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Molson Coors Reports Higher Net Sales And Underlying After-Tax Income For The Second Quarter

The Company will also host an online, real-time webcast of an Investor Relations Follow-up Session with financial analysts and institutional investors at 2:00 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 August 7, 2013. The Company will post this release and related financial statements on its website today.

Footnotes:

(1) The Company calculates non-GAAP underlying after-tax income by excluding special and other non-core items from the nearest U.S. GAAP earnings measure, which is net income from continuing operations attributable to MCBC. To calculate underlying after-tax income in the second quarter, the Company excluded non-core gains, losses and expenses, as well as special items. For further details, please see the section “Special and Other Non-Core Items,” along with tables for reconciliations to the nearest U.S. GAAP measures.

(2) Unless otherwise indicated, all $ amounts are in U.S. Dollars and all quarterly comparative results are for the Company’s fiscal second quarter ended June 30, 2012, compared to the fiscal second quarter ended June 25, 2011. Additionally, all per-hectoliter results exclude contract brewing and non-owned factored beverage volume in the denominator but include the financial impact of these sales in the numerator, unless otherwise indicated.

(3) MillerCoors, a U.S. joint venture of Molson Coors Brewing Company and SABMiller plc, was launched on July 1, 2008. Molson Coors has a 42 percent economic interest in MillerCoors, which is accounted for using the equity method. Molson Coors’ interest in MillerCoors results, along with certain adjustments under U.S. GAAP, is reflected in “Equity Income in MillerCoors.” This release includes reconciliation from MillerCoors Net Income to Molson Coors Brewing Company Equity Income in MillerCoors and Non-GAAP U.S. Segment Underlying Pretax Income (see Table 4).

(4) Unless otherwise indicated, all $ amounts are in U.S. Dollars. The pro forma statements of operations include adjustments directly attributable to the acquisition of StarBev. Actual amounts include the results of operations for Central Europe from the Acquisition date of June 15, 2012, through June 30, 2012. Pro forma amounts include the results of operations for Central Europe for the periods indicated on each statement. These amounts also include pro forma adjustments as if MCCE had been acquired on December 26, 2010, the first day of our 2011 fiscal year, including the effects of on-going acquisition accounting impacts and eliminating operating costs and expenses directly related to the transaction, but do not include adjustments for costs related to integration activities following the completion of the Acquisition, cost savings or synergies that have been or may be achieved by the combined businesses. Pro forma amounts are not necessarily indicative of what the results would have been had we operated the businesses since December 26, 2010, and do not purport to be indicative of future operating results.

Overview of Molson Coors

Molson Coors Brewing Company is one of the world’s largest brewers. The Company’s operating segments include Canada, the United States, Central Europe, the United Kingdom, and Molson Coors International (MCI). The Company has a diverse portfolio of owned and partner brands, including signature brands Coors Light, Molson Canadian, Staropramen and Carling. Molson Coors is listed on the 2011 Dow Jones Sustainability Index (DJSI), the most recognized global benchmark of sustainability among global corporations. For more information on Molson Coors Brewing Company, visit the company’s web site, www.molsoncoors.com.

Forward-Looking Statements

This press release includes estimates or projections that constitute “forward-looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” expect,” intend,” anticipate,” “project,” “will,” and similar expressions identify forward-looking statements, which generally are not historic in nature. Although the Company believes that the assumptions upon which 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 historical experience, and present projections and expectations are disclosed in the Company’s filings with the Securities and Exchange Commission (“SEC”). These factors include, among others, our ability to successfully integrate StarBev, retain key employees and achieve planned cost synergies; pension plan costs; availability or increase in the cost of packaging materials; our ability to maintain manufacturer/distribution agreements; impact of competitive pricing and product pressures; our ability to implement our strategic initiatives, including executing and realizing cost savings; changes in legal and regulatory requirements, including the regulation of distribution systems; increase in the cost of commodities used in the business; our ability to maintain brand image, reputation and product quality; our ability to maintain good labor relations; changes in our supply chain system; additional impairment charges; the impact of climate change and the availability and quality of water; the ability of MillerCoors to integrate operations and technologies; lack of full-control over the operations of MillerCoors; the ability of MillerCoors to maintain good relationships with its distributors; and other risks discussed in our filings with the SEC, including our Annual Report on Form 10-K for the year-ended December 31, 2011, which are available from the SEC. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise.

Reconciliations to Nearest U.S. GAAP Measure

       
Molson Coors Brewing Company
Table 1: 2012 Second Quarter Underlying After-Tax Income
(After-Tax Income From Continuing Operations, Excluding Special and Other Non-Core Items)
($ In Millions, Except Per Share Data)
(Note: Some numbers may not sum due to rounding.)
2nd Q
2012 2011

U.S. GAAP: Income from continuing operations attributable to MCBC, net of tax:

104.3 224.3
Per diluted share: $ 0.57 $ 1.19
Add back/(less):
Pretax special items - net 21.2 11.0
Proportionate share of MillerCoors special items - net (1) (1.0 ) 0.4
Environmental litigation reserve (2) - (0.1 )
Acquisition non-financing-related costs (4) 25.3 -
Acquisition financing-related costs (5) 49.9 -
Acquisition bridge-facility fees (2) 13.0 -
Acquisition-related inventory step-up (3) 8.6
Acquisition-Euro currency purchase loss (2) 57.9 -
Unrealized loss on acquisition-related convertible note (5) 5.6 -
Unrealized foreign exchange gain on acquisition financing instruments-net (2) (0.6 ) -
Unrealized gain related to commodity swaps (3) (1.5 ) -
Molson Coors Si'hai acquisition-related costs (4) 0.5 -
After-tax non-controlling interest effect of special items (5.1 ) -
Tax effects related to special and other non-core items   (28.0 )   (4.0 )

Non-GAAP: Underlying after-tax income:

  250.1     231.6  
  Per diluted share:     $ 1.38       $ 1.23  

Notes:

(1) Included in Equity Income in MillerCoors, but excluded from non-GAAP underlying pretax income
(2) Included in Other Income (Expense), net
(3) Included in Cost of Goods Sold
(4) Included in Marketing, General and Administrative expenses
(5) Included in Interest Expense
 

                             
Molson Coors Brewing Company
Table 2: 2012 Second Quarter Underlying Pretax Income
(Pretax Income From Continuing Operations, Excluding Special and Other Non-Core Items)
($ In Millions)
(Note: Some numbers may not sum due to rounding.)
Business     Total
        Canada     U.S.     U.K.     Central Europe     MCI     Corporate     Consolidated

U.S. GAAP: 2012 2nd Q Income (loss) from continuing operations before income taxes

$ 139.9 $ 185.6 $ 16.3 $ 12.4 $ (24.3 ) $ (206.1 ) $ 123.8
Add back/(less):
Pretax special items - net (0.9 ) - 11.7 - 10.4 - 21.2
Proportionate share of MillerCoors pretax special items - net (1) - (1.0 ) - - - - (1.0 )
Acquisition non-financing-related costs (4) - - - 2.5 - 22.8 25.3
Acquisition financing-related costs (5) - - - - - 49.9 49.9
Bridge facility fees (2) - - - - - 13.0 13.0
Acquisition-related inventory step-up (3) - - - 8.6 - - 8.6
Euro currency purchase loss (2) - - - - - 57.9 57.9
Unrealized loss on convertible note (5) - - - - - 5.6 5.6
Unrealized foreign exchange gain (loss) on acquisition financing instruments (2) - - - (3.8 ) - 3.2 (0.6 )
Unrealized gain related to commodity swaps (3) - - - - - (1.5 ) (1.5 )
Molson Coors Si'hai acquisition-related costs (4) - - - - 0.5 - 0.5

Non-GAAP: 2012 2nd Q underlying pretax income (loss)

      $ 139.0       $ 184.6       $ 28.0       $ 19.7       $ (13.4 )     $ (55.2 )     $ 302.7  
Percent change 2012 2nd Q vs. 2011 2nd Q underlying pretax income (loss)         (0.6 %)       7.2 %       (19.3 %)       N/A         (32.7 %)       3.0 %       8.2 %

U.S. GAAP: 2011 2nd Q Income (loss) from continuing operations before income taxes

$ 131.8 $ 171.8 $ 32.3 $ - $ (10.6 ) $ (56.8 ) $ 268.5
Add back/(less):
Pretax special items - net 8.1 - 2.4 - 0.5 - 11.0
Proportionate share of MillerCoors pretax special items - net (1) - 0.4 - - - - 0.4
Environmental litigation reserve (2) - - - - - (0.1 ) (0.1 )

Non-GAAP: 2011 2nd Q underlying pretax income (loss)

      $ 139.9       $ 172.2       $ 34.7       $ -       $ (10.1 )     $ (56.9 )     $ 279.8  

Notes:

(1) Included in Equity Income in MillerCoors
(2) Included in Other Income (Expense), net
(3) Included in Cost of Goods Sold
(4) Included in Marketing, General and Administrative expenses
(5) Included in Interest Expense
 
               
MillerCoors LLC
Table 3: Underlying Net Income
(Net Income Attributable to MillerCoors, Excluding Special Items)
(In Millions)
  Three Months Ended     Six Months Ended
June 30, 2012     June 30, 2011     June 30, 2012     June 30, 2011
 
U.S. GAAP - Net income attributable to MillerCoors: $ 438.3 $ 398.7 $ 713.6 $ 633.4
Add back: Special items, net   (2.3 )       1.1       (2.3 )       2.5
Non-GAAP - Underlying net income: $ 436.0       $ 399.8     $ 711.3       $ 635.9
 

Pretax and after-tax underlying income 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. Our management uses underlying income 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. We believe that underlying income performance 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.

               
Molson Coors Brewing Company
Table 4: Reconciliation of Net Income Attributable to MillerCoors to MCBC U.S. Segment Underlying Pretax Income (Excluding Special Items)
(In Millions)
(Note: Some numbers may not sum due to rounding.)
 
Three Months Ended     Six Months Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
Net Income Attributable to MillerCoors $ 438.3 $ 398.7 $ 713.6 $ 633.4
Multiply: MCBC economic interest % in MillerCoors   42 %       42 %       42 %       42 %
MCBC proportionate share of MillerCoors net income $ 184.1 $ 167.4 $ 299.7 $ 266.0

Add: Amortization of the difference between MCBC contributedcost basis and the underlying equity in net assets of MillerCoors (1)

1.5 2.5 1.9 4.9
Add: Share-based compensation adjustment (2)   -         1.9         2.9         2.1  
MCBC Equity Income in MillerCoors (U.S. GAAP) $ 185.6       $ 171.8       $ 304.5       $ 273.0  
Add: Proportionate share of MillerCoors special items (3)   (1.0 )       0.4         (1.0 )       1.0  
MCBC U.S. Segment Underlying Pretax Income (Non-GAAP) $ 184.6       $ 172.2       $ 303.5       $ 274.0  

Notes:

(1) Our net investment in MillerCoors is based on the carrying values of the net assets contributed to the joint venture which is less than our proportional share of underlying equity (42%) of MillerCoors (contributed by both Coors Brewing Company and Miller Brewing Company) by approximately $587 million as of June 30, 2012. This difference, with the exception of goodwill and land, is being amortized as additional equity income over the remaining useful lives of the contributed long-lived amortizing assets.
(2) The net adjustment is to record 100% of share-based compensation associated with pre-existing equity awards to be settled in MCBC Class B common stock held by former CBC employees now employed by MillerCoors and to eliminate all share-based compensation impacts related to pre-existing SABMiller plc equity awards held by former Miller Brewing Company employees now employed by MillerCoors. As of the end of the second quarter of 2011, the share-based awards granted to former CBC employees now employed by MillerCoors became fully vested, as such; no further adjustments will be recorded related to these awards. We are still recording adjustments to eliminate the impacts related to the pre-existing SAB Miller plc equity awards, which represent the amounts recorded in 2012.
(3) MillerCoors special items were a net gain of $2.3 million for both Q2 2012 and the first half 2012, and net charges of $1.1 million and $2.5 million for Q2 2011 and the first half of 2011, respectively. MCBC's proportionate share equals 42% of these net special charges. The tax effect of adjustments to arrive at underlying after-tax income attributable to MillerCoors, a non-GAAP measure, is calculated based on the estimated tax rate applicable to the item(s) being adjusted in the period in which they arose and is zero for all periods presented.
 
             
Molson Coors Brewing Company
Table 5: Worldwide Beer Volume
(In Millions of Hectoliters)
  Thirteen Weeks Ended
June 30, 2012     June 25, 2011 % Change  
 
Financial Volume: 5.799 4.964 16.8 %
Royalty Volume: 0.203     0.099 105.1 %
Owned Volume: 6.002 5.063 18.5 %
Proportionate Share of Equity Investment Sales-to-Retail (1) : 7.904     8.002 (1.2 %)
Total Worldwide Beer Volume (2) : 13.906     13.065 6.4 %
 

Notes:

(1) Reflects the addition of Molson Coors Brewing Company's proportionate share of equity method investments (MillerCoors and Modelo Molson) sales-to-retail for the periods presented.
(2) Includes 15 days of financial volume and royalty volume in the Company's Central Europe business in 2012 totaling 0.966 million hectoliters.
 

             
Molson Coors Brewing Company and Subsidiaries
Table 6: Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
(Unaudited)
 
Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
 
Volume in hectoliters   5.799         4.964         9.404         8.642  
 
Sales $ 1,440.9 $ 1,383.1 $ 2,449.0 $ 2,380.4
Excise taxes   (441.5 )       (449.5 )       (758.2 )       (756.4 )
Net sales 999.4 933.6 1,690.8 1,624.0
Cost of goods sold   (580.1 )       (523.9 )       (1,018.9 )       (951.1 )
Gross profit 419.3 409.7 671.9 672.9
Marketing, general and administrative expenses (304.8 ) (272.5 ) (553.0 ) (510.9 )
Special items, net (21.2 ) (11.0 ) (22.7 ) (11.0 )
Equity income in MillerCoors   185.6         171.8         304.5         273.0  
Operating income (loss) 278.9 298.0 400.7 424.0
Interest income (expense), net (84.6 ) (27.7 ) (108.4 ) (54.5 )
Other income (expense), net   (70.5 )       (1.8 )       (71.9 )       (2.5 )
Income (loss) from continuing operations before income taxes 123.8 268.5 220.4 367.0
Income tax expense   (25.9 )       (43.2 )       (43.2 )       (59.3 )
Net Income (loss) from continuing operations 97.9 225.3 177.2 307.7
Income (loss) from discontinued operations, net of tax   0.8         (1.5 )       0.9         (1.2 )
Net income (loss) including noncontrolling interests 98.7 223.8 178.1 306.5
Less: Net (income) loss attributable to noncontrolling interests   6.4         (1.0 )       6.5         (0.8 )
Net income (loss) attributable to MCBC $ 105.1       $ 222.8       $ 184.6       $ 305.7  
 
Basic net income (loss) attributable to MCBC per share:
From continuing operations $ 0.58 $ 1.20 $ 1.02 $ 1.64
From discontinued operations   -         (0.01 )       -         (0.01 )
Basic net income per share $ 0.58       $ 1.19       $ 1.02       $ 1.63    
 
Diluted net income (loss) attributable to MCBC per share:
From continuing operations $ 0.57 $ 1.19 $ 1.01 $ 1.63
From discontinued operations   -         (0.01 )       -         (0.01 )
Diluted net income per share $ 0.57       $ 1.18       $ 1.01       $ 1.62  
 
Weighted average shares - basic 180.8 187.1 180.6 187.0
Weighted average shares - diluted 181.6 188.8 181.6 188.8
 
Dividends per share $ 0.32       $ 0.32       $ 0.64       $ 0.60  
 
Amounts attributable to MCBC
Net income (loss) from continuing operations, net of tax $ 104.3 $ 224.3 $ 183.7 $ 306.9
Income (loss) from discontinued operations, net of tax   0.8         (1.5 )       0.9         (1.2 )
Net income (loss) attributable to MCBC $ 105.1       $ 222.8       $ 184.6       $ 305.7  
 

               
Molson Coors Brewing Company and Subsidiaries
Table 7: Canada Segment Results of Operations
(In Millions)
(Unaudited)
 
 
Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
 
Volume in hectoliters   2.411         2.368         4.097         4.081  
 
Sales $ 761.9 $ 745.0 $ 1,289.5 $ 1,264.2
Excise taxes   (179.0 )       (180.3 )       (304.3 )       (305.7 )
Net sales 582.9 564.7 985.2 958.5
Cost of goods sold   (301.9 )       (291.1 )       (544.3 )       (516.2 )
Gross profit 281.0 273.6 440.9 442.3
Marketing, general and administrative expenses (141.4 ) (130.8 ) (254.4 ) (243.3 )
Special items, net   0.9         (8.1 )       (1.2 )       (10.3 )
Operating income (loss) 140.5 134.7 185.3 188.7
Other income (expense), net   (0.6 )       (2.9 )       (1.5 )       (4.7 )
Income (loss) before income taxes $ 139.9       $ 131.8       $ 183.8       $ 184.0  
 
               
Molson Coors Brewing Company and Subsidiaries
Table 8: United Kingdom Segment Results of Operations
(In Millions)
(Unaudited)
 
 
Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
 
Volume in hectoliters (1)   2.220         2.371         3.959         4.142  
 
Sales (1) $ 568.3 $ 605.8 $ 1,018.3 $ 1,059.5
Excise taxes   (242.1 )       (264.1 )       (428.7 )       (443.1 )
Net sales (1) 326.2 341.7 589.6 616.4
Cost of goods sold   (220.9 )       (215.5 )       (401.9 )       (403.5 )
Gross profit 105.3 126.2 187.7 212.9
Marketing, general and administrative expenses (78.2 ) (93.2 ) (162.0 ) (175.6 )
Special items, net   (11.7 )       (2.4 )       (10.0 )       (0.2 )
Operating income (loss) 15.4 30.6 15.7 37.1
Interest income, net 1.4 1.4 2.9 2.9
Other income (expense), net   (0.5 )       0.3         (1.0 )       (0.9 )
Income (loss) before income taxes $ 16.3       $ 32.3       $ 17.6       $ 39.1  

Notes:

(1) Reflects gross segment sales and for the second quarter of 2012 includes intercompany sales to MCI of 0.067 million hectoliters and $4.5 million of net sales. The first half of 2012 includes intercompany sales to MCI of 0.111 million hectoliters and $7.2 million of net sales. Reflects gross segment sales and for the second quarter and first half of 2011 includes intercompany sales to MCI of 0.020 million hectoliters and $1.3 million of net sales. The net sales offset is included within MCI cost of goods sold, resulting in no UK profit impact. These amounts are eliminated in the consolidated totals.
 

           
Molson Coors Brewing Company and Subsidiaries
Table 9: Central Europe Results of Operations
(In Millions)    
(Unaudited)
 
 
Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
 
Volume in hectoliters   0.911         -       0.911         -
 
Sales $ 71.9 $ - $ 71.9 $ -
Excise taxes   (14.6 )       -       (14.6 )       -
Net Sales 57.3 - 57.3 -
Cost of goods sold   (37.0 )       -       (37.0 )       -
Gross profit 20.3 - 20.3 -
Marketing, general and administrative expenses (12.3 ) - (12.3 ) -
Special items, net   -         -       -         -
Operating income (loss) 8.0 - 8.0 -
Other income (expense), net   4.4         -       4.4         -
Income (loss) before income taxes $ 12.4       $ -     $ 12.4       $ -
 
               
Molson Coors Brewing Company and Subsidiaries
Table 10: Molson Coors International Results of Operations
(In Millions)
(Unaudited)
 
 
Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
 
Volume in hectoliters   0.324         0.245         0.548         0.439  
 
Sales $ 42.9 $ 33.3 $ 75.8 $ 57.4
Excise taxes   (5.8 )       (5.1 )       (10.6 )       (7.6 )
Net Sales 37.1 28.2 65.2 49.8
Cost of goods sold (1)   (25.8 )       (18.1 )       (44.3 )       (32.0 )
Gross profit 11.3 10.1 20.9 17.8
Marketing, general and administrative expenses (25.4 ) (20.2 ) (43.7 ) (35.4 )
Special items, net   (10.4 )       (0.5 )       (10.4 )       (0.5 )
Operating income (loss) (24.5 ) (10.6 ) (33.2 ) (18.1 )
Other income (expense), net   0.2         -         0.3         0.1  
Income (loss) before income taxes $ (24.3 )     $ (10.6 )     $ (32.9 )     $ (18.0 )

Notes:

(1) Reflects gross segment amounts and for the second quarter of 2012 includes intercompany cost of goods sold from the U.K. of $4.5 million. The first half of 2012 includes intercompany cost of goods sold from the U.K. of $7.2 million. Reflects gross segment amounts and for the second quarter and first half of 2011 includes intercompany cost of goods sold from the U.K. of $1.3 million. The offset is included within U.K. net sales. These amounts are eliminated in the consolidated totals.
 

               
Molson Coors Brewing Company and Subsidiaries
Table 11: Corporate Results of Operations
(In Millions)
(Unaudited)
 
 
Thirteen Weeks Ended     Twenty-Six Weeks Ended
June 30, 2012     June 25, 2011     June 30, 2012     June 25, 2011
 
Volume in hectoliters   -         -         -         -  
 
Sales $ 0.4 $ 0.3 $ 0.7 $ 0.6
Excise taxes   -         -         -         -  
Net Sales 0.4 0.3 0.7 0.6
Cost of goods sold   1.0         (0.5 )       1.4         (0.7 )
Gross profit 1.4 (0.2 ) 2.1 (0.1 )
Marketing, general and administrative expenses (47.5 ) (28.3 ) (80.6 ) (56.6 )
Special items, net   -         -         (1.1 )       -  
Operating income (loss) (46.1 ) (28.5 ) (79.6 ) (56.7 )
Interest expense, net (86.0 ) (29.1 ) (111.3 ) (57.4 )
Other income (expense), net   (74.0 )       0.8         (74.1 )       3.0  
Income (loss) before income taxes $ (206.1 )     $ (56.8 )     $ (265.0 )     $ (111.1 )
 
               
MillerCoors LLC (1)
Table 12: Results of Operations
(In Millions)
(Unaudited)
  Three Months Ended     Six Months Ended
June 30, 2012     June 30, 2011     June 30, 2012     June 30, 2011
 
 
Volume in hectoliters   21.697         21.504         39.056         38.905  
 
Sales $ 2,567.2 $ 2,473.1 $ 4,601.8 $ 4,448.4
Excise taxes   (343.2 )       (340.8 )       (618.0 )       (617.0 )
Net sales 2,224.0 2,132.3 3,983.8 3,831.4
Cost of goods sold   (1,311.8 )       (1,268.8 )       (2,381.8 )       (2,331.8 )
Gross profit 912.2 863.5 1,602.0 1,499.6
Marketing, general and administrative expenses (470.1 ) (456.0 ) (880.9 ) (852.0 )
Special items, net   2.3         (1.1 )       2.3         (2.5 )
Operating income 444.4 406.4 723.4 645.1
Other income (expense), net   1.1         (1.5 )       2.4         (1.9 )
Income before income taxes 445.5 404.9 725.8 643.2
Income tax expense   (1.8 )       (2.9 )       (2.5 )       (4.4 )
Net income 443.7 402.0 723.3 638.8
Less: Net income attributable to noncontrolling interests   (5.4 )       (3.3 )       (9.7 )       (5.4 )
Net income attributable to MillerCoors $ 438.3       $ 398.7       $ 713.6       $ 633.4  

Notes:

(1) Economic ownership of MillerCoors is 58% held by SABMiller and 42% held by Molson Coors. See Table 4 in the release for a reconciliation from Net Income Attributable to MillerCoors to Molson Coors Equity Income in MillerCoors, and to U.S. Segment Underlying Pretax Income (Non-GAAP).

       
Molson Coors Brewing Company and Subsidiaries
Table 13: Condensed Consolidated Balance Sheets
(In Millions)
(Unaudited)
   

As of

June 30, 2012 December 31, 2011
Assets
 
Cash and cash equivalents $ 516.0 $ 1,078.9
Receivables, net 876.1 726.0
Inventories, net 268.7 207.2
Other, net   172.8   105.9
Total current assets 1,833.6

 

2,118.0
 
Properties, net 1,977.7 1,430.1
Goodwill and intangibles, net 9,413.3 6,039.3
Investment in MillerCoors 2,605.8 2,487.9
Other, net   406.3   348.5
Total assets $ 16,236.7 $ 12,423.8
 
Liabilities and Equity
 
Accounts payable $ 492.0 $ 301.2
Accrued expenses and other, net 991.6 929.1
Current portion of long-term debt and short-term borrowings   802.5   46.9
Total current liabilities 2,286.1 1,277.2
 
Long-term debt 4,097.9 1,914.9
Pension and post-retirement benefits 687.2 697.5
Other, net   1,283.6   844.0
Total liabilities 8,354.8 4,733.6
 
Total MCBC stockholders' equity 7,810.8 7,647.9
Noncontrolling interests   71.1   42.3
Total equity   7,881.9   7,690.2
Total liabilities and equity $ 16,236.7 $ 12,423.8
 

     
Molson Coors Brewing Company and Subsidiaries
Table 14: Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)
   
Thirteen Weeks Ended
June 30, 2012 June 25, 2011
Cash flows from operating activities:
Net income (loss) including noncontrolling interests $ 178.1 $ 306.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 111.8 107.1
Amortization of debt issuance costs and discounts 25.0 10.6
Equity Income in MillerCoors (304.5 ) (273.0 )
Distributions from MillerCoors 304.5 273.0
Change in working capital and other, net   82.5     (152.4 )
Net cash provided by operating activities $ 397.4   $ 271.8  
 
Cash flows from investing activities:
Additions to properties $ (81.4 ) $ (72.5 )
Proceeds from sales of properties and intangible assets 1.3 1.2
Acquisition of businesses, net of cash acquired (2,257.4 ) (41.3 )
Change in restricted cash balances - 2.7
Proceeds from settlement of derivative instruments - 15.4
Investment in MillerCoors (565.7 ) (470.4 )
Return of capital from MillerCoors 459.9 376.4
Payments on settlement of debt-related derivatives (110.6 ) -
Investment in and advances to an unconsolidated affiliate (3.7 ) (5.7 )
Other, net   4.9     2.4  
Net cash used in investing activities $ (2,552.7 ) $ (191.8 )
 
Cash flows from financing activities:
Exercise of stock options under equity compensation plans $ 20.8 $ 6.3
Dividends paid (118.8 ) (113.6 )
Net borrowings of debt 1,715.3 (8.5 )
Other, net   (33.7 )   (9.5 )
Net cash used in financing activities $ 1,583.6   $ (125.3 )
 
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents $ (571.7 ) $ (45.3 )
Effect of foreign exchange rate changes on cash and cash equivalents 8.8 11.9
Balance at beginning of year   1,078.9     1,217.6  
Balance at end of period $ 516.0   $ 1,184.2  
 

       
Molson Coors Brewing Company and Subsidiaries
Table 15: Molson Coors Central Europe Pro Forma Results of Operations
(In Millions)
(Unaudited)
 
2nd Quarter
For the Three Months Ended
June 30, 2012 June 30, 2011
 
Volume in hectoliters   4.137     4.079  
Net sales $ 258.4 $ 297.9
Cost of goods sold   (143.0 )   (151.0 )
Gross profit 115.4 146.9
Marketing, general and administrative expenses (68.8 ) (75.6 )
Special items, net   -     (0.4 )
Operating income (loss) 46.6 70.9
Interest income (expense), net (0.6 ) 0.7
Other (expense) income, net   0.2     0.9  
U.S. GAAP: Income (loss) before income taxes 46.2 72.5
Add special and other non-core items(1)   -     0.4  
Non-GAAP: Underlying pretax income (loss) $ 46.2   $ 72.9  

Notes:

(1) The following special and other non-core items have been excluded from underlying pretax earnings. For 2011, special and other non-core items included restructuring and severance costs totaling $7.0 million. During the 2nd quarter of 2012, special and other non-core items included an $8.6 million charge related to a non-cash fair value adjustment to acquisition-date inventory, $2.5 million of acquisition-related expenses, and a $3.8 million unrealized foreign exchange gain, which were added back as pro forma adjustments and not underlying adjustments as they relate directly to the Acquisition.




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