Molson Coors Reports 2007 First Quarter Results
DENVER and MONTREAL, May 8 /PRNewswire-FirstCall/ -- Molson Coors Brewing
Company (NYSE: TAP; Toronto) today released its financial results for the fiscal
first quarter ending April 1, 2007.
The Company's sales volume increased 2.9 percent to 8.9 million barrels,
or 10.4 million hectoliters (HLs), during the 13-week fiscal first quarter 2007
compared to the 13-week fiscal first quarter ended March 26, 2006. Net sales
increased 6.5 percent to $1.23 billion in the first quarter 2007 versus a year
ago. (All $ amounts in U.S. dollars.) Net income in the first quarter 2007 was
$4.4 million. Income from continuing operations after tax in the first quarter
2007 was $19.2 million. Excluding special items(1), income from continuing
operations(2) was $25.1 million, compared to an after-tax loss of $0.4 million
in the first quarter 2006.
Leo Kiely, Molson Coors president and chief executive officer, said,
"Overall, our first quarter 2007 results are an encouraging start to the new
year. We continued to strengthen our momentum from the second half of 2006 with
our global focus on brand building and attacking costs. While cost and
competitive pressures continued in the first quarter, our underlying business
and financial performance continued to improve. We grew total company volume,
revenue per barrel, margins and profits in the first quarter, while we invested
aggressively behind strategic brands in all of our major businesses -- in
Canada, the U.S. and the U.K. In addition, we continued to make significant
improvements to our cost structure through merger synergies and other cost
reductions that helped to offset substantial cost inflation across all of our
businesses. As a result, we achieved strong double-digit percentage growth in
operating earnings.
"Looking ahead, we are pleased with the momentum of our strategic brands
as we prepare for this year's peak beer season. We believe our teams can build
on that momentum and win the summer, while we make even more progress building
great brands and reducing costs to fuel the investments we need to become a
top-performing global brewer."
2007 First Quarter Results
Key results for the Company's fiscal first quarter 2007, compared to the
first quarter a year ago, include the following:
* Net sales increased 6.5 percent to $1.23 billion.
* Sales volume of 8.9 million barrels (10.4 million HLs) was up 2.9
percent.
* Marketing, general and administrative expense rose 2.0 percent
* Marketing, general and administrative expense rose 2.0 percent to
$396.8 million.
* Excluding special items, income from continuing operations (after
tax) was $25.1 million, or $0.28 per diluted share, compared to a
loss of $0.4 million, or $0.01 loss per diluted share, in the first
quarter 2006. (See tables below for reconciliations to nearest U.S.
GAAP measures.)
During the quarter, Molson Coors achieved approximately $14 million in
merger synergies. Foreign exchange rate movements reduced total-company pretax
income by approximately $2.3 million in the quarter.
The Company's effective tax rate during the first quarter 2007 for income
from continuing operations was 19 percent including special items and 21 percent
excluding special items, compared to 33 percent and 31 percent, respectively,
during the first quarter a year ago. The Company's first quarter 2007 tax rate
was lower due to the net effect of a number of factors, including the completion
of certain prior year audits, mix of pretax income and the impact of new
accounting rules that were adopted at the beginning of 2007 for recognizing and
measuring uncertain tax provisions. The Company anticipates that these new rules
- -- known as FASB Interpretation No. 48, or FIN 48 -- will cause greater
volatility in the Company's effective tax rate in future quarters.
Following are the Company's 2007 first quarter results by business
segment:
Canada Business
Canada business pretax income was $45.3 million, excluding special
charges, even with the first quarter 2006. Canada sales volume increased 2.8
percent, while sales to retail increased 1.2 percent. Strong growth in Coors
Light, Rickard's, Carling and the Company's partner import brands was partially
offset by a decline in other premium, discount and unsupported brands. Canada
business net sales increased 4.1 percent in local currency. Net revenue per
barrel increased about 1.3 percent in local currency compared to the first
quarter 2006. Cost of goods sold per barrel increased 4.0 percent, while
marketing, general and administrative costs increased approximately 1.8 percent,
both in local currency. Synergies and other cost reduction initiatives offset
nearly all of the Canada business cost of goods inflation.
United States Business
U.S. business pretax income was $45.2 million in the first quarter 2007.
Excluding special charges a year ago, U.S. pretax income increased 23.1 percent,
driven by sales volume growth, higher net pricing and results of the Company's
merger synergies and other cost saving initiatives. In the first quarter 2007,
sales volume and net sales in the U.S. business increased 4.9 percent and 6.7
percent, respectively, from the first quarter a year ago, while net sales per
barrel increased 1.7 percent. Sales to retail grew 2.9 percent driven by a
low-single-digit growth by Coors Light and double-digit increases by Keystone
Light and Blue Moon. U.S. business cost of goods per barrel increased 0.3
percent and marketing, general and administrative expense was up 6.4 percent.
Europe Business
Excluding special items, the Europe business reported a pretax loss of
$4.5 million in the first quarter 2007 compared to a $13.4 million pretax loss
in the first quarter 2006. The smaller pretax loss compared to a year ago was
driven by continued progress on cost saving initiatives in the Europe business,
partly offset by ongoing industry volume pressures and unfavorable trends in
sales channel mix. In the first quarter 2007, Europe business owned-brand sales
volume decreased 1.7 percent compared to the same period a year ago.
Owned-brand net sales per barrel increased 0.6 percent in local currency
compared to the first quarter 2006. Cost of goods sold per barrel for the
Company's owned brands decreased 2.8 percent in local currency during the
quarter. Marketing, general and administrative expense decreased 5.5 percent in
local currency, with higher marketing spend in the first quarter more than
offset by reductions in general and administrative costs.
Corporate Expenses
The Company's Corporate general and administrative expenses totaled $21.4
million in the first quarter 2007, a decrease of $8.3 million from the first
quarter 2006. Net interest expense, excluding interest income from trade loans
in the U.K., was $29.2 million in the first quarter 2007, $5.6 million lower
than a year ago due primarily to lower average net debt balances during the
quarter compared to the first quarter 2006.
(1)Special Items
During the first quarter 2007 the Company reported net special charges of
$8.2 million, primarily due to restructuring expenses of $4.1 million in Canada
and $4.2 million in Europe.
(2)Discontinued Operations
The company reports results for its former Brazilian unit, Cervejarias
Kaiser ("Kaiser") as discontinued operations. The Company reported a net loss of
$14.8 million from discontinued operations during the quarter arising from an
increase in the fair value of indemnity guarantees related to the Kaiser
business. These liabilities increased during the first quarter 2007 due to
changes in estimates related to the timing and amounts of estimated future
outcomes and payments.
2007 First Quarter Earnings Conference Call
Molson Coors Brewing Company will conduct an earnings conference call with
financial analysts and investors at noon Eastern Time today to discuss the
Company's 2007 first quarter results. The Company will provide a live webcast of
the earnings call.
Approximately two hours after the conclusion of the earnings call, the
Company also will host an online, real-time webcast of an Investor Relations
Follow-up Session with financial analysts at 3:00 p.m. Eastern Time. Both
webcasts will be accessible via the Company's website, www.molsoncoors.com.
Online replays of the webcasts will be available until 11:59 p.m. Eastern Time
on July 1, 2007.
Reconciliations to Nearest U.S. GAAP Measures
Molson Coors Brewing Company
2007 First Quarter After-tax Income From Continuing Operations, Excluding
Special Items
(Note: Some numbers may not sum due to rounding.)
(In millions of $US, except per share data) 1st Q 2007 1st Q 2006
U.S. GAAP: After-tax income (loss) from
continuing operations: $19.2 ($18.6)
Per diluted share $0.22 ($0.22)
Add back: Pretax special items - net 8.2 26.8
Plus (Minus): Tax effect on special items (2.4) (8.7)
Non-GAAP: After-tax income (loss) from
continuing operations, excluding special items: $25.1 ($0.4)
Per diluted share: $0.28 ($0.01)
Molson Coors Brewing Company
2007 First Quarter Pretax Income From Continuing Operations, Excluding
Special Items
(Note: Some numbers may not sum due to rounding.)
(In millions of $US) Business Total
Canada U.S. Europe Corporate Consolidated
U.S. GAAP: 2007
1st Q pretax income
(loss) from
continuing
operations -
reported $41.2 $45.2 ($8.7) ($49.4) $28.4
Add back: Pretax
special charges/
credits - net 4.1 -- 4.2 -- 8.2
Non-GAAP: 2007
1st Q Pretax income
(loss) from
continuing
operations,
excluding special
items $45.3 $45.2 ($4.5) ($49.4) $36.6
Percent change 2007
1st Q vs. 2006 1st Q
pretax from
continuing
operations,
excluding special
items (0.1%) 23.1% (66.3%) (23.5%) 787.1%
U.S. GAAP: 2006
1st Q pretax income
(loss) from continuing
operations $45.3 $15.0 ($21.2) ($61.9) ($22.7)
Add back: Pretax
special charges/
credits - net -- 21.7 7.8 (2.7) 26.8
Non-GAAP: 2006
1st Q Pretax income
(loss) from
continuing
operations,
excluding special
items $45.3 $36.7 ($13.4) ($64.6) $4.1
Pretax and After-tax Income (Loss) From Continuing Operations, Excluding
Special Items should be viewed as a supplement to -- not a substitute for -- our
results of operations presented on the basis of accounting principles generally
accepted in the United States. We believe that Pretax and After-tax Income
(Loss) From Continuing Operations, Excluding Special Items is used by and is
useful to investors and other users of our financial statements in evaluating
our operating performance because it provides them with an additional tool to
evaluate our performance without regard to items such as special items, which
can vary substantially from company to company depending upon accounting methods
and book value of assets and capital structure. Our management uses Pretax and
After-tax Income (Loss) From Continuing Operations, Excluding Special Items as a
measure of operating performance to assist in comparing performance from period
to period on a consistent basis; as a measure for planning and forecasting
overall expectations and for evaluating actual results against such
expectations; and in communications with the board of directors, stockholders,
analysts and investors concerning our financial performance.
Forward-Looking Statements
This press release includes "forward-looking statements" within the
meaning of the federal securities laws, and language indicating trends, such as
"trend improvements," "progress," "anticipated," "expected," "improving sales
trends" and "on track." It also includes financial information, of which, as of
the date of this press release, the Company's independent auditors have not
completed their review. Although the Company believes that the assumptions upon
which the financial information and its forward-looking statements are based are
reasonable, it can give no assurance that these assumptions will prove to be
correct. Important factors that could cause actual results to differ materially
from the Company's projections and expectations are disclosed in the Company's
filings with the Securities and Exchange Commission. These factors include,
among others, changes in consumer preferences and product trends; price
discounting by major competitors; unanticipated expenses, margin impact and
other factors resulting from the recent merger; failure to realize anticipated
results from synergy initiatives; and increases in costs generally. All
forward-looking statements in this press release are expressly qualified by such
cautionary statements and by reference to the underlying assumptions. We do not
undertake to update forward-looking statements, whether as a result of new
information, future events or otherwise.
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Thirteen Weeks Ended
April 1, 2007 March 26, 2006
Volume in barrels 8,869 8,619
Sales $1,651,195 $1,543,946
Excise taxes (422,584) (390,100)
Net Sales 1,228,611 1,153,846
Cost of goods sold (770,162) (726,668)
Gross profit 458,449 427,178
Marketing, general and administrative
expenses (396,798) (388,858)
Special items, net (8,231) (26,831)
Operating income 53,420 11,489
Interest expense, net (26,318) (31,955)
Other income (expense), net 1,251 (2,241)
Income (loss) from continuing
operations before income taxes and
minority interests 28,353 (22,707)
Income tax (expense) benefit (5,313) 7,438
Income (loss) from continuing
operations before minority
interests 23,040 (15,269)
Minority interests in net income of
consolidated entities (3,803) (3,301)
Income (loss) from continuing
operations 19,237 (18,570)
Loss from discontinued operations,
net of tax (14,830) (11,667)
Net income (loss) $4,407 $(30,237)
Basic and diluted income (loss) per share:
From continuing operations $0.22 $(0.22)
From discontinued operations (0.17) (0.13)
Basic and diluted net income (loss)
per share $0.05 $(0.35)
Weighted average shares - basic 88,071 85,683
Weighted average shares - diluted 89,120 85,683
Dividends per share $0.32 $0.32
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CANADA SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended
April 1, 2007 March 26, 2006
Volume in barrels 1,635 1,591
Sales $440,538 $429,930
Excise taxes (102,685) (100,611)
Net sales 337,853 329,319
Cost of goods sold (198,541) (188,528)
Gross profit 139,312 140,791
Marketing, general and administrative
expenses (96,317) (95,996)
Special items, net (4,079) --
Operating income 38,916 44,795
Other income, net 2,270 522
Earnings before income taxes $41,186 $45,317
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
UNITED STATES SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended
April 1, 2007 March 26, 2006
Volume in barrels 5,200 4,958
Sales $681,565 $639,503
Excise taxes (93,506) (88,229)
Net sales 588,059 551,274
Cost of goods sold (363,261) (345,209)
Gross profit 224,798 206,065
Marketing, general and administrative
expenses (180,208) (169,446)
Special items, net -- (21,724)
Operating income 44,590 14,895
Other income, net 647 129
Earnings before income taxes $45,237 $15,024
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
EUROPE SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended
April 1, 2007 March 26, 2006
Volume in barrels 2,034 2,070
Sales $527,957 $473,839
Excise taxes (226,393) (201,260)
Net sales 301,564 272,579
Cost of goods sold (207,869) (192,503)
Gross profit 93,695 80,076
Marketing, general and administrative
expenses (98,880) (93,682)
Special items, net (4,152) (7,803)
Operating loss (9,337) (21,409)
Interest income, net 2,848 2,804
Other expense, net (2,165) (2,567)
Loss before income taxes $(8,654) $(21,172)
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CORPORATE RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended
April 1, 2007 March 26, 2006
Sales (1) $1,135 $674
Excise taxes -- --
Net sales 1,135 674
Cost of goods sold (1) (491) (428)
Gross profit 644 246
Marketing, general and administrative
expenses (21,393) (29,734)
Special items, net -- 2,696
Operating loss (20,749) (26,792)
Interest expense, net (29,166) (34,759)
Other income (expense), net 499 (325)
Loss before income taxes $(49,416) $(61,876)
(1) The amounts shown are reflective of revenues and costs associated with
the marketing of the Company's intellectual property, including
trademarks and brands.
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
As of
April 1, 2007 December 31, 2006
Assets
Cash and cash equivalents $119,364 $182,186
Receivables, net 729,453 828,599
Total inventories, net 365,327 319,538
Other, net 126,583 128,033
Total current assets 1,340,727 1,458,356
Properties, net 2,560,609 2,421,484
Goodwill and intangible assets, net 7,405,591 7,363,970
Other 332,984 359,603
Total assets $11,639,911 $11,603,413
Liabilities and stockholders' equity
Accounts payable $293,960 $419,650
Accrued expenses and other 1,087,748 1,376,025
Short-term borrowing and current
portion of long-term debt 85,794 4,441
Total current liabilities 1,467,502 1,800,116
Long-term debt 2,139,835 2,129,845
Pension and post-retirement benefits 714,401 753,697
Other 1,347,630 1,055,617
Total liabilities 5,669,368 5,739,275
Minority interests 49,241 46,782
Total stockholders' equity 5,921,302 5,817,356
Total liabilities and stockholders'
equity $11,639,911 $11,603,413
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended
April 1, 2007 March 26, 2006
Cash flows from operating activities:
Net income (loss) $4,407 $(30,237)
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 83,399 111,224
Change in working capital and
other, net (260,475) (91,362)
Net cash used in operating activities (172,669) (10,375)
Cash flows from investing activities:
Additions to properties and
intangible assets (106,967) (87,115)
Proceeds from sale of assets and
business, net 1,013 64,666
Other, net 2,111 499
Net cash used in investing activities (103,843) (21,950)
Cash flows from financing activities:
Issuance of stock under equity
compensation plans 144,922 13,986
Dividends paid (28,439) (27,408)
Net borrowings of debt 80,312 63,280
Other 16,524 4,563
Net cash provided by financing
activities 213,319 54,421
Cash and cash equivalents:
Net (decrease) increase in cash and
cash equivalents (63,193) 22,096
Effect of foreign exchange rate
changes on cash and cash
equivalents 371 (2,220)
Balance at beginning of year 182,186 39,413
Balance at end of period $119,364 $59,289
SOURCE Molson Coors Brewing Company
05/08/2007
/CONTACT: News Media, Paul de la Plante, +1-514-590-6349, or Investor
Relations, Dave Dunnewald, +1-303-279-6565, or Kevin Caulfield,
+1-303-277-6894, all of Molson Coors Brewing Company/
/Web site: http://www.molsoncoors.com /