| Coca-Cola Bottling Co. Consolidated Reports Third Quarter 2003 Results |
0-22-03 05:08 PM EST |
/PRNewswire-FirstCall/ -- 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."
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)