BURLINGTON, Mass. and
PLANO, Texas, Nov. 7, 2018 /PRNewswire/ -- Keurig Dr Pepper
Inc. (NYSE: KDP) today reported financial results for the third
quarter ended September 30,
2018. During the quarter, the company successfully completed
the merger of Keurig Green Mountain and Dr Pepper Snapple Group
("the merger"), effective July 9,
2018.
GAAP performance in the third quarter primarily reflected the
impact of the merger, with net sales advancing 140% versus year-ago
to $2.7 billion and operating income
increasing 45% to $344 million.
Earnings per diluted share ("diluted EPS") of $0.11 in the third quarter of 2018 also reflected
the impact of the merger and compared to diluted EPS of
$0.14 in the year-ago
quarter.
On an Adjusted pro forma1 basis, net sales in the
third quarter grew 2.9%, while Adjusted pro forma operating income
increased 14.3%, or 240 basis points on a percentage of Adjusted
pro forma net sales basis. Adjusted pro forma diluted EPS
grew 43% to $0.30, compared to
$0.21 in the year-ago
period.
Commenting on the announcement, Keurig Dr Pepper CEO
Bob Gamgort stated, "We're off to a
great start as a combined company. Our new organization is
working well and delivered a strong quarter, with both top- and
bottom-line growth and market share strength across our major
categories. We also repaid approximately $550 million of debt since the merger
close. We remain confident in our outlook for 2018 and the
long-term value creation framework we shared at the time of the
announcement of the merger."
During the quarter, KDP completed the acquisition of Big Red, a
strong regional CSD2 brand, and entered into a
definitive agreement to acquire Core®, a rapidly-growing
brand that participates in the premium enhanced water
segment. The Company also added Forto®, a
rapidly-growing brand of coffee energy shots, to its partner
portfolio and expanded its distribution relationship with
Peet's®, a premium specialty coffee company, for the
expansion of the Peet's RTD Iced Espresso line. In late
October, KDP entered into a long-term partnership with Danone
Waters of America to sell, distribute and merchandise
evian®, the leading global brand of premium natural
spring water, across the U.S.
Third Quarter Consolidated Results
Net sales in the
third quarter of 2018 more than doubled to $2.73 billion, compared to $1.14 billion in the year-ago quarter, primarily
reflecting the impact of the merger. Adjusted pro forma net
sales of $2.86 billion in the third
quarter of 2018 grew 2.9%, driven by volume/mix growth of 3.6%,
partially offset by unfavorable foreign currency translation of
0.5% and modestly lower net realized price of 0.2%.
Retail market performance, as measured by IRI, remained strong
in the quarter. The Company's CSD portfolio registered market
share growth in both units and dollars, driven by strong
performance of Dr Pepper and Canada Dry. Likewise, the
coffee portfolio also performed well in the quarter, driven by
single-serve pod category unit growth, combined with an increase in
market share of pods manufactured by KDP.
Operating income increased 45% to $344
million, compared to $238
million in the year-ago period, primarily reflecting the
impact of the merger, partially offset by the unfavorable
year-over-year impact of items affecting comparability.
Adjusted pro forma operating income advanced 14.3% to $697 million in the third quarter of 2018,
compared to $610 million in the
year-ago period. This performance primarily reflected the
benefit of the net sales growth, strong productivity and lower
marketing expense due to timing, despite inflation in input costs
and logistics. On a percentage of Adjusted pro forma net
sales basis, Adjusted operating income grew 240 basis points to
24.4% in the third quarter of 2018, compared to 22.0% in the
year-ago period.
Net income increased approximately 28% to $148 million, compared to $116 million in the year-ago period, largely
reflecting the impact of the merger, partially offset by the
unfavorable year-over-year impact of items affecting
comparability. Adjusted pro forma net income advanced
39% to $414 million, compared to
$297 million in the year-ago period,
primarily reflecting the growth in Adjusted pro forma operating
income and a significantly lower effective tax rate, due to the Tax
Cuts and Jobs Act, as well as a cash distribution from BODYARMOR,
in connection with KDP's interest in it as a unitholder.
Adjusted diluted EPS increased 43% to $0.30 per diluted share, compared to $0.21 per diluted share in the year-ago
period.
Since the merger close, KDP repaid approximately $550 million of debt, due to strong operating
profit results and effective working capital management.
1 Adjusted pro forma metrics used in this release are
non-GAAP financial measures and assume the merger occurred on
December 31, 2016 and adjusts for
other items affecting comparability. See reconciliation of
GAAP results to Pro forma results and Adjusted pro forma results in
the accompanying financial tables.
2 Refers to carbonated soft drinks.
Third Quarter Segment Results
Beverage Concentrates
Net sales for Beverage
Concentrates in the third quarter of 2018 totaled $317 million. Adjusted pro forma net sales
advanced 3.1% to $331 million,
compared to $321 in the year-ago
period, reflecting the benefits of increased volume/mix of 0.7% and
higher net price realization of 2.7%, partially offset by
unfavorable currency translation of 0.3%.
The Adjusted pro forma net sales growth in the quarter was
fueled by higher net pricing across the portfolio, as well as
shipment volume growth of 0.5%. The increase in net sales was
driven by Dr Pepper and A&W, partially offset by Sunkist, while
the increase in shipment volume was driven by Canada Dry, due to
product innovation and continued growth in the ginger ale segment,
as well as growth of Crush and Hawaiian Punch, partially offset by
Dr Pepper and Sunkist.
Bottler case sales volume increased 0.8%, driven by growth in
Canada Dry, partially offset by a
decline in Sunkist. Dr Pepper case sales volume was even with
year-ago in the quarter, with growth in regular offset by a decline
in diet. Fountain foodservice volume increased 1.7% in the
quarter, led by Dr Pepper and Hawaiian Punch.
Operating income for Beverage Concentrates in the third quarter
of 2018 was $193 million.
Adjusted pro forma operating income of $204
million was even with year-ago, primarily reflecting the
benefit of the net sales growth offset by higher SG&A, largely
due to increased performance-based compensation and inflation in
input costs and logistics.
Packaged Beverages
Net sales for Packaged
Beverages in the third quarter of 2018 totaled $1,238 million. Adjusted pro forma net
sales advanced 4.9% to $1,336
million, compared to $1,273
million in the year-ago period, reflecting higher volume/mix
of 5.7%, partially offset by lower net price realization of 0.7%
and unfavorable foreign currency translation of 0.1%.
The Adjusted pro forma net sales growth in the quarter was
fueled by shipment volume growth of 4.5%, due to increases in
contract manufacturing and growth in Canada Dry, BODYARMOR, Core and Bai, partially
offset by lower shipment volume of 7UP and Dr
Pepper.
Operating income for Packaged Beverages in the third quarter of
2018 totaled $61 million.
Adjusted pro forma operating income declined 16% to $164 million, compared to $195 million in the year-ago period. This
performance reflected the strong growth in Adjusted pro forma net
sales and productivity, more than offset by inflation in input
costs and logistics not yet fully covered by pricing actions taken
during the quarter. Also impacting the performance was
investment behind the Company's front-line sales, delivery and
merchandising workforce.
Latin America Beverages
Net sales for Latin
America Beverages in the third quarter of 2018 totaled $124 million. Adjusted pro forma net sales
increased 2.3% to $136 million,
compared to $133 million in the
year-ago period, reflecting higher net price realization of 8.7%,
partially offset by lower volume/mix of 0.6% and unfavorable
currency translation of 5.8%.
Operating income for Latin America Beverages in the third
quarter of 2018 totaled $15
million. Adjusted pro forma operating income more than
doubled in the third quarter of 2018 to $27
million, compared to $11
million in the year-ago period. This performance
reflected the benefit of the Adjusted pro forma net sales growth
and the favorable impact of comparison to the prior year write-off
of prepaid resin inventory, partially offset by inflation in input
costs and logistics.
Coffee Systems
Net sales for Coffee Systems
were $1,053 million in the third
quarter of 2018, compared to $1,140
million in the year-ago period which included an extra
shipping week. Adjusted pro forma net sales grew 0.4%
to $1,053 million in the third
quarter of 2018, driven by volume/mix growth of 2.5%, almost
entirely offset by lower net price realization of 1.7%, which
continued to moderate significantly on a sequential quarterly
basis, and unfavorable foreign currency translation of
0.4%.
The net sales growth in the third quarter was fueled by volume
growth of approximately 3% for pods and 8% for brewers, as well as
higher brewer pricing due to innovation, partially offset by the
aforementioned strategic pod pricing investment, which continued to
moderate, as expected.
During the third quarter of 2018, the Coffee Systems segment
added Tim Horton's®, an iconic
coffee brand in Canada, and
Panera®, a successful bakery-café brand, as new Keurig system
partners. In addition, KDP launched its new coffeehouse
brewers—namely the K-Café and the K-Latte—enabling consumers to
make lattes and cappuccinos at home using any K-Cup pod. The
Company also launched its updated K-Mini platform, with new
features and a modern, sleek design. The new innovations,
designed to drive household penetration of the Keurig system, are
performing well in the market, with each of the new brewers
receiving strong consumer reviews.
Operating income for Coffee Systems in the third quarter of 2018
advanced 16% to $334 million,
compared to $288 million in the
year-ago period. Adjusted pro forma operating income
advanced 22% to $380 million,
compared to $312 million in the
year-ago period, primarily reflecting the net sales performance,
strong productivity and lower marketing expense due to timing,
despite inflation in input costs and logistics.
KDP Adjusted Pro forma Outlook
The Company's outlook
for Adjusted pro forma diluted EPS in 2018 remains unchanged in the
range of $1.02 to $1.07, after the impact of preliminary Purchase
Price Accounting adjustments currently estimated at $0.04 per diluted share.
In addition, KDP continues to expect merger synergies totaling
$600 million over the 2019-2021
period, with $200 million in savings
expected each year, as well as ongoing productivity across the
business. The Company also continues to expect significant cash
flow generation and rapid deleveraging, with a targeted leverage
ratio below 3.0x in two to three years from the closing of the
merger. Finally, KDP continues to expect to achieve average
annualized growth of 15-17% in Adjusted pro forma diluted EPS from
2018 to 2021.
Investor Contacts:
Maria
Sceppaguercio
Keurig Dr Pepper
T: 781-418-8136 / maria.sceppaguercio@keurig.com
Steve Alexander
Keurig Dr Pepper
T: 972-673-6769 / steve.alexander@dpsg.com
Media Contact:
Katie
Gilroy
Keurig Dr Pepper
T: 781-418-3345 / katie.gilroy@keurig.com
ABOUT KEURIG DR PEPPER
Keurig Dr Pepper (KDP) is a
leading coffee and beverage company in North America, with annual revenue in excess
of $11 billion. KDP holds leadership
positions in soft drinks, specialty coffee and tea, water, juice
and juice drinks and mixers, and markets the #1 single serve coffee
brewing system in the U.S. The Company maintains an unrivaled
distribution system that enables its portfolio of more than 125
owned, licensed and partner brands to be available nearly
everywhere people shop and consume beverages. With a wide range of
hot and cold beverages that meet virtually any consumer need, KDP
key brands include Keurig®, Dr Pepper®, Green Mountain Coffee
Roasters®, Canada Dry®, Snapple®, Bai®, Mott's® and The Original
Donut Shop®. The Company employs more than 25,000 employees and
operates more than 120 offices, manufacturing plants, warehouses
and distribution centers across North America. For more
information, visit www.keurigdrpepper.com.
FORWARD LOOKING STATEMENTS
Certain statements
contained herein are "forward-looking statements" within the
meaning of applicable securities laws and regulations. These
forward-looking statements can generally be identified by the use
of words such as "anticipate," "expect," "believe," "could,"
"estimate," "feel," "forecast," "intend," "may," "plan,"
"potential," "project," "should," "will," "would," and similar
words, phrases or expressions and variations or negatives of these
words, although not all forward-looking statements contain these
identifying words. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain, such as
statements regarding the estimated or anticipated future results of
the combined company following the combination of Keurig Green
Mountain, Inc. ("KGM") and Dr Pepper Snapple Group, Inc. ("DPSG"
and such combination, the "transaction"), the anticipated benefits
of the transaction, including estimated synergies and cost savings,
and other statements that are not historical facts. These
statements are based on the current expectations of our management
and are not predictions of actual performance.
These forward-looking statements are subject to a number of
risks and uncertainties regarding the combined company's business
and the combination and actual results may differ materially. These
risks and uncertainties include, but are not limited to: (i) the
impact the significant additional debt incurred in connection with
the transaction may have on our ability to operate our combined
business, (ii) risks relating to the integration of the KGM and DPS
operations, products and employees into the combined company and
assumption of certain potential liabilities of KGM and the
possibility that the anticipated synergies and other benefits of
the combination, including cost savings, will not be realized or
will not be realized within the expected timeframe, and (iii) risks
relating to the combined businesses and the industries in which our
combined company operates. These risks and uncertainties, as well
as other risks and uncertainties, are more fully discussed in the
Company's filings with the SEC, including our Current Report on
Form 8-K filed with the SEC on July 9,
2018, and our subsequent filings with the SEC. While the
lists of risk factors presented here and in our public filings are
considered representative, no such list should be considered to be
a complete statement of all potential risks and uncertainties. Any
forward-looking statement made herein speaks only as of the date of
this document. We are under no obligation to, and expressly
disclaim any obligation to, update or alter any forward-looking
statements, whether as a result of new information, subsequent
events or otherwise, except as required by applicable laws or
regulations.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
On July 9, 2018
(the "Merger Date"), Maple Parent Holdings Corp. ("Maple"), a
Delaware corporation and the
parent entity of Keurig Green Mountain, Inc. ("Keurig") completed
its merger (the "Transaction") with a wholly owned subsidiary of Dr
Pepper Snapple Group Inc. ("DPS"), at which time Maple became a
wholly owned subsidiary of DPS and DPS changed its name to "Keurig
Dr Pepper Inc." ("KDP" or the "Company").
The following unaudited pro forma condensed combined financial
information (the "financial information") is presented to
illustrate the estimated effects of the Transaction as if it had
been consummated on December 31,
2016. The unaudited pro forma condensed combined statements
of income by quarter for 2017 and for the first two quarters of
2018 combines the historical financial statements of DPS and Maple
after giving effect to the Transaction and reflects the
assumptions, reclassifications and adjustments described in the
accompanying notes to this financial information. Refer to the
Summary of Reclassifications and Summary of Pro Forma Adjustments
in the attached schedules for details of the reclassifications and
adjustments applied to the historical financial statements of DPS
and of Maple.
The financial information was prepared using the acquisition
method of accounting, which requires, among other things, that
assets acquired and liabilities assumed in a business combination
be recognized at their fair values as of the completion of the
acquisition. We utilized estimated fair values at the Merger Date
for the preliminary allocation of consideration to the net tangible
and intangible assets acquired and liabilities assumed. During the
measurement period, we will continue to obtain information to
assist in determining the fair value of net tangible and intangible
assets acquired and liabilities assumed, which may differ
materially from these preliminary estimates. The historical
consolidated financial statements have been adjusted in the
accompanying financial information to give effect to unaudited pro
forma events that are (1) directly attributable to the transaction,
(2) factually supportable, and (3) are expected to have a
continuing impact on the results of operations of the combined
company.
The financial information has been prepared based upon currently
available information and assumptions deemed appropriate by the
Company's management. This financial information is not necessarily
indicative of what our results of operations actually would have
been had the Transaction been completed as of December 31, 2016. In addition, the financial
information is not indicative of future results or current
financial conditions and does not reflect any anticipated
synergies, operating efficiencies, cost savings or any integration
costs that may result from the Transaction. The financial
information should be read in conjunction with historical financial
statements and accompanying notes filed with the Securities and
Exchange Commission.
NON-GAAP FINANCIAL MEASURES
This release includes
certain non-GAAP financial measures including Adjusted pro forma
net sales, Adjusted pro forma operating income, and Adjusted
diluted EPS, which differ from results using U.S. Generally
Accepted Accounting Principles (GAAP). These non-GAAP financial
measures should be considered as supplements to the GAAP reported
measures, should not be considered replacements for, or superior
to, the GAAP measures and may not be comparable to similarly named
measures used by other companies. Non-GAAP financial measures
typically exclude certain charges, [including one-time costs
related to the Transaction and integration activities,] which are
not expected to occur routinely in future periods. The Company uses
non-GAAP financial measures internally to focus management on
performance excluding these special charges to gauge our business
operating performance, and to provide a meaningful comparison of
the Company's performance to periods prior to the Transaction.
Management believes this information is helpful to investors
because it increases transparency and assists investors in
understanding the underlying performance of the Company and in the
analysis of ongoing operating trends. Additionally, management
believes that non-GAAP financial measures are frequently used by
analysts and investors in their evaluation of companies, and its
continued inclusion provides consistency in financial reporting and
enables analysts and investors to perform meaningful comparisons of
past, present and future operating results. The most directly
comparable GAAP financial measures and reconciliations to non-GAAP
financial measures are set forth in the appendix to this
presentation and included in the Company's filings with the
SEC.
See the attached schedules for the supplemental financial data
and corresponding reconciliations of KDP Adjusted pro forma net
sales, Adjusted pro forma operating income, and Adjusted diluted
EPS.
KEURIG DR PEPPER
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
For
the Third Quarter and First Nine Months of 2018
and 2017
|
(Unaudited)
|
|
|
Third
Quarter
|
|
First Nine
Months
|
|
September
30,
|
|
September
30,
|
(in millions,
except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net
sales
|
$
|
2,732
|
|
|
$
|
1,140
|
|
|
$
|
4,629
|
|
|
$
|
3,056
|
|
Cost of
sales
|
1,371
|
|
|
585
|
|
|
2,305
|
|
|
1,571
|
|
Gross
profit
|
1,361
|
|
|
555
|
|
|
2,324
|
|
|
1,485
|
|
Selling, general and
administrative expenses
|
1,025
|
|
|
318
|
|
|
1,636
|
|
|
852
|
|
Other operating
income, net
|
(8)
|
|
|
(1)
|
|
|
(2)
|
|
|
—
|
|
Income from
operations
|
344
|
|
|
238
|
|
|
690
|
|
|
633
|
|
Interest
expense
|
172
|
|
|
28
|
|
|
221
|
|
|
76
|
|
Interest expense -
related party
|
—
|
|
|
25
|
|
|
51
|
|
|
75
|
|
Loss on early
extinguishment of debt
|
11
|
|
|
2
|
|
|
13
|
|
|
54
|
|
Other (income)
expense, net
|
(33)
|
|
|
20
|
|
|
(28)
|
|
|
88
|
|
Income before
provision for income taxes
|
194
|
|
|
163
|
|
|
433
|
|
|
340
|
|
Provision for income
taxes
|
46
|
|
|
46
|
|
|
110
|
|
|
102
|
|
Net
income
|
148
|
|
|
117
|
|
|
323
|
|
|
238
|
|
Net income
attributable to employee redeemable non-controlling interest and
mezzanine equity awards
|
—
|
|
|
1
|
|
|
3
|
|
|
3
|
|
Net income
attributable to KDP
|
$
|
148
|
|
|
$
|
116
|
|
|
$
|
320
|
|
|
$
|
235
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
|
$
|
0.15
|
|
|
$
|
0.33
|
|
|
$
|
0.30
|
|
Diluted
|
0.11
|
|
|
0.14
|
|
|
0.32
|
|
|
0.29
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,361.8
|
|
|
790.5
|
|
|
983.0
|
|
|
790.5
|
|
Diluted
|
1,373.6
|
|
|
790.5
|
|
|
994.1
|
|
|
790.5
|
|
KEURIG DR PEPPER
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
As of September
30, 2018 and December 31, 2017
|
(Unaudited)
|
|
|
September
30,
|
|
December
31,
|
(in millions,
except share and per share data)
|
2018
|
|
2017
|
Assets
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
94
|
|
|
$
|
90
|
|
Restricted cash and
restricted cash equivalents
|
18
|
|
|
5
|
|
Trade accounts
receivable, net
|
1,196
|
|
|
483
|
|
Inventories
|
720
|
|
|
384
|
|
Prepaid expenses and
other current assets
|
357
|
|
|
94
|
|
Total current
assets
|
2,385
|
|
|
1,056
|
|
Property, plant and
equipment, net
|
2,345
|
|
|
790
|
|
Investments in
unconsolidated subsidiaries
|
193
|
|
|
97
|
|
Goodwill
|
19,291
|
|
|
9,819
|
|
Other intangible
assets, net
|
24,436
|
|
|
3,834
|
|
Other non-current
assets
|
315
|
|
|
121
|
|
Deferred tax
assets
|
93
|
|
|
27
|
|
Total
assets
|
$
|
49,058
|
|
|
$
|
15,744
|
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
2,229
|
|
|
$
|
1,580
|
|
Accrued
expenses
|
1,231
|
|
|
201
|
|
Structured
payables
|
432
|
|
|
—
|
|
Short-term borrowings
and current portion of long-term obligations
|
1,765
|
|
|
219
|
|
Current portion of
capital lease and financing obligations
|
25
|
|
|
6
|
|
Income taxes
payable
|
11
|
|
|
3
|
|
Other current
liabilities
|
274
|
|
|
9
|
|
Total current
liabilities
|
5,967
|
|
|
2,018
|
|
Long-term
obligations
|
14,275
|
|
|
3,064
|
|
Long-term
obligations, related party
|
—
|
|
|
1,815
|
|
Capital lease and
financing obligations, less current
|
305
|
|
|
97
|
|
Deferred tax
liabilities
|
5,974
|
|
|
1,031
|
|
Other non-current
liabilities
|
244
|
|
|
56
|
|
Total
liabilities
|
26,765
|
|
|
8,081
|
|
Commitments and
contingencies
|
|
|
|
Employee redeemable
non-controlling interest and mezzanine equity awards
|
—
|
|
|
265
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.01 par value, 15,000,000 shares authorized, no shares
issued
|
—
|
|
|
—
|
|
Common stock, $0.01
par value, 2,000,000,000 shares authorized, 1,389,090,915 and
790,478,141 shares issued and outstanding as of September 30, 2018
and December 31, 2017, respectively
|
14
|
|
|
8
|
|
Additional paid-in
capital
|
21,020
|
|
|
6,377
|
|
Retained
earnings
|
1,122
|
|
|
914
|
|
Accumulated other
comprehensive income
|
137
|
|
|
99
|
|
Total stockholders'
equity
|
22,293
|
|
|
7,398
|
|
Total liabilities
and stockholders' equity
|
$
|
49,058
|
|
|
$
|
15,744
|
|
KEURIG DR PEPPER
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For The First Nine
Months of 2018 and 2017
|
(Unaudited)
|
|
|
First Nine
Months
|
(in
millions)
|
2018
|
|
2017
|
Operating
activities:
|
|
|
|
Net income
|
$
|
323
|
|
|
$
|
238
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
expense
|
150
|
|
|
109
|
|
Amortization
expense
|
144
|
|
|
85
|
|
Provision for sales
returns
|
38
|
|
|
38
|
|
Deferred income
taxes
|
(117)
|
|
|
16
|
|
Deferred
compensation
|
21
|
|
|
36
|
|
Loss on early
extinguishment of debt
|
13
|
|
|
55
|
|
Gain on step
acquisition of unconsolidated subsidiaries
|
(6)
|
|
|
—
|
|
Unrealized gain or
loss on foreign currency
|
7
|
|
|
11
|
|
Unrealized gain or
loss on derivatives
|
(6)
|
|
|
35
|
|
Other, net
|
33
|
|
|
41
|
|
Changes in assets and
liabilities, net of effects of acquisition:
|
|
|
|
Trade accounts
receivable
|
48
|
|
|
(9)
|
|
Inventories
|
91
|
|
|
(39)
|
|
Income taxes
receivable and payables, net
|
34
|
|
|
(84)
|
|
Other current and non
current assets
|
(108)
|
|
|
(13)
|
|
Accounts payable and
accrued expenses
|
391
|
|
|
796
|
|
Other current and non
current liabilities
|
7
|
|
|
6
|
|
Net change in
operating assets and liabilities
|
463
|
|
|
657
|
|
Net cash provided by
operating activities
|
1,063
|
|
|
1,321
|
|
Investing
activities:
|
|
|
|
Acquisitions of
business
|
(19,124)
|
|
|
—
|
|
Cash acquired in
acquisitions
|
150
|
|
|
—
|
|
Issuance of related
party note receivable
|
(6)
|
|
|
(6)
|
|
Investments in
unconsolidated subsidiaries
|
(23)
|
|
|
250
|
|
Proceeds from capital
distributions from investments in unconsolidated
subsidiaries
|
36
|
|
|
—
|
|
Purchases of
property, plant and equipment
|
(104)
|
|
|
(45)
|
|
Other, net
|
1
|
|
|
2
|
|
Net cash (used in)
provided by investing activities
|
(19,070)
|
|
|
201
|
|
Financing
activities:
|
|
|
|
Proceeds from
issuance of common stock private placement
|
9,000
|
|
|
—
|
|
Proceeds from
unsecured credit facility
|
1,900
|
|
|
—
|
|
Proceeds from senior
unsecured notes
|
8,000
|
|
|
—
|
|
Proceeds from term
loan
|
2,700
|
|
|
1,200
|
|
Net Issuance of
Commercial Paper
|
1,386
|
|
|
—
|
|
Proceeds from
structured payables
|
432
|
|
|
—
|
|
Repayment of
unsecured credit facility
|
(1,900)
|
|
|
—
|
|
Net repayment on line
of credit
|
—
|
|
|
(200)
|
|
Repayment of term
loan
|
(3,363)
|
|
|
(2,144)
|
|
Payments on capital
leases
|
(20)
|
|
|
(14)
|
|
Deferred financing
charges paid
|
(49)
|
|
|
(5)
|
|
Proceeds from stock
options exercised
|
3
|
|
|
—
|
|
Cash contributions
(distributions) from (to) redeemable NCI shareholders
|
19
|
|
|
(1)
|
|
Cash Dividends
paid
|
(23)
|
|
|
(46)
|
|
Cross Currency
Swap
|
—
|
|
|
(78)
|
|
Other, net
|
(1)
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
18,084
|
|
|
(1,288)
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents — net
change from:
|
|
|
|
Operating, investing
and financing activities
|
77
|
|
|
234
|
|
Effect of exchange
rate changes on cash, cash equivalents, restricted cash and
restricted cash equivalents
|
(50)
|
|
|
18
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at
beginning of period
|
95
|
|
|
97
|
|
Cash, cash
equivalents, restricted cash and restricted cash equivalents at end
of period
|
$
|
122
|
|
|
$
|
349
|
|
Unaudited Pro Forma Financial
Information
On January 29, 2018, Dr Pepper Snapple Group, Inc. ("DPS")
entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among DPS, Maple Parent Holdings Corp. ("Maple")
and Salt Merger Sub, Inc. ("Merger Sub"), whereby Merger Sub will
be merged with and into Maple, with Maple surviving the merger as a
wholly-owned subsidiary of DPS (the "Transaction"). The Transaction
was consummated on July 9, 2018 (the "Merger Date"), at which
time DPS changed its name to "Keurig Dr Pepper Inc.".
Immediately prior to the consummation of the Transaction (the
"Effective Time"), each share of common stock of Maple issued
and outstanding was converted into the right to receive a number of
fully paid and nonassessable shares of common stock of Merger Sub
determined pursuant to an exchange ratio set forth in the Merger
Agreement (the "Acquisition Shares"). As a result of the
Transaction, the stockholders of Maple as of immediately prior to
the Effective Time own approximately 87% of DPS common stock
following the closing and the stockholders of DPS as of immediately
prior to the Effective Time own approximately 13% on a fully
diluted basis. Upon consummation of the Transaction, DPS declared a
special cash dividend equal to $103.75 per share, subject to any withholding of
taxes required by law, payable to holders of its common stock as of
the record date for the special dividend.
The following unaudited pro forma condensed combined financial
information (the "financial information") is presented to
illustrate the estimated effects of the Transaction. The unaudited
pro forma condensed combined statements of income for the third
quarter of 2018 are based on the actual third quarter financial
statements of Keurig Dr Pepper Inc. with the inclusion of the 8
days of activity of DPS from July 1,
2018 through July 9, 2018,
after giving effect to the Transaction and the assumptions,
reclassifications and adjustments described in the accompanying
notes to this financial information. The unaudited pro forma
condensed combined statements of income are presented as if the
Transaction had been consummated on December
31, 2016, and combines the historical results of DPS and
Maple Parent. Refer to the Summary
of Pro Forma Adjustments and Summary of Reclassifications below for
details of the reclassifications and adjustments applied to the
historical financial statements of DPS and of Maple.
The financial information was prepared using the acquisition
method of accounting, which requires, among other things, that
assets acquired and liabilities assumed in a business combination
be recognized at their fair values as of the completion of the
acquisition. We utilized estimated fair values at the Merger Date
for the preliminary allocation of consideration to the net tangible
and intangible assets acquired and liabilities assumed. During the
measurement period, we will continue to obtain information to
assist in determining the fair value of the net tangible and
intangible assets acquired and liabilities assumed, which may
differ materially from these preliminary estimates. The historical
consolidated financial statements have been adjusted in the
accompanying financial information to give effect to unaudited pro
forma events that are (1) directly attributable to the transaction,
(2) factually supportable, and (3) are expected to have a
continuing impact on the results of operations of the combined
company.
The financial information has been prepared based upon currently
available information and assumptions deemed appropriate by the
Company's management. This financial information is not necessarily
indicative of what our results of operations actually would have
been had the Transaction been completed as of December 31, 2016. In addition, the financial
information is not indicative of future results or current
financial conditions and does not reflect any anticipated
synergies, operating efficiencies, cost savings or any integration
costs that may result from the Transaction. The financial
information should be read in conjunction with historical financial
statements and accompanying notes filed with the Securities and
Exchange Commission.
Summary of Pro Forma Adjustments
Pro forma adjustments included in the Pro Forma Condensed
Combined Statements of Income are as follows:
- A decrease in Net sales to remove the historical deferred
revenue associated with DPS' arrangements with PepsiCo, Inc. and
The Coca-Cola Company, which were eliminated in the fair value
adjustments for DPS as part of purchase price accounting.
- An increase in Net sales to remove the historical amortization
of certain capitalized upfront customer incentive program payments.
These were eliminated in the fair value adjustments for DPS as
these upfront payments were revalued within the customer
relationship intangible assets recorded in purchase price
accounting.
- Adjustment to remove the impact of the step-up of inventory
recorded in purchase price accounting.
- Adjustments to Selling, general and administrative ("SG&A")
expenses due to changes in amortization as a result of the fair
value adjustments for DPS' intangible assets with definite lives as
part of purchase price accounting.
- Adjustments to SG&A expenses due to changes in depreciation
as a result of the fair value adjustments for DPS' property, plant
and equipment as part of purchase price accounting.
- A decrease to SG&A expenses for both DPS and Maple to
remove non-recurring transaction costs as a result of the
Transaction.
- Removal of the Interest expense - related party caption for
Maple, as the related party debt was capitalized into Additional
paid-in capital immediately prior to the Transaction.
- Adjustments to Interest expense to remove the historical
amortization of deferred debt issuance costs, discounts and
premiums and to record incremental amortization as a result of the
fair value adjustments for DPS' senior unsecured notes as part of
purchase price accounting.
- Adjustments to Interest expense to record incremental interest
expense and amortization of deferred debt issuance costs for
borrowings related to the Transaction.
- Removal of the Net income attributable to employee redeemable
non-controlling interest and mezzanine equity awards caption as the
Maple non-controlling interest was eliminated to reflect the
capital structure of the combined company.
- Adjustments to SG&A expenses to remove accelerated
stock-based compensation expense as a result of the
Transaction.
- As a result of the change in year-end for KGM, the Company has
removed the 53rd week from its pro forma condensed combined
statement of income as it would not be representative of the
Company if the merger had occurred on December 31, 2016.
Summary of Reclassifications
Reclassifications included in the Pro Forma Condensed Combined
Statements of Income for the third quarter and first nine months of
2017 are as follows:
- Foreign currency transaction gains and losses were reclassified
from Cost of sales and SG&A expenses in the historical DPS
Statements of Income to Other (income) expense, net.
- Gains and losses related to impairment and sales of fixed
assets were reclassified from Cost of sales in the historical Maple
Statements of Income to Other operating income, net.
- Transportation and warehousing expenses were reclassified from
Transportation and warehousing expenses in the historical Maple
Statements of Income to SG&A expenses.
- Transaction costs were reclassified from Transaction costs in
the historical Maple Statements of Income to SG&A
expenses.
- Restructuring expenses were reclassified from Restructuring
expenses in the historical Maple Statements of Income to SG&A
expenses.
- Depreciation and amortization expenses were reclassified from
Depreciation and amortization in the historical DPS Statements of
Income to SG&A expenses.
- Interest income was reclassified from Interest income in the
historical DPS Statements of Income to Other (income) expense,
net.
- Gains and losses on derivative instruments were reclassified
from (Gain) loss on financial instruments, net in the historical
Maple Statements of Income to either Cost of goods sold, Interest
expense or Other (income) expense, net in order to match the income
statement presentation to the underlying nature of the
transaction.
Keurig Dr Pepper
Inc.
|
Pro Forma
Condensed Combined Statement of Income
|
For the Third
Quarter of 2018
|
(Unaudited)
|
|
(in millions,
except per share data)
|
Reported
KDP(1)
|
|
DPS
July 1 - July
8(2)
|
|
Reclassifications(3)
|
|
Pro Forma
Adjustments(4)
|
|
Pro Forma
Combined
|
Net
sales
|
$
|
2,732
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
2,856
|
|
Cost of
sales
|
1,371
|
|
|
58
|
|
|
—
|
|
|
(127)
|
|
|
1,302
|
|
Gross
profit
|
1,361
|
|
|
67
|
|
|
—
|
|
|
126
|
|
|
1,554
|
|
Selling, general and
administrative expenses
|
1,025
|
|
|
237
|
|
|
2
|
|
|
(265)
|
|
|
999
|
|
Other operating
income, net
|
(8)
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(10)
|
|
Income from
operations
|
344
|
|
|
(170)
|
|
|
—
|
|
|
391
|
|
|
565
|
|
Interest
expense
|
172
|
|
|
4
|
|
|
—
|
|
|
2
|
|
|
178
|
|
Interest expense -
related party
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Loss on early
extinguishment of debt
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
Other (income)
expense, net
|
(33)
|
|
|
(1)
|
|
|
—
|
|
|
(3)
|
|
|
(37)
|
|
Income before
provision for income taxes
|
194
|
|
|
(173)
|
|
|
—
|
|
|
392
|
|
|
413
|
|
Provision for income
taxes
|
46
|
|
|
(55)
|
|
|
—
|
|
|
121
|
|
|
112
|
|
Net
income
|
148
|
|
|
(118)
|
|
|
—
|
|
|
271
|
|
|
301
|
|
Net income
attributable to employee redeemable non-controlling interest and
mezzanine equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
attributable to KDP
|
$
|
148
|
|
|
$
|
(118)
|
|
|
$
|
—
|
|
|
$
|
271
|
|
|
$
|
301
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
|
|
|
|
|
|
|
$
|
0.22
|
|
Diluted
|
0.11
|
|
|
|
|
|
|
|
|
0.21
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
1,361.8
|
|
|
|
|
|
|
27.2
|
|
|
1,389.0
|
|
Diluted
|
1,373.6
|
|
|
|
|
|
|
27.1
|
|
|
1,400.7
|
|
|
|
1.
|
Refer to the
Statements of Income on page A-1.
|
|
|
2.
|
Refers to DPS'
activity during the three months ended September 30, 2018 prior to
the Merger Date.
|
|
|
3.
|
Refer to Summary
of Reclassifications on page A-5.
|
|
|
4.
|
Refer to Summary
of Pro Forma Adjustments on page A-5.
|
Keurig Dr Pepper
Inc.
|
Pro Forma
Condensed Combined Statement of Income
|
For the Third
Quarter of 2017
|
(Unaudited)
|
|
(in millions,
except per share data)
|
Historical
DPS(1)
|
|
Historical
KGM(2)
|
|
Reclassifications(3)
|
|
Pro Forma
Adjustments(4)
|
|
Pro Forma
Combined
|
Net
sales
|
$
|
1,740
|
|
|
$
|
1,140
|
|
|
$
|
—
|
|
|
$
|
(104)
|
|
|
$
|
2,776
|
|
Cost of
sales
|
707
|
|
|
593
|
|
|
(7)
|
|
|
(49)
|
|
|
1,244
|
|
Gross
profit
|
1,033
|
|
|
547
|
|
|
7
|
|
|
(55)
|
|
|
1,532
|
|
Selling, general and
administrative expenses
|
640
|
|
|
244
|
|
|
100
|
|
|
(18)
|
|
|
966
|
|
Transportation and
warehousing expenses
|
—
|
|
|
58
|
|
|
(58)
|
|
|
—
|
|
|
—
|
|
Transaction
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Depreciation and
amortization
|
26
|
|
|
—
|
|
|
(26)
|
|
|
—
|
|
|
—
|
|
Restructuring
expenses
|
—
|
|
|
15
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
Other operating
income, net
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
Income from
operations
|
367
|
|
|
230
|
|
|
7
|
|
|
(37)
|
|
|
567
|
|
Interest
expense
|
40
|
|
|
36
|
|
|
(15)
|
|
|
97
|
|
|
158
|
|
Interest expense -
related party
|
—
|
|
|
25
|
|
|
—
|
|
|
(25)
|
|
|
—
|
|
Interest
income
|
(1)
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Loss on early
extinguishment of debt
|
13
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
15
|
|
(Gain) loss on
financial instruments, net
|
—
|
|
|
(9)
|
|
|
9
|
|
|
—
|
|
|
—
|
|
(Gain) loss on
foreign currency, net
|
—
|
|
|
10
|
|
|
(10)
|
|
|
—
|
|
|
—
|
|
Other (income)
expense, net
|
(2)
|
|
|
3
|
|
|
22
|
|
|
(2)
|
|
|
21
|
|
Income before
provision for income taxes
|
317
|
|
|
163
|
|
|
—
|
|
|
(107)
|
|
|
373
|
|
Provision for income
taxes
|
114
|
|
|
46
|
|
|
—
|
|
|
(40)
|
|
|
120
|
|
Income before
equity in loss of unconsolidated subsidiaries
|
203
|
|
|
117
|
|
|
—
|
|
|
(67)
|
|
|
253
|
|
Equity in loss of
unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net
income
|
203
|
|
|
117
|
|
|
—
|
|
|
(67)
|
|
|
253
|
|
Net income
attributable to employee redeemable non-controlling interest and
mezzanine equity awards
|
—
|
|
|
1
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
Net income
attributable to KDP
|
$
|
203
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
(66)
|
|
|
$
|
253
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.12
|
|
|
|
|
|
|
|
|
$
|
0.18
|
|
Diluted
|
1.11
|
|
|
|
|
|
|
|
|
0.18
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
181.4
|
|
|
|
|
|
|
1,205.1
|
|
|
1,386.5
|
|
Diluted
|
182.1
|
|
|
|
|
|
|
1,204.4
|
|
|
1,386.5
|
|
|
|
1.
|
Refer to DPS' Form
10-Q as filed on October 25, 2017 for the three months ended
September 30, 2017.
|
|
|
2.
|
Refer to Exhibit 99.4
to the Form 8-K/A as filed on August 8, 2018 for KGM's three months
ended September 30, 2017.
|
|
|
3.
|
Refer to Summary
of Reclassifications on page A-5.
|
|
|
4.
|
Refer to Summary
of Pro Forma Adjustments on page A-5.
|
Keurig Dr Pepper
Inc.
|
Pro Forma
Condensed Combined Statement of Income
|
For the First Nine
Months of 2018
|
(Unaudited)
|
|
(in millions,
except per share data)
|
Reported
KDP(1)
|
|
DPS Jan
1 - July 8(2)
|
|
Pro Forma
Adjustments(3)
|
|
Pro Forma
Combined
|
Net
sales
|
$
|
4,629
|
|
|
$
|
3,605
|
|
|
$
|
(27)
|
|
|
$
|
8,207
|
|
Cost of
sales
|
2,305
|
|
|
1,529
|
|
|
(140)
|
|
|
3,694
|
|
Gross
profit
|
2,324
|
|
|
2,076
|
|
|
113
|
|
|
4,513
|
|
Selling, general and
administrative expenses
|
1,636
|
|
|
1,639
|
|
|
(375)
|
|
|
2,900
|
|
Other operating
income, net
|
(2)
|
|
|
(14)
|
|
|
—
|
|
|
(16)
|
|
Income from
operations
|
690
|
|
|
451
|
|
|
488
|
|
|
1,629
|
|
Interest
expense
|
221
|
|
|
88
|
|
|
184
|
|
|
493
|
|
Interest expense -
related party
|
51
|
|
|
—
|
|
|
(51)
|
|
|
—
|
|
Loss on early
extinguishment of debt
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
Other (income)
expense, net
|
(28)
|
|
|
5
|
|
|
(18)
|
|
|
(41)
|
|
Income before
provision for income taxes
|
433
|
|
|
358
|
|
|
373
|
|
|
1,164
|
|
Provision for income
taxes
|
110
|
|
|
82
|
|
|
117
|
|
|
309
|
|
Net
income
|
323
|
|
|
276
|
|
|
256
|
|
|
855
|
|
Net income
attributable to employee redeemable non-controlling interest and
mezzanine equity awards
|
3
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
Net income
attributable to KDP
|
$
|
320
|
|
|
$
|
276
|
|
|
$
|
259
|
|
|
$
|
855
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.33
|
|
|
|
|
|
|
$
|
0.62
|
|
Diluted
|
0.32
|
|
|
|
|
|
|
0.61
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
983.0
|
|
|
|
|
406.0
|
|
|
1,389.0
|
|
Diluted
|
994.1
|
|
|
|
|
405.9
|
|
|
1,400.0
|
|
|
|
1.
|
Refer to the
Statements of Income on page A-1.
|
|
|
2.
|
Refers to DPS'
activity during the nine months ended September 30, 2018 prior to
the Merger Date.
|
|
|
3.
|
Refer to Summary
of Pro Forma Adjustments on page A-5.
|
Keurig Dr Pepper
Inc.
|
Pro Forma
Condensed Combined Statement of Income
|
For the First Nine
Months of 2017
|
(Unaudited)
|
|
(in millions,
except per share data)
|
Historical
DPS(1)
|
|
Historical
KGM(2)
|
|
Reclassifications(3)
|
|
Pro Forma
Adjustments(4)
|
|
Pro Forma
Combined
|
Net
sales
|
$
|
5,047
|
|
|
$
|
3,056
|
|
|
$
|
—
|
|
|
$
|
(128)
|
|
|
$
|
7,975
|
|
Cost of
sales
|
2,032
|
|
|
1,569
|
|
|
—
|
|
|
(54)
|
|
|
3,547
|
|
Gross
profit
|
3,015
|
|
|
1,487
|
|
|
—
|
|
|
(74)
|
|
|
4,428
|
|
Selling, general and
administrative expenses
|
1,945
|
|
|
633
|
|
|
295
|
|
|
(14)
|
|
|
2,859
|
|
Transportation and
warehousing expenses
|
—
|
|
|
174
|
|
|
(174)
|
|
|
—
|
|
|
—
|
|
Transaction
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Depreciation and
amortization
|
76
|
|
|
—
|
|
|
(76)
|
|
|
—
|
|
|
—
|
|
Restructuring
expenses
|
—
|
|
|
45
|
|
|
(45)
|
|
|
—
|
|
|
—
|
|
Other operating
income, net
|
(31)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31)
|
|
Income from
operations
|
1,025
|
|
|
635
|
|
|
—
|
|
|
(60)
|
|
|
1,600
|
|
Interest
expense
|
124
|
|
|
127
|
|
|
(55)
|
|
|
263
|
|
|
459
|
|
Interest expense -
related party
|
—
|
|
|
75
|
|
|
—
|
|
|
(75)
|
|
|
—
|
|
Interest
income
|
(3)
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
Loss on early
extinguishment of debt
|
62
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
116
|
|
(Gain) loss on
financial instruments, net
|
—
|
|
|
18
|
|
|
(18)
|
|
|
—
|
|
|
—
|
|
(Gain) loss on
foreign currency, net
|
—
|
|
|
21
|
|
|
(21)
|
|
|
—
|
|
|
—
|
|
Other (income)
expense, net
|
(6)
|
|
|
—
|
|
|
92
|
|
|
(4)
|
|
|
82
|
|
Income before
provision for income taxes
|
848
|
|
|
340
|
|
|
(1)
|
|
|
(244)
|
|
|
943
|
|
Provision for income
taxes
|
279
|
|
|
102
|
|
|
—
|
|
|
(91)
|
|
|
290
|
|
Income before
equity in loss of unconsolidated subsidiaries
|
569
|
|
|
238
|
|
|
(1)
|
|
|
(153)
|
|
|
653
|
|
Equity in loss of
unconsolidated subsidiaries, net of tax
|
1
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
Net
income
|
568
|
|
|
238
|
|
|
—
|
|
|
(153)
|
|
|
653
|
|
Net income
attributable to employee redeemable non-controlling interest and
mezzanine equity awards
|
—
|
|
|
3
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
Net income
attributable to KDP
|
$
|
568
|
|
|
$
|
235
|
|
|
$
|
—
|
|
|
$
|
(150)
|
|
|
$
|
653
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
3.11
|
|
|
|
|
|
|
|
|
$
|
0.47
|
|
Diluted
|
3.09
|
|
|
|
|
|
|
|
|
0.47
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
182.7
|
|
|
|
|
|
|
1,203.8
|
|
|
1,386.5
|
|
Diluted
|
183.5
|
|
|
|
|
|
|
1,203.0
|
|
|
1,386.5
|
|
|
|
1.
|
Refer to DPS' Form
10-Q as filed on October 25, 2017 for the nine months ended
September 30, 2017.
|
|
|
2.
|
Refer to Exhibit 99.4
to the Form 8-K/A as filed on August 8, 2018 for KGM's nine months
ended September 30, 2017.
|
|
|
3.
|
Refer to Summary
of Reclassifications on page A-5.
|
|
|
4.
|
Refer to Summary
of Pro Forma Adjustments on page A-5.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
PRO FORMA SEGMENT INFORMATION
|
(Unaudited)
|
|
(in
millions)
|
Reported
KDP
|
|
DPS July 1 - July 8(1)
|
|
Reclassifications(2)
|
|
Pro Forma
Adjustments(3)
|
|
Pro Forma
Combined
|
For the Third
Quarter of 2018
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
317
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
331
|
|
Packaged
Beverages
|
1,238
|
|
|
98
|
|
|
—
|
|
|
—
|
|
|
1,336
|
|
Latin America
Beverages
|
124
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
136
|
|
Coffee
Systems
|
1,053
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,053
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
193
|
|
|
$
|
(5)
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
204
|
|
Packaged
Beverages
|
61
|
|
|
2
|
|
|
—
|
|
|
99
|
|
|
162
|
|
Latin America
Beverages
|
15
|
|
|
2
|
|
|
—
|
|
|
10
|
|
|
27
|
|
Coffee
Systems
|
334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
334
|
|
Unallocated
Corporate
|
(259)
|
|
|
(169)
|
|
|
—
|
|
|
266
|
|
|
(162)
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
KGM(4)
|
|
Historical
DPS(5)
|
|
Reclassifications(2)
|
|
Pro Forma
Adjustments(3)
|
|
Pro Forma
Combined
|
For the Third
Quarter of 2017
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
—
|
|
|
$
|
334
|
|
|
$
|
—
|
|
|
$
|
(13)
|
|
|
$
|
321
|
|
Packaged
Beverages
|
—
|
|
|
1,273
|
|
|
—
|
|
|
—
|
|
|
1,273
|
|
Latin America
Beverages
|
—
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
133
|
|
Coffee
Systems
|
1,140
|
|
|
—
|
|
|
—
|
|
|
(91)
|
|
|
1,049
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
—
|
|
|
$
|
217
|
|
|
$
|
—
|
|
|
$
|
(13)
|
|
|
$
|
204
|
|
Packaged
Beverages
|
—
|
|
|
191
|
|
|
(1)
|
|
|
2
|
|
|
192
|
|
Latin America
Beverages
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
Coffee
Systems
|
288
|
|
|
—
|
|
|
1
|
|
|
(28)
|
|
|
261
|
|
Unallocated
Corporate
|
(58)
|
|
|
(52)
|
|
|
7
|
|
|
2
|
|
|
(101)
|
|
|
|
1.
|
Refers to DPS'
activity during the three months ended September 30, 2018 prior to
the Merger Date.
|
|
|
2.
|
Refer to Summary
of Reclassifications on page A-5.
|
|
|
3.
|
Refer to Summary
of Pro Forma Adjustments on page A-5.
|
|
|
4.
|
Agrees to historical
GAAP financial statements for KGM's three months ended September
30, 2017 (as filed in Exhibit 99.4 to the Form 8-K/A on August 8,
2018). The presentation differs from the prior year KDP reported
results within the Form 10-Q as a result of the application of the
reclassifications shown above.
|
|
|
5.
|
Agrees to DPS' Form
10-Q as filed on October 25, 2017 for the three months ended
September 30, 2017. These numbers have been adjusted for the
allocation of other operating income, net.
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
PRO FORMA SEGMENT INFORMATION
|
(Unaudited)
|
|
(in
millions)
|
Reported
KDP
|
|
DPS
Jan 1 - July
8(1)
|
|
Reclassifications(2)
|
|
Pro Forma
Adjustments(3)
|
|
Pro Forma
Combined
|
For the First Nine
Months of 2018
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
317
|
|
|
$
|
689
|
|
|
$
|
—
|
|
|
$
|
(27)
|
|
|
$
|
979
|
|
Packaged
Beverages
|
1,238
|
|
|
2,654
|
|
|
—
|
|
|
—
|
|
|
3,892
|
|
Latin America
Beverages
|
124
|
|
|
262
|
|
|
—
|
|
|
—
|
|
|
386
|
|
Coffee
Systems
|
2,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,950
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
193
|
|
|
$
|
438
|
|
|
$
|
—
|
|
|
$
|
(15)
|
|
|
$
|
616
|
|
Packaged
Beverages
|
61
|
|
|
297
|
|
|
—
|
|
|
123
|
|
|
481
|
|
Latin America
Beverages
|
15
|
|
|
40
|
|
|
—
|
|
|
10
|
|
|
65
|
|
Coffee
Systems
|
865
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
865
|
|
Unallocated
Corporate
|
(444)
|
|
|
(324)
|
|
|
—
|
|
|
370
|
|
|
(398)
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
KGM(4)
|
|
Historical
DPS(5)
|
|
Reclassifications(2)
|
|
Pro Forma
Adjustments(3)
|
|
Pro Forma
Combined
|
For the First Nine
Months of 2017
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
—
|
|
|
$
|
984
|
|
|
$
|
—
|
|
|
$
|
(37)
|
|
|
$
|
947
|
|
Packaged
Beverages
|
—
|
|
|
3,693
|
|
|
—
|
|
|
—
|
|
|
3,693
|
|
Latin America
Beverages
|
—
|
|
|
370
|
|
|
—
|
|
|
—
|
|
|
370
|
|
Coffee
Systems
|
3,056
|
|
|
—
|
|
|
—
|
|
|
(91)
|
|
|
2,965
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
—
|
|
|
$
|
640
|
|
|
$
|
—
|
|
|
$
|
(37)
|
|
|
$
|
603
|
|
Packaged
Beverages
|
—
|
|
|
559
|
|
|
—
|
|
|
4
|
|
|
563
|
|
Latin America
Beverages
|
—
|
|
|
46
|
|
|
3
|
|
|
—
|
|
|
49
|
|
Coffee
Systems
|
786
|
|
|
—
|
|
|
(6)
|
|
|
(28)
|
|
|
752
|
|
Unallocated
Corporate
|
(151)
|
|
|
(220)
|
|
|
3
|
|
|
2
|
|
|
(366)
|
|
|
|
1.
|
Refers to DPS'
activity during the nine months ended September 30, 2018 prior to
the Merger Date.
|
|
|
2.
|
Refer to Summary
of Reclassifications on page A-5.
|
|
|
3.
|
Refer to Summary
of Pro Forma Adjustments on page A-5.
|
|
|
4.
|
Agrees to historical
GAAP financial statements for KGM's nine months ended September 30,
2017 (as filed in Exhibit 99.4 to the Form 8-K/A on August 8,
2018). The presentation differs from the prior year KDP reported
results within the Form 10-Q as a result of the application of the
reclassifications shown above.
|
|
|
5.
|
Agrees to DPS' Form
10-Q as filed on October 25, 2017 for the nine months ended
September 30, 2017. These numbers have been adjusted for the
allocation of other operating income, net.
|
KEURIG DR PEPPER INC.
RECONCILIATION
OF CERTAIN PRO FORMA AND NON-GAAP PRO FORMA INFORMATION
(Unaudited)
The company reports its financial results in accordance with
U.S. GAAP. However, management believes that certain non-GAAP
financial 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:
Adjusted: Defined as certain financial statement captions
and metrics adjusted for certain items affecting comparability.
Items affecting comparability: Defined as certain items
that are excluded for comparison to prior year periods, adjusted
for the tax impact as applicable. Tax impact is determined based
upon an approximate rate for each item. For each period, management
adjusts for (i) the unrealized mark-to-market impact of derivative
instruments not designated as hedges in accordance with U.S. GAAP;
(ii) the amortization associated with definite-lived intangible
assets; (iii) the amortization of the deferred financing costs
associated with the DPSG Merger and Keurig Acquisition; (iv) stock
compensation expense attributable to the matching awards made to
employees who made an initial investment in the Keurig Green
Mountain, Inc. Executive Ownership Plan; and (v) other certain
items that are excluded for comparison purposes to prior year
periods.
For the three and nine months ended September 30, 2018, the other certain items
excluded for comparison purposes include (i) restructuring and
integration expenses related to the DPSG Merger and the Keurig
Acquisition; (ii) productivity expenses; and (iii) the loss on
early extinguishment of debt related to the redemption of debt.
For the three and nine months ended September 30, 2017, the other certain items
excluded for comparison purposes include (i) restructuring and
integration expenses related to the DPSG Merger and the Keurig
Acquisition; (ii) productivity expenses; (iii) provisions for legal
settlements; and (iv) the loss on early extinguishment of debt
related to the redemption of debt.
Reconciliations for these items are provided in the tables
below.
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN PRO FORMA ITEMS TO CERTAIN NON-GAAP ADJUSTED PRO FORMA
ITEMS
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Third
Quarter of 2018
|
|
Pro
Forma
|
|
Mark to
Market
|
|
Amortization
of
Intangibles
|
|
Amortization
of
Deferred
Financing Costs
|
|
Stock
Compensation
|
|
Restructuring
and
Integration
Expenses
|
|
Productivity
|
|
Transaction
Costs
|
|
Loss on
Early
Payment
of Debt
|
|
Provision
for
Settlements
|
|
Tax
Reform
|
|
Total
Adjustments
|
|
Adjusted
Pro Forma
|
Net sales
|
$
|
2,856
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,856
|
|
Cost of
sales
|
1,302
|
|
|
(27)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32)
|
|
|
1,270
|
|
Gross
profit
|
1,554
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
1,586
|
|
Gross
margin
|
54.4
|
%
|
|
0.9
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.2
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.1
|
%
|
|
55.5
|
%
|
Selling, general and
administrative expenses
|
$
|
999
|
|
|
$
|
1
|
|
|
$
|
(30)
|
|
|
$
|
—
|
|
|
$
|
(4)
|
|
|
$
|
(47)
|
|
|
$
|
(7)
|
|
|
$
|
(2)
|
|
|
$
|
—
|
|
|
$
|
(11)
|
|
|
$
|
—
|
|
|
$
|
(100)
|
|
|
$
|
899
|
|
Other operating
income, net
|
(10)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
Income from
operations
|
565
|
|
|
26
|
|
|
30
|
|
|
—
|
|
|
4
|
|
|
47
|
|
|
12
|
|
|
2
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
132
|
|
|
697
|
|
Operating
margin
|
19.8
|
%
|
|
0.9
|
%
|
|
1.1
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
1.6
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
0.4
|
%
|
|
—
|
%
|
|
4.6
|
%
|
|
24.4
|
%
|
Interest
expense
|
$
|
178
|
|
|
$
|
(7)
|
|
|
$
|
—
|
|
|
$
|
(4)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10)
|
|
|
$
|
168
|
|
Loss on early
extinguishment of debt
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
—
|
|
Other income,
net
|
(37)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(39)
|
|
Income before
provision for income taxes
|
413
|
|
|
35
|
|
|
30
|
|
|
4
|
|
|
4
|
|
|
47
|
|
|
10
|
|
|
3
|
|
|
11
|
|
|
11
|
|
|
—
|
|
|
155
|
|
|
568
|
|
Provision for income
taxes
|
112
|
|
|
8
|
|
|
8
|
|
|
1
|
|
|
1
|
|
|
17
|
|
|
3
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
(3)
|
|
|
42
|
|
|
154
|
|
Effective tax
rate
|
27.1
|
%
|
|
(0.3)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.9
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.7)
|
%
|
|
—
|
%
|
|
27.1
|
%
|
Net income
|
$
|
301
|
|
|
$
|
27
|
|
|
$
|
22
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
30
|
|
|
$
|
7
|
|
|
$
|
2
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
3
|
|
|
$
|
113
|
|
|
$
|
414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
Forma
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Pro
Forma
EPS
|
Diluted earnings per
common share
|
$
|
0.21
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.09
|
|
|
$
|
0.30
|
|
Shares
|
1,400.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400.7
|
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN PRO FORMA ITEMS TO CERTAIN NON-GAAP ADJUSTED PRO FORMA
ITEMS
|
(Unaudited, in
millions, except per share data)
|
|
|
For the Third
Quarter of 2017
|
|
Pro
Forma
|
|
Mark to
Market
|
|
Amortization
of
Intangibles
|
|
Amortization
of
Deferred
Financing Costs
|
|
Stock
Compensation
|
|
Transaction
Costs
|
|
Restructuring
& Integration
Expenses
|
|
Productivity
|
|
Loss on
Early
Payment
of Debt
|
|
Provision
for
Settlements
|
|
Total
Adjustments
|
|
Adjusted
Pro Forma
|
Net sales
|
$
|
2,776
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,776
|
|
Cost of
sales
|
1,244
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
1,257
|
|
Gross
profit
|
1,532
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(13)
|
|
|
1,519
|
|
Gross
margin
|
55.2
|
%
|
|
(0.6)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.5)
|
%
|
|
54.7
|
%
|
Selling, general and
administrative expenses
|
$
|
966
|
|
|
$
|
10
|
|
|
$
|
(26)
|
|
|
$
|
—
|
|
|
$
|
(9)
|
|
|
$
|
(1)
|
|
|
$
|
(15)
|
|
|
$
|
(14)
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
(56)
|
|
|
$
|
910
|
|
Other operating
income, net
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Income from
operations
|
567
|
|
|
(25)
|
|
|
26
|
|
|
—
|
|
|
9
|
|
|
1
|
|
|
15
|
|
|
16
|
|
|
—
|
|
|
1
|
|
|
43
|
|
|
610
|
|
Operating
margin
|
20.4
|
%
|
|
(0.8)
|
%
|
|
0.9
|
%
|
|
—
|
%
|
|
0.3
|
%
|
|
0.1
|
%
|
|
0.5
|
%
|
|
0.6
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.60
|
%
|
|
22.0
|
%
|
Interest
expense
|
$
|
158
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
(6)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
160
|
|
Loss on early
extinguishment of debt
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
—
|
|
|
(15)
|
|
|
—
|
|
Other income,
net
|
21
|
|
|
(6)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)
|
|
|
15
|
|
Income before
provision for income taxes
|
373
|
|
|
(27)
|
|
|
26
|
|
|
6
|
|
|
9
|
|
|
1
|
|
|
15
|
|
|
16
|
|
|
15
|
|
|
1
|
|
|
62
|
|
|
435
|
|
Provision for income
taxes
|
120
|
|
|
(11)
|
|
|
9
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
5
|
|
|
—
|
|
|
18
|
|
|
138
|
|
Effective tax
rate
|
32.2
|
%
|
|
(0.7)
|
%
|
|
0.2
|
%
|
|
(0.3)
|
%
|
|
(0.2)
|
%
|
|
(0.1)
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
(0.5)
|
%
|
|
31.7
|
%
|
Net income
|
$
|
253
|
|
|
$
|
(16)
|
|
|
$
|
17
|
|
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
9
|
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
44
|
|
|
$
|
297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Pro
Forma
EPS
|
Diluted earnings per
common share
|
$
|
0.18
|
|
|
$
|
(0.01)
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.21
|
|
Shares
|
1,386.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,386.5
|
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN PRO FORMA ITEMS TO CERTAIN NON-GAAP ADJUSTED PRO FORMA
ITEMS
|
(Unaudited, in
millions, except per share data)
|
|
|
For the First Nine
Months of 2018
|
|
|
|
|
|
Amortization
of
|
|
|
|
Pro
Forma
|
|
Mark to
Market
|
|
Intangibles
|
|
Deferred
Financing
Costs
|
|
Stock
Compensation
|
|
Restructuring
and
Integration
Expenses
|
|
Productivity
|
|
Transaction
Costs
|
|
Loss on
Early
Payment
of Debt
|
|
Provision
for
Settlements
|
|
Tax
Reform
|
|
Total
Adjustments
|
|
Adjusted
Pro Forma
|
Net sales
|
$
|
8,207
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
8,211
|
|
Cost of
sales
|
3,694
|
|
|
(43)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54)
|
|
|
3,640
|
|
Gross
profit
|
4,513
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
58
|
|
|
4,571
|
|
Gross
margin
|
55.0
|
%
|
|
0.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
0.7
|
%
|
|
55.7
|
%
|
Selling, general and
administrative expenses
|
$
|
2,900
|
|
|
$
|
10
|
|
|
$
|
(89)
|
|
|
$
|
—
|
|
|
$
|
(16)
|
|
|
$
|
(86)
|
|
|
$
|
(12)
|
|
|
$
|
(2)
|
|
|
$
|
—
|
|
|
$
|
(11)
|
|
|
$
|
—
|
|
|
$
|
(206)
|
|
|
$
|
2,694
|
|
Other operating
income, net
|
(16)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
(20)
|
|
Income from
operations
|
1,629
|
|
|
33
|
|
|
89
|
|
|
—
|
|
|
16
|
|
|
86
|
|
|
27
|
|
|
2
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
268
|
|
|
1,897
|
|
Operating
margin
|
19.8
|
%
|
|
0.4
|
%
|
|
1.1
|
%
|
|
—
|
%
|
|
0.2
|
%
|
|
1.1
|
%
|
|
0.4
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.2
|
%
|
|
—
|
%
|
|
3.3
|
%
|
|
23.1
|
%
|
Interest
expense
|
$
|
493
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
(5)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
517
|
|
Loss on early
extinguishment of debt
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
Other income,
net
|
(41)
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(37)
|
|
Income before
provision for income taxes
|
1,164
|
|
|
(1)
|
|
|
89
|
|
|
5
|
|
|
16
|
|
|
86
|
|
|
27
|
|
|
3
|
|
|
13
|
|
|
15
|
|
|
—
|
|
|
253
|
|
|
1,417
|
|
Provision for income
taxes
|
309
|
|
|
(1)
|
|
|
23
|
|
|
1
|
|
|
3
|
|
|
23
|
|
|
8
|
|
|
1
|
|
|
3
|
|
|
4
|
|
|
4
|
|
|
69
|
|
|
378
|
|
Effective tax
rate
|
26.5
|
%
|
|
(0.1)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.1)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
|
26.7
|
%
|
Net income
|
$
|
855
|
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
4
|
|
|
$
|
13
|
|
|
$
|
63
|
|
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
(4)
|
|
|
$
|
184
|
|
|
$
|
1,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Pro
Forma
EPS
|
Diluted earnings per
common share
|
$
|
0.61
|
|
|
$
|
—
|
|
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.13
|
|
|
$
|
0.74
|
|
Shares
|
1,400.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400.0
|
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
CERTAIN PRO FORMA ITEMS TO CERTAIN NON-GAAP ADJUSTED PRO FORMA
ITEMS
|
(Unaudited, in
millions, except per share data)
|
|
|
For the First Nine
Months of 2017
|
|
Pro
Forma
|
|
Mark to
Market
|
|
Amortization
of Intangibles
|
|
Amortization
of
Deferred
Financing Costs
|
|
Stock
Compensation
|
|
Transaction
costs
|
|
Restructuring
& Integration
Expenses
|
|
Productivity
|
|
Loss on
Early
Payment
of Debt
|
|
Provision
for
Settlements
|
|
Total
Adjustments
|
|
Adjusted
Pro Forma
|
Net sales
|
$
|
7,975
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,975
|
|
Cost of
sales
|
3,547
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
3,561
|
|
Gross
profit
|
4,428
|
|
|
(23)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(14)
|
|
|
4,414
|
|
Gross
margin
|
55.5
|
%
|
|
(0.3)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.2)
|
%
|
|
55.3
|
%
|
Selling, general and
administrative expenses
|
$
|
2,859
|
|
|
$
|
(10)
|
|
|
$
|
(80)
|
|
|
$
|
—
|
|
|
$
|
(21)
|
|
|
$
|
(23)
|
|
|
$
|
(45)
|
|
|
$
|
(52)
|
|
|
$
|
—
|
|
|
$
|
(1)
|
|
|
$
|
(232)
|
|
|
$
|
2,627
|
|
Income from
operations
|
1,600
|
|
|
(13)
|
|
|
80
|
|
|
—
|
|
|
21
|
|
|
23
|
|
|
45
|
|
|
61
|
|
|
—
|
|
|
1
|
|
|
218
|
|
|
1,818
|
|
Operating
margin
|
20.1
|
%
|
|
(0.2)
|
%
|
|
1.0
|
%
|
|
—
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.7
|
%
|
|
22.8
|
%
|
Interest
expense
|
$
|
459
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
(19)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
494
|
|
Loss on early
extinguishment of debt
|
116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116)
|
|
|
—
|
|
|
(116)
|
|
|
—
|
|
Other (income)
expense, net
|
82
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
74
|
|
Income before
provision for income taxes
|
943
|
|
|
(59)
|
|
|
80
|
|
|
19
|
|
|
21
|
|
|
23
|
|
|
45
|
|
|
61
|
|
|
116
|
|
|
1
|
|
|
307
|
|
|
1,250
|
|
Provision for income
taxes
|
290
|
|
|
(23)
|
|
|
29
|
|
|
7
|
|
|
7
|
|
|
8
|
|
|
17
|
|
|
22
|
|
|
41
|
|
|
—
|
|
|
108
|
|
|
398
|
|
Effective tax
rate
|
30.8
|
%
|
|
(0.6)
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.5
|
%
|
|
(0.1)
|
%
|
|
1.0
|
%
|
|
31.8
|
%
|
Net income
|
$
|
653
|
|
|
$
|
(36)
|
|
|
$
|
51
|
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
15
|
|
|
$
|
28
|
|
|
$
|
39
|
|
|
$
|
75
|
|
|
$
|
1
|
|
|
$
|
199
|
|
|
$
|
852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Pro
Forma
EPS
|
Diluted earnings per
common share
|
$
|
0.47
|
|
|
$
|
(0.03)
|
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
0.14
|
|
|
$
|
0.61
|
|
Shares
|
1,386.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,386.5
|
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
PRO FORMA SEGMENT ITEMS TO
|
CERTAIN NON-GAAP
ADJUSTED PRO FORMA SEGMENT ITEMS
|
(Unaudited)
|
|
(in
millions)
|
Pro
Forma
|
|
Items
Affecting
Comparability
|
|
Adjusted Pro
Forma
|
For the Third
Quarter of 2018
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
331
|
|
|
$
|
—
|
|
|
$
|
331
|
|
Packaged
Beverages
|
1,336
|
|
|
—
|
|
|
1,336
|
|
Latin America
Beverages
|
136
|
|
|
—
|
|
|
136
|
|
Coffee
Systems
|
1,053
|
|
|
—
|
|
|
1,053
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
204
|
|
Packaged
Beverages
|
162
|
|
|
2
|
|
|
164
|
|
Latin America
Beverages
|
27
|
|
|
—
|
|
|
27
|
|
Coffee
Systems
|
334
|
|
|
46
|
|
|
380
|
|
Unallocated
Corporate
|
(162)
|
|
|
84
|
|
|
(78)
|
|
|
|
|
|
|
|
For the Third
Quarter of 2017
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
321
|
|
|
$
|
—
|
|
|
$
|
321
|
|
Packaged
Beverages
|
1,273
|
|
|
—
|
|
|
1,273
|
|
Latin America
Beverages
|
133
|
|
|
—
|
|
|
133
|
|
Coffee
Systems
|
1,049
|
|
|
—
|
|
|
1,049
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
204
|
|
Packaged
Beverages
|
192
|
|
|
3
|
|
|
195
|
|
Latin America
Beverages
|
11
|
|
|
—
|
|
|
11
|
|
Coffee
Systems
|
261
|
|
|
51
|
|
|
312
|
|
Unallocated
Corporate
|
(101)
|
|
|
(11)
|
|
|
(112)
|
|
KEURIG DR PEPPER
INC.
|
RECONCILIATION OF
PRO FORMA SEGMENT ITEMS TO
|
CERTAIN NON-GAAP
ADJUSTED PRO FORMA SEGMENT ITEMS
|
(Unaudited)
|
|
(in
millions)
|
Pro
Forma
|
|
Items
Affecting
Comparability
|
|
Adjusted Pro
Forma
|
For the First Nine
Months of 2018
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
979
|
|
|
$
|
—
|
|
|
$
|
979
|
|
Packaged
Beverages
|
3,892
|
|
|
—
|
|
|
3,892
|
|
Latin America
Beverages
|
386
|
|
|
—
|
|
|
386
|
|
Coffee
Systems
|
2,950
|
|
|
4
|
|
|
2,954
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
616
|
|
|
$
|
—
|
|
|
$
|
616
|
|
Packaged
Beverages
|
481
|
|
|
—
|
|
|
481
|
|
Latin America
Beverages
|
65
|
|
|
—
|
|
|
65
|
|
Coffee
Systems
|
865
|
|
|
130
|
|
|
995
|
|
Unallocated
Corporate
|
(398)
|
|
|
138
|
|
|
(260)
|
|
|
|
|
|
|
|
For the First Nine
Months of 2017
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
947
|
|
|
$
|
—
|
|
|
$
|
947
|
|
Packaged
Beverages
|
3,693
|
|
|
—
|
|
|
3,693
|
|
Latin America
Beverages
|
370
|
|
|
—
|
|
|
370
|
|
Coffee
Systems
|
2,965
|
|
|
—
|
|
|
2,965
|
|
|
|
|
|
|
|
Income from
Operations
|
|
|
|
|
|
Beverage
Concentrates
|
$
|
603
|
|
|
$
|
—
|
|
|
$
|
603
|
|
Packaged
Beverages
|
563
|
|
|
11
|
|
|
574
|
|
Latin America
Beverages
|
49
|
|
|
—
|
|
|
49
|
|
Coffee
Systems
|
752
|
|
|
161
|
|
|
913
|
|
Unallocated
Corporate
|
(366)
|
|
|
47
|
|
|
(319)
|
|
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SOURCE Keurig Dr Pepper Inc.