Attached files
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8-K - FORM 8-K - Keurig Dr Pepper Inc. | d79750e8vk.htm |
Exhibit
99.1
FOR IMMEDIATE RELEASE
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Contacts: | Media Relations Tina Barry, (972) 673-7931 Greg Artkop, (972) 673-8470 |
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Investor Relations Aly Noormohamed, (972) 673-6050 |
DR PEPPER SNAPPLE GROUP REPORTS FOURTH QUARTER AND FULL YEAR 2010 RESULTS
Net sales were up 4% for the quarter.
Excluding certain items, earnings per share were $0.67 for the quarter. Reported diluted earnings
per share were $0.49.
per share were $0.49.
Plano, TX, Feb. 17, 2011 Dr Pepper Snapple Group, Inc. (NYSE: DPS) reported fourth quarter 2010
diluted earnings of $0.49 per share compared to $0.44 per share in the prior year period. Excluding
the loss on the early retirement of a portion of the 6.82% 2018 notes and certain tax-related
items, diluted earnings per share were $0.67 compared to $0.44 in the prior year.
For the quarter, reported net sales increased 4% reflecting sales volume growth, positive pricing
and deferred revenue recognized under the PepsiCo, Inc. (PepsiCo) and The Coca-Cola Company
(Coca-Cola) licensing agreements. Reported segment operating profit (SOP) increased 3% reflecting
net sales growth and supply chain productivity benefits partially offset by a $19 million increase
in marketing, higher packaging, ingredient and transportation costs and higher LIFO-related
inventory provisions. Reported income from operations for the quarter was $268 million compared to
$251 million in the prior year period.
For the year, reported net sales increased 2%. Excluding the loss on the early retirements of a
portion of the 6.82% 2018 notes and certain tax-related items in the current year and a net gain on
certain distribution agreement changes and separation-related tax benefits in the prior year, the
company earned $2.40 per diluted share, an increase of 22%, compared to $1.97 in the prior year. On
a reported basis, diluted earnings per share were $2.17 in both the current and prior year.
DPS President and CEO Larry Young said, As we look ahead, Im encouraged by some of the improving
trends were seeing in consumer spending and in the economy generally and by the momentum of our
brands and business. We accomplished a lot in 2010, from the opening of our regional center in
Victorville, Calif., to the new licensing agreements with PepsiCo and Coca-Cola, to increased
availability of our products in take-home, immediate consumption and fountain. With key
foundational investments now behind us, we are focused on building our people capabilities and
delivering even greater customer value through our developing Rapid Continuous Improvement
initiative. This, combined with strong innovation, the national launch of Sun Drop and continued
marketplace investments, gives me great confidence in our ability to grow and enhance the returns
of this business in 2011 and beyond.
1
Fourth Quarter | Full Year | |||||||||||||||||||||||
Percent | Percent | |||||||||||||||||||||||
Diluted EPS reconciliation | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||
Diluted reported EPS |
$ | 0.49 | $ | 0.44 | 11 | $ | 2.17 | $ | 2.17 | | ||||||||||||||
Items affecting comparability |
||||||||||||||||||||||||
- Loss related to 2018 notes tender |
0.28 | | 0.27 | | ||||||||||||||||||||
- Net gain on Hansen termination
and sale of certain intangible
assets |
| | | (0.15 | ) | |||||||||||||||||||
- Kraft indemnified income |
(0.04 | ) | | (0.04 | ) | | ||||||||||||||||||
- Deferred and other tax |
(0.06 | ) | | | (0.05 | ) | ||||||||||||||||||
Diluted EPS excluding certain items |
$ | 0.67 | $ | 0.44 | 52 | $ | 2.40 | $ | 1.97 | 22 |
EPS earnings per share
Net sales and SOP in the tables and commentary below are presented on a currency neutral
basis. For a reconciliation of non-GAAP to GAAP measures see pages A-5 and A-6 accompanying this
release.
As reported | Currency Neutral | |||||||||||||||
Summary of 2010 results | Fourth | Fourth | ||||||||||||||
(Percent change) | Quarter | Full Year | Quarter | Full Year | ||||||||||||
BCS Volume |
1 | 2 | 1 | 2 | ||||||||||||
Sales Volume |
1 | 0 | 1 | 0 | ||||||||||||
Net Sales |
4 | 2 | 4 | 1 | ||||||||||||
SOP |
3 | 1 | 2 | (1 | ) |
BCS bottler case sales
BCS Volume
For the quarter, BCS volume increased 1% with carbonated soft drinks (CSDs) growing 2% while
non-carbonated beverages (NCBs) were flat.
In CSDs, Dr Pepper volume increased 3%. Core 4 brands 7UP, Sunkist soda, A&W and Canada Dry
declined 1%. Crush grew double digits and Canada Dry grew high-single digits while A&W and 7UP
declined low-single digits. Sunkist soda and Peñafiel declined high-single digits. Fountain
foodservice volume increased 7% on increased Dr Pepper availability and a return to restaurant
traffic growth.
In NCBs, Hawaiian Punch volume grew 3% and Snapple grew 4%. Motts declined 6% as it lapped 23%
growth in the prior year.
By geography, U.S. and Canada volume increased 2% while volume declined 2% in Mexico and the
Caribbean.
For the year, BCS volume increased 2%. CSD volume grew 2% and NCBs grew 3%. Dr Pepper volume
increased 3% and our Core 4 brands declined 1%. Crush and Canada Dry grew double digits. Sunkist
soda declined high-single digits, 7UP declined mid-single digits and A&W declined low-single
digits. Fountain foodservice volume increased 5% on increased Dr Pepper availability.
2
Hawaiian Punch volume grew 6%, Snapple grew 10% and Motts grew 3%. By geography, U.S. and Canada
volume increased 2% and Mexico and Caribbean volume also increased 2%.
Across all measured channels through December, as reported by The Nielsen Company, the company grew
U.S. CSD dollar share by 0.4 percentage points and flavored CSD dollar share by 0.2 percentage
points.
Sales volume
For the quarter, sales volume increased 1%. Branded sales volume grew 1% while contract
manufacturing declined 7%. For the year, sales volume was flat. Branded sales volume grew 1% while
contract manufacturing declined 23%, as the company continued to de-emphasize this business.
As reported | ||||||||||||||||||||||||
Fourth Quarter | Full Year | |||||||||||||||||||||||
2010 Segment results | Sales | Net | Sales | Net | ||||||||||||||||||||
(Percent change) | Volume | Sales | SOP | Volume | Sales | SOP | ||||||||||||||||||
Beverage Concentrates |
0 | 14 | 10 | 0 | 9 | 9 | ||||||||||||||||||
Packaged Beverages |
1 | 1 | (4 | ) | (1 | ) | 0 | (6 | ) | |||||||||||||||
Latin America
Beverages |
2 | 5 | (31 | ) | 6 | 7 | (26 | ) | ||||||||||||||||
Total |
1 | 4 | 3 | 0 | 2 | 1 |
Currency Neutral | ||||||||||||||||||||||||
Fourth Quarter | Full Year | |||||||||||||||||||||||
2010 Segment results | Sales | Net | Sales | Net | ||||||||||||||||||||
(Percent change) | Volume | Sales | SOP | Volume | Sales | SOP | ||||||||||||||||||
Beverage Concentrates |
0 | 14 | 9 | 0 | 8 | 8 | ||||||||||||||||||
Packaged Beverages |
1 | 1 | (6 | ) | (1 | ) | (1 | ) | (8 | ) | ||||||||||||||
Latin America
Beverages |
2 | 1 | (31 | ) | 6 | 1 | (34 | ) | ||||||||||||||||
Total |
1 | 4 | 2 | 0 | 1 | (1 | ) |
Beverage Concentrates
Net sales for the quarter increased 14% reflecting flat volume, lapping 8% volume growth in the
prior year, concentrate pricing taken earlier in the year and favorable discount timing. Revenue
recognized under the PepsiCo and Coca-Cola licensing agreements added 6 percentage points to net
sales growth. SOP increased 9% reflecting net sales growth partially offset by increased
marketplace investments.
Packaged Beverages
Net sales for the quarter were up 1%. Low-single digit volume growth in CSDs, mid-single digit
growth in Snapple and double digit growth in Hawaiian Punch were partially offset by a mid-single
digit decline in Motts, a high-single digit decline in contract manufacturing and the continued
impact of negative product mix. SOP decreased 6% as net sales growth and ongoing supply chain
productivity benefits were more than offset by higher packaging, ingredient and transportation
costs and a $9 million increase in LIFO-related inventory provisions.
Latin America Beverages
Net sales for the quarter increased 1% reflecting 2% volume growth. SOP declined 31% as net sales
growth was more than offset by higher packaging, ingredient and transportation costs, higher
marketing investments and increased costs related to company-owned route expansion and IT
infrastructure upgrades.
3
Corporate and other items
For the quarter, corporate costs totaled $67 million including an $8 million gain on the
termination of coverage in certain U.S. post-retirement medical plans, a $3 million gain on
unrealized commodity-related mark-to-market partially offset by $3 million of fees related to the
Coca-Cola licensing agreements. Corporate costs in 2009 were $76 million, including $6 million of
unrealized commodity-related mark-to-market gains.
For the year, unrealized commodity-related mark-to-market gains were $1 million versus $18 million
in the prior year. Productivity office investments recorded in the segments, as well as corporate,
were $30 million versus $29 million in the prior year.
Net interest expense decreased $51 million during the quarter reflecting lower net debt and lower
interest rates and the absence of $30 million of deferred financing fees expensed in the prior
year.
In December 2010, the company repurchased $476 million principal amount of its 6.82% 2018 notes. As
a result, it recorded a $100 million loss on extinguishment of debt including a tender offer
premium of $96 million.
For the quarter, the effective tax rate was 24.8%. Excluding the loss related to the 2018 notes
tender offer, non-taxable separation-related items recorded as other income and indemnified by
Kraft and certain deferred tax adjustments, the effective tax rate was 35.6%. For the year, the
effective tax rate was 35.8%.
Cash flow
For the year, the company generated $2.5 billion of cash from operating activities including
one-time proceeds of $900 million from PepsiCo and $715 million from Coca-Cola. Capital spending
totaled $246 million. The company repaid $881 million of its debt obligations and returned $1.3
billion to shareholders in the form of stock repurchases ($1.1 billion) and dividends ($194
million).
2011 full year guidance
The company expects full year reported net sales to increase 3% to 5% and diluted earnings per
share to be in the $2.70 to $2.78 range.
share to be in the $2.70 to $2.78 range.
Packaging and ingredient costs are expected to increase COGS between 6% and 7%, on a constant
volume/mix basis.
The company expects its tax rate to be approximately 35%, including an $18 million benefit related
to the PepsiCo and Coca-Cola transactions.
Having completed key foundational investments, the company now expects capital spending to be
approximately 4.5% of net sales.
Impact of the PepsiCo licensing agreements
On Feb. 26, 2010, the company completed its licensing agreements with PepsiCo. Under these
agreements, PepsiCo began distributing Dr Pepper, Crush and Schweppes in the U.S. territories where
these brands were previously distributed by The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas,
Inc. (PAS). The same applies to Dr Pepper, Crush, Schweppes, Vernors and Sussex in Canada, and
Squirt and Canada Dry in Mexico. These agreements have an initial term of 20 years, with 20-year
renewal periods, and require PepsiCo to meet certain performance conditions.
4
Additionally, effective April 19, 2010, in certain U.S. territories where it has a manufacturing
and distribution footprint, the company began selling certain owned and licensed brands, including
Sunkist soda, Squirt, Vernors and Hawaiian Punch, that were previously distributed by PBG and PAS.
The one-time cash payment of $900 million, received Feb. 26, 2010, was recorded as deferred revenue
and is being recognized as net sales over 25 years. The company recognized $9 million of revenue in
the fourth quarter and $30 million for the year.
Impact of the Coca-Cola Company licensing agreements
On Oct. 4, 2010, the company completed its licensing agreements with Coca-Cola. Under the new
agreements, KO began distributing Dr Pepper in the U.S. and Canada Dry in the Northeast U.S. where
they were previously distributed by Coca-Cola Enterprises (CCE). These agreements have an initial
term of 20 years, with 20-year renewal periods, and require Coca-Cola to meet certain performance
conditions. KO will distribute Canada Dry, CPlus and Schweppes in Canada, will offer Dr Pepper and
Diet Dr Pepper in local fountain accounts previously serviced by CCE and will include Dr Pepper and
Diet Dr Pepper on its Freestyle fountain dispenser.
Additionally, effective Jan. 7, 2011, in certain U.S. territories where it has a manufacturing and
distribution footprint, the company began selling Squirt, Canada Dry, Schweppes and Cactus Cooler,
which were previously sold by CCE.
The one-time cash payment of $715 million was received on Oct. 4, 2010, was recorded as deferred
revenue and is being recognized as net sales over 25 years. The company recognized $7 million of
revenue in the fourth quarter and year.
Definitions
Bottler case sales (BCS) volume: Sales of finished beverages, in equivalent 288 fluid ounce cases,
sold by the company and its bottling partners to retailers and independent distributors and
excludes contract manufacturing volume. Volume for products sold by the company and its bottling
partners is reported on a monthly basis, with the fourth quarter comprising October, November and
December.
Sales volume: Sales of concentrates and finished beverages, in equivalent 288 fluid ounce cases,
shipped by the company to its bottlers, retailers and independent distributors and includes
contract manufacturing volume.
Pricing refers to the impact of list price changes.
Forward-looking statements
This release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, in particular, statements about future events, future financial performance
including earnings estimates, plans, strategies, expectations, prospects, competitive environment,
regulation, and cost and availability of raw materials. Forward-looking statements include all
statements that are not historical facts and can be identified by the use of forward-looking
terminology such as the words may, will, expect, anticipate,
believe, estimate, plan, intend or the negative
5
of these terms or
similar expressions. These forward-looking statements have been based on our current views with
respect to future events and financial performance. Our actual financial performance could differ
materially from those projected in the forward-looking statements due to the inherent uncertainty
of estimates, forecasts and projections, and our financial performance may be better or worse than
anticipated. Given these uncertainties, you should not put undue reliance on any forward-looking
statements. All of the forward-looking statements are qualified in their entirety by reference to
the factors discussed under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2010, and our other filings with the Securities and Exchange
Commission. Forward-looking statements represent our estimates and assumptions only as of the date
that they were made. We do not undertake any duty to update the forward-looking statements, and the
estimates and assumptions associated with them, after the date of this release, except to the
extent required by applicable securities laws.
Conference Call
At 10 a.m. (CST) today, the company will host a conference call with investors to discuss fourth
quarter and full year 2010 results and the outlook for 2011. The conference call and slide
presentation will be accessible live through DPSs website at
http://www.drpeppersnapple.com and will be archived for replay for a period of 14 days.
In discussing financial results and guidance, the company may refer to certain non-GAAP measures.
Reconciliations of any such non-GAAP measures to the most directly comparable financial measures in
accordance with GAAP can be found on page A-5 and A-6 accompanying this release and under
Financial Press Releases on the companys website at http://www.drpeppersnapple.com in
the Investors section.
About Dr Pepper Snapple Group
Dr Pepper Snapple Group, Inc. (NYSE: DPS) is the leading producer of flavored beverages in North
America and the Caribbean. Our success is fueled by more than 50 brands that are synonymous with
refreshment, fun and flavor. We have 6 of the top 10 non-cola soft drinks, and 9 of our 12 leading
brands are No. 1 in their flavor categories. In addition to our flagship Dr Pepper and Snapple
brands, our portfolio includes Sunkist soda, 7UP, A&W, Canada Dry, Crush, Motts, Squirt, Hawaiian
Punch, Peñafiel, Clamato, Schweppes, Venom Energy, Roses and Mr & Mrs T mixers. To learn more
about our iconic brands and Plano, Texas-based company, please visit www.drpeppersnapple.com.
# # # #
6
DR PEPPER SNAPPLE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited, in millions, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited, in millions, except per share data)
For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 1,412 | $ | 1,356 | $ | 5,636 | $ | 5,531 | ||||||||
Cost of sales |
554 | 528 | 2,243 | 2,234 | ||||||||||||
Gross profit |
858 | 828 | 3,393 | 3,297 | ||||||||||||
Selling, general and administrative expenses |
551 | 539 | 2,233 | 2,135 | ||||||||||||
Depreciation and amortization |
32 | 33 | 127 | 117 | ||||||||||||
Other operating expense (income), net |
7 | 5 | 8 | (40 | ) | |||||||||||
Income from operations |
268 | 251 | 1,025 | 1,085 | ||||||||||||
Interest expense |
34 | 85 | 128 | 243 | ||||||||||||
Interest income |
(1 | ) | (1 | ) | (3 | ) | (4 | ) | ||||||||
Loss on early extinguishment of debt |
100 | | 100 | | ||||||||||||
Other (income) expense, net |
(14 | ) | 3 | (21 | ) | (22 | ) | |||||||||
Income before provision for income taxes and
equity in earnings of unconsolidated
subsidiaries |
149 | 164 | 821 | 868 | ||||||||||||
Provision for income taxes |
37 | 50 | 294 | 315 | ||||||||||||
Income before equity in earnings of
unconsolidated subsidiaries |
112 | 114 | 527 | 553 | ||||||||||||
Equity in earnings of unconsolidated subsidiaries,
net of tax |
| | 1 | 2 | ||||||||||||
Net income |
$ | 112 | $ | 114 | $ | 528 | $ | 555 | ||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.49 | $ | 0.45 | $ | 2.19 | $ | 2.18 | ||||||||
Diluted |
$ | 0.49 | $ | 0.44 | $ | 2.17 | $ | 2.17 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
226.0 | 254.2 | 240.4 | 254.2 | ||||||||||||
Diluted |
228.5 | 255.5 | 242.6 | 255.2 | ||||||||||||
Cash dividends declared per common share |
$ | 0.25 | $ | 0.15 | $ | 0.90 | $ | 0.15 |
A-1
DR PEPPER SNAPPLE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2010 and 2009
(Unaudited, in millions except share and per share data)
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2010 and 2009
(Unaudited, in millions except share and per share data)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 315 | $ | 280 | ||||
Accounts receivable: |
||||||||
Trade, net |
536 | 540 | ||||||
Other |
35 | 32 | ||||||
Inventories |
244 | 262 | ||||||
Deferred tax assets |
57 | 53 | ||||||
Prepaid expenses and other current assets |
122 | 112 | ||||||
Total current assets |
1,309 | 1,279 | ||||||
Property, plant and equipment, net |
1,168 | 1,109 | ||||||
Investments in unconsolidated subsidiaries |
11 | 9 | ||||||
Goodwill |
2,984 | 2,983 | ||||||
Other intangible assets, net |
2,691 | 2,702 | ||||||
Other non-current assets |
552 | 543 | ||||||
Non-current deferred tax assets |
144 | 151 | ||||||
Total assets |
$ | 8,859 | $ | 8,776 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 851 | $ | 850 | ||||
Deferred revenue |
65 | | ||||||
Current portion of long-term obligations |
404 | | ||||||
Income taxes payable |
18 | 4 | ||||||
Total current liabilities |
1,338 | 854 | ||||||
Long-term obligations |
1,687 | 2,960 | ||||||
Non-current deferred tax liabilities |
1,083 | 1,038 | ||||||
Non-current deferred revenue |
1,515 | | ||||||
Other non-current liabilities |
777 | 737 | ||||||
Total liabilities |
6,400 | 5,589 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Preferred stock, $.01 par value, 15,000,000
shares authorized, no shares issued |
| | ||||||
Common stock, $.01 par value, 800,000,000 shares
authorized, 223,936,156 and
254,109,047 shares issued and outstanding
for 2010 and 2009, respectively |
2 | 3 | ||||||
Additional paid-in capital |
2,085 | 3,156 | ||||||
Retained earnings |
400 | 87 | ||||||
Accumulated other comprehensive loss |
(28 | ) | (59 | ) | ||||
Total stockholders equity |
2,459 | 3,187 | ||||||
Total liabilities and stockholders equity |
$ | 8,859 | $ | 8,776 | ||||
A-2
DR PEPPER SNAPPLE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 30, 2010 and 2009
(Unaudited, in millions)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 30, 2010 and 2009
(Unaudited, in millions)
For the Twelve Months Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Operating activities: |
||||||||
Net income |
$ | 528 | $ | 555 | ||||
Adjustments to reconcile net income to net cash provided by
operations: |
||||||||
Depreciation expense |
185 | 167 | ||||||
Amortization expense |
38 | 40 | ||||||
Amortization of deferred financing costs |
5 | 17 | ||||||
Write-off of deferred loan costs |
| 30 | ||||||
Amortization of deferred revenue |
(37 | ) | | |||||
Loss on early extinguishment of debt |
100 | | ||||||
Provision for doubtful accounts |
1 | 3 | ||||||
Employee stock-based compensation expense |
29 | 19 | ||||||
Deferred income taxes |
37 | 103 | ||||||
Loss (gain) on property and intangible assets |
8 | (39 | ) | |||||
Unrealized gain on derivatives |
(1 | ) | (18 | ) | ||||
Other, net |
(1 | ) | 10 | |||||
Changes in assets and liabilities: |
||||||||
Trade and other accounts receivable |
(2 | ) | 5 | |||||
Inventories |
19 | 3 | ||||||
Other current and non-current assets |
(20 | ) | (58 | ) | ||||
Accounts payable and accrued expenses |
(48 | ) | 80 | |||||
Income taxes payable |
22 | (2 | ) | |||||
Current and non-current deferred revenue |
1,614 | | ||||||
Other non-current liabilities |
58 | (50 | ) | |||||
Net cash provided by operating activities |
2,535 | 865 | ||||||
Investing activities: |
||||||||
Purchase of property, plant and equipment |
(246 | ) | (317 | ) | ||||
Investments in unconsolidated subsidiaries |
(1 | ) | | |||||
Purchase of intangible assets |
| (8 | ) | |||||
Proceeds from disposals of property, plant and equipment |
18 | 5 | ||||||
Proceeds from disposals of intangible assets |
| 69 | ||||||
Other, net |
4 | | ||||||
Net cash used in investing activities |
(225 | ) | (251 | ) | ||||
Financing activities: |
||||||||
Repayment of senior unsecured credit facility |
(405 | ) | (1,805 | ) | ||||
Repayment of senior unsecured notes |
(573 | ) | | |||||
Proceeds from senior unsecured notes |
| 850 | ||||||
Proceeds from senior unsecured credit facility |
| 405 | ||||||
Proceeds from stock options exercised |
6 | 1 | ||||||
Repurchase of shares of common stock |
(1,113 | ) | | |||||
Dividends paid |
(194 | ) | | |||||
Deferred financing charges and debt reacquisition costs paid |
(1 | ) | (2 | ) | ||||
Other, net |
| (3 | ) | |||||
Net cash used in financing activities |
(2,280 | ) | (554 | ) | ||||
Cash and cash equivalents net change from: |
||||||||
Operating, investing and financing activities |
30 | 60 | ||||||
Currency translation |
5 | 6 | ||||||
Cash and cash equivalents at beginning of period |
280 | 214 | ||||||
Cash and cash equivalents at end of period |
$ | 315 | $ | 280 | ||||
A-3
DR PEPPER SNAPPLE GROUP, INC.
OPERATIONS BY OPERATING SEGMENT
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited, in millions)
OPERATIONS BY OPERATING SEGMENT
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited, in millions)
For the Three Months | For the Twelve Months | |||||||||||||||
Ended | Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Segment Results Net sales |
||||||||||||||||
Beverage Concentrates |
$ | 319 | $ | 279 | $ | 1,156 | $ | 1,063 | ||||||||
Packaged Beverages |
996 | 985 | 4,098 | 4,111 | ||||||||||||
Latin America Beverages |
97 | 92 | 382 | 357 | ||||||||||||
Net sales as reported |
$ | 1,412 | $ | 1,356 | $ | 5,636 | $ | 5,531 | ||||||||
For the Three Months | For the Twelve Months | |||||||||||||||
Ended | Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Segment Results SOP |
||||||||||||||||
Beverage Concentrates |
$ | 210 | $ | 191 | $ | 745 | $ | 683 | ||||||||
Packaged Beverages |
123 | 128 | 536 | 573 | ||||||||||||
Latin America Beverages |
9 | 13 | 40 | 54 | ||||||||||||
Total segment operating profit |
342 | 332 | 1,321 | 1,310 | ||||||||||||
Unallocated corporate costs |
67 | 76 | 288 | 265 | ||||||||||||
Other operating expense
(income), net |
7 | 5 | 8 | (40 | ) | |||||||||||
Income from operations |
268 | 251 | 1,025 | 1,085 | ||||||||||||
Interest expense, net |
33 | 84 | 125 | 239 | ||||||||||||
Loss on early extinguishment of
debt |
100 | | 100 | | ||||||||||||
Other (income) expense, net |
(14 | ) | 3 | (21 | ) | (22 | ) | |||||||||
Income before provision for income
taxes and equity in earnings of
unconsolidated subsidiaries as
reported |
$ | 149 | $ | 164 | $ | 821 | $ | 868 | ||||||||
A-4
DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited)
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited)
The company reports its financial results in accordance with U.S. GAAP.
However, management believes that certain non-GAAP measures, that reflect the
way management evaluates the business, may provide investors with additional
information regarding the companys results, trends and ongoing performance on
a comparable basis. Specifically, investors should consider the following with
respect to our quarterly results:
Net sales and Segment Operating Profit, as adjusted: Net sales and Segment
Operating Profit are on a currency neutral basis.
For the Three Months Ended December 31, 2010 | ||||||||||||||||
Latin | ||||||||||||||||
Beverage | Packaged | America | ||||||||||||||
Percent change | Concentrates | Beverages | Beverages | Total | ||||||||||||
Reported net sales |
14 | % | 1 | % | 5 | % | 4 | % | ||||||||
Impact of foreign currency |
| % | | % | (4 | )% | | % | ||||||||
Net sales, as adjusted |
14 | % | 1 | % | 1 | % | 4 | % | ||||||||
For the Three Months Ended December 31, 2010 | ||||||||||||||||
Latin | ||||||||||||||||
Beverage | Packaged | America | ||||||||||||||
Percent change | Concentrates | Beverages | Beverages | Total | ||||||||||||
Reported segment operating profit |
10 | % | (4 | )% | (31 | )% | 3 | % | ||||||||
Impact of foreign currency |
(1 | )% | (2 | )% | | % | (1 | )% | ||||||||
Segment operating profit, as adjusted |
9 | % | (6 | )% | (31 | )% | 2 | % | ||||||||
For the Twelve Months Ended December 31, 2010 | ||||||||||||||||
Latin | ||||||||||||||||
Beverage | Packaged | America | ||||||||||||||
Percent change | Concentrates | Beverages | Beverages | Total | ||||||||||||
Reported net sales |
9 | % | | % | 7 | % | 2 | % | ||||||||
Impact of foreign currency |
(1 | )% | (1 | )% | (6 | )% | (1 | )% | ||||||||
Net sales, as adjusted |
8 | % | (1 | )% | 1 | % | 1 | % | ||||||||
For the Twelve Months Ended December 31, 2010 | ||||||||||||||||
Latin | ||||||||||||||||
Beverage | Packaged | America | ||||||||||||||
Percent change | Concentrates | Beverages | Beverages | Total | ||||||||||||
Reported segment operating profit |
9 | % | (6 | )% | (26 | )% | 1 | % | ||||||||
Impact of foreign currency |
(1 | )% | (2 | )% | (8 | )% | (2 | )% | ||||||||
Segment operating profit, as adjusted |
8 | % | (8 | )% | (34 | )% | (1 | )% | ||||||||
A-5
DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (Continued)
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited, in millions)
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (Continued)
For the Three and Twelve Months Ended December 31, 2010 and 2009
(Unaudited, in millions)
The tables below provide reconciliations of the reported to the
adjusted 2010 effective tax rates for the quarter and year ended December 31, 2010.
For the Three Months Ended | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Loss on | Deferred | |||||||||||||||||||
2018 | Kraft- | and | ||||||||||||||||||
Notes | indemnified | other tax | As | |||||||||||||||||
As Reported | Tender | income | items | Adjusted | ||||||||||||||||
Income before provision for income taxes and
equity in earnings of unconsolidated subsidiaries |
$ | 149 | $ | 100 | $ | (10 | ) | $ | | $ | 239 | |||||||||
Provision for income taxes |
37 | 35 | | 13 | 85 | |||||||||||||||
Income before equity in earnings of
unconsolidated subsidiaries |
$ | 112 | $ | 65 | $ | (10 | ) | $ | (13 | ) | $ | 154 | ||||||||
Effective tax rate |
24.8 | % | 35.6 | % |
For the Twelve Months Ended | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Loss on | Deferred | |||||||||||||||||||
2018 | Kraft- | and | ||||||||||||||||||
Notes | indemnified | other tax | As | |||||||||||||||||
As Reported | Tender | income | items | Adjusted | ||||||||||||||||
Income before provision for income taxes and
equity in earnings of unconsolidated subsidiaries |
$ | 821 | $ | 100 | $ | (10 | ) | $ | | $ | 911 | |||||||||
Provision for income taxes |
294 | 35 | | | 329 | |||||||||||||||
Income before equity in earnings of
unconsolidated subsidiaries |
$ | 527 | $ | 65 | $ | (10 | ) | $ | | $ | 582 | |||||||||
Effective tax rate |
35.8 | % | 36.1 | % |
The tables below provide reconciliations of the reported to the adjusted diluted earning per share
(EPS) for the quarters and years ended December 31, 2010 and 2009.
For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||||||||||
December 31, 2010 | December 31, 2010 | |||||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||||
Reported Diluted EPS |
$ | 0.49 | $ | 0.44 | 11 | % | $ | 2.17 | $ | 2.17 | | % | ||||||||||||
Loss on early extinguishment of
debt |
0.28 | | 0.27 | | ||||||||||||||||||||
Net gain on Hansen termination and
sale of certain intangible assets |
| | | (0.15 | ) | |||||||||||||||||||
Kraft indemnity income related
items |
(0.04 | ) | | (0.04 | ) | | ||||||||||||||||||
Deferred and other tax items |
(0.06 | ) | | | (0.05 | ) | ||||||||||||||||||
Diluted EPS, excluding certain items |
$ | 0.67 | $ | 0.44 | 52 | % | $ | 2.40 | $ | 1.97 | 22 | % | ||||||||||||
A-6