Press Releases
CHARLOTTE, N.C., Oct 22, 2003 /PRNewswire-FirstCall via COMTEX/ -- Coca-Cola Bottling Co. Consolidated (Nasdaq: COKE) today announced earnings of $13.8 million or $1.53 per share for the third quarter of 2003. This compares to net income of $9.5 million or $1.08 per share for the third quarter of 2002. For the first nine months of 2003, net income was $27.2 million or $3.00 per share as compared to $23.7 million or $2.69 per share for the first nine months of 2002.
Net sales increased 1.8% in the third quarter of 2003 as compared to the third quarter of 2002. This increase reflected growth in average revenue per case and contract sales, which more than offset a 3.8% decline in bottle/can volume. The decline in volume reflected unseasonably cool and abnormally wet weather across the Company's territories in July and August as well as less aggressive retail pricing by several of the Company's customers. For the third quarter of 2003, average revenue per case, excluding customer marketing costs, increased by 1.9%. Income from operations in the third quarter of 2003 was down 6.8%, which primarily reflected higher operating expenses, driven by higher wage rates and a significant increase in pension costs, health care benefits and fuel prices. The reduction in income from operations was offset by declines in interest expense and minority interest expense. The Company's effective income tax rate was 17% in the third quarter of 2003 compared to 42% in the third quarter of 2002. This decrease was attributable to deferred tax benefits relating to a reduction in the valuation allowance against state deferred tax assets.
For the first nine months of 2003, net sales were approximately even with the prior year. These results reflected a 2.6% decline in bottle/can volume offset by a 1.2% increase in average revenue per case, excluding customer marketing costs, and higher contract sales. Income from operations for the first nine months was down 16.7% compared to the prior year. This decline primarily reflected higher operating expenses driven by increased wage rates, pension costs, health care benefits, fuel costs and casualty insurance. Declines in interest expense, minority interest expense and income tax expense have more than offset the decline in operating income, resulting in an increase in net income for the first nine months of 2003. The Company's effective income tax rate was 19% for the first nine months of 2003 compared to 41% for the first nine months of 2002. This decrease was attributable to deferred tax benefits arising from the completion of a favorable state tax audit and a reduction in the valuation allowance against state deferred tax assets.
J. Frank Harrison, III, Chairman and CEO, said, "While I am disappointed in the Company's operating income performance through September, the pricing increases we have been able to implement in the third quarter are encouraging." Mr. Harrison said, "I am also encouraged by the Company's expense control through the first nine months. Despite higher wage rates, a significant increase in pension and medical benefit costs, and higher fuel prices, the Company's other operating expenses have only increased modestly." Mr. Harrison also noted that the Company's strong cash flow has enabled it to reduce debt considerably over the past few years and increase the Company's ownership in Piedmont Coca-Cola Bottling Partnership. These moves have led to lower interest expense and minority interest expense, offsetting much of the decline in operating income.
William B. Elmore, President and COO, said, "The volume decline in the third quarter reflects unseasonably cool and wet weather in July and August and exceptionally strong prior year volume. Volume in the third quarter of 2002 was up 8% sparked by the very successful launch of Vanilla Coke." Mr. Elmore also said, "While overall volume declined in the third quarter, our diet portfolio was very strong, growing nearly 8% fueled by diet Vanilla Coke and diet Cherry Coke." Mr. Elmore concluded, "The Company remains focused on improving net sales performance through a combination of higher pricing and innovations in packaging. These innovations include a 390 ml PET bottle for the immediate consumption market and 12 ounce PET bottle in Fridge Packs(TM) for the take-home market."
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 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. These statements may include, among others, statements relating to our expectations concerning improving net sales performance in the fourth quarter of 2003 through a combination of higher pricing and innovations in packaging including the 390 ml PET bottle for the immediate consumption market and 12 ounce PET bottle in Fridge Packs(TM) for the take-home market. 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 funding support payments from The Coca-Cola Company; material changes from expectations in the cost of raw materials; the inability of our aluminum can or PET bottle suppliers to meet our demand; higher than expected fuel prices; adverse weather conditions 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)
Third Quarter First Nine Months
2003 2002 2003 2002
Net sales $325,637 $319,725 $919,002 $920,855
Cost of sales 168,878 165,902 473,718 473,245
Gross margin 156,759 153,823 445,284 447,610
Selling, general and
administrative expenses 108,400 103,087 317,730 307,674
Depreciation expense 18,956 19,405 57,253 56,247
Amortization of
intangibles 846 683 2,311 2,056
Income from operations 28,557 30,648 67,990 81,633
Interest expense 10,414 11,454 31,701 35,471
Minority interest 1,432 2,672 2,690 6,195
Income before income
taxes 16,711 16,522 33,599 39,967
Income taxes 2,865 6,983 6,446 16,267
Net income $ 13,846 $ 9,539 $ 27,153 $ 23,700
Basic net income
per share $ 1.53 $ 1.08 $ 3.00 $ 2.69
Diluted net income
per share $ 1.53 $ 1.07 $ 3.00 $ 2.67
Weighted average
number of common
shares outstanding 9,043 8,864 9,043 8,807
Weighted average number
of common
shares outstanding
- assuming dilution 9,043 8,924 9,043 8,887
Certain prior year amounts have been reclassified to conform to current year classifications.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands
Sept. 28, Dec. 29, Sept. 29,
2003 2002 2002
ASSETS
Current Assets:
Cash $ 18,280 $ 18,193 $ 8,286
Accounts receivable, trade, net 83,977 79,548 84,365
Accounts receivable from
The Coca-Cola Company 24,555 12,992 19,965
Accounts receivable, other 4,531 17,001 6,479
Inventories 41,156 38,648 42,433
Prepaid expenses and other
current assets 7,121 4,588 6,501
Total current assets 179,620 170,970 168,029
Property, plant and
equipment, net 457,097 466,840 467,281
Leased property under
capital leases, net 43,726 44,623 44,593
Other assets 59,421 58,167 72,220
Franchise rights and goodwill, net 622,721 606,128 607,007
Other identifiable
intangible assets, net 9,844 6,797 6,658
Total $1,372,429 $1,353,525 $1,365,788
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In Thousands
Sept. 28, Dec. 29, Sept. 29,
2003 2002 2002
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Portion of long-term debt
payable within one year $ 35,039 $ 31 $ 154,731
Current portion of obligations
under capital leases 4,194 3,960 3,717
Accounts payable, trade 39,368 38,303 35,238
Accounts payable to
The Coca-Cola Company 5,559 9,823 41,477
Other accrued liabilities 74,931 72,647 66,985
Accrued compensation 15,159 20,462 16,912
Accrued interest payable 18,866 10,649 16,179
Total current liabilities 193,116 155,875 335,239
Deferred income taxes 161,789 155,964 170,012
Pension and retiree
benefit obligations 39,286 37,227 31,603
Other liabilities 60,953 58,261 61,782
Obligations under capital leases 41,727 42,066 41,985
Long-term debt 785,078 807,725 620,125
Total liabilities 1,281,949 1,257,118 1,260,746
Minority interest 34,264 63,540 62,332
Stockholders' Equity:
Common Stock 9,704 9,704 9,653
Class B Common Stock 3,029 3,009 3,009
Capital in excess of par value 97,220 95,986 94,209
Retained earnings 26,413 6,043 9,176
Accumulated other
comprehensive loss (18,896) (20,621) (12,083)
117,470 94,121 103,964
Less-Treasury stock, at cost:
Common 60,845 60,845 60,845
Class B Common 409 409 409
Total stockholders' equity 56,216 32,867 42,710
Total $1,372,429 $1,353,525 $1,365,788
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 (COKE)