Exhibit 99.1
MOLSON COORS REPORTS 2006 FIRST QUARTER RESULTS
DENVER and MONTREAL, Canada, May 2 /PRNewswire-FirstCall/ -- Molson Coors
Brewing Company (NYSE: TAP; TSX) today reported a small net loss from continuing
operations(1) in the first quarter 2006 and lower consolidated net sales from
continuing operations on higher sales volume compared to pro forma first quarter
2005(2).
For the 13-week first quarter ended March 26, 2006, the company reported net
sales of $1.2 billion, down 0.1 percent from the pro forma net sales in the
first quarter 2005. Sales volume of 8.6 million barrels, or 10.1 million
hectoliters (hl), from continuing operations (Canada, U.S. and Europe), was up
2.0 percent from the pro forma first quarter a year ago. The first quarter 2006
consolidated net loss from continuing operations was $18.6 million, or a loss of
$0.22 per share. Excluding special items, the after-tax loss from continuing
operations was $0.4 million, or a loss of $0.01 per share, down from after-tax
income of $14.7 million or $0.17 per share in pro forma first quarter 2005. The
2006 results include the impact of stock option expense and other long-term
incentives, the combination of which reduced first quarter pretax income by $4.3
million, or $0.03 per share after tax. (See tables below for reconciliations to
nearest U.S. GAAP measures.)
Leo Kiely, Molson Coors president and chief executive officer, said,
"Overall, our results during the first quarter of the year reflected positive
sales volume and brand strength in all three of our businesses, while our
earnings were negatively affected by a very difficult operating environment in
the U.K., temporarily high corporate overhead expenses, and higher commodity and
energy inflation costs across our system, which had a disproportionate impact
because the first quarter is seasonally our smallest profit quarter. Despite
these challenges, we are encouraged by the positive momentum of our core brands
as we head into our key summer selling season, including the strong global
performance of Coors Light, encouraging trends for Molson Canadian in Canada,
and the continued strength of our leading brand in the U.K., Carling.
"During the first quarter, Coors Light sales to retail in the U.S. were
positive for the fourth consecutive quarter, and the brand achieved a
mid-single-digit growth rate in global sales volume, driven by growth in all of
our major markets. In addition to our strong volume performance during the first
quarter, we continued to make substantial progress on reducing our cost
structure through the capture of additional merger-related synergies, as well as
through baseline cost-savings initiatives that are contributing to greater
productivity across all of our business units and helping us offset inflationary
and other cost pressures."
The company's effective tax rate for the first quarter 2006 was 33 percent,
or 31 percent for income from continuing operations, excluding special items.
All $ amounts are stated in U.S. dollars.
Canada Segment
Canada segment comparable 2006 first quarter sales to retail increased 3.9
percent from the prior year. Double-digit percentage growth by Coors Light and
significant growth of super-premium brands drove the volume improvement. In
addition, Molson Canadian volume trends improved significantly during the first
quarter, with a mid-single-digit increase in sales to retail compared to the
prior year. The company's sales to retail grew approximately in line with the
industry, resulting in unchanged market share from a year earlier.
Canada segment sales volume was up 1.6 percent on a pro forma basis versus
prior year. Canada segment net sales increased 11.0 percent on a pro forma basis
from the first quarter of 2005, driven by favorable volume, foreign exchange
rate movements, pricing and brand mix. Favorable foreign exchange rates
benefited Canada segment net sales by approximately six percent. Pretax income
in Canada during the first quarter 2006 increased 9.4 percent on a pro forma
basis versus prior year due to favorable foreign exchange rates, volume growth,
positive beer pricing, and lower overhead costs, partially offset by higher
distribution and production costs.
United States Segment
In the first quarter 2006, U.S. sales to retail increased 1.9 percent on a
pro forma basis during the quarter, driven by low-single-digit growth for Coors
Light, strong-double-digit growth of Blue Moon and mid-single-digit growth of
Keystone Light. Comparable U.S. segment sales volume increased 2.4 percent. On a
pro forma basis, the company reported a 3.9 percent increase in U.S. segment net
sales compared to the first quarter a year ago.
U.S. pretax income was $15.0 million including special items. Excluding
special items, U.S. pretax income was $36.7 million, up 62.4 percent on a pro
forma basis, driven by volume growth, higher frontline pricing and additional
progress on operations cost saving initiatives, partially offset by higher
packaging materials and energy costs and competitive price discounting in some
key markets.
Europe Segment
In the first quarter 2006, Europe segment sales volume increased 1.4 percent
compared to a year ago, driven by mid-single-digit growth of the Carling brand.
Net sales per barrel decreased 17.8 percent from the first quarter of 2005. Net
sales and other results were affected by a roughly seven percent depreciation in
the British pound versus the U.S. dollar. Approximately two-thirds of the
decrease in net sales per barrel in local currency was the result of a change in
invoicing arrangements with a major customer for the sale of non-owned brands,
which did not impact Europe segment profits. In addition, net sales per barrel
in the U.K. were negatively impacted by unfavorable owned-brand net pricing and
sales mix.
U.K. beer industry volume decreased an estimated one percent in the first
quarter, indicating a market share gain by the company's U.K. business of about
one-half percentage point. In the first quarter, the Europe segment reported a
pretax loss of $21.2 million including special items. Excluding special items,
the Europe segment pretax loss of $13.4 million was approximately double the
loss during the same period a year ago, primarily due to continued unfavorable
industry conditions including ongoing pricing pressures across all channels and
industry volume declines in the on-premise channel. The profit declines were
partially offset by the company's volume performance and cost-reduction
programs.
Corporate Expenses
In the company's Corporate segment, general and administrative expense in
the quarter was $29.7 million, up $17.5 million from the pro forma first quarter
2005. About $4.4 million of the increase was related to non-recurring expenses,
such as severance costs and additional merger-related legal fees. About $2.5
million of the increase was related to the corporate portion of the company's
stock-based long-term incentive plan, including the effect of adopting FAS123R
accounting treatment for expensing of equity-based compensation. Approximately
$3 million of the increase was driven by investments in projects and initiatives
designed to achieve further cost-reductions by 2008. The balance of the increase
was related to establishing a corporate center, including the transfer of nearly
$3 million of global costs from operating segments and investments to support
the global enterprise.
Corporate interest expense was $34.8 million in the first quarter, 19.3
percent higher than the pro forma expense a year ago due to the high percentage
of long-term debt versus a short-term bridge loan that the company had in place
a year ago, as well as higher market interest rates this year.
(1) Discontinued Operations
Following the company's sale of a 68 percent equity interest in its
Brazilian unit, Cervejarias Kaiser ("Kaiser") in January 2006, the company now
reports results for its Brazil business as discontinued operations, including
the company's 2006 first quarter results and 2005 first quarter results.
In the first quarter of 2006, the Brazil discontinued operations reported an
after-tax loss of $11.7 million, which includes the company's portion of the
operating loss sustained by Kaiser for the period of the fiscal first quarter
prior to the sale of the company's controlling interest, along with recognition
of contingent liabilities for sale-related indemnity provisions, adjusted for
foreign currency and non-cash accretion. In the first quarter a year ago, the
Brazil segment reported a pro forma after-tax loss of $37.6 million.
Special Items
The company reported special items totaling $26.8 million, or $0.21 per
share after-tax, during the first quarter 2006. These special charges were
primarily related to accelerated initiatives to improve the company's future
performance and were as follows:
* A U.S. segment net special charge of $21.7 million, driven by expenses
related to closing the Memphis brewery in the next six months, primarily
accelerated asset depreciation and limited restructuring expenses.
* In Europe, a $7.8 million special charge largely attributable to
restructuring expenses for supply chain cost-reduction initiatives, as
well as costs related to the closure of the company's sales operation in
Russia.
* A corporate segment special credit of $2.7 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.
In the first quarter a year ago, the company reported pretax pro forma
special charges totaling $64.6 million related to the closing of the company's
Memphis brewery, the write-off of obsolete brewery assets in the Europe segment
and merger-related corporate expenses.
2006 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 2006 first quarter 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 June 25, 2006.
Reconciliations to Nearest U.S. GAAP Measures
Molson Coors Brewing Company
2006 First Quarter After-tax Income From Continuing Operations
Excluding Special Items
(In millions of $US, except per share data) 1st Q 2006 1st Q 2005(2)
- --------------------------------------------- ------------ --------------
U.S. GAAP: After-tax loss from continuing
operations: $ (18.6) $ (38.1)
Per share $ (0.22) $ (0.44)
Add back: Pretax special items - net 26.8 64.6
Minus: Tax effect on special items (8.6) 11.8
Non-GAAP: After-tax (loss) income from
continuing operations, excluding special
items: $ (0.4) $ 14.7
Per share $ (0.01) $ 0.17
Percent change from 2005 pro forma results
from continuing operations, excluding
special items (103.0)%
Molson Coors Brewing Company
2006 1st Quarter Pretax Income From Continuing Operations, Excluding Special
Items
(Note: Some numbers may not sum due to rounding.)
Segment
----------------------------------------------- Total
(In millions of $US) Canada U.S. Europe Corporate Consolidated
- -------------------------- -------- -------- -------- ------------ ------------
U.S. GAAP: 2006 1st Q
pretax income from
continuing operations -
reported $ 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 from
continuing operations,
excluding special items $ 45.3 $ 36.7 $ (13.4) $ (64.6) $ 4.1
Percent change 2006
1st Q vs. 2005 1st Q
pro forma pretax from
continuing operations,
excluding special items +9.4% +62.4% (95.6)% (56.0)% (74.0)%
U.S. GAAP: 2005 1st Q
pretax income from
continuing operations -
pro forma(2) $ 41.4 $ 15.2 $ (10.5) $ (94.9) $ (48.7)
Add back: Pretax special
charges/credits - net -- 7.4 3.6 53.5 64.6
Non-GAAP: 2005 1st Q
Pretax income from
continuing operations,
excluding special
items(2) $ 41.4 $ 22.6 $ (6.8) $ (41.4) $ 15.8
(2) Due to the completion of the Molson Coors merger on Feb. 9, 2005, 1Q05
figures are pro forma, which were prepared as though the merger took place
on Dec. 26, 2004, to make the results more comparable.
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.
(Summary of Operations Attached)
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 update forward-looking statements, whether as a result of new
information, future events or otherwise.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CONSOLIDATED
1st QUARTER 2006
(Unaudited)
Thirteen Weeks Ended
----------------------------
March 26, March 27,
(In thousands, except per share amounts) 2006 2005
- --------------------------------------------- ------------ ------------
Barrels of beer and other beverages sold 8,619 7,710
Sales $ 1,543,946 $ 1,396,036
Beer excise taxes (390,100) (347,601)
Net sales 1,153,846 1,048,435
Costs and expenses:
Cost of goods sold (726,668) (689,644)
Gross profit 427,178 358,791
Marketing, general and administrative (388,858) (337,370)
Special charges (26,831) (40,700)
Operating income (loss) 11,489 (19,279)
Other expense - net (2,241) (5,006)
Interest expense - net (31,955) (19,584)
Loss from continuing operations before
income taxes and minority interests (22,707) (43,869)
Income tax expense 7,438 15,693
Loss before minority interests (15,269) (28,176)
Minority interest (3,301) (2,223)
Loss from continuing operations (18,570) (30,399)
Loss from discontinued operations
(net of tax) (11,667) (3,785)
Net loss $ (30,237) $ (34,184)
Loss from continuing operations per
share (basic and diluted) $ (0.22) $ (0.48)
Loss from discontinued operations per
share (basic and diluted) (0.13) (0.06)
Net loss per share (basic and diluted) $ (0.35) $ (0.54)
Weighted average number of shares
outstanding (basic and diluted) 85,683 63,106
Cash dividends declared per share $ 0.32 $ 0.32
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
1st QUARTER 2006
(Unaudited)
Thirteen Weeks Ended
----------------------------
March 26, March 27,
(In thousands) 2006 2005
- --------------------------------------------- ------------ ------------
Barrels of beer and other beverages sold 1,591 875
Sales $ 429,930 $ 239,323
Beer excise taxes (100,611) (42,992)
Net sales 329,319 196,331
Costs and expenses:
Cost of goods sold (188,528) (134,163)
Gross profit 140,791 62,168
Marketing, general and administrative (95,996) (45,787)
Operating income 44,795 16,381
Other income (expense) - net 522 (706)
Interest income - net -- --
Earnings before income taxes $ 45,317 $ 15,675
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - UNITED STATES
1st QUARTER 2006
(Unaudited)
Thirteen Weeks Ended
----------------------------
March 26, March 27,
(In thousands) 2006 2005
- --------------------------------------------- ------------ ------------
Barrels of beer and other beverages sold 4,958 4,794
Sales $ 639,503 $ 610,859
Beer excise taxes (88,229) (85,886)
Net sales 551,274 524,973
Costs and expenses:
Cost of goods sold (345,209) (331,427)
Gross profit 206,065 193,546
Marketing, general and administrative (169,446) (171,479)
Special charges (21,724) (7,447)
Operating income 14,895 14,620
Other income - net 129 76
Interest income - net -- --
Earnings before income taxes $ 15,024 $ 14,696
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - EUROPE
1st QUARTER 2006
(Unaudited)
Thirteen Weeks Ended
----------------------------
March 26, March 27,
(In thousands) 2006 2005
- --------------------------------------------- ------------ ------------
Barrels of beer and other beverages sold 2,070 2,041
Sales $ 473,839 $ 545,854
Beer excise taxes (201,260) (218,723)
Net sales 272,579 327,131
Costs and expenses:
Cost of goods sold (192,503) (224,054)
Gross profit 80,076 103,077
Marketing, general and administrative (93,682) (109,136)
Special charges (7,803) (3,629)
Operating loss (21,409) (9,688)
Other expense - net (2,567) (4,353)
Interest income - net 2,804 3,576
Loss before income taxes $ (21,172) $ (10,465)
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CORPORATE
1st QUARTER 2006
(Unaudited)
Thirteen Weeks Ended
----------------------------
March 26, March 27,
(In thousands) 2006 2005
- --------------------------------------------- ------------ ------------
Barrels of beer and other beverages sold -- --
Sales (1) $ 674 $ --
Beer excise taxes -- --
Net sales (1) 674 --
Costs and expenses:
Cost of goods sold (1) (428) --
Gross profit 246 --
Marketing, general and administrative (29,734) (10,968)
Special items - net 2,696 (29,624)
Operating loss (26,792) (40,592)
Other expense - net (325) (23)
Interest expense - net (34,759) (23,160)
Loss before income taxes $ (61,876) $ (63,775)
(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- 05/02/2006
/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 /