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Molson Coors Reports Higher Net Sales And Lower Underlying After-Tax Income For The Fourth Quarter 2012

2012 Fourth Quarter and Year-End Earnings Conference Call

Molson Coors Brewing Company will conduct an earnings conference call with financial analysts and investors at 11:00 a.m. Eastern Time today to discuss the Company’s 2012 fourth quarter and full year results. The Company will provide a live webcast of the earnings call.

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 May 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 and underlying free cash flow by excluding special and other non-core items from the nearest U.S. GAAP performance measures, which are net income from continuing operations attributable to MCBC and net cash provided by operating activities, respectively. For further details regarding these adjustments, please see the section “Special and Other Non-Core Items,” along with tables for reconciliations to the nearest U.S. GAAP measures. Unless otherwise indicated, all $ amounts are in U.S. Dollars and all quarterly comparative results are for the Company’s fiscal fourth quarter ended December 29, 2012, compared to the fiscal fourth quarter ended December 31, 2011. Additionally, all per-hectoliter calculations 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.

(2) 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 6).

(3) Unless otherwise indicated, all $ amounts are in U.S. Dollars, and quarterly comparative results are for MCCE’s actual fiscal fourth quarter ended December 31, 2012, compared to the pro forma fiscal fourth quarter ended December 31, 2011. The pro forma statements of operations include adjustments directly attributable to the acquisition of StarBev. Pro forma amounts include the results of operations for Central Europe, excluding the Central Europe global export and license business, 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.

(4) Beginning July 1, 2012, our Central Europe export and license business (“Central Europe export”), is reported in our MCI segment. For periods prior to this date, this business was included with the Central Europe business, which we acquired on June 15, 2012.

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 as the beverage industry sector leader on the 2012/2013 Dow Jones Sustainability World Index (W1SGITRD), 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 Fourth Quarter Underlying After-Tax Income
(After-Tax Income From Continuing Operations, Excluding Special and Other Non-Core Items)
($ In Millions, Except Per Share Data)
4th Q
  2012         2011  

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

60.1 172.4
Per diluted share: $ 0.33 $ 0.95
Add back/(less):
Pretax special items - net 22.8 1.2
Proportionate share of MillerCoors special items - net (1) 6.5 -
Acquisition and integration costs (2) 4.6 -
Unrealized mark-to-market (gains) and losses (3) (3.6 ) 1.6
Other non-core items (4) (4.9 ) 5.8
Tax effect of Serbia statutory tax rate increase (5) 38.3 -
Tax effects related to special and other non-core items   2.3     (5.0 )

Non-GAAP: Underlying after-tax income:

  126.1     176.0  
Per diluted share:     $ 0.69       $ 0.97  

Notes:

(1) Included in Equity Income in MillerCoors, but excluded from non-GAAP underlying pretax income
(2) Included in Marketing, General and Administrative Expenses
(3) $0.3 million gain for Q4 2012 and $1.6 million loss for Q4 2011 included in Cost of Goods Sold. $18.0 million loss for Q4 2012 included in Other Income (Expense), net and $21.3 million gain for Q4 2012 included in Interest Expense

(4) Included in Other Income (Expense), net

(5) Included in Income Tax Benefit (Expense)  
 

                           
Molson Coors Brewing Company
Table 2: 2012 Fourth Quarter Underlying Pretax Income
(Pretax Income From Continuing Operations, Excluding Special and Other Non-Core Items)
($ In Millions)                                      
Business     Total
      Canada     U.S.     U.K.    

Central Europe

    MCI     Corporate     Consolidated

U.S. GAAP: 2012 4th Q Income (loss) from continuing operations before income taxes

$ 92.2 $ 74.4 $ 13.5 $ 9.8 $ (1.8 ) $ (59.6 ) $ 128.5
Add back/(less):
Pretax special items - net 8.8 - 9.1 1.9 2.1 0.9 22.8
Proportionate share of MillerCoors pretax special items - net (1) - 6.5 - - - - 6.5
Acquisition and integration costs (2) - - - 1.2 - 3.4 4.6
Unrealized mark-to-market (gains) and losses (3) - - - - - (3.6 ) (3.6 )
Other non-core items (4) - - - - - (4.9 ) (4.9 )

Non-GAAP: 2012 4th Q underlying pretax income (loss)

    $ 101.0       $ 80.9       $ 22.6       $ 12.9     $ 0.3       $ (63.8 )     $ 153.9  
Percent change 2012 4th Q vs. 2011 4th Q underlying pretax income (loss)       (22.2 %)       (5.4 %)       (35.1 %)       N/A       104.0 %       (22.0 %)       (19.2 %)

U.S. GAAP: 2011 4th Q Income (loss) from continuing operations before income taxes

$ 128.9 $ 85.5 $ 34.9 $ - $ (7.8 ) $ (59.7 ) $ 181.8
Add back/(less):
Pretax special items - net 1.0 - (0.1 ) - 0.3 - 1.2
Unrealized mark-to-market (gains) and losses (3) - - - - - 1.6 1.6
Other non-core items (4) - - - - - 5.8 5.8

Non-GAAP: 2011 4th Q underlying pretax income (loss)

    $ 129.9       $ 85.5       $ 34.8       $ -     $ (7.5 )     $ (52.3 )     $ 190.4  

Notes:

(1) Included in Equity Income in MillerCoors, but excluded from non-GAAP underlying pretax income
(2) Included in Marketing, General and Administrative Expenses
(3) $0.3 million gain for Q4 2012 and $1.6 million loss for Q4 2011 included in Cost of Goods Sold. $18.0 million loss for Q4 2012 included in Other Income (Expense), net and $21.3 million gain for Q4 2012 included in Interest Expense

(4) Included in Other Income (Expense), net

 
 
               
MillerCoors LLC
Table 3: Underlying Net Income
(Net Income Attributable to MillerCoors, Excluding Special Items)
(In Millions)
  Three Months Ended     Twelve Months Ended
December 31, 2012     December 31, 2011     December 31, 2012     December 31, 2011
 
U.S. GAAP - Net income attributable to MillerCoors: $ 170.4 $ 194.0 $ 1,190.9 $ 1,003.8
Add back: Special items, net 15.4 - 31.8 113.4
Less: Tax effect of adjustments to arrive at underlying after-tax income         -       -       (0.4 )
Non-GAAP - Underlying net income: $ 185.8     $ 194.0     $ 1,222.7     $ 1,116.8  
 

       
Molson Coors Brewing Company
Table 4: 2012 Full Year Underlying After-Tax Income
(After-Tax Income From Continuing Operations, Excluding Special and Other Non-Core Items)
($ In Millions, Except Per Share Data)
 
2012 Full Year   2011 Full Year

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

441.5 674.0
Per diluted share: $ 2.43 $ 3.62
Add back/(less):
Pretax special items - net 81.4 12.3
Proportionate share of MillerCoors special items - net (1) 13.4 47.4
Acquisition and integration costs (2) 170.5 -
Unrealized mark-to-market (gains) and losses (3) 12.8 4.6
Basis amortization related to the Sparks brand impairment (1) - (25.2 )
Other non-core items (4) (5.0 ) 7.6
Tax effect of Serbia statutory tax rate increase (5) 38.3 -
Noncontrolling interest effect on special items (5.1 )

 

-
Tax effects related to special and other non-core items   (37.3 )   (19.2 )

Non-GAAP: Underlying after-tax income:

  710.5     701.5  
Per diluted share:     $ 3.91       $ 3.76  

Notes:

(1) Included in Equity Income in MillerCoors, but excluded from non-GAAP underlying pretax income
(2) $8.6 million included in Cost of Goods Sold, $40.2 million included in Marketing, General and Administrative Expenses, $50.8 million included in Interest Expense and $70.9 million included in Other Income (Expense), net

(3) $3.0 million gain for full year 2012 and $4.6 million loss for full year 2011 included in Cost of Goods Sold. $23.8 million loss for full year 2012 included in Other Income (Expense), net and $8.0 million gain for full year 2012 included in Interest Expense

(4) $0.3 million gain for full year 2012 and $1.1 million loss for full year 2011 included in Cost of Goods Sold, $0.1 million loss for full year 2012 and $1.4 million gain for full year 2011 included in Marketing, General, and Administrative Expense, and $4.8 million gain for full year 2012 and $5.1 million loss for full year 2011 included in Other Income (Expense), net

(5) Included in Income Tax Benefit (Expense)

 
 

                           
Molson Coors Brewing Company
Table 5: 2012 Full Year Underlying Pretax Income
(Pretax Income From Continuing Operations, Excluding Special and Other Non-Core Items)
($ In Millions)                                      
Business     Total
      Canada     U.S.     U.K.    

Central Europe

    MCI     Corporate     Consolidated

U.S. GAAP: 2012 Full Year Income (loss) from continuing operations before income taxes

$ 423.0 $ 510.9 $ 38.8 $ 97.4 $ (72.1 ) $ (405.9 ) $ 592.1
Add back/(less):
Pretax special items - net 13.7 - 21.5 2.0 42.2 2.0 81.4
Proportionate share of MillerCoors pretax special items - net (1) - 13.4 - - - - 13.4
Acquisition and integration costs (2) - - - 13.0 - 157.5 170.5
Unrealized mark-to-market (gains) and losses (3) - - - - - 12.8 12.8
Other non-core items (4) - - (0.7 ) - 0.5 (4.8 ) (5.0 )

Non-GAAP: 2012 Full Year underlying pretax income (loss)

    $ 436.7       $ 524.3       $ 59.6       $ 112.4     $ (29.4 )     $ (238.4 )     $ 865.2  
Percent change 2012 vs. 2011 Full Year underlying pretax income (loss)       (10.2 %)       9.2 %       (41.3 %)       N/A       9.0 %       (10.9 %)       5.4 %

U.S. GAAP: 2011 Full Year Income (loss) from continuing operations before income taxes

$ 474.9 $ 457.9 $ 99.3 $ - $ (33.3 ) $ (224.6 ) $ 774.2
Add back/(less):
Pretax special items - net 11.6 - (0.3 ) - 1.0 - 12.3
Proportionate share of MillerCoors pretax special items - net (1) - 47.4 - - - - 47.4
Basis amortization related to the Sparks brand impairment (1) - (25.2 ) - - - - (25.2 )
Unrealized mark-to-market (gains) and losses (3) - - - - - 4.6 4.6
Other non-core items (4) - - 2.5 - - 5.1 7.6

Non-GAAP: 2011 Full Year underlying pretax income (loss)

    $ 486.5       $ 480.1       $ 101.5       $ -     $ (32.3 )     $ (214.9 )     $ 820.9  

Notes:

(1) Included in Equity Income in MillerCoors, but excluded from non-GAAP underlying pretax income
(2) $8.6 million included in Cost of Goods Sold, $40.2 million included in Marketing, General and Administrative Expenses, $50.8 million included in Interest Expense and $70.9 million included in Other Income (Expense), net

(3) $3.0 million gain for full year 2012 and $4.6 million loss for full year 2011 included in Cost of Goods Sold. $23.8 million loss for full year 2012 included in Other Income (Expense), net and $8.0 million gain for full year 2012 included in Interest Expense

(4) $0.3 million gain for full year 2012 and $1.1 million loss for full year 2011 included in Cost of Goods Sold, $0.1 million loss for full year 2012 and $1.4 million gain for full year 2011 included in Marketing, General, and Administrative Expense, and $4.8 million gain for full year 2012 and $5.1 million loss for full year 2011 included in Other Income (Expense), net

 

Pretax and after-tax underlying income and underlying free cash flow should be viewed as supplements to, not substitutes for, our results of operations and cash flow presented on the basis of accounting principles generally accepted in the United States. Our management uses underlying income and underlying free cash flow as measures of operating performance to assist in comparing performance from period to period on a consistent basis; as measures 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 and underlying free cash flow performance are used by and are useful to investors and other users of our financial statements in evaluating our operating and cash performance because they provide them with additional tools to evaluate our performance without regard to special and other non-core 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 6: Reconciliation of Net Income Attributable to MillerCoors to MCBC U.S. Segment Underlying Pretax Income (Excluding Special Items)
(In Millions)
 
Thirteen Weeks Ended     Fourteen Weeks Ended     Fifty-Two Weeks Ended     Fifty-Three Weeks Ended
December 29, 2012     December 31, 2011     December 29, 2012     December 31, 2011
Net Income Attributable to MillerCoors $ 170.4 $ 194.0 $ 1,190.9 $ 1,003.8
Multiply: MCBC economic interest % in MillerCoors   42 %       42 %       42 %       42 %
MCBC proportionate share of MillerCoors net income $ 71.6 $ 81.5 $ 500.2 $ 421.6
Add: Amortization of the difference between MCBC contributed cost basis and the underlying equity in net assets of MillerCoors (1) 1.8 2.8 4.9 35.4
Add: Share-based compensation adjustment (2)   1.0         1.2         5.8         0.9  
MCBC Equity Income in MillerCoors (U.S. GAAP) $ 74.4       $ 85.5       $ 510.9       $ 457.9  
Add: Proportionate share of MillerCoors special items (3) 6.5 0.0 13.4 47.6
(Less): Basis amortization associated with Sparks brand impairment (1) - - - (25.2 )
(Less): Tax effect on special items (4)   -         -         -         (0.2 )
MCBC U.S. Segment Underlying Pretax Income (Non-GAAP) $ 80.9       $ 85.5       $ 524.3       $ 480.1  

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 $576 million as of December 29, 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 net charges of $15.4 million and $31.8 million for Q4 2012 and full year 2012, respectively, and net charges of zero and $113.4 million for Q4 2011 and full year 2011, respectively. MCBC's proportionate share equals 42% of these net special charges.
(4) 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.
 
             
Molson Coors Brewing Company
Table 7: 2012 4th Quarter Worldwide Beer Volume
(In Millions of Hectoliters)
  Thirteen Weeks Ended     Fourteen Weeks Ended
December 29, 2012     December 31, 2011 % Change
 
Financial Volume: 6.897 5.253 31.3%
Royalty Volume: 0.344     0.151 127.8%
Owned Volume: 7.241 5.404 34.0%
Proportionate Share of Equity Investment Sales-to-Retail (1) : 6.823     6.798 0.4%
Total Worldwide Beer Volume: 14.064     12.202 15.3%

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.
 

           
Molson Coors Brewing Company
Table 8: 2012 Full Year Worldwide Beer Volume
(In Millions of Hectoliters)
  Fifty-Two Weeks Ended     Fifty-Three Weeks Ended
December 29, 2012     December 31, 2011 % Change  
 
Financial Volume: 25.343 18.861 34.4 %
Royalty Volume: 1.064     0.451 135.9 %
Owned Volume: 26.407 19.312 36.7 %
Proportionate Share of Equity Investment Sales-to-Retail (1) : 28.652     29.046 (1.4 %)
Total Worldwide Beer Volume: 55.059     48.358 13.9 %

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.
 

               
Molson Coors Brewing Company and Subsidiaries
Table 9: Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Data)
(Unaudited)
 

Thirteen Weeks Ended

   

Fourteen Weeks Ended

   

Fifty-Two Weeks Ended

   

Fifty-Three Weeks Ended

December 29, 2012     December 31, 2011     December 29, 2012     December 31, 2011
 
Volume in hectoliters   6.897         5.253         25.343         18.861  
 
Sales $ 1,480.2 $ 1,395.6 $ 5,615.0 $ 5,169.9
Excise taxes   (450.0 )       (458.3 )       (1,698.5 )       (1,654.2 )
Net sales 1,030.2 937.3 3,916.5 3,515.7
Cost of goods sold   (646.6 )       (547.5 )       (2,352.5 )       (2,049.1 )
Gross profit 383.6 389.8 1,564.0 1,466.6
Marketing, general and administrative expenses (272.5 ) (259.9 ) (1,126.1 ) (1,019.0 )
Special items, net (22.8 ) (1.2 ) (81.4 ) (12.3 )
Equity income in MillerCoors   74.4         85.5         510.9         457.9  
Operating income (loss) 162.7 214.2 867.4 893.2
Interest income (expense), net (22.2 ) (26.2 ) (185.0 ) (108.0 )
Other income (expense), net   (12.0 )       (6.2 )       (90.3 )       (11.0 )
Income (loss) from continuing operations before income taxes 128.5 181.8 592.1 774.2
Income tax expense   (68.8 )       (9.0 )       (154.5 )       (99.4 )  
Net Income (loss) from continuing operations 59.7 172.8 437.6 674.8
Income (loss) from discontinued operations, net of tax   (0.1 )       0.8         1.5         2.3  
Net income (loss) including noncontrolling interests 59.6 173.6 439.1 677.1
Less: Net (income) loss attributable to noncontrolling interests   0.4         (0.4 )       3.9         (0.8 )
Net income (loss) attributable to MCBC $ 60.0       $ 173.2       $ 443.0       $ 676.3  
 
Basic net income (loss) attributable to MCBC per share:
From continuing operations $ 0.33 $ 0.95 $ 2.44 $ 3.65
From discontinued operations   -         -         0.01         0.01  
Basic net income per share $ 0.33       $ 0.95       $ 2.45       $ 3.66  
 
Diluted net income (loss) attributable to MCBC per share:
From continuing operations $ 0.33 $ 0.95 $ 2.43 $ 3.62
From discontinued operations   -         -         0.01         0.01  
Diluted net income per share $ 0.33       $ 0.95       $ 2.44       $ 3.63  
 
Weighted average shares - basic 181.3 180.9 180.8 184.9
Weighted average shares - diluted 182.2 181.9 181.8 186.4
 
Dividends per share $ 0.32       $ 0.32       $ 1.28       $ 1.24  
 
Amounts attributable to MCBC
Net income (loss) from continuing operations, net of tax $ 60.1 $ 172.4 $ 441.5 $ 674.0
Income (loss) from discontinued operations, net of tax   (0.1 )       0.8         1.5         2.3  
Net income (loss) attributable to MCBC $ 60.0       $ 173.2       $ 443.0       $ 676.3  
 

   
Molson Coors Brewing Company and Subsidiaries
Table 10: Canada Segment Results of Operations
(In Millions)            
(Unaudited)
 
 

Thirteen Weeks Ended

   

Fourteen Weeks Ended

   

Fifty-Two Weeks Ended

   

Fifty-Three Weeks Ended

December 29, 2012     December 31, 2011     December 29, 2012     December 31, 2011
 
Volume in hectoliters   1.968         2.226         8.505         8.850  
 
Sales $ 624.1 $ 675.0 $ 2,675.2 $ 2,732.8
Excise taxes   (152.6 )       (165.1 )       (638.4 )       (665.5 )
Net sales 471.5 509.9 2,036.8 2,067.3
Cost of goods sold   (270.9 )       (264.2 )       (1,120.7 )       (1,087.8 )
Gross profit 200.6 245.7 916.1 979.5
Marketing, general and administrative expenses (99.1 ) (115.2 ) (476.5 ) (485.6 )
Special items, net   (8.8 )       (1.0 )       (13.7 )       (11.6 )
Operating income (loss) 92.7 129.5 425.9 482.3
Other income (expense), net   (0.5 )       (0.6 )       (2.9 )       (7.4 )
Income (loss) before income taxes $ 92.2       $ 128.9       $ 423.0       $ 474.9  
 
           
Molson Coors Brewing Company and Subsidiaries
Table 11: PRO FORMA Central Europe Results of Operations
(See footnote 3 on page 7)    
(In Millions)
(Unaudited)
 

Thirteen Weeks Ended

   

Fourteen Weeks Ended

   

Fifty-Two Weeks Ended

   

Fifty-Three Weeks Ended

Actual     Pro Forma     Pro Forma     Pro Forma
December 29, 2012     December 31, 2011     December 29, 2012     December 31, 2011
 
Volume in hectoliters   2.477         2.609         12.868         12.951  
 
Sales $ 205.3 $ 223.4 $ 1,033.2 $ 1,166.6
Excise taxes   (45.6 )       (49.2 )       (224.3 )       (252.5 )
Net Sales 159.7 174.2 808.9 914.1
Cost of goods sold   (101.1 )       (108.6 )       (471.9 )       (504.7 )
Gross profit 58.6 65.6 337.0 409.4
Marketing, general and administrative expenses (46.8 ) (49.8 ) (213.0 ) (234.7 )
Special items, net   (1.9 )       (4.5 )       (2.0 )       (7.0 )
Operating income (loss) 9.9 11.3 122.0 167.7
Other income (expense), net   (0.1 )       (1.1 )       (0.5 )       (2.9 )
Income (loss) before income taxes $ 9.8       $ 10.2       $ 121.5       $ 164.8  
 

           
Molson Coors Brewing Company and Subsidiaries
Table 12: United Kingdom Segment Results of Operations
(In Millions)    
(Unaudited)
 
 

Thirteen Weeks Ended

   

Fourteen Weeks Ended

   

Fifty-Two Weeks Ended

   

Fifty-Three Weeks Ended

December 29, 2012     December 31, 2011     December 29, 2012     December 31, 2011
 
Volume in hectoliters (1)   2.224         2.790         8.331         9.151  
 
Sales (1) $ 608.8 $ 676.1 $ 2,170.9 $ 2,301.1
Excise taxes   (245.6 )       (286.2 )       (904.6 )       (967.6 )
Net sales (1) 363.2 389.9 1,266.3 1,333.5
Cost of goods sold   (258.2 )       (259.9 )       (882.2 )       (887.4 )
Gross profit 105.0 130.0 384.1 446.1
Marketing, general and administrative expenses (82.9 ) (96.9 ) (327.2 ) (352.6 )
Special items, net   (9.1 )       0.1         (21.5 )       0.3  
Operating income (loss) 13.0 33.2 35.4 93.8
Interest income, net 1.4 1.6 5.7 6.3
Other income (expense), net   (0.9 )       0.1         (2.3 )       (0.8 )
Income (loss) before income taxes $ 13.5       $ 34.9       $ 38.8       $ 99.3  

Notes:

(1) Reflects gross segment sales and for Q4 2012 and Q4 2011 includes intercompany sales to MCI of 0.048 million hectoliters and 0.082 million hectoliters, respectively and $3.3 million of net sales and $4.5 million of net sales, respectively. For full year 2012 and full year 2011 includes intercompany sales to MCI of 0.246 million hectoliters and 0.152 million hectoliters, respectively and $16.0 million of net sales and $9.0 million of net sales, respectively. The offset is included within MCI cost of goods sold. These amounts are eliminated in the consolidated totals.
 
           
Molson Coors Brewing Company and Subsidiaries
Table 13: Molson Coors International Results of Operations
(In Millions)    
(Unaudited)
 
 

Thirteen Weeks Ended

   

Fourteen Weeks Ended

   

Fifty-Two Weeks Ended

   

Fifty-Three Weeks Ended

December 29, 2012 (2)     December 31, 2011     December 29, 2012     December 31, 2011
 
Volume in hectoliters   0.276         0.319         1.188         1.012  
 
Sales $ 45.0 $ 48.7 $ 171.0 $ 143.7
Excise taxes   (6.2 )       (7.0 )       (24.0 )       (21.1 )
Net Sales 38.8 41.7 147.0 122.6
Cost of goods sold (1)   (19.6 )       (26.2 )       (90.1 )       (77.6 )
Gross profit 19.2 15.5 56.9 45.0
Marketing, general and administrative expenses (19.1 ) (23.0 ) (87.4 ) (77.4 )
Special items, net   (2.1 )       (0.3 )       (42.2 )       (1.0 )
Operating income (loss) (2.0 ) (7.8 ) (72.7 ) (33.4 )
Other income (expense), net   0.2         -         0.6         0.1  
Income (loss) before income taxes $ (1.8 )     $ (7.8 )     $ (72.1 )     $ (33.3 )

Notes:

(1) Reflects gross segment amounts and for Q4 2012 and Q4 2011 includes intercompany cost of goods sold from the U.K. of $3.3 million and $4.5 million, respectively. For full year 2012 and full year 2011 includes intercompany cost of goods sold from the U.K. of $16.0 million and $9.0 million, respectively. The offset is included within U.K. net sales. These amounts are eliminated in the consolidated totals.
(2) The results related to the Central Europe export business have been moved to our MCI segment beginning July 1, 2012, in accordance with how our Chief Operating Decision Maker views our businesses. The MCI results for the fourth quarter of 2012 reflect $2.6 million and $2.7 million of Income before income taxes and non-GAAP underlying pretax income, respectively. The MCI results for the full year 2012 reflect $5.4 million and $5.5 million of Income before income taxes and non-GAAP underlying pretax income, respectively.
 

   
Molson Coors Brewing Company and Subsidiaries
Table 14: Corporate Results of Operations            
(In Millions)
(Unaudited)
 
 

Thirteen Weeks Ended

   

Fourteen Weeks Ended

   

Fifty-Two Weeks Ended

   

Fifty-Three Weeks Ended

December 29, 2012     December 31, 2011     December 29, 2012     December 31, 2011
 
Volume in hectoliters   -         -         -         -  
 
Sales $ 0.3 $ 0.3 $ 1.2 $ 1.3
Excise taxes   -         -         -         -  
Net Sales 0.3 0.3 1.2 1.3
Cost of goods sold   (0.1 )       (1.7 )       2.2         (5.3 )
Gross profit 0.2 (1.4 ) 3.4 (4.0 )
Marketing, general and administrative expenses (24.6 ) (24.8 ) (130.8 ) (103.4 )
Special items, net   (0.9 )       -         (2.0 )       -  
Operating income (loss) (25.3 ) (26.2 ) (129.4 ) (107.4 )
Interest expense, net (1) (23.6 ) (27.8 ) (190.7 ) (114.3 )
Other income (expense), net   (10.7 )       (5.7 )       (85.8 )       (2.9 )
Income (loss) before income taxes $ (59.6 )     $ (59.7 )     $ (405.9 )     $ (224.6 )

Notes:

(1) Reflects acquisition-related interest expense of $1.3 million and $20.1 million on a GAAP basis and an underlying basis, respectively, for Q4 2012 and $90.1 million and $47.4 million on a GAAP basis and an underlying basis, respectively, for the full year 2012. Beginning July 1, 2012, interest income and expense related to our Central Europe segment is reflected within Corporate results consistent with our other segments, and this amount is $1.1 million of net income on both a GAAP basis and an underlying basis for Q4 2012 and $0.3 million of net expense and $0.5 million of net income on a GAAP basis and an underlying basis, respectively, for the full year 2012.
 
               
MillerCoors LLC (1)
Table 15: Results of Operations
(In Millions)
(Unaudited)
  Three Months Ended     Twelve Months Ended
December 31, 2012     December 31, 2011     December 31, 2012     December 31, 2011
 
 
Volume in hectoliters   17.394         17.602         76.299         76.652  
 
Sales $ 2,058.0 $ 2,029.7 $ 8,966.6 $ 8,763.3
Excise taxes   (274.2 )       (275.8 )       (1,205.5 )       (1,213.1 )
Net sales 1,783.8 1,753.9 7,761.1 7,550.2
Cost of goods sold   (1,106.8 )       (1,102.8 )       (4,689.7 )       (4,647.9 )
Gross profit 677.0 651.1 3,071.4 2,902.3
Marketing, general and administrative expenses (484.4 ) (455.1 ) (1,828.5 ) (1,768.6 )
Special items, net   (15.4 )       -         (31.8 )       (113.4 )
Operating income 177.2 196.0 1,211.1 1,020.3
Other income (expense), net   (3.2 )       0.7         0.3         1.2  
Income before income taxes 174.0 196.7 1,211.4 1,021.5
Income tax expense   (1.7 )       (1.5 )       (5.5 )       (7.5 )
Net income 172.3 195.2 1,205.9 1,014.0
Less: Net income attributable to noncontrolling interests   (1.9 )       (1.2 )       (15.0 )       (10.2 )
Net income attributable to MillerCoors $ 170.4       $ 194.0       $ 1,190.9       $ 1,003.8  

Notes:

(1) Economic ownership of MillerCoors is 58% held by SABMiller and 42% held by Molson Coors. See Table 6 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 16: Condensed Consolidated Balance Sheets
(In Millions)
(Unaudited)
   

As of

December 29, 2012 December 31, 2011
Assets
 
Cash and cash equivalents $ 624.0 $ 1,078.9
Receivables, net 753.4 726.0
Inventories, net 213.9 207.2
Other, net   156.7   105.9
Total current assets 1,748.0

 

2,118.0
 
Properties, net 1,995.9 1,430.1
Goodwill and intangibles, net 9,687.9 6,039.3
Investment in MillerCoors 2,431.8 2,487.9
Other, net   320.0   348.5
Total assets $ 16,183.6 $ 12,423.8
 
Liabilities and Equity
 
Accounts payable $ 427.0 $ 301.2
Accrued expenses and other, net 926.1 929.1
Current portion of long-term debt and short-term borrowings   1,245.6   46.9
Total current liabilities 2,598.7 1,277.2
 
Long-term debt 3,422.5 1,914.9
Pension and post-retirement benefits 833.0 697.5
Other, net   1,337.8   844.0
Total liabilities 8,192.0 4,733.6
 
Total MCBC stockholders' equity 7,966.9 7,647.9
Noncontrolling interests   24.7   42.3
Total equity   7,991.6   7,690.2
Total liabilities and equity $ 16,183.6 $ 12,423.8
 

       
Molson Coors Brewing Company and Subsidiaries
Table 17: Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)
   
Fifty-Two Weeks Ended     Fifty-Three Weeks Ended
December 29, 2012 December 31, 2011
Cash flows from operating activities:
Net income (loss) including noncontrolling interests $ 439.1 $ 677.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 272.7 217.1
Loss on sale or impairment of properties and other long-lived assets 46.4 8.6
Amortization of debt issuance costs and discounts 41.7 22.5
Equity Income in MillerCoors (510.9 ) (457.9 )
Distributions from MillerCoors 510.9 457.9
Change in working capital and other, net   183.8     (57.2 )
Net cash provided by operating activities $ 983.7   $ 868.1  
 
Cash flows from investing activities:
Additions to properties $ (222.3 ) $ (235.4 )
Proceeds from sales of properties and other long-lived assets 15.7 4.6
Acquisition of businesses, net of cash acquired (2,258.3 ) (41.3 )
Change in restricted cash balances - 6.7
Proceeds from settlement of derivative instruments - 15.4
Investment in MillerCoors (1,008.8 ) (800.1 )
Return of capital from MillerCoors 942.4 782.7
Payments on settlement of debt-related derivatives (110.6 ) -
Investment in and advances to an unconsolidated affiliate - (83.2 )
Other, net   6.8     12.5  
Net cash used in investing activities $ (2,635.1 ) $ (338.1 )
 
Cash flows from financing activities:
Exercise of stock options under equity compensation plans $ 34.1 $ 11.6
Dividends paid (237.2 ) (230.4 )
Payments for purchase of treasury stock - (321.1 )
Payments for purchase of Non-controlling interest (27.9 ) -
Net borrowings of debt 1,543.2 (11.8 )
Payments on settlements of debt-related derivatives (8.2 ) (104.5 )
Change in overdraft balances and other, net   (132.6 )   (8.9 )
Net cash used in financing activities $ 1,171.4   $ (665.1 )
 
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents $ (480.0 ) $ (135.1 )
Effect of foreign exchange rate changes on cash and cash equivalents 25.1 (3.6 )
Balance at beginning of year   1,078.9     1,217.6  
Balance at end of period $ 624.0   $ 1,078.9  
 

       
Molson Coors Brewing Company
Table 18: Underlying Free Cash Flow -- Reconciliation to Nearest U.S. GAAP Measure (1)
(US$ in millions)
    Fifty-Two Weeks Ended Fifty-Three Weeks Ended
December 29, 2012 December 31, 2011
U.S. GAAP: Net Cash Provided by Operating Activities $ 983.7 $ 868.1
Less: Additions to properties (2) (222.3 )

 

(235.4 )
Less: Investment in MillerCoors (2) (1,008.8 )

 

(800.1 )
Add: Return of capital from MillerCoors (2) 942.4

 

782.7
Add: Cash impact of Special items (3) 11.6 3.1
Add: Costs related to the Acquisition (4) 134.7

 

-
Add: MillerCoors investments in businesses (5) 14.4

 

-
Add: MillerCoors purchase of noncontrolling interest (5)   9.0  

 

  -  
Non-GAAP: Underlying Free Cash Flow $ 864.7   $ 618.4  

Notes:

 
(1) For 2012, we have revised our calculation of underlying free cash flow to exclude the benefit of proceeds from asset sales and to adjust for the cash impact of Special and other non-core items, such as adding back payments related to Special and other non-core charges. This change has the effect of aligning the adjustments to our underlying free cash flow with adjustments to our underlying earnings and provides greater consistency in the treatment of our non-GAAP measures. Following this approach reduced 2011 underlying free cash flow by $16.9 million.
(2) Included in Net cash used in investing activities.
(3) Included in Net cash provided by operating activities.
(4) Included in Net cash provided by operating activities and reflects loss related to settlement of Treasury Locks of $39.2 million, Euro currency purchase loss of $57.9 million and acquisition and integration costs paid of $37.6 million.
(5) Amounts represent MCBC's proportionate 42% share of the cash flow impacts, as determined by management. These items adjust operating cash flow to arrive at our underlying free cash flow for the full year 2012 and the comparable prior-year period.




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