PLANO, Texas, July 27, 2016 /PRNewswire/ -- Dr Pepper Snapple
Group, Inc. (NYSE: DPS) reported second quarter 2016 EPS of
$1.39 compared to $1.14 in the prior year period. Core EPS were
$1.25, up 11% compared to
$1.13 in the prior year period.
Year-to-date, the company reported earnings of $2.35 per diluted share compared to $1.95 per diluted share in the prior year period.
Core EPS were $2.18, up 12% compared
to $1.94 in the prior year
period.
For the quarter, reported net sales increased 2% on favorable
product and package mix, net price increases and a 1% increase in
sales volumes, which were partially offset by unfavorable segment
mix. Net sales growth was further reduced by 2 percentage points of
unfavorable foreign currency translation. Reported segment
operating profit (SOP) increased 5%, or $24
million, on net sales growth, lower commodity costs, ongoing
productivity improvements and lower logistics costs, which were
partially offset by increases in certain operating costs including
a one-time charge of $4 million
related to a transition of a certain employee benefit program.
Unfavorable foreign currency translation further reduced SOP growth
by 2 percentage points.
Reported income from operations for the quarter was $412 million, which included $25 million in unrealized commodity
mark-to-market gains. Reported income from operations was
$369 million in the prior year
period, which included $5 million in
unrealized commodity mark-to-market gains. Core income from
operations for the quarter was $387
million, up 6%, and represented 22.8% of net sales compared
to 22.1% in the prior year period.
Year-to-date, reported net sales increased 2%. Reported income
from operations was $725 million,
including $32 million in unrealized
commodity mark-to-market gains. Foreign currency translation
negatively impacted reported net sales by 2% and reported income
from operations by 1%. Reported income from operations in the prior
year period was $639 million, which
included $4 million in unrealized
commodity mark-to-market gains. Core income from operations was
$693 million, up 9%, representing
21.8% of net sales compared to 20.5% in the prior year.
DPS President and CEO Larry Young
said, "Our teams delivered another solid quarter of growth in what
continues to be a competitive industry. We focused relentlessly on
driving integrated communication and execution across our key
priority brands."
Young continued, "Our partnerships with allied brands are
driving meaningful growth, and Rapid Continuous Improvement (RCI)
continues to provide tangible financial benefits to the
business."
EPS
reconciliation
|
Second
Quarter
|
Year-to-Date
|
2016
|
2015
|
Percent
Change
|
2016
|
2015
|
Percent
Change
|
Reported
EPS
Unrealized commodity
mark-to-market net gain
Items affecting
comparability
- Extinguishment
gain
- Litigation
provision
|
$1.39
(0.08)
(0.06)
-
|
$1.14
(0.01)
-
-
|
22
|
$2.35
(0.11)
(0.06)
-
|
$1.95
(0.01)
-
-
|
21
|
|
------
|
------
|
------
|
-----
|
-----
|
------
|
Core EPS
|
$1.25
|
$1.13
|
11
|
$2.18
|
$1.94
|
12
|
Net sales and SOP in the tables and commentary below are
presented on a currency neutral basis. Refer to the Definitions
section of this press release for details on how the company
calculates currency neutral metrics. For a reconciliation of
non-GAAP to GAAP measures see pages A-5 through A-10 accompanying
this release.
Summary of 2016
results
(Percent
change)
|
As
Reported
|
Currency
Neutral
(Translation)
|
Second
Quarter
|
YTD
|
Second
Quarter
|
YTD
|
BCS Volume
|
1
|
1
|
1
|
1
|
Sales
Volume
|
1
|
1
|
1
|
1
|
Net Sales
|
2
|
2
|
4
|
4
|
SOP
|
5
|
8
|
7
|
9
|
BCS Volume
For the quarter, BCS volume increased 1%, with carbonated soft
drinks (CSDs) increasing 1% and non-carbonated beverages (NCBs)
increasing 2%.
By geography, U.S. and Canada
volume was flat, and Mexico and
the Caribbean volume increased
6%.
In CSDs, Squirt increased 8% in the quarter on strong growth in
both the U.S. and Mexico, and
Schweppes grew 9% on increased promotional activity at a large
retailer. Peñafiel and Crush each grew 4%. Brand Dr Pepper
decreased 1%, as growth in our fountain foodservice business was
more than offset by declines in diet. Our Core 4 brands decreased
1%, as a mid-single-digit increase in Canada Dry was more than offset by a 10%
decrease in 7UP and low-single-digit decreases in both A&W and
Sunkist soda. Fountain foodservice volume increased 1% in the
quarter.
In NCBs, our water category grew 25% on strong growth in Bai
brands, Aguafiel and FIJI. Clamato
increased 14% in the quarter on distribution gains and increased
promotional activity, while Hawaiian Punch decreased 5% primarily
on price increases on single-serve packages. Snapple decreased 2%,
as growth from product innovation was more than offset by the
effect a year ago of liquidating certain Snapple inventories.
Mott's was flat in the quarter, as growth in sauce was fully
offset by decreases in juice.
Sales Volume
Sales volumes increased 1% in the quarter and year-to-date.
2016 Segment
results (Percent Change)
|
Second
Quarter
|
|
|
As
Reported
|
Currency
Neutral
(Translation)
|
Sales
Volume
|
Net
Sales
|
SOP
|
Net
Sales
|
SOP
|
Beverage
Concentrates
|
1
|
4
|
4
|
4
|
4
|
Packaged
Beverages
|
(1)
|
3
|
10
|
3
|
11
|
Latin America
Beverages
|
6
|
(7)
|
(11)
|
10
|
-
|
Total
|
1
|
2
|
5
|
4
|
7
|
|
|
|
2016 Segment
results (Percent Change)
|
Year-to-Date
|
|
|
As
Reported
|
Currency
Neutral
(Translation)
|
Sales
Volume
|
Net
Sales
|
SOP
|
Net
Sales
|
SOP
|
Beverage
Concentrates
|
1
|
2
|
3
|
3
|
3
|
Packaged
Beverages
|
(1)
|
4
|
16
|
4
|
16
|
Latin America
Beverages
|
6
|
(8)
|
(11)
|
8
|
-
|
Total
|
1
|
2
|
8
|
4
|
9
|
Beverage Concentrates
Net sales increased 4% in the quarter on concentrate price
increases taken earlier in the year and a 1% increase in
concentrate shipments. Lower discounts further increased net sales
as favorable trade accrual adjustments were partially offset by
increases related to our fountain foodservice business. SOP
increased 4% driven by net sales growth, which was partially offset
by increases in marketing investments and certain operating
costs.
Packaged Beverages
Net sales increased 3% in the quarter on favorable product and
package mix and price increases, which were partially offset by
lower contract manufacturing volumes. SOP increased 11% on net
sales growth, lower commodity and logistics costs and ongoing
productivity improvements. These increases were partially offset by
increases in certain operating costs, including a one-time charge
of $4 million related to a transition
of a certain employee benefit program.
Latin America Beverages
Net sales increased 10% in the quarter on a 6% increase in sales
volumes, favorable product mix and higher net pricing. SOP was flat
in the quarter, as the segment incurred $5
million of higher U.S. dollar denominated input costs which
caused a 19% decline in SOP. The aforementioned foreign currency
transaction cost taken together with increases in certain operating
and logistics costs collectively offset net sales growth and
ongoing productivity improvements.
Corporate and Other Items
For the quarter, corporate costs totaled $52
million, which included $25
million in unrealized commodity mark-to-market gains.
Corporate costs in the prior year period were $70 million, which included $5 million in unrealized commodity mark-to-market
gains.
Other income increased $23 million
in the quarter as a result of a $21
million gain on the extinguishment of a multi-employer
pension plan withdrawal liability.
Net interest expense increased $5
million in the quarter driven by higher debt balances and
refinancing of certain debt in the prior year.
For the quarter, the reported effective tax rate was 35.3%. The
effective tax rate in the prior year period was 35.5%.
Cash Flow
Year-to-date, the company generated $407
million of cash from operating activities net of the
$35 million multi-employer pension
plan settlement payment, compared to $349
million in the prior year period. Capital spending totaled
$68 million compared to $42 million in the prior year period. The company
returned $493 million to shareholders
in the form of stock repurchases ($303
million) and dividends ($190
million).
2016 Full Year Guidance
The company continues to expect full year reported net sales to be
up approximately 2% and now expects core EPS to be in the
$4.27 to $4.35 range. Collectively,
foreign currency translation and transaction are expected to
continue to negatively impact net sales by approximately 1% and are
now expected to negatively impact core EPS growth by approximately
3%.
Packaging and ingredient costs are now expected to decrease COGS
by approximately 1% on a constant volume/mix basis.
The company continues to expect its core tax rate to be
approximately 35.5%.
The company continues to expect capital spending to be
approximately 3% of net sales.
The company continues to expect to repurchase $650 million to $700 million of its common
stock.
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 second quarter comprising April, May and June.
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.
Unrealized mark-to-market: We recognize the change in the fair
value of open commodity derivative positions between periods in
corporate unallocated expenses, as these instruments do not qualify
for hedge accounting treatment. As the underlying commodity is
delivered, the realized gains and losses are subsequently reflected
in the segment results.
EPS represents diluted earnings per share.
Core financial measures are determined utilizing reported
financial numbers adjusted for the unrealized mark-to-market impact
of commodity derivatives and certain items that are excluded for
comparison to prior year periods.
Core metrics are determined based on the core financial
measures.
Net sales and Segment Operating Profit, as adjusted to currency
neutral: Net sales and Segment Operating Profit are calculated on a
currency neutral basis by converting our current-period local
currency financial results using the prior-period foreign currency
exchange rates.
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 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, 2015, 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 9 a.m. (CDT) today, the company
will host a conference call with investors to discuss second
quarter results and the outlook for 2016. The conference call and
slide presentation will be accessible live through DPS's 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 pages A-5 through
A-10 accompanying this release and under "Financial News" on the
company's website at http://www.drpeppersnapple.com in the
"Investors" section.
For additional information about Dr Pepper Snapple Group, please
reference the "DPS Overview" presentation slideshow under "Events
and Presentations" on the company's website at
http://www.drpeppersnapple.com in the "Investors" section.
About Dr Pepper Snapple Group
Dr Pepper Snapple Group (NYSE: DPS) is a 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 six of the top 10
non-cola soft drinks, and 13 of our 14 leading brands are No. 1 or
No. 2 in their flavor categories. In addition to our flagship Dr
Pepper and Snapple brands, our portfolio includes 7UP, A&W,
Canada Dry, Clamato, Crush, Hawaiian Punch, Mott's, Mr & Mrs T
mixers, Peñafiel, Rose's, Schweppes, Squirt and Sunkist soda. To
learn more about our iconic brands and Plano, Texas-based company, please visit
www.DrPepperSnapple.com. For our latest news and updates, follow us
at www.Facebook.com/DrPepperSnapple or
www.Twitter.com/DrPepperSnapple.
Contacts:
|
Media
Relations
|
|
Chris Barnes, (972)
673-5539
|
|
|
|
Investor
Relations
|
|
Heather Catelotti,
(972) 673-5869
|
DR PEPPER SNAPPLE
GROUP, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
For the Three and
Six Months Ended June 30, 2016 and 2015
|
(Unaudited, in
millions, except per share data)
|
|
|
For
the
|
|
For
the
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
sales
|
$
|
1,695
|
|
|
$
|
1,655
|
|
|
$
|
3,182
|
|
|
$
|
3,106
|
|
Cost of
sales
|
670
|
|
|
674
|
|
|
1,272
|
|
|
1,276
|
|
Gross
profit
|
1,025
|
|
|
981
|
|
|
1,910
|
|
|
1,830
|
|
Selling, general and
administrative expenses
|
590
|
|
|
586
|
|
|
1,136
|
|
|
1,138
|
|
Depreciation and
amortization
|
24
|
|
|
26
|
|
|
50
|
|
|
53
|
|
Other operating
income, net
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Income from
operations
|
412
|
|
|
369
|
|
|
725
|
|
|
639
|
|
Interest
expense
|
33
|
|
|
28
|
|
|
66
|
|
|
55
|
|
Interest
income
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
Other (income)
expense, net
|
(22)
|
|
|
1
|
|
|
(23)
|
|
|
—
|
|
Income before
provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
402
|
|
|
341
|
|
|
683
|
|
|
585
|
|
Provision for income
taxes
|
142
|
|
|
121
|
|
|
241
|
|
|
208
|
|
Income before equity
in earnings of unconsolidated subsidiaries
|
260
|
|
|
220
|
|
|
442
|
|
|
377
|
|
Equity in earnings of
unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net
income
|
$
|
260
|
|
|
$
|
220
|
|
|
$
|
442
|
|
|
$
|
377
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.40
|
|
|
$
|
1.15
|
|
|
$
|
2.37
|
|
|
$
|
1.96
|
|
Diluted
|
1.39
|
|
|
1.14
|
|
|
2.35
|
|
|
1.95
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
185.7
|
|
|
191.4
|
|
|
186.7
|
|
|
192.2
|
|
Diluted
|
186.5
|
|
|
192.4
|
|
|
187.7
|
|
|
193.5
|
|
|
A-1
|
DR PEPPER SNAPPLE
GROUP, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
As of June 30,
2016 and December 31, 2015
|
(Unaudited, in
millions, except share and per share data)
|
|
|
June
30,
|
|
December
31,
|
|
2016
|
|
2015
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
245
|
|
|
$
|
911
|
|
Accounts
receivable:
|
|
|
|
Trade, net
|
642
|
|
|
570
|
|
Other
|
58
|
|
|
58
|
|
Inventories
|
236
|
|
|
209
|
|
Prepaid expenses and
other current assets
|
144
|
|
|
69
|
|
Total current
assets
|
1,325
|
|
|
1,817
|
|
Property, plant and
equipment, net
|
1,129
|
|
|
1,156
|
|
Investments in
unconsolidated subsidiaries
|
35
|
|
|
31
|
|
Goodwill
|
2,986
|
|
|
2,988
|
|
Other intangible
assets, net
|
2,658
|
|
|
2,663
|
|
Other non-current
assets
|
209
|
|
|
150
|
|
Non-current deferred
tax assets
|
64
|
|
|
64
|
|
Total
assets
|
$
|
8,406
|
|
|
$
|
8,869
|
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
359
|
|
|
$
|
277
|
|
Deferred
revenue
|
64
|
|
|
64
|
|
Short-term borrowings
and current portion of long-term obligations
|
9
|
|
|
507
|
|
Income taxes
payable
|
50
|
|
|
27
|
|
Other current
liabilities
|
688
|
|
|
708
|
|
Total current
liabilities
|
1,170
|
|
|
1,583
|
|
Long-term
obligations
|
2,921
|
|
|
2,875
|
|
Non-current deferred
tax liabilities
|
811
|
|
|
787
|
|
Non-current deferred
revenue
|
1,150
|
|
|
1,181
|
|
Other non-current
liabilities
|
212
|
|
|
260
|
|
Total
liabilities
|
6,264
|
|
|
6,686
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.01 par value, 15,000,000 shares authorized, no shares
issued
|
—
|
|
|
—
|
|
Common stock, $0.01
par value, 800,000,000 shares authorized, 185,403,402 and
187,841,509 shares issued and outstanding for 2016 and 2015,
respectively
|
2
|
|
|
2
|
|
Additional paid-in
capital
|
94
|
|
|
211
|
|
Retained
earnings
|
2,248
|
|
|
2,165
|
|
Accumulated other
comprehensive loss
|
(202)
|
|
|
(195)
|
|
Total stockholders'
equity
|
2,142
|
|
|
2,183
|
|
Total liabilities and
stockholders' equity
|
$
|
8,406
|
|
|
$
|
8,869
|
|
|
A-2
|
DR PEPPER SNAPPLE
GROUP, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the Six Months
Ended June 30, 2016 and 2015
|
(Unaudited, in
millions)
|
|
|
For
the
|
|
Six Months
Ended
|
|
June
30,
|
|
2016
|
|
2015
|
Operating
activities:
|
|
|
|
Net income
|
$
|
442
|
|
|
$
|
377
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
95
|
|
|
96
|
|
Amortization
expense
|
16
|
|
|
16
|
|
Amortization of
deferred revenue
|
(32)
|
|
|
(32)
|
|
Employee stock-based
compensation expense
|
22
|
|
|
21
|
|
Deferred income
taxes
|
30
|
|
|
19
|
|
Gain on
extinguishment of multi-employer plan withdrawal
liability
|
(21)
|
|
|
—
|
|
Other, net
|
(50)
|
|
|
(21)
|
|
Changes in assets and
liabilities, net of effects of acquisition:
|
|
|
|
Trade accounts
receivable
|
(74)
|
|
|
(78)
|
|
Other accounts
receivable
|
(5)
|
|
|
(2)
|
|
Inventories
|
(29)
|
|
|
(16)
|
|
Other current and
non-current assets
|
(80)
|
|
|
(77)
|
|
Other current and
non-current liabilities
|
(33)
|
|
|
(41)
|
|
Trade accounts
payable
|
81
|
|
|
18
|
|
Income taxes
payable
|
45
|
|
|
69
|
|
Net cash provided by
operating activities
|
407
|
|
|
349
|
|
Investing
activities:
|
|
|
|
Purchase of property,
plant and equipment
|
(68)
|
|
|
(42)
|
|
Purchase of
intangible assets
|
—
|
|
|
(1)
|
|
Investment in
unconsolidated subsidiaries
|
(6)
|
|
|
—
|
|
Purchase of cost
method investment
|
(1)
|
|
|
(15)
|
|
Proceeds from
disposals of property, plant and equipment
|
3
|
|
|
11
|
|
Other, net
|
(7)
|
|
|
—
|
|
Net cash used in
investing activities
|
(79)
|
|
|
(47)
|
|
Financing
activities:
|
|
|
|
Repayment of senior
unsecured notes
|
(500)
|
|
|
—
|
|
Repurchase of shares
of common stock
|
(303)
|
|
|
(251)
|
|
Dividends
paid
|
(190)
|
|
|
(172)
|
|
Tax withholdings
related to net share settlements of certain stock awards
|
(31)
|
|
|
(27)
|
|
Proceeds from stock
options exercised
|
12
|
|
|
22
|
|
Excess tax benefit on
stock-based compensation
|
21
|
|
|
20
|
|
Capital lease
payments
|
(4)
|
|
|
(2)
|
|
Other, net
|
—
|
|
|
1
|
|
Net cash used in
financing activities
|
(995)
|
|
|
(409)
|
|
Cash and cash
equivalents — net change from:
|
|
|
|
Operating, investing
and financing activities
|
(667)
|
|
|
(107)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1
|
|
|
(3)
|
|
Cash and cash
equivalents at beginning of period
|
911
|
|
|
237
|
|
Cash and cash
equivalents at end of period
|
$
|
245
|
|
|
$
|
127
|
|
|
|
|
|
|
|
|
|
A-3
|
DR PEPPER SNAPPLE
GROUP, INC.
|
OPERATIONS BY
OPERATING SEGMENT
|
For the Three and
Six Months Ended June 30, 2016 and 2015
|
(Unaudited,
in millions)
|
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Segment Results –
Net sales
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
342
|
|
|
$
|
330
|
|
|
$
|
629
|
|
|
$
|
615
|
|
Packaged
Beverages
|
1,225
|
|
|
1,188
|
|
|
2,322
|
|
|
2,241
|
|
Latin America
Beverages
|
128
|
|
|
137
|
|
|
231
|
|
|
250
|
|
Net
sales
|
$
|
1,695
|
|
|
$
|
1,655
|
|
|
$
|
3,182
|
|
|
$
|
3,106
|
|
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Segment Results –
SOP
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
230
|
|
|
$
|
222
|
|
|
$
|
417
|
|
|
$
|
405
|
|
Packaged
Beverages
|
209
|
|
|
190
|
|
|
384
|
|
|
331
|
|
Latin America
Beverages
|
24
|
|
|
27
|
|
|
39
|
|
|
44
|
|
Total SOP
|
463
|
|
|
439
|
|
|
840
|
|
|
780
|
|
Unallocated corporate
costs
|
52
|
|
|
70
|
|
|
116
|
|
|
141
|
|
Other operating
income, net
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Income from
operations
|
412
|
|
|
369
|
|
|
725
|
|
|
639
|
|
Interest expense,
net
|
32
|
|
|
27
|
|
|
65
|
|
|
54
|
|
Other (income)
expense, net
|
(22)
|
|
|
1
|
|
|
(23)
|
|
|
—
|
|
Income before
provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
$
|
402
|
|
|
$
|
341
|
|
|
$
|
683
|
|
|
$
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-4
|
DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
(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
company's 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 to
currency neutral: Net sales and Segment Operating Profit are
calculated on a currency neutral basis by converting our
current-period local currency financial results using the
prior-period foreign currency exchange rates.
Free Cash Flow: Free cash flow is defined as net cash
provided by operating activities adjusted for capital spending and
certain items excluded for comparison to prior year periods. For
the six months ended June 30, 2016
and 2015, there were no certain items excluded for comparison to
prior year periods.
Core earnings: Core earnings is defined as net income
adjusted for the unrealized mark-to-market impact of commodity
derivatives and certain items that are excluded for comparison to
prior year periods. The certain item excluded for the three and six
months ended June 30, 2016 is a gain on the extinguishment of
a multi-employer withdrawal liability. The certain item excluded
for the three and six months ended June 30, 2015, is an
adjustment to a previously disclosed legal provision.
The tables on the following pages provide these
reconciliations.
A-5
|
|
|
|
RECONCILIATION OF
NET SALES AND SOP
|
AS REPORTED TO AS
ADJUSTED TO CURRENCY NEUTRAL
|
(Unaudited)
|
|
|
|
For the Three
Months Ended June 30, 2016
|
|
|
Beverage
|
|
Packaged
|
|
Latin
America
|
|
|
Percent
change
|
|
Concentrates
|
|
Beverages
|
|
Beverages
|
|
Total
|
Reported net
sales
|
|
4
|
%
|
|
3
|
%
|
|
(7)
|
%
|
|
2
|
%
|
Impact of foreign
currency
|
|
—
|
%
|
|
—
|
%
|
|
17
|
%
|
|
2
|
%
|
Net sales, as
adjusted to currency neutral
|
|
4
|
%
|
|
3
|
%
|
|
10
|
%
|
|
4
|
%
|
|
|
|
For the Three
Months Ended June 30, 2016
|
|
|
Beverage
|
|
Packaged
|
|
Latin
America
|
|
|
Percent
change
|
|
Concentrates
|
|
Beverages
|
|
Beverages
|
|
Total
|
Reported
SOP
|
|
4
|
%
|
|
10
|
%
|
|
(11)
|
%
|
|
5
|
%
|
Impact of foreign
currency
|
|
—
|
%
|
|
1
|
%
|
|
11
|
%
|
|
2
|
%
|
SOP, as adjusted
to currency neutral
|
|
4
|
%
|
|
11
|
%
|
|
—
|
%
|
|
7
|
%
|
|
|
|
For the Six Months
Ended June 30, 2016
|
|
|
Beverage
|
|
Packaged
|
|
Latin
America
|
|
|
Percent
change
|
|
Concentrates
|
|
Beverages
|
|
Beverages
|
|
Total
|
Reported net
sales
|
|
2
|
%
|
|
4
|
%
|
|
(8)
|
%
|
|
2
|
%
|
Impact of foreign
currency
|
|
1
|
%
|
|
—
|
%
|
|
16
|
%
|
|
2
|
%
|
Net sales, as
adjusted to currency neutral
|
|
3
|
%
|
|
4
|
%
|
|
8
|
%
|
|
4
|
%
|
|
|
|
For the Six Months
Ended June 30, 2016
|
|
|
Beverage
|
|
Packaged
|
|
Latin
America
|
|
|
Percent
change
|
|
Concentrates
|
|
Beverages
|
|
Beverages
|
|
Total
|
Reported
SOP
|
|
3
|
%
|
|
16
|
%
|
|
(11)
|
%
|
|
8
|
%
|
Impact of foreign
currency
|
|
—
|
%
|
|
—
|
%
|
|
11
|
%
|
|
1
|
%
|
SOP, as adjusted
to currency neutral
|
|
3
|
%
|
|
16
|
%
|
|
—
|
%
|
|
9
|
%
|
RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH
FLOW
|
(Unaudited, in
millions)
|
|
|
|
For
the
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
Net cash provided
by operating activities
|
|
$
|
407
|
|
|
$
|
349
|
|
|
$
|
58
|
|
Purchase of property,
plant and equipment
|
|
(68)
|
|
|
(42)
|
|
|
|
Free Cash
Flow
|
|
$
|
339
|
|
|
$
|
307
|
|
|
$
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-6
|
RECONCILIATION OF
NET INCOME TO CORE EARNINGS
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Three
Months Ended June 30, 2016
|
|
Reported
|
|
Mark to
Market
|
|
Extinguishment
Gain
|
|
Total
Adjustments
|
|
Core
|
|
FX
Translation
|
|
Currency
Neutral
Core
|
Net sales
|
$
|
1,695
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,695
|
|
|
$
|
26
|
|
|
$
|
1,721
|
|
Cost of
sales
|
670
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
683
|
|
|
13
|
|
|
696
|
|
Gross
profit
|
1,025
|
|
|
(13)
|
|
|
—
|
|
|
(13)
|
|
|
1,012
|
|
|
13
|
|
|
1,025
|
|
Selling, general and
administrative expenses
|
590
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
602
|
|
|
7
|
|
|
609
|
|
Depreciation and
amortization
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
Other operating
income, net
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
Income from
operations
|
412
|
|
|
(25)
|
|
|
—
|
|
|
(25)
|
|
|
387
|
|
|
6
|
|
|
393
|
|
Interest
expense
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
Interest
income
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
Other (income)
expense, net
|
(22)
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
(1)
|
|
|
1
|
|
|
—
|
|
Income before
provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
402
|
|
|
(25)
|
|
|
(21)
|
|
|
(46)
|
|
|
356
|
|
|
5
|
|
|
361
|
|
Provision for income
taxes
|
142
|
|
|
(10)
|
|
|
(9)
|
|
|
(19)
|
|
|
123
|
|
|
1
|
|
|
124
|
|
Income before equity
in earnings of unconsolidated subsidiaries
|
260
|
|
|
(15)
|
|
|
(12)
|
|
|
(27)
|
|
|
233
|
|
|
4
|
|
|
237
|
|
Equity in earnings of
unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
|
$
|
260
|
|
|
$
|
(15)
|
|
|
$
|
(12)
|
|
|
$
|
(27)
|
|
|
$
|
233
|
|
|
$
|
4
|
|
|
$
|
237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$
|
1.39
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.14)
|
|
|
$
|
1.25
|
|
|
$
|
0.02
|
|
|
$
|
1.27
|
|
Effective tax
rate
|
35.3
|
%
|
|
|
|
|
|
|
|
34.6
|
%
|
|
|
|
34.3
|
%
|
Operating
margin
|
24.3
|
%
|
|
|
|
|
|
|
|
22.8
|
%
|
|
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-7
|
RECONCILIATION OF
NET INCOME TO CORE EARNINGS - (Continued)
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Three
Months Ended June 30, 2015
|
|
Reported
|
|
Mark to
Market
|
|
Litigation
Provision
|
|
Total
Adjustments
|
|
Core
|
Net sales
|
$
|
1,655
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,655
|
|
Cost of
sales
|
674
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
672
|
|
Gross
profit
|
981
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
983
|
|
Selling, general and
administrative expenses
|
586
|
|
|
7
|
|
|
(1)
|
|
|
6
|
|
|
592
|
|
Depreciation and
amortization
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
Other operating
income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Income from
operations
|
369
|
|
|
(5)
|
|
|
1
|
|
|
(4)
|
|
|
365
|
|
Interest
expense
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
Interest
income
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Other (income)
expense, net
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Income before
provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
341
|
|
|
(5)
|
|
|
1
|
|
|
(4)
|
|
|
337
|
|
Provision for income
taxes
|
121
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
119
|
|
Income before equity
in earnings of unconsolidated subsidiaries
|
220
|
|
|
(3)
|
|
|
1
|
|
|
(2)
|
|
|
218
|
|
Equity in earnings of
unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
|
$
|
220
|
|
|
$
|
(3)
|
|
|
$
|
1
|
|
|
$
|
(2)
|
|
|
$
|
218
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$
|
1.14
|
|
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
(0.01)
|
|
|
$
|
1.13
|
|
Effective tax
rate
|
35.5
|
%
|
|
|
|
|
|
|
|
35.3
|
%
|
Operating
margin
|
22.3
|
%
|
|
|
|
|
|
|
|
22.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
A-8
|
RECONCILIATION OF
NET INCOME TO CORE EARNINGS - (Continued)
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Six Months
Ended June 30, 2016
|
|
Reported
|
|
Mark to
Market
|
|
Extinguishment
Gain
|
|
Total
Adjustments
|
|
Core
|
|
FX
Translation
|
|
Currency
Neutral
Core
|
Net sales
|
$
|
3,182
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,182
|
|
|
$
|
47
|
|
|
$
|
3,229
|
|
Cost of
sales
|
1,272
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
1,288
|
|
|
22
|
|
|
1,310
|
|
Gross
profit
|
1,910
|
|
|
(16)
|
|
|
—
|
|
|
(16)
|
|
|
1,894
|
|
|
25
|
|
|
1,919
|
|
Selling, general and
administrative expenses
|
1,136
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
1,152
|
|
|
16
|
|
|
1,168
|
|
Depreciation and
amortization
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
Other operating
income, net
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
Income from
operations
|
725
|
|
|
(32)
|
|
|
—
|
|
|
(32)
|
|
|
693
|
|
|
9
|
|
|
702
|
|
Interest
expense
|
66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
Interest
income
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
Other (income)
expense, net
|
(23)
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
(2)
|
|
|
1
|
|
|
(1)
|
|
Income before
provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
683
|
|
|
(32)
|
|
|
(21)
|
|
|
(53)
|
|
|
630
|
|
|
8
|
|
|
638
|
|
Provision for income
taxes
|
241
|
|
|
(12)
|
|
|
(9)
|
|
|
(21)
|
|
|
220
|
|
|
2
|
|
|
222
|
|
Income before equity
in earnings of unconsolidated subsidiaries
|
442
|
|
|
(20)
|
|
|
(12)
|
|
|
(32)
|
|
|
410
|
|
|
6
|
|
|
416
|
|
Equity in earnings of
unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
|
$
|
442
|
|
|
$
|
(20)
|
|
|
$
|
(12)
|
|
|
$
|
(32)
|
|
|
$
|
410
|
|
|
$
|
6
|
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$
|
2.35
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.06)
|
|
|
$
|
(0.17)
|
|
|
$
|
2.18
|
|
|
$
|
0.03
|
|
|
$
|
2.21
|
|
Effective tax
rate
|
35.3
|
%
|
|
|
|
|
|
|
|
34.9
|
%
|
|
|
|
34.8
|
%
|
Operating
margin
|
22.8
|
%
|
|
|
|
|
|
|
|
21.8
|
%
|
|
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-9
|
RECONCILIATION OF
NET INCOME TO CORE EARNINGS - (Continued)
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Six Months
Ended June 30, 2015
|
|
Reported
|
|
Mark to
Market
|
|
Litigation
Provision
|
|
Total
Adjustments
|
|
Core
|
Net sales
|
$
|
3,106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,106
|
|
Cost of
sales
|
1,276
|
|
|
(4)
|
|
|
—
|
|
|
(4)
|
|
|
1,272
|
|
Gross
profit
|
1,830
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
1,834
|
|
Selling, general and
administrative expenses
|
1,138
|
|
|
8
|
|
|
(1)
|
|
|
7
|
|
|
1,145
|
|
Multi-employer
pension plan withdrawal
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Depreciation and
amortization
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
Other operating
income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Income from
operations
|
639
|
|
|
(4)
|
|
|
1
|
|
|
(3)
|
|
|
636
|
|
Interest
expense
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
Interest
income
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Other (income)
expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Income before
provision for income taxes and equity in earnings of unconsolidated
subsidiaries
|
585
|
|
|
(4)
|
|
|
1
|
|
|
(3)
|
|
|
582
|
|
Provision for income
taxes
|
208
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
206
|
|
Income before equity
in earnings of unconsolidated subsidiaries
|
377
|
|
|
(2)
|
|
|
1
|
|
|
(1)
|
|
|
376
|
|
Equity in earnings of
unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
|
$
|
377
|
|
|
$
|
(2)
|
|
|
$
|
1
|
|
|
$
|
(1)
|
|
|
$
|
376
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share
|
$
|
1.95
|
|
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
(0.01)
|
|
|
$
|
1.94
|
|
Effective tax
rate
|
35.6
|
%
|
|
|
|
|
|
|
|
35.4
|
%
|
Operating
margin
|
20.6
|
%
|
|
|
|
|
|
|
|
20.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
A-10
|
Logo - http://photos.prnewswire.com/prnh/20150701/227684LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dr-pepper-snapple-group-reports-second-quarter-2016-results-300304416.html
SOURCE Dr Pepper Snapple Group, Inc.