EXHIBIT 99.1
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CONSTELLATION REPORTS RECORD FIRST QUARTER SALES AND NET INCOME
Company expects continued growth throughout the year
FAIRPORT, NEW YORK, JULY 1, 2003 - Constellation Brands, Inc. (NYSE: STZ and
STZ.B, ASX: CBR) today reported record net sales and net income for its first
quarter ended May 31, 2003. Led by the benefit from the Hardy acquisition,
increased beer sales and lower average spirits costs, net income on a comparable
basis increased $10 million, or 26 percent, to reach a record $47 million.
Diluted earnings per share on a comparable basis increased 23 percent to reach
$0.49.
Net income and diluted earnings per share as reported under generally
accepted accounting principles ("reported") for the first quarter increased two
million dollars, or five percent, to reach $39 million. Reported diluted
earnings per share increased three percent to reach $0.41.
Net income on a comparable basis and diluted earnings per share on a
comparable basis exclude the after-tax impact of: an increase in cost of goods
sold resulting from the step up of inventory associated with the Hardy
acquisition; financing costs and the imputed interest charges associated with
the Hardy acquisition; restructuring charges; and a gain on change in fair value
of derivative instruments. For a further discussion of these items, please see
the section "Items Affecting Comparability" contained in this release. A table
reconciling these measures and other related financial measures for the quarter
is included in this release.
Richard Sands, Chairman and Chief Executive Officer, said, "We are pleased
with our strong comparable earnings growth this quarter, which was enhanced by
our recent acquisition. The integration of Hardy has gone very well and it is
clear that Constellation has already begun to experience tangible benefits from
the acquisition, particularly in the enhancement of our scale, breadth and
growth. Our company-wide business model of independent sales, marketing and
production teams has once again demonstrated its flexibility, allowing us to
adapt to changes in the marketplace while maintaining close contact with our
customers."
Sands added, "We remain focused on building long-term brand equity and we
continue to invest behind brands and sectors that have the greatest potential
for growth, while maintaining profitability on more established brands. This
approach to the market enabled us to maintain a strong bottom line and we are on
track to deliver our fiscal year earnings goals."
BUSINESS SEGMENTS
As reported in its recently filed Form 10-K, the Company has changed its
organizational structure. Beginning with the first quarter ended May 31, 2003
("First Quarter 2004"), the Company is reporting its operating results in three
segments: Constellation Wines (branded wine, and U.K. wholesale and other),
Constellation Beers and Spirits (imported beer and distilled spirits) and
Corporate Operations and Other. In accordance with the provisions of segment
reporting, the Company has elected to change its definition of operating income
for segment purposes to exclude restructuring and unusual costs that affect
comparability. This calculation of operating income for segments reflects the
measure currently used by management to evaluate results.
CONSOLIDATED RESULTS
For the three months ended May 31, 2003 ("First Quarter 2004"), net sales
grew 19 percent, reaching $772 million compared to $650 million in the prior
year and includes a positive four percent impact from foreign exchange. Net
sales growth was driven primarily by the addition of wine sales from the Hardy
acquisition completed during the quarter. Increases in U.K. wholesale sales and
imported beer sales also contributed to the growth. Net sales for the quarter on
an equivalent basis, including April and May sales from Hardy in the prior year
period of $85 million, increased five percent, including a positive four
percent impact from foreign exchange.
Gross profit on a comparable basis for the first quarter increased 21
percent to reach $213 million and gross margin on a comparable basis improved 50
basis points to reach 27.7 percent. The increase in gross profit and the
improvement in gross margin for the quarter resulted primarily from: sales from
the Hardy acquisition; higher average imported beer prices partially offset by
higher average imported beer costs; and lower average spirits costs.
Reported gross profit, which includes inventory step-up associated with the
Hardy acquisition of six million dollars, increased 18 percent to reach $208
million and reported gross margin declined 30 basis points to 26.9 percent.
First quarter selling, general and administrative expenses ("SG&A") on a
comparable basis increased $12 million to reach $103 million. The majority of
the increase resulted from expenses associated with the Hardy acquisition. As a
percent of net sales, SG&A on a comparable basis were 13.3 percent compared to
14.0 percent for the prior year.
Reported SG&A increased $16 million to reach $107 million, and includes
four million dollars of financing costs (non-cash) associated with the Hardy
acquisition. As a percent of net sales, reported SG&A were 13.8 percent,
including a 50 basis point impact from the financing costs, compared to 14.0
percent for the prior year.
Operating income on a comparable basis increased to $111 million, an
increase of 29 percent versus $86 million in the prior year. Reported operating
income was $99 million, an increase of 15 percent, and includes: inventory
step-up of six million dollars; financing costs of four million dollars; and
restructuring charges of two million dollars.
Net interest expense on a comparable basis increased $10 million to $37
million as a result of higher average borrowings due to the financing of the
Hardy acquisition, partially offset by a lower average borrowing rate. Reported
net interest expense for the quarter increased $12 million to $39 million and
includes two million dollars of imputed interest expense related to the Hardy
acquisition.
As a result of the above factors, net income and diluted earnings per share
on a comparable basis for First Quarter 2004 increased 26 percent and 23
percent, respectively, reaching $47 million and $0.49. Net income and diluted
earnings per share on a reported basis for First Quarter 2004 increased five
percent and three percent, respectively, reaching $39 million and $0.41.
CONSTELLATION BEERS AND SPIRITS RESULTS
Net sales for First Quarter 2004 grew two percent to reach $277 million and
operating income grew 10 percent to reach $60 million. Imported beer sales
increased four percent resulting from both volume gains, particularly Corona
Extra and Corona Light, and higher average prices. The higher average prices
resulted from a price increase on the Company's Mexican portfolio, which took
effect in the first quarter of last year. Spirits sales were down three percent
on flat volume. The decline in sales was due primarily to sales mix towards
lower average priced brands.
The 10 percent increase in operating income for the quarter resulted from
higher beer sales and lower average spirits costs, partially offset by increased
imported beer costs and imported beer advertising.
CONSTELLATION WINES RESULTS
Net sales for First Quarter 2004 were $494 million compared to $378 million
the prior year, an increase of $116 million, or 31 percent. The increase was
driven primarily by the addition of wine sales from the Hardy acquisition and
includes a positive six percent impact from foreign exchange. Net sales on an
equivalent basis, including April and May branded wine sales from Hardy in the
prior period of $85 million, increased seven percent and includes a positive six
percent impact from foreign exchange.
Branded wine sales increased 45 percent and include a positive three
percent impact from foreign exchange. Branded wine sales on an equivalent basis,
including April and May sales from Hardy in the prior year period of $83
million, increased four percent driven by a positive impact from foreign
exchange. Excluding the impact from foreign exchange, branded wine sales were up
slightly on an equivalent basis as sales increased across all geographies; U.S.,
Europe and Australasia. The Company continues to face a challenging wine
environment due to competitive discounting driven in part by excess grape
supplies. The Company does not believe this is a long-term issue and is pleased
that its wine sales are growing in line with the overall wine market in which
the Company principally operates. The Company has taken a strategy of preserving
the long-term brand equity of its portfolio and investing its marketing dollars
in the higher growth sectors of the wine business.
Wholesale and other net sales increased 13 percent driven by gains in the
U.K. wholesale business, and a positive 10 percent impact from foreign exchange,
partially offset by lower cider sales.
Operating income for First Quarter 2004 was $61 million, an increase of 57
percent. The increase was primarily the result of sales derived from the Hardy
acquisition.
ITEMS AFFECTING COMPARABILITY
INVENTORY STEP-UP - The Hardy acquisition resulted in an allocation of
purchase price in excess of book value to certain inventory on hand at the date
of purchase. This allocation of purchase price in excess of book value is
referred to as inventory step-up. The inventory step-up represents an assumed
manufacturing profit attributable to Hardy pre acquisition. For inventory
produced and sold after the acquisition date, the related manufacturer's profit
will accrue to the Company. The Company sold acquired inventory having a
step-up of six million dollars during First Quarter 2004, resulting in higher
cost of sales. The Company expects additional step-up impacts of $14 million
pre-tax over the remainder of the fiscal year.
FINANCING COSTS - In connection with the Hardy acquisition, the Company
recorded amortization expense for deferred financing costs associated with
non-continuing financing, primarily related to the bridge loan agreement. The
Company recorded four million dollars pre-tax in the first quarter and expects
to incur additional amortization expense of five million dollars pre-tax in the
remainder of the current fiscal year.
RESTRUCTURING CHARGES - Restructuring charges resulted from the realignment
of business operations in the Company's wine division, as previously announced
in the fourth quarter of last fiscal year. The Company recorded a restructuring
charge of two million dollars pre-tax in the first quarter and expects to incur
additional charges of approximately five million dollars pre-tax over the
remainder of the current fiscal year.
IMPUTED INTEREST CHARGES - In connection with the Hardy acquisition and in
accordance with purchase accounting, the Company was required to take a one-time
imputed interest charge of two million dollars for the time period between when
the Company obtained control of Hardy and the date it paid shareholders.
GAIN ON CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS - In connection with
the Hardy acquisition, the Company entered into derivative instruments to cap
the cost of the acquisition in U.S. dollars. The one million-dollar gain
represents the net change in value of the derivative instruments from the
beginning of the first quarter until the date Hardy shareholders were paid.
EXITING U.S. COMMODITY CONCENTRATE PRODUCT LINE
The Company has made a decision to exit the commodity concentrate product
line located in Madera, California. The commodity concentrate product line is
facing declining sales and profits and is not part of the Company's core
business, beverage alcohol. The Company will continue to produce and sell
value-added, proprietary products such as MegaColors.
Related to exiting commodity concentrate, the Company will sell its Escalon
facility, located in Escalon, California, and move all remaining production and
storage from Escalon to Madera and other locations. By exiting commodity
concentrate, the Company will free up capacity at its winery in Madera and
forego further investment in its Escalon facility. The Company believes these
steps will simplify its wine operations and represent a better use of its
capital. The Company expects the restructuring project to improve overall
profitability and asset utilization resulting in increased return on invested
capital, and to be immediately cash flow positive.
The total restructuring charge for exiting the commodity concentrate
product line and closing the Escalon Winery is expected to be $56 million and
will be spread out over the next six quarters, beginning with an estimated $40
million in the Second Quarter 2004. The charge results from renegotiating
existing grape contracts associated with commodity concentrate and the Escalon
facility, the write down of existing concentrate inventory, asset write-offs and
severance-related costs. More than half of the charges are non-cash charges.
OUTLOOK
The following statements are management's current operating income
expectations both on a comparable basis and a reported (GAAP) basis for the
second quarter ending August 31, 2003 ("Second Quarter 2004") and fiscal year
ending February 29, 2004 ("Fiscal 2004"):
- - Operating income on a comparable basis for Second Quarter 2004 is expected
to be within a range of $138 million to $145 million versus $105 million
for Second Quarter 2003.
- - Operating income on a comparable basis for Fiscal 2004 is expected to be
within a range of $560 million to $580 million versus $410 million for
Fiscal 2003.
- - Operating income on a reported (GAAP) basis for Second Quarter 2004 is
expected to be within a range of $79 million to $86 million versus $105
million for Second Quarter 2003.
- - Operating income on a reported (GAAP) basis for Fiscal 2004 is expected to
be within a range of $467 million to $487 million versus $410 million for
Fiscal 2003.
This Outlook is made as of the date of this press release, is
forward-looking and is based on management's current expectations, including
management estimates and preliminary independent appraisals of the fair value of
the assets acquired and the liabilities assumed in the Hardy acquisition. Actual
results may differ materially from these expectations due to a number of risks
and uncertainties. A reconciliation of reported estimates to comparable
estimates is included in this press release.
No earnings per share guidance is given, as alternative capital structures
in connection with refinancing the Company's $400 million bridge loan incurred
as part of financing the Hardy acquisition are under evaluation. The Company's
final decision could have an impact on its earnings per share.
STATUS OF BUSINESS OUTLOOK
During the quarter, Constellation may reiterate the estimates set forth
above under the heading Outlook (collectively, the "Outlook"). Prior to the
start of the Quiet Period (described below), the public can continue to rely on
the Outlook as still being Constellation's current expectations on the matters
covered, unless Constellation publishes a notice stating otherwise.
Beginning August 16, 2003, Constellation will observe a "Quiet Period"
during which the Outlook no longer constitutes the Company's current
expectations. During the Quiet Period, the Outlook should be considered to be
historical, speaking as of prior to the Quiet Period only and not subject to
update by the Company. During the Quiet Period, Constellation's representatives
will not comment concerning the Outlook or Constellation's financial results or
expectations. The Quiet Period will extend until the day when Constellation's
next quarterly Earnings Release is published, presently scheduled for Tuesday,
September 30, 2003, after market hours.
FORWARD-LOOKING STATEMENTS
The statements made under the heading Outlook, as well as all other
statements set forth in this press release which are not historical facts, are
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ materially from those set forth in or implied by the
forward-looking statements. The Company's forward-looking statements are based
on management's current expectations and, unless otherwise noted, do not take
into account the impact of any future acquisition, merger or any other business
combination, divestiture or financing that may be completed after the date of
this release. Any projections of future results of operations, and in
particular, (i) the Company's estimated operating income on a comparable basis
for Second Quarter 2004 and Fiscal 2004, and (ii) the Company's estimated
operating income on a reported (GAAP) basis for Second Quarter 2004 and Fiscal
2004, should not be construed in any manner as a guarantee that such results
will in fact occur. In addition to the risks and uncertainties of ordinary
business operations, the forward-looking statements of the Company contained in
this press release are also subject to the following risks and uncertainties:
the successful integration of the Hardy business into that of the Company; final
management determinations and independent appraisals vary materially from
current management estimates and preliminary independent appraisals of the fair
value of the assets acquired and the liabilities assumed in the Hardy
acquisition; the Company achieving certain sales projections and meeting certain
cost targets; wholesalers and retailers may give higher priority to products of
the Company's competitors; raw material supply, production or shipment
difficulties could adversely affect the Company's ability to supply its
customers; increased competitive activities in the form of pricing, advertising
and promotions could adversely impact consumer demand for the Company's products
and/or result in higher than expected selling, general and administrative
expenses; a general decline in alcohol consumption; increases in excise and
other taxes on beverage alcohol products; changes in foreign exchange rates. For
additional information about risks and uncertainties that could adversely affect
the Company's forward-looking statements, please refer to the Company's filings
with the Securities and Exchange Commission, including its Annual Report on Form
10-K for the fiscal year ended February 28, 2003.
ABOUT CONSTELLATION
Constellation Brands, Inc. is a leading international producer and marketer
of beverage alcohol brands with a broad portfolio across the wine, spirits and
imported beer categories. The Company is the largest multi-category supplier of
beverage alcohol in the United States; a leading producer and exporter of wine
from Australia and New Zealand; and both a major producer and independent drinks
wholesaler in the United Kingdom. Well-known brands in Constellation's
portfolio include: Corona Extra, Pacifico, St. Pauli Girl, Black Velvet,
Fleischmann's, Mr. Boston, Estancia, Simi, Ravenswood, Blackstone, Banrock
Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells of
Chelsea and Blackthorn.
CONFERENCE CALL DETAILS
A conference call to discuss the quarterly results will be hosted by
Richard Sands, Chairman and CEO, and Tom Summer, Executive Vice President and
CFO, on Tuesday, July 1, 2003, at 5:00 p.m. (Eastern). The conference call can
be accessed by dialing 412-858-4600 beginning 10 minutes prior to the start of
the call. A live listen-only web cast of the conference call, together with a
copy of this press release (including the attachments) is available on the
Internet at Constellation's website: www.cbrands.com under "Investor
Information." If you are unable to participate in the conference call, there
will be a replay available on Constellation's website or by dialing 412-858-1440
from approximately 7:00 p.m. (Eastern) on Tuesday, July 1, 2003, through 9:00
a.m. (Eastern) on Wednesday, July 16, 2003. The financial and statistical
information discussed in the call, including information regarding non-GAAP
financial measures, as well as schedules reconciling reported and comparable
information, may also be found on our website at www.cbrands.com by selecting
Financial Information/Financial Reports. Also included is a comprehensive
historical reconciliation of reported and comparable information.
Digital Playback Instructions - Courtesy of ChorusCall
- ------------------------------------------------------
1. Dial 412-858-1440.
2. Enter '629' when prompted for your account number followed by the # sign.
3. Please press '1' to play a recorded conference.
4. Please enter '319532' when prompted to enter the conference number
followed by the # sign.
5. Please clearly state your name and company name when prompted to do so
followed by any key.
6. Please press '1' to begin the conference playback.
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOLLOW
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
May 31, 2003 February 28, 2003
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ASSETS
- ------
CURRENT ASSETS:
Cash and cash investments $ 46,008 $ 13,810
Accounts receivable, net 566,348 399,095
Inventories, net 1,329,108 819,912
Prepaid expenses and other current assets 108,773 97,284
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Total current assets 2,050,237 1,330,101
PROPERTY, PLANT AND EQUIPMENT, net 981,116 602,469
GOODWILL 1,382,889 722,223
INTANGIBLE ASSETS, net 803,019 382,428
OTHER ASSETS 141,695 159,109
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Total assets $ 5,358,956 $ 3,196,330
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Notes payable $ 16,262 $ 2,623
Current maturities of long-term debt 468,575 71,264
Accounts payable 279,877 171,073
Accrued excise taxes 43,812 36,421
Other accrued expenses and liabilities 411,665 303,827
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Total current liabilities 1,220,191 585,208
LONG-TERM DEBT, less current maturities 2,293,548 1,191,631
DEFERRED INCOME TAXES 253,467 145,239
OTHER LIABILITIES 152,088 99,268
STOCKHOLDERS' EQUITY 1,439,662 1,174,984
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Total liabilities and stockholders' equity $ 5,358,956 $ 3,196,330
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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
ON A REPORTED BASIS
(in thousands, except per share data)
For the Three For the Three
Months Ended Months Ended Percent
May 31, 2003 May 31, 2002 Change
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Gross sales $ 989,067 $ 860,463 15%
Excise taxes (217,438) (210,070) 4%
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Net sales 771,629 650,393 19%
Cost of product sold (563,717) (473,667) 19%
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Gross profit 207,912 176,726 18%
Selling, general and administrative expenses (106,629) (90,761) 17%
Restructuring charges (2,316) - N/A
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Operating income 98,967 85,965 15%
Gain on change in fair value of derivative instruments 1,181 - N/A
Equity in earnings of joint ventures 328 2,739 -88%
Interest expense, net (39,243) (27,141) 45%
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Income before income taxes 61,233 61,563 -1%
Provision for income taxes (22,044) (24,194) -9%
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Net income $ 39,189 $ 37,369 5%
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Earnings per common share:
Basic $ 0.42 $ 0.42 0%
Diluted $ 0.41 $ 0.40 3%
Weighted average common shares outstanding:
Basic 92,880 88,845 5%
Diluted 95,661 92,353 4%
Segment Information:
Net sales:
Constellation Beers and Spirits
Imported beers $ 207,264 $ 199,706 4%
Spirits 70,205 72,199 -3%
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Net sales $ 277,469 $ 271,905 2%
Constellation Wines
Branded Wine $ 305,009 $ 210,786 45%
Wholesale and other 189,151 167,702 13%
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Net sales $ 494,160 $ 378,488 31%
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Consolidated net sales $ 771,629 $ 650,393 19%
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Operating income:
Constellation Beers and Spirits $ 59,883 $ 54,421 10%
Constellation Wines 61,023 38,838 57%
Corporate Operations (10,071) (7,294) 38%
Restructuring and unusual costs (a) (11,868) - N/A
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Consolidated operating income $ 98,967 $ 85,965 15%
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(a) Restructuring and unusual costs for First Quarter 2004 include the flow
through of inventory step-up associated with the Hardy acquisition of
$5,517, financing costs of $4,035 and restructuring charges of $2,316.
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
ON A COMPARABLE BASIS (a)
(in thousands, except per share data)
For the Three For the Three
Months Ended Months Ended Percent
May 31, 2003 May 31, 2002 Change
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Gross sales $ 989,067 $ 860,463 15%
Excise taxes (217,438) (210,070) 4%
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Net sales 771,629 650,393 19%
Cost of product sold (558,200) (473,667) 18%
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Gross profit 213,429 176,726 21%
Selling, general and administrative expenses (102,594) (90,761) 13%
Restructuring charges - - N/A
------------- -------------
Operating income 110,835 85,965 29%
Gain on change in fair value of
derivative instruments - - N/A
Equity in earnings of joint ventures 328 2,739 -88%
Interest expense, net (37,585) (27,141) 38%
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Income before income taxes 73,578 61,563 20%
Provision for income taxes (26,488) (24,194) 9%
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Net income $ 47,090 $ 37,369 26%
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Earnings per common share:
Basic $ 0.51 $ 0.42 21%
Diluted $ 0.49 $ 0.40 23%
Weighted average common shares outstanding:
Basic 92,880 88,845 5%
Diluted 95,661 92,353 4%
Segment Information:
Net sales:
Constellation Beers and Spirits
Imported beers $ 207,264 $ 199,706 4%
Spirits 70,205 72,199 -3%
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Net sales $ 277,469 $ 271,905 2%
Constellation Wines
Branded Wine $ 305,009 $ 210,786 45%
Wholesale and other 189,151 167,702 13%
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Net sales $ 494,160 $ 378,488 31%
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Consolidated net sales $ 771,629 $ 650,393 19%
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Operating income:
Constellation Beers and Spirits $ 59,883 $ 54,421 10%
Constellation Wines 61,023 38,838 57%
Corporate Operations (10,071) (7,294) 38%
Restructuring and unusual costs - -
------------- -------------
Consolidated operating income $ 110,835 $ 85,965 29%
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(a) Excludes the flow through of inventory step-up associated with the Hardy
acquisition, restructuring charges, financing costs and the imputed
interest charge associated with the Hardy acquisition, and the gain on
change in fair value of derivative instruments for First Quarter 2004.
RECONCILIATION OF REPORTED AND COMPARABLE INFORMATION
(in thousands, except per share data)
Comparable measures are provided because management uses this information in
evaluating the results of the continuing operations of the Company and internal
goal setting. In addition, the Company believes this information provides
investors better insight on underlying business trends and results in order to
evaluate year over year financial performance. As such, an increase in cost of
goods sold resulting from the step up of inventory associated with the Hardy
acquisition, financing costs and the imputed interest charges associated with
the Hardy acquisition, restructuring charges and the gain on change in fair
value of derivative instruments are excluded from comparable results. Similarly,
equivalent information including Hardy sales in the year ago period provide
investors with a better basis for year over year comparison. You may also visit
the Company's website at www.cbrands.com under Investors/Financial
Information/Financial Reports for a historical reconciliation between reported
and comparable information.
For the Three For the Three
Months Ended Months Ended
May 31, 2003 Margin May 31, 2002 Margin
------------- ------ ------------- ------
Reported net sales $ 771,629 100.0% $ 650,393 100.0%
Reported gross profit $ 207,912 26.9% $ 176,726 27.2%
Inventory step-up 5,517 0.7% -
------------- -------------
Comparable gross profit $ 213,429 27.7% $ 176,726 27.2%
============= =============
Reported operating income $ 98,967 12.8% $ 85,965 13.2%
Inventory step-up 5,517 0.7% -
Financing costs 4,035 0.5% -
Restructuring charges 2,316 0.3% -
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Comparable operating income $ 110,835 14.4% $ 85,965 13.2%
============= =============
Reported net income $ 39,189 5.1% $ 37,369 5.7%
Inventory step-up 3,531 0.5% -
Financing costs 2,583 0.3% -
Restructuring charges 1,482 0.2% -
Imputed interest charge 1,061 0.1% -
Gain on derivative
instruments (756) -0.1% -
------------- -------------
Comparable net income $ 47,090 6.1% $ 37,369 5.7%
============= =============
Reported Diluted EPS $ 0.41 $ 0.40
Inventory step-up 0.04 -
Financing costs 0.03 -
Restructuring charges 0.01 -
Imputed interest charge 0.01 -
Gain on derivative (0.01) -
------------- -------------
Comparable Diluted EPS $ 0.49 $ 0.40
============= =============
RECONCILIATION OF REPORTED AND COMPARABLE OUTLOOK
(in thousands)
Range for the Second Quarter Range for the Year
Ended August 31, 2003 Ended February 29, 2004
---------------------------- -------------------------
Forecasted reported operating income $ 79,000 $ 86,000 $ 467,000 $ 487,000
Inventory step-up 9,000 9,000 20,000 20,000
Financing costs 5,000 5,000 9,000 9,000
Restructuring charges 5,000 5,000 9,000 9,000
Commodity concentrate charges 40,000 40,000 55,000 5,000
------------ ------------ ----------- -----------
Forecasted comparable operating income $ 138,000 $ 145,000 $ 560,000 $ 580,000
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