Net sales were flat for the quarter.
Reported EPS were
Year-to-date, the company repurchased
Company reaffirms full year 2012 Core EPS in the
For the quarter, reported net sales were flat. Shipment volumes were
down 3%. Product and package price/mix was up 4%, while volume mix shift
across the segments lowered net sales by 1%. Reported segment operating
profit (SOP) increased 3%, or
Year-to-date, reported net sales increased 2%. Reported income from
operations was
DPS President and CEO
| EPS reconciliation | Third Quarter | Year-to-Date | ||||||||||||||||
| 2012 | 2011 |
Percent
Change |
2012 | 2011 |
Percent
Change |
|||||||||||||
| Reported EPS | $ | 0.84 | $ | 0.71 | 18 | $ | 2.15 | $ | 1.97 | 9 | ||||||||
| Unrealized commodity mark-to-market net (gain)/loss | (0.05 | ) | 0.03 | (0.05 | ) | 0.05 | ||||||||||||
| Items affecting comparability | ||||||||||||||||||
|
- Foreign deferred tax benefit |
- | - | (0.02 | ) | - | |||||||||||||
|
- Depreciation adjustment on capital lease |
- | - | 0.02 | - | ||||||||||||||
|
|
||||||||||||||||||
| ------ | ------ | ------ | ------ | ------ | ------ | |||||||||||||
|
Core EPS |
$ | 0.79 | $ | 0.74 | 7 | $ | 2.10 | $ | 2.02 | 4 | ||||||||
|
EPS — earnings per share |
||||||||||||||||||
Net sales and SOP in the tables and commentary below are presented on a currency neutral basis. For a reconciliation of non-GAAP to GAAP measures see pages A-5 through A-9 accompanying this release.
|
Summary of 2012 results
(Percent change) |
As Reported | Currency Neutral | ||||||||||
|
Third
Quarter |
YTD |
Third
Quarter |
YTD | |||||||||
| BCS Volume | (3 | ) | (1 | ) | (3 | ) | (1 | ) | ||||
| Sales Volume | (3 | ) | (2 | ) | (3 | ) | (2 | ) | ||||
| Net Sales | - | 2 | - | 2 | ||||||||
| SOP | 3 | 1 | 4 | 2 | ||||||||
|
BCS - bottler case sales |
||||||||||||
BCS Volume
For the quarter, BCS volume declined 3% with carbonated soft drinks (CSDs) declining 2% and non-carbonated beverages (NCBs) declining 5%.
In CSDs, Dr Pepper volume decreased 1% driven primarily by declines in
the base business, partially offset by growth of Dr Pepper TEN and
continued fountain availabilities. Our Core 5 brands declined 6% on
higher retail pricing and lower promotional activity. 7UP and Sunkist
soda both experienced a high-single digit decline, while A&W experienced
a mid-single digit decline and
In NCBs, Hawaiian Punch volume declined 14% on retail price increases
and Mott's volume declined 10% due to lower promotional activity. These
declines were partially offset by a 4% increase in
By geography, U.S. and
Sales volume
For the quarter, sales volume decreased 3%. Branded volume declined 3%, while contract manufacturing volume decreased by 6%.
| 2012 Segment results (Percent Change) | As Reported | ||||||||||||||||
| Third Quarter | Year-to-Date | ||||||||||||||||
|
Sales |
Net |
SOP |
Sales |
Net |
SOP |
||||||||||||
| Beverage Concentrates | (2 | ) | 4 | 1 | (2 | ) | 2 | (3 | ) | ||||||||
| Packaged Beverages | (6 | ) | (1 | ) | 3 | (2 | ) | 2 | 4 | ||||||||
| Latin America Beverages | 1 | - | 40 | 1 | (4 | ) | 9 | ||||||||||
| Total | (3 | ) | - | 3 | (2 | ) | 2 | 1 | |||||||||
| 2012 Segment results (Percent Change) | Currency Neutral | |||||||||||||||
| Third Quarter | Year-to-Date | |||||||||||||||
|
Sales |
Net |
SOP |
Sales |
Net |
SOP |
|||||||||||
| Beverage Concentrates | (2 | ) | 4 | 1 | (2 | ) | 3 | (2 | ) | |||||||
| Packaged Beverages | (6 | ) | (1 | ) | 4 | (2 | ) | 2 | 5 | |||||||
| Latin America Beverages | 1 | 7 | 133 | 1 | 4 | 54 | ||||||||||
| Total | (3 | ) | - | 4 | (2 | ) | 2 | 2 | ||||||||
Beverage Concentrates
Net sales for the quarter increased 4% as concentrate price increases
taken earlier in the year, lower discounts and favorable mix were
partially offset by a 2% volume decline. SOP increased 1% as the
benefits of net sales growth were partially offset by increased
marketing investments of
Packaged Beverages
Net sales for the quarter decreased 1% as a 6% volume decline was
partially offset by favorable mix, price increases and lower discounts.
SOP increased 4% as the benefits of price increases, favorable mix and
ongoing RCI productivity improvements were partially offset by lower
sales volumes, certain increases in labor and benefits costs, a higher
LIFO charge of
Latin America Beverages
Net sales for the quarter increased 7% reflecting favorable product mix, higher pricing and a 1% increase in sales volumes. SOP increased 133% reflecting net sales growth and favorable operating leverage from ongoing RCI productivity improvements.
Corporate and other items
For the quarter, corporate costs totaled
Net interest expense increased
For the quarter, the effective tax rate was 36.3% compared to 34.7% in
the prior year period, which included a
Cash flow
Year-to-date, the company generated
2012 full year guidance
The company now expects full year reported net sales growth to be
approximately 2% and Core EPS to be in the
Packaging and ingredient costs are expected to increase COGS by 2% on a constant volume/mix basis, including the increased cost of apples.
The company expects its reported tax rate to be approximately 37% and now expects capital spending to be approximately 3.5% to 3.75% of net sales.
The company now expects to repurchase approximately
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 third quarter comprising July, August and September.
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 EPS is defined as EPS adjusted for the unrealized mark-to-market impact of commodity derivatives and certain items that are excluded for comparison to prior year periods.
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
Conference Call
At
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-9 accompanying this release and under "Financial Press Releases" on the company's website at http://www.drpeppersnapple.com in the "Investors" section.
About
|
|
||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
|
For the Three and Nine Months Ended |
||||||||||||||||
| (Unaudited, in millions except per share data) | ||||||||||||||||
| For the | For the | |||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
|
|
|
|||||||||||||||
| 2012 |
2011 |
2012 | 2011 | |||||||||||||
| Net sales | $ | 1,528 | $ | 1,529 | $ | 4,511 | $ | 4,442 | ||||||||
| Cost of sales | 626 | 672 | 1,895 | 1,881 | ||||||||||||
| Gross profit | 902 | 857 | 2,616 | 2,561 | ||||||||||||
| Selling, general and administrative expenses | 561 | 559 | 1,713 | 1,704 | ||||||||||||
| Depreciation and amortization | 29 | 31 | 95 | 95 | ||||||||||||
| Other operating expense (income), net | 4 | 6 | 8 | 9 | ||||||||||||
| Income from operations | 308 | 261 | 800 | 753 | ||||||||||||
| Interest expense | 31 | 30 | 94 | 85 | ||||||||||||
| Interest income | — | (1 | ) | (1 | ) | (2 | ) | |||||||||
| Other income, net | (4 | ) | (4 | ) | (8 | ) | (9 | ) | ||||||||
| Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries | 281 | 236 | 715 | 679 | ||||||||||||
| Provision for income taxes | 102 | 82 | 256 | 240 | ||||||||||||
| Income before equity in earnings of unconsolidated subsidiaries | 179 | 154 | 459 | 439 | ||||||||||||
| Equity in earnings of unconsolidated subsidiaries, net of tax | — | — | — | 1 | ||||||||||||
| Net income | $ | 179 | $ | 154 | $ | 459 | $ | 440 | ||||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 0.85 | $ | 0.71 | $ | 2.17 | $ | 2.00 | ||||||||
| Diluted | 0.84 | 0.71 | 2.15 | 1.97 | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 210.4 | 216.0 | 211.6 | 220.5 | ||||||||||||
| Diluted | 212.0 | 218.2 | 213.3 | 222.9 | ||||||||||||
| Cash dividends declared per common share | $ | 0.34 | $ | 0.32 | $ | 1.02 | $ | 0.89 | ||||||||
|
A-1 |
||||||||||||||||
|
|
||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
As of |
||||||||
| (Unaudited, in millions except share and per share data) | ||||||||
|
|
|
|||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 383 | $ | 701 | ||||
| Accounts receivable: | ||||||||
| Trade, net | 546 | 585 | ||||||
| Other | 52 | 50 | ||||||
| Inventories | 207 | 212 | ||||||
| Deferred tax assets | 94 | 96 | ||||||
| Prepaid expenses and other current assets | 114 | 113 | ||||||
| Total current assets | 1,396 | 1,757 | ||||||
| Property, plant and equipment, net | 1,194 | 1,152 | ||||||
| Investments in unconsolidated subsidiaries | 14 | 13 | ||||||
| Goodwill | 2,983 | 2,980 | ||||||
| Other intangible assets, net | 2,685 | 2,677 | ||||||
| Other non-current assets | 583 | 573 | ||||||
| Non-current deferred tax assets | 134 | 131 | ||||||
| Total assets | $ | 8,989 | $ | 9,283 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 297 | $ | 265 | ||||
| Deferred revenue | 65 | 65 | ||||||
| Current portion of long-term obligations | 701 | 452 | ||||||
| Income taxes payable | 48 | 530 | ||||||
| Other current liabilities | 625 | 603 | ||||||
| Total current liabilities | 1,736 | 1,915 | ||||||
| Long-term obligations | 2,065 | 2,256 | ||||||
| Non-current deferred tax liabilities | 635 | 586 | ||||||
| Non-current deferred revenue | 1,402 | 1,449 | ||||||
| Other non-current liabilities | 833 | 814 | ||||||
| Total liabilities | 6,671 | 7,020 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
|
Preferred stock, |
— | — | ||||||
|
Common stock, |
2 | 2 | ||||||
| Additional paid-in capital | 1,433 | 1,631 | ||||||
| Retained earnings | 981 | 740 | ||||||
| Accumulated other comprehensive loss | (98 | ) | (110 | ) | ||||
| Total stockholders' equity | 2,318 | 2,263 | ||||||
| Total liabilities and stockholders' equity | $ | 8,989 | $ | 9,283 | ||||
|
A-2 |
||||||||
|
|
||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
|
For the Nine Months Ended |
||||||||
| (Unaudited, in millions) | ||||||||
| For the | ||||||||
| Nine Months Ended | ||||||||
|
|
||||||||
| 2012 | 2011 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 459 | $ | 440 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation expense | 154 | 148 | ||||||
| Amortization expense | 28 | 23 | ||||||
| Amortization of deferred revenue | (49 | ) | (49 | ) | ||||
| Employee stock-based compensation expense | 26 | 24 | ||||||
| Deferred income taxes | 58 | (361 | ) | |||||
| Other, net | (21 | ) | 12 | |||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | 42 | (12 | ) | |||||
| Other accounts receivable | (1 | ) | (15 | ) | ||||
| Inventories | 7 | (19 | ) | |||||
| Other current and non-current assets | (20 | ) | (21 | ) | ||||
| Other current and non-current liabilities | 23 | 35 | ||||||
| Trade accounts payable | 24 | (7 | ) | |||||
| Income taxes payable | (466 | ) | 382 | |||||
| Net cash provided by operating activities | 264 | 580 | ||||||
| Investing activities: | ||||||||
| Purchase of property, plant and equipment | (143 | ) | (148 | ) | ||||
| Purchase of intangible assets | (7 | ) | — | |||||
| Proceeds from disposals of property, plant and equipment | 6 | 2 | ||||||
| Net cash used in investing activities | (144 | ) | (146 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from senior unsecured notes | — | 500 | ||||||
| Repurchase of shares of common stock | (262 | ) | (425 | ) | ||||
| Dividends paid | (213 | ) | (183 | ) | ||||
| Proceeds from stock options exercised | 21 | 12 | ||||||
| Excess tax benefit on stock-based compensation | 16 | 9 | ||||||
| Deferred financing charges paid | (1 | ) | (3 | ) | ||||
| Other, net | (3 | ) | (2 | ) | ||||
| Net cash used in financing activities | (442 | ) | (92 | ) | ||||
| Cash and cash equivalents — net change from: | ||||||||
| Operating, investing and financing activities | (322 | ) | 342 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 4 | (6 | ) | |||||
| Cash and cash equivalents at beginning of period | 701 | 315 | ||||||
| Cash and cash equivalents at end of period | $ | 383 | $ | 651 | ||||
| Supplemental cash flow disclosures of non-cash investing and financing activities: | ||||||||
| Capital expenditures included in other current liabilities | $ | 60 | $ | 32 | ||||
| Dividends declared but not yet paid | 72 | 69 | ||||||
| Capital lease additions | 49 | — | ||||||
| Supplemental cash flow disclosures: | ||||||||
| Interest paid | $ | 68 | $ | 42 | ||||
| Income taxes paid | 650 | 198 | ||||||
|
A-3 |
||||||||
|
|
||||||||||||||||
| OPERATIONS BY OPERATING SEGMENT | ||||||||||||||||
|
For the Three and Nine Months Ended |
||||||||||||||||
| (Unaudited, in millions) | ||||||||||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Segment Results — Net sales | ||||||||||||||||
| Beverage Concentrates | $ | 303 | $ | 292 | $ | 888 | $ | 868 | ||||||||
| Packaged Beverages | 1,120 | 1,132 | 3,314 | 3,252 | ||||||||||||
| Latin America Beverages | 105 | 105 | 309 | 322 | ||||||||||||
| Net sales | $ | 1,528 | $ | 1,529 | $ | 4,511 | $ | 4,442 | ||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Segment Results — SOP | ||||||||||||||||
| Beverage Concentrates | $ | 198 | $ | 196 | $ | 552 | $ | 567 | ||||||||
| Packaged Beverages | 147 | 143 | 408 | 391 | ||||||||||||
| Latin America Beverages | 14 | 10 | 37 | 34 | ||||||||||||
| Total SOP | 359 | 349 | 997 | 992 | ||||||||||||
| Unallocated corporate costs | 47 | 82 | 189 | 230 | ||||||||||||
| Other operating expense (income), net | 4 | 6 | 8 | 9 | ||||||||||||
| Income from operations | 308 | 261 | 800 | 753 | ||||||||||||
| Interest expense, net | 31 | 29 | 93 | 83 | ||||||||||||
| Other income, net | (4 | ) | (4 | ) | (8 | ) | (9 | ) | ||||||||
| Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries | $ | 281 | $ | 236 | $ | 715 | $ | 679 | ||||||||
|
A-4 |
||||||||||||||||
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION
For the Three and Nine Months Ended
(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: Net sales and Segment Operating Profit are on a currency neutral basis.
Core Earnings: Core Earnings is defined as Reported Earnings
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 items excluded for the nine months ended
September 30, 2012 are (i) a separation-related foreign deferred tax
benefit and (ii) a depreciation adjustment associated with the
reassessment of a capital lease executed prior to the separation from
The tables below provide these reconciliations.
|
RECONCILIATION OF NET SALES AND SOP AS REPORTED TO AS ADJUSTED |
|||||||||||
|
For the Three Months Ended |
|||||||||||
| Beverage | Packaged |
Latin
America |
|||||||||
| Percent change | Concentrates | Beverages | Beverages | Total | |||||||
| Reported net sales | 4% | (1)% | —% | —% | |||||||
| Impact of foreign currency | —% | —% | 7% | —% | |||||||
| Net sales, as adjusted | 4% | (1)% | 7% | —% | |||||||
|
For the Three Months Ended |
|||||||||||
| Beverage | Packaged |
Latin
America |
|||||||||
| Percent change | Concentrates | Beverages | Beverages | Total | |||||||
| Reported segment operating profit | 1% | 3 | % | 40% | 3% | ||||||
| Impact of foreign currency | —% | 1 | % | 93% | 1% | ||||||
| Segment operating profit, as adjusted | 1% | 4 | % | 133% | 4% | ||||||
|
For the Nine Months Ended |
|||||||||||
| Beverage | Packaged |
Latin
America |
|||||||||
| Percent change | Concentrates | Beverages | Beverages | Total | |||||||
| Reported net sales | 2% | 2 | % | (4 | )% | 2% | |||||
| Impact of foreign currency | 1% | — | % | 8 | % | —% | |||||
| Net sales, as adjusted | 3% | 2 | % | 4 | % | 2% | |||||
|
For the Nine Months Ended |
|||||||||||
| Beverage | Packaged |
Latin
America |
|||||||||
| Percent change | Concentrates | Beverages | Beverages | Total | |||||||
| Reported segment operating profit | (3 | )% | 4 | % | 9% | 1% | |||||
| Impact of foreign currency | 1 | % | 1 | % | 45% | 1% | |||||
| Segment operating profit, as adjusted | (2 | )% | 5 | % | 54% | 2% | |||||
|
A-5 |
|||||||||||
| RECONCILIATION OF NET INCOME TO CORE EARNINGS | ||||||||||||
| (Unaudited, in millions except per share data) | ||||||||||||
|
For the Three Months Ended |
||||||||||||
| Reported | Mark to Market | Core | ||||||||||
| Net sales | $ | 1,528 | $ | — | $ | 1,528 | ||||||
| Cost of sales | 626 | 15 | 641 | |||||||||
| Gross profit | 902 | (15 | ) | 887 | ||||||||
| Selling, general and administrative expenses | 561 | 3 | 564 | |||||||||
| Depreciation and amortization | 29 | — | 29 | |||||||||
| Other operating expense (income), net | 4 | — | 4 | |||||||||
| Income from operations | 308 | (18 | ) | 290 | ||||||||
| Interest expense | 31 | — | 31 | |||||||||
| Interest income | — | — | — | |||||||||
| Other income, net | (4 | ) | — | (4 | ) | |||||||
| Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries | 281 | (18 | ) | 263 | ||||||||
| Provision for income taxes | 102 | (6 | ) | 96 | ||||||||
| Income before equity in earnings of unconsolidated subsidiaries | 179 | (12 | ) | 167 | ||||||||
| Equity in earnings of unconsolidated subsidiaries, net of tax | — | — | — | |||||||||
| Net income | $ | 179 | $ | (12 | ) | $ | 167 | |||||
| Earnings per common share: | ||||||||||||
| Diluted | $ | 0.84 | $ | (0.05 | ) | $ | 0.79 | |||||
|
A-6 |
||||||||||||
|
RECONCILIATION OF NET INCOME TO CORE EARNINGS - (Continued) |
||||||||||||
|
For the Three Months Ended |
||||||||||||
| Reported | Mark to Market | Core | ||||||||||
| Net sales | $ | 1,529 | $ | — | $ | 1,529 | ||||||
| Cost of sales | 672 | (9 | ) | 663 | ||||||||
| Gross profit | 857 | 9 | 866 | |||||||||
| Selling, general and administrative expenses | 559 | (2 | ) | 557 | ||||||||
| Depreciation and amortization | 31 | — | 31 | |||||||||
| Other operating expense (income), net | 6 | — | 6 | |||||||||
| Income from operations | 261 | 11 | 272 | |||||||||
| Interest expense | 30 | — | 30 | |||||||||
| Interest income | (1 | ) | — | (1 | ) | |||||||
| Other income, net | (4 | ) | — | (4 | ) | |||||||
| Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries | 236 | 11 | 247 | |||||||||
| Provision for income taxes | 82 | 4 | 86 | |||||||||
| Income before equity in earnings of unconsolidated subsidiaries | 154 | 7 | 161 | |||||||||
| Equity in earnings of unconsolidated subsidiaries, net of tax | — | — | — | |||||||||
| Net income | $ | 154 | $ | 7 | $ | 161 | ||||||
| Earnings per common share: | ||||||||||||
| Diluted | $ | 0.71 | $ | 0.03 | $ | 0.74 | ||||||
|
A-7 |
||||||||||||
|
RECONCILIATION OF NET INCOME TO CORE EARNINGS - (Continued) |
||||||||||||||||||||||||
|
For the Nine Months Ended |
||||||||||||||||||||||||
| Reported |
Mark to |
Depreciation |
Foreign |
Total |
Core | |||||||||||||||||||
| Net sales | $ | 4,511 | $ | — | $ | — | $ | — | $ | — | $ | 4,511 | ||||||||||||
| Cost of sales | 1,895 | 15 | (2 | ) | — | 13 | 1,908 | |||||||||||||||||
| Gross profit | 2,616 | (15 | ) | 2 | — | (13 | ) | 2,603 | ||||||||||||||||
| Selling, general and administrative expenses | 1,713 | 3 | — | — | 3 | 1,716 | ||||||||||||||||||
| Depreciation and amortization | 95 | — | (6 | ) | — | (6 | ) | 89 | ||||||||||||||||
| Other operating expense (income), net | 8 | — | — | — | — | 8 | ||||||||||||||||||
| Income from operations | 800 | (18 | ) | 8 | — | (10 | ) | 790 | ||||||||||||||||
| Interest expense | 94 | — | — | — | — | 94 | ||||||||||||||||||
| Interest income | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||
| Other income, net | (8 | ) | — | — | — | — | (8 | ) | ||||||||||||||||
| Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries | 715 | (18 | ) | 8 | — | (10 | ) | 705 | ||||||||||||||||
| Provision for income taxes | 256 | (6 | ) | 3 | 4 | 1 | 257 | |||||||||||||||||
| Income before equity in earnings of unconsolidated subsidiaries | 459 | (12 | ) | 5 | (4 | ) | (11 | ) | 448 | |||||||||||||||
| Equity in earnings of unconsolidated subsidiaries, net of tax | — | — | — | — | — | — | ||||||||||||||||||
| Net income | $ | 459 | $ | (12 | ) | $ | 5 | $ | (4 | ) | $ | (11 | ) | $ | 448 | |||||||||
| Earnings per common share: | ||||||||||||||||||||||||
| Diluted |
$ |
2.15 |
$ |
(0.05 | ) |
$ |
0.02 |
$ |
(0.02 | ) | $ | (0.05 | ) | $ | 2.10 | |||||||||
|
A-8 |
||||||||||||||||||||||||
|
RECONCILIATION OF NET INCOME TO CORE EARNINGS - (Continued) |
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For the Nine Months Ended |
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| Reported | Mark to Market | Core | ||||||||||
| Net sales | $ | 4,442 | $ | — | $ | 4,442 | ||||||
| Cost of sales | 1,881 | (14 | ) | 1,867 | ||||||||
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Gross profit |
2,561 | 14 | 2,575 | |||||||||
| Selling, general and administrative expenses | 1,704 | (2 | ) | 1,702 | ||||||||
| Depreciation and amortization | 95 | — | 95 | |||||||||
| Other operating expense (income), net | 9 | — | 9 | |||||||||
| Income from operations | 753 | 16 | 769 | |||||||||
| Interest expense | 85 | — | 85 | |||||||||
| Interest income | (2 | ) | — | (2 | ) | |||||||
| Other income, net | (9 | ) | — | (9 | ) | |||||||
| Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries | 679 | 16 | 695 | |||||||||
| Provision for income taxes | 240 | 6 | 246 | |||||||||
| Income before equity in earnings of unconsolidated subsidiaries | 439 | 10 | 449 | |||||||||
| Equity in earnings of unconsolidated subsidiaries, net of tax | 1 | — | 1 | |||||||||
| Net income | $ | 440 | $ | 10 | $ | 450 | ||||||
| Earnings per common share: | ||||||||||||
| Diluted | $ | 1.97 | $ | 0.05 | $ | 2.02 | ||||||
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A-9 |
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