-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, td6tgiLamLUiQ4CvB3XFhSriKxzGMjlaaZ8rpD6OIHyTziH7X552QPHX3MGaZlwm S6lf61f93EhNSfRuNIOqfg== 0000024545-94-000016.txt : 19941122 0000024545-94-000016.hdr.sgml : 19941122 ACCESSION NUMBER: 0000024545-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941002 FILED AS OF DATE: 19941116 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COORS ADOLPH CO CENTRAL INDEX KEY: 0000024545 STANDARD INDUSTRIAL CLASSIFICATION: 2082 IRS NUMBER: 840178360 STATE OF INCORPORATION: CO FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08251 FILM NUMBER: 94560674 BUSINESS ADDRESS: STREET 1: 12TH & FORD STREETS CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3032796565 10-Q 1 THIRD QUARTER 1994 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter ended October 2, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) Commission file number 0-8251 ADOLPH COORS COMPANY (Exact name of registrant as specified in its charter) COLORADO 84-0178360 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Golden, Colorado 80401 (Address of principal executive offices) (Zip Code) 303-279-6565 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Class B Common Stock (non-voting), no par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] State the aggregate market value of the voting stock held by non-affiliates of the registrant: All voting shares are held by Adolph Coors, Jr. Trust. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of November 11, 1994: Class A Common Stock - 1,260,000 shares Class B Common Stock - 37,066,134 shares PART I. FINANCIAL INFORMATION Item 1. Financial Statements ADOLPH COORS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
Sixteen weeks ended ---------------------- October 2, October 3, 1994 1993 --------- --------- (In thousands, except per share data) SALES $ 683,964 $ 660,107 Less - beer excise taxes ( 128,383) ( 124,480) --------- --------- NET SALES 555,581 535,627 --------- --------- Costs and expenses: Cost of goods sold 358,679 349,149 Marketing, general and administrative 159,979 158,288 Research and project development 4,217 4,506 --------- --------- Total operating expenses 522,875 511,943 --------- --------- OPERATING INCOME 32,706 23,684 Other expense - net 1,266 3,696 --------- --------- Income before income taxes 31,440 19,988 Income tax expense 14,100 10,400 --------- --------- NET INCOME $ 17,340 $ 9,588 ========= ========= NET INCOME PER SHARE OF COMMON STOCK $ 0.45 $ 0.25 ========= ========= Weighted average number of outstanding shares of common stock 38,306 38,101 ========= ========= Cash dividends declared per share of common stock $ 0.125 $ 0.125 ========= =========
ADOLPH COORS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
Forty weeks ended ---------------------- October 2, October 3, 1994 1993 --------- --------- (In thousands, except per share data) SALES $1,601,299 $1,532,117 Less - beer excise taxes ( 295,049) ( 287,639) --------- --------- NET SALES 1,306,250 1,244,478 --------- --------- Costs and expenses: Cost of goods sold 824,568 805,593 Marketing, general and administrative 380,598 356,838 Research and project development 9,727 9,941 --------- --------- Total operating expenses 1,214,893 1,172,372 --------- --------- OPERATING INCOME 91,357 72,106 Other expense - net 3,677 9,974 --------- --------- Income before income taxes 87,680 62,132 Income tax expense 39,500 29,000 --------- --------- NET INCOME $ 48,180 $ 33,132 ========= ========= NET INCOME PER SHARE OF COMMON STOCK $ 1.26 $ 0.87 ========= ========= Weighted average number of outstanding shares of common stock 38,270 37,926 ========= ========= Cash dividends declared per share of common stock $ 0.375 $ 0.375 ========= =========
ADOLPH COORS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
October 2, December 26, 1994 1993 ---------- ----------- (In thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 25,359 $ 82,211 Accounts and notes receivable 99,782 75,967 Inventories: Finished 69,067 56,878 In process 27,698 24,402 Raw materials 43,798 56,370 Packaging materials 6,095 9,581 ---------- ---------- Total inventories 146,658 147,231 Other assets 78,187 78,339 ---------- ---------- Total current assets 349,986 383,748 ---------- ---------- PROPERTIES, at cost, less accumulated depreciation, depletion and amortiza- tion of $1,191,498 in 1994 and $1,118,292 in 1993 899,500 884,102 OTHER ASSETS 103,377 83,094 ---------- ---------- TOTAL ASSETS $1,352,863 $1,350,944 ========== ==========
ADOLPH COORS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
October 2, December 26, 1994 1993 ---------- ----------- (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 44,000 $ 50,000 Accounts payable 108,043 121,376 Federal and state income taxes 6,381 4,157 Accrued expenses and other liabilities 209,039 201,018 ---------- ---------- Total current liabilities 367,463 376,551 ---------- ---------- LONG-TERM DEBT 131,000 175,000 DEFERRED TAX LIABILITY 65,438 53,430 OTHER LONG-TERM LIABILITIES 119,871 114,036 ---------- ---------- Total liabilities 683,772 719,017 ---------- ---------- SHAREHOLDERS' EQUITY: Capital stock: Preferred stock, non-voting, $1 par value, 25,000,000 shares authorized and no shares issued -- -- Class A common stock, voting, $1 par value, authorized and issued 1,260,000 shares 1,260 1,260 Class B common stock, non-voting, no par value, 100,000,000 authorized and 46,200,000 shares issued 11,000 11,000 ---------- ---------- 12,260 12,260 Paid-in capital 56,741 54,928 Retained earnings 618,269 584,444 Other 1,296 40 ---------- ---------- 688,566 651,672 Less - treasury stock, at cost, Class B shares, 9,133,866 in 1994 and 9,260,779 in 1993 19,475 19,745 ---------- ---------- Total shareholders' equity 669,091 631,927 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,352,863 $1,350,944 ========== ==========
ADOLPH COORS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
For the forty weeks ended -------------------------- October 2, October 3, 1994 1993 --------- --------- (In thousands) Cash flows from operating activities: Net income (loss) $ 48,180 $ 33,132 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 91,964 90,972 Change in accumulated deferred income taxes 12,008 ( 2,519) (Gain) Loss on sale or abandonment of properties 882 3,534 Change in current assets and current liabilities ( 26,400) 75,174 Change in non-current assets and non-current liabilities 2,126 ( 12,607) --------- --------- Net cash provided by operating activities 128,760 187,686 --------- --------- Cash flows from investing activities: Additions to properties ( 110,939) ( 87,865) Proceeds from sale of properties 2,999 1,466 Additions to intangible assets ( 16,525) -- Other 1,125 ( 538) --------- --------- Net cash (used in) investing activities ( 123,340) ( 86,937) --------- --------- Cash flows from financing activities: Proceeds from long-term debt -- 5,000 Exercise of stock options, net of related notes receivable 2,083 7,350 Dividends paid ( 14,355) ( 14,239) Payment of current portion of long-term debt( 50,000) -- --------- --------- Net cash (used in) financing activities ( 62,272) ( 1,889) --------- --------- Cash and cash equivalents: Net increase (decrease) in cash and cash equivalents ( 56,852) 98,860 Balance at beginning of year 82,211 39,669 --------- --------- Balance at end of quarter $ 25,359 $ 138,529 ========= =========
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Sales and Volume: - - ----------------- Adolph Coors Company (ACC) reported net sales of $555.6 million and $1,306.3 million for the third quarter and first forty weeks of 1994 which represents a 3.7% and 5.0% increase, respectively, from the comparable periods in the prior year. ACC's single direct subsidiary, Coors Brewing Company (CBC), had malt beverage sales of 6,884,000 barrels for the third quarter of 1994 compared to 6,767,000 barrels sold in the third quarter of 1993, an increase of 1.7%. The improved sales volume resulted primarily from increased sales of Zima (TM) Clearmalt (TM) following its national expansion, incremental third quarter contract production at CBC's recently acquired Spanish brewery and the introduction of Coors Artic Ice which is now available in 54% of the United States. Malt beverage sales for the first forty weeks of 1994 rose 2.1% to 15,957,000 barrels from 15,623,000 for the same period of 1993. The improved sales volume resulted primarily from the same factors that affected the third quarter. Gross Profit: - - ------------- Gross profit as a percentage of net sales for the third quarter of 1994 improved to 35.4% from 34.8% for the same period a year earlier. Gross profit as a percentage of net sales for the first forty weeks of 1994 improved to 36.9% from 35.3% for the first forty weeks of 1993. The improvements for the third quarter and first forty weeks were primarily a result of improved brand mix profitability, operational efficiencies and lower glass and aluminum costs. In addition, the gross margin percentages for the first forty weeks benefitted from increased volume during the first half of the year. The improvements in the gross profit percentages for both periods of 1994 helped to absorb the costs of a limited product withdrawal in the third quarter. At the present time, management believes the reserve established in the third quarter will be adequate to absorb all costs of this limited product withdrawal. Operating Income: - - ----------------- Operating income for the third quarter of 1994 increased 38.1% to $32.7 million compared to $23.7 million for the third quarter of 1993. Operating income for the first forty weeks of 1994 increased 26.7% to $91.4 million from $72.1 million for the first forty weeks of 1993. Higher operating income was the result of improved gross profit offset in part by increased marketing, general and administrative expenses of 1.1% and 6.7% for the third quarter and first forty weeks of 1994, respectively. The increase in marketing, general and administrative expense was primarily because of marketing spending in support of Zima Clearmalt's national rollout and Coors Artic Ice. Marketing expense increases were partially offset by decreased general and administrative expenses that were the result of a company-wide effort that began in 1993 to reduce costs. Non-Operating Expenses: - - ----------------------- Other expense - net was $1.3 million for the third quarter of 1994 compared to $3.7 million expense for the same period a year earlier. The principal contributions to the decrease were a gain on the sale of investments and higher royalty income. Net interest expense during the third quarter of 1994 was $2.3 million compared to $3.8 million a year ago due to the $50.0 million payment of the current portion of long-term debt. The payment was made early in the third quarter. Other expense - net decreased $6.3 million to $3.7 million expense in the first forty weeks of 1994 from $10.0 million expense for the same period a year earlier. The principal contributors to the decrease for the first forty weeks of 1994 from the first forty weeks of 1993 include higher royalty income, a one-time, pre-tax gain of approximately $2.1 million on the sale of a company-owned distributorship, and gains from the sale of investments. Additionally, net interest expense declined to $8.4 million in the first forty weeks of 1994 from $10.4 million in the first forty weeks of 1993 primarily due to higher capitalized interest and the $50.0 million payment of the current portion of long-term debt. Effective Tax Rate: - - ------------------- The consolidated effective tax rate for the third quarter and first forty weeks of 1994 decreased to 44.8% and 45.1%, respectively, compared to 52.0% and 46.7% for the same periods of 1993. The consolidated tax rates for the third quarter and first forty weeks of 1993 are higher than the same periods in 1994 primarily because in the third quarter of 1993 the federal income tax rate increased from 34% to 35% on a retroactive basis to the beginning of 1993. The retroactive application of the incremental 1% in the tax rate resulted in a catchup adjustment in the third quarter of 1993 for the first half of 1993 and for deferred income taxes. Net Income: - - ----------- Consolidated net income for the third quarter and first forty weeks of 1994 was $17.3 million, or $0.45 per share and $48.2 million, or $1.26 per share compared to $9.6 million, or $0.25 per share and $33.1 million, or $0.87 per share for the same periods a year earlier. Working Capital Changes: - - ------------------------ Consolidated working capital at October 2, 1994 decreased $24.7 million from year end 1993, primarily because of a decrease in cash and cash equivalents of $56.9 million. This change was offset by a seasonal increase in accounts receivable, a decrease in accounts payable, the completion of the investment commitment in South Korea for the Jinro-Coors Brewing Company and the reduction of the current portion of long-term debt. Cash Provided by Operating Activities: - - -------------------------------------- Net cash provided by operating activities for the first forty weeks of 1994 was $128.8 million, down $58.9 million from $187.7 million for the same period a year ago. This decrease resulted primarily from a $23.8 million increase in accounts receivable in 1994 compared to an $18.6 million decrease in 1993. The increase in accounts receivable in 1994 is due primarily to the seasonality of the beer business and a receivable due from the new CBC/ANC joint venture described later in this Form 10-Q. The decrease in accounts receivable in 1993 was due primarily to a temporary extension of credit terms to wholesalers at year end 1992. This temporary extension of credit terms more than offset the normal seasonal increase in accounts receivable. Also contributing to the decline in net cash provided by operating activities was a relatively stable overall investment in total inventories in 1994, whereas, the overall investment in total inventories declined by $9.4 million in 1993. The liabilities for federal and state income taxes and accrued expenses increased in 1993 significantly while these liabilities did not have the same relative increases in 1994. Partially offsetting these items was a $15.0 million increase in net income and a $12.0 million increase in 1994 in accumulated deferred income taxes. The increase in deferred taxes resulted from income tax temporary differences created by the early payment of the 1994 pension contribution and by the 1994 payment of various 1993 accrued expenses. These accrued expenses were not deductible for income tax purposes in 1993. Cash Used in Investing Activities: - - ---------------------------------- Cash flows used in investing activities for the first forty weeks of 1994 increased by $36.4 million from the comparable period last year principally due to the purchases of a brewery in Spain and a distributorship in San Bernardino, California. Cash Used in Financing Activities: - - ----------------------------------- Cash flows used in financing activities for the first forty weeks of 1994 increased by $60.4 million from the same period last year. Early in the third quarter of 1994, the Company made the first principal payment on its unsecured medium-term notes. The $50.0 million payment was funded by a combination of internally generated cash and short-term borrowing. Outlook: - - -------- The Company expects continued pricing pressure and minimal industry growth for 1994. CBC volume and net sales are expected to increase due to Zima's national expansion and, to a lesser extent, Killian's continued growth at a slower pace. The gross profit percentage is expected to be improved over 1993 in the fourth quarter of 1994. Generally, CBC's gross profit percentage follows a seasonal pattern with the second and third quarters' gross profit percentages being higher than the first and fourth quarters' gross profit percentages. CBC normally achieves its greatest economies of scale in the second quarter for higher proportionate sales volume relative to fixed manufacturing costs. Marketing expenditures are expected to increase in the fourth quarter of 1994 over the same period a year ago due to the Zima expansion and the introduction of Coors Artic Ice. Partially offsetting the marketing increases are expected reductions in general and administrative expenditures in line with a company-wide effort that began in 1993 to reduce costs. Due to supply contracts currently in place, Alcoa's recent announcement regarding a change in its aluminum pricing structure is not expected to impact CBC's raw materials cost in 1994, but the change may have an adverse impact on CBC in 1995. The ultimate impact is unknown at this time. In May, CBC announced the formation of a joint venture with American National Can Company (ANC) to produce beverage can ends at the CBC end manufacturing facility in Golden. The joint venture will produce reduced-diameter ends for sale on the open market and it will also continue the production of CBC's supply of can ends. The companies expect the joint venture to increase the facility's efficiency and volume. In October, CBC and ANC announced the expansion of their long-term joint venture to include the production of beverage cans at the CBC can manufacturing facility in Golden. In July, CBC announced an agreement in principle with Public Service Company of Colorado (PSC) to sell the brewery's electrical power generating assets and to supply the steam needed to operate the assets. Coors would have then purchased all of its electricity and coal supplies from PSC. The value of the assets involved in the proposed transaction was estimated to be between $31.0 million and $36.0 million. In October, CBC and PSC announced that negotiations had ended without a final agreement. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 26, 1993. The accompanying financial statements have not been examined by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management of Adolph Coors Company, the financial statements include all adjustments necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the 40 weeks ended October 2, 1994, may not be indicative of results that may be expected for the year ending December 25, 1994. PART II. OTHER INFORMATION Item 1. Legal Proceedings See the company's quarterly report on the Form 10-Q for the quarter ended June 12, 1994 for a description of pending litigation with TransRim Enterprises (USA) Ltd. Item 6. Exhibits and Reports on Form 8-K. (b) Reports on Form 8-K None. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ADOLPH COORS COMPANY By /s/ Robert J. Diaz -------------------------------- Robert J. Diaz Vice President, Controller Coors Brewing Company (Principal Financial Officer) (Principal Accounting Officer) November 15, 1994 EX-27 2
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