
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2015
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2016
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2015
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Net sales
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$
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3,993.9
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$
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2,991.6
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$
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10,692.6
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$
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8,254.3
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Cost of goods sold
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3,795.0
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2,820.0
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10,154.7
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7,786.5
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Gross profit
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198.9
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171.6
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537.9
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467.8
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Warehousing and distribution expenses
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117.4
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92.8
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315.0
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260.9
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Selling, general and administrative expenses
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57.6
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52.8
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160.0
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147.6
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Amortization of intangible assets
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1.7
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0.6
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3.8
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1.8
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Total operating expenses
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176.7
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146.2
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478.8
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410.3
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Income from operations
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22.2
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25.4
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59.1
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57.5
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Interest expense
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(1.5
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(0.6
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(3.3
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(1.9
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Interest income
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—
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0.1
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0.1
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0.4
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Foreign currency transaction losses , net
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(0.5
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(0.7
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(0.1
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(1.3
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Income before income taxes
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20.2
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24.2
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55.8
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54.7
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Provision for income taxes (Note 7)
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(6.7
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(9.1
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(20.3
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(20.9
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Net income
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$
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13.5
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$
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15.1
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$
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35.5
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$
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33.8
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Basic net income per common share (Note 9)
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$
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0.29
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$
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0.33
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$
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0.77
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$
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0.73
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Diluted net income per common share (Note 9)
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$
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0.29
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$
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0.33
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$
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0.76
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$
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0.73
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Basic weighted-average shares (Note 9)
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46.3
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46.2
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46.3
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46.2
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Diluted weighted-average shares (Note 9)
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46.5
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46.6
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46.5
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46.6
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Dividends declared and paid per common share (Note 11)
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$
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0.08
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$
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0.07
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$
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0.24
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$
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0.20
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
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September 30,
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||||||||||||
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2016
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2015
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2016
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2015
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Net income
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$
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13.5
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$
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15.1
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$
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35.5
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$
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33.8
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Other comprehensive income (loss), net of tax:
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Defined benefit plan adjustments
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0.3
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(0.8
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)
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0.5
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(0.7
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Foreign currency translation (loss) gain
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(0.2
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(1.9
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)
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1.6
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(4.1
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)
|
||||
Other comprehensive income (loss), net of tax
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0.1
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(2.7
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)
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2.1
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(4.8
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)
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||||
Comprehensive income
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$
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13.6
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$
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12.4
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$
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37.6
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$
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29.0
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Nine Months Ended
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||||||
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September 30,
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||||||
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2016
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2015
|
||||
Cash flows from operating activities:
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|
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Net income
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$
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35.5
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$
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33.8
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Adjustments to reconcile net income to net cash (used in) provided by operating activities:
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|
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LIFO and inventory provisions
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10.0
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9.2
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Amortization of debt issuance costs
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0.3
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0.2
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Stock-based compensation expense
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5.5
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6.7
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Bad debt expense, net
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1.6
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1.1
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Depreciation and amortization
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31.2
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28.3
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|
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Foreign currency transaction losses, net
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0.1
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1.3
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|
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Deferred income taxes
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3.6
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(0.3
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)
|
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Pension settlement expenses
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1.2
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0.9
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|
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Changes in operating assets and liabilities:
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|
||||
Accounts receivable, net
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(48.6
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)
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(33.3
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)
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Other receivables, net
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(39.2
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)
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(3.3
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)
|
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Inventories, net
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(74.3
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)
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53.9
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|
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Deposits, prepayments and other non-current assets
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(31.6
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)
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(18.0
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)
|
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Accounts payable
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(25.9
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)
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22.3
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|
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Cigarette and tobacco taxes payable
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36.2
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(10.2
|
)
|
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Pension, claims, accrued and other long-term liabilities
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39.3
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15.3
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|
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Excess tax deductions associated with stock-based compensation
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(2.8
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)
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(2.0
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)
|
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Net cash (used in) provided by operating activities
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(57.9
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)
|
|
105.9
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|
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Cash flows from investing activities:
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|
||||
Acquisition of business, net of cash acquired
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(88.4
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)
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(8.0
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)
|
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Change in restricted cash
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0.5
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3.3
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Additions to property and equipment, net
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(44.5
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)
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(24.7
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)
|
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Capitalization of software and related development costs
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(5.1
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)
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(7.5
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)
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Proceeds from sale of fixed assets
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—
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0.3
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Net cash used in investing activities
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(137.5
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)
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(36.6
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)
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Cash flows from financing activities:
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Borrowings under revolving credit facility
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1,164.8
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718.5
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Repayments under revolving credit facility
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(949.9
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)
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(768.7
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)
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Dividends paid
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(11.3
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)
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(9.1
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)
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Payments on capital leases
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(1.8
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)
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(1.6
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)
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Payments of financing costs
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(1.5
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)
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(0.4
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)
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Repurchases of common stock
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(7.2
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)
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(9.0
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)
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Proceeds from exercise of common stock options
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0.3
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0.3
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Tax withholdings related to net share settlements of restricted stock units
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(5.4
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)
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(3.2
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)
|
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Excess tax deductions associated with stock-based compensation
|
2.8
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2.0
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Increase (decrease) in book overdrafts
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13.7
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(1.1
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)
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Net cash provided by (used in) financing activities
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204.5
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(72.3
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)
|
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Effects of changes in foreign exchange rates
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1.3
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(2.0
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)
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Change in cash and cash equivalents
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10.4
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(5.0
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)
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Cash and cash equivalents, beginning of period
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12.5
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14.4
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Cash and cash equivalents, end of period
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$
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22.9
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$
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9.4
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Supplemental disclosures:
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Cash paid during the period for:
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Income taxes, net
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$
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14.4
|
|
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$
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21.1
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Interest
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$
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2.3
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$
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1.0
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Non-cash capital lease obligations incurred
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$
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0.2
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$
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5.2
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Unpaid property and equipment purchases included in accrued liabilities
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$
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1.3
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|
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$
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1.5
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1.
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Summary of Company Information
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2.
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Basis of Presentation and Principles of Consolidation
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3.
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Acquisition
|
|
June 6, 2016
|
||
Accounts receivable
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$
|
35.5
|
|
Inventory
|
20.9
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|
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Prepaid expenses / other assets
|
0.5
|
|
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Property, plant and equipment
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10.4
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Goodwill
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6.3
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Intangible assets
|
17.2
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|
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Less : Other current liabilities
|
2.4
|
|
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Total consideration
|
$
|
88.4
|
|
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Fair Value in Millions
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Useful Life in Years
|
||
Customer relationships
|
$
|
14.1
|
|
10 - 12
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Trade names
|
1.0
|
|
1 - 2
|
|
Non-competition agreements
|
2.1
|
|
5
|
|
Total intangible assets
|
$
|
17.2
|
|
|
4.
|
Inventories
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Inventories at FIFO, net of reserves
|
$
|
622.8
|
|
|
$
|
524.6
|
|
Less: LIFO reserve
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(127.2
|
)
|
|
(117.2
|
)
|
||
Total inventories at LIFO, net of reserves
|
$
|
495.6
|
|
|
$
|
407.4
|
|
5.
|
Long-term Debt
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Amounts borrowed
|
$
|
262.0
|
|
|
$
|
47.0
|
|
Obligations under capital leases
|
12.1
|
|
|
13.4
|
|
||
Total long-term debt
|
$
|
274.1
|
|
|
$
|
60.4
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Amounts borrowed
|
$
|
262.0
|
|
|
$
|
47.0
|
|
Outstanding letters of credit and other commitments
|
37.3
|
|
|
18.5
|
|
||
Amounts available to borrow
(1)
|
150.7
|
|
|
123.9
|
|
(1)
|
Excluding
$150
million expansion feature.
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6.
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Contingencies
|
7.
|
Income Taxes
|
8.
|
Employee Benefit Plans
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
PENSION BENEFITS COSTS
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
0.9
|
|
|
$
|
1.3
|
|
Expected return on plan assets
|
(0.4
|
)
|
|
(0.5
|
)
|
|
(1.4
|
)
|
|
(1.5
|
)
|
||||
Amortization of net actuarial loss
|
0.1
|
|
|
0.2
|
|
|
0.5
|
|
|
0.5
|
|
||||
Settlement charge
|
1.2
|
|
|
0.9
|
|
|
1.2
|
|
|
0.9
|
|
||||
Total pension expense
|
$
|
1.2
|
|
|
$
|
1.1
|
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
9.
|
Earnings Per Share
|
|
Three Months Ended September 30,
|
||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||
|
Net Income
|
|
Weighted-Average
Shares Outstanding |
|
Net Income Per Common Share
|
|
Net Income
|
|
Weighted-Average
Shares Outstanding |
|
Net Income Per Common Share
|
||||||||||
Basic EPS
|
$
|
13.5
|
|
|
46.3
|
|
|
$
|
0.29
|
|
|
$
|
15.1
|
|
|
46.2
|
|
|
$
|
0.33
|
|
Effect of dilutive common share equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restricted stock units
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Performance shares
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Diluted EPS
|
$
|
13.5
|
|
|
46.5
|
|
|
$
|
0.29
|
|
|
$
|
15.1
|
|
|
46.6
|
|
|
$
|
0.33
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||
|
Net Income
|
|
Weighted-Average
Shares
Outstanding
|
|
Net Income Per Common Share
|
|
Net Income
|
|
Weighted-Average
Shares Outstanding |
|
Net Income Per Common Share
|
||||||||||
Basic EPS
|
$
|
35.5
|
|
|
46.3
|
|
|
$
|
0.77
|
|
|
$
|
33.8
|
|
|
46.2
|
|
|
$
|
0.73
|
|
Effect of dilutive common share equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restricted stock units
|
—
|
|
|
0.1
|
|
|
(0.01
|
)
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Performance shares
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Diluted EPS
|
$
|
35.5
|
|
|
46.5
|
|
|
$
|
0.76
|
|
|
$
|
33.8
|
|
|
46.6
|
|
|
$
|
0.73
|
|
10.
|
Stock-based Compensation Plans
|
11.
|
Stockholders’ Equity
|
Declaration Date
|
|
Dividends Per Share
|
|
Record Date
|
|
Cash Payment Amount
|
|
Payment Date
|
February 24, 2016
|
|
$0.08
|
|
March 11, 2016
|
|
$3.8
|
|
March 28, 2016
|
May 9, 2016
|
|
$0.08
|
|
May 25, 2016
|
|
$3.7
|
|
June 15, 2016
|
August 8, 2016
|
|
$0.08
|
|
August 24, 2016
|
|
$3.8
|
|
September 15, 2016
|
November 4, 2016
|
|
$0.09
|
|
November 23, 2016
|
|
N/A
(1)
|
|
December 15, 2016
|
(1)
|
Amount will be determined based on common stock outstanding as of the record date.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Number of shares repurchased
|
99,210
|
|
|
99,022
|
|
|
188,126
|
|
|
296,838
|
|
||||
Average price per share
|
$
|
37.77
|
|
|
$
|
30.30
|
|
|
$
|
38.52
|
|
|
$
|
30.32
|
|
Total repurchase costs
|
$
|
3.7
|
|
|
$
|
3.0
|
|
|
$
|
7.2
|
|
|
$
|
9.0
|
|
12.
|
Segment and Geographic Information
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
3,591.0
|
|
|
$
|
2,657.4
|
|
|
$
|
9,634.3
|
|
|
$
|
7,312.7
|
|
Canada
|
387.7
|
|
|
323.0
|
|
|
1,030.2
|
|
|
914.9
|
|
||||
Corporate
(1)
|
15.2
|
|
|
11.2
|
|
|
28.1
|
|
|
26.7
|
|
||||
Total
|
$
|
3,993.9
|
|
|
$
|
2,991.6
|
|
|
$
|
10,692.6
|
|
|
$
|
8,254.3
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes:
|
|
|
|
|
|
|
|
||||||||
United States
(2)
|
$
|
24.8
|
|
|
$
|
25.5
|
|
|
$
|
59.1
|
|
|
$
|
54.2
|
|
Canada
|
2.3
|
|
|
1.1
|
|
|
3.4
|
|
|
0.5
|
|
||||
Corporate
(3)
|
(6.9
|
)
|
|
(2.4
|
)
|
|
(6.7
|
)
|
|
—
|
|
||||
Total
|
$
|
20.2
|
|
|
$
|
24.2
|
|
|
$
|
55.8
|
|
|
$
|
54.7
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
9.9
|
|
|
$
|
9.0
|
|
|
$
|
29.7
|
|
|
$
|
25.8
|
|
Canada
|
0.2
|
|
|
0.2
|
|
|
0.7
|
|
|
0.6
|
|
||||
Corporate
(4)
|
(8.6
|
)
|
|
(8.6
|
)
|
|
(27.1
|
)
|
|
(24.5
|
)
|
||||
Total
|
$
|
1.5
|
|
|
$
|
0.6
|
|
|
$
|
3.3
|
|
|
$
|
1.9
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
7.7
|
|
|
$
|
7.5
|
|
|
$
|
22.5
|
|
|
$
|
21.7
|
|
Canada
|
0.7
|
|
|
0.6
|
|
|
1.9
|
|
|
1.9
|
|
||||
Corporate
(5)
|
3.0
|
|
|
1.8
|
|
|
6.8
|
|
|
4.7
|
|
||||
Total
|
$
|
11.4
|
|
|
$
|
9.9
|
|
|
$
|
31.2
|
|
|
$
|
28.3
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
21.1
|
|
|
$
|
10.0
|
|
|
$
|
42.9
|
|
|
$
|
23.9
|
|
Canada
|
0.6
|
|
|
0.3
|
|
|
1.6
|
|
|
0.8
|
|
||||
Total
|
$
|
21.7
|
|
|
$
|
10.3
|
|
|
$
|
44.5
|
|
|
$
|
24.7
|
|
(1)
|
Consists primarily of external sales made by the Company’s consolidating warehouses, management service fee revenue, allowance for sales returns and certain other sales adjustments.
|
(3)
|
Consists primarily of expenses and other income, such as corporate incentives and salaries, LIFO expense, health care costs, insurance and workers’ compensation adjustments, elimination of overhead allocations and foreign exchange gains or losses.
|
(4)
|
Consists primarily of intercompany eliminations for interest.
|
(5)
|
Consists primarily of depreciation for the consolidation centers and amortization of intangible assets.
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Identifiable assets:
|
|
|
|
||||
United States
|
$
|
1,273.1
|
|
|
$
|
981.4
|
|
Canada
|
110.7
|
|
|
95.9
|
|
||
Total
|
$
|
1,383.8
|
|
|
$
|
1,077.3
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Product Category
|
Net Sales
|
|
Net Sales
|
|
Net Sales
|
|
Net Sales
|
||||||||
Cigarettes
|
$
|
2,855.3
|
|
|
$
|
2,049.6
|
|
|
$
|
7,601.0
|
|
|
$
|
5,594.0
|
|
Food
|
387.5
|
|
|
336.5
|
|
|
1,047.2
|
|
|
940.7
|
|
||||
Fresh
|
106.4
|
|
|
91.6
|
|
|
289.2
|
|
|
250.0
|
|
||||
Candy
|
165.6
|
|
|
145.1
|
|
|
465.9
|
|
|
422.5
|
|
||||
Other tobacco products
|
306.7
|
|
|
229.9
|
|
|
829.2
|
|
|
651.0
|
|
||||
Health, beauty & general
|
118.0
|
|
|
91.7
|
|
|
320.5
|
|
|
271.8
|
|
||||
Beverages
|
53.3
|
|
|
46.6
|
|
|
137.1
|
|
|
122.9
|
|
||||
Equipment/other
|
1.1
|
|
|
0.6
|
|
|
2.5
|
|
|
1.4
|
|
||||
Total food/non-food products
|
1,138.6
|
|
|
942.0
|
|
|
3,091.6
|
|
|
2,660.3
|
|
||||
Total net sales
|
$
|
3,993.9
|
|
|
$
|
2,991.6
|
|
|
$
|
10,692.6
|
|
|
$
|
8,254.3
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(1)
|
Adjusted EBITDA is a non-GAAP measure and should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Adjusted EBITDA is equal to net income adding back net interest expense, provision for income taxes, depreciation and amortization, LIFO expense, stock-based compensation expense and net foreign currency transaction gains or losses. See the reconciliation of Adjusted EBITDA to net income below and in "Non-GAAP Financial Information".
|
•
|
In June 2016, we acquired substantially all of the assets of Pine State Convenience, a division of Pine State Trading Company, located in Gardiner, Maine, for cash consideration of approximately $88 million. The Company has incurred approximately $1.9 million in start-up and due diligence costs in 2016 and expects to incur another $1.5 million in integration costs in 2017. Annualized sales for the acquired business are expected to be approximately $1 billion.
|
•
|
In October 2015, we signed a five year agreement with Murphy U.S.A. to be the primary wholesale distributor to over 1,350 stores located in 24 states across the Southwest, Southeast and Midwest United States. Services under this contract began in the first quarter of 2016 and have created efficiencies and a strategic supply chain relationship for Murphy U.S.A.
|
•
|
In October 2015, we signed a five year supply agreement with 7-Eleven, Inc. to service approximately 900 stores in three western regions. We began servicing 7-Eleven in October 2016 and Core-Mark will be the primary wholesale distributor delivering a wide range of products to these stores out of three of our divisions - Las Vegas, NV, Salt Lake City, UT and Sacramento, CA.
|
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||
|
|
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||
|
|
Increase (Decrease)
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
||||||||||
Net sales
|
|
$
|
1,002.3
|
|
|
$
|
3,993.9
|
|
|
100.0
|
%
|
|
—
|
%
|
|
$
|
2,991.6
|
|
|
100.0
|
%
|
|
—
|
%
|
Net sales — Cigarettes
|
|
805.7
|
|
|
2,855.3
|
|
|
71.5
|
|
|
66.2
|
|
|
2,049.6
|
|
|
68.5
|
|
|
63.1
|
|
|||
Net sales — Food/non-food
|
|
196.6
|
|
|
1,138.6
|
|
|
28.5
|
|
|
33.8
|
|
|
942.0
|
|
|
31.5
|
|
|
36.9
|
|
|||
Net sales, less excise taxes
(2)
|
|
730.3
|
|
|
3,114.8
|
|
|
78.0
|
|
|
100.0
|
|
|
2,384.5
|
|
|
79.7
|
|
|
100.0
|
|
|||
Gross profit
(3)
|
|
27.3
|
|
|
198.9
|
|
|
5.0
|
|
|
6.4
|
|
|
171.6
|
|
|
5.7
|
|
|
7.2
|
|
|||
Warehousing and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
distribution expenses
|
|
24.6
|
|
|
117.4
|
|
|
2.9
|
|
|
3.8
|
|
|
92.8
|
|
|
3.1
|
|
|
3.9
|
|
|||
Selling, general and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
administrative expenses
|
|
4.8
|
|
|
57.6
|
|
|
1.4
|
|
|
1.8
|
|
|
52.8
|
|
|
1.8
|
|
|
2.2
|
|
|||
Amortization of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
intangible assets
|
|
1.1
|
|
|
1.7
|
|
|
—
|
|
|
0.1
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|||
Income from operations
(4)
|
|
(3.2
|
)
|
|
22.2
|
|
|
0.6
|
|
|
0.7
|
|
|
25.4
|
|
|
0.8
|
|
|
1.1
|
|
|||
Interest expense
|
|
0.9
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Interest income
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
gains (losses), net
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|||
Income before taxes
|
|
(4.0
|
)
|
|
20.2
|
|
|
0.5
|
|
|
0.6
|
|
|
24.2
|
|
|
0.8
|
|
|
1.0
|
|
|||
Net income
|
|
(1.6
|
)
|
|
13.5
|
|
|
0.3
|
|
|
0.4
|
|
|
15.1
|
|
|
0.5
|
|
|
0.6
|
|
|||
Adjusted EBITDA
(5)
|
|
(2.1
|
)
|
|
39.2
|
|
|
1.0
|
|
|
1.3
|
|
|
41.3
|
|
|
1.4
|
|
|
1.7
|
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
Net sales, less excise taxes is a non-GAAP financial measure, which we provide to separate the increase in sales due to product sales growth and increases in state, local and provincial excise taxes, which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the taxes on to us as part of the product cost and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage may be reduced; however, we do not expect increases in excise taxes to negatively impact gross profit per carton (see the reconciliation of net sales to net sales less excise taxes in “Comparison of Sales and Gross Profit by Product Category”).
|
(3)
|
Gross profit may not be comparable to those of other entities because warehousing and distribution expenses are not included as a component of our cost of goods sold.
|
(4)
|
Income from operations for the three months ended September 30, 2015 includes cigarette tax stamp inventory holding gains in the U.S. of $8.3 million and associated operating costs of approximately $0.4 million, resulting from the increase in the excise tax rates of certain jurisdictions.
|
(5)
|
Adjusted EBITDA is a non-GAAP financial measure and should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP (See the reconciliation of Adjusted EBITDA to net income below and in "Non-GAAP Financial Information").
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase
|
|||||||||
Product Category
|
Net Sales
|
|
Net Sales
|
|
Amounts
|
|
Percentage
|
|||||||
Food
|
$
|
387.5
|
|
|
$
|
336.5
|
|
|
$
|
51.0
|
|
|
15.2
|
%
|
Fresh
|
106.4
|
|
|
91.6
|
|
|
14.8
|
|
|
16.2
|
%
|
|||
Candy
|
165.6
|
|
|
145.1
|
|
|
20.5
|
|
|
14.1
|
%
|
|||
OTP
|
306.7
|
|
|
229.9
|
|
|
76.8
|
|
|
33.4
|
%
|
|||
Health, beauty & general
|
118.0
|
|
|
91.7
|
|
|
26.3
|
|
|
28.7
|
%
|
|||
Beverages
|
53.3
|
|
|
46.6
|
|
|
6.7
|
|
|
14.4
|
%
|
|||
Equipment/other
|
1.1
|
|
|
0.6
|
|
|
0.5
|
|
|
NA
|
|
|||
Total Food/Non-food Products
|
$
|
1,138.6
|
|
|
$
|
942.0
|
|
|
$
|
196.6
|
|
|
20.9
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||
|
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||
|
Increase (Decrease)
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
||||||||||
Net sales
|
$
|
1,002.3
|
|
|
$
|
3,993.9
|
|
|
100.0
|
%
|
|
—
|
%
|
|
$
|
2,991.6
|
|
|
100.0
|
%
|
|
—
|
%
|
Net sales, less excise taxes
(2)
|
730.3
|
|
|
3,114.8
|
|
|
78.0
|
|
|
100.0
|
|
|
2,384.5
|
|
|
79.7
|
|
|
100.0
|
|
|||
Components of gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cigarette inventory holding gains
(3)
|
$
|
(0.2
|
)
|
|
$
|
0.4
|
|
|
0.01
|
%
|
|
0.01
|
%
|
|
$
|
0.6
|
|
|
0.02
|
%
|
|
0.03
|
%
|
Cigarette tax stamp inventory holding gains
(4)
|
(8.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.3
|
|
|
0.28
|
|
|
0.35
|
|
|||
LIFO expense
|
0.4
|
|
|
(3.7
|
)
|
|
(0.09
|
)
|
|
(0.12
|
)
|
|
(3.3
|
)
|
|
(0.11
|
)
|
|
(0.14
|
)
|
|||
Remaining gross profit
(5)
|
36.2
|
|
|
202.2
|
|
|
5.06
|
|
|
6.49
|
|
|
166.0
|
|
|
5.55
|
|
|
6.96
|
|
|||
Gross profit
|
$
|
27.3
|
|
|
$
|
198.9
|
|
|
4.98
|
%
|
|
6.38
|
%
|
|
$
|
171.6
|
|
|
5.74
|
%
|
|
7.20
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
Net sales, less excise taxes is a non-GAAP financial measure, which we provide to separate the increase in sales due to product sales growth and increases in state, local and provincial excise taxes, which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the taxes on to us as part of the product cost and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage may be reduced; however, we do not expect increases in excise taxes to negatively impact gross profit per carton (see the reconciliation of net sales to net sales less excise taxes in “Comparison of Sales and Gross Profit by Product Category”).
|
(3)
|
For 2016,
$0.1 million
of the cigarette inventory holding gains were attributable to the U.S. and
$0.3 million
to Canada. For 2015,
$0.6 million
were attributable to Canada.
|
(4)
|
In the
third
quarter of 2015, we recognized cigarette tax stamp inventory holding gains in the U.S. of
$8.3 million
, resulting from the increase in the excise tax rates of certain jurisdictions.
|
(5)
|
Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette and candy inventory holding gains and other items that significantly affect the comparability of gross profit.
|
|
|
|
|
Nine Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||
|
|
Increase (Decrease)
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
||||||||||
Net sales
|
|
$
|
2,438.3
|
|
|
$
|
10,692.6
|
|
|
100.0
|
%
|
|
—
|
%
|
|
$
|
8,254.3
|
|
|
100.0
|
%
|
|
—
|
%
|
Net sales — Cigarettes
|
|
2,007.0
|
|
|
7,601.0
|
|
|
71.1
|
|
|
66.2
|
|
|
5,594.0
|
|
|
67.8
|
|
|
62.4
|
|
|||
Net sales — Food/non-food
|
|
431.3
|
|
|
3,091.6
|
|
|
28.9
|
|
|
33.8
|
|
|
2,660.3
|
|
|
32.2
|
|
|
37.6
|
|
|||
Net sales, less excise taxes
(2)
|
|
1,876.8
|
|
|
8,486.0
|
|
|
79.4
|
|
|
100.0
|
|
|
6,609.2
|
|
|
80.1
|
|
|
100.0
|
|
|||
Gross profit
(3)
|
|
70.1
|
|
|
537.9
|
|
|
5.0
|
|
|
6.3
|
|
|
467.8
|
|
|
5.7
|
|
|
7.1
|
|
|||
Warehousing and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
distribution expenses
|
|
54.1
|
|
|
315.0
|
|
|
2.9
|
|
|
3.7
|
|
|
260.9
|
|
|
3.2
|
|
|
3.9
|
|
|||
Selling, general and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
administrative expenses
|
|
12.4
|
|
|
160.0
|
|
|
1.5
|
|
|
1.9
|
|
|
147.6
|
|
|
1.8
|
|
|
2.2
|
|
|||
Amortization of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
intangible assets
|
|
2.0
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|||
Income from operations
(4)
|
|
1.6
|
|
|
59.1
|
|
|
0.6
|
|
|
0.7
|
|
|
57.5
|
|
|
0.7
|
|
|
0.9
|
|
|||
Interest expense
|
|
1.4
|
|
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|||
Interest income
|
|
(0.3
|
)
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
gains (losses), net
|
|
1.2
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|||
Income before taxes
|
|
1.1
|
|
|
55.8
|
|
|
0.5
|
|
|
0.7
|
|
|
54.7
|
|
|
0.7
|
|
|
0.8
|
|
|||
Net income
|
|
1.7
|
|
|
35.5
|
|
|
0.3
|
|
|
0.4
|
|
|
33.8
|
|
|
0.4
|
|
|
0.5
|
|
|||
Adjusted EBITDA
(5)
|
|
4.1
|
|
|
105.8
|
|
|
1.0
|
|
|
1.2
|
|
|
101.7
|
|
|
1.2
|
|
|
1.5
|
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
Net sales, less excise taxes is a non-GAAP financial measure, which we provide to separate the increase in sales due to product sales growth and increases in state, local and provincial excise taxes, which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the taxes on to us as part of the product cost and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage may be reduced; however, we do not expect increases in excise taxes to negatively impact gross profit per carton (see the reconciliation of net sales to net sales less excise taxes in “Comparison of Sales and Gross Profit by Product Category”).
|
(3)
|
Gross profit may not be comparable to those of other entities because warehousing and distribution expenses are not included as a component of our cost of goods sold.
|
(5)
|
Adjusted EBITDA is a non-GAAP financial measure and should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP (See the reconciliation of Adjusted EBITDA to net income below and in "Non-GAAP Financial Information").
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase
|
|||||||||
Product Category
|
Net Sales
|
|
Net Sales
|
|
Amounts
|
|
Percentage
|
|||||||
Food
|
$
|
1,047.2
|
|
|
$
|
940.7
|
|
|
$
|
106.5
|
|
|
11.3
|
%
|
Fresh
|
289.2
|
|
|
250.0
|
|
|
39.2
|
|
|
15.7
|
%
|
|||
Candy
|
465.9
|
|
|
422.5
|
|
|
43.4
|
|
|
10.3
|
%
|
|||
OTP
|
829.2
|
|
|
651.0
|
|
|
178.2
|
|
|
27.4
|
%
|
|||
Health, beauty & general
|
320.5
|
|
|
271.8
|
|
|
48.7
|
|
|
17.9
|
%
|
|||
Beverages
|
137.1
|
|
|
122.9
|
|
|
14.2
|
|
|
11.6
|
%
|
|||
Equipment/other
|
2.5
|
|
|
1.4
|
|
|
1.1
|
|
|
NA
|
|
|||
Total Food/Non-food Products
|
$
|
3,091.6
|
|
|
$
|
2,660.3
|
|
|
$
|
431.3
|
|
|
16.2
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
|
|
|
Nine Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||
|
Increase (Decrease)
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
||||||||||
Net sales
|
$
|
2,438.3
|
|
|
$
|
10,692.6
|
|
|
100.00
|
%
|
|
—
|
%
|
|
$
|
8,254.3
|
|
|
100.00
|
%
|
|
—
|
%
|
Net sales, less excise taxes
(2)
|
1,876.8
|
|
|
8,486.0
|
|
|
79.36
|
|
|
100.00
|
|
|
6,609.2
|
|
|
80.1
|
|
|
100.00
|
%
|
|||
Components of gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cigarette inventory holding gains
(3)
|
$
|
3.0
|
|
|
$
|
8.4
|
|
|
0.08
|
%
|
|
0.10
|
%
|
|
$
|
5.4
|
|
|
0.07
|
|
|
0.08
|
%
|
Cigarette tax stamp inventory holding gains
(4)
|
(8.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.3
|
|
|
0.10
|
|
|
0.13
|
|
|||
OTP tax refunds
(5)
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
0.02
|
|
|
0.03
|
|
|||
LIFO expense
|
0.8
|
|
|
(10.0
|
)
|
|
(0.10
|
)
|
|
(0.12
|
)
|
|
(9.2
|
)
|
|
(0.11
|
)
|
|
(0.14
|
)
|
|||
Remaining gross profit
(6)
|
78.0
|
|
|
539.5
|
|
|
5.05
|
|
|
6.36
|
|
|
461.5
|
|
|
5.59
|
|
|
6.98
|
|
|||
Gross profit
|
$
|
70.1
|
|
|
$
|
537.9
|
|
|
5.03
|
%
|
|
6.34
|
%
|
|
$
|
467.8
|
|
|
5.67
|
%
|
|
7.08
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
Net sales, less excise taxes is a non-GAAP financial measure, which we provide to separate the increase in sales due to product sales growth and increases in state, local and provincial excise taxes, which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the taxes on to us as part of the product cost and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage may be reduced; however, we do not expect increases in excise taxes to negatively impact gross profit per carton (see the reconciliation of net sales to net sales less excise taxes in “Comparison of Sales and Gross Profit by Product Category”).
|
(3)
|
For the
nine months ended September 30, 2016
,
$6.8 million
of the cigarette inventory holding gains were attributable to the U.S. and
$1.6 million
to Canada. For the same period in 2015,
$4.1 million
and
$1.3 million
were attributable to the U.S. and Canada, respectively.
|
(4)
|
For the
nine months ended September 30, 2015
, we recognized cigarette tax stamp inventory holding gains in the U.S. of
$8.3 million
, resulting from the increase in the excise tax rates of certain jurisdictions.
|
(5)
|
For the
nine months ended September 30, 2015
, we received Other Tobacco Products (OTP) tax refunds of
$1.8 million
related to prior years’ taxes.
|
(6)
|
Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette and candy inventory holding gains and other items that significantly affect the comparability of gross profit.
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
||||||||||||||
|
September 30,
|
|
%
|
|
September 30,
|
|
%
|
||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
Net income
|
$
|
13.5
|
|
|
$
|
15.1
|
|
|
|
|
$
|
35.5
|
|
|
$
|
33.8
|
|
|
|
||
Interest expense, net
(1)
|
1.5
|
|
|
0.5
|
|
|
|
|
3.2
|
|
|
1.5
|
|
|
|
||||||
Provision for income taxes
|
6.7
|
|
|
9.1
|
|
|
|
|
20.3
|
|
|
20.9
|
|
|
|
||||||
Depreciation and amortization
|
11.4
|
|
|
9.9
|
|
|
|
|
31.2
|
|
|
28.3
|
|
|
|
||||||
LIFO expense
|
3.7
|
|
|
3.3
|
|
|
|
|
10.0
|
|
|
9.2
|
|
|
|
||||||
Stock-based compensation expense
|
1.9
|
|
|
2.7
|
|
|
|
|
5.5
|
|
|
6.7
|
|
|
|
||||||
Foreign currency transaction losses, net
|
0.5
|
|
|
0.7
|
|
|
|
|
0.1
|
|
|
1.3
|
|
|
|
||||||
Adjusted EBITDA
|
$
|
39.2
|
|
|
$
|
41.3
|
|
|
(5.1
|
)%
|
|
$
|
105.8
|
|
|
$
|
101.7
|
|
|
4.0
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cigarettes
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
2,855.3
|
|
|
$
|
2,049.6
|
|
|
$
|
7,601.0
|
|
|
$
|
5,594.0
|
|
Excise taxes in sales
(2)
|
794.6
|
|
|
544.6
|
|
|
1,985.2
|
|
|
1,469.0
|
|
||||
Net sales, less excise taxes
(3)
|
2,060.7
|
|
|
1,505.0
|
|
|
5,615.8
|
|
|
4,125.0
|
|
||||
LIFO expense
|
2.9
|
|
|
3.1
|
|
|
8.4
|
|
|
8.5
|
|
||||
Gross profit
(4)
|
55.7
|
|
|
53.4
|
|
|
158.2
|
|
|
132.4
|
|
||||
Gross profit %
|
1.95
|
%
|
|
2.61
|
%
|
|
2.08
|
%
|
|
2.37
|
%
|
||||
Gross profit % less excise taxes
|
2.70
|
%
|
|
3.55
|
%
|
|
2.82
|
%
|
|
3.21
|
%
|
||||
Remaining gross profit
(6)
|
$
|
58.2
|
|
|
$
|
47.6
|
|
|
$
|
158.2
|
|
|
$
|
127.2
|
|
Remaining gross profit %
|
2.04
|
%
|
|
2.32
|
%
|
|
2.08
|
%
|
|
2.27
|
%
|
||||
Remaining gross profit % less excise taxes
|
2.83
|
%
|
|
3.16
|
%
|
|
2.82
|
%
|
|
3.08
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Food/Non-food Products
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,138.6
|
|
|
$
|
942.0
|
|
|
$
|
3,091.6
|
|
|
$
|
2,660.3
|
|
Excise taxes in sales
(2)
|
84.5
|
|
|
62.5
|
|
|
221.4
|
|
|
176.1
|
|
||||
Net sales, less excise taxes
(3)
|
1,054.1
|
|
|
879.5
|
|
|
2,870.2
|
|
|
2,484.2
|
|
||||
LIFO expense
|
0.8
|
|
|
0.2
|
|
|
1.6
|
|
|
0.7
|
|
||||
Gross profit
(5)
|
143.2
|
|
|
118.2
|
|
|
379.7
|
|
|
335.4
|
|
||||
Gross profit %
|
12.57
|
%
|
|
12.55
|
%
|
|
12.28
|
%
|
|
12.61
|
%
|
||||
Gross profit % less excise taxes
|
13.59
|
%
|
|
13.44
|
%
|
|
13.23
|
%
|
|
13.50
|
%
|
||||
Remaining gross profit
(6)
|
$
|
144.0
|
|
|
$
|
118.4
|
|
|
$
|
381.3
|
|
|
$
|
334.3
|
|
Remaining gross profit %
|
12.64
|
%
|
|
12.57
|
%
|
|
12.33
|
%
|
|
12.57
|
%
|
||||
Remaining gross profit % less excise taxes
|
13.66
|
%
|
|
13.46
|
%
|
|
13.28
|
%
|
|
13.46
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Totals
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
3,993.9
|
|
|
$
|
2,991.6
|
|
|
$
|
10,692.6
|
|
|
$
|
8,254.3
|
|
Excise taxes in sales
(2)
|
879.1
|
|
|
607.1
|
|
|
2,206.6
|
|
|
1,645.1
|
|
||||
Net sales, less excise taxes
(3)
|
3,114.8
|
|
|
2,384.5
|
|
|
8,486.0
|
|
|
6,609.2
|
|
||||
LIFO expense
|
3.7
|
|
|
3.3
|
|
|
10.0
|
|
|
9.2
|
|
||||
Gross profit
(4) (5)
|
198.9
|
|
|
171.6
|
|
|
537.9
|
|
|
467.8
|
|
||||
Gross profit %
|
4.98
|
%
|
|
5.74
|
%
|
|
5.03
|
%
|
|
5.67
|
%
|
||||
Gross profit % less excise taxes
|
6.39
|
%
|
|
7.20
|
%
|
|
6.34
|
%
|
|
7.08
|
%
|
||||
Remaining gross profit
(6)
|
$
|
202.2
|
|
|
$
|
166.0
|
|
|
$
|
539.5
|
|
|
$
|
461.5
|
|
Remaining gross profit %
|
5.06
|
%
|
|
5.55
|
%
|
|
5.05
|
%
|
|
5.59
|
%
|
||||
Remaining gross profit % less excise taxes
|
6.49
|
%
|
|
6.96
|
%
|
|
6.36
|
%
|
|
6.98
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
Excise taxes included in our net sales consist of state, local and provincial excise taxes, which we are responsible for collecting and remitting. Federal excise taxes are levied on the manufacturers who pass the tax on to us as part of the product cost and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage may be reduced since gross profit dollars generally remain the same.
|
(3)
|
Net sales, less excise taxes is a non-GAAP financial measure, which we provide to separate the increase in sales due to product sales growth and increases in excise taxes.
|
(4)
|
Cigarette gross profit includes (i) cigarette inventory holding gains related to manufacturer price increases, (ii) increases in state, local and provincial excise taxes and (iii) LIFO effects. Cigarette inventory holding gains were
$0.4 million
and
$8.4 million
for the
three and nine months ended
September 30, 2016
, respectively compared to
$0.6 million
and
$5.4 million
for same periods in 2015. For 2015, we recognized cigarette tax stamp inventory holding gains in the U.S. of $8.3 million, resulting from the increase in the excise tax rates of certain jurisdictions.
|
(5)
|
Food/non-food gross profit includes (i) inventory holding gains related to manufacturer price increases, (ii) increases in state, local and provincial excise taxes, (iii) LIFO effects and (iv) OTP tax items. Included in the gross profit for the
nine months ended
September 30, 2015
were OTP tax refunds of $1.8 million related to prior years’ taxes.
|
(6)
|
Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette and candy inventory holding gains and other items that significantly affect the comparability of gross profit.
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Amounts borrowed
|
$
|
262.0
|
|
|
$
|
47.0
|
|
Outstanding letters of credit and other commitments
|
37.3
|
|
|
18.5
|
|
||
Amounts available to borrow
(1)
|
150.7
|
|
|
123.9
|
|
(1)
|
Excluding $150 million expansion feature.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
Amounts
|
% of Net Sales
|
|
Amounts
|
% of Net Sales
|
|
Amounts
|
% of Net Sales
|
|
Amounts
|
% of Net Sales
|
||||||||||||
Gross Profit
|
$
|
198.9
|
|
5.0
|
%
|
|
$
|
171.6
|
|
5.7
|
%
|
|
$
|
537.9
|
|
5.0
|
%
|
|
$
|
467.8
|
|
5.7
|
%
|
Cigarette inventory holding gains
|
(0.4
|
)
|
—
|
|
|
(0.6
|
)
|
—
|
|
|
(8.4
|
)
|
(0.1
|
)
|
|
(5.4
|
)
|
(0.1
|
)
|
||||
Cigarette tax stamp holding gains
|
|
|
|
(8.3
|
)
|
(0.3
|
)
|
|
|
|
|
(8.3
|
)
|
(0.1
|
)
|
||||||||
OTP tax refunds
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(1.8
|
)
|
—
|
|
||||
LIFO expense
|
3.7
|
|
0.1
|
|
|
3.3
|
|
0.1
|
|
|
10.0
|
|
0.1
|
|
|
9.2
|
|
0.1
|
|
||||
Remaining gross profit
|
$
|
202.2
|
|
5.1
|
%
|
|
$
|
166.0
|
|
5.5
|
%
|
|
$
|
539.5
|
|
5.0
|
%
|
|
$
|
461.5
|
|
5.6
|
%
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Issuer Purchases of Equity Securities
|
|||||||||||||||
|
|
|
|
|
|
|
|
Approximate
|
|||||||
|
|
|
|
|
|
|
|
Dollar Value
|
|||||||
|
|
|
|
|
|
Total
|
|
of Shares that
|
|||||||
|
|
|
|
|
|
Shares
|
|
May Yet be
|
|||||||
|
|
Total
|
|
|
|
Purchased as
|
|
Purchased Under
|
|||||||
|
|
Number
|
|
Average
|
|
Part of Publicly
|
|
the Plans
|
|||||||
Calendar month
|
|
of Shares
|
|
Price Paid
|
|
Announced Plans
|
|
or Programs
|
|||||||
in which purchases were made:
|
|
Repurchased
(1)
|
|
per Share
(2)
|
|
or Programs
|
|
(in millions)
(3)
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
July 1, 2016 to July 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.0
|
|
August 1, 2016 to August 31, 2016
|
|
25,200
|
|
|
39.84
|
|
|
1,004,006
|
|
|
7.0
|
|
|||
September 1, 2016 to September 30, 2016
|
|
74,010
|
|
|
37.06
|
|
|
2,742,965
|
|
|
4.3
|
|
|||
Total repurchases for the three months ended September 30, 2016
|
|
99,210
|
|
|
$
|
37.77
|
|
|
$
|
3,746,971
|
|
|
$
|
4.3
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All purchases were made as part of the share repurchase program announced on May 25, 2011.
|
(2)
|
Includes related transaction fees.
|
(3)
|
Shares repurchased under the program were made in open market and the timing and amount of the purchases are based on market conditions, our cash and liquidity requirements, relevant securities laws and other factors. The share repurchase program may be discontinued or amended at any time. The program has no stated expiration date but expires when the amount authorized has been expended or the Board of Directors withdraws its authorization.
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
|
|
Core-Mark Holding Company, Inc.
|
|
|
|
|
|
|
November 7, 2016
|
By:
|
/
S
/ THOMAS B. PERKINS
|
|
|
Name:
|
Thomas B. Perkins
|
|
|
Title:
|
President, Chief Executive Officer and Director
|
|
|
|
|
|
|
Core-Mark Holding Company, Inc.
|
|
|
|
|
|
|
November 7, 2016
|
By:
|
/s/ CHRISTOPHER M. MILLER
|
|
|
Name:
|
Christopher M. Miller
|
|
|
Title:
|
Chief Financial Officer
|
A.
|
The Borrowers, Administrative Agent, the Lenders and the other parties thereto have previously entered into that certain Credit Agreement, dated as of October 12, 2005 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, including, without limitation, by that certain First Amendment to Credit Agreement, dated as of December 4, 2007, that certain Second Amendment to Credit Agreement, dated as of March 12, 2008, that certain letter agreement to Credit Agreement, dated as of January 31, 2009, that certain Third Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement, dated as of February 2, 2010, that certain Fourth Amendment to Credit Agreement, dated as of May 5, 2011, that certain letter agreement to Credit Agreement and Security Agreement, dated as of December 21, 2012, that certain Fifth Amendment to Credit Agreement and Second Amendment to Pledge and Security Agreement, dated as of May 30, 2013, that certain Sixth Amendment to Credit Agreement, dated as of May 21, 2015, that certain Seventh Amendment to Credit Agreement and Third Amendment to Pledge and Security Agreement, dated as of January 11, 2016, and that certain Eighth Amendment to Credit Agreement and Fourth Amendment to Pledge and Security Agreement, dated as of May 16, 2016, the “
Existing Credit Agreement
”; the Existing Credit Agreement as amended by this Amendment and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms shall be referred to herein as the “
Credit Agreement
”), pursuant to which the Lenders have made certain loans and financial accommodations available to the Borrowers. Terms used herein without definition shall have the meanings ascribed to them in the Existing Credit Agreement.
|
B.
|
The Borrowers and Administrative Agent have previously entered into that certain Pledge and Security Agreement, dated as of October 12, 2005 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, including, without limitation, by that certain Third Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement, dated as of February 2, 2010, that certain letter agreement to Credit Agreement and Security Agreement, dated December 21, 2012, that certain Fifth Amendment to Credit Agreement and Second Amendment to Pledge and Security Agreement, dated as of May 30, 2013, that certain Seventh Amendment to Credit Agreement and Third Amendment to Pledge and Security Agreement, dated as of January 11, 2016, and that certain Eighth Amendment to Credit Agreement and Fourth Amendment to Pledge and Security Agreement, dated as of May 16, 2016, the “
Existing Security Agreement
”; the Existing Security Agreement as amended by this Amendment and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms shall be referred to herein as the “
Security Agreement
”).
|
C.
|
The Borrowers have requested that the Administrative Agent and the Lenders amend the Existing Credit Agreement to increase the aggregate amount of the Revolving Commitments to $600,000,000.
|
D.
|
The Borrowers have further requested that Administrative Agent and the Lenders amend the Existing Credit Agreement and the Existing Security Agreement.
|
E.
|
Administrative Agent and the Lenders are willing to amend the Existing Credit Agreement and the Existing Security Agreement pursuant to the terms and conditions set forth herein.
|
F.
|
Each Borrower is entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Administrative Agent’s or any Lender’s rights or remedies as set forth in the Existing Credit Agreement, the Existing Security Agreement and the other Loan Documents are being waived or modified by the terms of this Amendment.
|
1.
|
Amendments to Existing Credit Agreement
.
|
(a)
|
The following definitions are hereby added to Section 1.01 of the Existing Credit Agreement in the appropriate alphabetical order:
|
(b)
|
The definition of “Revolving Commitment” in Section 1.01 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:
|
(c)
|
The first sentence of Section 2.21(a) of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follow:
|
(d)
|
The Commitment Schedule and Schedule 3.10 to the Existing Credit Agreement are hereby deleted and replaced in their entirety with the corresponding schedules attached hereto and made a part hereof as Annex A.
|
2.
|
[
Reserved
].
|
3.
|
Conditions Precedent to Effectiveness of this Amendment
. This Amendment and the amendments to the Existing Credit Agreement and the Existing Security Agreement contained herein shall become effective, and shall become part of the Credit Agreement and the Security Agreement, as applicable, on the date (the “
Ninth Amendment Effective Date
”) when each of the following conditions precedent shall have been satisfied in the reasonable discretion of Administrative Agent or waived by Administrative Agent:
|
a.
|
Amendment
. Administrative Agent shall have received counterparts to this Amendment, executed by each party hereto.
|
b.
|
Representations and Warranties
. The representations and warranties of the Borrowers set forth herein must be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof).
|
c.
|
Authorizing Resolutions
. Administrative Agent shall have received a certificate of each Loan Party dated as of the Ninth Amendment Effective Date signed by a Financial Officer or otherwise acceptable officer of such Loan Party certifying and attaching the resolutions adopted by such Loan Party approving or consenting to this Amendment and any other Loan Documents executed in connection herewith.
|
d.
|
Payment of Fees
. Administrative Agent shall have received from the Borrowers all reasonable fees due and payable on or before the Ninth Amendment Effective Date, including, without limitation all fees payable in connection with this Amendment pursuant to that certain fee letter dated as of October 28, 2016, between the Borrowers and Agent.
|
4.
|
Representations and Warranties
.
Each Borrower represents and warrants as follows as of the date hereof:
|
a.
|
Authority
. Each Borrower has the requisite corporate power and authority to execute and deliver this Amendment and to perform its obligations hereunder and under the Loan Documents (as amended or modified hereby) to which it is a party. The execution, delivery, and performance by each Borrower of this Amendment have been duly approved by all necessary corporate action, have received all necessary governmental approval, if any, and do not contravene (i) any law or (ii) any contractual restriction binding on such Borrower, except for contraventions of contractual restrictions which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
|
b.
|
Enforceability
. This Amendment has been duly executed and delivered by each Borrower. This Amendment and each Loan Document (as amended or modified hereby) (i) is the legal, valid, and binding obligation of each Borrower, enforceable against such Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, and (ii) is in full force and effect, assuming due execution by each other party hereto and thereto.
|
c.
|
Representations and Warranties
. After giving effect to this Amendment, the representations and warranties of the Borrowers contained in each Loan Document (other than any such representations or warranties that, by their terms, are specifically made as of an earlier date) are correct in all material respects on and as of the date hereof as though made on and as of the date hereof.
|
d.
|
No Default
. After giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.
|
5.
|
Ratable Commitments
. Concurrently with the effectiveness of this Amendment, each Lender shall assign to the other Lenders, and such other Lenders shall purchase from such Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in Letters of Credit on such date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in Letters of Credit will be held by all Lenders ratably in accordance with their Revolving Commitments after giving effect to the provisions of this Amendment.
|
6.
|
Choice of Law
. The validity of this Amendment, the construction, interpretation and enforcement hereof, and the rights of the parties hereto with respect to all matters arising hereunder or related hereto shall be determined under, governed by, and construed in accordance with the laws of the State of New York.
|
7.
|
Counterparts
. This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile shall be effective as delivery of a manually executed counterpart of the Amendment.
|
8.
|
Reference to and Effect on the Loan Documents
.
|
a.
|
Upon and after the Ninth Amendment Effective Date, each reference in the Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Existing Credit Agreement as modified and amended hereby.
|
b.
|
Upon and after the Ninth Amendment Effective Date, each reference in the Existing Security Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Security Agreement, and each reference in the other Loan Documents to “the Security Agreement”, “thereof” or words of like import referring to the Security Agreement, shall mean and be a reference to the Existing Security Agreement as modified and amended hereby.
|
c.
|
Except as specifically amended by Section 1 and Section 2 of this Amendment, the Existing Credit Agreement, the Existing Security Agreement and all other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of the Borrowers to Administrative Agent and the Lenders without defense, offset, claim, or contribution.
|
d.
|
The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy of Administrative Agent or any Lender under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
|
9.
|
Estoppel
. To induce Administrative Agent and Lenders to enter into this Amendment and to induce Administrative Agent and the Lenders to continue to make advances to the Borrowers under the Credit Agreement, each Borrower hereby acknowledges and agrees that, after giving effect to this Amendment, as of the date hereof, there exists no Default or Event of Default and no right of offset, defense, counterclaim or objection in favor of any Borrower as against Administrative Agent or any Lender with respect to the Obligations.
|
10.
|
Integration
. This Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.
|
11.
|
Severability
. In case any provision in this Amendment shall be invalid, illegal, or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
|
12.
|
Submission of Amendment
. The submission of this Amendment to the parties or their agents or attorneys for review or signature does not constitute a commitment by Administrative Agent or any Lender to waive any of their respective rights and remedies under the Loan Documents, and this Amendment shall have no binding force or effect until all of the conditions to the effectiveness of this Amendment have been satisfied as set forth herein.
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By:
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/S/ Theodore Castro
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Name:
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Theodore Castro
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Title:
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Treasurer and Secretary
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By:
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/S/ Theodore Castro
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Name:
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Theodore Castro
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Title:
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Treasurer and Secretary
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By:
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/S/ Theodore Castro
|
Name:
|
Theodore Castro
|
Title:
|
Treasurer and Secretary
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By:
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/S/ Theodore Castro
|
Name:
|
Theodore Castro
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Title:
|
Treasurer and Secretary
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By:
|
/S/ Theodore Castro
|
Name:
|
Theodore Castro
|
Title:
|
Treasurer and Secretary
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By:
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/S/ Theodore Castro
|
Name:
|
Theodore Castro
|
Title:
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Treasurer and Secretary
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By:
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/S/ James Fallahay
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Name:
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James Fallahay
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Title:
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Authorized Officer
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By:
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/S/ Michael N. Tam
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Name:
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Michael N. Tam
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Title:
|
Senior Vice President
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By:
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/S/ Gregory A. Jones
|
Name:
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Gregory A. Jones
|
Title:
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Senior Vice President
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By:
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/S/ Medina Sales de Andrade
|
Name:
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Medina Sales de Andrade
|
Title:
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Vice President
|
By:
|
/S/ Maria Quintanille
|
Name:
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Maria Quintanille
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Title:
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Authorized Signatory
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By:
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/S/ David G. Phillips
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Name:
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David G. Phillips
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Title:
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Senior Vice President
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By:
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/S/ Diane Emanuel
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Name:
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Diane Emanuel
|
Title:
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Managing Director
|
By:
|
/S/ Craig Thistlethwaite
|
Name:
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Craig Thistlethwaite
|
Title:
|
Managing Director
|
By:
|
/S/ Helen Alvarez-Hernandez
|
Name:
|
Helen Alvarez-Hernandez
|
Title:
|
Director
|
By:
|
/S/ William Patton
|
Name:
|
William Patton
|
Title:
|
Vice President
|
By:
|
/S/ John P. Rehob
|
Name:
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John P. Rehob
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Title:
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Vice President & Principal Officer
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By:
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/S/ David Slattery
|
Name:
|
David Slattery
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Title:
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Vice President
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By:
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/S/ David Miller
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Name:
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David Miller
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Title:
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Vice President
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Lender
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Revolving Commitment
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Canadian Commitment
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JPMorgan Chase Bank, N.A.
|
$115,000,000
|
Cdn.$0
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JPMorgan Chase Bank, N.A., Toronto Branch
|
$—
|
Cdn. $21,083,333.33
|
Wells Fargo Capital Finance, LLC
|
$115,000,000
|
Cdn.$0
|
Wells Fargo Capital Finance Corporation Canada
|
$—
|
Cdn. $21,083,333.33
|
Bank of Montreal
|
$115,000,000
|
Cdn. $21,083,333.33
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Bank of America, N.A.
|
$85,000,000
|
Cdn. $0
|
Bank of America, N.A. (acting through its Canada branch)
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$—
|
Cdn. $15,583,333.33
|
The Bank of Nova Scotia
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$36,000,000
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Cdn. $6,600,000.00
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Branch Banking and Trust Company
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$50,000,000
|
Cdn. $9,166,666.67
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Citizens Business Capital, a division of Citizens Asset Finance, Inc.
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$42,000,000
|
Cdn. $7,700,000.00
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U.S. Bank National Association
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$42,000,000
|
Cdn.$0
|
U.S. Bank National Association, Canada Branch
|
$—
|
Cdn. $7,700,000.00
|
|
|
|
Total
|
$600,000,000
|
Cdn.$110,000,000
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1.
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I have reviewed this quarterly report on Form 10-Q of Core-Mark Holding Company, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant's other certifying officer 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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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The registrant's other certifying officer 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):
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a)
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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
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b)
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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.
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November 7, 2016
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By:
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/s/ THOMAS B. PERKINS
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Thomas B. Perkins
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President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Core-Mark Holding Company, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant's other certifying officer 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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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The registrant's other certifying officer 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):
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a)
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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
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b)
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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.
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November 7, 2016
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By:
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/s/ CHRISTOPHER M. MILLER
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Christopher M. Miller
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|
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Chief Financial Officer
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
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November 7, 2016
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By:
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/s/ THOMAS B. PERKINS
|
|
|
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Thomas B. Perkins
|
|
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|
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President and Chief Executive Officer
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
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|
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November 7, 2016
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By:
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/s/ CHRISTOPHER M. MILLER
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Christopher M. Miller
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Chief Financial Officer
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