CONTACT: News Media FOR IMMEDIATE RELEASE
---------- 8/7/2007
Paul de la Plante
(514) 590-6349
Investor Relations
------------------
Dave Dunnewald Kevin Caulfield
(303) 279-6565 (303) 277-6894
MOLSON COORS REPORTS HIGHER NET INCOME AND EARNINGS PER SHARE
ON HIGHER NET SALES AND VOLUME FOR 2007 SECOND QUARTER
DENVER and MONTREAL, Aug. 7/PRNewswire-FirstCall/ - Molson Coors Brewing
Company (NYSE: TAP; TSX) today reported higher consolidated sales volume, net
income and earnings per share for the Company's fiscal 2007 second quarter.
Key results for the Company's fiscal second quarter ended July 1, 2007,
compared to the fiscal second quarter ended June 25, 2006, include the
following:
o Net sales increased 5.9 percent to $1.68 billion.
o Sales volume of 11.5 million barrels, or 13.5 million hectoliters
(HLs), grew 0.7 percent; total Company sales to retail (STRs) down
0.7 percent. Canada STRs up 1.1 percent, U.S. STRs up 1.6 percent,
U.K. STRs down 7.5 percent.
o Cost of goods sold increased 5.1 percent to $966.9 million.
o Marketing, general and administrative expenses rose 1.9 percent to
$456.9 million.
o Net income was $185.0 million.
o Income from continuing operations (after tax) was $184.3 million.
o Excluding special and other one-time items, income from continuing
operations (after tax) was $176.1 million, or $1.94 per diluted
share, up 44.9 percent compared to $121.6 million, or $1.40 per
diluted share, in the second quarter 2006. (See "Special and Other
One-Time Items" and "Discontinued Operations" below.)
All $ amounts in U.S. dollars. See tables below for reconciliations to
nearest U.S. GAAP measures.
Leo Kiely, Molson Coors president and chief executive officer, said, "We
were pleased with our Company's performance during the second quarter. We were
especially pleased that we continued to grow overall volume and achieved share
gains in our two largest markets. We remained focused on building our strategic
brands, led by Coors Light. In addition, we delivered on cost reduction plans
across our global enterprise, offsetting a significant portion of our cost
inflation challenges."
Through the end of the second quarter 2007, the Company's year-to-date
savings from merger synergies and next-generation cost savings programs totaled
$78 million. Foreign exchange rate movements increased total-company pretax
income by approximately $7 million in the second quarter 2007. The Company's
effective tax rate during the second quarter 2007 for income from continuing
operations was 13 percent, or 20 percent excluding special and other one-time
items, compared to negative 3 percent and positive 31 percent, respectively,
during the second quarter a year ago.
(continued)
Molson Coors Brewing Company - 2
Canada business pretax income was $146.2 million, excluding special and
other one-time items, a 1.9 percent increase compared to the second quarter
2006. Canada sales volume increased 4.0 percent, driven by a 1.1 percent
increase in sales to retail and the inclusion of the higher volume week leading
into the Canada Day weekend in the second quarter 2007 versus its inclusion in
the third quarter 2006. During the second quarter 2007, the Company's Canada
business grew quarterly market share for the first time in nearly four years.
Strong growth in Coors Light, Rickard's, Creemore, 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
approximately 5 percent in local currency. Net sales per barrel increased
approximately 1 percent in local currency compared to the second quarter 2006.
Cost of goods sold per barrel increased approximately 6 percent in local
currency, driven by growth of the Company's higher-cost super-premium partner
import brands and the mark-to-market adjustments of certain foreign currency
hedge positions. Synergies and other cost reduction initiatives more than offset
the Canada business cost of goods increase related to inflation. Reductions in
general and administrative expenses more than offset increased brand
investments, resulting in a decrease of 1 percent in marketing, general and
administrative expenses in local currency.
United States Business
U.S. business pretax income was $98.1 million, up 39.1 percent compared to
the second quarter 2006, excluding special charges a year ago, driven by sales
volume growth, higher net pricing and results of the Company's merger synergies
and other cost saving initiatives. Sales volume and net sales in the U.S.
business increased 3.1 percent and 5.4 percent, respectively, from the second
quarter 2006, while net sales per barrel increased 2.2 percent. U.S. business
50-state sales to retail grew 2.0 percent, driven by a low-single-digit growth
by Coors Light and double-digit growth of Blue Moon and mid-single-digit growth
of Keystone Light.
U.S. business cost of goods per barrel decreased 0.5 percent driven by
cost-saving initiatives and lower depreciation expense, largely offset by higher
commodity, transportation and packaging material costs. Synergies and other cost
savings offset about two-thirds of cost of goods inflation in the U.S. business.
Marketing, general and administrative expenses were down 0.9 percent, with
higher brand-building and sales investments more than offset by decreases in
general and administrative costs.
Europe Business
Excluding special items, Europe business pretax income was $38.9 million,
up 5.1 percent from the second quarter 2006, driven by higher sales per barrel,
continued progress on cost saving initiatives, higher pension income and an
approximately 9 percent appreciation in the British pound versus the U.S.
dollar. Europe business owned-brand sales volume decreased 7.5 percent compared
to the second quarter 2006. Lower volumes were largely attributable to cycling
increased sales during the World Cup soccer tournament a year ago, as well as
unusually poor weather in the second quarter 2007. Europe business
year-over-year results also were negatively
(continued)
Molson Coors Brewing Company - 3
impacted by a $5.5 million gain on sale of real estate in the second quarter
2006. U.K. owned-brand net sales per barrel increased slightly more than 4
percent in local currency compared to the second quarter 2006. Cost of goods
sold per barrel for the Company's owned brands decreased approximately 1 percent
in local currency during the quarter. Marketing, general and administrative
expenses in the U.K. decreased approximately 1 percent in local currency, with
higher marketing spend in the second quarter more than offset by reductions in
general and administrative costs.
Corporate Expenses
The Company's Corporate general and administrative expenses totaled $30.3
million in the second quarter 2007, an increase of $2.0 million from the second
quarter 2006 due to debt-restructure fees and investments in cost-saving
projects. The Company's recent convertible offering and associated debt tender
are expected to reduce future interest payments by approximately $15 million
annually. In the second quarter 2007, net interest expense, excluding interest
income from trade loans in the U.K., was $27.8 million, $12.0 million lower than
a year ago due primarily to lower average net debt balances in 2007 and lower
expense related to adjusting Ontario Beer Store interest rate swaps to market
value.
Special and Other One-time Items
During the second quarter 2007 the Company reported net special charges of
$25.4 million including a $24.1 million charge in Canada related to the
impairment of the value of the Company's Foster's U.S. license agreement, and
$1.2 million in special restructuring expenses in the Europe business supply
chain.
One-time items during the second quarter 2007 included other income from a
$16.7 million gain on the sale of the Company's equity interest in the House of
Blues Canada business. In addition, one-time tax benefits reduced the Company's
reported tax expense by $11.5 million in the second quarter 2007. The
non-recurring tax benefits were related to revaluation of the Company's deferred
tax assets and liabilities for a one-half percentage-point reduction in the
Canada corporate income tax rate, as well as a one-time adjustment to reduce the
Company's liabilities for unrecognized tax benefits.
In the second quarter a year ago, the Company had reported net special
charges totaling $25.8 million and a one-time tax benefit of $52.3 million from
reductions in Canada federal and provincial corporate income tax rates.
Discontinued Operations
The Company reports results for its former Brazilian unit, Cervejarias
Kaiser ("Kaiser") as discontinued operations. The Company reported net income of
$0.6 million from discontinued operations during the quarter arising from
favorable foreign currency exchange rates that more than offset a small increase
in the indemnity estimates related to Kaiser.
2007 Second 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 second quarter results.
(continued)
Molson Coors Brewing Company - 4
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, http://www.molsoncoors.com. Online replays of the
webcasts will be available until 11:59 p.m. Eastern Time on September 30, 2007.
Reconciliations to Nearest U.S. GAAP Measures
2007 Second Quarter After-tax Income From Continuing Operations, Excluding
Special and Other One-time Items
(Note: Some numbers may not sum due to rounding.)
(In millions of $US, except per share data) 2nd Q 2007 2nd Q 2006
- --------------------------------------------------------------------------------------------------------
U.S. GAAP: After-tax income from continuing operations: $184.3 $157.6
Per diluted share $ 2.03 $ 1.82
Add back: Pretax special items - net 25.4 25.8
Minus: Gain on sale of House of Blues Canada equity
investment (other income) (16.7) --
Minus: Tax effect on special items and gain on sale of
House of Blues Canada equity investment (5.5) (9.6)
Minus: One-time tax benefits (11.5) (52.3)
Non-GAAP: After-tax income (loss) from continuing operations,
excluding special and other one-time items: $176.1 $121.6
Per diluted share: $ 1.94 $ 1.40
2007 Second Quarter Pretax Income From Continuing Operations, Excluding Special
and Other One-time 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 2nd Q pretax income (loss)
from continuing operations - reported $138.8 $98.1 $37.7 ($57.5) $217.1
Add back: Pretax special items - net 24.1 -- 1.2 -- 25.4
Minus: Gain on sale of House of Blues Canada
equity investment (other income) (16.7) -- -- -- (16.7)
------------ ------------ ------------ ------------ ------------
Non-GAAP: 2007 2nd Q Pretax income (loss) from
continuing operations, excluding
special and other one-time items $146.2 $98.1 $38.9 ($57.5) $225.8
- -------------------------------------------------------------------------------------------------------------------------------
Percent change 2007 2nd Q vs. 2006 2nd Q pretax
from continuing operations, excluding
special and other one-time items 1.9% 39.1% 5.1% (15.6%) 23.4%
- -------------------------------------------------------------------------------------------------------------------------------
U.S. GAAP: 2006 2nd Q pretax income (loss)
from continuing operations $143.5 $44.1 $38.9 ($69.4) $157.1
Plus (Minus): Pretax special items - net -- 26.4 (1.9) 1.3 25.8
------------ ------------ ------------ ------------ ------------
Non-GAAP: 2006 2nd Q Pretax income (loss)
from continuing operations, excluding
special and other one-time items $143.5 $70.5 $37.0 ($68.1) 182.9
- -------------------------------------------------------------------------------------------------------------------------------
(continued)
Molson Coors Brewing Company - 5
Pretax and After-tax Income (Loss) From Continuing Operations, Excluding
Special and Other One-time 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 and Other
One-time 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 and Other One-time 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 Twenty-Six Weeks Ended
---------------------------------- ----------------------------------
July 1, 2007 June 25, 2006 July 1, 2007 June 25, 2006
--------------- --------------- --------------- ---------------
Volume in barrels 11,509 11,424 20,378 20,043
=============== =============== =============== ===============
Sales $ 2,244,024 $ 2,130,047 $ 3,895,219 $ 3,673,993
Excise taxes (567,757) (547,022) (990,341) (937,122)
--------------- --------------- --------------- ---------------
Net Sales 1,676,267 1,583,025 2,904,878 2,736,871
Cost of goods sold (966,897) (919,976) (1,737,059) (1,646,644)
--------------- --------------- --------------- ---------------
Gross profit 709,370 663,049 1,167,819 1,090,227
Marketing, general and administrative expenses (456,894) (448,281) (853,692) (837,139)
Special items, net (25,379) (25,840) (33,610) (52,671)
--------------- --------------- --------------- ---------------
Operating income 227,097 188,928 280,517 200,417
Interest expense, net (24,967) (36,894) (51,285) (68,849)
Other income, net 14,942 5,045 16,193 2,804
--------------- --------------- --------------- ---------------
Income from continuing operations before
income taxes and minority interests 217,072 157,079 245,425 134,372
Income tax (expense) benefit (28,423) 4,965 (33,736) 12,403
--------------- --------------- --------------- ---------------
Income from continuing operations before
minority interests 188,649 162,044 211,689 146,775
Minority interests in net income of
consolidated entities (4,305) (4,402) (8,108) (7,703)
--------------- --------------- --------------- ---------------
Income from continuing operations 184,344 157,642 203,581 139,072
Gain (loss) from discontinued operations,
net of tax 619 (1,415) (14,211) (13,082)
--------------- --------------- --------------- ---------------
Net income $ 184,963 $ 156,227 $ 189,370 $ 125,990
=============== =============== =============== ===============
Basic income (loss) per share:
From continuing operations $ 2.06 $ 1.83 $ 2.29 $ 1.62
From discontinued operations 0.01 (0.01) (0.16) (0.15)
--------------- --------------- --------------- ---------------
Basic net income per share $ 2.07 $ 1.82 $ 2.13 $ 1.47
=============== =============== =============== ===============
Diluted income (loss) per share:
From continuing operations $ 2.03 $ 1.82 $ 2.26 $ 1.61
From discontinued operations 0.01 (0.01) (0.16) (0.15)
--------------- --------------- --------------- ---------------
Diluted net income per share $ 2.04 $ 1.81 $ 2.10 $ 1.46
=============== =============== =============== ===============
Weighted average shares - basic 89,471 85,953 88,771 85,819
Weighted average shares - diluted 90,621 86,526 90,047 86,351
Dividends per share $ 0.32 $ 0.32 $ 0.64 $ 0.64
=============== =============== =============== ===============
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CANADA SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------------------- ----------------------------------
July 1, 2007 June 25, 2006 July 1, 2007 June 25, 2006
--------------- --------------- --------------- ---------------
Volume in barrels 2,344 2,253 3,979 3,844
=============== =============== =============== ===============
Sales $ 683,857 $ 643,858 $ 1,124,395 $ 1,073,788
Excise taxes (149,321) (147,574) (252,006) (248,185)
--------------- --------------- --------------- ---------------
Net sales 534,536 496,284 872,389 825,603
Cost of goods sold (266,025) (235,665) (464,566) (424,193)
--------------- --------------- --------------- ---------------
Gross profit 268,511 260,619 407,823 401,410
Marketing, general and administrative expenses (120,473) (118,418) (216,790) (214,414)
Special items, net (24,131) -- (28,210) --
--------------- --------------- --------------- ---------------
Operating income 123,907 142,201 162,823 186,996
Other income, net 14,896 1,281 17,166 1,803
--------------- --------------- --------------- ---------------
Earnings before income taxes $ 138,803 $ 143,482 $ 179,989 $ 188,799
=============== =============== =============== ===============
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
UNITED STATES SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------------------- ----------------------------------
July 1, 2007 June 25, 2006 July 1, 2007 June 25, 2006
--------------- --------------- --------------- ---------------
Volume in barrels 6,629 6,428 11,829 11,386
=============== =============== =============== ===============
Sales $ 880,089 $ 835,873 $ 1,561,654 $ 1,475,376
Excise taxes (119,302) (114,094) (212,808) (202,323)
--------------- --------------- --------------- ---------------
Net sales 760,787 721,779 1,348,846 1,273,053
Cost of goods sold (461,712) (449,960) (824,973) (795,169)
--------------- --------------- --------------- ---------------
Gross profit 299,075 271,819 523,873 477,884
Marketing, general and administrative expenses (201,244) (203,074) (381,452) (372,520)
Special items, net -- (26,422) -- (48,146)
--------------- --------------- --------------- ---------------
Operating income 97,831 42,323 142,421 57,218
Other income, net 251 1,775 898 1,904
--------------- --------------- --------------- ---------------
Earnings before income taxes $ 98,082 $ 44,098 $ 143,319 $ 59,122
=============== =============== =============== ===============
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
EUROPE SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------------------- ----------------------------------
July 1, 2007 June 25, 2006 July 1, 2007 June 25, 2006
--------------- --------------- --------------- ---------------
Volume in barrels 2,536 2,743 4,570 4,813
=============== =============== =============== ===============
Sales $ 678,730 $ 648,579 $ 1,206,687 $ 1,122,418
Excise taxes (299,134) (285,354) (525,527) (486,614)
--------------- --------------- --------------- ---------------
Net sales 379,596 363,225 681,160 635,804
Cost of goods sold (239,188) (233,599) (447,057) (426,102)
--------------- --------------- --------------- ---------------
Gross profit 140,408 129,626 234,103 209,702
Marketing, general and administrative expenses (104,922) (98,510) (203,802) (192,192)
Special items, net (1,248) 1,917 (5,400) (5,886)
--------------- --------------- --------------- ---------------
Operating loss 34,238 33,033 24,901 11,624
Interest income, net 2,854 2,885 5,702 5,689
Other income (expense), net 574 3,027 (1,591) 460
--------------- --------------- --------------- ---------------
Loss before income taxes $ 37,666 $ 38,945 $ 29,012 $ 17,773
=============== =============== =============== ===============
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CORPORATE RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------------------- ----------------------------------
July 1, 2007 June 25, 2006 July 1, 2007 June 25, 2006
--------------- --------------- --------------- ---------------
Net sales (1) $ 1,348 $ 1,737 $ 2,483 $ 2,411
Cost of goods sold (1) 28 (752) (463) (1,180)
--------------- --------------- --------------- ---------------
Gross profit 1,376 985 2,020 1,231
General and administrative expenses (30,255) (28,279) (51,648) (58,013)
Special items, net -- (1,335) -- 1,361
--------------- --------------- --------------- ---------------
Operating loss (28,879) (28,629) (49,628) (55,421)
Interest expense, net (27,821) (39,779) (56,987) (74,538)
Other expense, net (779) (1,038) (280) (1,363)
--------------- --------------- --------------- ---------------
Loss before income taxes $ (57,479) $ (69,446) $ (106,895) $ (131,322)
=============== =============== =============== ===============
(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
---------------------------------
July 1, 2007 December 31, 2006
--------------- ---------------
Assets
Cash and cash equivalents $ 679,970 $ 182,186
Receivables, net 867,283 828,599
Total inventories, net 364,983 319,538
Other, net 124,955 128,033
--------------- ---------------
Total current assets 2,037,191 1,458,356
Properties, net 2,646,285 2,421,484
Goodwill and intangibles assets, net 7,873,276 7,363,970
Other 505,020 359,603
--------------- ---------------
Total assets $ 13,061,772 $ 11,603,413
=============== ===============
Liabilities and stockholders' equity
Accounts payable $ 324,998 $ 419,650
Accrued expenses and other 1,219,509 1,376,025
Short-term borrowing and current portion of long-term debt 660,604 4,441
--------------- ---------------
Total current liabilities 2,205,111 1,800,116
Long-term debt 2,163,823 2,129,845
Pension and post-retirement benefits 663,923 753,697
Other 1,496,543 1,055,617
--------------- ---------------
Total liabilities 6,529,400 5,739,275
Minority interests 53,548 46,782
Total stockholders' equity 6,478,824 5,817,356
--------------- ---------------
Total liabilities and stockholders' equity $ 13,061,772 $ 11,603,413
=============== ===============
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Twenty-Six Weeks Ended
----------------------------------
July 1, 2007 June 25, 2006
--------------- ---------------
Cash flows from operating activities:
Net income $ 189,370 $ 125,990
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 167,440 228,214
Change in working capital and other, net (308,595) (117,039)
--------------- ---------------
Net cash provided by operating activities 48,215 237,165
--------------- ---------------
Cash flows from investing activities:
Additions to properties and intangible assets (268,293) (201,683)
Proceeds from sale of assets and business, net 33,283 74,151
Other, net 2,737 1,009
--------------- ---------------
Net cash used in investing activities (232,273) (126,523)
--------------- ---------------
Cash flows from financing activities:
Issuance of stock under equity compensation plans 167,874 27,724
Dividends paid (57,134) (64,168)
Net proceeds from (payments on) debt 599,601 (43,835)
Other, net (32,838) 7,042
--------------- ---------------
Net cash provided by (used in) financing activities 677,503 (73,237)
--------------- ---------------
Cash and cash equivalents:
Net increase in cash and cash equivalents 493,445 37,405
Effect of foreign exchange rate changes on cash and cash equivalents 4,339 2,773
Balance at beginning of year 182,186 39,413
--------------- ---------------
Balance at end of period $ 679,970 $ 79,591
=============== ===============