Board of Directors Authorizes a 13% Dividend
Increase
- Non-GAAP1 EPS of $0.85 and GAAP EPS of
$0.61 for the quarter
- Non-GAAP EPS of $3.56 and GAAP EPS of
$3.14 for the full year 2015
- Net sales of $1.04 billion for the
quarter and $4.5 billion for the full year
- Generated 2015 free cash flow of $344
million
- Repurchased approximately 4% or $350
million in common shares from the beginning of the fiscal fourth
quarter 2015 through November 18
- Outlook includes fiscal year 2016
currency neutral revenue growth of flat to low single digits with
Non-GAAP EPS of $3.25-$3.45 and free cash flow in the range of
$420-$500 million
Keurig Green Mountain, Inc. (Keurig) (NASDAQ: GMCR), a personal
beverage system company that has revolutionized the way consumers
create and enjoy beverages, today announced its business results
for the 13 weeks and 52 weeks ended September 26, 2015.
“Our results for the quarter and the year reflect the
competitive and dynamic marketplace in which we operate as well as
the steps we are taking to position our Company for longer-term
growth and value creation,” said Brian Kelley, Keurig’s President
and CEO. “I’m particularly pleased with the benefits realized from
our cost reduction efforts as well as our strong cash generation,
both of which exceeded expectations in the fourth quarter. While we
expect marketplace conditions will remain challenging in the near
term, we have a stronger product line-up and price positioning as
we enter the new holiday season.”
Mr. Kelley continued, “Our priorities for 2016 are to
reinvigorate our hot system and continue the disciplined rollout of
our Kold system. We remain confident that our investments in the
business and our multi-year productivity program will deliver
long-term value to shareholders. Today’s announcement of the
Board’s authorization of a 13% increase in our dividend underscores
our confidence in our future prospects and continues our track
record of delivering strong cash returns to our shareholders.”
Fourth Quarter Fiscal 2015 Financial
Review
Thirteenweeks ended
Thirteenweeks ended
($ in millions except earnings per share)
Sept 26, 2015
Sept 27, 2014
% Increase /(Decrease)
Net sales $ 1,037.0 $ 1,195.6 (13 )% Operating income: GAAP $ 144.2
$ 228.8 (37 )% Non-GAAP 197.0 $ 248.0 (21 )% Net income: GAAP $
94.6 $ 141.1 (33 )% Non-GAAP $ 131.3 $ 153.8 (15 )% Diluted income
per share: GAAP $ 0.61 $ 0.86 (29 )% Non-GAAP $ 0.85 $ 0.94 (10 )%
Note: Complete GAAP to Non-GAAP reconciliation tables
provided with this release.
Net Sales by Product
Net sales of $1.0 billion decreased 13% versus the prior year
period with declines in brewer sales and pod sales. The net sales
decline includes an unfavorable impact from foreign currency
exchange rates of approximately 2%.
Thirteen weeks
ended Thirteen weeks ended ($ in millions)
Sept 26, 2015
Sept 27, 2014
$ Increase(Decrease)
% Increase(Decrease)
Pods $ 861.2 $ 948.7 $ (87.5 ) (9 )% Brewers and accessories
123.6 181.6 (58.0 ) (32 )% Subtotal 984.8 1,130.3
(145.5 ) (13 )% Other products and royalties 52.2
65.3 (13.1 ) (20 )% Total net sales $ 1,037.0 $ 1,195.6 $
(158.6 ) (13 )%
Pods
- Pod net sales were driven by a 4%
decrease in equivalent servings2 volume and an approximately 6%
decrease due to product mix. This was partially offset by an
approximately 2% increase due to net price realization.3 Foreign
currency exchange rates negatively impacted pod net sales by
approximately 2%.
- For the Company’s U.S. At Home
business, pod volumes fell by 3%. The Company typically sees a
build in customer and retailer inventory in the fourth quarter in
advance of the holiday season. In the fourth quarter of 2014, the
Company saw a much larger build in such inventories, due in part to
the SAP transition in the first quarter of 2015. While shipments
were impacted by this comparison, consumer demand for pods as
measured by retail sales remains healthy. The Company estimates
that retail unit sales of pods grew 7% in the fourth quarter of
2015.
Brewers and Accessories
- For the quarter, 1.9 million Keurig®
hot system brewers were sold including 1.8 million sold by Keurig
with 0.1 million reported sold by Keurig’s licensed brewer
partners. This brewer shipment number does not account for consumer
returns.
- Brewer sales were driven by a 20%
decrease in sales volume, an approximately 10% decrease due to
product mix and an approximately 1% decrease due to net price
realization. Foreign currency exchange rates negatively impacted
brewer and accessory net sales by approximately 1%.
Other Products
- Sales of other products were driven by
the unfavorable impact of foreign exchange rates, the loss of a
customer in our away from home channel and our decision to focus
and allocate resources on our pod business.
- For the quarter, GAAP gross margin
declined 530 basis points to 32.3% of net sales from 37.6% in the
prior year period. Non-GAAP gross margin declined approximately 300
basis points to 34.7% of net sales from 37.6% in the prior year
period. An $8.6 million obsolescence charge related to BOLT®
brewers negatively impacted both GAAP and Non-GAAP gross margin. An
abandonment and impairment of packaging lines negatively impacted
GAAP gross profit by $24 million and was excluded from Non-GAAP
gross profit. The following table quantifies the changes in gross
margin period to period:
Change from Q4Fiscal 2014
toQ4 Fiscal 2015
Impairment and abandonment of packaging lines -230 bps
Unfavorable green coffee costs -220 bps Shift in sales mix between
pods, brewers and accessories, and other products 210 bps Higher
obsolescence expense of finished goods -120 bps Mix primarily
associated with pods -110 bps Sales return favorability 70 bps
Foreign currency rates -60 bps Other items -70 bps GAAP
margin change -530 bps Impairment and abandonment of packaging
lines 230 bps Non-GAAP margin change -300 bps
- GAAP SG&A declined 20%,
representing 17.0% of net sales for the quarter as compared to
18.5% in the prior year period. Non-GAAP SG&A decreased 20%
representing 15.7% of sales for the quarter as compared to 16.9% in
the prior year period. The decrease in Non-GAAP SG&A over the
prior year period was primarily driven by declines in marketing
expense and compensation expense.
- GAAP operating income declined 37%,
representing 13.9% of net sales for the quarter, compared to 19.1%
in the prior year period.
- Non-GAAP operating income declined 21%,
representing 19.0% of net sales in the quarter, compared to 20.7%
in the prior year period.
- The Company’s effective income tax rate
was 32.3% for the quarter as compared to 35.2% in the prior year
period.
- Diluted weighted average shares
outstanding for the fourth quarter were 155.2 million, down 6% from
164.4 million in the prior year period. The reduction in shares
outstanding from the prior year quarter was driven by the Company’s
share repurchases under its previously announced share repurchase
authorizations including a $700 million accelerated share
repurchase (ASR) program, open market purchases and 10(b)5-1 plans
and the previously announced repurchase of 5.2 million shares from
Luigi Lavazza S.p.A. on March 3, 2015.
- GAAP diluted EPS declined 29% from the
prior year period to $0.61.
- Non-GAAP diluted EPS declined 10% from
the prior year period to $0.85.
Fiscal Year 2015 Financial
Review
($ in millions except earnings per share)
Fiscal 2015 Fiscal 2014
% Increase /(Decrease)
Net sales $ 4,520.0 $ 4,707.7 (4 )% Operating income: GAAP $ 765.4
$ 947.2 (19 )% Non-GAAP $ 861.0 $ 1,001.2 (14 )% Net income: GAAP $
498.3 $ 596.5 (16 )% Non-GAAP $ 565.8 $ 632.9 (11 )% Diluted income
per share: GAAP $ 3.14 $ 3.74 (16 )% Non-GAAP $ 3.56 $ 3.97 (10 )%
Note: Complete GAAP to Non-GAAP reconciliation tables
provided with this release.
Net Sales by Product
For the year, net sales of $4.5 billion declined 4% over the
prior year. The 4% net sales decline includes an unfavorable impact
from foreign currency exchange rates of approximately 1%.
Net Sales by Product
($ in millions)
Fiscal 2015 Fiscal
2014
$ Increase(Decrease)
% Increase(Decrease)
Pods $ 3,645.1 $ 3,604.5 $ 40.6 1 % Brewers and accessories
632.6 822.3 (189.7 ) (23 )% Subtotal 4,277.7 4,426.8
(149.1 ) (3 )% Other products and royalties 242.3
280.9 (38.6 ) (14 )% Total net sales $ 4,520.0 $ 4,707.7 $
(187.7 ) (4 )%
Pods
- For the year, approximately 10.5
billion equivalent pod servings were sold.
- Pod sales were driven by an increase of
approximately 7% due to equivalent servings volume and a 2%
increase due to net price realization partially offset by a roughly
7% decrease due to product mix. Foreign currency exchange rates
negatively impacted pod net sales by approximately 1%.
Brewers and Accessories
- For the year, 9.2 million Keurig® hot
system brewers were sold including 8.7 million sold by Keurig with
0.5 million reported sold by Keurig’s licensed brewer partners.
This brewer shipment number does not account for consumer
returns.
- Brewer net sales were driven by a
decrease of 16% due to sales volume, a 5% decline in net pricing
and a roughly 1% decrease due to product mix. Foreign currency
exchange rates negatively impacted brewer net sales by
approximately 1%.
- Additionally, accessories net sales
decreased by $15 million.
Other Products
- Sales of other products were primarily
driven by the unfavorable impact of foreign exchange rates as well
as the loss of a customer in our away from home channel and our
decision to focus and allocate resources on our pod business.
- For the year, GAAP gross margin
declined 300 basis points to 35.6% of net sales from 38.6% in the
prior year period. Non-GAAP gross margin declined 250 basis points
to 36.1% of net sales from 38.6% in the prior year period. GAAP and
Non-GAAP gross margin were negatively impacted by $36 million in
obsolescence charges related to Rivo®, Bolt® and certain Keurig 2.0
brewers. Losses on abandonment and impairment of packaging lines
negatively impacted GAAP gross profit by $24 million and was
excluded from Non-GAAP gross profit. The following table quantifies
the changes in gross margin period to period:
Change fromFiscal 2014
toFiscal 2015
Shift in sales mix between pods, brewers and accessories, and other
products 250 bps Mix primarily associated with brewers -160
bps Higher obsolescence expense of finished goods -160 bps
Unfavorable green coffee costs -140 bps Mix primarily associated
with pods -90 bps
Impairment and abandonment of packaging
lines
-50 bps Other items 50 bps GAAP margin change -300 bps
Impairment and abandonment of packaging lines 50 bps
Non-GAAP margin change -250 bps
- GAAP SG&A declined 5%, representing
18.3% of sales for the year as compared to 18.5% in the prior year
period. Non-GAAP SG&A decreased 5% representing 17.0% of sales
for the year as compared to 17.3% in the prior year period. The
decrease in Non-GAAP SG&A over the prior year period was driven
by declines in compensation expense and marketing expense partially
offset by higher research and development expenses and significant
investments in the Keurig KOLDTM beverage ®system.
- GAAP operating income declined by 19%,
representing 16.9% of net sales for the year, down 320 basis points
from 20.1% in the prior year period.
- Non-GAAP operating income decreased by
14%, representing 19.0% of net sales in fiscal year 2015, down 230
basis points from 21.3% in the prior year.
- The Company’s effective income tax rate
was 33.6% for the year as compared to 35.4% in the prior year.
- Diluted weighted average shares
outstanding for the full year were 158.9 million, down from 159.6
million in 2014. The reduction in shares outstanding was driven by
the Company’s share repurchases under its share repurchase program
including a $700 million accelerated share repurchase (ASR)
program, open market purchases and 10(b)5-1 plans and the
previously announced repurchase of 5.2 million shares from Luigi
Lavazza S.p.A. on March 3, 2015, partially offset by dilution from
the Coca-Cola and Lavazza equity transactions4.
- GAAP diluted EPS decreased 16% from the
prior year period to $3.14; non-GAAP diluted EPS decreased 10% from
the prior year period to $3.56.
Balance Sheet & Cash Flow Highlights
Balance Sheet & Cash Flow Highlights ($
in millions) September 26, 2015 September 27,
2014 % Change Cash and cash equivalents, including
restricted cash $ 89.8 $ 761.6 (88 )% Accounts receivables, net $
517.9 $ 621.5 (17 )% Inventories $ 692.0 $ 835.2 (17 )% Raw
materials & supplies $ 227.5 $ 169.9 34 % Coffee $ 126.4 $ 74.4
70 % Packaging & other raw materials $ 101.1 $ 95.5 6 %
Finished goods $ 464.5 $ 665.3 (30 )% Brewers & accessories $
314.7 $ 477.5 (34 )% Pods $ 133.7 $ 164.9 (19 )% Other $ 16.1 $
22.9 (30 )% Debt outstanding and capital lease and financing
obligations $ 451.5 $ 278.5 62 % Cash provided by operating
activities (1) $ 754.9 $ 719.4 5 % Free cash flow (1) $ 343.8 $
381.6 (10 )%
(1) Free cash flow is calculated by subtracting capital
expenditures for fixed assets from net cash provided by operating
activities as reported in the unaudited statement of cash
flows.
Productivity Program
The Company previously announced a multi-year productivity
program and continues to expect $300 million in savings over the
next three years with approximately $100 million of savings in
fiscal 2016.
The Company incurred $16 million in pre-tax charges related to
its restructuring and productivity programs in its fiscal fourth
quarter 2015 of which $12 million are expected to result in cash
expenditures. Pre-tax restructuring charges associated with the
productivity program are expected to be $14-$19 million in fiscal
year 2016 of which approximately $10-14 million are expected to be
cash expenditures.
Share Repurchases
Pursuant to the Company’s share repurchase program, the Company
repurchased 9.5 million shares in fiscal year 2015 at a cost of
$1,033 million. This includes 1.99 million shares repurchased in
the fiscal fourth quarter at a cost of $115 million. From the end
of the Company’s fiscal year 2015 through November 18, 2015, the
Company repurchased an additional 4.4 million shares at a cost of
$235 million.
As of November 18, 2015, the Company has $914 million remaining
on its share repurchase authorization.
Dividend Declaration
Reflecting its commitment to return capital to shareholders and
its expectation for continued strong cash flow generation, the
Company announced a 13% increase in its indicated annualized
dividend to $1.30 per share from $1.15. The increase will take
effect with the February 16, 2016 quarterly dividend payment of
$0.325 declared by the Board payable to shareholders of record as
of the close of business on January 15, 2016.
Business Outlook and Other
Forward-Looking Information
The Company provided its outlook for fiscal year 2016:
Fiscal Year 2016
- Currency neutral net sales growth of
flat to low single digits compared to fiscal year 2015. At current
exchange rates, foreign currency is expected to negatively impact
net sales growth by approximately 1%.
- An annual effective tax rate of
approximately 33.0 % to 33.5%.
- Non-GAAP earnings per share of
$3.25-$3.45. This includes an expected $100 million in productivity
savings, additional share repurchase, an approximately $0.16
negative impact from foreign currency at current exchange rates.
The midpoint of the guidance range includes a pre-tax estimated
income statement loss of $125 million from the Keurig® KOLDTM
beverage system. Non-GAAP EPS guidance excludes any restructuring
or one-time charges related to the Company’s productivity
initiative.
- Free cash flow in the range of $420
million to $500 million.
- Capital investment in the range of $225
million to $275 million, with total depreciation and amortization
expense of $290 million.
Conference Call and Webcast
Keurig will be discussing these financial results with analysts
and investors in a conference call and live webcast available via
the Internet at 5:00 p.m. ET today, November 18, 2015. The call is
accessible via live webcast from the events section of the Investor
Relations portion of the Company’s website at
http://investor.keuriggreenmountain.com/events.cfm. The Company
archives the latest conference call for a period of time. A replay
of the conference call also will be available by telephone at (719)
457-0820, passcode 784384 from 9:00 p.m. ET on November 18, 2014
through 9:00 p.m. ET on Monday, November 23, 2014.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with
generally accepted accounting principles (GAAP), the Company
provides non-GAAP operating results that exclude legal and
accounting expenses related to the pending securities and
stockholder derivative class action litigation, pending antitrust
litigation against the Company, and the now concluded SEC inquiry;
non-cash acquisition-related items such as amortization of
identifiable intangibles; fixed asset impairment and abandonment
write-downs; and restructuring and productivity expenses related to
our multi-year productivity program, each of which include
adjustments to show the tax impact of excluding these items. In
each case these amounts are not in accordance with, or an
alternative to, GAAP. The Company’s management believes that these
measures provide investors with transparency by helping illustrate
the underlying financial and business trends relating to the
Company’s results of operations and financial condition and
comparability between current and prior periods. Management uses
the measures to establish and monitor budgets and operational goals
and to evaluate the performance of the Company. Please see the
“GAAP to Non-GAAP Reconciliation” table that accompanies this
document for a full reconciliation of the Company’s GAAP to
non-GAAP results.
About Keurig Green Mountain, Inc.
Keurig Green Mountain, Inc. (Keurig) (NASDAQ: GMCR) is
reimagining how beverages can be created, personalized, and
enjoyed, fresh-made in homes and workplaces. We are a personal
beverage system company revolutionizing the beverage experience
through the power of innovative technology and strategic brand
partnerships. With an expanding family of more than 80 beloved
brands and more than 575 beverage varieties, our Keurig® hot and
Keurig KOLD™ beverage systems deliver great taste, convenience, and
choice at the push of a button. As a company founded on social
responsibility, we are committed to using the power of business to
brew a better world through our work to build resilient supply
chains, sustainable products, thriving communities, and a
water-secure world.
For more information visit: www.KeurigGreenMountain.com. To
purchase Keurig products: www.keurig.com, www.keurig.ca, www.keurig.co.uk.
Keurig routinely posts information that may be of importance
to investors in the Investor Relations section of its
website, www.KeurigGreenMountain.com, including news releases
and its complete financial statements, as filed with the SEC.
The Company encourages investors to consult this section of its
website regularly for important information and news. Additionally,
by subscribing to the Company's automatic email news release
delivery, individuals can receive news directly
from Keurig as it is released.
Forward-Looking Statements
Certain information in this press release constitutes
"forward-looking statements." Forward-looking statements can be
identified by the fact that they do not relate strictly to
historical or current facts. They often include words such as
"believes," "expects," "anticipates," "estimates," "intends,"
"plans," "seeks" or words of similar meaning, or future or
conditional verbs, such as "will," "should," "could," "may,"
"aims," "intends," or "projects." However, the absence of these
words or similar expressions does not mean that a statement is not
forward-looking. These statements may relate to: the expected
impact of raw material costs and our pricing actions on our results
of operations and gross margins, expected trends in net sales and
earnings performance and other financial measures, estimates of
future financial results, the expected productivity program charges
and working capital improvements, the success of introducing and
producing new product offerings, the impact of foreign exchange
fluctuations, the adequacy of internally generated funds and
existing sources of liquidity, such as the availability of bank
financing, the expected results of operations of businesses
acquired by us, our ability to issue debt or additional equity
securities, projections for future capital expenditures, our
expectations regarding purchasing shares of our common stock under
the existing authorizations, projections of payment of dividends,
the impact of pending and future stockholder claims and other
litigation, and the impact of antitrust litigation pending against
the Company in the United States and Canada. A forward-looking
statement is neither a prediction nor a guarantee of future events
or circumstances, and those future events or circumstances may not
occur. Management believes that these forward-looking statements
are reasonable as and when made. However, caution should be taken
not to place undue reliance on any such forward-looking statements
because such statements speak only as of the date when made. We
expressly disclaim any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. In addition, forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from our historical experience
and our present expectations or projections. These risks and
uncertainties include, but are not limited to, those described in
Part I, "Item 1A. Risk Factors" and Part II "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our fiscal 2015 Annual Report filed on
Form 10-K, elsewhere in that report and those described from time
to time in our future reports filed with the Securities and
Exchange Commission.
1 Certain items in this press release are designated as
“Non-GAAP” and represent non-GAAP financial measures that exclude
certain items. Please see the attached “GAAP to Non-GAAP
Reconciliation” to find disclosure and reconciliation of non-GAAP
financial measures, as well as a discussion in this release as to
why the Company is presenting such non-GAAP measures.
2 Equivalent servings translates our multiple pod sizes,
including K-Cup®, Vue®, K-CarafeTM and Bolt® pods , into a common
serving.
3 Numbers do not sum due to rounding.
4 The Company issued 16.7 million shares as part of the
transaction with The Coca-Cola Company, which closed February 27,
2014 and another 1.4 million shares as part of the transaction with
Luigi Lavazza S.p.A., which closed April 17, 2014.
KGM-G, KGM-US, KGM-CA
KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated
Balance Sheets (Dollars in thousands, except per share
data)
September 26,2015
September 27,2014
Assets Current assets: Cash and cash equivalents $ 59,334 $
761,214 Restricted cash and cash equivalents 30,460 378 Short-term
investment — 100,000 Receivables, less uncollectible accounts and
return allowances of $35,459 and $66,120 at September 26, 2015 and
September 27, 2014, respectively 517,936 621,451 Inventories
691,980 835,167 Income taxes receivable 51,786 — Other current
assets 95,526 69,272 Deferred income taxes, net 70,181
58,038 Total current assets 1,517,203
2,445,520 Fixed assets, net 1,293,563 1,171,425 Intangibles,
net 423,887 365,444 Goodwill 747,406 755,895 Deferred income taxes,
net 854 131 Long-term restricted cash 278 — Other long-term assets
18,386 58,892 Total assets $
4,001,577 $ 4,797,307
Liabilities and
Stockholders' Equity Current liabilities: Current portion of
long-term debt $ 279 $ 19,077 Current portion of capital lease and
financing obligations 3,271 2,226 Accounts payable 298,609 411,107
Accrued expenses 226,519 305,677 Income tax payable 1,085 53,586
Dividend payable 44,048 40,580 Deferred income taxes, net 264 340
Other current liabilities 28,049 10,395
Total current liabilities 602,124 842,988 Long-term debt,
less current portion 330,766 140,937 Capital lease and financing
obligations, less current portion 117,187 116,240 Deferred income
taxes, net 195,063 202,936 Other long-term liabilities 42,525
23,085 Commitments and contingencies Redeemable
noncontrolling interests 4,554 12,440 Stockholders' equity:
Preferred stock, $0.10 par value: Authorized - 1,000,000 shares; No
shares issued or outstanding — — Common stock, $0.10 par value:
Authorized - 500,000,000 shares; Issued and outstanding -
153,209,256 and 162,318,246 shares at September 26, 2015 and
September 27, 2014, respectively 15,321 16,232 Additional paid-in
capital 879,060 1,808,881 Retained earnings 2,014,279 1,687,619
Accumulated other comprehensive loss (199,302 )
(54,051 ) Total stockholders' equity $ 2,709,358 $ 3,458,681
Total liabilities and stockholders’ equity $
4,001,577 $ 4,797,307
KEURIG GREEN MOUNTAIN, INC.
Unaudited Consolidated Statements of Operations (Dollars
in thousands except per share data)
Thirteenweeks ended
Thirteenweeks ended
Sept 26, 2015 Sept 27, 2014
Fiscal 2015
Fiscal 2014
Net sales $ 1,036,964 $ 1,195,567 $ 4,520,031 $ 4,707,680 Cost of
sales 701,630 745,778 2,912,507
2,891,820 Gross profit 335,334 449,789
1,607,524 1,815,860 Selling and operating expenses 111,357
140,498 539,259 561,573 General and administrative expenses 64,566
80,509 287,591 307,046 Restructuring expenses 15,250
— 15,250 — Operating
income 144,161 228,782 765,424 947,241 Other income
(expense), net (1,224 ) (1,673 ) 1,123 262 Gain on financial
instruments, net 2,967 3,689 8,077 8,307 Loss on foreign currency,
net (5,988 ) (9,323 ) (22,166 ) (19,746 ) Interest expense
(128 ) (3,635 ) (1,882 ) (11,691 ) Income
before income taxes 139,788 217,840 750,576 924,373 Income
tax expense (45,126 ) (76,590 ) (251,948 )
(326,959 ) Net income $ 94,662 $ 141,250 $ 498,628 $ 597,414
Net income attributable to noncontrolling interests
66 194 353 896
Net income attributable to Keurig $ 94,596 $ 141,056
$ 498,275 $ 596,518 Net income
attributable to Keurig per common share: Basic $ 0.61 $ 0.87 $ 3.17
$ 3.80 Diluted $ 0.61 $ 0.86 $ 3.14 $ 3.74 Cash dividends
declared per common share $ 0.2875 $ 0.25 $ 1.15 $ 1.00
Weighted-average common shares outstanding: Basic 153,938,926
162,540,994 157,286,303 157,085,574 Diluted 155,202,057 164,446,353
158,898,678 159,568,342
KEURIG GREEN MOUNTAIN,
INC. Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands) Fiscal 2015
Fiscal 2014 Cash flows from operating activities: Net income
$ 498,628 $ 597,414 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization of
fixed assets 217,515 214,607 Amortization of intangibles 48,148
43,032 Amortization of deferred financing fees 4,606 5,651 Loss on
impairment of fixed assets 16,256 — Unrealized (gain) loss on
foreign currency, net (2,862 ) 15,196 Provision for doubtful
accounts 5,452 1,782 Provision for sales returns 114,392 114,057
Gain on derivatives, net (20,959 ) (1,582 ) Excess tax benefits
from equity-based compensation plans (40,843 ) (55,444 ) Deferred
income taxes (8,591 ) (52,708 ) Deferred compensation and stock
compensation 32,471 30,882 Other 10,563 4,224 Changes in assets and
liabilities, net of acquisitions Receivables (24,303 ) (274,884 )
Inventories 128,423 (166,473 ) Income tax payable/receivable, net
(64,337 ) 120,553 Other current assets (23,573 ) (838 ) Other
long-term assets, net 2,369 3,162 Accounts payable and accrued
expenses (155,922 ) 133,818 Other current liabilities (1,191 )
(7,521 ) Other long-term liabilities 18,620
(5,495 ) Net cash provided by operating activities 754,862 719,433
Cash flows from investing activities: Change in restricted
cash (5,383 ) 182 Purchase of short-term investment — (100,000 )
Maturity of short-term investment 100,000 — Purchase of long-term
investment (1,000 ) (35,905 ) Acquisition, net of cash acquired
(180,698 ) — Proceeds from the sale of subsidiary, net of cash
retained 765 — Capital expenditures for fixed assets (411,099 )
(337,860 ) Other investing activities (1,016 ) 1,164
Net cash used in investing activities (498,431 ) (472,419 )
Cash flows from financing activities: Net change in
revolving line of credit 330,000 — Proceeds from issuance of common
stock under compensation plans 29,272 40,681 Proceeds from sale of
common stock — 1,348,414 Repurchase of common stock (1,033,321 )
(1,052,430 ) Excess tax benefits from equity-based compensation
plans 40,843 55,444 Payments on capital lease and financing
obligations (2,823 ) (1,931 ) Proceeds from borrowings of long-term
debt — 403 Deferred financing fees (4,123 ) — Repayment of
long-term debt (158,730 ) (13,361 ) Dividends paid (175,707 )
(118,358 ) Purchase of noncontrolling interest — (4,752 ) Other
financing activities 2,710 (1,124 ) Net cash
(used in) provided by financing activities (971,879 ) 252,986
Effect of exchange rate changes on cash and cash equivalents
13,568 1,122 Net (decrease) increase in cash and cash
equivalents (701,880 ) 501,122 Cash and cash equivalents at
beginning of period 761,214 260,092
Cash and cash equivalents at end of period $ 59,334 $
761,214 Supplemental disclosures of cash flow
information: Cash paid for interest (net of amounts capitalized) $
(2,785 ) $ 4,012 Cash paid for income taxes $ 320,239 $ 270,367
Dividends declared not paid at the end of each period $ 44,048 $
40,580 Fixed asset purchases included in accounts payable and not
disbursed at the end of each year $ 32,122 $ 64,202 Noncash
investing and financing activities: Fixed assets acquired under
capital lease and financing obligations $ 375 $ 40,125
KEURIG GREEN MOUNTAIN, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share
data)
Thirteen weeks ended September 26, 2015
Fiscal 2015 % Change Net Sales - Reported (GAAP) (13 )% (4
)% % Foreign Exchange Impact 2 % 1 % % Change
Constant Currency Net Sales (Non-GAAP) (11 )% (3 )%
Thirteen weeks ended Thirteen weeks ended
September 26, 2015 September 27, 2014 Gross profit $
335,334 $ 449,789 Losses on fixed asset impairment and abandonment
(1) 23,975 — Non-GAAP gross profit $
359,309 $ 449,789
Thirteen weeks ended
Thirteen weeks ended September 26, 2015 September
27, 2014 Selling and operating expenses $ 111,357 $ 140,498
General and administrative expenses 64,566
80,509 Total SG&A $ 175,923 $ 221,007
Expenses related to SEC inquiry (2) — (1,031 ) Expenses related to
antitrust litigation (3) — (7,771 ) Amortization of identifiable
intangibles (4) (12,380 ) (10,405 ) Restructuring and productivity
initiative expenses (5) (1,242 ) — Non-GAAP
SG&A $ 162,301 $ 201,800
Thirteen weeks
ended Thirteen weeks ended September 26, 2015
September 27, 2014 Operating income $ 144,161 $ 228,782
Losses on fixed asset impairment and abandonment (1) 23,975 —
Expenses related to SEC inquiry (2) — 1,031 Expenses related to
antitrust litigation (3) — 7,771 Amortization of identifiable
intangibles (4) 12,380 10,405 Restructuring and productivity
initiative expenses (5) 16,492 —
Non-GAAP operating income $ 197,008 $ 247,989
Thirteen weeks ended Thirteen weeks ended
September 26, 2015 September 27, 2014 Net income
attributable to Keurig $ 94,596 $ 141,056
After tax:
Losses on fixed asset impairment and abandonment (1) 16,236 —
Expenses related to SEC inquiry (2) — 676 Expenses related to
antitrust litigation (3) — 5,022 Amortization of identifiable
intangibles (4) 9,290 7,078 Restructuring and productivity
initiative expenses (5) 11,168 —
Non-GAAP net income attributable to Keurig $ 131,290 $
153,832
Thirteen weeks ended Thirteen weeks
ended September 26, 2015 September 27, 2014
Diluted income per share $ 0.61 $ 0.86 After tax: Losses on fixed
asset impairment and abandonment (1) 0.10 — Expenses related to SEC
inquiry (2) — — Expenses related to antitrust litigation (3) — 0.03
Amortization of identifiable intangibles (4) 0.06 0.04
Restructuring and productivity initiative expenses (5) 0.07
— Non-GAAP net income per share $ 0.85
* $ 0.94 * * Does not sum due to rounding.
(1) Represents loss on impairment of the Company's Bolt® fixed
assets and other write-downs related to abandonment of packaging
lines, classified as cost of sales.
(2) Represents legal and accounting expenses related to the SEC
inquiry and pending securities and stockholder derivative class
action litigation classified as general and administrative
expense.
(3) Represents legal expenses related to antitrust litigation
classified as general and administrative expense.
(4) Represents the amortization of intangibles related to the
Company’s acquisitions classified as general and administrative
expense.
(5)Represents restructuring and productivity initiative expenses
related to the Company's multi-year productivity initiative.
KEURIG GREEN MOUNTAIN, INC.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands, except per share
data)
Fiscal 2015 Fiscal 2014 Gross
profit $ 1,607,524 $ 1,815,860 Losses on fixed asset impairment and
abandonment (1) 23,975 — Non-GAAP gross
profit $ 1,631,499 $ 1,815,860
Fiscal
2015 Fiscal 2014 Selling and operating expenses $
539,259 $ 561,573 General and administrative expenses
287,591 307,046 Total SG&A $ 826,850
$ 868,619 Expenses related to SEC inquiry (2) (1,442
) (3,130 ) Expenses related to antitrust litigation (3) (5,541 )
(7,771 ) Amortization of identifiable intangibles (4) (48,148 )
(43,032 ) Restructuring and productivity initiative expenses (5)
(1,242 ) — Non-GAAP SG&A $ 770,477
$ 814,686
Fiscal 2015 Fiscal
2014 Operating income $ 765,424 $ 947,241 Losses on fixed asset
impairment and abandonment (1) 23,975 — Expenses related to SEC
inquiry (2) 1,442 3,130 Expenses related to antitrust litigation
(3) 5,541 7,771 Amortization of identifiable intangibles (4) 48,148
43,032 Restructuring and productivity initiative expenses (5)
16,492 — Non-GAAP operating income $
861,022 $ 1,001,174
Fiscal 2015
Fiscal 2014 Net income attributable to Keurig $ 498,275 $
596,518 After tax: Losses on fixed asset impairment and abandonment
(1) 16,236 — Expenses related to SEC inquiry (2) 927 2,023 Expenses
related to antitrust litigation (3) 3,699 5,020 Amortization of
identifiable intangibles (4) 35,516 29,324 Restructuring and
productivity initiative expenses (5) 11,168 —
Non-GAAP net income attributable to Keurig $ 565,821
$ 632,885
Fiscal 2015 Fiscal
2014 Diluted income per share $ 3.14 $ 3.74 After tax: Losses
on fixed asset impairment and abandonment (1) 0.10 — Expenses
related to SEC inquiry (2) 0.01 0.01 Expenses related to antitrust
litigation (3) 0.02 0.03 Amortization of identifiable intangibles
(4) 0.22 0.18 Restructuring and productivity initiative expenses
(5) 0.07 — Non-GAAP net income per share $ 3.56 $ 3.97
* * Does not sum due to rounding.
(1) Represents loss on impairment of the Company's Bolt® fixed
assets and other write-downs related to abandonment of packaging
lines, classified as cost of sales.
(2) Represents legal and accounting expenses related to the SEC
inquiry and pending securities and stockholder derivative class
action litigation classified as general and administrative
expense.
(3) Represents legal expenses related to antitrust litigation
classified as general and administrative expense.
(4) Represents the amortization of intangibles related to the
Company’s acquisitions classified as general and administrative
expense.
(5) Represents restructuring and productivity initiative
expenses related to the Company's multi-year productivity
initiative.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151118006631/en/
Keurig Green Mountain, Inc.For Media:Suzanne DuLong,
781-418-8075pr@keurig.comorFor Investors:Kristi Bonner,
646-762-8095kristi.bonner@keurig.com
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