CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
September 30, December 31,
2007 2006
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Assets
Current assets:
Cash and cash equivalents $ 14.8 $ 19.9
Restricted cash 11.5 9.3
Accounts receivable, net of allowance for
doubtful accounts of $9.2 and $4.0,
respectively 149.7 149.4
Other receivables, net 33.3 35.7
Inventories, net 238.3 219.4
Deposits and prepayments 38.3 17.0
Deferred Income Taxes 5.8 -
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Total current assets 491.7 450.7
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Property and equipment, net 62.3 55.0
Goodwill 2.8 2.9
Other non-current assets, net 51.4 47.0
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Total assets $ 608.2 $ 555.6
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 65.2 $ 51.6
Book overdrafts 18.4 15.5
Cigarette and tobacco taxes payable 90.1 67.2
Accrued liabilities 59.9 56.0
Income taxes payable - 6.9
Deferred income taxes - 14.4
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Total current liabilities 233.6 211.6
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Long-term debt, net 53.7 78.0
Other tax liabilities 13.7 3.6
Claims liabilities, net of current portion 38.5 37.5
Pension liabilities 7.7 9.2
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Total liabilities 347.2 339.9
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Stockholders' equity:
Common stock; $0.01 par value (50,000,000
shares authorized; 10,435,435 and
10,208,292 shares issued and outstanding
at September 30, 2007 and December 31,
2006, respectively) 0.1 0.1
Additional paid-in capital 201.2 175.5
Retained earnings 59.3 40.2
Accumulated other comprehensive income (loss) 0.4 (0.1)
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Total stockholders' equity 261.0 215.7
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Total liabilities and stockholders'
equity $ 608.2 $ 555.6
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CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 1,477.5 $ 1,482.0 $ 4,187.6 $ 4,006.5
Cost of goods sold 1,392.3 1,403.0 3,930.3 3,789.2
--------- --------- --------- ---------
Gross profit 85.2 79.0 257.3 217.3
--------- --------- --------- ---------
Warehousing and distribution
expenses 45.6 42.3 128.6 111.8
Selling, general and
administrative expenses 34.6 28.1 95.3 79.8
Amortization of intangible
assets 0.4 0.4 1.3 1.1
--------- --------- --------- ---------
Total operating expenses 80.6 70.8 225.2 192.7
--------- --------- --------- ---------
Income from operations 4.6 8.2 32.1 24.6
Interest expense 0.5 1.7 2.0 3.7
Interest (income) (0.2) (0.4) (0.7) (0.9)
Foreign currency transaction
(gains), net (0.3) - (0.9) (0.4)
--------- --------- --------- ---------
Income before income taxes 4.6 6.9 31.7 22.2
Provision for income taxes 1.3 2.5 12.7 9.2
--------- --------- --------- ---------
Net income $ 3.3 $ 4.4 $ 19.0 $ 13.0
========= ========= ========= =========
Basic income per common share $ 0.32 $ 0.43 $ 1.84 $ 1.30
========= ========= ========= =========
Diluted income per common share $ 0.30 $ 0.40 $ 1.69 $ 1.19
========= ========= ========= =========
Basic weighted average shares 10.4 10.1 10.4 10.0
Diluted weighted average shares 11.3 10.9 11.2 10.9
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
------------------
2007 2006
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Cash flows from operating activities:
Net income $ 19.0 $ 13.0
Adjustments to reconcile net income to net cash
provided by operating activities:
LIFO and inventory provisions 10.0 4.5
Amortization of stock-based compensation
expense 4.1 3.3
Bad debt expense, net 5.5 (0.4)
Depreciation and amortization 11.0 9.2
Amortization of debt issuance costs 0.3 0.3
Foreign currency transaction gains, net (0.9) (0.4)
Deferred income taxes - 0.2
Changes in operating assets and liabilities:
Accounts receivable (4.2) (2.9)
Other receivables 4.0 (1.9)
Inventories (25.5) 17.5
Deposits, prepayments and other non-current
assets (22.8) (6.4)
Accounts payable 13.2 34.3
Cigarette and tobacco taxes payable 19.3 (22.6)
Income taxes payable (5.3) (0.8)
Pension, claims and other accrued liabilities 1.1 (0.5)
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Net cash provided by operating activities 28.8 46.4
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Cash flows from investing activities:
Restricted cash (0.6) 1.7
Acquisition of business, net of cash acquired - (55.8)
Additions to property and equipment, net (13.3) (8.2)
Proceeds from sale of fixed assets 0.1 0.3
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Net cash used in investing activities (13.8) (62.0)
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Cash flows from financing activities:
(Repayments) borrowings under revolving credit
facility, net (24.3) 9.2
Cash proceeds from exercise of common stock options 2.0 2.5
Excess tax deductions associated with stock-based
compensation 1.1 1.7
Increase (decrease) in book overdrafts 2.9 (6.7)
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Net cash (used in) provided by financing
activities (18.3) 6.7
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Effects of changes in foreign exchange rates (1.8) (0.3)
Decrease in cash and cash equivalents (5.1) (9.2)
Cash and cash equivalents, beginning period 19.9 30.0
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Cash and cash equivalents, end of period $ 14.8 $ 20.8
======== ========
Supplemental disclosures:
Cash paid during the period for:
Income taxes, net of refunds $ 27.0 $ 7.6
Interest paid $ 2.5 $ 3.7
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 that are disclosed in Management's
Discussion and Analysis in our Form 10Q for the quarter ended September
30, 2007:
Three months ended Nine months ended
September 30 September 30
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(Amounts in millions)
------------------------------------------
(Income) Expense 2007 2006 2007 2006
--------- ---------- --------- ---------
State of Washington OTP tax
refund $ - $ - $ (13.3) $ -
LIFO Expense 4.6 0.8 9.3 3.7
Cigarette inventory holding
profits (2.3) - (6.7) (0.6)
Bad Debt Charge related to two
customers 5.2 - 5.2 -
Division Integration / Closure
Costs - 0.6 - 0.6
Severance Costs - - 0.6 -
Favorable workers compensation
settlement - - - (2.0)
Favorable settlement AP/AR
previously written off - - - (1.6)
- State of Washington OTP Tax Refund -
In April 2007, we entered into a settlement agreement with the State of
Washington Department of Revenue related to a technical interpretation of
the State of Washington’s Other Tobacco Tax Law which specifies a refund of
Other Tobacco Product (OTP) tax of approximately $13.3 million,
representing 25% of the State of Washington OTP tax we paid for the periods
of December 1991 through December 1996 and May 1998 through June 2005. This
refund was received in July 2007.
- LIFO expense -
The increase in LIFO expense in 2007 results from higher annual producer
price index estimates primarily for cigarettes, grocery, and confectionery
products.
- Cigarette Inventory Holding Profits -
The increase in cigarette inventory holding profits relate to increases in
manufacturer prices and excise taxes.
- Bad Debt Charge Related to Two Customers -
During the third quarter of 2007, two of our customers experienced
deteriorating financial conditions leading one of the customers to seek
protection under Court Receivership in September of 2007. We believe this
customer will file for bankruptcy under Chapter 11 in the near future.
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 to
provide for the collection risks with respect to these accounts receivable.
- Division Integration/Closure Costs -
Approximately $0.3 million of integration costs related to our acquisition
in June of 2006 of Klein Candy Co., which is now our Pennsylvania division.
Approximately, $0.3 million relates 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.
- Favorable Workers Compensation Settlement -
During the nine months ended September 30, 2006 we benefited from a $2.0
million reduction in workers compensation costs resulting from a favorable
settlement of amounts owed by us for claims inherited in connection with
the Fleming bankruptcy.
- Favorable Settlement AP/AR previously written off -
During the nine months ended September 30, 2006 we benefited from reversal
of vendor payables determined not due and the favorable settlement of
previously written-off receivables totaling $1.6 million.
Contact Information: Contact: Ms Milton Gray Draper Director of Investor Relations 650-589-9445 X3027