Press Releases
* Operating cash flow* declined by 14%
* Net income was $1.4 million down $2 million from prior year
CHARLOTTE, N.C., Apr 23, 2003 /PRNewswire-FirstCall via COMTEX/ -- Coca-Cola Bottling Co. Consolidated (Nasdaq: COKE) today announced it earned $1.4 million or $.16 per share for the first quarter of 2003. This compares to net income of $3.4 million or $.39 per share for the first quarter of 2002.
The Company's first quarter results reflect below expected sales, especially in the high margin cold drink channels. Net sales were up 1.3% reflecting a 1% increase in bottle/can volume, higher contract sales and a small decrease in average revenue per case. Volume was up 4% in our take home channels, but was down 5% in our cold drink channels. Cost of goods per unit was approximately flat as slightly higher raw material costs were offset by lower manufacturing costs. As a result, the Company's gross margin was approximately even with the prior year. Selling, general and administrative ("SG&A") expenses were up $5.7 million or approximately 6%, which led to a $5.3 million or 14% decline in operating cash flow*. The growth in SG&A expense includes an increase of $1 million in employee benefit costs, primarily reflecting increases in the cost for pension and health benefits. In addition, the cost of property and casualty insurance was up by $1.1 million and fuel costs were up 30% or about $.6 million. Interest expense declined $1.8 million or approximately 15%, offsetting a portion of the operating cash flow* decline.
J. Frank Harrison, III, Chairman and CEO, said, "The Company's financial results in the first quarter were disappointing. Our financial results reflect lower margins driven by softer than anticipated sales, particularly in our cold drink channels, higher benefit costs as well as the fixed nature of many of our operating expenses." Mr. Harrison said, "The shift of the Easter holiday from March in 2002 to April in 2003 impacts first quarter volume comparisons, primarily in the take home channels. Severe weather led to closings of businesses in portions of our territories in the first quarter, which reduced sales in the Company's cold drink channels." Mr. Harrison also said, "Despite the disappointing earnings, cash flow continues to be strong as reflected by a decrease in debt and lease liabilities of more than $20 million over the past twelve months, despite the March 28, 2003 purchase of half of The Coca-Cola Company's interest in Piedmont Coca-Cola Bottling Partnership for $53.5 million."
William B. Elmore, President and COO, said, "Although overall volume was below expectations, Dasani continued its solid growth trend, with volume up nearly 20% in the first quarter of 2003. Another bright spot in the quarter was the growth in our take home business, which was up 4%, despite the shift in Easter holiday sales. This growth reflects innovation led by Vanilla Coke, diet Vanilla Coke, diet Cherry Coke and Minute Maid Lemonade." Mr. Elmore also said that a portion of the Company's weakness in financial results reflects the shift in distribution methodology which was made during 2002 from conventional routing to a pre-sell system. The cost of a pre-sell system is more fixed in nature than a conventional system, which lowers operating margins in the seasonally softer first and fourth quarters. This seasonal softness was exacerbated in the first quarter of 2003 by the shifting of Easter holiday sales and the adverse impact of weather on the Company's higher margin cold drink business.
* Operating Cash Flow is defined as Income from Operations plus
Depreciation and Amortization Expense. Included in the attached pages
of this release is a reconciliation of this non-GAAP measure to a
measurement required by accounting principles generally accepted in the
United States of America. The Company believes that operating cash flow
is a useful measurement tool that is commonly used in evaluating the
financial performance and in business valuations of soft drink bottlers
by investors.
Forward-looking statements.
Included in this news release are several forward-looking management comments and other statements that reflect management's current outlook for future periods. These statements include the effect of the shift of the Easter holiday from March 2002 to April 2003 and the effect of the shift in distribution methodology from conventional routing to a pre-sell system. These expectations are based on currently available competitive, financial and economic data along with the Company's operating plans, and are subject to future events and uncertainties. Among the events or uncertainties which could adversely affect future periods are lower than expected net pricing resulting from increased marketplace competition, an inability to meet requirements under bottling contracts, an inability to meet performance requirements for expected levels of marketing support payments from The Coca- Cola Company, reduced marketing and advertising spending by The Coca-Cola Company or other beverage companies; material changes from expectations in the cost of raw materials; higher than expected insurance premiums; lower than anticipated return on pension plan assets; higher than anticipated health care costs; war or other civil disturbances; the inability of our aluminum can or PET bottle suppliers to meet our demand; higher than expected fuel prices; changes in financial markets; an inability to meet projections in acquired bottling territories and unfavorable interest rate fluctuations. The forward- looking statements in this news release should be read in conjunction with the detailed cautionary statements found on pages 27 and 28 of the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2002.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
First Quarter
2003 2002
Net sales $ 275,200 $ 271,618
Cost of sales 140,306 137,144
Gross margin 134,894 134,474
Selling, general and administrative
expenses 102,125 96,412
Depreciation expense 19,015 17,985
Amortization of goodwill and
intangibles 698 687
Income from operations 13,056 19,390
Interest expense 10,371 12,140
Other income (expense), net (199) (899)
Minority interest 116 759
Income before income taxes 2,370 5,592
Federal and state income taxes 963 2,214
Net income $ 1,407 $ 3,378
Basic net income per share $ .16 $ .39
Diluted net income per share $ .16 $ .38
Weighted average number of common
shares outstanding 9,043 8,773
Weighted average number of common
shares outstanding - assuming dilution 9,043 8,857
Reconciliation of Operating Cash Flow
Income from operations $ 13,056 $ 19,390
Amortization of goodwill and
intangibles 698 687
Depreciation expense 19,015 17,985
Operating cash flow $ 32,769 $ 38,062
Certain prior year amounts have been reclassified to conform to current year classifications.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands
March 30, March 31,
2003 2002
ASSETS
Current Assets:
Cash $ 7,162 $ 9,172
Accounts receivable, trade, net 79,341 81,303
Accounts receivable from The
Coca-Cola Company 13,134 15,475
Accounts receivable, other 5,649 6,385
Inventories 38,469 40,852
Prepaid expenses and other current
assets 9,334 5,304
Total current assets 153,089 158,491
Property, plant and equipment 853,681 826,018
Less-Accumulated depreciation
and amortization 390,956 347,045
Property, plant and equipment, net 462,725 478,973
Leased property under capital leases 47,618 60,761
Less-Accumulated amortization 3,538 9,982
Leased property under capital
leases, net 44,080 50,779
Other assets 58,521 70,729
Franchise rights, net 522,189 506,277
Goodwill, net 100,754 100,754
Other identifiable intangible
assets, net 10,398 8,026
Total $1,351,756 $1,374,029
Certain prior year amounts have been reclassified to conform to current year classifications.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands
March 30, March 31,
2003 2002
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Portion of long-term debt payable
within one year $ 39 $ 147,431
Current portion of obligations
under capital leases 3,969 5,715
Accounts payable, trade 38,617 35,476
Accounts payable to The Coca-Cola
Company 5,227 4,817
Other accrued liabilities 65,543 68,257
Accrued compensation 11,354 7,817
Accrued interest payable 16,577 15,122
Total current liabilities 141,326 284,635
Deferred income taxes 156,330 160,578
Pension and retiree benefit
obligations 39,286 32,941
Other liabilities 60,248 60,510
Obligations under capital leases 41,771 41,811
Long-term debt 845,978 717,625
Total liabilities 1,284,939 1,298,100
Minority interest 31,819 56,452
Stockholders' Equity:
Common Stock 9,704 9,454
Class B Common Stock 3,029 3,009
Capital in excess of par value 97,220 89,559
Retained earnings (accumulated deficit) 5,189 (8,929)
Accumulated other comprehensive loss (18,890) (12,362)
96,252 80,731
Less-Treasury stock, at cost:
Common 60,845 60,845
Class B Common 409 409
Total stockholders' equity 34,998 19,477
Total $1,351,756 $1,374,029
Certain prior year amounts have been reclassified to conform to current year classifications.
SOURCE Coca-Cola Bottling Co. Consolidated
media, Lauren C. Steele, VP Corporate Affairs, +1-704-557-4551, or investors, David V. Singer, Executive VP & CFO, +1-704-557-4604, both of Coca-Cola Bottling Co. Consolidated