Fair Value Measurements

12 Months Ended

Dec. 29, 2012

Fair Value Measurements

Note 21—Fair Value Measurements

ASC No. 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

We have certain assets and liabilities that are required to be recorded at fair value on a recurring basis in accordance with U.S. GAAP.

	December 29, 2012
(in millions of U.S. dollars)	Level 1		Level 2		Level 3		Fair Value Measurements
Assets
Derivatives	$	—	$	0.1	$	—	$	0.1
Assets held for sale		—		—		0.1		0.1
Total Assets	$	—	$	0.1	$	0.1	$	0.2

	December 31, 2011
(in millions of U.S. dollars)	Level 1		Level 2		Level 3		Fair Value Measurements
Assets
Derivatives	$	—	$	0.2	$	—	$	0.2
Assets held for sale		—		1.2		—		1.2
Total Assets	$	—	$	1.4	$	—	$	1.4

Fair value of financial instruments

The carrying amounts reflected in the Consolidated Balance Sheets for cash, receivables, payables, short-term borrowings and long-term debt approximate their respective fair values, except as otherwise indicated. The carrying values and estimated fair values of our significant outstanding debt as of December 29, 2012 and December 31, 2011 were as follows:

	December 29, 2012				December 31, 2011
(in millions of U.S. dollars)	Carrying Value		Fair Value		Carrying Value		Fair Value
8.375% senior notes due in 20171		215.0		234.4		215.0		231.4
8.125% senior notes due in 20181		375.0		414.8		375.0		404.5
Total	$	590.0	$	649.2	$	590.0	$	635.9

¹ The fair values were based on the trading levels and bid/offer prices observed by a market participant and are considered level 1 financial instruments.

Fair value of contingent consideration

The fair value of the contingent consideration payable in the Cliffstar Acquisition was based on significant inputs not observed in the market and thus represented a Level 3 instrument. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value.

	For the Year Ended
(in millions of U.S. dollars)	December 29, 2012		December 31, 2011
Beginning balance	$	—	$	32.2
Acquisition date fair value		—		—
Payment		—		(34.3	)
Accretion to fair value		—		1.2
Adjustments to fair value		0.6		0.9
Ending balance	$	0.6	$	—

In 2011, the seller of Cliffstar raised certain objections to the performance measures used to calculate the contingent consideration, and the parties commenced the dispute resolution mechanism provided for in the asset purchase agreement. During 2011, Cott made interim payments to the seller equal to $29.6 million which was net of a $4.7 million refund due to Cott and included $0.9 million in settlement of certain of the seller’s objections to the calculation of the contingent consideration. The seller’s claims for an additional $12.1 million in contingent consideration were submitted to binding arbitration pursuant to the asset purchase agreement and favorably resolved by payment by Cott in February 2013 of approximately $0.6 million.