CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
December 31, December 31,
2007 2006
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Assets
Current assets:
Cash and cash equivalents $ 21.3 $ 19.9
Restricted cash 11.5 9.3
Accounts receivable, net of allowance for
doubtful accounts of $9.3 and $4.0,
respectively 135.7 149.4
Other receivables, net 32.1 35.7
Inventories, net 216.4 219.4
Deposits and prepayments 36.9 17.0
Deferred income taxes 8.4 -
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Total current assets 462.3 450.7
Property and equipment, net 69.3 55.0
Deferred income taxes 7.2 -
Goodwill 2.8 2.9
Other non-current assets, net 35.5 47.0
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Total assets $ 577.1 $ 555.6
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 54.3 $ 51.6
Book overdrafts 21.1 15.5
Cigarette and tobacco taxes payable 94.2 67.2
Accrued liabilities 56.7 56.0
Income taxes payable - 6.9
Deferred income taxes - 14.4
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Total current liabilities 226.3 211.6
Long-term debt, net 29.7 78.0
Other tax liabilities 13.7 3.6
Claims liabilities, net of current portion 31.2 37.5
Pension liabilities 9.7 9.2
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Total liabilities 310.6 339.9
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Stockholders' equity:
Common stock; $0.01 par value (50,000,000
shares authorized; 10,445,886 and
10,208,292 shares issued and outstanding
at December 31, 2007 and December 31, 2006,
respectively) 0.1 0.1
Additional paid-in capital 202.6 175.5
Retained earnings 64.4 40.2
Accumulated other comprehensive loss (0.6) (0.1)
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Total stockholders' equity 266.5 215.7
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Total liabilities and stockholders'
equity $ 577.1 $ 555.6
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CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Year Ended Quarter Ended
December 31, December 31,
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 5,560.9 $ 5,314.4 $ 1,373.3 $ 1,307.9
Cost of goods sold 5,228.3 5,016.7 1,298.0 1,227.5
--------- --------- --------- ---------
Gross profit 332.6 297.7 75.3 80.4
Warehousing and distribution
expenses 174.1 151.1 45.5 39.3
Selling, general and
administrative expenses 119.0 106.6 23.7 26.8
Amortization of intangible
assets 1.8 1.5 0.5 0.4
--------- --------- --------- ---------
Total operating expenses 294.9 259.2 69.7 66.5
Income from operations 37.7 38.5 5.6 13.9
Interest expense 2.4 5.3 0.4 1.6
Interest income (1.4) (1.1) (0.7) (0.2)
Foreign currency transaction
gains (losses), net (0.9) 0.3 0.0 0.7
--------- --------- --------- ---------
Income before income taxes 37.6 34.0 5.9 11.8
Provision for income taxes 13.5 13.4 0.8 4.2
--------- --------- --------- ---------
Net income $ 24.1 $ 20.6 $ 5.1 $ 7.6
Basic income per common share
(1) $ 2.30 $ 2.05 $ 0.49 $ 0.74
========= ========= ========= =========
Diluted income per common share
(1) $ 2.15 $ 1.87 $ 0.46 $ 0.69
========= ========= ========= =========
Basic weighted average shares 10.5 10.0 10.6 10.2
Diluted weighted average shares 11.2 11.0 11.2 11.0
Note 1: Basic and diluted earnings per share are calculated based on
unrounded actual amounts.
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
December 31,
2007 2006
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Cash flows from operating activities:
Net income $ 24.1 $ 20.6
Adjustments to reconcile net income to net cash
provided by operating activities:
LIFO and inventory provisions 14.5 3.7
Amortization of debt issuance costs 0.4 0.4
Amortization of stock-based compensation expense 5.3 4.4
Bad debt expense, net 6.9 (1.2)
Depreciation and amortization 14.9 13.2
Foreign currency transaction (gains) losses, net (0.9) 0.3
Deferred income taxes (4.5) 3.2
Changes in operating assets and liabilities:
Accounts receivable 9.2 (1.5)
Other receivables 6.0 (4.9)
Inventories (7.1) (3.3)
Deposits, prepayments and other non-current assets (8.5) 5.7
Accounts payable 2.3 4.9
Cigarette and tobacco taxes payable 22.7 2.7
Pension, claims and other accrued liabilities (15.3) (11.8)
Income taxes payable (3.4) 1.1
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Net cash provided by operating activities 66.6 37.5
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Cash flows from investing activities:
Restricted cash (0.6) 1.5
Acquisition of business, net of cash acquired - (55.5)
Additions to property and equipment, net (20.8) (12.8)
Capitalization of internally developed software (2.0) -
Proceeds from sale of fixed assets 0.1 0.2
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Net cash used in investing activities (23.3) (66.6)
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Cash flows from financing activities:
(Repayments) borrowings under revolving credit
facility, net (48.4) 18.4
Cash proceeds from exercise of common stock options 2.2 3.2
Excess tax deductions associated with stock-based
compensation 1.1 1.8
Increase (decrease) in book overdrafts 5.6 (4.7)
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Net cash (used in) provided by financing
activities (39.5) 18.7
-------- --------
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Effects of changes in foreign exchange rates (2.4) 0.3
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Increase (decrease) in cash and cash equivalents 1.4 (10.1)
Cash and cash equivalents, beginning period 19.9 30.0
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Cash and cash equivalents, end of period $ 21.3 $ 19.9
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Supplemental disclosures:
Cash paid during the period for:
Income taxes, includes interest paid, net of refunds 28.1 8.2
Interest 2.5 5.5
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
ITEMS AFFECTING COMPARABILITY
(In millions)
(Unaudited)
The period-over-period comparisons of our Income from Operations are
affected by the following pre-tax items for the quarter and year ended
December 31, 2007:
Three months ended Twelve months ended
December 31 December 31
------------------ ------------------
(Income) Expense 2007 2006 2007 2006
-------- -------- -------- --------
State of Washington OTP tax refund $ - $ - $ (13.3) $ -
LIFO expense 3.9 (0.8) 13.1 2.9
Cigarette inventory holding profits (0.6) (3.5) (7.3) (4.1)
Calgary rebate and excise tax
charges 0.9 - 0.4 -
Bad debt charge related to two
customers 0.7 - 5.9 -
Division integration/closure costs - 1.0 - 1.6
Severance costs - - 0.6 -
Reduction in workers' compensation
costs (3.1) (1.8) (3.1) (3.8)
Favorable settlement AP/AR
previously written off - - - (1.6)
Fire insurance proceeds - (1.6) - (1.6)
Start up costs for new division in
Toronto 0.7 - 0.8 -
- State of Washington OTP Tax Refund -
In April 2007, we entered into a settlement agreement with the State of
Washington Department of Revenue which resulted in a refund of Other
Tobacco Product (OTP) tax of approximately $13.3 million, representing 25%
of the OTP tax we paid to the State for the periods ranging from 1991 to
2005. This refund was received in July 2007.
- LIFO Expense -
The increase in LIFO expense in 2007 results from higher annual producer
price index amounts primarily for cigarettes, grocery, and confectionery
products.
- Cigarette Inventory Holding Profits -
The cigarette inventory holding profits relate to increases in manufacturer
prices and excise taxes.
- Calgary Operational Charges -
As a result of operational issues in our Calgary division, adjustments of
$0.9 were made during the fourth quarter of 2007 related to excise taxes
and rebates. Approximately $0.5 million of these adjustments related to
the first three quarters of 2007 and $0.4 million related to 2006.
- Bad Debt Charge Related to Two Customers -
During 2007, two of our customers experienced deteriorating financial
conditions which led to their filing for bankruptcy under Chapter 11 during
the fourth quarter of 2007. Based on management's evaluation of the
customers' ability to make future payments, including the legal options
available, we increased the allowance for doubtful accounts by $5.2 million
in the third quarter of 2007 and an additional $0.7 million in the fourth
quarter.
- Division Integration/Closure Costs -
In 2006 we had $1.0 million of integration costs related to our acquisition
in June of 2006 of Klein Candy Co., which is now our Pennsylvania division
and $0.6 million in cost related to consolidation and termination costs of
our Victoria facility in British Columbia, Canada, which operations were
consolidated with our Vancouver distribution center in Canada.
- Severance Costs -
During the second quarter of 2007 we had organizational changes in our
Canadian operations resulting in severance costs of $0.6 million.
- Reduction in Workers' Compensation Costs -
These benefits represent a reduction in workers' compensation costs
resulting from favorable claims experience for prior years as well as
settlement of amounts owed to us for claims inherited in connection with
the Fleming bankruptcy.
- Favorable Settlement AP/AR previously written off -
During the year ended December 31, 2006 we benefited from reversal of
vendor payables determined not due and the favorable settlement of
previously written-off receivables totaling $1.6 million.
- Fire Insurance Proceeds -
In the fourth quarter of 2006 we received $1.6 million of insurance
reimbursements related to a fire at our Denver facility in 2002.
- Start-Up Costs for New Division in Toronto -
In April 2007, we announced our plan to open a new distribution facility
near Toronto, Ontario by February 2008. This new facility will expand our
existing market geography in Canada. We estimate total start-up costs of
approximately $1.5 million of which $0.8 million was expensed in 2007 and
the remainder will be expensed in 2008.
Contact Information: Contact: Ms. Milton Gray Draper Director of Investor Relations 650-589-9445 X3027