Dr Pepper Snapple Group Reports Second Quarter 2016 Results
Company reports EPS of $1.39 for the quarter. Core EPS were $1.25 for the quarter, up 11%.
Net Sales increased 2% for the quarter and year-to-date.
Foreign currency translation reduced Net Sales and Reported EPS by 2% in the quarter.
Company raises guidance and now expects full year 2016 Core EPS in the $4.27 to $4.35 range and expects to return over $1 billion to shareholders in the form of stock repurchases and dividends.
Jul 27, 2016

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

EPS – earnings per share

 

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 - bottler case sales

 

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

 

Dr Pepper Snapple Group, Inc. Logo

Logo - http://photos.prnewswire.com/prnh/20150701/227684LOGO

 

SOURCE Dr Pepper Snapple Group, Inc.

More News
Sep 13, 2018

Keurig Dr Pepper (NYSE: KDP) announced today that its Board of Directors authorized a quarterly dividend program and declared its first quarterly dividend on the Company's common stock. KDP will...

Aug 8, 2018

Keurig Dr Pepper Inc. (NYSE: KDP) today reported second quarter 2018 results for Keurig Green Mountain ("KGM") and Dr Pepper Snapple Group ("DPS") for the period ending June 30, 2018. Keurig Dr...

Jul 30, 2018

Keurig Dr Pepper (NYSE: KDP) to report second quarter results for Keurig Green Mountain, Inc. and Dr Pepper Snapple Group, Inc. before the market opens on August 8, 2018. As announced on July 9,...