DENVER and MONTREAL, Feb. 10 /PRNewswire-FirstCall/ -- Molson Coors
Brewing Company (NYSE: TAP; TSX) today reported higher worldwide
beer volume and underlying income for the full year ending December
28, 2008. For the fiscal fourth quarter of 2008, pro forma
worldwide beer volume and underlying income declined due to
unfavorable foreign currency and slowing industry trends. "We
looked at this past year as an opportunity to continue to
strengthen our financial base and position ourselves for long-term
growth," said Peter Swinburn, Molson Coors president and chief
executive officer. "In 2008, we invested substantially in our
strategic brands, increased global beer volume, achieved higher
pricing in all of our markets, and exceeded our cost-reduction
targets, all while successfully executing major strategic
initiatives like the launch of MillerCoors." "Our lower fourth
quarter financial results reflect the combined challenges of a much
stronger U.S. dollar versus a year ago, significant commodity
inflation, and lower sales volume in our major markets. Foreign
currency movements alone accounted for more than 55% of the
year-over-year decline in fourth quarter profit, and input cost
inflation across all of our businesses added another $41 million of
headwinds to the quarter." "In this economic environment, we remain
committed to building great beer brands while diligently reducing
our costs," Swinburn added. "We are benefiting from strategic
initiatives in each of our businesses to improve long-term
performance. While our Canada team is balancing its brand and
pricing priorities, our U.K. team is ramping up its contract
brewing arrangement and the Magners draught cider business. At the
same time, MillerCoors is delivering synergies ahead of schedule in
the U.S. and taking important steps to strengthen its top-line."
"As we enter 2009, we remain focused on the fundamentals that drive
our business regardless of the economic environment: building great
beer brands, increasing revenue per barrel, delivering cost
savings, generating free cash, and growing long-term returns to
shareholders." Fourth Quarter Highlights Key operating and
financial highlights for the Company's fiscal fourth quarter ended
December 28, 2008, compared to the fiscal fourth quarter ended
December 30, 2007, include the following: * Worldwide beer volume
declined 4.2 percent on a pro forma basis. * Molson Coors net
income decreased 44.1 percent to $96.8 million for the fourth
quarter. * Underlying after-tax income(1) decreased 21.0 percent to
$105.1 million, or $0.57 per diluted share. * Foreign currency
movements drove over 55 percent, or $23 million, of the $41.0
million decline in fourth quarter underlying pretax income. *
Excluding the impact of foreign currency, the Company's underlying
income declined approximately seven percent in the quarter. Full
Year 2008 Highlights Key operating and financial highlights for the
Company's fiscal year ended December 28, 2008, compared to the
fiscal year ended December 30, 2007, include the following: *
Worldwide beer volume grew 4.0 percent on a reported basis. * Net
income decreased 22.0 percent to $388.0 million. * Underlying
after-tax income(1) increased 1.0 percent to $512.6 million, or
$2.76 per diluted share. * For the full year 2008, foreign currency
movements decreased total underlying pretax income by approximately
$16 million. * As of December 28, 2008, cash and cash equivalents
totaled $216 million, and total owned debt was $1.75 billion,
excluding approximately $82 million of non-owned joint venture
debt. (1) The Company calculates non-GAAP underlying income by
excluding special and other one-time items from the nearest U.S.
GAAP earnings measure. To calculate underlying income in the fourth
quarter of 2008, the Company excluded one-time expenses,
particularly related to MillerCoors and the Foster's cash-settled
total-return swap, as well as a net special credit of $2.1 million
pretax. To calculate underlying income for the full year 2008, the
Company excluded net special items of $133.9 million, as well as
one-time expenses related to MillerCoors and debt extinguishment
costs. For further details, please see the section "Special and
Other One-Time Items" below, along with tables for reconciliations
to the nearest U.S. GAAP measures. All $ amounts are in U.S.
Dollars. The Company's effective tax rate for the full year 2008
was 20 percent on both a reported and an underlying basis. In the
fourth quarter, the Company's effective tax rate for income from
continuing operations was 20 percent on a reported basis, and 22
percent on an underlying basis. The Company estimates that its
full-year 2009 effective tax rate will be in the range of 16
percent to 20 percent on an underlying basis. For the full year
2008, Molson Coors achieved $87 million of cost savings as part of
its Resources for Growth (RFG) cost savings program, which exceeded
the Company's 2008 goal by approximately $10 million. In the first
two years of its three-year, $250 million RFG program, Molson Coors
has delivered $178 million of cost savings. In the fourth quarter
alone, the Company delivered $22 million of RFG cost reductions.
MillerCoors is well on its way to deliver its stated goal of $500
million of annual cost synergies by the third year of combined
operations. For the quarter, MillerCoors delivered $26 million in
synergies, for a total of $28 million since combining operations.
The timing to achieve the company's original goal of $50 million in
synergies in the first 12 months of operations has accelerated, and
MillerCoors now expects to realize $128 million of synergies by
June 30, 2009. By the end of calendar year 2009, MillerCoors
expects to achieve a total of $238 million in synergies surpassing
its original forecast of $225 million. While the timing of synergy
delivery has accelerated, MillerCoors' goal remains $500 million in
three years. The Company's total worldwide beer volume was 10.653
million barrels in the quarter, down 4.2 percent versus the prior
year on a pro forma basis. Fourth quarter volume increased 1.2
percent when compared to reported volume a year ago, as shown in
Table 1 below. Full year 2008 volume increased 4.0 percent versus a
year ago on a reported basis to 43.693 million barrels, as shown in
Table 2 below. Table 1: Molson Coors 2008 Fourth Quarter Worldwide
Beer Volume Thirteen Weeks Ended Thirteen Weeks Ended December
December % December December % 28, 2008 30, 2007 Change 28, 2008
30, 2007 Change Actual Pro forma(1) Actual Actual Volume in U.S.
barrels (000): Financial volume 4,202 4,537 (7.4%) 4,202 10,463
(59.8%) Royalty volume 82 63 30.2% 82 63 30.2% Owned volume 4,284
4,600 (6.9%) 4,284 10,526 (59.3%) Proportionate share of equity
investment sales- to-retail (2) 6,369 6,516 (2.3%) 6,369 - 100.0%
Total worldwide beer volume 10,653 11,116 (4.2%) 10,653 10,526 1.2%
(1) Reflects the reduction of the U.S. segment volume reported for
the 13 weeks ended December 31, 2007. (2) Reflects the addition of
Molson Coors Brewing Company's proportionate share of MillerCoors
and Molson Modelo sales-to-retail for the periods presented,
adjusted for comparable trading days. Table 2: Molson Coors 2008
Full Year Worldwide Beer Volume Fifty Two Weeks Ended December 28,
December 30, 2008 2007 % Change Actual Actual Volume in U.S.
barrels (000): Financial volume 29,656 41,796 (29.0%) Royalty
volume 256 214 19.6% Owned volume 29,912 42,010 (28.8%)
Proportionate share of equity investment sales-to- retail (1)
13,781 - 100.0% Total worldwide beer volume 43,693 42,010 4.0% (1)
Reflects the addition of Molson Coors Brewing Company's
proportionate share of MillerCoors and Molson Modelo
sales-to-retail for the periods presented, adjusted for comparable
trading days. Business Segments Following are the Company's 2008
fourth quarter results by business segment: Canada Business The
Canada business earned underlying pretax income of $99.8 million in
the fourth quarter, a 23.0 percent decrease from the same period
last year. This profit decline was driven by a 19 percent
depreciation of the Canadian dollar, which reduced the Canada
segment underlying income by approximately $18 million. In local
currency, Canada underlying pretax income was five percent lower
than the fourth quarter 2007 due to lower sales volume, increased
competitive discounting in Quebec and continued cost inflation,
partially offset by favorable front-line pricing across Canada. On
a comparable basis(2), Canada sales-to-retail decreased 0.6 percent
in the fourth quarter versus last year, resulting in a market-share
decrease of less than one-half share point versus a year ago.
Low-single-digit growth of Molson's strategic brands, led by
double-digit growth of Coors Light and continued strong growth by
Carling, Creemore, and our import brands was offset by lower sales
of non-strategic brands. The Canadian beer industry slowed in the
quarter, with sales growth of approximately 0.5 percent versus a
year ago. This represents a deceleration versus earlier in 2008 and
was driven by poor weather, a softening economy, and an
acceleration of Quebec industry volume to the 3rd quarter ahead of
a 4th quarter price increase. On a comparable basis, Canada sales
volume decreased 2.1 percent during the fourth quarter to 1.8
million barrels. Comparable net sales per barrel increased 3.5
percent in local currency, half driven by favorable net pricing,
led by front-line pricing in Quebec and Ontario, and half driven by
favorable sales mix, including increased sales volume of partner
import brands. Cost of goods sold per barrel increased 9.2 percent
on a comparable basis in local currency, due to a six percent
increase in commodity and packaging materials, a 1.5 percent
increase in fuel and distribution costs, and a 3.5 percent increase
due to a sales mix shift toward higher-cost partner import brands,
partially offset by two percentage points of savings from the
Resources for Growth initiatives. Comparable marketing, general and
administrative expenses increased approximately 1.3 percent in
local currency due to higher pension and other overhead expenses.
Other income in the fourth quarter increased $4.5 million, driven
by pretax gains from foreign currency hedges. (2) Except where
otherwise indicated, comparable Canada results exclude the effect
of establishing the Modelo Molson joint venture in 2008, as well as
the reporting effects of discontinuing the Company's Foster's U.S.
contract in 2007. Results for the Modelo Molson joint venture,
which sells the Modelo brands across Canada, are recorded under the
equity method of accounting. Beginning in 2008, Modelo brand
results are no longer reported on a line-item basis in the
Company's Canada results, affecting the comparability of results
with 2007. Beginning in 2008, Modelo Molson sales volumes are
excluded from financial volume. In addition, Molson Coors now
includes its 50% ownership share of Modelo Molson sales-to-retail
in its consolidated worldwide beer volume for both the current year
and prior year. Comparable results exclude the year-over-year
impact for beer sales to MillerCoors. With the completion of the
MillerCoors joint venture, the financial impact of our brand
exports to the U.S. will no longer be treated as inter-company
sales and eliminated upon consolidation of total Molson Coors
results. Sales volume for these U.S. exports will be excluded from
Canada results and are now be reported by MillerCoors. United
States Business (MillerCoors)(3) Molson Coors underlying U.S.
segment pretax income decreased 21.2 percent to $56.2 million in
the fourth quarter, as a result of year-over-year timing
differences in sales and marketing spending, along with the impact
of changes in accounting policies. U.S. segment results include the
Company's 42% share of MillerCoors net income and various
adjustments for the equity income calculation under U.S. GAAP, as
shown in Table 8 below. MillerCoors Operating and Financial
Highlights (U.S. GAAP) Underlying net income, excluding special
items, for the quarter increased 16.5 percent to $135 million from
the prior year pro forma result, driven primarily by strong pricing
and cost management, which more than offset increases in commodity
costs and a reduction in shipment volume. During the period,
MillerCoors sales-to-retailers (STRs) declined 2.3 percent,
reflecting a weaker quarter for the industry and softness in Miller
Lite and certain above-premium brands. Five out of six MillerCoors
priority brands increased STRs in the fourth quarter: o Coors Light
STRs increased 1.0 percent, posting its fourteenth consecutive
quarter of growth, o MGD 64 STRs continued to deliver strong growth
since its national launch, o Blue Moon STRs were up double digits,
o Keystone Light delivered strong double-digit growth, while Miller
High Life STRs increased marginally, and o Miller Lite STRs
declined 7.5 percent with particularly strong net pricing growth
for the quarter. Domestic sales-to-wholesalers (STWs) dropped 4.3
percent, driven largely by a reduction in distributor inventory
levels and lower sales to retail. Third-party contract brewing
volumes declined 6 percent. MillerCoors total net sales increased
by 3.1 percent to $1.740 billion versus the prior pro forma
quarter. Excluding contract brewing, domestic net sales increased
3.4 percent to $1.622 billion. Pricing remained strong as domestic
net sales per barrel, excluding contract brewing and company-owned
distributor sales, increased 8.0 percent versus the prior year
driven by strong front line pricing, reductions in discounting and
favorable mix. Cost of Goods Sold (COGS) per barrel increased by
5.2 percent, as cost savings initiatives were more than offset by
increasing commodity costs. Fourth quarter results were only
minimally improved by significant recent commodity price reductions
as materials were largely hedged through calendar year 2008 and
2009 prior to the reductions. Marketing, general and administrative
expenses increased by 6.1 percent to $514 million, driven primarily
by integration costs of $10 million and higher spending on the
launch of MGD 64, Coors Light media, increased sales and tactical
spending. (3) MillerCoors, a U.S. joint venture of Molson Coors
Brewing Company and SABMiller plc, was launched on July 1, 2008.
MillerCoors is 42 percent owned by Molson Coors, and is accounted
for using the equity method. Molson Coors' interest in MillerCoors'
results, along with certain adjustments under U.S. GAAP, are
reflected in "Equity Investment Income in MillerCoors." Historical
period results have not been reclassified to conform to this
presentation, so year-over-year comparisons of consolidated and
U.S. segment volume, net sales, cost of goods sold, and marketing,
general and administrative results are less meaningful. For
comparability, the parent companies of MillerCoors have provided a
full income statement for fourth quarter 2008, along with pro forma
results for the prior year period. This release also includes
reconciliation from MillerCoors Net Income to Molson Coors Brewing
Company Equity Investment Income in MillerCoors (see Table 8) and
Non-GAAP U.S. Segment Underlying Pretax Income (see Table 7).
United Kingdom Business The U.K. business reported underlying
pretax income of $30.6 million in the fourth quarter, a 23.6
percent decrease over the same quarter last year. A 23 percent
decline in the value of the British pound versus the U.S. dollar
reduced underlying pretax income by approximately $9 million.
Excluding the effect of foreign currency, the U.K. underlying
pretax income was virtually unchanged versus last year in local
currency. Strong pricing growth, the ramp up of our contract
brewing arrangement, and reduced marketing spending were offset by
lower volumes, higher input cost inflation, and higher pension and
bad-debt costs. U.K. owned-brand volume decreased 9.4 percent
during the quarter, while the beer industry declined 8.3 percent,
reflecting a weak economy in the U.K. The Company grew share in the
on-premise channel during the quarter, but under-performed the
market in the off-premise, as it took a tougher stance with
customers on pricing. In local currency, comparable U.K. net sales
per barrel of owned products increased 10.4 percent, nearly
two-thirds driven by higher net pricing, with the balance of the
increase attributable to a one-time reduction in volume- related
payments to customers, and positive sales mix. Comparable cost of
goods sold per barrel for owned brands increased 6.8 percent in
local currency in the fourth quarter, due primarily to higher
energy and materials cost inflation and higher pension costs,
partly offset by results of cost-reduction initiatives. Marketing,
general and administrative expense increased 5.2 percent in local
currency due to higher bad debt charges and pension expense,
partially offset by decreased marketing expenses in line with the
trading environment. Global Markets and Corporate Our Global
Markets team continues to take a disciplined approach to building
our brands in international markets. The Global Markets grew volume
nearly 20 percent driven by the growth of Coors Light in China and
Europe. Marketing, general and administrative expense for Global
Markets was $10.3 million in the quarter, virtually unchanged
versus a year ago. Corporate general and administrative expense was
$23.2 million in the fourth quarter, a decrease of $7.6 million, or
24.8 percent, due to lower incentive compensation and project
spending. Net interest expense was $19.6 million in the fourth
quarter, a decrease of $7.6 million compared to a year ago. Also in
the quarter, Corporate other expense was driven by a one-time
mark-to-market expense related to the Foster's cash-settled
total-return swap. The underlying pretax loss for Global Markets
and Corporate was $50.3 million, a 21.0 percent improvement versus
the fourth quarter of 2007. Special and Other One-Time Items During
the fourth quarter 2008, the Company reported a net special credit
of $2.1 million pretax, which was composed primarily of a $10.4
million curtailment gain related to closing a pension plan in the
U.K., partially offset by Edmonton Brewery closure costs of $4.2
million, an asset impairment charge of $1.7 million, and
MillerCoors readiness and deal costs of $1.4 million. Corporate
other expense in the quarter totaled $20.0 million, primarily
composed of a $17.9 million one-time non-cash mark-to-market cost
related to the cash-settled total-return swap the Company arranged
with respect to Foster's common stock in 2008. During the fourth
quarter of 2008, MillerCoors reported special or exceptional items
totaling $81 million, which included a Sparks' brand impairment of
$65 million, as well as integration costs. These integration costs
are part of the investment which will enable MillerCoors to meet
its stated $500 million three-year synergy plan. The Sparks' brand
impairment has been offset by a one-time adjustment in our equity
method accounting and thus had no effect on Molson Coors results.
Discontinued Operations The Company reports results associated with
its former Brazilian unit, Cervejarias Kaiser ("Kaiser"), as
discontinued operations. The Company reported a gain of $6.1
million from discontinued operations during the quarter primarily
due to the impact of favorable foreign exchange movements on the
Kaiser indemnity estimates. 2008 Fourth Quarter 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 2008 fourth quarter and
full year results. The Company will provide a live webcast of the
earnings call. Approximately two hours after the conclusion of the
earnings call, the Company also will host an online, real-time
webcast of an Investor Relations Follow-up Session with financial
analysts at 2:00 p.m. Eastern Time. Both webcasts will be
accessible via the Company's website, http://www.molsoncoors.com/.
Online replays of the webcasts will be available until 11:59 p.m.
Eastern Time on May 4, 2009. The company will post this release and
related financial statements today on its web site,
http://www.molsoncoors.com/ Reconciliations to Nearest U.S. GAAP
Measures Molson Coors Brewing Company Table 3: 2008 Fourth Quarter
Underlying After-Tax Income (After-Tax Income From Continuing
Operations, Excluding Special and Other One-time Items) (Note: Some
numbers may not sum due to rounding.) (In millions of $US, except
per share data) 2008 4th Q 2007 4th Q U.S. GAAP: After-tax income
from continuing operations: 90.7 176.2 Per diluted share: $0.49 $
0.96 Add back: Pretax special items - net (2.1) 23.2 Add back: Loss
on environmental liability reserve (1) 0.8 - Add back: Loss related
to the cash-settled total return swap (1) 17.9 - Add back:
Proportionate share of MillerCoors pretax special items - net (2)
34.1 - Add back: Impact of MillerCoors accounting policy elections
(2) 4.2 - Minus: Basis amortization related to the Sparks brand
impairment (2) (27.3) - Minus: MillerCoors variable share-based
compensation (2) (3.9) - Minus: Other one-time items (1.0) - Minus:
One-time tax benefits - (60.4) Minus: Tax effects related to
special and other one-time items (8.3) (6.0) Non-GAAP: Underlying
after-tax income: 105.1 133.0 Per diluted share: $0.57 $0.73 Notes:
(1) Included in Other Income (Expense) (2) Included in Equity
Income in MillerCoors, but excluded from non-GAAP underlying pretax
income. Molson Coors Brewing Company Table 4: 2008 Fourth Quarter
Underlying Pretax Income (Pretax Income From Continuing Operations,
Excluding Special and Other One-time Items) (Note: Some numbers may
not sum due to rounding.) (In millions of $US) Business Total
Global Markets & Canada U.S. U.K. Corporate Consolidated U.S.
GAAP: 2008 4th Q pretax income (loss) from continuing operations -
reported $93.7 $49.1 $40.6 $(69.7) $113.7 Add back: Pretax special
items - net 6.1 - (9.9) 1.7 (2.1) Add back: Loss on environmental
liability reserve (1) - - - 0.8 0.8 Add back: Gain related to the
cash-settled total return swap (1) - - - 17.9 17.9 Add back:
Proportionate share of MillerCoors pretax special items - net (2) -
34.1 - - 34.1 Add back: Impact of MillerCoors accounting policy
elections (2) - 4.2 - - 4.2 Minus: Basis amortization related to
the Sparks brand impairment (2) - (27.3) - - (27.3) Minus:
MillerCoors variable share- based compensation (2) - (3.9) - -
(3.9) Minus: Other one-time items - - - (1.0) (1.0) Non-GAAP: 2008
4th Q underlying pretax income (loss) $99.8 $56.2 $30.6 $(50.3)
$136.3 Percent change 2008 4th Q vs. 2007 4th Q underlying pretax
income (loss) -23.0% -21.2% -23.6% -21.0% -23.1% U.S. GAAP: 2007
4th Q pretax income (loss) from continuing operations $125.9 $64.6
$38.6 $(75.1) $154.0 Add back: Pretax special items - net 3.7 6.7
1.4 11.4 23.2 Non-GAAP: 2007 4th Q underlying pretax income (loss)
$129.6 $71.3 $40.0 $(63.7) $177.3 Notes: (1) Included in Other
Income (Expense) (2) Included in Equity Income in MillerCoors, but
excluded from non-GAAP underlying pretax income. Molson Coors
Brewing Company Table 5: 2008 Full Year Underlying After-Tax Income
(After-Tax Income From Continuing Operations, Excluding Special and
Other One-time Items) (Note: Some numbers may not sum due to
rounding.) (In millions of $US, except per share data) FY 2008 FY
2007 U.S. GAAP: After-tax income from continuing operations: 400.1
514.9 Per diluted share: $2.16 $ 2.84 Add back: Pretax special
items - net 133.9 112.2 Add back: Loss on environmental liability
reserve (1) 4.4 - Add back: Net debt extinguishment costs 12.4 -
Add back: Loss related to the cash-settled total return swap (1)
4.3 - Add back: Proportionate share of MillerCoors pretax special
items - net (2) 43.6 - Add back: Other one-time items - 7.8 Minus:
Basis amortization related to the Sparks brand impairment (2)
(27.3) - Minus: Impact of MillerCoors accounting policy elections
(2) (27.7) - Minus: Other one-time items (1.0) - Minus: One-time
tax benefits - (84.9) Minus: Tax effects related to special and
other one-time items (30.2) (42.6) Non-GAAP: Underlying after-tax
income: 512.6 507.4 Per diluted share: $2.76 $2.80 Notes: (1)
Included in Other Income (Expense) (2) Included in Equity Income in
MillerCoors, but excluded from non-GAAP underlying pretax income.
Molson Coors Brewing Company Table 6: 2008 Full Year Underlying
Pretax Income (Pretax Income From Continuing Operations, Excluding
Special and Other One-time Items) (Note: Some numbers may not sum
due to rounding.) (In millions of $US) Business Total Global
Markets & Canada U.S. U.K. Corporate Consolidated U.S. GAAP: FY
2008 pretax income (loss) from continuing operations - reported
$458.4 $265.0 $85.4 $(293.6) $515.2 Add back: Pretax special items
- net 10.9 69.3 (4.5) 58.2 133.9 Add back: Loss on environmental
liability reserve (1) - - - 4.4 4.4 Add back: Net debt
extinguishment costs - - - 12.4 12.4 Add back: Loss related to the
cash-settled total return swap (1) - - - 4.3 4.3 Add back:
Proportionate share of MillerCoors pretax special items - net (2) -
43.6 - - 43.6 Minus: Basis amortization related to the Sparks brand
impairment (2) - (27.3) - - (27.3) Minus: Impact of MillerCoors
accounting policy elections (2) - (27.7) - - (27.7) Minus: Other
one-time items - - - (1.0) (1.0) Non-GAAP: FY 2008 underlying
pretax income (loss) $469.3 $322.9 $80.9 $(215.3) $657.8 Percent
change FY 2008 vs. FY 2007 underlying pretax income (loss) -3.3%
9.1% -21.9% -6.6% 0.5% U.S. GAAP: FY 2007 pretax income (loss) from
continuing operations $427.3 $286.4 $89.5 $(268.8) $534.4 Add back:
Pretax special items - net 75.2 9.5 14.1 13.4 112.2 Add back: Debt
extinguishment costs - - - 24.5 24.5 Minus: Gain on sale of House
of Blues equity investment (16.7) - - (16.7) Non-GAAP: FY 2007
underlying pretax income (loss) $485.8 $295.9 $103.6 $(230.9)
$654.4 Notes: (1) Included in Other Income (Expense) (2) Included
in Equity Income in MillerCoors, but excluded from non-GAAP
underlying pretax income. MillerCoors LLC Table 7: 2008 Fourth
Quarter Underlying Net Income (Net Income, Excluding Special Items)
(In millions of $US) Three Months Ended Six Months Ended December
31, December 31, December 31, December 31, 2008 2007 2008 2007
Adjusted Adjusted Pro Forma(1) Pro Forma(1) U.S. GAAP - Net Income:
$54.1 $90.7 $222.4 $238.7 Add back: Special items, net 81.2 25.4
103.8 28.2 Non-GAAP - Underlying Net Income: $135.3 $116.1 $326.2
$266.9 (1) The adjusted pro forma net income excludes the benefit
of a $26.3 million and $43.1 million settlement received from Ball
Corporation which related to the three months ended and six months
ended December 31, 2007, respectively. 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.
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. 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. Molson Coors
Brewing Company Table 8: Reconciliation of MillerCoors Net Income
to MCBC's Equity Income in MillerCoors and Reconciliation to U.S.
Segment Underlying Pretax Income (Note: Some numbers may not sum
due to rounding.) Thirteen Twenty-Six Weeks Ended Weeks Ended
December 28, December 28, (In millions of $ US) 2008 2008
MillerCoors Net Income $54.1 $222.4 Multiply: MCBC economic
interest % in MillerCoors 42% 42% MCBC Proportionate $ Share of
MillerCoors Net Income $22.7 $93.4 Add/(Minus): Accounting policy
elections (1) (4.2) 27.7 Add/(Minus): Amortization of the
difference between MCBC contributed cost basis and the underlying
equity in net assets of MillerCoors (2) 30.7 36.7 Add/(Minus):
Share-based compensation adjustment (3) (0.1) (2.2) Equity Income
in MillerCoors (Reported) $49.1 $155.6 Add/(Minus): Proportionate
share of MillerCoors special items (4) 34.1 43.6 Add/(Minus):
Portion of basis amortization associated with Sparks brand
impairment (2) (27.3) (27.3) Add/(Minus): MillerCoors variable
share-based compensation (5) (3.9) - Add/(Minus): Accounting policy
elections (1) 4.2 (27.7) U.S. Segment Underlying Pretax Income
(Non-GAAP) $56.2 $144.3 (1) MillerCoors made its initial accounting
policy elections upon formation, impacting certain asset and
liability balances. These adjustments reflect the impact to our
investment in MillerCoors, which is based upon our contributed
assets and liabilities. (2) MCBC's net investment in MillerCoors is
based on the carrying values of the net assets it contributed to
the joint venture. MCBC's investment basis in MillerCoors is less
than our underlying equity (42%) in the total net assets of
MillerCoors (contributed by both Coors and Miller) by approximately
$652.0 million. This amount is being amortized over a period of
time represented primarily by the remaining useful lives of
long-lived assets giving rise to the difference. For
non-depreciable assets, such as goodwill, no adjustment will be
recorded to the MillerCoors equity method income unless there is an
impairment. The amortization amounts include $27.3 million in both
the thirteen week and twenty-six week periods associated
specifically with MillerCoors $65.1 million impairment of the
Sparks brand during the fourth quarter of 2008. Since our portion
of the Sparks brand impairment is an adjustment to arrive at the
non- GAAP measure above (footnote 4), the offsetting basis
amortization adjustment is included in the non-GAAP reconciliation
as well. (3) The net adjustment is to record all stock-based
compensation associated with preexisting equity awards to be
settled in MCBC Class B common stock held by former CBC employees
now employed by MillerCoors and eliminate all stock-based
compensation impacts related to preexisting SABMiller equity awards
held by Miller employees now employed by MillerCoors. The
adjustment is to recognize the additional 58% of the stock-based
compensation costs associated with those awards recognized and
reported by MCBC's U.S. business and eliminate all of the costs
associated with equity awards to be settled in SABMiller equity.
(4) MillerCoors Q4 2008 Special Items of $81.2 million, multiplied
by MCBC's proportionate share of MillerCoors at 42%, equals $34.1
million. (5) Included in Equity Income in MillerCoors. This
adjustment represents the fair value mark to market component of
MCBC share-based compensation held by employees of MillerCoors.
Forward-Looking Statements This press release includes
"forward-looking statements" within the meaning of the federal
securities laws, and language indicating trends, such as "trend
improvements," "progress," "anticipated," "expected," "improving
sales trends" and "on track." It also includes financial
information, of which, as of the date of this press release, the
Company's independent auditors have not completed their review.
Although the Company believes that the assumptions upon which the
financial information and 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 projections and
expectations are disclosed in the Company's filings with the
Securities and Exchange Commission. These factors include, among
others, changes in consumer preferences and product trends; price
discounting by major competitors; failure to realize the
anticipated cost savings and other benefits from MillerCoors;
failure to realize anticipated results from synergy initiatives;
and increases in costs generally. All forward-looking statements in
this press release are expressly qualified by such cautionary
statements and by reference to the underlying assumptions. We do
not undertake to update forward-looking statements, whether as a
result of new information, future events or otherwise. DATASOURCE:
Molson Coors Brewing Company CONTACT: News Media, Paul de la
Plante, +1-514-843-2332, or Investor Relations, Dave Dunnewald,
+1-303-279-6565, or Leah Ramsey, +1-303-277-7205, all of Molson
Coors Brewing Company Web site: http://www.molsoncoors.com/
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