U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter ended March 19, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 0-8251
ADOLPH COORS COMPANY
(Exact name of registrant as specified in its charter)
COLORADO 84-0178360
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
303-279-6565
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock (non-voting), no par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: All voting shares are held by Adolph Coors, Jr. Trust.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of April 28, 1995:
Class A Common Stock - 1,260,000 shares
Class B Common Stock - 37,076,132 shares
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Twelve weeks ended
----------------------
March 19, March 20,
1995 1994
--------- ---------
(In thousands, except per share data)
<S> <C> <C>
SALES $ 402,628 $ 390,247
Less - beer excise taxes ( 76,040) ( 71,794)
--------- ---------
NET SALES 326,588 318,453
--------- ---------
Costs and expenses:
Cost of goods sold 222,133 211,252
Marketing, general and administrative 99,096 92,926
Research and project development 3,322 2,197
--------- ---------
Total operating expenses 324,551 306,375
--------- ---------
OPERATING INCOME 2,037 12,078
Other income (expense) - net ( 1,880) 156
--------- ---------
Income before income taxes 157 12,234
Income tax expense 65 5,300
--------- ---------
NET INCOME $ 92 $ 6,934
========= =========
NET INCOME PER SHARE OF COMMON STOCK $ 0.00 $ 0.18
========= =========
Weighted average number of outstanding
shares of common stock 38,328 38,215
========= =========
Cash dividends declared and paid per share
of common stock $ 0.125 $ 0.125
========= =========
/TABLE
<PAGE>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 19, December 25,
1995 1994
---------- -----------
(In thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 9,648 $ 27,168
Accounts and notes receivable 109,785 106,327
Inventories:
Finished 56,015 67,500
In process 32,178 22,918
Raw materials 26,776 38,108
Packaging materials 20,134 13,078
---------- ----------
Total inventories 135,103 141,604
Other assets 86,089 80,067
---------- ----------
Total current assets 340,625 355,166
---------- ----------
PROPERTIES, at cost, less accumulated
depreciation, depletion and amortiza-
tion of $1,245,973 in 1995
and $1,220,836 in 1994 924,555 922,208
OTHER ASSETS 96,072 94,202
---------- ----------
TOTAL ASSETS $1,361,252 $1,371,576
========== ==========
/TABLE
<PAGE>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 19, December 25,
1995 1994
---------- -----------
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 44,000 $ 44,000
Short-term borrowings 44,500 --
Accounts payable 110,961 164,430
Accrued expenses and other liabilities 171,671 171,784
---------- ----------
Total current liabilities 371,132 380,214
---------- ----------
LONG-TERM DEBT 131,000 131,000
DEFERRED TAX LIABILITY 73,588 71,660
OTHER LONG-TERM LIABILITIES 115,258 114,501
---------- ----------
Total liabilities 690,978 697,375
---------- ----------
SHAREHOLDERS' EQUITY:
Capital stock:
Preferred stock, non-voting, $1 par
value, 25,000,000 shares authorized
and no shares issued -- --
Class A common stock, voting, $1
par value, authorized and issued
1,260,000 shares 1,260 1,260
Class B common stock, non-voting,
no par value, 100,000,000 authorized
and 46,200,000 shares issued 11,000 11,000
---------- ----------
12,260 12,260
Paid-in capital 56,783 56,758
Retained earnings 618,719 623,418
Other 1,981 1,238
---------- ----------
689,743 693,674
Less - treasury stock, at cost,
Class B shares, 9,130,079 in
1995 and 9,133,060 in 1994 19,469 19,473
---------- ----------
Total shareholders' equity 670,274 674,201
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,361,252 $1,371,576
========== ==========
/TABLE
<PAGE>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the twelve weeks ended
--------------------------
March 19, March 20,
1995 1994
--------- ---------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 92 $ 6,934
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation, depletion and
amortization 28,080 27,078
Change in accumulated deferred
income taxes 1,928 ( 1,562)
(Gain) on sale or abandonment
of properties - net ( 1,959) ( 616)
Change in current assets and current
liabilities ( 55,851) ( 13,432)
Change in non-current liabilities
and other ( 874) ( 4,629)
--------- ---------
Net cash (used in) provided by
operating activities ( 28,584) 13,773
--------- ---------
Cash flows from investing activities:
Additions to properties ( 30,297) ( 20,727)
Proceeds from sale of properties 2,506 1,719
Other ( 908) 182
--------- ---------
Net cash used in
investing activities ( 28,699) ( 18,826)
--------- ---------
Cash flows from financing activities:
Exercise of stock options, net of related
notes receivable 29 909
Dividends paid ( 4,791) ( 4,779)
Short-term borrowings 44,500 --
--------- ---------
Net cash provided by (used in)
financing activities 39,738 ( 3,870)
--------- ---------
Cash and cash equivalents:
Net decrease ( 17,545) ( 8,923)
Effect of exchange rate changes 25 --
Balance at beginning of year 27,168 82,211
--------- ---------
Balance at end of quarter $ 9,648 $ 73,288
========= =========
/TABLE
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Sales and Volume:
- - -----------------
Adolph Coors Company (ACC) reported net sales of $326.6 million for the first
quarter of 1995, which represents a 2.6% increase from the comparable period
in the prior year. ACC's single direct subsidiary, Coors Brewing Company
(CBC), had malt beverage sales of 3,984,000 barrels in the first quarter of
1995 compared to 3,907,000 barrels sold in the first quarter of 1994, an
increase of 2.0%. The improved sales volume resulted from increased sales of
Coors Light, Killian's Irish Red and Artic Ice and an increase in
international sales increased from 1994.
Gross Profit:
- - -------------
Gross profit as a percentage of net sales for the first quarter of 1995
decreased to 32.0% from 33.7% for the same period a year earlier, primarily
due to higher aluminum and other packaging costs. Gross profit decreased
$2.7 million.
Operating Income:
- - -----------------
Operating income for the first quarter decreased to $2.0 million
compared to $12.1 million for the first quarter of 1994. Lower operating
income in 1995 was primarily the result of lower gross profit and higher
marketing, general and administrative expenses. The increase in marketing,
general and administrative expense was primarily because of higher
advertising costs for Coors Light, Artic Ice brands and Original Coors.
General and administrative (G&A) expense increased 6% from 1994. G&A
expense for the first quarter of 1994 benefited from planned but unfilled
positions resulting from the 1993 reduction in the Company's white collar
work force. Susequent to the first quarter of 1994 these planned positions
were filled.
Non-Operating Expenses:
- - -----------------------
Other (income) expense-net changed significantly to $1.9 million expense in
the first quarter of 1995 from $0.2 million income for the first quarter of
1994. A one-time, pre-tax gain of approximately $2.1 million on the sale of
a company-owned distributorship is reflected in the 1994 other income. Net
interest expense declined from $3.0 million in the first quarter of 1994 to
$1.9 million in the first quarter of 1995 due to the scheduled $50.0 million
payment of principal in the third quarter of 1994.
Effective Tax Rate:
- - -------------------
The consolidated effective tax rate for the first quarter decreased to 41.4%
compared to 43.3% for the same period of 1994. The 1994 effective tax rate
included an increase in a valuation allowance for a deferred tax asset.
Based on the present circumstances, management does not believe an adjustment
to the valuation allowance is appropriate for 1995.
Net Income:
- - -----------
Consolidated net income for the first quarter of 1995 was $92 thousand, or
$0.00 per share compared to $6.9 million, or $0.18 per share a year earlier.
Working Capital Changes:
- - ------------------------
Consolidated working capital at March 19, 1995 decreased $5.5 million from
year-end 1994, primarily because of decreases in cash and cash equivalents
and inventories combined with an increase in short-term borrowings. The
decrease in cash and cash equivalents and the increase in short-term
borrowings relate to the decrease in accounts payable from the end of 1994.
The decrease in finished goods relates to an aggressive first quarter sales
effort while the decrease in raw materials relates to seasonal usage of
barley.
Cash (Used in) Provided by Operating Activities:
- - ------------------------------------------------
Net cash used in consolidated operating activities for the first quarter
of 1995 was $28.6 million. This compares to $13.8 million of net cash
provided by operations in 1994. The change resulted primarily from lower net
income and a significant reduction in accounts payable in 1995.
Cash Used in Investing Activities:
- - ----------------------------------
Cash flows used in investing activities for the first quarter of 1995
increased by $9.6 million from the comparable period last year because of
higher property additions in 1995.
Cash Provided by (Used in) Financing Activities:
- - ------------------------------------------------
Cash flows provided by financing activities reflects a substantial increase
in short-term borrowings under ACC's line of credit. A significant portion
of the line of credit remains unused. The other principal financing
activity was dividends paid to shareholders.
Outlook:
- - --------
As previously disclosed, the Company expects a continuation of a significant
increase in cost of goods sold (COGS) in 1995 over 1994 primarily due to
increased costs of aluminum and other packaging materials. Marketing,
general and administrative (MG&A) expense should also increase primarily due
to increased advertising support for Coors Light.
The Company expects that volume gains, modest price increases, productivity
gains arising from restructuring efforts and benefits derived from the
Company's joint venture with American National Can Company will offset in
part increases in COGS and MG&A expense. These offsets are expected to
benefit the third and fourth quarters.
These statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Form 10-K for the year ended
December 25, 1994. The accompanying financial statements have not been
examined by the Company's independent accountants in accordance with
generally accepted auditing standards, but in the opinion of management of
Adolph Coors Company, such financial statements include all adjustments
necessary to present fairly the Company's financial position and results of
operations. The results of operations for the 12 weeks ended March 19, 1995,
may not be indicative of results that may be expected for the year ending
December 31, 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In January 1992, ACC and CBC (as well as two former affiliates that are now
subsidiaries of ACX Technologies, Inc.) were sued by TransRim Enterprises
(USA) Ltd. in Federal District Court for the District of Colorado. TransRim
alleged that the defendants misused confidential information and breached an
implied contract to proceed with a joint venture project to build and operate
a paper board mill. TransRim initially claimed damages totaling $159 million
based on a number of theories, some of which were dismissed from the case by
the judge granting the defendants' motion for the partial summary judgment.
A jury trial was held in April 1994, and the jury returned a verdict in favor
of all defendants on all claims. The U.S. Court of Appeals, 10th Judicial
Circuit, upheld the verdict in a decision rendered April 7, 1995. TransRim
has petitioned the 10th Circuit to rehear the appeal.
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADOLPH COORS COMPANY
By /s/ Timothy V. Wolf
--------------------------------
Timothy V. Wolf
Vice President, Treasurer,
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
May 2, 1995
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<NAME> ADOLPH COORS COMPANY
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