þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
(State or other jurisdiction of incorporation or organization) |
98-0517725
(I.R.S. employer identification number) |
|
5301 Legacy Drive, Plano, Texas
(Address of principal executive offices) |
75024
(Zip code) |
Large Accelerated Filer o | Accelerated Filer o |
Non-Accelerated Filer
þ
(Do not check if a smaller reporting company) |
Smaller Reporting Company o |
ii
For the | For the | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales
|
$ | 1,481 | $ | 1,545 | $ | 2,741 | $ | 2,840 | ||||||||
Cost of sales
|
596 | 694 | 1,127 | 1,259 | ||||||||||||
|
||||||||||||||||
Gross profit
|
885 | 851 | 1,614 | 1,581 | ||||||||||||
Selling, general and administrative expenses
|
550 | 536 | 1,049 | 1,044 | ||||||||||||
Depreciation and amortization
|
28 | 28 | 55 | 56 | ||||||||||||
Restructuring costs
|
| 14 | | 24 | ||||||||||||
Other operating expense (income)
|
10 | 4 | (52 | ) | 2 | |||||||||||
|
||||||||||||||||
Income from operations
|
297 | 269 | 562 | 455 | ||||||||||||
Interest expense
|
52 | 92 | 107 | 140 | ||||||||||||
Interest income
|
(1 | ) | (10 | ) | (2 | ) | (27 | ) | ||||||||
Other income
|
(2 | ) | (1 | ) | (5 | ) | (1 | ) | ||||||||
|
||||||||||||||||
Income before provision for income taxes and equity in
earnings of unconsolidated subsidiaries
|
248 | 188 | 462 | 343 | ||||||||||||
Provision for income taxes
|
91 | 80 | 173 | 140 | ||||||||||||
|
||||||||||||||||
Income before equity in earnings of unconsolidated subsidiaries
|
157 | 108 | 289 | 203 | ||||||||||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
1 | | 1 | | ||||||||||||
|
||||||||||||||||
Net income
|
$ | 158 | $ | 108 | $ | 290 | $ | 203 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$ | 0.62 | $ | 0.42 | $ | 1.14 | $ | 0.80 | ||||||||
Diluted
|
$ | 0.62 | $ | 0.42 | $ | 1.14 | $ | 0.80 | ||||||||
|
||||||||||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
254.2 | 254.0 | 254.2 | 253.8 | ||||||||||||
Diluted
|
255.1 | 254.0 | 254.6 | 253.8 |
1
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 235 | $ | 214 | ||||
Accounts receivable:
|
||||||||
Trade (net of allowances of $12 and $13, respectively)
|
580 | 532 | ||||||
Other
|
49 | 51 | ||||||
Inventories
|
284 | 263 | ||||||
Deferred tax assets
|
86 | 93 | ||||||
Prepaid expenses and other current assets
|
76 | 84 | ||||||
|
||||||||
Total current assets
|
1,310 | 1,237 | ||||||
Property, plant and equipment, net
|
1,013 | 990 | ||||||
Investments in unconsolidated subsidiaries
|
14 | 12 | ||||||
Goodwill
|
2,983 | 2,983 | ||||||
Other intangible assets, net
|
2,708 | 2,712 | ||||||
Other non-current assets
|
562 | 564 | ||||||
Non-current deferred tax assets
|
140 | 140 | ||||||
|
||||||||
Total assets
|
$ | 8,730 | $ | 8,638 | ||||
|
||||||||
Liabilities and Stockholders Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$ | 803 | $ | 796 | ||||
Income taxes payable
|
13 | 5 | ||||||
|
||||||||
Total current liabilities
|
816 | 801 | ||||||
Long-term debt
|
3,240 | 3,522 | ||||||
Deferred tax liabilities
|
1,003 | 981 | ||||||
Other non-current liabilities
|
751 | 727 | ||||||
|
||||||||
Total liabilities
|
5,810 | 6,031 | ||||||
|
||||||||
Commitments and contingencies
|
||||||||
|
||||||||
Stockholders equity:
|
||||||||
Preferred stock, $.01 par value, 15,000,000 shares authorized, no shares issued
|
| | ||||||
Common stock, $.01 par value, 800,000,000 shares authorized, 254,017,802 and
253,685,733 shares issued and outstanding for 2009 and 2008, respectively
|
3 | 3 | ||||||
Additional paid-in capital
|
3,143 | 3,140 | ||||||
Accumulated deficit
|
(140 | ) | (430 | ) | ||||
Accumulated other comprehensive loss
|
(86 | ) | (106 | ) | ||||
|
||||||||
Total stockholders equity
|
2,920 | 2,607 | ||||||
|
||||||||
Total liabilities and stockholders equity
|
$ | 8,730 | $ | 8,638 | ||||
|
2
For the | ||||||||
Six Months Ended | ||||||||
June 30, | ||||||||
2009 | 2008 | |||||||
Operating activities:
|
||||||||
Net income
|
$ | 290 | $ | 203 | ||||
Adjustments to reconcile net income to net cash provided by operations:
|
||||||||
Depreciation expense
|
79 | 69 | ||||||
Amortization expense
|
20 | 26 | ||||||
Amortization of deferred financing costs
|
9 | 4 | ||||||
Gain on disposal of intangible assets and property
|
(62 | ) | (2 | ) | ||||
Employee stock-based compensation expense
|
8 | 4 | ||||||
Deferred income taxes
|
38 | 37 | ||||||
Write-off of deferred loan costs
|
| 21 | ||||||
Other, net
|
4 | 16 | ||||||
Changes in assets and liabilities:
|
||||||||
Trade and other accounts receivable
|
(44 | ) | (51 | ) | ||||
Related party receivable
|
| 11 | ||||||
Inventories
|
(21 | ) | (22 | ) | ||||
Other current assets
|
11 | (74 | ) | |||||
Other non-current assets
|
(21 | ) | (1 | ) | ||||
Accounts payable and accrued expenses
|
60 | 60 | ||||||
Related party payable
|
| (70 | ) | |||||
Income taxes payable
|
12 | 47 | ||||||
Other non-current liabilities
|
(12 | ) | | |||||
|
||||||||
Net cash provided by operating activities
|
371 | 278 | ||||||
Investing activities:
|
||||||||
Purchases of property, plant and equipment
|
(138 | ) | (142 | ) | ||||
Purchases of intangible assets
|
(7 | ) | | |||||
Proceeds from disposals of property, plant and equipment
|
4 | 3 | ||||||
Proceeds from disposals of investments and other assets
|
68 | | ||||||
Issuances of related party notes receivables
|
| (165 | ) | |||||
Proceeds from repayment of related party notes receivables
|
| 1,540 | ||||||
|
||||||||
Net cash (used in) provided by investing activities
|
(73 | ) | 1,236 | |||||
Financing activities:
|
||||||||
Proceeds from issuance of related party long-term debt
|
| 1,615 | ||||||
Proceeds from senior unsecured credit facility
|
| 2,200 | ||||||
Proceeds from senior unsecured notes
|
| 1,700 | ||||||
Proceeds from bridge loan facility
|
| 1,700 | ||||||
Repayment of related party long-term debt
|
| (4,664 | ) | |||||
Repayment of senior unsecured credit facility
|
(280 | ) | (55 | ) | ||||
Repayment of bridge loan facility
|
| (1,700 | ) | |||||
Deferred financing charges paid
|
| (106 | ) | |||||
Cash distribution to Cadbury
|
| (2,065 | ) | |||||
Change in Cadburys net investment
|
| 94 | ||||||
Other, net
|
(1 | ) | (1 | ) | ||||
|
||||||||
Net cash used in financing activities
|
(281 | ) | (1,282 | ) | ||||
Cash and cash equivalents net change from:
|
||||||||
Operating, investing and financing activities
|
17 | 232 | ||||||
Currency translation
|
4 | 1 | ||||||
Cash and cash equivalents at beginning of period
|
214 | 67 | ||||||
|
||||||||
Cash and cash equivalents at end of period
|
$ | 235 | $ | 300 | ||||
|
||||||||
Supplemental cash flow disclosures of non-cash investing and financing activities:
|
||||||||
Capital expenditures included in accounts payable
|
21 | | ||||||
Non-cash settlement related to separation from Cadbury
|
| 141 | ||||||
Non-cash purchase accounting adjustment related to prior year acquisitions
|
| 8 | ||||||
Non-cash transfer of assets
|
4 | | ||||||
Supplemental cash flow disclosures:
|
||||||||
Interest paid
|
$ | 79 | $ | 94 | ||||
Income taxes paid
|
90 | 38 |
3
Accumulated | ||||||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||||||
Common Stock Issued | Paid-In | Accumulated | Cadburys Net | Comprehensive | Comprehensive | |||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Investment | Income (Loss) | Total Equity | Income (Loss) | |||||||||||||||||||||||||
Balance as of December 31, 2007
|
| $ | | $ | | $ | | $ | 5,001 | $ | 20 | $ | 5,021 | |||||||||||||||||||
Net (loss) income
|
| | | (430 | ) | 118 | | (312 | ) | $ | (312 | ) | ||||||||||||||||||||
Contributions from Cadbury
|
| | | | 259 | | 259 | | ||||||||||||||||||||||||
Distributions to Cadbury
|
| | | | (2,242 | ) | | (2,242 | ) | | ||||||||||||||||||||||
Separation from Cadbury on May 7, 2008
and issuance of common stock upon
distribution
|
253.7 | 3 | 3,133 | | (3,136 | ) | | | | |||||||||||||||||||||||
Stock-based compensation expense,
including tax benefit
|
| | 7 | | | | 7 | | ||||||||||||||||||||||||
Net change in pension liability, net
of tax of $30
|
| | | | | (43 | ) | (43 | ) | (43 | ) | |||||||||||||||||||||
Adoption of SFAS 158, net of tax of $1
|
| | | | | (2 | ) | (2 | ) | | ||||||||||||||||||||||
Cash flow hedges, net of tax of $12
|
| | | | | (20 | ) | (20 | ) | (20 | ) | |||||||||||||||||||||
Foreign currency translation adjustment
|
| | | | | (61 | ) | (61 | ) | (61 | ) | |||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2008
|
253.7 | 3 | 3,140 | (430 | ) | | (106 | ) | 2,607 | $ | (436 | ) | ||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Shares issued under employee
stock-based compensation plans & other
|
0.3 | | | | | | | | ||||||||||||||||||||||||
Net income
|
| | | 290 | | | 290 | $ | 290 | |||||||||||||||||||||||
Stock-based compensation expense, net
of tax of $5
|
| | 3 | | | | 3 | | ||||||||||||||||||||||||
Net change in pension liability, net
of tax of $1
|
| | | | | 2 | 2 | 2 | ||||||||||||||||||||||||
Cash flow hedges, net of tax of $4
|
| | | | | 6 | 6 | 6 | ||||||||||||||||||||||||
Foreign currency translation adjustment
|
| | | | | 12 | 12 | 12 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance as of June 30, 2009
|
254.0 | $ | 3 | $ | 3,143 | $ | (140 | ) | $ | | $ | (86 | ) | $ | 2,920 | $ | 310 | |||||||||||||||
|
4
5
| revenue recognition; | ||
| customer marketing programs and incentives; | ||
| stock-based compensation; | ||
| pension and postretirement benefits; | ||
| risk management programs; | ||
| income taxes; | ||
| goodwill and other indefinite lived intangibles; and | ||
| definite lived intangible assets. |
As Previously Reported | As Restated | |||||||||||||||
Net Sales | Cost of Sales | Net Sales | Cost of Sales | |||||||||||||
Three months ended June 30, 2008
|
$ | 1,557 | $ | 706 | $ | 1,545 | $ | 694 | ||||||||
Six months ended June 30, 2008
|
2,864 | 1,283 | 2,840 | 1,259 |
6
7
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Raw materials
|
$ | 98 | $ | 78 | ||||
Work in process
|
5 | 4 | ||||||
Finished goods
|
233 | 231 | ||||||
|
||||||||
Inventories at FIFO cost
|
336 | 313 | ||||||
Reduction to LIFO cost
|
(52 | ) | (50 | ) | ||||
|
||||||||
Inventories
|
$ | 284 | $ | 263 | ||||
|
Beverage | Packaged | Latin America | ||||||||||||||
Concentrates | Beverages | Beverages | Total | |||||||||||||
Balance as of December 31, 2008
|
$ | 1,733 | $ | 1,220 | $ | 30 | $ | 2,983 | ||||||||
Impact of foreign currency
|
(1 | ) | | 1 | | |||||||||||
|
||||||||||||||||
Balance as of June 30, 2009
|
$ | 1,732 | $ | 1,220 | $ | 31 | $ | 2,983 | ||||||||
|
8
June 30, 2009 | December 31, 2008 | |||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||
Intangible assets with indefinite
lives:
|
||||||||||||||||||||||||
Brands
(1)
|
$ | 2,650 | $ | | $ | 2,650 | $ | 2,647 | $ | | $ | 2,647 | ||||||||||||
Bottler agreements
(2)
|
| | | 4 | | 4 | ||||||||||||||||||
Distributor rights
(2)
|
7 | | 7 | | | | ||||||||||||||||||
Intangible assets with finite lives:
|
||||||||||||||||||||||||
Brands
|
29 | (22 | ) | 7 | 29 | (21 | ) | 8 | ||||||||||||||||
Customer relationships
|
76 | (39 | ) | 37 | 76 | (33 | ) | 43 | ||||||||||||||||
Bottler agreements
(3)
|
22 | (15 | ) | 7 | 24 | (14 | ) | 10 | ||||||||||||||||
Distributor rights
|
2 | (2 | ) | | 2 | (2 | ) | | ||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 2,786 | $ | (78 | ) | $ | 2,708 | $ | 2,782 | $ | (70 | ) | $ | 2,712 | ||||||||||
|
(1) | Intangible brands with indefinite lives increased between December 31, 2008, and June 30, 2009, due to changes in foreign currency. | |
(2) | During the six months ended June 30, 2009, the Company sold indefinite lived bottler agreements and acquired indefinite lived distribution rights. In connection with certain transactions, the Company recorded a gain of $11 million during the six months ended June 30, 2009, as a component of other operating income in the unaudited Condensed Consolidated Statement of Operations. | |
(3) | Hansen Natural Corporation terminated its agreements with the Company to distribute Monster Energy as well as other Hansens branded beverages in certain markets in the United States and Mexico. During the six months ended June 30, 2009, the Company recorded a one-time gain of $51 million associated with the termination of the Hansen distribution agreements (receipt of termination payments of $53 million less the write-off of bottler agreements of $2 million) as a component of other operating income in the unaudited Condensed Consolidated Statement of Operations. |
Aggregate | ||||
Amortization | ||||
Year | Expense | |||
Remaining six months for the year ending December 31, 2009
|
$ | 10 | ||
2010
|
16 | |||
2011
|
8 | |||
2012
|
4 | |||
2013
|
4 |
9
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Trade accounts payable
|
$ | 255 | $ | 234 | ||||
Customer rebates and incentives
|
190 | 177 | ||||||
Accrued compensation
|
95 | 86 | ||||||
Insurance reserves
|
69 | 59 | ||||||
Interest accrual and interest rate swap liability
|
40 | 58 | ||||||
Other current liabilities
|
154 | 182 | ||||||
|
||||||||
Accounts payable and accrued expenses
|
$ | 803 | $ | 796 | ||||
|
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Senior unsecured notes
|
$ | 1,700 | $ | 1,700 | ||||
Revolving credit facility
|
| | ||||||
Senior unsecured term loan A facility
|
1,525 | 1,805 | ||||||
Less current portion
|
| | ||||||
|
||||||||
Subtotal
|
3,225 | 3,505 | ||||||
Long-term capital lease obligations
|
15 | 17 | ||||||
|
||||||||
Long-term debt
|
$ | 3,240 | $ | 3,522 | ||||
|
| A senior unsecured term loan A facility in an aggregate principal amount of $2.2 billion with a maturity in 2013. During the second quarter of 2008, DPS borrowed $2.2 billion under the term loan A facility. | ||
| A revolving credit facility in an aggregate principal amount of $500 million with a maturity in 2013. The revolving credit facility was undrawn as of June 30, 2009, and December 31, 2008, except to the extent utilized by letters of credit. Up to $75 million of the revolving credit facility is available for the issuance of letters of credit, of which $43 million and $38 million was utilized as of June 30, 2009, and December 31, 2008, respectively. |
10
11
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
Other non-current assets:
|
||||||||
Long-term receivables from Cadbury
(1)
|
$ | 392 | $ | 386 | ||||
Deferred financing costs, net
|
57 | 66 | ||||||
Customer incentive programs
|
85 | 83 | ||||||
Other
|
28 | 29 | ||||||
|
||||||||
Other non-current assets
|
$ | 562 | $ | 564 | ||||
|
||||||||
Other non-current liabilities:
|
||||||||
Long-term payables due to Cadbury
(1)
|
$ | 117 | $ | 112 | ||||
Liabilities for unrecognized tax benefits and other tax related items
|
547 | 515 | ||||||
Long-term pension and postretirement liability
|
66 | 89 | ||||||
Other
|
21 | 11 | ||||||
|
||||||||
Other non-current liabilities
|
$ | 751 | $ | 727 | ||||
|
(1) | Amounts represent receivables from or payables to Cadbury under the Tax Indemnity Agreement entered into in connection with the Companys separation from Cadbury. |
12
For the | For the | |||||||
Three Months Ended | Six Months Ended | |||||||
June 30, 2008 | June 30, 2008 | |||||||
Organizational restructuring
|
$ | 9 | $ | 15 | ||||
Integration of the Direct Store Delivery business
|
4 | 5 | ||||||
Integration of technology facilities
|
1 | 2 | ||||||
Other
|
| 2 | ||||||
|
||||||||
Total restructuring charges
|
$ | 14 | $ | 24 | ||||
|
Workforce | ||||||||||||||||||||
Reduction | External | Closure | ||||||||||||||||||
Costs | Consulting | Costs | Other | Total | ||||||||||||||||
Balance as of December 31, 2008
|
$ | 6 | $ | | $ | | $ | 2 | $ | 8 | ||||||||||
Charges to expense
|
| | | | | |||||||||||||||
Cash payments
|
(3 | ) | | | | (3 | ) | |||||||||||||
Non-cash items
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
Balance as of June 30, 2009
|
$ | 3 | $ | | $ | | $ | 2 | $ | 5 | ||||||||||
|
Cumulative | Costs for the | Costs for the | ||||||||||
Costs through | Three Months Ended | Six Months Ended | ||||||||||
June 30, 2009 | June 30, 2008 | June 30, 2008 | ||||||||||
Beverage Concentrates
|
$ | 34 | $ | 1 | $ | 4 | ||||||
Packaged Beverages
|
19 | 2 | 4 | |||||||||
Latin America Beverages
|
2 | 1 | 1 | |||||||||
Corporate
|
16 | 5 | 6 | |||||||||
|
||||||||||||
Total
|
$ | 71 | $ | 9 | $ | 15 | ||||||
|
13
Cumulative | Costs for the Three | Costs for the | ||||||||||
Costs through | Months Ended | Six Months Ended | ||||||||||
June 30, 2009 | June 30, 2008 | June 30, 2008 | ||||||||||
Packaged Beverages
|
$ | 26 | $ | 2 | $ | 3 | ||||||
Beverage Concentrates
|
17 | 2 | 2 | |||||||||
Corporate
|
6 | | | |||||||||
|
||||||||||||
Total
|
$ | 49 | $ | 4 | $ | 5 | ||||||
|
For the | For the | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Service cost
|
$ | | $ | 2 | $ | | $ | 6 | ||||||||
Interest cost
|
4 | 5 | 8 | 10 | ||||||||||||
Expected return on assets
|
(3 | ) | (4 | ) | (6 | ) | (9 | ) | ||||||||
Recognition of actuarial loss
|
1 | | 2 | 2 | ||||||||||||
|
||||||||||||||||
Net periodic benefit costs
|
$ | 2 | $ | 3 | $ | 4 | $ | 9 | ||||||||
|
14
For the | For the | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Plans sponsored by Cadbury
(1)
|
$ | | $ | 2 | $ | | $ | 3 | ||||||||
DPS stock options and restricted stock units
|
5 | 1 | 8 | 1 | ||||||||||||
|
||||||||||||||||
Total stock-based compensation expense
|
5 | 3 | 8 | 4 | ||||||||||||
Income tax benefit recognized in the income statement
|
(2 | ) | (1 | ) | (3 | ) | (2 | ) | ||||||||
|
||||||||||||||||
Net stock-based compensation expense
|
$ | 3 | $ | 2 | $ | 5 | $ | 2 | ||||||||
|
(1) | Prior to the Companys separation from Cadbury, certain of its employees participated in stock-based compensation plans sponsored by Cadbury. These plans provided employees with stock or options to purchase stock in Cadbury. The expense incurred by Cadbury for stock or stock options granted to DPS employees has been reflected in the Companys unaudited Condensed Consolidated Statements of Operations in selling, general, and administrative expenses for the three and six months ended June 30, 2008. The interests of the Companys employees in certain Cadbury benefit plans were converted into one of three Company plans which were approved by the Companys sole stockholder on May 5, 2008. As a result of this conversion, the participants in these three plans are fully vested in and will receive shares of common stock of the Company on designated future dates. The aggregate number of shares of the Companys common stock as of June 30, 2009, that are to be distributed under these plans is approximately 200,000 shares. |
Weighted | Weighted Average | Aggregate | ||||||||||||||
Average | Remaining Contractual | Intrinsic Value | ||||||||||||||
Stock Options | Exercise Price | Term (Years) | (in millions) | |||||||||||||
Outstanding at December 31, 2008
|
1,159,619 | $ | 25.30 | 9.36 | $ | | ||||||||||
Granted
|
1,242,494 | $ | 13.48 | |||||||||||||
Exercised
|
| $ | | |||||||||||||
Forfeited or expired
|
(91,182 | ) | $ | 23.17 | ||||||||||||
|
||||||||||||||||
Outstanding at June 30, 2009
|
2,310,931 | $ | 19.03 | 9.29 | $ | 9 | ||||||||||
|
||||||||||||||||
Exercisable at June 30, 2009
|
360,226 | $ | 25.36 | 8.86 | $ | |
Weighted | Weighted Average | Aggregate | ||||||||||||||
Restricted | Average Grant | Remaining Contractual | Intrinsic Value | |||||||||||||
Stock Units | Date Fair Value | Term (Years) | (in millions) | |||||||||||||
Outstanding at December 31, 2008
|
1,028,609 | $ | 24.83 | 2.35 | $ | 17 | ||||||||||
Granted
|
1,909,601 | $ | 13.78 | |||||||||||||
Vested
|
(52,491 | ) | $ | 25.35 | ||||||||||||
Forfeited or expired
|
(64,717 | ) | $ | 20.33 | ||||||||||||
|
||||||||||||||||
Outstanding at June 30, 2009
|
2,821,002 | $ | 17.44 | 2.41 | $ | 60 | ||||||||||
|
15
For the | For the | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Basic EPS:
|
||||||||||||||||
Net income
|
$ | 158 | $ | 108 | $ | 290 | $ | 203 | ||||||||
Weighted average common shares outstanding
(1)
|
254.2 | 254.0 | 254.2 | 253.8 | ||||||||||||
Earnings per common share basic
|
$ | 0.62 | $ | 0.42 | $ | 1.14 | $ | 0.80 | ||||||||
|
||||||||||||||||
Diluted EPS:
|
||||||||||||||||
Net income
|
$ | 158 | $ | 108 | $ | 290 | $ | 203 | ||||||||
|
||||||||||||||||
Weighted average common shares outstanding
(1)
|
254.2 | 254.0 | 254.2 | 253.8 | ||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Stock options and restricted stock units
(2)
|
0.9 | | 0.4 | | ||||||||||||
|
||||||||||||||||
Weighted average common shares outstanding and common
stock equivalents
|
255.1 | 254.0 | 254.6 | 253.8 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Earnings per common share diluted
|
$ | 0.62 | $ | 0.42 | $ | 1.14 | $ | 0.80 |
(1) | For periods prior to May 7, 2008, the date DPS distributed the common stock of DPS to Cadbury plc shareholders, the same number of shares is being used for diluted EPS as for basic EPS as no common stock of DPS was previously outstanding and no DPS equity awards were outstanding for the prior periods. Subsequent to May 7, 2008, the number of basic shares includes approximately 500,000 shares related to former Cadbury benefit plans converted to DPS shares on a daily volume weighted average. See Note 10 for information regarding the Companys stock-based compensation plans. | |
(2) | Anti-dilutive stock options and RSUs totaling 1.1 million shares were excluded from the diluted weighted average shares outstanding for the three months ended June 30, 2009, and 1.2 million shares were excluded from the diluted weighted average shares outstanding for the six months ended June 30, 2009. |
| interest rates; | ||
| foreign exchange rates; and | ||
| commodity prices, affecting the cost of our raw materials. |
16
17
June 30, | December 31, | |||||||||||
Balance Sheet Location | 2009 | 2008 | ||||||||||
Assets:
|
||||||||||||
Derivative instruments not designated as
cash flow hedging
instruments under SFAS 133:
|
||||||||||||
Commodity futures
|
Prepaid and other current assets | $ | 2 | $ | | |||||||
|
||||||||||||
Commodity futures
|
Other non-current assets | 1 | | |||||||||
|
||||||||||||
Total assets
|
$ | 3 | $ | | ||||||||
|
||||||||||||
|
||||||||||||
Liabilities:
|
||||||||||||
Derivative instruments designated as
cash flow hedging
instruments under SFAS 133:
|
||||||||||||
Interest rate swap contracts
|
Accounts payable and accrued expenses | $ | 20 | $ | 32 | |||||||
Foreign exchange forward contracts
|
Accounts payable and accrued expenses | 2 | | |||||||||
Interest rate swap contracts
(1)
|
Other non-current liabilities | | | |||||||||
Derivative instruments not designated as hedging
instruments under SFAS 133:
|
||||||||||||
Commodity futures
|
Accounts payable and accrued expenses | 2 | 8 | |||||||||
|
||||||||||||
Total liabilities
|
$ | 24 | $ | 40 | ||||||||
|
(1) | The fair value of interest rate swap contracts recorded under Other non-current liabilities was less than $1 million as of June 30, 2009. There were no interest rate swap contracts recorded under Other non-current liabilities as of December 31, 2008. |
Amount of Gain | Amount of Gain (Loss) | Location of Gain (Loss) | ||||||||||
(Loss) Recognized in | Reclassified from AOCI into | Reclassified from AOCI into | ||||||||||
OCI | Net Income | Net Income | ||||||||||
For the three months ended
June 30, 2009:
|
||||||||||||
Interest rate swap contracts
|
$ | (2 | ) | $ | (9 | ) | Interest Expense | |||||
Foreign exchange forward
contracts
(1)
|
(3 | ) | | Cost of Sales | ||||||||
|
||||||||||||
Total
|
$ | (5 | ) | $ | (9 | ) | ||||||
|
||||||||||||
|
||||||||||||
For the six months ended
June 30, 2009:
|
||||||||||||
Interest rate swap contracts
|
$ | (8 | ) | $ | (20 | ) | Interest Expense | |||||
Foreign exchange forward
contracts
(1)
|
(2 | ) | | Cost of Sales | ||||||||
|
||||||||||||
Total
|
$ | (10 | ) | $ | (20 | ) | ||||||
|
(1) | The amount of gain (loss) on foreign exchange forward contracts reclassified from AOCI into net income was less than $1 million for the three and six months ended June 30, 2009. |
18
Amount of Gain (Loss) | Location of Gain (Loss) | |||||||
Recognized in Income | Recognized in Income | |||||||
For the three months ended
June 30, 2009:
|
||||||||
Commodity futures
|
$ | 1 | Cost of sales | |||||
Commodity futures
|
3 | Selling, general and administrative expenses | ||||||
|
||||||||
Total
(1)
|
$ | 4 | ||||||
|
||||||||
|
||||||||
For the six months ended
June 30, 2009:
|
||||||||
Commodity futures
|
$ | (2 | ) | Cost of sales | ||||
Commodity futures
|
1 | Selling, general and administrative expenses | ||||||
|
||||||||
Total
(2)
|
$ | (1 | ) | |||||
|
(1) | The total gain recognized for the three months ended June 30, 2009, includes a realized $4 million loss which represents contracts that settled during the three months ended June 30, 2009, and an unrealized $8 million gain which represents the change in fair value of outstanding contracts. | |
(2) | The total loss recognized for the six months ended June 30, 2009, includes a realized $10 million loss which represents contracts that settled during the six months ended June 30, 2009, and an unrealized $9 million gain which represents the change in fair value of outstanding contracts. |
19
Fair Value Measurements at Reporting Date Using | ||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||
Active Markets for | Observable | Unobservable | ||||||||||
Identical Assets | Inputs | Inputs | ||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Commodity futures
|
$ | | $ | 3 | $ | | ||||||
|
||||||||||||
Total assets
|
$ | | $ | 3 | $ | | ||||||
|
||||||||||||
|
||||||||||||
Interest rate swaps
|
$ | | $ | 20 | $ | | ||||||
Foreign exchange forward contracts
|
| 2 | | |||||||||
Commodity futures
|
| 2 | | |||||||||
|
||||||||||||
Total liabilities
|
$ | | $ | 24 | $ | | ||||||
|
June 30, 2009 | December 31, 2008 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Long term debt 6.12% Senior unsecured notes
|
$ | 250 | $ | 259 | $ | 250 | $ | 248 | ||||||||
Long term debt 6.82 % Senior unsecured notes
|
1,200 | 1,272 | 1,200 | 1,184 | ||||||||||||
Long term debt 7.45% Senior unsecured notes
|
250 | 263 | 250 | 249 | ||||||||||||
Long term debt Senior unsecured term loan A facility
|
1,525 | 1,495 | 1,805 | 1,606 |
20
21
| The Beverage Concentrates segment reflects sales of the Companys branded concentrates and syrup to third party bottlers primarily in the United States and Canada. Most of the brands in this segment are carbonated soft drink brands. | ||
| The Packaged Beverages segment reflects sales in the United States and Canada from the manufacture and distribution of finished beverages and other products, including sales of the Companys own brands and third party brands, through both DSD and warehouse direct delivery systems. | ||
| The Latin America Beverages segment reflects sales in the Mexico and Caribbean markets from the manufacture and distribution of both concentrates and finished beverages. | ||
The Company has made the following changes to its financial segment information: | |||
| Intersegment sales. All intersegment sales are made at cost and intersegment eliminations are reported as part of the segment results. | ||
| Allocations of certain trade and marketing costs . Trade and marketing expenditures are allocated to the Beverage Concentrates and Packaged Beverages segments based on brand volume. | ||
| Allocations of overhead and selling costs . Certain overhead costs, which are managed at a corporate level, such as information technology, back-office shared services, finance, research and development and human resources, are no longer allocated to the segments. These costs are now reported as unallocated corporate costs. Additionally, the Company has changed its allocation methodology for certain combined selling activities. | ||
| Other adjustments previously excluded from the segment profitability measures . Certain items, such as LIFO inventory adjustments, the impact of foreign exchange, and other income and expense items that previously were included in the other line item within adjustments are reported as a component of segment operating profit (loss) (SOP). |
22
For the | For the | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Segment Results Net Sales
|
||||||||||||||||
Beverage Concentrates
|
$ | 281 | $ | 269 | $ | 524 | $ | 491 | ||||||||
Packaged Beverages
|
1,105 | 1,152 | 2,049 | 2,130 | ||||||||||||
Latin America Beverages
|
95 | 124 | 168 | 219 | ||||||||||||
|
||||||||||||||||
Net sales as reported
|
$ | 1,481 | $ | 1,545 | $ | 2,741 | $ | 2,840 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Segment Results SOP
|
||||||||||||||||
Beverage Concentrates
|
$ | 184 | $ | 174 | $ | 334 | $ | 300 | ||||||||
Packaged Beverages
|
170 | 143 | 277 | 244 | ||||||||||||
Latin America Beverages
|
14 | 34 | 23 | 51 | ||||||||||||
|
||||||||||||||||
Total segment operating profit
|
368 | 351 | 634 | 595 | ||||||||||||
Unallocated corporate costs
|
61 | 64 | 124 | 114 | ||||||||||||
Restructuring costs
|
| 14 | | 24 | ||||||||||||
Other operating expense (income)
|
10 | 4 | (52 | ) | 2 | |||||||||||
|
||||||||||||||||
Income from operations
|
297 | 269 | 562 | 455 | ||||||||||||
Interest expense, net
|
51 | 82 | 105 | 113 | ||||||||||||
Other income
|
(2 | ) | (1 | ) | (5 | ) | (1 | ) | ||||||||
|
||||||||||||||||
Income before provision for income
taxes and equity in earnings of
unconsolidated subsidiaries as
reported
|
$ | 248 | $ | 188 | $ | 462 | $ | 343 | ||||||||
|
23
Condensed Consolidating Statements of Operations | ||||||||||||||||||||
For the Three Months Ended June 30, 2009 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales
|
$ | | $ | 1,348 | $ | 133 | $ | | $ | 1,481 | ||||||||||
Cost of sales
|
| 540 | 56 | | 596 | |||||||||||||||
|
||||||||||||||||||||
Gross profit
|
| 808 | 77 | | 885 | |||||||||||||||
Selling, general and
administrative expenses
|
| 499 | 51 | | 550 | |||||||||||||||
Depreciation and amortization
|
| 28 | | | 28 | |||||||||||||||
Other operating expense (income)
|
| 11 | (1 | ) | | 10 | ||||||||||||||
|
||||||||||||||||||||
Income from operations
|
| 270 | 27 | | 297 | |||||||||||||||
Interest expense
|
52 | 31 | | (31 | ) | 52 | ||||||||||||||
Interest income
|
(31 | ) | | (1 | ) | 31 | (1 | ) | ||||||||||||
Other income
|
(3 | ) | | 1 | | (2 | ) | |||||||||||||
|
||||||||||||||||||||
(Loss) income before
provision for income taxes
and equity in earnings of
subsidiaries
|
(18 | ) | 239 | 27 | | 248 | ||||||||||||||
Provision for income taxes
|
(7 | ) | 96 | 2 | | 91 | ||||||||||||||
|
||||||||||||||||||||
(Loss) income before equity
in earnings of subsidiaries
|
(11 | ) | 143 | 25 | | 157 | ||||||||||||||
Equity in earnings of
consolidated subsidiaries
|
169 | 26 | | (195 | ) | | ||||||||||||||
Equity in earnings of
unconsolidated subsidiaries,
net of tax
|
| | 1 | | 1 | |||||||||||||||
|
||||||||||||||||||||
Net income
|
$ | 158 | $ | 169 | $ | 26 | $ | (195 | ) | $ | 158 | |||||||||
|
24
Condensed Consolidating Statements of Operations | ||||||||||||||||||||
For the Three Months Ended June 30, 2008 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales
|
$ | | $ | 1,377 | $ | 172 | $ | (4 | ) | $ | 1,545 | |||||||||
Cost of sales
|
| 631 | 67 | (4 | ) | 694 | ||||||||||||||
|
||||||||||||||||||||
Gross profit
|
| 746 | 105 | | 851 | |||||||||||||||
Selling, general and
administrative expenses
|
| 484 | 52 | | 536 | |||||||||||||||
Depreciation and amortization
|
| 26 | 2 | | 28 | |||||||||||||||
Restructuring costs
|
| 13 | 1 | | 14 | |||||||||||||||
Other operating expense (income)
|
| 4 | | | 4 | |||||||||||||||
|
||||||||||||||||||||
Income from operations
|
| 219 | 50 | | 269 | |||||||||||||||
Interest expense
|
74 | 47 | | (29 | ) | 92 | ||||||||||||||
Interest income
|
(34 | ) | (4 | ) | (1 | ) | 29 | (10 | ) | |||||||||||
Other (income) expense
|
| (3 | ) | 2 | | (1 | ) | |||||||||||||
|
||||||||||||||||||||
Income before provision for
income taxes and equity in
earnings of subsidiaries
|
(40 | ) | 179 | 49 | | 188 | ||||||||||||||
Provision for income taxes
|
(16 | ) | 76 | 20 | | 80 | ||||||||||||||
|
||||||||||||||||||||
Income before equity in
earnings of subsidiaries
|
(24 | ) | 103 | 29 | | 108 | ||||||||||||||
Equity in earnings of
consolidated subsidiaries
|
109 | 22 | | (131 | ) | | ||||||||||||||
Equity in earnings of
unconsolidated subsidiaries,
net of tax
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
Net income
|
$ | 85 | $ | 125 | $ | 29 | $ | (131 | ) | $ | 108 | |||||||||
|
Condensed Consolidating Statements of Operations | ||||||||||||||||||||
For the Six Months Ended June 30, 2009 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales
|
$ | | $ | 2,513 | $ | 228 | $ | | $ | 2,741 | ||||||||||
Cost of sales
|
| 1,029 | 98 | | 1,127 | |||||||||||||||
|
||||||||||||||||||||
Gross profit
|
| 1,484 | 130 | | 1,614 | |||||||||||||||
Selling, general and
administrative expenses
|
| 963 | 86 | | 1,049 | |||||||||||||||
Depreciation and amortization
|
| 53 | 2 | | 55 | |||||||||||||||
Other operating (income) expense
|
| (46 | ) | (6 | ) | | (52 | ) | ||||||||||||
|
||||||||||||||||||||
Income from operations
|
| 514 | 48 | | 562 | |||||||||||||||
Interest expense
|
107 | 70 | | (70 | ) | 107 | ||||||||||||||
Interest income
|
(70 | ) | | (2 | ) | 70 | (2 | ) | ||||||||||||
Other income
|
(6 | ) | | 1 | | (5 | ) | |||||||||||||
|
||||||||||||||||||||
(Loss) income before
provision for income taxes
and equity in earnings of
subsidiaries
|
(31 | ) | 444 | 49 | | 462 | ||||||||||||||
Provision for income taxes
|
(14 | ) | 179 | 8 | | 173 | ||||||||||||||
|
||||||||||||||||||||
(Loss) income before equity
in earnings of subsidiaries
|
(17 | ) | 265 | 41 | | 289 | ||||||||||||||
Equity in earnings of
consolidated subsidiaries
|
307 | 42 | | (349 | ) | | ||||||||||||||
Equity in earnings of
unconsolidated subsidiaries,
net of tax
|
| | 1 | | 1 | |||||||||||||||
|
||||||||||||||||||||
Net income
|
$ | 290 | $ | 307 | $ | 42 | $ | (349 | ) | $ | 290 | |||||||||
|
25
Condensed Consolidating Statements of Operations | ||||||||||||||||||||
For the Six Months Ended June 30, 2008 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Net sales
|
$ | | $ | 2,545 | $ | 303 | $ | (8 | ) | $ | 2,840 | |||||||||
Cost of sales
|
| 1,144 | 123 | (8 | ) | 1,259 | ||||||||||||||
|
||||||||||||||||||||
Gross profit
|
| 1,401 | 180 | | 1,581 | |||||||||||||||
Selling, general and
administrative expenses
|
| 946 | 98 | | 1,044 | |||||||||||||||
Depreciation and amortization
|
| 52 | 4 | | 56 | |||||||||||||||
Restructuring costs
|
| 23 | 1 | | 24 | |||||||||||||||
Other operating expense (income)
|
| 4 | (2 | ) | | 2 | ||||||||||||||
|
||||||||||||||||||||
Income from operations
|
| 376 | 79 | | 455 | |||||||||||||||
Interest expense
|
74 | 95 | | (29 | ) | 140 | ||||||||||||||
Interest income
|
(34 | ) | (17 | ) | (5 | ) | 29 | (27 | ) | |||||||||||
Other (income) expense
|
| (3 | ) | 2 | | (1 | ) | |||||||||||||
|
||||||||||||||||||||
Income before provision for
income taxes and equity in
earnings of subsidiaries
|
(40 | ) | 301 | 82 | | 343 | ||||||||||||||
Provision for income taxes
|
(16 | ) | 125 | 31 | | 140 | ||||||||||||||
|
||||||||||||||||||||
Income before equity in
earnings of subsidiaries
|
(24 | ) | 176 | 51 | | 203 | ||||||||||||||
Equity in earnings of
consolidated subsidiaries
|
109 | 25 | | (134 | ) | | ||||||||||||||
Equity in earnings of
unconsolidated subsidiaries,
net of tax
|
| | | | | |||||||||||||||
|
||||||||||||||||||||
Net income
|
$ | 85 | $ | 201 | $ | 51 | $ | (134 | ) | $ | 203 | |||||||||
|
26
Condensed Consolidating Balance Sheets | ||||||||||||||||||||
As of June 30, 2009 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Current assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | | $ | 137 | $ | 98 | $ | | $ | 235 | ||||||||||
Accounts receivable:
|
||||||||||||||||||||
Trade (net of allowances of $0, $9, $3,
$0 and $12, respectively)
|
| 528 | 52 | | 580 | |||||||||||||||
Other
|
| 40 | 9 | | 49 | |||||||||||||||
Related party receivable
|
17 | 8 | 5 | (30 | ) | | ||||||||||||||
Inventories
|
| 256 | 28 | | 284 | |||||||||||||||
Deferred tax assets
|
8 | 77 | 1 | | 86 | |||||||||||||||
Prepaid expenses and other current assets
|
| 62 | 14 | | 76 | |||||||||||||||
|
||||||||||||||||||||
Total current assets
|
25 | 1,108 | 207 | (30 | ) | 1,310 | ||||||||||||||
Property, plant and equipment, net
|
| 954 | 59 | | 1,013 | |||||||||||||||
Investments in consolidated subsidiaries
|
2,764 | 438 | | (3,202 | ) | | ||||||||||||||
Investments in unconsolidated
subsidiaries
|
| | 14 | | 14 | |||||||||||||||
Goodwill
|
| 2,961 | 22 | | 2,983 | |||||||||||||||
Other intangible assets, net
|
| 2,632 | 76 | | 2,708 | |||||||||||||||
Long-term receivable, related parties
|
3,394 | 323 | | (3,717 | ) | | ||||||||||||||
Other non-current assets
|
448 | 112 | 2 | | 562 | |||||||||||||||
Non-current deferred tax assets
|
| | 140 | | 140 | |||||||||||||||
|
||||||||||||||||||||
Total assets
|
$ | 6,631 | $ | 8,528 | $ | 520 | $ | (6,949 | ) | $ | 8,730 | |||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||
Accounts payable and accrued expenses
|
$ | 61 | $ | 686 | $ | 56 | $ | | $ | 803 | ||||||||||
Related party payable
|
| 22 | 8 | (30 | ) | | ||||||||||||||
Income taxes payable
|
(14 | ) | 27 | | | 13 | ||||||||||||||
|
||||||||||||||||||||
Total current liabilities
|
47 | 735 | 64 | (30 | ) | 816 | ||||||||||||||
Long-term debt payable to third parties
|
3,225 | 15 | | | 3,240 | |||||||||||||||
Long-term debt payable to related parties
|
323 | 3,394 | | (3,717 | ) | | ||||||||||||||
Deferred tax liabilities
|
| 995 | 8 | | 1,003 | |||||||||||||||
Other non-current liabilities
|
116 | 625 | 10 | | 751 | |||||||||||||||
|
||||||||||||||||||||
Total liabilities
|
3,711 | 5,764 | 82 | (3,747 | ) | 5,810 | ||||||||||||||
|
||||||||||||||||||||
Total equity
|
2,920 | 2,764 | 438 | (3,202 | ) | 2,920 | ||||||||||||||
|
||||||||||||||||||||
Total liabilities and equity
|
$ | 6,631 | $ | 8,528 | $ | 520 | $ | (6,949 | ) | $ | 8,730 | |||||||||
|
27
Condensed Consolidating Balance Sheets | ||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Current assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | | $ | 145 | $ | 69 | $ | | $ | 214 | ||||||||||
Accounts receivable:
|
||||||||||||||||||||
Trade (net of allowances of $0, $11,
$2, $0 and $13, respectively)
|
| 481 | 51 | | 532 | |||||||||||||||
Other
|
| 49 | 2 | | 51 | |||||||||||||||
Related party receivable
|
27 | 619 | 6 | (652 | ) | | ||||||||||||||
Inventories
|
| 240 | 23 | | 263 | |||||||||||||||
Deferred tax assets
|
12 | 78 | 3 | | 93 | |||||||||||||||
Prepaid expenses and other current assets
|
24 | 54 | 6 | | 84 | |||||||||||||||
|
||||||||||||||||||||
Total current assets
|
63 | 1,666 | 160 | (652 | ) | 1,237 | ||||||||||||||
Property, plant and equipment, net
|
| 935 | 55 | | 990 | |||||||||||||||
Investments in consolidated subsidiaries
|
2,413 | 380 | | (2,793 | ) | | ||||||||||||||
Investments in unconsolidated
subsidiaries
|
| | 12 | | 12 | |||||||||||||||
Goodwill
|
| 2,961 | 22 | | 2,983 | |||||||||||||||
Other intangible assets, net
|
| 2,639 | 73 | | 2,712 | |||||||||||||||
Long-term receivable, related parties
|
3,989 | | | (3,989 | ) | | ||||||||||||||
Other non-current assets
|
451 | 106 | 7 | | 564 | |||||||||||||||
Non-current deferred tax assets
|
| | 140 | | 140 | |||||||||||||||
|
||||||||||||||||||||
Total assets
|
$ | 6,916 | $ | 8,687 | $ | 469 | $ | (7,434 | ) | $ | 8,638 | |||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||
Accounts payable and accrued expenses
|
$ | 78 | $ | 667 | $ | 51 | $ | | $ | 796 | ||||||||||
Related party payable
|
614 | 28 | 10 | (652 | ) | | ||||||||||||||
Income taxes payable
|
| | 5 | | 5 | |||||||||||||||
|
||||||||||||||||||||
Total current liabilities
|
692 | 695 | 66 | (652 | ) | 801 | ||||||||||||||
Long-term debt payable to third parties
|
3,505 | 17 | | | 3,522 | |||||||||||||||
Long-term debt payable to related parties
|
| 3,989 | | (3,989 | ) | | ||||||||||||||
Deferred tax liabilities
|
| 966 | 15 | | 981 | |||||||||||||||
Other non-current liabilities
|
112 | 607 | 8 | | 727 | |||||||||||||||
|
||||||||||||||||||||
Total liabilities
|
4,309 | 6,274 | 89 | (4,641 | ) | 6,031 | ||||||||||||||
|
||||||||||||||||||||
Total equity
|
2,607 | 2,413 | 380 | (2,793 | ) | 2,607 | ||||||||||||||
|
||||||||||||||||||||
Total liabilities and equity
|
$ | 6,916 | $ | 8,687 | $ | 469 | $ | (7,434 | ) | $ | 8,638 | |||||||||
|
28
Condensed Consolidating Statements of Cash Flows | ||||||||||||||||||||
For the Six Months Ended June 30, 2009 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Operating activities:
|
||||||||||||||||||||
Net cash (used in) provided by
operating activities
|
$ | (104 | ) | $ | 450 | $ | 25 | $ | | $ | 371 | |||||||||
Investing activities:
|
||||||||||||||||||||
Purchases of property, plant and
equipment
|
| (133 | ) | (5 | ) | | (138 | ) | ||||||||||||
Purchases of intangible assets
|
| (7 | ) | | | (7 | ) | |||||||||||||
Proceeds from disposals of property,
plant and equipment
|
| 4 | | | 4 | |||||||||||||||
Proceeds from disposals of investments
and other assets
|
| 63 | 5 | | 68 | |||||||||||||||
Issuance of notes receivable
|
| (259 | ) | | 259 | | ||||||||||||||
Proceeds from repayment of notes
receivable
|
125 | | | (125 | ) | | ||||||||||||||
|
||||||||||||||||||||
Net cash provided by (used in)
investing activities
|
125 | (332 | ) | | 134 | (73 | ) | |||||||||||||
Financing activities:
|
||||||||||||||||||||
Proceeds from issuance of long-term
debt related to guarantor/
non-guarantor
|
259 | | | (259 | ) | | ||||||||||||||
Repayment of related party long-term
debt
|
| (125 | ) | | 125 | | ||||||||||||||
Repayment of senior unsecured credit
facility
|
(280 | ) | | | | (280 | ) | |||||||||||||
Other, net
|
| (1 | ) | | | (1 | ) | |||||||||||||
|
||||||||||||||||||||
Net cash used in financing activities
|
(21 | ) | (126 | ) | | (134 | ) | (281 | ) | |||||||||||
Cash and cash equivalents
net change from:
|
||||||||||||||||||||
Operating, investing and financing
activities
|
| (8 | ) | 25 | | 17 | ||||||||||||||
Currency translation
|
| | 4 | | 4 | |||||||||||||||
Cash and cash equivalents at beginning
of period
|
| 145 | 69 | | 214 | |||||||||||||||
|
||||||||||||||||||||
Cash and cash equivalents at end of
period
|
$ | | $ | 137 | $ | 98 | $ | | $ | 235 | ||||||||||
|
29
Condensed Consolidating Statements of Cash Flows | ||||||||||||||||||||
For the Six Months Ended June 30, 2008 | ||||||||||||||||||||
Parent | Guarantor | Non-Guarantor | Eliminations | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Operating activities:
|
||||||||||||||||||||
Net cash (used in) provided by
operating activities
|
$ | (17 | ) | $ | 237 | $ | 58 | $ | | $ | 278 | |||||||||
Investing activities:
|
||||||||||||||||||||
Purchases of property, plant and
equipment
|
| (139 | ) | (3 | ) | | (142 | ) | ||||||||||||
Issuance of notes receivable
|
(3,888 | ) | (328 | ) | (27 | ) | 4,078 | (165 | ) | |||||||||||
Proceeds from repayments of notes
receivable
|
| 1,464 | 76 | | 1,540 | |||||||||||||||
Proceeds from disposals of
property, plant and equipment
|
| | 3 | | 3 | |||||||||||||||
|
||||||||||||||||||||
Net cash (used in) provided by
investing activities
|
(3,888 | ) | 997 | 49 | 4,078 | 1,236 | ||||||||||||||
Financing activities:
|
||||||||||||||||||||
Proceeds from issuance of related
party long-term debt
|
| 1,615 | | | 1,615 | |||||||||||||||
Proceeds from issuance of related
party long-term debt related to
guarantor/ non-guarantor
|
166 | 3,888 | 24 | (4,078 | ) | | ||||||||||||||
Proceeds from Senior Unsecured
Credit Facility
|
2,200 | | | | 2,200 | |||||||||||||||
Proceeds from Senior Unsecured Notes
|
1,700 | | | | 1,700 | |||||||||||||||
Proceeds from Bridge Loan Facility
|
1,700 | | | | 1,700 | |||||||||||||||
Repayment of related party
long-term debt
|
| (4,653 | ) | (11 | ) | | (4,664 | ) | ||||||||||||
Repayment of Senior Unsecured
Credit Facility
|
(55 | ) | | | | (55 | ) | |||||||||||||
Repayment of Bridge Loan Facility
|
(1,700 | ) | | | | (1,700 | ) | |||||||||||||
Deferred financing charges paid
|
(106 | ) | | | | (106 | ) | |||||||||||||
Cash distribution to Cadbury
|
| (1,989 | ) | (76 | ) | | (2,065 | ) | ||||||||||||
Change in Cadburys net investment
|
| 100 | (6 | ) | | 94 | ||||||||||||||
Other, net
|
| (1 | ) | | | (1 | ) | |||||||||||||
|
||||||||||||||||||||
Net cash provided by (used in)
financing activities
|
3,905 | (1,040 | ) | (69 | ) | (4,078 | ) | (1,282 | ) | |||||||||||
Cash and cash equivalents
net change from:
|
||||||||||||||||||||
Operating, investing and financing
activities
|
| 194 | 38 | | 232 | |||||||||||||||
Currency translation
|
| (2 | ) | 3 | | 1 | ||||||||||||||
Cash and cash equivalents at
beginning of period
|
| 28 | 39 | | 67 | |||||||||||||||
|
||||||||||||||||||||
Cash and cash equivalents at end of
period
|
$ | | $ | 220 | $ | 80 | $ | | $ | 300 | ||||||||||
|
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Intersegment sales.
All intersegment sales are made at cost and intersegment eliminations
are reported as part of the segment results.
Allocations of certain trade and marketing costs
. Trade and marketing expenditures are
allocated to the Beverage Concentrates and Packaged Beverages segments based on brand
volume.
Table of Contents
Allocations of overhead and selling costs
. Certain overhead costs, which are managed at a
corporate level, such as information technology, back-office shared services, finance,
research and development and human resources, are no longer allocated to the segments. These
costs are now reported as unallocated corporate costs. Additionally, we have changed our
allocation methodology for certain combined selling activities.
Other adjustments previously excluded from the segment profitability measures
. Certain
items, such as LIFO inventory adjustments, the impact of foreign exchange, and other income
and expense items that previously were included in the other line item within adjustments
are reported as a component of segment operating profit.
Table of Contents
Net sales totaled $1,481 million for the three months ended June 30, 2009, a decrease
of $64 million, or 4%, from the three months ended June 30, 2008.
Net income for the three months ended June 30, 2009, was $158 million, compared to
$108 million for the year ago period, an increase of $50 million, or 46%.
Earnings per share was $0.62 per share for the three months ended June, 2009,
compared with $0.42 for the year ago period.
Table of Contents
For the Three Months Ended June 30,
2009
2008
Percentage
Dollars
Percent
Dollars
Percent
Change
$
1,481
100.0
%
$
1,545
100.0
%
(4
)%
596
40.2
694
44.9
(14
)
885
59.8
851
55.1
4
550
37.1
536
34.7
3
28
1.9
28
1.8
14
0.9
NM
10
0.7
4
0.3
150
297
20.1
269
17.4
10
52
3.5
92
5.9
43
(1
)
(0.1
)
(10
)
(0.6
)
(90
)
(2
)
(0.1
)
(1
)
(0.1
)
100
248
16.8
188
12.2
32
91
6.2
80
5.2
14
157
10.6
108
7.0
45
1
0.1
NM
$
158
10.7
%
$
108
7.0
%
46
%
$
0.62
NM
$
0.42
NM
48
%
$
0.62
NM
$
0.42
NM
48
%
Table of Contents
For the
Three Months Ended
June 30,
2009
2008
$
281
$
269
1,105
1,152
95
124
$
1,481
$
1,545
$
184
$
174
170
143
14
34
368
351
61
64
14
10
4
297
269
51
82
(2
)
(1
)
$
248
$
188
Table of Contents
For the
Three Months Ended
June 30,
Amount
2009
2008
Change
$
281
$
269
$
12
184
174
10
For the
Three Months Ended
June 30,
Amount
2009
2008
Change
$
1,105
$
1,152
$
(47
)
170
143
27
Table of Contents
For the
Three Months Ended
June 30,
Amount
2009
2008
Change
$
95
$
124
$
(29
)
14
34
(20
)
For the Six Months Ended June 30,
2009
2008
Percentage
Dollars
Percent
Dollars
Percent
Change
$
2,741
100.0
%
$
2,840
100.0
%
(3
)%
1,127
41.1
1,259
44.3
(10
)
1,614
58.9
1,581
55.7
2
1,049
38.3
1,044
36.8
55
2.0
56
2.0
(2
)
24
0.8
(100
)
(52
)
(1.9
)
2
0.1
NM
562
20.5
455
16.0
24
107
3.9
140
4.9
(24
)
(2
)
(0.1
)
(27
)
(1.0
)
(93
)
(5
)
(0.2
)
(1
)
NM
462
16.9
343
12.1
35
173
6.3
140
4.9
24
289
10.6
203
7.2
42
1
NM
$
290
10.6
%
$
203
7.2
%
43
%
$
1.14
NM
$
0.80
NM
43
%
$
1.14
NM
$
0.80
NM
43
%
Table of Contents
Table of Contents
For the
Six Months Ended
June 30,
2009
2008
$
524
$
491
2,049
2,130
168
219
$
2,741
$
2,840
$
334
$
300
277
244
23
51
634
595
124
114
24
(52
)
2
562
455
105
113
(5
)
(1
)
$
462
$
343
For the
Six Months Ended
June 30,
Amount
2009
2008
Change
$
524
$
491
$
33
334
300
34
Table of Contents
For the
Six Months Ended
June 30,
Amount
2009
2008
Change
$
2,049
$
2,130
$
(81
)
277
244
33
For the
Six Months Ended
June 30,
Amount
2009
2008
Change
$
168
$
219
$
(51
)
23
51
(28
)
Table of Contents
revenue recognition;
customer marketing programs and incentives;
stock-based compensation;
pension and postretirement benefits;
risk management programs;
income taxes;
goodwill and other indefinite lived intangible assets; and
definite lived intangible assets.
changes in economic factors and recent global financial events could impact consumers
purchasing power, which could consequently impact our ability to fund our operating
requirements with cash provided by operations;
changes in economic factors and recent global financial events could have a negative
impact on the ability of our customers to obtain financing and to timely pay their
obligations to us, thus reducing our operating cash flow;
we incurred significant third party debt and assumed significant pension obligations in
connection with our separation from Cadbury;
we will continue to make capital expenditures to build new manufacturing capacity,
upgrade our existing plants and distribution fleet of trucks, replace and expand our cold
drink equipment, make investments in IT systems, and from time-to-time invest in
restructuring programs in order to improve operating efficiencies and lower costs; and
we may make further acquisitions.
Table of Contents
A senior unsecured term loan A facility in an aggregate principal amount of $2.2
billion with a maturity in 2013. As of June 30, 2009, we had $1.525 billion outstanding
under the term loan A facility.
A revolving credit facility in an aggregate principal amount of $500 million with a
maturity in 2013. The revolving credit facility was undrawn as of June 30, 2009, except
to the extent utilized by letters of credit. Up to $75 million of the revolving credit
facility is available for the issuance of letters of credit, of which $43 million was
utilized as of June 30, 2009. We may use borrowings under the revolving credit facility
for working capital and general corporate purposes.
Table of Contents
For the
Six Months Ended
June 30,
2009
2008
$
371
$
278
(73
)
1,236
(281
)
(1,282
)
Table of Contents
For the
Six Months Ended
June 30,
2009
2008
$
$
2,200
1,700
1,700
$
$
5,600
$
(280
)
$
(55
)
(1,700
)
(1
)
(1
)
$
(281
)
$
(1,756
)
$
(281
)
$
3,844
$
$
1,615
$
$
(4,664
)
$
$
(3,049
)
Table of Contents
Payments Due in Year
Total
2009
2010
2011
2012
2013
After 2013
$
1,525
$
$
12
$
330
$
908
$
275
$
1,580
97
173
198
174
113
825
374
40
66
53
44
40
131
613
176
219
62
55
49
52
(1)
Amounts represent our estimated interest payments based on projected interest rates for floating rate debt and specified interest rates for fixed rate
debt.
(2)
Amounts represent minimum rental commitments under non-cancelable operating leases.
(3)
Amounts represent commitments under agreements to purchase goods or services that are legally binding and that specify all significant terms, including
capital obligations and long-term contractual obligations.
Table of Contents
Table of Contents
1.
The following Class I directors were elected to hold office for a three year term and
until their respective successor shall have been duly elected and qualified. The vote was
as follows:
Name
For
Withheld
Abstain
185,696,238
13,634,765
75,777
185,524,690
13,806,788
75,302
187,352,295
11,977,537
76,948
2.
The fiscal year Management Incentive Plan related to performance-based incentive
compensation for certain of our executive officers was approved and adopted. The vote was
as follows:
For
Against
Abstain
8,009,350
109,631
3.
The appointment of Deloitte & Touche as our independent registered public accounting
firm for fiscal year 2009 was ratified. The vote was as follows:
For
Against
Abstain
199,122,317
218,370
66,093
4.
The Omnibus Stock Incentive Plan of 2009 was approved and adopted. The vote was as
follows:
For
Against
Abstain
Broker Non-votes
164,358,832
18,205,906
127,506
16,714,536
(1)
the salary continuation payments increase from 12 months of his annual
base salary to 15 months and from 1 times his target award under the Management
Incentive Plan (MIP) to 1.25 times;
(2)
the lump sum payment of 12 months of his annual base salary increases to
15 months;
(3)
the lump sum payment of 1 times his target under the MIP increases to
1.25 times; and
Table of Contents
(4)
participation in our medical, dental and vision plans and out-placement
services increases from 12 to 15 months.
2.1
Separation and Distribution Agreement between Cadbury Schweppes plc and Dr Pepper Snapple
Group, Inc. and, solely for certain provisions set forth therein, Cadbury plc, dated as of May
1, 2008 (filed as Exhibit 2.1 to the Companys Current Report on Form 8-K (filed on May 5,
2008) and incorporated herein by reference).
3.1
Amended and Restated Certificate of Incorporation of Dr Pepper Snapple Group, Inc. (filed as
Exhibit 3.1 to the Companys Current Report on Form 8-K (filed on May 12, 2008) and
incorporated herein by reference).
3.2
Amended and Restated By-Laws of Dr Pepper Snapple Group, Inc. (filed as Exhibit 3.1 to the
Companys Current Report on Form 8-K (filed on July 16, 2009) and incorporated herein by
reference).
4.1
Indenture, dated April 30, 2008, between Dr Pepper Snapple Group, Inc. and Wells Fargo Bank,
N.A. (filed an Exhibit 4.1 to the Companys Current Report on Form 8-K (filed on May 1, 2008)
and incorporated herein by reference).
4.2
Form of 6.12% Senior Notes due 2013 (filed as Exhibit 4.2 to the Companys Current Report on
Form 8-K (filed on May 1, 2008) and incorporated herein by reference).
4.3
Form of 6.82% Senior Notes due 2013 (filed as Exhibit 4.3 to the Companys Current Report on
Form 8-K (filed on May 1, 2008) and incorporated herein by reference).
4.4
Form of 7.45% Senior Notes due 2013 (filed as Exhibit 4.4 to the Companys Current Report on
Form 8-K (filed on May 1, 2008) and incorporated herein by reference).
4.5
Registration Rights Agreement, dated April 30, 2008, between Dr Pepper Snapple Group, Inc.,
J.P. Morgan Securities Inc., Banc of America Securities LLC, Goldman, Sachs & Co., Morgan
Stanley & Co. Incorporated, UBS Securities LLC, BNP Paribas Securities Corp., Mitsubishi UFJ
Securities International plc, Scotia Capital (USA) Inc., SunTrust Robinson Humphrey, Inc.,
Wachovia Capital Markets, LLC and TD Securities (USA) LLC (filed as Exhibit 4.5 to the
Companys Current Report on Form 8-K (filed on May 1, 2008) and incorporated herein by
reference).
4.6
Supplemental Indenture, dated May 7, 2008, among Dr Pepper Snapple Group, Inc., the
subsidiary guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit
4.1 to the Companys Current Report on Form 8-K (filed on May 12, 2008) and incorporated
herein by reference).
4.7
Second Supplemental Indenture dated March 17, 2009, to be effective as of December 31, 2008,
among Splash Transport, Inc., as a subsidiary guarantor, Dr Pepper Snapple Group, Inc., and
Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.8 to the Companys Annual Report on
Form 10-K (filed March 26, 2009) and incorporated herein by reference).
4.8
Registration Rights Agreement Joinder, dated May 7, 2008, by the subsidiary guarantors named
therein (filed as Exhibit 4.2 to the Companys Current Report on Form 8-K (filed on May 12,
2008) and incorporated herein by reference).
10.1
Omnibus Stock Incentive Plan of 2009 approved by the Stockholders on May 19, 2009 (filed as
Exhibit 10.1 to the Companys Current Report on Form 8-K (filed May 21, 2009) and incorporated
by reference to Appendix C to the Companys Definitive Proxy Statement on Form DEF 14A filed
March 31, 2009).
10.2
Management Incentive Plan of 2009 approved by the Stockholders on May 19, 2009 (filed as
Exhibit 10.2 to the Companys Current Report on Form 8-K (filed May 21, 2009) and incorporated
by reference to Appendix A to the Companys Definitive Proxy Statement on Form DEF 14A filed
March 31, 2009).
10.3*
Second Amendment to Employment Agreement, effective as of August 11, 2009, between DPS
Holdings, Inc. and Larry D. Young.
Table of Contents
10.4
Agreement dated April 8, 2009, between The American Bottling Company and Crown Cork & Seal
USA, Inc. (filed as Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q (filed May 13,
2009) and incorporated herein by reference).
31.1*
Certification of Chief Executive Officer of Dr Pepper Snapple Group, Inc. pursuant to Rule
13a-14(a) or 15d-14(a) promulgated under the Exchange Act .
31.2*
Certification of Chief Financial Officer of Dr Pepper Snapple Group, Inc. pursuant to Rule
13a-14(a) or 15d-14(a) promulgated under the Exchange Act.
32.1**
Certification of Chief Executive Officer of Dr Pepper Snapple Group, Inc. pursuant to Rule
13a-14(b) or 15d-14(b) promulgated under the Exchange Act, and Section 1350 of Chapter 63 of
Title 18 of the United States Code.
32.2**
Certification of Chief Financial Officer of Dr Pepper Snapple Group, Inc. pursuant to Rule
13a-14(b) or 15d-14(b) promulgated under the Exchange Act, and Section 1350 of Chapter 63 of
Title 18 of the United States Code.
*
Filed herewith.
**
Furnished herewith.
Table of Contents
Dr Pepper Snapple Group, Inc.
By:
/s/ John O. Stewart
Name:
John O. Stewart
Title:
Executive Vice President and Chief Financial
Officer
1. | The first sentence of Section 6(c)(i) is deleted in its entirety and replaced with the following: |
2. | The first sentence of Section 6(c)(ii) is deleted in its entirety and replaced with the following: |
3. | Section 6(c)(iii) is deleted in its entirety and replaced with the following: |
1
2
4. | The first sentence of Section 6(c)(iv) is deleted in its entirety and replaced with the following: |
5. | Section 6(c)(vii) is deleted in its entirety and replaced with the following: |
3
DPS HOLDINGS, INC. | ||||||
|
||||||
|
||||||
|
||||||
|
By: | /s/ James L. Baldwin, Jr. | ||||
|
||||||
|
Name: | James L. Baldwin, Jr. | ||||
|
Title: | Executive Vice President | ||||
|
||||||
|
||||||
EXECUTIVE | ||||||
|
||||||
|
||||||
/s/ Larry Young | ||||||
Larry Young |
4
1. | I have reviewed this Quarterly Report on Form 10-Q of Dr Pepper Snapple Group, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Intentionally omitted; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Larry D. Young | ||||
Larry D. Young | ||||
President and Chief Executive Officer of Dr Pepper Snapple Group, Inc. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Dr Pepper Snapple Group, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Intentionally omitted; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ John O. Stewart | ||||
John O. Stewart | ||||
Executive Vice President and Chief Financial Officer of Dr Pepper Snapple Group, Inc. |
(1) | the Quarterly Report on Form 10-Q of the Company for the second quarter of fiscal year 2009 ended June 30, 2009, as filed with the Securities and Exchange Commission (the Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and | ||
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Larry D. Young | ||||
Larry D. Young | ||||
President and Chief Executive Officer of Dr Pepper Snapple Group, Inc. |
(1) | the Quarterly Report on Form 10-Q of the Company for the second quarter of fiscal year 2009 ended June 30, 2009, as filed with the Securities and Exchange Commission (the Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and | ||
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 13, 2009 | /s/ John O. Stewart | |||
John O. Stewart | ||||
Executive Vice President and Chief Financial Officer of Dr Pepper Snapple Group, Inc. | ||||