Wimm-Bill-Dann Foods OJSC Announces Full Year 2002 Financial Results.Business Editors MOSCOW--(BUSINESS WIRE)--March 17, 2003 - Sales Growth Remains Strong in First Year as a Public Company - Wimm-Bill-Dann Foods OJSC OJSC Open Joint Stock Company (NYSE NYSE See: New York Stock Exchange : WBD WBD Will Be Done WBD Wide Band Data Instrument (Cluster spacecraft) WBD Wideband Data ) today announced its financial results for the year ended December December: see month. 31, 2002. The year marked the company's fourth consecutive year of profitable growth following Russia's financial crisis in 1998. During 2002, Wimm-Bill-Dann's sales increased by 22.3% compared to 2001. Gross profit increased by 34.9% with gross margins rising by 2.8% year-on-year due to the increased share of high-margin products in dairy dairy 1. a retail outlet for milk products. 2. the feeding and milking sheds on a dairy farm. 3. pertaining to or emanating from an animals or other thing concerned in the production of milk, e.g. dairy goat, dairy cleanser. , improved economies of scale and lower cost of raw milk. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rose by 9.1% year-on-year, net income grew by 12.3% compared to 2001 and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become increased by 13.0%. As anticipated, net income was affected mostly by strong competitive pressures on juice pricing and the increase in selling and distribution expenses as the company continued to carry out its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. regional expansion program in line with its strategy of becoming Russia's leading nation-wide nation-wide adj → diffuso/a in tutto il paese adv → in tutto il paese food producer. Sergei Plastinin, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Wimm-Bill-Dann Foods OJSC, said: "Last year has been a momentous mo·men·tous adj. Of utmost importance; of outstanding significance or consequence: a momentous occasion; a momentous decision. one for Wimm-Bill-Dann, beginning with our listing in February February: see month. 2002 on the NYSE. In 2002, we embarked on an aggressive strategy of expansion to enter and bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation). A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz our presence in Russia's fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive regional markets, which included a number of acquisitions and the start of a major upgrade of our production facilities. Looking forward, we see 2003 as a year of intensive investment in modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, and reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. , as we consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the newly acquired companies, while continuing to focus on operational efficiency." Key Operating and Financial Indicators of 2002
2002 2001 Change
------- ------- ------
Sales volumes, thousand tons 1422.7 1174.3 21.2%
US$ US$
'mln 'mln
Sales 824.7 674.6 22.3%
Gross profit 245.0 181.6 34.9%
Gross margin, % 29.7% 26.9% 2.8%
Selling and distribution expenses (109.5) (62.2) 76.0%
General and administrative expenses (63.0) (54.5) 15.6%
Operating income 66.0 60.5 9.1%
Financial income and expenses, net (14.1) (10.6) 33.0%
Net income 35.7 31.8 12.3%
EBITDA 83.3 73.7 13.0%
CAPEX excluding acquisitions 136.1 57.7
Acquisitions 39.6 8.9
------- ------- ------
In 2002, Wimm-Bill-Dann's sales amounted to US$824.7 million compared to US$674.6 million in 2001. Sales in Wimm-Bill-Dann's dairy segment increased by 16.0% from US$485.5 million in 2001 to US$563.0 million in 2002. Volume growth (9.7% organic and 2.0% from acquisitions) was 11.7%, whereas average price increase accounted for another 4.3% of growth. Sales in Wimm-Bill-Dann's juice segment increased 38.4% from US$189.1 million in 2001 to US$261.7 million in 2002. This was driven by a 45.4% organic increase in sales volumes and affected by the higher portion of lower-end brands in the sales mix sales mix See product mix. , competitive pricing pressures and changes in the distribution policy aimed at incentivising key accounts. In 2002, in the dairy division, gross margins of 29.3% accounted for 3.6% of total margin growth due to lower cost of raw milk (decreased on average by 14% compared to 2001), higher share of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: products and improved economies of scale. In the juice division, 2002 gross margins of 31.0% reduced the group margin growth by 0.8%, due to increased concentrate prices, competitive pricing pressures and a change in product mix towards lower-end brands. Overall, Wimm-Bill-Dann saw a 2.8% increase in gross margins in 2002. The regional expansion program has led to an increase in selling and distribution costs distribution costs distribute npl → Vertriebskosten pl , particularly in advertising and personnel. We strengthened our advertising presence in key markets, and the share of regional advertising increased to 14.1% of our total advertising and marketing budget. Annual media inflation on leading national TV channels exceeded 80%, however, Wimm-Bill-Dann was able to obtain volume discounts and hence manage the cost increase more effectively. A substantial increase in the number of employees, averaging from about 11,000 in 2001, to over 16,000 in 2002, is also attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to expansion. This factor contributed to an over 90% increase in the personnel portion of S&D expenses year-on-year. External factors, linked to broader Russian Russian associated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. market conditions, have also exerted pressure on cost components, such as transportation costs. In 2002, general and administrative expenses showed positive dynamics, decreasing to 7.6% of sales from 8.1% in 2001. This was managed in line with our growth. The company also saw growth of net financial expenses in 2002. This is attributable to the 2002 currency remeasurement loss of US$2.9 million against the background of a US$2.5 million currency remeasurement gain booked last year. The loss was partially offset by interest income, however, interest expenses also increased this year as a result of our intensive investment in CAPEX and additional working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in the second half of the year. EBITDA increased to US$83.3 million in 2002, compared to US$73.7 million in 2001, while the EBITDA margin in 2002 was 10.1%. Reconciliation of EBITDA to US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Income before provision for income taxes and minority interest
2002 2001
----------- --------
(unaudited)
-----------
Income before provision for income taxes
and minority interest 51,917 49,873
Interest expense 12,818 11,126
Depreciation and Amortization 18,611 12,722
----------- --------
EBITDA $ 83,346 $ 73,721
=========== ========
CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: AND COMBINED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Amounts in thousands of U.S. dollars, except share and per share data)
2002 2001
----------- -----------
(unaudited)
-----------
SALES $ 824,734 $ 674,616
COST OF SALES (579,707) (492,990)
----------- -----------
Gross profit 245,027 181,626
SELLING AND DISTRIBUTION EXPENSES (109,527) (62,213)
GENERAL AND ADMINISTRATIVE EXPENSES (62,955) (54,461)
OTHER OPERATING EXPENSES (6,497) (4,498)
----------- -----------
Operating income 66,048 60,454
FINANCIAL INCOME AND EXPENSES, NET (14,131) (10,581)
----------- -----------
Income before provision for income
taxes
and minority interest 51,917 49,873
PROVISION FOR INCOME TAXES (14,249) (14,166)
MINORITY INTEREST (1,922) (3,962)
----------- -----------
INCOME FROM CONTINUING OPERATIONS 35,746 31,745
Income from discontinued operations,
net of income tax expense - 103
----------- -----------
NET INCOME $ 35,746 $ 31,848
----------- -----------
Earnings per share - basic and diluted:
Net income $ 0.83 $ 0.91
Weighted average number of shares
outstanding 43,063,014 34,888,000
WIMM-BILL-DANN FOODS CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. AS OF DECEMBER 31, 2002 AND 2001 (Amounts in thousands of U.S. dollars)
2002 2001
----------- ---------
CURRENT ASSETS: (unaudited)
-----------
Cash and cash equivalents $ 29,340 $ 6,919
Trade receivables, net 60,146 25,271
Inventory, net 86,063 89,501
Taxes receivable 68,352 34,917
Advances paid 10,811 13,069
Net investment in direct financing leases 1,338 1,172
Deferred tax asset 1,850 2,060
Other current assets 5,810 7,355
----------- ---------
Total current assets 263,710 180,264
PROPERTY, PLANT AND EQUIPMENT, net 293,580 154,548
INTANGIBLE ASSETS 2,736 461
GOODWILL 19,885 11,179
NET INVESTMENT IN DIRECT FINANCING LEASES
- long-term portion 4,381 4,076
INVESTMENTS 1,989 1,850
OTHER ASSETS 2,812 339
----------- ---------
Total long-term assets 325,383 172,453
----------- ---------
Total assets $ 589,093 $ 352,717
=========== =========
CURRENT LIABILITIES:
Trade accounts payable $ 40,144 $ 48,610
Advances received 3,905 2,088
Short-term loans 94,050 91,928
Long-term loans, current portion 2,483 8,099
Bonds payable 16,096 16,832
Taxes payable 15,551 14,279
Accrued liabilities 8,346 9,098
Government grants - current portion 2,033 2,545
Other payables 25,770 10,425
----------- ---------
Total current liabilities 208,378 203,904
LONG-TERM LIABILITIES:
Long-term loans 4,546 5,163
Other long-term payable 55,047 17,986
Government grants - long-term portion 8,568 13,348
Deferred taxes 8,121 3,929
----------- ---------
Total long-term liabilities 76,282 40,426
----------- ---------
Total liabilities 284,660 244,330
----------- ---------
MINORITY INTEREST 21,549 23,376
----------- ---------
SHAREHOLDERS' EQUITY:
Common stock 29,908 24,063
Share premium account 164,132 7,850
Retained earnings 88,844 53,098
----------- ---------
Total shareholders' equity $ 282,884 $ 85,011
----------- ---------
Total liabilities and shareholders' equity $ 589,093 $ 352,717
=========== =========
WIMM-BILL-DANN FOODS CONSOLIDATED AND COMBINED CASH FLOW STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (Amounts in thousands of U.S. dollars)
2002 2001
----------- ---------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash flows from continuing operating
activities
Income from continuing operations $ 35,746 $ 31,745
Adjustments to reconcile income to net
cash provided by operating activities:
Minority interest 1,922 3,962
Depreciation 18,447 12,225
Amortization of intangible assets 164 42
Amortization of goodwill - 455
Finance lease expense - 50
Provision for obsolete inventory 1,154 182
Provision for doubtful accounts 1,970 226
Loss on disposal of property, plant and
equipment 606 341
Earned income on net investments in
direct financing leases (395) (561)
Deferred tax expense 38 2,173
Currency remeasurement gain relating
to bonds payable (1,295) (257)
Currency remeasurement loss relating
to cash and cash equivalents 639 300
Unrealised holding gain for trading
securities (742) (318)
Non-cash rental received 1,606 1,621
Write off of trade receivables 1,262 -
Write off of net investment in direct
financing leases 162 288
Changes in operating assets and
liabilities:
Decrease (increase) in inventories 5,194 (30,296)
Increase in trade accounts receivable (34,893) (14,107)
Decrease (increase) in advances paid 3,189 (5,434)
Increase in taxes receivable (32,880) (13,885)
Decrease (increase) in other current
assets 2,782 (3,285)
(Decrease) increase in trade accounts
payable (13,279) 9,377
Increase (decrease) in advances received 1,390 (306)
Increase in taxes payable 1,028 5,356
(Decrease) increase in accrued
liabilities (1,081) 1,326
Increase in other current payables 619 5,216
(Decrease) increase in other long-term
payables (216) 6,155
----------- ---------
Net cash (used in) provided by
operating activities associated with
continuing operations (6,863) 12,591
----------- ---------
Cash flows from discontinued operating
activities
Net income from discontinued operations - 103
Adjustments to reconcile net income to
net cash used in operating activities:
Minority interest - (96)
Depreciation - 97
Amortization of goodwill - (38)
Allowance for doubtful accounts - (89)
Deferred taxes expense - 247
Currency remeasurement loss relating
to cash and cash equivalents - 212
Net change in operating assets and
liabilities - the Breweries - (276)
Net change in operating assets and
liabilities - Expobank - (12,628)
----------- ---------
Net cash used in operating
activities associated with
discontinued operations - (12,468)
----------- ---------
Total net cash (used in) provided by
operating activities (6,863) 123
----------- ---------
WIMM-BILL-DANN FOODS CONSOLIDATED AND COMBINED CASH FLOW STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (CONTINUED) (Amounts in thousands of U.S. dollars)
2002 2001
----------- ---------
(unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions of
subsidiaries, net of cash acquired $ (39,571)$ (8,855)
Cash paid for property, plant and
equipment (78,505) (45,417)
Cash paid for net investments in direct
financing leases (1,843) (855)
Cash paid for acquisitions of investments (285) (145)
Proceeds from disposal of investments - 137
Cash paid for other long-term assets (2,473) (351)
----------- ---------
Net cash used in investing activities
associated with continuing
operations (122,677) (55,486)
----------- ---------
Cash paid for property, plant and
equipment - the Breweries - (322)
Cash paid for property and equipment -
Expobank - (30)
----------- ---------
Net cash used in investing activities
associated with discontinued
operations - (352)
----------- ---------
Total cash used in investing activities (122,677) (55,838)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of capital
stock, net of direct expenses 162,127 -
Repayment of obligations under capital
leases (95) (762)
Increase in short-term loans 771 32,232
Proceeds from long-term loans 4,226 4,695
Repayment of long term payables (5,058) (5,909)
Proceeds from notes payable 559 16,832
Repayment of long-term loans (9,930) (2,475)
----------- ---------
Net cash provided by financing
activities associated with
continuing operations 152,600 44,613
----------- ---------
Increase in short-term loans - the
Breweries - 721
Cash disposed of with discontinued
operations - (5,175)
----------- ---------
Net cash used in financing activities
associated with
discontinued operations - (4,454)
----------- ---------
Total cash provided by financing
activities 152,600 40,159
----------- ---------
Total cash provided by operating,
investing and financing activities
associated with continuing operations 23,060 1,718
Impact of exchange rate differences on
cash and cash equivalents associated with
continuing operations (639) (300)
----------- ---------
Net increase in cash and cash equivalents
associated with continuing operations 22,421 1,418
----------- ---------
Total cash used in operating, investing
and financing activities associated with
discontinued operations - (17,274)
Impact of exchange rate differences on
cash and cash equivalents associated with
discontinued operations - (212)
----------- ---------
Net decrease in cash and cash equivalents
associated with discontinued operations - (17,486)
----------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 22,421 (16,068)
CASH AND CASH EQUIVALENTS, at beginning of
period 6,919 22,987
----------- ---------
Cash and cash equivalents associated with
continuing operations,
at end of period 29,340 6,919
Cash and cash equivalents associated with
discontinued operations,
at end of period - -
----------- ---------
CASH AND CASH EQUIVALENTS, at end of
period $ 29,340 $ 6,919
=========== =========
These materials are not an offer for sale of any securities of Wimm-Bill-Dann OJSC in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Any securities offered by Wimm-Bill-Dann OJSC in connection with this potential offering have not been and will not be registered under the United States Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and may not be offered or sold in the United States absent registration or an exemption exemption n. 1) in income taxation, a credit given for each dependent, blindness or other disability, and age over 65, which result in a downward calculation in tax levels. from registration under the United States Securities Act of 1933, as amended. Some of the information contained in this press release may contain projections or other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future events or the future financial performance of Wimm-Bill-Dann Foods OJSC, as defined in the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to conform them to actual results. We refer you to the documents Wimm-Bill-Dann Foods OJSC files from time to time with the U.S. Securities and Exchange Commission, specifically, the Company's most recent Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, potential fluctuations in quarterly results, and risks associated with our competitive environment, acquisition strategy, ability to develop new products or maintain market share, brand and company image, operating in Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). , volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of stock price, financial risk management, and future growth. NOTES TO EDITORS Wimm-Bill-Dann Foods OJSC is a leading producer of dairy and juice products in Russia. The company was founded in 1992. The Company currently owns 23 manufacturing facilities in 19 locations in Russia and the Commonwealth of Independent States Commonwealth of Independent States (CIS), community of independent nations established by a treaty signed at Minsk, Belarus, on Dec. 8, 1991, by the heads of state of Russia, Belarus, and Ukraine. Between Dec. 8 and Dec. (CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S ), as well as affiliates in 26 cities in Russia and the CIS. The company also distributes its products in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. , the Netherlands, the Netherlands, The officially Kingdom of The Netherlands byname Holland Country, northwestern Europe. Area: 16,034 sq mi (41,528 sq km). Population (2005 est.): 16,300,000. Capital: Amsterdam. Seat of government: The Hague. Most of the people are Dutch. UK and the United States through both its own distribution network and independent distributors. Wimm-Bill-Dann has a strong and diversified diversified (di·verˑ·s branded portfolio with over 1,100 types of dairy products dairy products dairy npl → produits laitier dairy products dairy npl → Milchprodukte pl, Molkereiprodukte pl and over 170 types of juice, nectars and still drinks. The company currently employs over 17,000 people. Wimm-Bill-Dann was rated second best out of 42 firms in terms of transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. in the S&P survey of leading Russian companies This is a list of companies from Russia. See List of banks in Russia for banks. Company Industry MICEX RTS 1C Company Software - - Acron (company) Chemicals - RTS:B>AKRN Aeroflot Airlines MICEX:B>AFLT RTS:B>AFLT Alfa Group Investment - - , and was rated fourth best in the latest Brunswick Brunswick, cities, United States Brunswick. 1 City (1990 pop. 16,433), seat of Glynn co., SE Ga., on St. Simon's Sound near the Atlantic coast; laid out 1771–72, inc. 1856. It is a port of entry with numerous container docks. UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Warburg War·burg , Otto Heinrich 1883-1970. German biochemist. He won a 1931 Nobel Prize for research on the respiration of cells. survey of corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. in Russia. Wimm-Bill-Dann was awared best European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Equity Deal of 2002 by Euroweek and Institutional Investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. magazines. |
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