Coca-Cola Bottling Co. Consolidated Reports First Quarter 2011 Results

CHARLOTTE, N.C.--()--Coca-Cola Bottling Co. Consolidated (NASDAQ: COKE) today announced it earned $5.9 million, or basic net income per share of $.64, on net sales of $359.6 million for the first quarter of 2011, compared to net income of $4.7 million, or basic net income per share of $.51, on net sales of $347.5 million for the first quarter of 2010. The results for the first quarter of 2011 included $0.4 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 results for the first quarter of 2010 included $0.1 million of after-tax gains ($0.2 million on a pre-tax basis) due to mark-to-market adjustments on fuel and aluminum hedges and a $0.5 million increase in income tax expense due to the change in tax law eliminating the tax deduction once available for Medicare Part D subsidies.

On a comparable basis, the Company earned $6.4 million in the first quarter of 2011, or comparable basic net income per share of $.69, versus $4.9 million in the first quarter of 2010, or comparable basic net income per share of $.54.

The following table reconciles reported GAAP net income and basic net income per share to comparable net income and basic net income per share for the first quarter of 2011 and 2010:

     
First Quarter
Net Income

Basic Net Income Per

Share

In Thousands, Except Per Share Amounts 2011 2010 2011 2010
 
Reported net income (GAAP) $ 5,913 $ 4,660 $ 0.64 $ 0.51
 
Net (gain) loss on fuel & aluminum hedges, net of tax 396 (149 ) 0.04 (0.02 )
Impact of change in tax law regarding Medicare Part D subsidy - 464 - 0.05
Other income tax changes   62   (35 )   0.01   (0.00 )
 
Total   458   280     0.05   0.03  
 
Comparable net income (a) $ 6,371 $ 4,940   $ 0.69 $ 0.54  
 

(a) This non-GAAP financial information is provided to allow investors to more clearly evaluate operating performance and business trends for the first quarters of 2011 and 2010. 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, “We are pleased with our first quarter results. We continued to grow our revenue and effectively control costs which resulted in a strong start to 2011. Our first quarter results reflect strong execution across our entire business. We continue to face many challenges including the potential for significant increases in commodity costs and persistently high unemployment in the areas we serve. ”

William B. Elmore, President and COO, added, “Our strong first quarter results are a great start for the year. However, we believe that our greatest challenges in 2011 lie in the months ahead. As we look to the remainder of 2011, the challenges are expected to get tougher as higher commodity prices will have greater impact on costs. We are also starting to see lower sales trends in our convenience store business as consumers react to higher fuel prices. As we have been doing over the past several years, we will continue to look for ways to improve our supply chain and minimize our operating costs. We will also review our pricing and make adjustments as necessary to maintain our profitability.”

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 the challenges that lie ahead in 2011, including the impact of higher commodity prices and lower sales trends in our convenience store business resulting from consumer reaction to higher fuel prices; our continued focus on improving our supply chain and minimizing operating costs; and our intention to make pricing adjustments as necessary to maintain profitability.

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; bottler system disputes; 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 2, 2011 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.

—Enjoy Coca-Cola—

Coca-Cola Bottling Co. Consolidated  
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
 
 
First Quarter
2011 2010
 
Net sales $ 359,629 $ 347,498
Cost of sales   210,468   200,795
Gross margin 149,161 146,703
Selling, delivery and administrative expenses   129,982   129,044
Income from operations 19,179 17,659
Interest expense   8,769   8,810
Income before income taxes 10,410 8,849
Income taxes   3,941   3,714
Net income 6,469 5,135
Less: Net income attributable to the
noncontrolling interest   556   475
Net income attributable to Coca-Cola Bottling Co.
Consolidated $ 5,913 $ 4,660
 
 
Basic net income per share based on net
income attributable to Coca-Cola Bottling Co.
Consolidated:
Common Stock $ 0.64 $ 0.51
Weighted average number of Common
Stock shares outstanding 7,141 7,141
 
Class B Common Stock $ 0.64 $ 0.51
Weighted average number of Class B
Common Stock shares outstanding 2,051 2,029
 
Diluted net income per share based on net
income attributable to Coca-Cola Bottling Co.
Consolidated:
Common Stock $ 0.64 $ 0.51
Weighted average number of Common
Stock shares outstanding – assuming dilution 9,232 9,210
 
Class B Common Stock $ 0.64 $ 0.50
Weighted average number of Class B Common
Stock shares outstanding – assuming dilution 2,091 2,069
 
  Coca-Cola Bottling Co. Consolidated    
CONDENSED BALANCE SHEETS (UNAUDITED)
In Thousands
April 3, January 2, April 4,
2011 2011 2010
ASSETS
Current assets:
Cash $ 33,882 $ 49,372 $ 52,825
Trade accounts receivable, net 110,809 96,787 111,397
Accounts receivable, other 23,706 27,910 28,034
Inventories 72,606 64,870 64,734
Prepaids and other current assets   27,306   25,760   32,590
Total current assets   268,309   264,699   289,580
 
Property, plant and equipment, net 319,682 322,143 321,488
Leased property under capital leases, net 64,188 46,856 50,375
Other assets 51,457 46,332 46,796
Franchise rights, goodwill and other intangibles, net   627,469   627,592   627,948
Total $ 1,331,105 $ 1,307,622 $ 1,336,187
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt and capital lease obligations $ 3,946 $ 3,866 $ 23,851
Accounts payable and accrued expenses   170,341   172,874   168,565
Total current liabilities   174,287   176,740   192,416
 
Deferred income taxes 144,972 143,962 159,591
Pension, postretirement and other liabilities 225,533 224,045 198,336
Long-term debt and obligations under capital leases   596,026   578,458   611,271
Total liabilities   1,140,818   1,123,205   1,161,614
Stockholders' equity 133,209 127,895 121,294
Noncontrolling interest   57,078   56,522   53,279
Total $ 1,331,105 $ 1,307,622 $ 1,336,187

Contacts

Coca-Cola Bottling Co. Consolidated
Media Contact:
Lauren C. Steele, VP - Corporate Affairs
704-557-4551
or
Investor Contact:
James E. Harris, Senior VP - CFO
704-557-4582

Release Summary

Coca-Cola Bottling Co. Consolidated Reports First Quarter 2011 Results

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Contacts

Coca-Cola Bottling Co. Consolidated
Media Contact:
Lauren C. Steele, VP - Corporate Affairs
704-557-4551
or
Investor Contact:
James E. Harris, Senior VP - CFO
704-557-4582