Coca-Cola Bottling Co. Consolidated Reports Fiscal Year And Fourth Quarter 2010 Results

Coca-Cola Bottling Co. Consolidated (NASDAQ: COKE) today announced it earned $36.1 million, or basic net income per share of $3.93, on net sales of $1.51 billion for fiscal 2010, compared to net income of $38.1 million, or basic net income per share of $4.16, on net sales of $1.44 billion for fiscal 2009. The results for 2010 included $3.2 million of after-tax losses ($5.2 million on a pre-tax basis) due to mark-to-market adjustments on fuel and aluminum hedges, $.5 million of after-tax gains ($.9 million on a pre-tax basis) from insurance recoveries on assets lost or damaged during the Nashville, Tennessee area flood in May 2010, a $.5 million increase in tax expense due to the change in tax law eliminating the tax deduction previously available for Medicare Part D subsidies, and $1.7 million in tax benefits related to changes in reserves for uncertain tax positions. The results for fiscal 2009 included $8.5 million of after-tax gains ($14.1 million on a pre-tax basis) due to mark-to-market adjustments on fuel and aluminum hedges and $1.1 million of additional income on an after-tax basis ($1.9 million on a pre-tax basis) from the 53 rd week of fiscal 2009 (fiscal 2009 was a 53-week year). Fiscal 2009 results also included $7.1 million in tax benefits related to changes in reserves for uncertain tax positions which reduced the Company’s effective tax rate to 30.3%.

The following table reconciles reported GAAP net income to comparable net income and basic net income per share for fiscal 2010 and 2009:
     
Fiscal Year
Net Income Basic Net Income Per Share
In Thousands, Except Per Share Amounts 2010 2009 2010 2009
 
Reported net income (GAAP) $ 36,057 $ 38,136 $ 3.93 $ 4.16
 
Net (gain) loss on fuel & aluminum hedges, net of tax 3,179 (8,522 ) 0.35 (0.93 )
Impact of Nashville area flood, net of tax (541 ) - (0.06 ) -
Impact of change in tax law regarding Medicare Part D subsidy 478 - 0.05 -
Change in reserves for uncertain tax positions (1,665 ) (7,071 ) (0.18 ) (0.77 )
Results from the 53rd week, net of tax - (1,143 ) - (0.12 )
Other income tax items   198     77     0.02     0.01  
 
Total   1,649     (16,659 )   0.18     (1.81 )
 
Comparable net income (a) $ 37,706   $ 21,477   $ 4.11   $ 2.35  

(a) This non-GAAP financial information is provided to allow investors to more clearly evaluate operating performance and business trends for fiscal 2010 and 2009. Management uses this information to review results excluding items that are not necessarily indicative of ongoing results.

For the fourth quarter of 2010, the Company earned $3.8 million, or basic net income per share of $.42, on net sales of $354 million compared to net income of $2.0 million, or basic net income per share of $.22, on net sales of $354 million in the fourth quarter of 2009. The fourth quarter of 2010 results included $0.5 million of after-tax losses ($0.7 million on a pre-tax basis) due to mark-to-market adjustments on fuel and aluminum hedges. The fourth quarter of 2009 results included $3.5 million of after-tax gains ($5.8 million on a pre-tax basis) due to mark-to-market adjustments on fuel and aluminum hedges and $1.1 million of additional income on an after-tax basis ($1.9 million on a pre-tax basis) from the 53 rd week of fiscal 2009.

The following table reconciles reported GAAP net income to comparable net income (loss) and basic net income (loss) per share for the fourth quarter of 2010 and 2009:
     
Fourth Quarter
Net Income (Loss) Basic Net Income (Loss) Per Share
In Thousands, Except Per Share Amounts 2010 2009 2010 2009
 
Reported net income (GAAP) $ 3,821 $ 1,990 $ 0.42 $ 0.22
 
Net (gain) loss on fuel & aluminum hedges, net of tax 454 (3,521 ) 0.05 (0.38 )
Results from the 53rd week, net of tax   -   (1,143 )   -   (0.12 )
 
Total   454   (4,664 )   0.05   (0.50 )
 
Comparable net income (loss) (a) $ 4,275 $ (2,674 ) $ 0.47 $ (0.28 )

(a) This non-GAAP financial information is provided to allow investors to more clearly evaluate operating performance and business trends for the fourth quarters of 2010 and 2009. Management uses this information to review results excluding items that are not necessarily indicative of ongoing results.

J. Frank Harrison, III, Chairman and CEO, said, “2010 was a very successful year for our Company. Our performance was the result of the combination of solid volume driven top-line growth, muted increases in our input costs and continued focus on managing our operating costs. We were very pleased with strong performance by our brands across all segments of our business producing both volume and share growth. We also thank our dedicated employees, who generate the continuous improvement for which we strive, bringing value to our shareholders, customers, consumers and the communities in which we live and work.”

William B. Elmore, President and COO, added, “We are very pleased with our results for 2010. Many of the initiatives we have undertaken over the past few years contributed to these results. Our immediate consumption business saw significant improvement during 2010 driven by our 16/24 ounce convenience store strategy and a revitalized focus on our on-premise channels. Overall, our future consumption business also experienced robust growth. Process improvement in our supply chain system, including warehouse automation and branch consolidations, continue to allow us to operate more effectively and efficiently. Our results for 2010 were also aided by a significant decline in the rate of cost increases in key raw material costs, including packaging and fuel. As we look to 2011, these costs have again begun to rise significantly, creating new challenges for our Company. We will continue our focus on improving how we make, sell and deliver our products to ensure that we meet these challenges.”

Cautionary Information Regarding Forward-Looking Statements

Included in this news release and other information that we make publicly available from time to time are forward-looking management comments and other statements that reflect management’s current outlook for future periods. These statements include, among others, statements regarding rising raw material, packaging and fuel costs and a challenging business environment for 2011, and our intention to continue to focus on improving how we make, sell and deliver our products to meet these challenges.

These statements and expectations are based on currently available competitive, financial and economic data along with our operating plans, and are subject to future events and uncertainties that could cause anticipated events not to occur or actual results to differ materially from historical or anticipated results. Among the events or uncertainties which could adversely affect future periods are: lower than expected selling pricing resulting from increased marketplace competition; changes in how significant customers market or promote our products; changes in our top customer relationships; changes in public and consumer preferences related to nonalcoholic beverages; unfavorable changes in the general economy; miscalculation of our need for infrastructure investment; our inability to meet requirements under beverage agreements; material changes in the performance requirements for marketing funding support or our inability to meet such requirements; decreases from historic levels of marketing funding support; changes in The Coca-Cola Company’s and other beverage companies’ levels of advertising, marketing and spending on brand innovation; the inability of our aluminum can or plastic bottle suppliers to meet our purchase requirements; our inability to offset higher raw material costs with higher selling prices, increased bottle/can sales volume or reduced expenses; sustained increases in fuel costs or our inability to secure adequate supplies of fuel; sustained increases in workers’ compensation, employment practices and vehicle accident claims costs; sustained increases in the cost of employee benefits; product liability claims or product recalls; technology failures; changes in interest rates; the impact of debt levels on operating flexibility and access to capital and credit markets; adverse changes in our credit rating (whether as a result of our operations or prospects or as a result of those of The Coca-Cola Company or other bottlers in the Coca-Cola system); changes in legal contingencies; legislative changes effecting our distribution and packaging; adoption of significant product labeling or warning requirements; additional taxes resulting from tax audits; natural disasters and unfavorable weather; global climate change or legal or regulatory responses to such change; issues surrounding labor relations; recent bottler litigation; our use of estimates and assumptions; changes in accounting standards; impact of obesity and health concerns on product demand; public policy challenges regarding the sale of soft drinks in schools; the impact of recent volatility in the financial markets to access the credit markets; the impact of recently announced and completed acquisitions of bottlers by their franchisors; and the concentration of our capital stock ownership. The forward-looking statements in this news release should be read in conjunction with the more detailed descriptions of the above factors located in our Annual Report on Form 10-K for the year ended January 3, 2010 under Part I, Item 1A “Risk Factors” as well as those additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements contained in this release as a result of new information or future events or developments.
Coca-Cola Bottling Co. Consolidated      
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
 
 
Fourth Quarter Fiscal Year
2010 2009 2010 2009
 
Net sales $ 354,376 $ 354,420 $ 1,514,599 $ 1,442,986
Cost of sales   201,388     199,002   873,783   822,992
Gross margin 152,988 155,418 640,816 619,994
Selling, delivery and administrative expenses   137,809     139,030   544,498   525,491
Income from operations 15,179 16,388 96,318 94,503
Interest expense   8,674     9,320   35,127   37,379
Income before income taxes 6,505 7,068 61,191 57,124
Income taxes   2,713     4,653   21,649   16,581
Net income 3,792 2,415 39,542 40,543
Less: Net income (loss) attributable to the
noncontrolling interest   (29 )   425   3,485   2,407
Net income attributable to Coca-Cola Bottling Co.
Consolidated $ 3,821   $ 1,990 $ 36,057 $ 38,136
 
 
Basic net income per share based on net
income attributable to Coca-Cola Bottling Co.
Consolidated:
Common Stock $ 0.42   $ 0.22 $ 3.93 $ 4.16
Weighted average number of Common
Stock shares outstanding 7,141 7,141 7,141 7,072
 
Class B Common Stock $ 0.42   $ 0.22 $ 3.93 $ 4.16
Weighted average number of Class B
Common Stock shares outstanding 2,044 2,022 2,040 2,092
 
Diluted net income per share based on net
income attributable to Coca-Cola Bottling Co.
Consolidated:
Common Stock $ 0.41   $ 0.22 $ 3.91 $ 4.15
Weighted average number of Common
Stock shares outstanding – assuming dilution 9,225 9,203 9,221 9,197
 
Class B Common Stock $ 0.41   $ 0.21 $ 3.90 $ 4.13
Weighted average number of Class B Common
Stock shares outstanding – assuming dilution 2,084 2,062 2,080 2,125
   
Coca-Cola Bottling Co. Consolidated
CONDENSED BALANCE SHEETS (UNAUDITED)
In Thousands
January 2, January 3,
2011 2010
ASSETS
Current assets:
Cash $ 49,372 $ 22,270
Trade accounts receivable, net 96,787 92,727
Accounts receivable, other 27,910 21,114
Inventories 64,870 59,122
Prepaids and other current assets   25,760   35,016
Total current assets   264,699   230,249
 
Property, plant and equipment, net 322,143 326,701
Leased property under capital leases, net 46,856 51,548
Other assets 46,332 46,508
Franchise rights, goodwill and other intangibles, net   627,592   628,071
Total $ 1,307,622 $ 1,283,077
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and capital lease obligations $ 3,866 $ 3,846
Accounts payable and accrued expenses   172,874   158,136
Total current liabilities   176,740   161,982
 
Deferred income taxes 143,962 158,548
Pension, postretirement and other liabilities 224,045 196,274
Long-term debt and obligations under capital leases   578,458   597,178
Total liabilities   1,123,205   1,113,982
Stockholders' equity 127,895 116,291
Noncontrolling interest   56,522   52,804
Total $ 1,307,622 $ 1,283,077

 

 

 

Copyright Business Wire 2010

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