Exhibit 99.1
MOLSON COORS REPORTS 2005 FOURTH QUARTER AND FULL-YEAR RESULTS
DENVER and MONTREAL, Feb. 9 /PRNewswire-FirstCall/ -- Molson Coors Brewing
Company (NYSE: TAP; TSX) today reported lower consolidated net sales, sales
volume and income from continuing operations for the fourth quarter and full
year 2005 compared to pro forma periods in 2004. Following the company's sale of
68 percent equity interest in its Brazilian unit, Cervejarias Kaiser ("Kaiser"),
the company now reports historical results for its Brazil business as
discontinued operations, including for the company's 2005 fourth quarter and
full year results and 2004 pro forma results. (All $ amounts are stated in U.S.
dollars.)
For the 13-week fourth quarter ended December 25, 2005, the company reported
net sales of $1.38 billion and sales volume of 10.3 million barrels, or 12.1
million hectoliters (hl), from continuing operations (Canada, U.S. and Europe).
Fourth quarter 2005 consolidated net income was $22.4 million, or $0.26 per
diluted share. After-tax income from continuing operations, excluding special
items, was $53.9 million*, or $0.63 per diluted share, down 34.1 percent from
the pro forma fourth quarter 2004. (*See table below for reconciliation to
nearest U.S. GAAP measure.)
For the 52-week fiscal year ended December 25, 2005, the company reported
pro forma net sales of $5.61 billion and sales volume of 41.2 million barrels,
or 48.3 million hectoliters (hl), from continuing operations. Pro forma net
income in 2005 was $93.4 million, or $1.10 per diluted share. On a pro forma
basis, after-tax income from continuing operations, excluding special items, was
$335.5 million*, or $3.95 per share, in 2005, 22.6 percent lower than 2004.
The company's effective tax rate for the fourth quarter 2005 was 36.9
percent, or 36.4 percent for income from continuing operations, excluding
special items. For the full year 2005, the company's effective tax rate was 17.0
percent, or 22.0 percent for income from continuing operations, excluding
special items.
On a consolidated pro forma basis, compared to the fourth quarter and full
year 2004, the company's results from continuing operations included:
Pro forma Results From Continuing Operations
(Excluding special items and before the cumulative effect of a change in
accounting principle)
2005 Fourth Quarter
* Sales to retail (0.4)%
* Sales volume (1.0)%
* Net sales (8.9)%
* Gross profit (3.6)%
* Operating income (20.9)%
* Pretax income (35.3)%
* After-tax income (34.1)%
* Diluted earnings per share (33.7)%
2005 Full Year
* Sales to retail (1.1)%
* Sales volume (1.4)%
* Net sales (4.4)%
* Gross profit (1.0)%
* Operating income (14.3)%
* Pretax income (21.9)%
* After-tax income (22.6)%
* Diluted earnings per share (21.7)%
Including discontinued operations (Brazil results) for 2005 and 2004, before
the change in accounting principle, total company 2005 after-tax income
excluding special items was $264.5 million**, or $3.11 per diluted share, 24.2
percent lower than comparable pro forma 2004 earnings. For the fourth quarter of
2005, after-tax income including discontinued operations (Brazil) but excluding
special items was $45.6 million**, or $0.53 per diluted share, 30.6 percent
lower than comparable pro forma earnings a year earlier. (**See table below for
reconciliation to nearest U.S. GAAP measure.)
Leo Kiely, Molson Coors president and chief executive officer, said, "Our
fourth quarter 2005 financial performance reflects challenging operating
environments in all of our major markets but also significant improvements in
key trends in our businesses as the year progressed. In Canada, our sales to
retail in the fourth quarter increased for the third consecutive quarter, with
Coors Light and super premium Rickard's finishing the year with double-digit
growth and Molson Canadian volume trends improving significantly in the fourth
quarter to virtually even with last year. In the U.S., Coors Light sales-to-
retail trends continued to strengthen, and growth of our Blue Moon brand
remained very strong. In the U.K., while competitive discounting and retailer
consolidations continued to exert margin pressure in our Europe segment, our
market-leading Carling brand and newly introduced Coors Fine Light Beer both
continued to achieve volume and share growth. Although significant input cost
inflation impacted results company-wide, the impact was significantly offset by
merger cost synergies and underlying cost initiatives across all of our
businesses.
"In addition, for the full year, we far exceeded our free cash flow goal of
$200 million, generating $295 million of free cash available to pay down debt
during 2005. Our goal in 2006 is to generate more than $300 million in free cash
available for paying down debt, including the cash proceeds from the sale of a
controlling interest in our Brazil business.
"As we enter the new year, in addition to building momentum behind our key
brands in our key markets, we will continue to focus on achieving the goals we
established when we completed the Molson Coors merger exactly one year ago
today. Among these goals was resolving our strategic situation in Brazil, and a
few weeks ago we announced that we sold a controlling interest in our Brazil
Kaiser business. We are pleased with this outcome, as it will improve
consolidated cash flow and remove pretax losses, debt and contingent liabilities
from our financial results. The Brazil sale will also allow us to focus on our
biggest markets while retaining opportunities in the future for us to
participate in the growing Brazil market with a strong and capable strategic
partner.
"Looking ahead, we will continue to focus on our other key goals for Molson
Coors Brewing Company, including capturing at least $175 million in
merger-related cost synergies by the end of 2007, addressing the top-line
challenges and restoring growth in Canada, and re-establishing consistent growth
trends for Coors Light in the U.S., while continuing to make progress on
reducing our cost structure and repaying debt."
Canada Segment
Canada segment comparable 2005 fourth quarter sales to retail increased 0.3
percent from the prior year. Double-digit growth by Coors Light and growth by
partner import brands drove the volume improvement. Molson Canadian volume
trends improved substantially from earlier in the year to finish the fourth
quarter virtually even with the prior year, the best volume trend for the brand
in more than two years. Overall industry sales to retail grew an estimated 0.6
percent in the quarter from a year earlier.
Canada segment sales volume of 2.0 million barrels (2.3 million hl) was up
0.3 percent on a comparable basis versus prior year. Canada segment net sales
increased 5.3 percent on a pro forma basis from the fourth quarter of 2004,
driven by favorable foreign exchange rates and brand mix, partially offset by
increased price discounting. Excluding special items, operating income in Canada
during the fourth quarter 2005 increased 3.9 percent on a pro forma basis versus
prior year due to favorable foreign exchange rates and lower manufacturing
costs, partially offset by higher marketing and sales investment.
United States Segment
In the fourth quarter 2005, U.S. sales to retail increased 1.1 percent on a
pro forma basis during the quarter, driven by low-single-digit percentage growth
by Coors Light and a double-digit increase in the Blue Moon brand. Comparable
U.S. segment sales volume decreased 0.1 percent. On a pro forma basis, the
company reported a 0.7 percent decrease in U.S. segment net sales compared to
the fourth quarter a year ago. Excluding special items, U.S. operating income
was up 7.4 percent on a pro forma basis, driven by lower overhead and
manufacturing costs, partially offset by increased beer price discounting and
higher packaging materials and energy costs.
Europe Segment
In the fourth quarter 2005, Europe segment sales volume decreased 3.5
percent compared to a year ago. Net sales per barrel decreased 25.6 percent from
the fourth quarter of 2004, primarily because of a change in invoicing
arrangements with a major customer for the sale of non-owned brands. This change
did not impact Europe segment profits. In addition, an overall decline in
non-owned brand volume, and unfavorable owned-brand net pricing and sales mix
contributed to lower net sales per barrel.
U.K. beer industry volume declined an estimated 3.6 percent in the fourth
quarter, indicating a slight market share gain by the company's U.K. business.
Europe segment operating income during the fourth quarter 2005 decreased 36.2
percent from the prior year, excluding special items, primarily due to increased
price discounting and lower owned-brand volume versus a year ago, as well as
unfavorable sales mix and factored (non-owned) brand volume declines.
Discontinued Operations
The company's business in Brazil is now reported as discontinued operations
for all periods prior to the sale of a controlling interest in the business on
January 13, 2006. During 2005, on a pro forma basis the Brazil business affected
the company's financial results in the following ways, all of which will no
longer impact the company's results in reporting periods following the sale:
* The income statement impact included pretax losses and Brazil-related
interest and overhead expenses that totaled a negative $125.7 million
after tax, or $1.48 per diluted share, in 2005. These three components,
which will no longer flow through the company's income statements, are:
* Pretax losses in the Brazil segment totaled $112.8 million in
2005, excluding $22.8 million of the minority owner's share of
losses but including $54.7 million of special charges.
* Corporate interest expense on Brazil debt totaled $11.5 million in
2005, excluding the minority owner share.
* Corporate overhead and other costs related to the Brazil business
totaled $1.4 million for the year.
* Since the company's effective tax rate did not benefit from these
Brazil losses, these represent after-tax impacts on the company's
financial results.
* The company's balance sheet improves in two principal ways:
* The company's total debt position improves by approximately $128
million in 2006 versus 2005 following the Brazil sale with the
inflow of $68 million of sale proceeds and the removal of $60
million of financial debt.
* Contingent liabilities of $260 million are removed from the
company's balance sheet, and approximately $365 million of
disclosed but unaccrued transactional tax claims are no longer the
responsibility of Molson Coors.
* The Brazil business reduced the company's free cash flow by $22 million
during 2005 due to capital contributions, interest expense and other
costs.
As disclosed at the time of the Brazil business sale, while the company
believes that all significant contingencies have been disclosed as part of the
sale process and adequately reserved for on the Kaiser financial statements,
resolution of contingencies and claims above reserved or otherwise disclosed
amounts could, under some circumstances, result in additional liabilities for
Molson Coors because of transaction-related indemnity provisions.
Special Items
The company reported special items totaling $30.2 million, or $0.23 per
share after-tax, during the fourth quarter 2005. These special charges were
primarily related to accelerated initiatives to improve the company's future
performance and were as follows:
* U.S. segment special charges of $13.5 million, primarily related to
closing the Memphis brewery, including accelerated asset depreciation
and limited restructuring expenses.
* In Europe, a $12.9 million special charge primarily attributable to
restructuring expenses for cost-reduction initiatives, as well as costs
related to the closure of the company's sales operation in Russia.
* Canada segment charges of $5.2 million primarily related to
restructuring sales and marketing organizations.
* A corporate segment special credit of $1.3 million was attributable to
stock option income resulting from the quarterly adjustment to the cost
of providing a floor price under options for Coors executives who left
under a change-of-control provision following the merger of Molson and
Coors.
Merger Synergies Update
In the fourth quarter 2005, Molson Coors synergy teams continued to pursue
aggressively $175 million of merger-related pretax cost synergies that the
company has committed to capturing in stages in the first three years of the
Molson Coors merger. During 2005, the company captured $59 million in merger-
related cost synergies, surpassing the company's 2005 goal of $50 million by 18
percent. Based on the success of efforts to date related to capturing synergies
and identifying additional cost-saving opportunities, the company remains
confident that it will meet or exceed its merger-related synergies goals of an
incremental $40 million in 2006 and a total of $175 million by the third year
following the completion of the merger.
Cumulative Effect of Change in Accounting Principle
Molson Coors has adopted Financial Accounting Standards Board
Interpretation No. 47 (FIN 47) under which companies must recognize potential
long-term liabilities related to the eventual retirement of assets. As a result
of adopting FIN 47, the company recorded a cumulative non-cash expense of $3.7
million in the 2005 fourth quarter, reported as Cumulative Effect of Change in
Accounting in the company's income statements.
As reported in the company's 2005 fourth quarter and full year results, this
expense represents a catch-up of more than 30 years of accumulated accretion of
interest related to anticipated asset retirement obligations. Following this
catch-up expense in the 2005 fourth quarter, the company does not expect FIN
47-related expense to have a significant impact on annual operating results.
2005 Fourth Quarter and Full Year 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 2005 fourth quarter and full year financial 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 March 26, 2006.
Reconciliations to Nearest U.S. GAAP Measures:
Molson Coors Brewing Company
*2005 After-tax Income From Continuing Operations, Excluding Special Items
(In millions of $US, except per share data)
1Q05(1) 2Q05 3Q05 4Q05 FY05(1)
---------- ---------- ---------- ---------- ----------
U.S. GAAP: After-tax income
from continuing operations
- reported: $ (38.1) $ 95.5 $ 131.0 $ 34.4 $ 222.8
Above, per diluted share $ (0.44) $ 1.11 $ 1.52 $ 0.40 $ 2.62
Add back: Pretax special
items - net 64.6 41.0 33.5 30.2 169.3
Minus: Tax effect on
special items 11.8 21.9 12.2 10.7 56.6
Non-GAAP: After-tax income
from continuing operations,
excluding special items: $ 14.7 $ 114.5 $ 152.3 $ 53.9 $ 335.5
Above, per diluted share $ 0.17 $ 1.33 $ 1.77 $ 0.63 $ 3.95
Percent change from 2004
pro forma results from
continuing operations,
excluding special items (72.0)% (15.7)% (5.2)% (34.1)% (22.6)%
(1) Due to the completion of the Molson Coors merger on Feb. 9, 2005, 1Q05 and
FY05 figures are pro forma.
**After-tax Income (Including Discontinued Operations, Before Change In
Accounting Principle), Excluding Special Items
(In millions of $US)
2005 Fourth Quarter
U.S. GAAP: After-tax income before change in accounting
principle - reported $ 26.1
Add back: Pretax special items - net 30.2
Minus: Minority Interest in special items 0.0
Minus: Tax effect on special items (10.7)
Non-GAAP: After-tax income before change in accounting
principle, excluding special items $ 45.6
2005 Full Year (pro forma)
U.S. GAAP: After-tax income before change in accounting
principle - reported $ 97.1
Add back: Pretax special items - net 235.3
Minus: Minority interest in special items (11.3)
Minus: Tax effect on special items (56.6)
Non-GAAP: After-tax income before change in accounting
principle, excluding special items $ 264.5
After-tax Income, and After-tax Income 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 After-tax Income 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 and amortization expense, which
can vary substantially from company to company depending upon accounting methods
and book value of assets, capital structure and the method by which assets were
acquired. Our management uses After-tax Income 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," "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 publicly update forward-looking statements, whether as a result of
new information, future events or otherwise.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CONSOLIDATED
4th QUARTER AND FULL-YEAR 2005
(Unaudited)
Thirteen Weeks Ended Fifty-two Weeks Ended
---------------------------- ----------------------------
(In thousands, except Dec. 25, Dec. 26, Dec. 25, Dec. 26,
per share amounts) 2005 2004 2005 2004
- ---------------------------- ------------ ------------ ------------ ------------
Barrels of beer and
other beverages sold 10,318 8,284 40,431 32,703
Sales $ 1,888,003 $ 1,546,886 $ 7,417,702 $ 5,819,727
Beer excise taxes (503,493) (419,581) (1,910,796) (1,513,911)
Net sales 1,384,510 1,127,305 5,506,906 4,305,816
Costs and expenses:
Cost of goods sold (839,201) (738,542) (3,306,949) (2,741,694)
Gross profit 545,309 388,763 2,199,957 1,564,122
Marketing, general
and administrative (418,249) (305,362) (1,632,516) (1,223,219)
Special items - net (30,236) 7,522 (145,392) 7,522
Operating income 96,824 90,923 422,049 348,425
Other (expense)
income - net (4,462) 7,063 (13,245) 12,946
Interest expense - net (35,009) (12,358) (113,603) (53,189)
Income from continuing
operations before income
taxes and minority
interests 57,353 85,628 295,201 308,182
Income tax expense (21,167) (25,570) (50,264) (95,228)
Income before minority
interests 36,186 60,058 244,937 212,954
Minority interests (1,797) (4,340) (14,491) (16,218)
Income from continuing
operations 34,389 55,718 230,446 196,736
Loss from discontinued
operations (net of tax) (8,329) -- (91,826) --
Income before cumulative
effect of change in
accounting principle 26,060 55,718 138,620 196,736
Cumulative effect of
change in accounting
principle (net of tax) (3,676) -- (3,676)
Net income (1) $ 22,384 $ 55,718 $ 134,944 $ 196,736
Income from continuing
operations per share
(basic) $ 0.40 $ 1.49 $ 2.90 $ 5.29
Income from continuing
operations per share
(diluted) $ 0.40 $ 1.45 $ 2.88 $ 5.19
Loss from discontinued
operations per share
(basic) $ (0.10) $ -- $ (1.16) $ --
Loss from discontinued
operations per share
(diluted) $ (0.10) $ -- $ (1.15) $ --
Net income per share
(basic) $ 0.26 $ 1.49 $ 1.70 $ 5.29
Net income per share
(diluted) $ 0.26 $ 1.45 $ 1.69 $ 5.19
Weighted average number of
shares o/s (basic) (2) 85,397 37,471 79,403 37,159
Weighted average number of
shares o/s (diluted) 85,968 38,376 80,036 37,909
Cash dividends declared
per share $ 0.32 $ 0.205 $ 1.28 $ 0.82
(1) Purchase accounting, which is preliminary as of December 25, 2005, could
result in additional income or loss that these results do not reflect on an
annualized basis when finalized in subsequent reporting periods.
(2) Shares outstanding at December 26, 2004, totaled 37.7 million and were 85.7
million at December 25, 2005, largely as a result of the merger.
NOTE: All results prior to February 9, 2005, exclude Molson Inc., which merged
with Adolph Coors Company on that date.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CANADA
4th QUARTER AND FULL-YEAR 2005
(Unaudited)
Thirteen Weeks Ended Fifty-two Weeks Ended
---------------------------- ----------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
(In thousands) 2005 2004 2005 2004
- ---------------------------- ------------ ------------ ------------ ------------
Barrels of beer and
other beverages sold 1,967 -- 7,457 --
Sales $ 533,269 $ 15,734 $ 1,979,082 $ 60,693
Beer excise taxes (126,353) -- (451,776) --
Net sales 406,916 15,734 1,527,306 60,693
Costs and expenses:
Cost of goods sold (204,748) -- (790,859) --
Gross profit 202,168 15,734 736,447 60,693
Marketing, general
and administrative (104,480) 332 (377,545) 969
Special charges (5,161) -- (5,161) --
Operating income 92,527 16,066 353,741 61,662
Other income (expense)
- net 4,770 -- (2,183) --
Interest income - net -- -- -- --
Earnings before income
taxes $ 97,297 $ 16,066 $ 351,558 $ 61,662
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - UNITED STATES
4th QUARTER AND FULL-YEAR 2005
(Unaudited)
Thirteen Weeks Ended Fifty-two Weeks Ended
---------------------------- ----------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
(In thousands) 2005 2004 2005 2004
- ---------------------------- ------------ ------------ ------------ ------------
Barrels of beer and
other beverages sold 5,440 5,266 22,645 22,068
Sales $ 686,447 $ 664,775 $ 2,878,740 $ 2,772,702
Beer excise taxes (96,306) (91,884) (403,784) (392,509)
Net sales 590,141 572,891 2,474,956 2,380,193
Costs and expenses:
Cost of goods sold (380,436) (363,755) (1,525,060) (1,462,373)
Gross profit 209,705 209,136 949,896 917,820
Marketing, general
and administrative (178,306) (180,961) (739,315) (735,529)
Special charges (13,520) -- (68,081) --
Operating income 17,879 28,175 142,500 182,291
Other income (expense)
- net 648 11,463 (457) 19,924
Interest income - net -- -- -- --
Earnings before income
taxes $ 18,527 $ 39,638 $ 142,043 $ 202,215
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - EUROPE
4th QUARTER AND FULL-YEAR 2005
(Unaudited)
Thirteen Weeks Ended Fifty-two Weeks Ended
---------------------------- ----------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
(In thousands) 2005 2004 2005 2004
- ---------------------------- ------------ ------------ ------------ ------------
Barrels of beer and
other beverages sold 2,911 3,018 10,329 10,635
Sales $ 667,602 $ 866,377 $ 2,556,535 $ 2,986,332
Beer excise taxes (280,834) (327,697) (1,055,236) (1,121,402)
Net sales 386,768 538,680 1,501,299 1,864,930
Costs and expenses:
Cost of goods sold (253,008) (374,787) (989,740) (1,279,321)
Gross profit 133,760 163,893 511,559 585,609
Marketing, general
and administrative (100,403) (111,612) (429,973) (447,163)
Special items - net (12,881) 7,522 (13,841) 7,522
Operating income 20,476 59,803 67,745 145,968
Other expense - net (5,094) (2,761) (14,174) (5,655)
Interest income - net 2,870 4,196 12,978 16,024
Earnings before income
taxes $ 18,252 $ 61,238 $ 66,549 $ 156,337
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CORPORATE
4th QUARTER AND FULL-YEAR 2005
(Unaudited)
Thirteen Weeks Ended Fifty-two Weeks Ended
---------------------------- ----------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
(In thousands) 2005 2004 2005 2004
- ---------------------------- ------------ ------------ ------------ ------------
Barrels of beer and
other beverages sold -- -- -- --
Sales (1) $ 685 $ -- $ 3,345 $ --
Beer excise taxes -- -- -- --
Net sales (1) 685 -- 3,345 --
Costs and expenses:
Cost of goods sold (1) (1,009) -- (1,290) --
Gross profit (324) -- 2,055 --
Marketing, general
and administrative (35,060) (13,121) (85,683) (41,496)
Special items - net 1,326 -- (58,309) --
Operating loss (34,058) (13,121) (141,937) (41,496)
Other (expense) income
- net (4,786) (1,639) 3,569 (1,323)
Interest expense - net (37,879) (16,554) (126,581) (69,213)
Loss before income
taxes $ (76,723) $ (31,314) $ (264,949) $ (112,032)
(1) The amounts shown are reflective of revenues and costs associated with the
Company's intellectual property, including trademarks and brands. Prior
period amounts have not been reclassified due to immateriality.
SOURCE Molson Coors Brewing Company
-0- 02/09/2006
/CONTACT: News Media, Sylvia Morin, +1-514-590-6345, 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 /