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Delaware
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98-0517725
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(State or other jurisdiction of
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(I.R.S. employer
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incorporation or organization)
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identification number)
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5301 Legacy Drive, Plano, Texas
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75024
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(Address of principal executive offices)
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(Zip code)
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Large Accelerated Filer
R
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Accelerated Filer
o
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Non-Accelerated Filer
o
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Smaller Reporting Company
o
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(Do not check if a smaller reporting company)
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Page
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ITEM 1.
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Financial Statements (Unaudited).
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For the
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For the
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||||||||||||
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
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September 30,
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||||||||||||
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2013
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2012
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2013
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2012
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||||||||
Net sales
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$
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1,543
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$
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1,528
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$
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4,534
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$
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4,511
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Cost of sales
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650
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626
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1,916
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1,895
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||||
Gross profit
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893
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902
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2,618
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2,616
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Selling, general and administrative expenses
|
563
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561
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1,745
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1,713
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||||
Depreciation and amortization
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28
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29
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86
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95
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||||
Other operating expense, net
|
2
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4
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5
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8
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||||
Income from operations
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300
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|
308
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782
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800
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|
||||
Interest expense
|
29
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|
|
31
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|
|
94
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|
|
94
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|
||||
Interest income
|
—
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—
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(1
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)
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(1
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)
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||||
Other expense (income), net
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428
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(4
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)
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384
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(8
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)
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(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
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(157
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)
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281
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305
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715
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||||
(Benefit) provision for income taxes
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(364
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)
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102
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(162
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)
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256
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||||
Income before equity in earnings of unconsolidated subsidiaries
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207
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179
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467
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459
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Equity in earnings of unconsolidated subsidiaries, net of tax
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—
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—
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1
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—
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Net income
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$
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207
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$
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179
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$
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468
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$
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459
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Earnings per common share:
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Basic
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$
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1.02
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$
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0.85
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$
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2.29
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$
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2.17
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Diluted
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1.01
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0.84
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2.28
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2.15
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Weighted average common shares outstanding:
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||||||||
Basic
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203.3
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210.4
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204.0
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211.6
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Diluted
|
204.7
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212.0
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205.5
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213.3
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Cash dividends declared per common share
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$
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0.38
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$
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0.34
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$
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1.14
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$
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1.02
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For the
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For the
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||||||||||||
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
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September 30,
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||||||||||||
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2013
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2012
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2013
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2012
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||||||||
Comprehensive income
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$
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208
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$
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186
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$
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475
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$
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471
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September 30,
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December 31,
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||||
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2013
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2012
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Assets
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|||||||
Current assets:
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Cash and cash equivalents
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$
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119
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$
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366
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Accounts receivable:
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Trade, net
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531
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552
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Other
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55
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50
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Inventories
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196
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197
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Deferred tax assets
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60
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66
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Prepaid expenses and other current assets
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98
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104
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Total current assets
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1,059
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1,335
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Property, plant and equipment, net
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1,155
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1,202
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Investments in unconsolidated subsidiaries
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14
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14
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Goodwill
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2,988
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2,983
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Other intangible assets, net
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2,696
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2,684
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Other non-current assets
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129
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580
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Non-current deferred tax assets
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88
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130
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Total assets
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$
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8,129
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$
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8,928
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Liabilities and Stockholders' Equity
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|||||||
Current liabilities:
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Accounts payable
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$
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271
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$
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283
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Deferred revenue
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65
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65
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Short-term borrowings and current portion of long-term obligations
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1
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250
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Income taxes payable
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21
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45
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Other current liabilities
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598
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589
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Total current liabilities
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956
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1,232
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Long-term obligations
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2,521
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2,554
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Non-current deferred tax liabilities
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743
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630
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Non-current deferred revenue
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1,336
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1,386
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Other non-current liabilities
|
265
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|
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846
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Total liabilities
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5,821
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|
6,648
|
|
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Commitments and contingencies
|
|
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|
||||
Stockholders' equity:
|
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|
||||
Preferred stock, $.01 par value, 15,000,000 shares authorized, no shares issued
|
—
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|
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—
|
|
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Common stock, $.01 par value, 800,000,000 shares authorized, 201,303,899 and 205,292,657 shares issued and outstanding for 2013 and 2012, respectively
|
2
|
|
|
2
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|
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Additional paid-in capital
|
1,116
|
|
|
1,308
|
|
||
Prepaid forward repurchase of common stock
|
(20
|
)
|
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—
|
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||
Retained earnings
|
1,313
|
|
|
1,080
|
|
||
Accumulated other comprehensive loss
|
(103
|
)
|
|
(110
|
)
|
||
Total stockholders' equity
|
2,308
|
|
|
2,280
|
|
||
Total liabilities and stockholders' equity
|
$
|
8,129
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|
|
$
|
8,928
|
|
|
For the
|
||||||
|
Nine Months Ended
|
||||||
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September 30,
|
||||||
|
2013
|
|
2012
|
||||
Operating activities:
|
|
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|
||||
Net income
|
$
|
468
|
|
|
$
|
459
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation expense
|
146
|
|
|
154
|
|
||
Amortization expense
|
28
|
|
|
28
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|
||
Amortization of deferred revenue
|
(49
|
)
|
|
(49
|
)
|
||
Employee stock-based compensation expense
|
28
|
|
|
26
|
|
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Deferred income taxes
|
147
|
|
|
58
|
|
||
Other, net
|
16
|
|
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(21
|
)
|
||
Changes in assets and liabilities, net of effects of acquisition:
|
|
|
|
||||
Trade accounts receivable
|
21
|
|
|
42
|
|
||
Other accounts receivable
|
(6
|
)
|
|
(1
|
)
|
||
Inventories
|
1
|
|
|
7
|
|
||
Other current and non-current assets
|
436
|
|
|
(20
|
)
|
||
Other current and non-current liabilities
|
(601
|
)
|
|
32
|
|
||
Trade accounts payable
|
(1
|
)
|
|
33
|
|
||
Income taxes payable
|
(18
|
)
|
|
(466
|
)
|
||
Net cash provided by operating activities
|
616
|
|
|
282
|
|
||
Investing activities:
|
|
|
|
||||
Acquisition of business
|
(10
|
)
|
|
—
|
|
||
Purchase of property, plant and equipment
|
(111
|
)
|
|
(161
|
)
|
||
Purchase of intangible assets
|
(5
|
)
|
|
(7
|
)
|
||
Proceeds from disposals of property, plant and equipment
|
1
|
|
|
6
|
|
||
Other, net
|
(3
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(128
|
)
|
|
(162
|
)
|
||
Financing activities:
|
|
|
|
||||
Repayment of senior unsecured notes
|
(250
|
)
|
|
—
|
|
||
Repurchase of shares of common stock
|
(243
|
)
|
|
(262
|
)
|
||
Cash paid for shares not yet received
|
(20
|
)
|
|
—
|
|
||
Dividends paid
|
(225
|
)
|
|
(213
|
)
|
||
Tax withholdings related to net share settlements of certain stock awards
|
(13
|
)
|
|
—
|
|
||
Proceeds from stock options exercised
|
13
|
|
|
21
|
|
||
Excess tax benefit on stock-based compensation
|
6
|
|
|
16
|
|
||
Deferred financing charges paid
|
—
|
|
|
(1
|
)
|
||
Other, net
|
—
|
|
|
(3
|
)
|
||
Net cash used in financing activities
|
(732
|
)
|
|
(442
|
)
|
||
Cash and cash equivalents — net change from:
|
|
|
|
||||
Operating, investing and financing activities
|
(244
|
)
|
|
(322
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
4
|
|
||
Cash and cash equivalents at beginning of period
|
366
|
|
|
701
|
|
||
Cash and cash equivalents at end of period
|
$
|
119
|
|
|
$
|
383
|
|
1
.
|
General
|
2
.
|
Acquisition of Dr. Pepper/7-Up Bottling Company of the West
|
|
|
Fair Value
|
|
Useful Life
|
||
Property, plant & equipment
|
|
$
|
7
|
|
|
3 - 40 years
|
Distribution rights: definite-lived
|
|
2
|
|
|
5 - 15 years
|
|
Distribution rights: indefinite-lived
|
|
10
|
|
|
—
|
|
Goodwill
|
|
6
|
|
|
—
|
|
Current liabilities, net of current assets assumed
|
|
(2
|
)
|
|
—
|
|
Total
|
|
$
|
23
|
|
|
|
3
.
|
Inventories
|
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Raw materials
|
$
|
72
|
|
|
$
|
114
|
|
Work in process
|
6
|
|
|
5
|
|
||
Finished goods
|
167
|
|
|
151
|
|
||
Inventories at first in first out cost
|
245
|
|
|
270
|
|
||
Reduction to last in first out cost
|
(49
|
)
|
|
(73
|
)
|
||
Inventories
|
$
|
196
|
|
|
$
|
197
|
|
4
.
|
Goodwill and Other Intangible Assets
|
|
Beverage Concentrates
|
|
WD Reporting Unit
(1)
|
|
DSD Reporting Unit
(1)
|
|
Latin America Beverages
|
|
Total
|
||||||||||
Balance as of January 1, 2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
1,732
|
|
|
$
|
1,220
|
|
|
$
|
180
|
|
|
$
|
28
|
|
|
$
|
3,160
|
|
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
(180
|
)
|
|||||
|
1,732
|
|
|
1,220
|
|
|
—
|
|
|
28
|
|
|
2,980
|
|
|||||
Foreign currency impact
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|||||
Balance as of December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
1,732
|
|
|
1,220
|
|
|
180
|
|
|
31
|
|
|
3,163
|
|
|||||
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
(180
|
)
|
|||||
|
1,732
|
|
|
1,220
|
|
|
—
|
|
|
31
|
|
|
2,983
|
|
|||||
Foreign currency impact
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Acquisition activity
(2)
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Balance as of September 30, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
1,732
|
|
|
1,220
|
|
|
186
|
|
|
30
|
|
|
3,168
|
|
|||||
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
(180
|
)
|
|||||
|
$
|
1,732
|
|
|
$
|
1,220
|
|
|
$
|
6
|
|
|
$
|
30
|
|
|
$
|
2,988
|
|
(1)
|
The Packaged Beverages segment is comprised of two reporting units, the Direct Store Delivery ("DSD") system and the Warehouse Direct ("WD") system.
|
(2)
|
The acquisition activity represents the goodwill associated with the purchase of DP/7UP West. See Note
2
for further information related to the acquisition.
|
|
September 30, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
|
|
Net
|
|
Gross
|
|
Accumulated
|
|
Net
|
||||||||||||
|
Amount
|
|
Amortization
|
|
Amount
|
|
Amount
|
|
Amortization
|
|
Amount
|
||||||||||||
Intangible assets with indefinite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Brands
(1)
|
$
|
2,651
|
|
|
$
|
—
|
|
|
$
|
2,651
|
|
|
$
|
2,652
|
|
|
$
|
—
|
|
|
$
|
2,652
|
|
Distribution rights
(2)
|
24
|
|
|
—
|
|
|
24
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Brands
|
29
|
|
|
(26
|
)
|
|
3
|
|
|
29
|
|
|
(25
|
)
|
|
4
|
|
||||||
Distribution rights
(2)(3)
|
12
|
|
|
(2
|
)
|
|
10
|
|
|
5
|
|
|
(1
|
)
|
|
4
|
|
||||||
Customer relationships
|
76
|
|
|
(69
|
)
|
|
7
|
|
|
76
|
|
|
(67
|
)
|
|
9
|
|
||||||
Bottler agreements
|
19
|
|
|
(18
|
)
|
|
1
|
|
|
19
|
|
|
(18
|
)
|
|
1
|
|
||||||
Total
|
$
|
2,811
|
|
|
$
|
(115
|
)
|
|
$
|
2,696
|
|
|
$
|
2,795
|
|
|
$
|
(111
|
)
|
|
$
|
2,684
|
|
(1)
|
In
2013
, brands with indefinite lives decreased due to a
$1 million
change in foreign currency translation.
|
(2)
|
In
2013
, distribution rights included
$10 million
and
$2 million
in indefinite-lived and finite-lived distribution rights, respectively, associated with the purchase of DP/7UP West. See Note
2
for further information related to the acquisition.
|
(3)
|
In
2013
, distribution rights also included the reacquired distribution rights for Snapple and several other non-carbonated beverage brands in parts of the Asia-Pacific region from Mondelēz.
|
Year
|
Aggregate Amortization Expense
|
||
October 1, 2013 through December 31, 2013
|
$
|
2
|
|
2014
|
6
|
|
|
2015
|
6
|
|
|
2016
|
3
|
|
|
2017
|
—
|
|
5
.
|
Other Current Liabilities
|
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Customer rebates and incentives
|
$
|
199
|
|
|
$
|
226
|
|
Accrued compensation
|
94
|
|
|
105
|
|
||
Insurance liability
|
54
|
|
|
43
|
|
||
Interest accrual and interest rate swap liability
|
40
|
|
|
27
|
|
||
Dividends payable
|
77
|
|
|
70
|
|
||
Other
|
134
|
|
|
118
|
|
||
Total other current liabilities
|
$
|
598
|
|
|
$
|
589
|
|
6
.
|
Debt
|
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Senior unsecured notes
(1)
|
$
|
2,465
|
|
|
$
|
2,748
|
|
Revolving credit facility
|
—
|
|
|
—
|
|
||
Capital lease obligations
|
57
|
|
|
56
|
|
||
Subtotal
|
2,522
|
|
|
2,804
|
|
||
Less — current portion
|
(1
|
)
|
|
(250
|
)
|
||
Long-term obligations
|
$
|
2,521
|
|
|
$
|
2,554
|
|
(1)
|
The carrying amount includes the unamortized net discount on debt issuances and adjustments of
$6 million
and
$29 million
as of
September 30, 2013
and
December 31, 2012
, respectively,
related to the change in the fair value of interest rate swaps designated as fair value hedges or the unamortized value of de-designated fair value hedges.
See Note
7
for further information regarding derivatives.
|
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Current portion of long-term obligations
(1)
|
$
|
1
|
|
|
$
|
250
|
|
Short-term borrowings and current portion of long-term obligations
|
$
|
1
|
|
|
$
|
250
|
|
(1)
|
Capital lease obligations, primarily related to manufacturing facilities, totaled
$57 million
as of
September 30, 2013 and December 31, 2012
. Current obligations related to these capital leases were
$1 million
as of
September 30, 2013 and December 31, 2012
. The current obligation as of
December 31, 2012
was included as a component of other current liabilities.
|
|
|
|
|
|
|
Principal Amount
|
|
Carrying Amount
|
||||||||
|
|
|
|
|
|
September 30,
|
|
September 30,
|
|
December 31,
|
||||||
Issuance
|
|
Maturity Date
|
|
Rate
|
|
2013
|
|
2013
|
|
2012
|
||||||
2013 Notes
(1)
|
|
May 1, 2013
|
|
6.12%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
2016 Notes
|
|
January 15, 2016
|
|
2.90%
|
|
500
|
|
|
500
|
|
|
500
|
|
|||
2018 Notes
|
|
May 1, 2018
|
|
6.82%
|
|
724
|
|
|
724
|
|
|
724
|
|
|||
2019 Notes
|
|
January 15, 2019
|
|
2.60%
|
|
250
|
|
|
249
|
|
|
253
|
|
|||
2020 Notes
|
|
January 15, 2020
|
|
2.00%
|
|
250
|
|
|
243
|
|
|
247
|
|
|||
2021 Notes
|
|
November 15, 2021
|
|
3.20%
|
|
250
|
|
|
244
|
|
|
254
|
|
|||
2022 Notes
|
|
November 15, 2022
|
|
2.70%
|
|
250
|
|
|
249
|
|
|
249
|
|
|||
2038 Notes
|
|
May 1, 2038
|
|
7.45%
|
|
250
|
|
|
256
|
|
|
271
|
|
|||
|
|
|
|
|
|
$
|
2,474
|
|
|
$
|
2,465
|
|
|
$
|
2,748
|
|
(1)
|
The repayment of the 2013 Notes occurred on May 1, 2013 at maturity.
|
|
Amount Utilized
|
|
Balances Available
|
||||
Revolver
|
$
|
—
|
|
|
$
|
498
|
|
Letters of credit
|
2
|
|
|
73
|
|
||
Swingline advances
|
—
|
|
|
50
|
|
7
.
|
Derivatives
|
|
Balance Sheet Location
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
Assets:
|
|
|
|
|
|
||||
Derivative instruments designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Interest rate contracts
(1)
|
Prepaid expenses and other current assets
|
|
$
|
13
|
|
|
$
|
11
|
|
Foreign exchange forward contracts
|
Prepaid expenses and other current assets
|
|
1
|
|
|
—
|
|
||
Interest rate contracts
|
Other non-current assets
|
|
2
|
|
|
24
|
|
||
Foreign exchange forward contracts
|
Other non-current assets
|
|
1
|
|
|
—
|
|
||
Derivative instruments not designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Commodity contracts
|
Prepaid expenses and other current assets
|
|
—
|
|
|
3
|
|
||
Commodity contracts
|
Other non-current assets
|
|
—
|
|
|
2
|
|
||
Total assets
|
|
|
$
|
17
|
|
|
$
|
40
|
|
Liabilities:
|
|
|
|
|
|
||||
Derivative instruments designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Interest rate contracts
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
1
|
|
Foreign exchange forward contracts
|
Other current liabilities
|
|
—
|
|
|
2
|
|
||
Interest rate contracts
|
Other non-current liabilities
|
|
18
|
|
|
2
|
|
||
Derivative instruments not designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Commodity contracts
|
Other current liabilities
|
|
9
|
|
|
1
|
|
||
Total liabilities
|
|
|
$
|
27
|
|
|
$
|
6
|
|
(1)
|
Interest rate contracts as of
September 30, 2013
include gross and offsetting amounts of
$15 million
and
$2 million
, respectively. Interest rate contracts as of
December 31,
2012
include gross and offsetting amounts of
$12 million
and
$1 million
, respectively. These contracts are subject to a netting provision included within the counterparty agreements whereby the Company pays interest either quarterly or semi-annually and receives interest payments semi-annually. These payables and receivables are netted as appropriate.
|
|
Amount of Gain (Loss) Recognized in Comprehensive Income
|
|
Amount of Loss Reclassified from AOCL into Income
|
|
Location of Loss Reclassified from AOCL into Income
|
||||
For the three months ended September 30, 2013:
|
|
|
|
|
|
||||
Interest rate contracts
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
(2
|
)
|
|
(1
|
)
|
|
Cost of sales
|
||
Total
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
|
|
||||
For the nine months ended September 30, 2013:
|
|
|
|
|
|
||||
Interest rate contracts
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
2
|
|
|
(1
|
)
|
|
Cost of sales
|
||
Total
|
$
|
2
|
|
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
|
||||
For the three months ended September 30, 2012:
|
|
|
|
|
|
||||
Interest rate contracts
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
(4
|
)
|
|
—
|
|
|
Cost of sales
|
||
Total
|
$
|
(9
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
||||
For the nine months ended September 30, 2012:
|
|
|
|
|
|
||||
Interest rate contracts
|
$
|
(16
|
)
|
|
$
|
(2
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
(4
|
)
|
|
(1
|
)
|
|
Cost of sales
|
||
Total
|
$
|
(20
|
)
|
|
$
|
(3
|
)
|
|
|
|
|
Amount of Gain
|
|
Location of Gain
|
||
|
|
Recognized in Income
|
|
Recognized in Income
|
||
For the three months ended September 30, 2013:
|
|
|
|
|
||
Interest rate contracts
|
|
$
|
2
|
|
|
Interest expense
|
Total
|
|
$
|
2
|
|
|
|
|
|
|
|
|
||
For the nine months ended September 30, 2013:
|
|
|
|
|
||
Interest rate contracts
|
|
$
|
7
|
|
|
Interest expense
|
Total
|
|
$
|
7
|
|
|
|
|
|
|
|
|
||
For the three months ended September 30, 2012:
|
|
|
|
|
||
Interest rate contracts
(1)
|
|
$
|
3
|
|
|
Interest expense
|
Total
|
|
$
|
3
|
|
|
|
|
|
|
|
|
||
For the nine months ended September 30, 2012:
|
|
|
|
|
||
Interest rate contracts
(1)
|
|
$
|
8
|
|
|
Interest expense
|
Total
|
|
$
|
8
|
|
|
|
(1)
|
The gain recognized in interest expense included amortization of the adjustment to the carrying value of the 2012 Notes as a result of the de-designation of those Notes in 2010. For the three and
nine months ended
September 30, 2012
, the amortization of this adjustment was
$1 million
and
$2 million
, respectively.
|
|
|
Amount of Gain (Loss)
|
|
Location of Gain (Loss)
|
||
|
|
Recognized in Income
|
|
Recognized in Income
|
||
For the three months ended September 30, 2013:
|
|
|
|
|
||
Commodity contracts
(1)
|
|
$
|
(2
|
)
|
|
Cost of sales
|
Commodity contracts
(1)
|
|
—
|
|
|
SG&A expenses
|
|
Total
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
||
For the nine months ended September 30, 2013:
|
|
|
|
|
||
Commodity contracts
(1)
|
|
$
|
(17
|
)
|
|
Cost of sales
|
Commodity contracts
(1)
|
|
—
|
|
|
SG&A expenses
|
|
Total
|
|
$
|
(17
|
)
|
|
|
|
|
|
|
|
||
For the three months ended September 30, 2012:
|
|
|
|
|
||
Commodity contracts
(1)
|
|
$
|
10
|
|
|
Cost of sales
|
Commodity contracts
(1)
|
|
4
|
|
|
SG&A expenses
|
|
Total
|
|
$
|
14
|
|
|
|
|
|
|
|
|
||
For the nine months ended September 30, 2012:
|
|
|
|
|
||
Commodity contracts
(1)
|
|
$
|
3
|
|
|
Cost of sales
|
Commodity contracts
(1)
|
|
3
|
|
|
SG&A expenses
|
|
Total
|
|
$
|
6
|
|
|
|
(1)
|
Commodity contracts include both realized and unrealized gains and losses.
|
8
.
|
Other Non-Current Assets and Other Non-Current Liabilities
|
|
September 30,
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||||
Other non-current assets:
|
|
|
|
||||
Long-term receivables from Mondelēz
|
$
|
—
|
|
|
$
|
439
|
|
Deferred financing costs, net
|
12
|
|
|
13
|
|
||
Customer incentive programs
|
58
|
|
|
63
|
|
||
Marketable securities - trading
|
19
|
|
|
—
|
|
||
Derivative instruments
|
3
|
|
|
26
|
|
||
Other
|
37
|
|
|
39
|
|
||
Total other non-current assets
|
$
|
129
|
|
|
$
|
580
|
|
Other non-current liabilities:
|
|
|
|
||||
Long-term payables due to Mondelēz
|
$
|
48
|
|
|
$
|
98
|
|
Liabilities for unrecognized tax benefits and other tax related items
|
17
|
|
|
574
|
|
||
Long-term pension and post-retirement liability
|
46
|
|
|
55
|
|
||
Insurance liability
|
88
|
|
|
77
|
|
||
Derivative instruments
|
18
|
|
|
2
|
|
||
Other
|
48
|
|
|
40
|
|
||
Total other non-current liabilities
|
$
|
265
|
|
|
$
|
846
|
|
9
.
|
Income Taxes
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Indemnity expense (income) from Mondelēz
|
$
|
430
|
|
|
$
|
(2
|
)
|
|
$
|
387
|
|
|
$
|
(6
|
)
|
Other
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Other expense (income), net
|
$
|
428
|
|
|
$
|
(4
|
)
|
|
$
|
384
|
|
|
$
|
(8
|
)
|
|
Fair Value Measurements at September 30, 2013
|
||||||||||
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Interest rate contracts
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Foreign exchange forward contracts
|
—
|
|
|
2
|
|
|
—
|
|
|||
Marketable securities - trading
|
19
|
|
|
—
|
|
|
—
|
|
|||
Total assets
|
$
|
19
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
18
|
|
|
—
|
|
|||
Total liabilities
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
Fair Value Measurements at December 31, 2012
|
||||||||||
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
35
|
|
|
—
|
|
|||
Total assets
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
3
|
|
|
—
|
|
|||
Foreign exchange forward contracts
|
—
|
|
|
2
|
|
|
—
|
|
|||
Total liabilities
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
September 30, 2013
|
|
December 31, 2012
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Long-term debt – 2013 Notes
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
255
|
|
Long-term debt – 2016 Notes
|
500
|
|
|
521
|
|
|
500
|
|
|
528
|
|
||||
Long-term debt – 2018 Notes
|
724
|
|
|
868
|
|
|
724
|
|
|
919
|
|
||||
Long-term debt – 2019 Notes
(2)
|
249
|
|
|
254
|
|
|
253
|
|
|
256
|
|
||||
Long-term debt – 2020 Notes
(2)
|
243
|
|
|
237
|
|
|
247
|
|
|
245
|
|
||||
Long-term debt – 2021 Notes
(2)
|
244
|
|
|
245
|
|
|
254
|
|
|
253
|
|
||||
Long-term debt – 2022 Notes
(2)
|
249
|
|
|
232
|
|
|
249
|
|
|
250
|
|
||||
Long-term debt – 2038 Notes
(2)
|
256
|
|
|
321
|
|
|
271
|
|
|
366
|
|
(1)
|
The repayment of the 2013 Notes occurred on May 1, 2013 at maturity.
|
(2)
|
The carrying amount includes the unamortized discounts on the issuance of debt and adjustments related to the change in the fair value of interest rate swaps designated as fair value hedges on the 2019, 2020, 2021 and 2038 Notes.
Refer to Note 7 for additional information
regarding derivatives.
|
12
.
|
Employee Benefit Plans
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
3
|
|
|
3
|
|
|
9
|
|
|
10
|
|
||||
Expected return on assets
|
(3
|
)
|
|
(4
|
)
|
|
(11
|
)
|
|
(12
|
)
|
||||
Recognition of actuarial loss
|
1
|
|
|
1
|
|
|
4
|
|
|
3
|
|
||||
Settlement loss
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Net periodic benefit costs
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Total stock-based compensation expense
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
28
|
|
|
$
|
26
|
|
Income tax benefit recognized in the income statement
|
(3
|
)
|
|
(2
|
)
|
|
(9
|
)
|
|
(8
|
)
|
||||
Stock-based compensation expense, net of tax
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
19
|
|
|
$
|
18
|
|
|
Stock Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding as of January 1, 2013
|
2,001,908
|
|
|
$
|
34.07
|
|
|
7.95
|
|
$
|
20
|
|
Granted
|
580,184
|
|
|
43.82
|
|
|
|
|
|
|||
Exercised
|
(438,251
|
)
|
|
29.58
|
|
|
|
|
8
|
|
||
Forfeited or expired
|
(49,176
|
)
|
|
40.52
|
|
|
|
|
|
|||
Outstanding as of September 30, 2013
|
2,094,665
|
|
|
37.56
|
|
|
7.90
|
|
15
|
|
||
Exercisable as of September 30, 2013
|
877,525
|
|
|
33.91
|
|
|
6.90
|
|
10
|
|
|
RSUs/PSUs
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding as of January 1, 2013
|
2,685,116
|
|
|
$
|
35.52
|
|
|
1.23
|
|
$
|
119
|
|
Granted
|
873,243
|
|
|
43.83
|
|
|
|
|
|
|||
Vested and released
|
(836,754
|
)
|
|
31.99
|
|
|
|
|
|
|||
Forfeited
|
(127,737
|
)
|
|
39.29
|
|
|
|
|
|
|||
Outstanding as of September 30, 2013
|
2,593,868
|
|
|
39.27
|
|
|
1.39
|
|
116
|
|
14
.
|
Earnings Per Share
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Basic EPS:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
207
|
|
|
$
|
179
|
|
|
$
|
468
|
|
|
$
|
459
|
|
Weighted average common shares outstanding
|
203.3
|
|
|
210.4
|
|
|
204.0
|
|
|
211.6
|
|
||||
Earnings per common share — basic
|
$
|
1.02
|
|
|
$
|
0.85
|
|
|
$
|
2.29
|
|
|
$
|
2.17
|
|
Diluted EPS:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
207
|
|
|
$
|
179
|
|
|
$
|
468
|
|
|
$
|
459
|
|
Weighted average common shares outstanding
|
203.3
|
|
|
210.4
|
|
|
204.0
|
|
|
211.6
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options, RSUs, PSUs and dividend equivalent units
|
1.4
|
|
|
1.6
|
|
|
1.5
|
|
|
1.7
|
|
||||
Weighted average common shares outstanding and common stock equivalents
|
204.7
|
|
|
212.0
|
|
|
205.5
|
|
|
213.3
|
|
||||
Earnings per common share — diluted
|
$
|
1.01
|
|
|
$
|
0.84
|
|
|
$
|
2.28
|
|
|
$
|
2.15
|
|
|
Foreign Currency Translation
|
|
Change in Pension Liability
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Loss
|
||||||||
Balance as of July 1, 2013
|
$
|
(16
|
)
|
|
$
|
(48
|
)
|
|
$
|
(40
|
)
|
|
$
|
(104
|
)
|
OCI before reclassifications
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Amounts reclassified from AOCL
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Net current period OCI
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Balance as of September 30, 2013
|
$
|
(16
|
)
|
|
$
|
(47
|
)
|
|
$
|
(40
|
)
|
|
$
|
(103
|
)
|
|
Foreign Currency Translation
|
|
Change in Pension Liability
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Loss
|
||||||||
Balance as of January 1, 2012
|
$
|
(27
|
)
|
|
$
|
(48
|
)
|
|
$
|
(35
|
)
|
|
$
|
(110
|
)
|
Current year OCI
|
19
|
|
|
(8
|
)
|
|
(11
|
)
|
|
—
|
|
||||
Balance as of December 31, 2012
|
(8
|
)
|
|
(56
|
)
|
|
(46
|
)
|
|
(110
|
)
|
||||
OCI before reclassifications
|
(8
|
)
|
|
5
|
|
|
3
|
|
|
—
|
|
||||
Amounts reclassified from AOCL
|
—
|
|
|
4
|
|
|
3
|
|
|
7
|
|
||||
Net current year OCI
|
(8
|
)
|
|
9
|
|
|
6
|
|
|
7
|
|
||||
Balance as of September 30, 2013
|
$
|
(16
|
)
|
|
$
|
(47
|
)
|
|
$
|
(40
|
)
|
|
$
|
(103
|
)
|
|
|
|
For the
|
|
For the
|
||||
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
Location of Loss Reclassified from AOCL into Income
|
|
September 30, 2013
|
|
September 30, 2013
|
||||
Loss on cash flow hedges:
|
|
|
|
|
|
||||
Interest rate contracts
|
Interest expense
|
|
$
|
(2
|
)
|
|
$
|
(6
|
)
|
Foreign exchange forward contracts
|
Cost of sales
|
|
(1
|
)
|
|
(1
|
)
|
||
Total
|
|
|
(3
|
)
|
|
(7
|
)
|
||
Income tax expense
|
|
|
(2
|
)
|
|
(4
|
)
|
||
Total
|
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
|
|
|
|
|
||||
Defined benefit pension and postretirement plan items:
|
|
|
|
|
|
||||
Amortization of prior service costs
|
Selling, General and Administrative Expenses
|
|
$
|
—
|
|
|
$
|
1
|
|
Amortization of actuarial gains/(losses), net
|
Selling, General and Administrative Expenses
|
|
(1
|
)
|
|
(4
|
)
|
||
Settlement loss
|
Selling, General and Administrative Expenses
|
|
(1
|
)
|
|
(3
|
)
|
||
Total
|
|
|
(2
|
)
|
|
(6
|
)
|
||
Income tax expense
|
|
|
(1
|
)
|
|
(2
|
)
|
||
Total
|
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
|
|
|
|
|
||||
Total Reclassifications
|
|
|
$
|
(2
|
)
|
|
$
|
(7
|
)
|
17
.
|
Supplemental Cash Flow Information
|
|
For the Nine Months Ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
Supplemental cash flow disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Dividends declared but not yet paid
|
$
|
77
|
|
|
$
|
72
|
|
Capital expenditures included in accounts payable and other current liabilities
|
16
|
|
|
19
|
|
||
Stock issued for acquisition of business
|
13
|
|
|
—
|
|
||
Capital lease additions
|
1
|
|
|
49
|
|
||
Supplemental cash flow disclosures:
|
|
|
|
||||
Interest paid
|
$
|
69
|
|
|
$
|
68
|
|
Income taxes paid
|
231
|
|
|
650
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Segment Results – Net sales
|
|
|
|
|
|
|
|
||||||||
Beverage Concentrates
|
$
|
309
|
|
|
$
|
303
|
|
|
$
|
908
|
|
|
$
|
888
|
|
Packaged Beverages
|
1,114
|
|
|
1,120
|
|
|
3,280
|
|
|
3,314
|
|
||||
Latin America Beverages
|
120
|
|
|
105
|
|
|
346
|
|
|
309
|
|
||||
Net sales
|
$
|
1,543
|
|
|
$
|
1,528
|
|
|
$
|
4,534
|
|
|
$
|
4,511
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Segment Results – SOP
|
|
|
|
|
|
|
|
||||||||
Beverage Concentrates
|
$
|
201
|
|
|
$
|
198
|
|
|
$
|
560
|
|
|
$
|
552
|
|
Packaged Beverages
|
159
|
|
|
147
|
|
|
418
|
|
|
408
|
|
||||
Latin America Beverages
|
17
|
|
|
14
|
|
|
45
|
|
|
37
|
|
||||
Total SOP
|
377
|
|
|
359
|
|
|
1,023
|
|
|
997
|
|
||||
Unallocated corporate costs
|
75
|
|
|
47
|
|
|
236
|
|
|
189
|
|
||||
Other operating expense, net
|
2
|
|
|
4
|
|
|
5
|
|
|
8
|
|
||||
Income from operations
|
300
|
|
|
308
|
|
|
782
|
|
|
800
|
|
||||
Interest expense, net
|
29
|
|
|
31
|
|
|
93
|
|
|
93
|
|
||||
Other expense (income), net
|
$
|
428
|
|
|
$
|
(4
|
)
|
|
384
|
|
|
(8
|
)
|
||
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
$
|
(157
|
)
|
|
$
|
281
|
|
|
$
|
305
|
|
|
$
|
715
|
|
|
Workforce Reduction Costs
|
||
2013 restructuring costs
|
$
|
7
|
|
Cash payments
|
(6
|
)
|
|
Balance as of September 30, 2013
|
$
|
1
|
|
|
Condensed Consolidating Statements of Income
|
||||||||||||||||||
|
For the Three Months Ended September 30, 2013
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,392
|
|
|
$
|
160
|
|
|
$
|
(9
|
)
|
|
$
|
1,543
|
|
Cost of sales
|
—
|
|
|
583
|
|
|
76
|
|
|
(9
|
)
|
|
650
|
|
|||||
Gross profit
|
—
|
|
|
809
|
|
|
84
|
|
|
—
|
|
|
893
|
|
|||||
Selling, general and administrative expenses
|
2
|
|
|
505
|
|
|
56
|
|
|
—
|
|
|
563
|
|
|||||
Depreciation and amortization
|
—
|
|
|
27
|
|
|
1
|
|
|
—
|
|
|
28
|
|
|||||
Other operating expense, net
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Income from operations
|
(2
|
)
|
|
275
|
|
|
27
|
|
|
—
|
|
|
300
|
|
|||||
Interest expense
|
27
|
|
|
22
|
|
|
—
|
|
|
(20
|
)
|
|
29
|
|
|||||
Interest income
|
(19
|
)
|
|
—
|
|
|
(1
|
)
|
|
20
|
|
|
—
|
|
|||||
Other expense (income), net
|
428
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
428
|
|
|||||
(Loss) income before (benefit) provision for income taxes and equity in earnings of subsidiaries
|
(438
|
)
|
|
254
|
|
|
27
|
|
|
—
|
|
|
(157
|
)
|
|||||
(Benefit) provision for income taxes
|
(3
|
)
|
|
(373
|
)
|
|
12
|
|
|
—
|
|
|
(364
|
)
|
|||||
Income (loss) before equity in earnings of subsidiaries
|
(435
|
)
|
|
627
|
|
|
15
|
|
|
—
|
|
|
207
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
642
|
|
|
15
|
|
|
—
|
|
|
(657
|
)
|
|
—
|
|
|||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
207
|
|
|
$
|
642
|
|
|
$
|
15
|
|
|
$
|
(657
|
)
|
|
$
|
207
|
|
|
Condensed Consolidating Statements of Income
|
||||||||||||||||||
|
For the Three Months Ended September 30, 2012
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,388
|
|
|
$
|
146
|
|
|
$
|
(6
|
)
|
|
$
|
1,528
|
|
Cost of sales
|
—
|
|
|
569
|
|
|
63
|
|
|
(6
|
)
|
|
626
|
|
|||||
Gross profit
|
—
|
|
|
819
|
|
|
83
|
|
|
—
|
|
|
902
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
510
|
|
|
51
|
|
|
—
|
|
|
561
|
|
|||||
Depreciation and amortization
|
—
|
|
|
27
|
|
|
2
|
|
|
—
|
|
|
29
|
|
|||||
Other operating expense, net
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Income from operations
|
—
|
|
|
278
|
|
|
30
|
|
|
—
|
|
|
308
|
|
|||||
Interest expense
|
29
|
|
|
24
|
|
|
—
|
|
|
(22
|
)
|
|
31
|
|
|||||
Interest income
|
(20
|
)
|
|
—
|
|
|
(2
|
)
|
|
22
|
|
|
—
|
|
|||||
Other (income) expense, net
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Income (loss) before provision for income taxes and equity in earnings of subsidiaries
|
(7
|
)
|
|
256
|
|
|
32
|
|
|
—
|
|
|
281
|
|
|||||
Provision for income taxes
|
(4
|
)
|
|
99
|
|
|
7
|
|
|
—
|
|
|
102
|
|
|||||
Income (loss) before equity in earnings of subsidiaries
|
(3
|
)
|
|
157
|
|
|
25
|
|
|
—
|
|
|
179
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
182
|
|
|
25
|
|
|
—
|
|
|
(207
|
)
|
|
—
|
|
|||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
179
|
|
|
$
|
182
|
|
|
$
|
25
|
|
|
$
|
(207
|
)
|
|
$
|
179
|
|
|
Condensed Consolidating Statements of Income
|
||||||||||||||||||
|
For the Nine Months Ended September 30, 2013
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
4,091
|
|
|
$
|
468
|
|
|
$
|
(25
|
)
|
|
$
|
4,534
|
|
Cost of sales
|
—
|
|
|
1,720
|
|
|
221
|
|
|
(25
|
)
|
|
1,916
|
|
|||||
Gross profit
|
—
|
|
|
2,371
|
|
|
247
|
|
|
—
|
|
|
2,618
|
|
|||||
Selling, general and administrative expenses
|
2
|
|
|
1,575
|
|
|
168
|
|
|
—
|
|
|
1,745
|
|
|||||
Depreciation and amortization
|
—
|
|
|
80
|
|
|
6
|
|
|
—
|
|
|
86
|
|
|||||
Other operating expense, net
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Income from operations
|
(2
|
)
|
|
711
|
|
|
73
|
|
|
—
|
|
|
782
|
|
|||||
Interest expense
|
90
|
|
|
66
|
|
|
—
|
|
|
(62
|
)
|
|
94
|
|
|||||
Interest income
|
(58
|
)
|
|
—
|
|
|
(5
|
)
|
|
62
|
|
|
(1
|
)
|
|||||
Other expense (income), net
|
384
|
|
|
(4
|
)
|
|
4
|
|
|
—
|
|
|
384
|
|
|||||
(Loss) income before (benefit) provision for income taxes and equity in earnings of subsidiaries
|
(418
|
)
|
|
649
|
|
|
74
|
|
|
—
|
|
|
305
|
|
|||||
(Benefit) provision for income taxes
|
(11
|
)
|
|
(224
|
)
|
|
73
|
|
|
—
|
|
|
(162
|
)
|
|||||
Income (loss) before equity in earnings of subsidiaries
|
(407
|
)
|
|
873
|
|
|
1
|
|
|
—
|
|
|
467
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
875
|
|
|
2
|
|
|
—
|
|
|
(877
|
)
|
|
—
|
|
|||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net income
|
$
|
468
|
|
|
$
|
875
|
|
|
$
|
2
|
|
|
$
|
(877
|
)
|
|
$
|
468
|
|
|
Condensed Consolidating Statements of Income
|
||||||||||||||||||
|
For the Nine Months Ended September 30, 2012
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
4,102
|
|
|
$
|
428
|
|
|
$
|
(19
|
)
|
|
$
|
4,511
|
|
Cost of sales
|
—
|
|
|
1,721
|
|
|
193
|
|
|
(19
|
)
|
|
1,895
|
|
|||||
Gross profit
|
—
|
|
|
2,381
|
|
|
235
|
|
|
—
|
|
|
2,616
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
1,559
|
|
|
154
|
|
|
—
|
|
|
1,713
|
|
|||||
Depreciation and amortization
|
—
|
|
|
90
|
|
|
5
|
|
|
—
|
|
|
95
|
|
|||||
Other operating expense, net
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Income from operations
|
—
|
|
|
724
|
|
|
76
|
|
|
—
|
|
|
800
|
|
|||||
Interest expense
|
92
|
|
|
67
|
|
|
—
|
|
|
(65
|
)
|
|
94
|
|
|||||
Interest income
|
(61
|
)
|
|
—
|
|
|
(5
|
)
|
|
65
|
|
|
(1
|
)
|
|||||
Other (income) expense, net
|
(8
|
)
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
(8
|
)
|
|||||
Income (loss) before provision for income taxes and equity in earnings of subsidiaries
|
(23
|
)
|
|
660
|
|
|
78
|
|
|
—
|
|
|
715
|
|
|||||
Provision for income taxes
|
(11
|
)
|
|
253
|
|
|
14
|
|
|
—
|
|
|
256
|
|
|||||
Income (loss) before equity in earnings of subsidiaries
|
(12
|
)
|
|
407
|
|
|
64
|
|
|
—
|
|
|
459
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
471
|
|
|
64
|
|
|
—
|
|
|
(535
|
)
|
|
—
|
|
|||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
459
|
|
|
$
|
471
|
|
|
$
|
64
|
|
|
$
|
(535
|
)
|
|
$
|
459
|
|
|
Condensed Consolidating Statements of Comprehensive Income
|
||||||||||||||||||
|
For the Three Months Ended September 30, 2013
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Comprehensive income (loss)
|
$
|
208
|
|
|
$
|
644
|
|
|
$
|
19
|
|
|
$
|
(663
|
)
|
|
$
|
208
|
|
|
Condensed Consolidating Statements of Comprehensive Income
|
||||||||||||||||||
|
For the Three Months Ended September 30, 2012
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Comprehensive income (loss)
|
$
|
186
|
|
|
$
|
195
|
|
|
$
|
43
|
|
|
$
|
(238
|
)
|
|
$
|
186
|
|
|
Condensed Consolidating Statements of Comprehensive Income
|
||||||||||||||||||
|
For the Nine Months Ended September 30, 2013
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Comprehensive income (loss)
|
$
|
475
|
|
|
$
|
874
|
|
|
$
|
(13
|
)
|
|
$
|
(861
|
)
|
|
$
|
475
|
|
|
Condensed Consolidating Statements of Comprehensive Income
|
||||||||||||||||||
|
For the Nine Months Ended September 30, 2012
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Comprehensive income (loss)
|
$
|
471
|
|
|
$
|
495
|
|
|
$
|
92
|
|
|
$
|
(587
|
)
|
|
$
|
471
|
|
|
Condensed Consolidating Balance Sheets
|
||||||||||||||||||
|
As of September 30, 2013
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
119
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade, net
|
—
|
|
|
472
|
|
|
59
|
|
|
—
|
|
|
531
|
|
|||||
Other
|
4
|
|
|
39
|
|
|
12
|
|
|
—
|
|
|
55
|
|
|||||
Related party receivable
|
12
|
|
|
7
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
169
|
|
|
27
|
|
|
—
|
|
|
196
|
|
|||||
Deferred tax assets
|
—
|
|
|
57
|
|
|
3
|
|
|
—
|
|
|
60
|
|
|||||
Prepaid expenses and other current assets
|
174
|
|
|
87
|
|
|
3
|
|
|
(166
|
)
|
|
98
|
|
|||||
Total current assets
|
190
|
|
|
875
|
|
|
179
|
|
|
(185
|
)
|
|
1,059
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
1,067
|
|
|
88
|
|
|
—
|
|
|
1,155
|
|
|||||
Investments in consolidated subsidiaries
|
5,256
|
|
|
598
|
|
|
—
|
|
|
(5,854
|
)
|
|
—
|
|
|||||
Investments in unconsolidated subsidiaries
|
1
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
14
|
|
|||||
Goodwill
|
—
|
|
|
2,966
|
|
|
22
|
|
|
—
|
|
|
2,988
|
|
|||||
Other intangible assets, net
|
—
|
|
|
2,618
|
|
|
78
|
|
|
—
|
|
|
2,696
|
|
|||||
Long-term receivable, related parties
|
3,057
|
|
|
3,579
|
|
|
275
|
|
|
(6,911
|
)
|
|
—
|
|
|||||
Other non-current assets
|
34
|
|
|
95
|
|
|
—
|
|
|
—
|
|
|
129
|
|
|||||
Non-current deferred tax assets
|
24
|
|
|
—
|
|
|
88
|
|
|
(24
|
)
|
|
88
|
|
|||||
Total assets
|
$
|
8,562
|
|
|
$
|
11,798
|
|
|
$
|
743
|
|
|
$
|
(12,974
|
)
|
|
$
|
8,129
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
245
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
271
|
|
Related party payable
|
—
|
|
|
12
|
|
|
7
|
|
|
(19
|
)
|
|
—
|
|
|||||
Deferred revenue
|
—
|
|
|
63
|
|
|
2
|
|
|
—
|
|
|
65
|
|
|||||
Short-term borrowings and current portion of long-term obligations
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Income taxes payable
|
—
|
|
|
185
|
|
|
2
|
|
|
(166
|
)
|
|
21
|
|
|||||
Other current liabilities
|
125
|
|
|
428
|
|
|
45
|
|
|
—
|
|
|
598
|
|
|||||
Total current liabilities
|
125
|
|
|
934
|
|
|
82
|
|
|
(185
|
)
|
|
956
|
|
|||||
Long-term obligations to third parties
|
2,465
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
2,521
|
|
|||||
Long-term obligations to related parties
|
3,579
|
|
|
3,332
|
|
|
—
|
|
|
(6,911
|
)
|
|
—
|
|
|||||
Non-current deferred tax liabilities
|
—
|
|
|
765
|
|
|
2
|
|
|
(24
|
)
|
|
743
|
|
|||||
Non-current deferred revenue
|
—
|
|
|
1,294
|
|
|
42
|
|
|
—
|
|
|
1,336
|
|
|||||
Other non-current liabilities
|
85
|
|
|
161
|
|
|
19
|
|
|
—
|
|
|
265
|
|
|||||
Total liabilities
|
6,254
|
|
|
6,542
|
|
|
145
|
|
|
(7,120
|
)
|
|
5,821
|
|
|||||
Total stockholders' equity
|
2,308
|
|
|
5,256
|
|
|
598
|
|
|
(5,854
|
)
|
|
2,308
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
8,562
|
|
|
$
|
11,798
|
|
|
$
|
743
|
|
|
$
|
(12,974
|
)
|
|
$
|
8,129
|
|
|
Condensed Consolidating Balance Sheets
|
||||||||||||||||||
|
As of December 31, 2012
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
257
|
|
|
$
|
109
|
|
|
$
|
—
|
|
|
$
|
366
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade, net
|
—
|
|
|
498
|
|
|
54
|
|
|
—
|
|
|
552
|
|
|||||
Other
|
3
|
|
|
36
|
|
|
11
|
|
|
—
|
|
|
50
|
|
|||||
Related party receivable
|
12
|
|
|
8
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
171
|
|
|
26
|
|
|
—
|
|
|
197
|
|
|||||
Deferred tax assets
|
(1
|
)
|
|
63
|
|
|
4
|
|
|
—
|
|
|
66
|
|
|||||
Prepaid and other current assets
|
162
|
|
|
75
|
|
|
21
|
|
|
(154
|
)
|
|
104
|
|
|||||
Total current assets
|
176
|
|
|
1,108
|
|
|
225
|
|
|
(174
|
)
|
|
1,335
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
1,117
|
|
|
85
|
|
|
—
|
|
|
1,202
|
|
|||||
Investments in consolidated subsidiaries
|
4,334
|
|
|
611
|
|
|
—
|
|
|
(4,945
|
)
|
|
—
|
|
|||||
Investments in unconsolidated subsidiaries
|
1
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
14
|
|
|||||
Goodwill
|
—
|
|
|
2,961
|
|
|
22
|
|
|
—
|
|
|
2,983
|
|
|||||
Other intangible assets, net
|
—
|
|
|
2,605
|
|
|
79
|
|
|
—
|
|
|
2,684
|
|
|||||
Long-term receivable, related parties
|
2,999
|
|
|
2,779
|
|
|
204
|
|
|
(5,982
|
)
|
|
—
|
|
|||||
Other non-current assets
|
476
|
|
|
97
|
|
|
7
|
|
|
—
|
|
|
580
|
|
|||||
Non-current deferred tax assets
|
26
|
|
|
—
|
|
|
130
|
|
|
(26
|
)
|
|
130
|
|
|||||
Total assets
|
$
|
8,012
|
|
|
$
|
11,278
|
|
|
$
|
765
|
|
|
$
|
(11,127
|
)
|
|
$
|
8,928
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
253
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
283
|
|
Related party payable
|
—
|
|
|
12
|
|
|
10
|
|
|
(22
|
)
|
|
—
|
|
|||||
Deferred revenue
|
—
|
|
|
63
|
|
|
2
|
|
|
—
|
|
|
65
|
|
|||||
Short-term borrowings and current portion of long-term obligations
|
250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250
|
|
|||||
Income taxes payable
|
—
|
|
|
198
|
|
|
1
|
|
|
(154
|
)
|
|
45
|
|
|||||
Other current liabilities
|
105
|
|
|
436
|
|
|
46
|
|
|
2
|
|
|
589
|
|
|||||
Total current liabilities
|
355
|
|
|
962
|
|
|
89
|
|
|
(174
|
)
|
|
1,232
|
|
|||||
Long-term obligations to third parties
|
2,498
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
2,554
|
|
|||||
Long-term obligations to related parties
|
2,779
|
|
|
3,203
|
|
|
—
|
|
|
(5,982
|
)
|
|
—
|
|
|||||
Non-current deferred tax liabilities
|
—
|
|
|
653
|
|
|
3
|
|
|
(26
|
)
|
|
630
|
|
|||||
Non-current deferred revenue
|
—
|
|
|
1,342
|
|
|
44
|
|
|
—
|
|
|
1,386
|
|
|||||
Other non-current liabilities
|
100
|
|
|
728
|
|
|
18
|
|
|
—
|
|
|
846
|
|
|||||
Total liabilities
|
5,732
|
|
|
6,944
|
|
|
154
|
|
|
(6,182
|
)
|
|
6,648
|
|
|||||
Total stockholders' equity
|
2,280
|
|
|
4,334
|
|
|
611
|
|
|
(4,945
|
)
|
|
2,280
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
8,012
|
|
|
$
|
11,278
|
|
|
$
|
765
|
|
|
$
|
(11,127
|
)
|
|
$
|
8,928
|
|
|
Condensed Consolidating Statements of Cash Flows
|
||||||||||||||||||
|
For the Nine Months Ended September 30, 2013
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(60
|
)
|
|
$
|
611
|
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
616
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisition of business
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Purchase of property, plant and equipment
|
—
|
|
|
(95
|
)
|
|
(16
|
)
|
|
—
|
|
|
(111
|
)
|
|||||
Purchase of intangible assets
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Proceeds from disposals of property, plant and equipment
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Issuance of related party notes receivable
|
—
|
|
|
(551
|
)
|
|
(80
|
)
|
|
631
|
|
|
—
|
|
|||||
Repayment of related party notes receivable
|
250
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|
—
|
|
|||||
Other, net
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net cash (used in) provided by investing activities
|
247
|
|
|
(660
|
)
|
|
(96
|
)
|
|
381
|
|
|
(128
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from issuance of related party long-term debt
|
551
|
|
|
80
|
|
|
—
|
|
|
(631
|
)
|
|
—
|
|
|||||
Repayment of related party long-term debt
|
—
|
|
|
(250
|
)
|
|
—
|
|
|
250
|
|
|
—
|
|
|||||
Repurchase of shares of common stock
|
(243
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(243
|
)
|
|||||
Cash paid for shares not yet received
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||||
Repayment of senior unsecured notes
|
(250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|||||
Tax withholdings related to net share settlements of certain stock awards
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||||
Dividends paid
|
(225
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(225
|
)
|
|||||
Proceeds from stock options exercised
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||
Excess tax benefit on stock-based compensation
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||
Net cash (used in) provided by financing activities
|
(187
|
)
|
|
(164
|
)
|
|
—
|
|
|
(381
|
)
|
|
(732
|
)
|
|||||
Cash and cash equivalents — net change from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating, investing and financing activities
|
—
|
|
|
(213
|
)
|
|
(31
|
)
|
|
—
|
|
|
(244
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
257
|
|
|
109
|
|
|
—
|
|
|
366
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
44
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
119
|
|
|
Condensed Consolidating Statements of Cash Flows
|
||||||||||||||||||
|
For the Nine Months Ended September 30, 2012
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(92
|
)
|
|
$
|
288
|
|
|
$
|
86
|
|
|
$
|
—
|
|
|
$
|
282
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property, plant and equipment
|
—
|
|
|
(146
|
)
|
|
(15
|
)
|
|
—
|
|
|
(161
|
)
|
|||||
Return of capital
|
—
|
|
|
21
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|||||
Purchase of intangible assets
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Proceeds from disposals of property, plant and equipment
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||
Issuance of related party notes receivable
|
—
|
|
|
(548
|
)
|
|
(25
|
)
|
|
573
|
|
|
—
|
|
|||||
Net cash (used in) provided by investing activities
|
—
|
|
|
(674
|
)
|
|
(61
|
)
|
|
573
|
|
|
(162
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of related party long-term debt
|
548
|
|
|
25
|
|
|
—
|
|
|
(573
|
)
|
|
—
|
|
|||||
Repurchase of shares of common stock
|
(262
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
|||||
Dividends paid
|
(213
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(213
|
)
|
|||||
Proceeds from stock options exercised
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||
Excess tax benefit on stock-based compensation
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Deferred financing charges paid
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Other, net
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net cash (used in) provided by financing activities
|
92
|
|
|
39
|
|
|
—
|
|
|
(573
|
)
|
|
(442
|
)
|
|||||
Cash and cash equivalents — net change from:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating, investing and financing activities
|
—
|
|
|
(347
|
)
|
|
25
|
|
|
—
|
|
|
(322
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
641
|
|
|
60
|
|
|
—
|
|
|
701
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
294
|
|
|
$
|
89
|
|
|
$
|
—
|
|
|
$
|
383
|
|
•
|
Net sales totaled
$1,543 million
for the
three months ended
September 30, 2013
,
an
in
crease of
$15 million
, or
1%
, from the
three months ended
September 30, 2012
.
|
•
|
Net income for the
three months ended
September 30, 2013
was
$207 million
, compared to
$179 million
for the
three months ended
September 30, 2012
,
an
in
crease of
$28 million
, or
16%
.
|
•
|
Diluted earnings per share was
$1.01
for the
three months ended
September 30, 2013
and
$0.84
for the year ago period, a
in
crease of
$0.17
, or approximately
20%
.
|
•
|
Earnings for the
three months ended
September 30, 2013
included a $33 million non-cash increase in net income associated with the conclusion of an Internal Revenue Service ("IRS") audit, which increased diluted earnings per share by $0.16 during the
three months ended
September 30, 2013
.
|
•
|
During the third quarter of
2013
, our Board of Directors (our "Board") declared a dividend of
$0.38
per share, which was paid on October 4, 2013, to shareholders of record on September 16, 2013.
|
•
|
During the
three and nine months ended September 30, 2013
, we repurchased
2.6 million
shares and
5.4 million
shares, respectively, of our common stock valued at approximately
$117 million
and
$243 million
, respectively.
|
|
For the Three Months Ended September 30,
|
|
|
|||||||||||||
|
2013
|
|
2012
|
|
Percentage
|
|||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Change
|
|||||||
Net sales
|
$
|
1,543
|
|
|
100.0
|
%
|
|
$
|
1,528
|
|
|
100.0
|
%
|
|
1
|
%
|
Cost of sales
|
650
|
|
|
42.1
|
|
|
626
|
|
|
41.0
|
|
|
|
|||
Gross profit
|
893
|
|
|
57.9
|
|
|
902
|
|
|
59.0
|
|
|
(1
|
)
|
||
Selling, general and administrative expenses
|
563
|
|
|
36.5
|
|
|
561
|
|
|
36.7
|
|
|
|
|||
Depreciation and amortization
|
28
|
|
|
1.9
|
|
|
29
|
|
|
1.9
|
|
|
|
|||
Other operating expense, net
|
2
|
|
|
0.1
|
|
|
4
|
|
|
0.3
|
|
|
|
|||
Income from operations
|
300
|
|
|
19.4
|
|
|
308
|
|
|
20.1
|
|
|
(3
|
)
|
||
Interest expense
|
29
|
|
|
1.9
|
|
|
31
|
|
|
2.0
|
|
|
|
|||
Interest income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
Other expense (income), net
|
428
|
|
|
27.7
|
|
|
(4
|
)
|
|
(0.3
|
)
|
|
|
|||
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
(157
|
)
|
|
(10.2
|
)
|
|
281
|
|
|
18.4
|
|
|
(156
|
)
|
||
(Benefit) provision for income taxes
|
(364
|
)
|
|
(23.6
|
)
|
|
102
|
|
|
6.7
|
|
|
|
|||
Income before equity in earnings of unconsolidated subsidiaries
|
207
|
|
|
13.4
|
|
|
179
|
|
|
11.7
|
|
|
|
|||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
Net income
|
$
|
207
|
|
|
13.4
|
%
|
|
$
|
179
|
|
|
11.7
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
1.02
|
|
|
NM
|
|
|
$
|
0.85
|
|
|
NM
|
|
|
20
|
%
|
Diluted
|
1.01
|
|
|
NM
|
|
|
0.84
|
|
|
NM
|
|
|
20
|
%
|
|
For the Three Months Ended September 30, 2013
|
|
|
||||||||||||
(in millions)
|
As reported
|
|
Completion of the IRS audit in August 2013
|
|
As reported excluding tax and indemnity items
|
|
For the Three Months Ended September 30, 2012
|
||||||||
Other expense (income), net
|
$
|
428
|
|
|
$
|
(430
|
)
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
(157
|
)
|
|
430
|
|
|
273
|
|
|
281
|
|
||||
(Benefit) provision for income taxes
|
(364
|
)
|
|
463
|
|
|
99
|
|
|
102
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Effective tax rate
|
231.8
|
%
|
|
|
|
36.3
|
%
|
|
36.3
|
%
|
|
For the Three Months Ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
Segment Results — Net sales
|
|
|
|
||||
Beverage Concentrates
|
$
|
309
|
|
|
$
|
303
|
|
Packaged Beverages
|
1,114
|
|
|
1,120
|
|
||
Latin America Beverages
|
120
|
|
|
105
|
|
||
Net sales
|
$
|
1,543
|
|
|
$
|
1,528
|
|
|
|
|
|
||||
|
For the Three Months Ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
Segment Results — SOP
|
|
|
|
||||
Beverage Concentrates
|
$
|
201
|
|
|
$
|
198
|
|
Packaged Beverages
|
159
|
|
|
147
|
|
||
Latin America Beverages
|
17
|
|
|
14
|
|
||
Total SOP
|
377
|
|
|
359
|
|
||
Unallocated corporate costs
|
75
|
|
|
47
|
|
||
Other operating expense, net
|
2
|
|
|
4
|
|
||
Income from operations
|
300
|
|
|
308
|
|
||
Interest expense, net
|
29
|
|
|
31
|
|
||
Other expense (income), net
|
428
|
|
|
(4
|
)
|
||
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
$
|
(157
|
)
|
|
$
|
281
|
|
|
For the Three Months Ended September 30,
|
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net sales
|
$
|
309
|
|
|
$
|
303
|
|
|
$
|
6
|
|
SOP
|
201
|
|
|
198
|
|
|
3
|
|
|
For the Three Months Ended September 30,
|
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net sales
|
$
|
1,114
|
|
|
$
|
1,120
|
|
|
$
|
(6
|
)
|
SOP
|
159
|
|
|
147
|
|
|
12
|
|
|
For the Three Months Ended September 30,
|
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net sales
|
$
|
120
|
|
|
$
|
105
|
|
|
$
|
15
|
|
SOP
|
17
|
|
|
14
|
|
|
3
|
|
|
For the Nine Months Ended September 30,
|
|
|
|||||||||||||
|
2013
|
|
2012
|
|
Percentage
|
|||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Change
|
|||||||
Net sales
|
$
|
4,534
|
|
|
100.0
|
%
|
|
$
|
4,511
|
|
|
100.0
|
%
|
|
1
|
%
|
Cost of sales
|
1,916
|
|
|
42.3
|
|
|
1,895
|
|
|
42.0
|
|
|
|
|||
Gross profit
|
2,618
|
|
|
57.7
|
|
|
2,616
|
|
|
58.0
|
|
|
—
|
|
||
Selling, general and administrative expenses
|
1,745
|
|
|
38.5
|
|
|
1,713
|
|
|
38.0
|
|
|
|
|||
Depreciation and amortization
|
86
|
|
|
1.9
|
|
|
95
|
|
|
2.1
|
|
|
|
|||
Other operating expense, net
|
5
|
|
|
0.1
|
|
|
8
|
|
|
0.2
|
|
|
|
|||
Income from operations
|
782
|
|
|
17.2
|
|
|
800
|
|
|
17.7
|
|
|
(2
|
)
|
||
Interest expense
|
94
|
|
|
2.1
|
|
|
94
|
|
|
2.1
|
|
|
|
|||
Interest income
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
|
|||
Other expense (income), net
|
384
|
|
|
8.4
|
|
|
(8
|
)
|
|
(0.2
|
)
|
|
|
|||
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
305
|
|
|
6.7
|
|
|
715
|
|
|
15.8
|
|
|
(57
|
)
|
||
(Benefit) provision for income taxes
|
(162
|
)
|
|
(3.6
|
)
|
|
256
|
|
|
5.7
|
|
|
|
|||
Income before equity in earnings of unconsolidated subsidiaries
|
467
|
|
|
10.3
|
|
|
459
|
|
|
10.1
|
|
|
|
|||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
Net income
|
$
|
468
|
|
|
10.3
|
%
|
|
$
|
459
|
|
|
10.1
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
2.29
|
|
|
NM
|
|
|
$
|
2.17
|
|
|
NM
|
|
|
6
|
%
|
Diluted
|
$
|
2.28
|
|
|
NM
|
|
|
$
|
2.15
|
|
|
NM
|
|
|
6
|
%
|
|
For the Nine Months Ended September 30, 2013
|
|
|
||||||||||||||||
(in millions)
|
As reported
|
|
Completion of the IRS audit in August 2013
|
|
Enactment of the Canadian bill in June 2013
|
|
As reported excluding tax and indemnity items
|
|
For the Nine Months Ended September 30, 2012
|
||||||||||
Other expense (income), net
|
$
|
384
|
|
|
$
|
(430
|
)
|
|
$
|
38
|
|
|
$
|
(8
|
)
|
|
$
|
(8
|
)
|
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
305
|
|
|
430
|
|
|
(38
|
)
|
|
697
|
|
|
715
|
|
|||||
(Benefit) provision for income taxes
|
(162
|
)
|
|
463
|
|
|
(50
|
)
|
|
251
|
|
|
256
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effective tax rate
|
(53.1
|
)%
|
|
|
|
|
|
36.0
|
%
|
|
35.8
|
%
|
|
For the Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2013
|
|
2012
|
||||
Segment Results — Net sales
|
|
|
|
||||
Beverage Concentrates
|
$
|
908
|
|
|
$
|
888
|
|
Packaged Beverages
|
3,280
|
|
|
3,314
|
|
||
Latin America Beverages
|
346
|
|
|
309
|
|
||
Net sales
|
$
|
4,534
|
|
|
$
|
4,511
|
|
|
|
|
|
||||
|
For the Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2013
|
|
2012
|
||||
Segment Results — SOP
|
|
|
|
||||
Beverage Concentrates
|
$
|
560
|
|
|
$
|
552
|
|
Packaged Beverages
|
418
|
|
|
408
|
|
||
Latin America Beverages
|
45
|
|
|
37
|
|
||
Total SOP
|
1,023
|
|
|
997
|
|
||
Unallocated corporate costs
|
236
|
|
|
189
|
|
||
Other operating expense, net
|
5
|
|
|
8
|
|
||
Income from operations
|
782
|
|
|
800
|
|
||
Interest expense, net
|
93
|
|
|
93
|
|
||
Other expense (income), net
|
384
|
|
|
(8
|
)
|
||
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
$
|
305
|
|
|
$
|
715
|
|
|
For the Nine Months Ended
|
|
|
||||||||
|
September 30,
|
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net sales
|
$
|
908
|
|
|
$
|
888
|
|
|
$
|
20
|
|
SOP
|
560
|
|
|
552
|
|
|
8
|
|
|
For the Nine Months Ended
|
|
|
||||||||
|
September 30,
|
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net sales
|
$
|
3,280
|
|
|
$
|
3,314
|
|
|
$
|
(34
|
)
|
SOP
|
418
|
|
|
408
|
|
|
10
|
|
|
For the Nine Months Ended September 30,
|
|
|
||||||||
|
2013
|
|
2012
|
|
Change
|
||||||
Net sales
|
$
|
346
|
|
|
$
|
309
|
|
|
$
|
37
|
|
SOP
|
45
|
|
|
37
|
|
|
8
|
|
•
|
goodwill and other indefinite-lived intangible assets;
|
•
|
customer marketing programs and incentives;
|
•
|
revenue recognition;
|
•
|
pension and post-retirement benefits;
|
•
|
risk management programs; and
|
•
|
income taxes.
|
•
|
continued capital expenditures to upgrade our existing plants and fleet of distribution trucks, replace and expand our cold drink equipment and make investments in IT systems;
|
•
|
continued payment of dividends;
|
•
|
seasonality of our operating cash flows could impact short-term liquidity;
|
•
|
our continued repurchases of our outstanding common stock pursuant to our repurchase programs;
|
•
|
acquisitions of regional bottling companies, distributors and distribution rights to further extend our geographic coverage or access to new products; and
|
•
|
our ability to issue unsecured commercial paper notes ("Commercial Paper") on a private placement basis up to a maximum aggregate amount outstanding at any time of
$500 million
.
|
|
Amount Utilized
|
|
Balances Available
|
||||
Revolver
|
$
|
—
|
|
|
$
|
498
|
|
Letters of credit
|
2
|
|
|
73
|
|
||
Swingline advances
|
—
|
|
|
50
|
|
|
For the Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2013
|
|
2012
|
||||
|
|
|
(as adjusted)
|
|
|||
Net cash provided by operating activities
|
$
|
616
|
|
|
$
|
282
|
|
Net cash used in investing activities
|
(128
|
)
|
|
(162
|
)
|
||
Net cash used in financing activities
|
(732
|
)
|
|
(442
|
)
|
|
|
|
Payments Due in Year
|
||||||||||||||||||||||||
|
Total
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
After 2017
|
||||||||||||||
Senior unsecured notes
(1)
|
$
|
2,474
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
1,974
|
|
Capital leases
(2)
|
205
|
|
|
2
|
|
|
11
|
|
|
11
|
|
|
11
|
|
|
11
|
|
|
159
|
|
|||||||
Purchase obligations
(3)
|
727
|
|
|
239
|
|
|
360
|
|
|
90
|
|
|
17
|
|
|
15
|
|
|
6
|
|
|||||||
Payable to Mondelēz
|
55
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
27
|
|
|||||||
Total
|
$
|
3,461
|
|
|
$
|
241
|
|
|
$
|
378
|
|
|
$
|
108
|
|
|
$
|
535
|
|
|
$
|
33
|
|
|
$
|
2,166
|
|
(1)
|
Amounts represent payment for the senior unsecured notes issued by us. Please refer to
Note 6 of the Notes to our Unaudited Condensed Consolidated Financial Statements
for further information.
|
(2)
|
Amounts represent our contractual payment obligations for our lease arrangements classified as a capital lease.
|
(3)
|
Amounts represent payments 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.
|
Sensitivity Analysis
|
|||||||||||
|
|
|
|
Change in Fair Value
|
|||||||
Hypothetical Change in Interest Rates
|
|
Annual Impact to Interest Expense
|
|
Other Current and Non-current Assets
|
|
Other Non-current Liabilities
|
|
Total Debt
|
|||
1-percent decrease
(1)
|
|
$
|
—
|
|
|
$50 million increase
|
|
—
|
|
|
$50 million increase
|
1-percent increase
|
|
$5 million increase
|
|
|
$32 million decrease
|
|
$36 million increase
|
|
|
$68 million decrease
|
(1)
|
We pay an average floating rate, which fluctuates periodically, based on LIBOR and a credit spread, as a result of designated fair value hedges on certain debt instruments. See
Note 6 of the Notes to our Unaudited Condensed Consolidated Financial Statements
for further information. Our weighted average LIBOR rate as of
September 30, 2013
was 0.32%. As LIBOR has not historically fallen below 0.25%, our estimate of the annual impact to interest expense reflects this assumption if our hypothetical change in the interest rate fell below the historical threshold.
|
Item 1.
|
Legal Proceedings.
|
Period
|
|
Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs
|
||||||
July 1, 2013 – July 31, 2013
|
|
265
|
|
|
$
|
46.27
|
|
|
265
|
|
|
$
|
833,486
|
|
August 1, 2013 – August 31, 2013
|
|
234
|
|
|
45.73
|
|
|
234
|
|
|
822,772
|
|
||
September 1, 2013 – September 30, 2013
|
|
2,054
|
|
|
45.40
|
|
|
2,054
|
|
|
729,545
|
|
||
For the quarter ended September 30, 2013
|
|
2,553
|
|
|
45.52
|
|
|
2,553
|
|
|
|
(1)
|
As previously disclosed, the Board has authorized us to purchase an aggregate amount of up to $3,000 million of our outstanding common stock. This column discloses the number of shares purchased pursuant to these programs during the indicated time periods. As of
September 30, 2013
, there was a remaining balance of
$730 million
authorized for repurchase that had not been utilized.
|
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 Company's 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 Company's Current Report on Form 8-K (filed on May 12, 2008) and incorporated herein by reference).
|
3.2
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation of Dr Pepper Snapple Group, Inc. effective as of May 17, 2012 (filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q (filed July 26, 2012) and incorporated herein by reference).
|
3.3
|
Amended and Restated By-Laws of Dr Pepper Snapple Group, Inc. effective as of May 17, 2012 (filed as Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q (filed July 26, 2012) 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 as Exhibit 4.1 to the Company's 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 Company's 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 2018 (filed as Exhibit 4.3 to the Company's 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 2038 (filed as Exhibit 4.4 to the Company's 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 Company's Current Report on Form 8-K (filed on May 1, 2008) and incorporated herein by reference).
|
4.6
|
Registration Rights Agreement Joinder, dated May 7, 2008, by the subsidiary guarantors named therein (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on May 12, 2008) and incorporated herein by reference).
|
4.7
|
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 Company's Current Report on Form 8-K (filed on May 12, 2008) and incorporated herein by reference).
|
4.8
|
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 Company's Annual Report on Form 10-K (filed on March 26, 2009) and incorporated herein by reference).
|
4.9
|
Third Supplemental Indenture, dated October 19, 2009, among 234DP Aviation, LLC, as a subsidiary guarantor; Dr Pepper Snapple Group, Inc., and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.9 to the Company's Quarterly Report on Form 10-Q (filed November 5, 2009) and incorporated herein by reference).
|
4.10
|
Indenture, dated as of December 15, 2009, between Dr Pepper Snapple Group, Inc. and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on December 23, 2009) and incorporated herein by reference).
|
4.11
|
First Supplemental Indenture, dated as of December 21, 2009, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on December 23, 2009) and incorporated herein by reference).
|
4.12
|
2.35% Senior Notes due 2012 (in global form), dated December 21, 2009, in the principal amount of $450 million(filed as Exhibit 4.4 to the Company's Current Report on Form 8-K (filed on December 23, 2009) and incorporated herein by reference).
|
4.13
|
Second Supplemental Indenture, dated as of January 11, 2011, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on January 11, 2011) and incorporated herein by reference).
|
4.14
|
2.90% Senior Note due 2016 (in global form), dated January 11, 2011, in the principal amount of $500 million (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on January 11, 2011) and incorporated herein by reference).
|
4.15
|
Third Supplemental Indenture, dated as of November 15, 2011, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on November 15, 2011) and incorporated herein by reference).
|
4.16
|
2.60% Senior Note due 2019 (in global form), dated November 15, 2011, in the principal amount of $250 million (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on November 15, 2011) and incorporated herein by reference).
|
4.17
|
3.20% Senior Note due 2021 (in global form), dated November 15, 2011, in the principal amount of $250 million (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on November 15, 2011) and incorporated herein by reference).
|
4.18
|
Fourth Supplemental Indenture, dated as of November 20, 2012, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on November 20, 2012) and incorporated herein by reference).
|
4.19
|
2.00% Senior Note due 2020 (in global form), dated November 20, 2012, in the principal amount of $250 million (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on November 20, 2012) and incorporated herein by reference).
|
4.20
|
2.70% Senior Note due 2022 (in global form), dated November 20, 2012, in the principal amount of $250 million (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on November 20, 2012) and incorporated herein by reference).
|
10.1 †
|
Agreement dated July 22, 2013, among The American Bottling Company, Mott's LLP and CROWN Cork & Seal USA, Inc.
|
10.2*
|
First Amendment to Omnibus Stock Incentive Plan of 2009 approved by the Board of Directors and the Compensation Committee of the Board of Directors of Dr Pepper Snapple Group, Inc. on September 18, 2013 and filed herewith.
|
10.3*
|
Non-Employee Director Deferral Plan approved by the Board of Directors and the Compensation Committee of the Board of Directors of Dr Pepper Snapple Group, Inc. on September 18, 2013 and filed herewith.
|
12.1*
|
Computation of Ratio of Earnings to Fixed Charges.
|
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.
|
101*
|
The following financial information from Dr Pepper Snapple Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012, (ii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012, (iii) Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012, and (v) the Notes to Condensed Consolidated Financial Statements.
|
|
Dr Pepper Snapple Group, Inc.
|
|
||
|
|
|
|
|
|
By:
|
/s/ Martin M. Ellen
|
|
|
|
|
|
|
|
|
Name:
|
|
Martin M. Ellen
|
|
|
Title:
|
|
Executive Vice President and Chief Financial
|
|
|
|
|
Officer of Dr Pepper Snapple Group, Inc.
|
|
Date: October 24, 2013
|
|
|
|
|
A.
|
The stockholders of the Company approved the Omnibus Stock Incentive Plan of 2009 (the “Omnibus Plan”) on May 19, 2009.
|
B.
|
Under the Omnibus Plan the Committee has the power to “correct any defect or supply any omission or reconcile any inconsistency” in the Omnibus Plan to further Omnibus Plan purposes, and provides the Board and the Committee with the authority to amend and modify the Omnibus Plan for any purpose permitted by law (unless it would materially adversely affect the right of a participant for previously granted awards and subject to stockholder approval when required).
|
C.
|
The Omnibus Plan provides that stock awards may be granted to both employees and nonemployee directors, but only contemplates that stock awards may be granted in lieu of salary or bonus, and does not expressly contemplate granting stock awards in lieu of cash compensation paid to, and for service as, a nonemployee director.
|
D.
|
The Board and the Committee concluded that the Omnibus Plan should be consistent to allow both employees and nonemployee directors to receive stock awards in lieu of salary, bonus or cash compensation paid to, and for service as, a nonemployee director.
|
E.
|
Stockholder approval is not required for the amendment to the Omnibus Plan, since the New York Stock Exchange Listing Standards specifically exclude from the stockholder approval requirement any compensation plan in which the directors have the choice to purchase shares at fair market value (in lieu of accepting cash regardless of whether the stock is delivered currently or after a deferral period).
|
|
|
|
|
|
|
DR PEPPER SNAPPLE GROUP, INC.
|
|
||
|
|
|
||
|
By:
|
/s/ James L. Baldwin
|
|
|
|
|
James L. Baldwin
|
|
|
|
|
Title:
|
Executive Vice President,
General Counsel and Corporate Secretary |
|
(d)
|
the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets,
other than
a sale or disposition if the holders of the voting securities of the Company outstanding immediately prior thereto hold securities immediately thereafter which represent more than a majority of the combined voting power of the voting securities of the acquirer, or parent of the acquirer, of such assets; or
|
|
For the Nine Months Ended September 30,
|
|
For the Fiscal Years
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Calculation of fixed charges ratio:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and cumulative effect of change in accounting policy
|
$
|
305
|
|
|
$
|
978
|
|
|
$
|
925
|
|
|
$
|
821
|
|
|
$
|
868
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Add/(deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges
|
106
|
|
|
142
|
|
|
131
|
|
|
147
|
|
|
265
|
|
|||||
Amortization of capitalized interest
|
3
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|||||
Capitalized interest
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|||||
Total earnings available for fixed charges
|
$
|
413
|
|
|
$
|
1,121
|
|
|
$
|
1,056
|
|
|
$
|
967
|
|
|
$
|
1,127
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
94
|
|
|
$
|
125
|
|
|
$
|
114
|
|
|
$
|
128
|
|
|
$
|
243
|
|
Capitalized interest
|
1
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|
8
|
|
|||||
Interest component of rental expense
(1)
|
11
|
|
|
15
|
|
|
15
|
|
|
16
|
|
|
14
|
|
|||||
Total fixed charges
|
$
|
106
|
|
|
$
|
142
|
|
|
$
|
131
|
|
|
$
|
147
|
|
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
3.9x
|
|
|
7.9x
|
|
|
8.1x
|
|
|
6.6x
|
|
|
4.3x
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents a reasonable estimate of the interest component of rental expense incurred by us.
|
|
/s/ Larry D. Young
|
|
Date: October 24, 2013
|
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 registrant's 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting.
|
|
/s/ Martin M. Ellen
|
|
Date: October 24, 2013
|
Martin M. Ellen
|
|
|
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
third
quarterly period ended
September 30, 2013
, 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
|
|
Date: October 24, 2013
|
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
third
quarterly period ended
September 30, 2013
, 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/ Martin M. Ellen
|
|
Date: October 24, 2013
|
Martin M. Ellen
|
|
|
Executive Vice President and Chief Financial Officer of Dr Pepper Snapple Group, Inc.
|
|