Exhibit 99.1
MOLSON COORS REPORTS 2006 THIRD QUARTER RESULTS
DENVER and MONTREAL, Oct. 31 /PRNewswire-FirstCall/ -- Molson Coors Brewing
Company (NYSE: TAP; TSX) released today its financial results for the third
quarter ending September 24, 2006. Net sales, net income and earnings per share
all increased in the quarter compared to the same period a year ago.
All of the Company's operating segments achieved pretax profit growth, with
solid core brand volume performance during the quarter. Key results for the
Company's third quarter 2006, compared to the same period a year ago, include
the following (all $ amounts in U.S. dollars):
* Net sales increased 3.3 percent to $1.58 billion.
* Sales volume of 11.2 million barrels, or 13.2 million hectoliters (hls),
was unchanged.
* Cost of goods sold increased 2.8 percent to $907.3 million.
* Marketing, general and administrative expense rose 0.8 percent to $434.1
million.
* Net income increased 25.5 percent to $135.8 million, or $1.56 per
diluted share.
* Excluding special items, income from continuing operations
(after-tax)(1) was $139.5 million, or $1.61 per diluted share, down 8.4
percent from the third quarter 2005.
* Excluding a one-time tax benefit of $0.51 per share in the third quarter
of 2005, third quarter 2006 after-tax income from continuing operations
excluding special items increased 28.3 percent.
(See tables below for reconciliations to nearest U.S. GAAP measures.)
Leo Kiely, Molson Coors president and chief executive officer, said, "Our
third quarter results demonstrate consistent progress strengthening the
fundamentals of our company, even while we face tough competitive and cost
pressures in all of our markets. All three of our businesses grew pretax
earnings at double-digit rates. Our Canadian teams continue to achieve strong
profit growth driven by solid strategic brand performance and cost reductions.
In the U.S., volume gains, synergy achievements and improved industry pricing
contributed to double-digit profit growth in the quarter. U.S. volume gains were
driven by Coors Light, which grew for the sixth consecutive quarter. In the
U.K., our teams are doing impressive work in a very competitive market, focusing
on the factors they can control to minimize the impact of margin pressures and
other challenging trends in the U.K. beer industry.
"On pricing -- an area that is key to profitability in all of our businesses
- -- we have strategies that are driven by our own business priorities, which
include building brands and ensuring our brand equities remain strong. With that
in mind, our teams on the frontline are making prudent tactical pricing
decisions necessary to be competitive by market, channel and package."
During the quarter, Molson Coors achieved approximately $25 million in
additional synergies and other cost savings. These savings were more than
offset, however, by commodity and energy-related cost inflation. Favorable
foreign exchange rates increased total-company pretax income by approximately
$8.5 million in the quarter.
The Company's effective tax rate during the third quarter 2006 was 31
percent including special items and 32 percent excluding special items, compared
to 5 percent and 11 percent, respectively, during the third quarter a year ago.
The low third quarter 2005 tax rates were attributable to a one-time $43.5
million benefit from releasing deferred tax liabilities related to the Company's
U.K. business with the election of APB 23 tax treatment for that operation.
Canada Business
Canada operating income of $155.1 million in the third quarter 2006
increased 12.2 percent from the third quarter 2005 due to positive beer pricing,
lower overall costs and an approximately 7 percent favorable movement in foreign
exchange rates. Canada sales volume of 2.3 million barrels (2.7 million hls) was
down 2.5 percent from the same period a year ago while net sales were up 6.1
percent from third quarter of 2005. Net revenue per barrel was up about 1
percent in local currency compared to the third quarter 2005. Cost of goods sold
and marketing, general and administrative costs declined in local currency
compared to the same period a year ago. Sales to retail decreased 1.7 percent
during the quarter compared to third quarter 2005. Double-digit growth in Coors
Light, Rickard's and the Company's partner import brands was offset by a decline
in other premium, discount and unsupported brands stemming from intense
competitive pricing pressure in key provinces, along with the impact of the
discontinuation of Molson Kick and A Marca Bavaria in fall 2005.
Synergies and other cost reduction initiatives offset about one-third of the
Canada business cost of goods inflation. Canada segment other income was up
$12.9 million compared to the third quarter a year ago, driven by improved
financial performance by the Montreal Canadiens Hockey Club and a $9.0 million
benefit related to a reduction in the Company's financial guarantee obligations
to the team in the third quarter.
United States Business
In the third quarter 2006, sales volume and net sales in the U.S. business
increased 3.0 percent and 6.0 percent, respectively, from the third quarter a
year ago. U.S. sales to retail increased 1.4 percent during the quarter compared
to the same period in 2005, driven largely by a low-single-digit increase in
Coors Light volume and a low double-digit increase in Keystone Light. Excluding
the company's Caribbean business, U.S. 50-states sales to retail increased 1.8
percent from a year ago, well ahead of the domestic U.S. beer industry.
Including special charges, U.S. pretax income was $48.8 million. Excluding
special charges, U.S. pretax income increased 10.7 percent to $74.3 million
compared to the same period a year ago driven by sales volume growth, higher net
pricing and the Company's cost saving initiatives and merger synergies.
Europe Business
Including special items, Europe business pretax income during the third
quarter 2006 was $34.6 million. Excluding special items, pretax income for the
Europe business was $36.9 million, a 27.6 percent increase from the third
quarter of 2005, driven by cost savings initiatives in supply chain and
overheads. In the third quarter 2006, Europe business owned-brand sales volume
decreased by 4.4 percent compared to the same period a year ago. The Company's
market-leading Carling brand continued to outperform the U.K. beer industry,
though the brand's volume declined at a low-single-digit rate, primarily due to
lower sales following the World Cup this year, the cycling of distribution gains
in multiple pub chains a year ago and declines in the overall on-premise market.
Net sales per barrel decreased about 4.7 percent in local currency compared
to the third quarter of 2005. About 3 percentage points of the decline was due
to unfavorable owned-brand net pricing and sales mix, while the balance of the
decline was largely attributable to declining factored brand volumes and a
change in invoicing arrangements on certain factored brand sales. The invoicing
change reduced both net sales and cost of goods sold by about $5.8 million with
no impact on gross profits in the third quarter 2006. Cost of goods sold per
barrel for the Company's owned brands decreased approximately 5 percent during
the quarter, while marketing, general and administrative costs decreased by
about 14 percent, both in local currency.
Corporate Expenses
The Company's Corporate general and administrative expenses totaled $27.2
million in the third quarter, up $4.1 million from a year ago. About half of the
increase was due to the Company's stock-based long-term incentive plan,
including the effect of expensing equity-based compensation. The balance of the
increase was for severance payments and other labor-related costs.
Interest expense, excluding interest income from trade loans in the U.K.,
was $31.2 million in the third quarter, 9.4 percent lower than the interest
expense a year ago due to debt repayments, including repaying $208 million of
special dividend debt, during the past year and lower expense related to
recording Ontario Beer Store interest rate swaps at market value.
(1)Discontinued Operations
Net income from discontinued operations during the third quarter of 2006 was
$13.4 million, which reflects a reduction in the fair value of indemnity
guarantees related to the Brazil Kaiser business. These liabilities were reduced
because Kaiser participated in federal and state amnesty programs in Brazil to
settle a significant portion of the Company's previously recorded tax-related
liabilities.
Special Charges
During the third quarter 2006 the company reported special charges totaling
$28.5 million pretax, or $0.20 per diluted share after-tax, primarily related to
the following:
* U.S. results included a $25.5 million pretax special charge related
primarily to the closure of the Company's Memphis brewery, which was
completed on September 6. These charges include accelerated depreciation
of Memphis assets, severance and other plant closure costs.
* In Europe, a $2.3 million special charge was attributable to
restructuring costs in the Company's U.K. supply chain and other areas.
* The Corporate special charge of $0.7 million was attributable to the
cost of benefits for the Coors executives who left immediately following
the merger last year under a change of control agreement.
2006 Third 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 third 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 December 31, 2006.
Reconciliations to Nearest U.S. GAAP Measures
Molson Coors Brewing Company
2006 Third 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) 3rd Q 2006 3rd Q 2005
- -------------------------------------------------- ---------- ----------
U.S. GAAP: After-tax income from
continuing operations: $ 122.4 $ 131.0
Per diluted share $ 1.41 $ 1.52
Add back: Pretax special items - net 28.5 33.5
Minus: Tax effect on special items (11.3) (12.2)
Non-GAAP: After-tax income from
continuing operations, excluding special items: $ 139.5 $ 152.3
Per diluted share $ 1.61 $ 1.77
Percent change from 2005 results from
continuing operations, excluding special items (8.4)%
Minus: One-time tax benefit reported in
3rd Q 2005 -- (43.5)
Non-GAAP: After-tax income from continuing
operations, excluding special items and
one-time tax benefit 139.5 108.7
Per diluted share: $ 1.61 $ 1.27
Percent change from 2005 results from
continuing operations, excluding special items
and one-time tax benefit 28.3%
Molson Coors Brewing Company
2006 Third Quarter Pretax Income From Continuing Operations, Excluding
Special Items
(Note: Some numbers may not sum due to rounding.)
Business
--------------------------------------------- Total
(In millions of $US) Canada U.S. Europe Corporate Consolidated
- -------------------- -------- -------- -------- --------- ------------
U.S. GAAP:
2006 3rd Q
pretax income
(loss) from
continuing
operations
- reported $ 161.1 $ 48.8 $ 34.6 $ (59.4) $ 185.1
Add back: Pretax
special charges -- 25.5 2.3 0.7 28.5
Non-GAAP:
2006 3rd Q
Pretax income
(loss) from
continuing
operations,
excluding
special items $ 161.1 $ 74.3 $ 36.9 $ (58.7) $ 213.6
Percent change
2006 3rd Q vs.
2005 3rd Q pretax
from continuing
operations,
excluding
special items 22.7% 10.7% 27.6% 15.0% 21.2%
U.S. GAAP:
2005 3rd Q
pretax income
(loss) from
continuing
operations $ 131.2 $ 30.0 $ 28.4 $ (46.9) $ 142.8
Add back:
Pretax special
charges/credits
- net -- 37.1 0.6 (4.2) 33.5
Non-GAAP:
2005 3rd Q
Pretax income
(loss) from
continuing
operations,
excluding
special items $ 131.2 $ 67.1 $ 28.9 $ (51.1) $ 176.3
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," "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 Thirty-Nine Weeks Ended
------------------------------- -------------------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Volume in barrels 11,243 11,243 31,286 30,115
Sales $ 2,126,652 $ 2,068,317 $ 5,800,645 $ 5,529,699
Excise taxes (549,828) (541,219) (1,486,950) (1,407,303)
Net Sales 1,576,824 1,527,098 4,313,695 4,122,396
Cost of goods sold (907,305) (882,503) (2,553,949) (2,467,748)
Gross profit 669,519 644,595 1,759,746 1,654,648
Marketing, general
and administrative
expenses (434,106) (430,498) (1,271,245) (1,214,267)
Special charges, net (28,453) (33,493) (81,124) (115,156)
Operating income 206,960 180,604 407,377 325,225
Interest expense, net (28,268) (31,309) (97,117) (78,594)
Other income
(expense), net 6,421 (6,527) 9,225 (8,783)
Income from
continuing
operations
before income
taxes and minority
interests 185,113 142,768 319,485 237,848
Income tax expense (57,628) (7,372) (45,225) (29,097)
Income from
continuing
operations
before minority
interests 127,485 135,396 274,260 208,751
Minority interests
in net income of
consolidated
entities (5,100) (4,411) (12,803) (12,694)
Income from
continuing
operations 122,385 130,985 261,457 196,057
Gain (loss) from
discontinued
operations,
net of tax 13,409 (22,787) 327 (83,497)
Net income $ 135,794 $ 108,198 $ 261,784 $ 112,560
Basic income (loss)
per share:
From continuing
operations $ 1.42 $ 1.54 $ 3.04 $ 2.53
From discontinued
operations 0.16 (0.27) 0.01 (1.08)
Basic net income
per share $ 1.58 $ 1.27 $ 3.05 $ 1.45
Diluted income (loss)
per share:
From continuing
operations $ 1.41 $ 1.52 $ 3.02 $ 2.51
From discontinued
operations 0.15 (0.26) 0.01 (1.07)
Diluted net income
per share $ 1.56 $ 1.26 $ 3.03 $ 1.44
Weighted average shares
- basic 86,160 85,323 85,933 77,405
Weighted average shares
- diluted 86,783 85,900 86,496 78,059
Cash dividends declared
per share $ 0.32 $ 0.32 $ 0.96 $ 0.96
NOTE: All results prior to February 9, 2005, exclude Molson Inc., which merged
with Adolph Coors Company on that date.
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CANADA SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------------- -------------------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Volume in barrels 2,339 2,398 6,183 5,491
Sales $ 673,630 $ 635,191 $ 1,747,418 $ 1,445,813
Excise taxes (158,634) (149,725) (406,819) (325,423)
Net sales 514,996 485,466 1,340,599 1,120,390
Cost of goods sold (237,652) (233,297) (661,845) (586,111)
Gross profit 277,344 252,169 678,754 534,279
Marketing, general
and administrative
expenses (122,223) (113,968) (336,637) (273,065)
Operating income 155,121 138,201 342,117 261,214
Other income
(expense), net 5,941 (6,953) 7,744 (6,953)
Segment earnings
before income
taxes $ 161,062 $ 131,248 $ 349,861 $ 254,261
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
UNITED STATES SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------------- -------------------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Volume in barrels 6,257 6,077 17,643 17,205
Sales $ 809,833 $ 766,390 $ 2,285,209 $ 2,192,293
Excise taxes (112,448) (108,530) (314,771) (307,478)
Net sales 697,385 657,860 1,970,438 1,884,815
Cost of goods sold (435,908) (403,203) (1,231,077) (1,144,624)
Gross profit 261,477 254,657 739,361 740,191
Marketing, general
and administrative
expenses (188,419) (186,371) (560,939) (561,009)
Special charges, net (25,506) (37,115) (73,652) (54,561)
Operating income 47,552 31,171 104,770 124,621
Other income
(expense), net 1,231 (1,163) 3,135 (1,105)
Segment earnings
before income
taxes $ 48,783 $ 30,008 $ 107,905 $ 123,516
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
EUROPE SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------------- -------------------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Volume in barrels 2,647 2,768 7,460 7,419
Sales $ 641,547 $ 664,076 $ 1,763,965 $ 1,888,933
Excise taxes (278,746) (282,964) (765,360) (774,402)
Net sales 362,801 381,112 998,605 1,114,531
Cost of goods sold (233,533) (245,722) (659,635) (736,732)
Gross profit 129,268 135,390 338,970 377,799
Marketing, general
and administrative
expenses (96,288) (107,109) (288,480) (329,570)
Special charges, net (2,287) (561) (8,173) (960)
Operating income 30,693 27,720 42,317 47,269
Interest income, net 2,941 3,150 8,630 10,108
Other income (expense),
net 1,006 (2,487) 1,466 (9,080)
Segment earnings
before income taxes $ 34,640 $ 28,383 $ 52,413 $ 48,297
MOLSON COORS BREWING COMPANY AND SUBSIDIARIES
CORPORATE SEGMENT RESULTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------------- -------------------------------
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Volume in barrels -- -- -- --
Sales $ 1,642 $ 2,660 $ 4,053 $ 2,660
Excise taxes -- -- -- --
Net sales 1,642 2,660 4,053 2,660
Cost of goods sold (212) (281) (1,392) (281)
Gross profit 1,430 2,379 2,661 2,379
Marketing, general
and administrative
expenses (27,176) (23,050) (85,189) (50,623)
Special (charges)
credits, net (660) 4,183 701 (59,635)
Operating loss (26,406) (16,488) (81,827) (107,879)
Interest expense, net (31,209) (34,459) (105,747) (88,702)
Other (expense)
income, net (1,757) 4,076 (3,120) 8,355
Segment loss
before income
tax $ (59,372) $ (46,871) $ (190,694) $ (188,226)
SOURCE Molson Coors Brewing Company
-0- 10/31/2006
/CONTACT: News Media, Paul de la Plante, +1-514-590-6349, for Molson
Coors Brewing Company; or Investor Relations, Dave Dunnewald, +1-303-279-6565,
or Kevin Caulfield, +1-303-277-6894, both of Molson Coors Brewing Company/
/Web site: http://www.molsoncoors.com /
(TAP TAP.)