|
Delaware
|
|
98-0517725
|
(State or other jurisdiction of
|
|
(I.R.S. employer
|
incorporation or organization)
|
|
identification number)
|
|
|
|
5301 Legacy Drive, Plano, Texas
|
|
75024
|
(Address of principal executive offices)
|
|
(Zip code)
|
|
Large Accelerated Filer
x
|
|
Accelerated Filer
o
|
|
Non-Accelerated Filer
o
|
|
Smaller Reporting Company
o
|
|
Emerging Growth Company
o
|
|
|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
||||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
||||
|
||||
|
||||
|
|
|
|
|
|
||||
|
||||
|
||||
|
||||
|
||||
|
ITEM 1.
|
Financial Statements (Unaudited)
|
|
|
For the
|
||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
(in millions, except per share data)
|
|
2017
|
|
2016
|
||||
Net sales
|
|
$
|
1,510
|
|
|
$
|
1,487
|
|
Cost of sales
|
|
607
|
|
|
602
|
|
||
Gross profit
|
|
903
|
|
|
885
|
|
||
Selling, general and administrative expenses
|
|
621
|
|
|
546
|
|
||
Depreciation and amortization
|
|
25
|
|
|
26
|
|
||
Other operating income, net
|
|
(28
|
)
|
|
—
|
|
||
Income from operations
|
|
285
|
|
|
313
|
|
||
Interest expense
|
|
40
|
|
|
33
|
|
||
Interest income
|
|
(1
|
)
|
|
—
|
|
||
Other income, net
|
|
(2
|
)
|
|
(1
|
)
|
||
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
|
248
|
|
|
281
|
|
||
Provision for income taxes
|
|
71
|
|
|
99
|
|
||
Income before equity in earnings of unconsolidated subsidiaries
|
|
177
|
|
|
182
|
|
||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
|
—
|
|
|
—
|
|
||
Net income
|
|
$
|
177
|
|
|
$
|
182
|
|
Earnings per common share:
|
|
|
|
|
||||
Basic
|
|
$
|
0.97
|
|
|
$
|
0.97
|
|
Diluted
|
|
0.96
|
|
|
0.96
|
|
||
Weighted average common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
183.4
|
|
|
187.6
|
|
||
Diluted
|
|
184.6
|
|
|
189.0
|
|
||
Cash dividends declared per common share
|
|
$
|
0.58
|
|
|
$
|
0.53
|
|
|
For the
|
||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Comprehensive income
|
$
|
200
|
|
|
$
|
190
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions, except share and per share data)
|
2017
|
|
2016
|
||||
Assets
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
73
|
|
|
$
|
1,787
|
|
Restricted cash and restricted cash equivalents
|
87
|
|
|
—
|
|
||
Accounts receivable:
|
|
|
|
||||
Trade, net
|
606
|
|
|
595
|
|
||
Other
|
55
|
|
|
51
|
|
||
Inventories
|
246
|
|
|
202
|
|
||
Prepaid expenses and other current assets
|
180
|
|
|
101
|
|
||
Total current assets
|
1,247
|
|
|
2,736
|
|
||
Property, plant and equipment, net
|
1,125
|
|
|
1,138
|
|
||
Investments in unconsolidated subsidiaries
|
23
|
|
|
23
|
|
||
Goodwill
|
3,560
|
|
|
2,993
|
|
||
Other intangible assets, net
|
3,784
|
|
|
2,656
|
|
||
Other non-current assets
|
206
|
|
|
183
|
|
||
Non-current deferred tax assets
|
63
|
|
|
62
|
|
||
Total assets
|
$
|
10,008
|
|
|
$
|
9,791
|
|
Liabilities and Stockholders' Equity
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
353
|
|
|
$
|
303
|
|
Deferred revenue
|
64
|
|
|
64
|
|
||
Short-term borrowings and current portion of long-term obligations
|
10
|
|
|
10
|
|
||
Income taxes payable
|
24
|
|
|
4
|
|
||
Other current liabilities
|
696
|
|
|
670
|
|
||
Total current liabilities
|
1,147
|
|
|
1,051
|
|
||
Long-term obligations
|
4,467
|
|
|
4,468
|
|
||
Non-current deferred tax liabilities
|
842
|
|
|
812
|
|
||
Non-current deferred revenue
|
1,101
|
|
|
1,117
|
|
||
Other non-current liabilities
|
258
|
|
|
209
|
|
||
Total liabilities
|
7,815
|
|
|
7,657
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 800,000,000 shares authorized, 183,795,277 and 183,119,843 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
61
|
|
|
95
|
|
||
Retained earnings
|
2,336
|
|
|
2,266
|
|
||
Accumulated other comprehensive loss
|
(206
|
)
|
|
(229
|
)
|
||
Total stockholders' equity
|
2,193
|
|
|
2,134
|
|
||
Total liabilities and stockholders' equity
|
$
|
10,008
|
|
|
$
|
9,791
|
|
|
For the
|
||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
177
|
|
|
$
|
182
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation expense
|
49
|
|
|
48
|
|
||
Amortization expense
|
11
|
|
|
8
|
|
||
Amortization of deferred revenue
|
(16
|
)
|
|
(16
|
)
|
||
Employee stock-based compensation expense
|
6
|
|
|
11
|
|
||
Deferred income taxes
|
30
|
|
|
16
|
|
||
Gain on step acquisition of unconsolidated subsidiaries
|
(28
|
)
|
|
—
|
|
||
Unrealized gains on economic hedges
|
(5
|
)
|
|
(7
|
)
|
||
Other, net
|
4
|
|
|
2
|
|
||
Changes in assets and liabilities, net of effects of acquisition:
|
|
|
|
||||
Trade accounts receivable
|
18
|
|
|
(5
|
)
|
||
Other accounts receivable
|
5
|
|
|
1
|
|
||
Inventories
|
(16
|
)
|
|
(25
|
)
|
||
Other current and non-current assets
|
(85
|
)
|
|
(82
|
)
|
||
Other current and non-current liabilities
|
(92
|
)
|
|
(70
|
)
|
||
Trade accounts payable
|
19
|
|
|
81
|
|
||
Income taxes payable
|
20
|
|
|
53
|
|
||
Net cash provided by operating activities
|
97
|
|
|
197
|
|
||
Investing activities:
|
|
|
|
||||
Acquisition of business
|
(1,548
|
)
|
|
—
|
|
||
Cash acquired in step acquisition of unconsolidated subsidiaries
|
3
|
|
|
—
|
|
||
Purchase of property, plant and equipment
|
(16
|
)
|
|
(27
|
)
|
||
Purchase of intangible assets
|
(1
|
)
|
|
—
|
|
||
Investment in unconsolidated subsidiaries
|
(1
|
)
|
|
(6
|
)
|
||
Proceeds from disposals of property, plant and equipment
|
1
|
|
|
1
|
|
||
Other, net
|
(7
|
)
|
|
(8
|
)
|
||
Net cash used in investing activities
|
(1,569
|
)
|
|
(40
|
)
|
||
Financing activities:
|
|
|
|
||||
Repayment of senior unsecured notes
|
—
|
|
|
(500
|
)
|
||
Repurchase of shares of common stock
|
(28
|
)
|
|
(179
|
)
|
||
Dividends paid
|
(97
|
)
|
|
(90
|
)
|
||
Tax withholdings related to net share settlements of certain stock awards
|
(30
|
)
|
|
(31
|
)
|
||
Proceeds from stock options exercised
|
17
|
|
|
7
|
|
||
Deferred financing charges paid
|
(1
|
)
|
|
—
|
|
||
Capital lease payments
|
(3
|
)
|
|
(2
|
)
|
||
Net cash used in financing activities
|
(142
|
)
|
|
(795
|
)
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from:
|
|
|
|
||||
Operating, investing and financing activities
|
(1,614
|
)
|
|
(638
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
3
|
|
|
2
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
1,787
|
|
|
911
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
176
|
|
|
$
|
275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|||||||||||
|
Common Stock
|
|
Additional
|
|
|
|
Other
|
|
|
|||||||||||||
|
Issued
|
|
Paid-In
|
|
Retained
|
|
Comprehensive
|
|
Total
|
|||||||||||||
(in millions, except per share data)
|
Shares
|
|
Amount
|
|
Capital
|
|
Earnings
|
|
Loss
|
|
Equity
|
|||||||||||
Balance as of January 1, 2017
|
183.1
|
|
|
$
|
2
|
|
|
$
|
95
|
|
|
$
|
2,266
|
|
|
$
|
(229
|
)
|
|
$
|
2,134
|
|
Shares issued under employee stock-based compensation plans and other
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
177
|
|
|
—
|
|
|
177
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
23
|
|
|||||
Dividends declared, $0.58 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
(107
|
)
|
|||||
Stock options exercised and stock-based compensation
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Common stock repurchases
|
(0.3
|
)
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||||
Balance as of March 31, 2017
|
183.8
|
|
|
$
|
2
|
|
|
$
|
61
|
|
|
$
|
2,336
|
|
|
$
|
(206
|
)
|
|
$
|
2,193
|
|
1
.
|
General
|
•
|
The Company paid certain seller transaction costs, which included
$2 million
to reimburse Bai Brands for payments made on behalf of the Company for buyer acquisition-related costs, which were recorded as selling, general and administrative ("SG&A") expenses. The remainder of the seller transaction costs paid by the Company were accounted for by the Company as part of the consideration transferred.
|
•
|
Bai Brands had an executory contract as of
January 31, 2017
, which compensated certain counterparties with Profit Interest Units from Bai Brands (the “Predecessor PIUs”). The Predecessor PIUs were based upon the counterparties completing service requirements and various performance criteria. As a result of the Bai Brands Merger, these Predecessor PIUs have fully vested and were converted into cash as of
January 31, 2017
based upon the consideration paid by the Company to acquire Bai Brands. The cash was placed in escrow and will be released from escrow to the counterparties on certain anniversary dates as long as the counterparties are not in breach of the executory contract. Although none of the costs of these benefits have been paid by the Company, DPSG will record SG&A expenses for the deferred compensation amounts payable to these counterparties by Bai Brands. As of
March 31, 2017
, the total unrecognized compensation cost is
$13 million
and the period over which these costs are expected to be recognized is
18 months
.
|
(in millions)
|
Preliminary Purchase Price
|
||
Cash paid to consummate Bai Brands Merger, net of the Company's previous ownership interest
|
$
|
1,548
|
|
Holdback placed in escrow
|
103
|
|
|
Less: Seller transaction costs reimbursed to Bai Brands for payments made on behalf of the Company for its acquisition-related costs
|
(2
|
)
|
|
Preliminary Purchase Price - Bai Brands
(1)
|
$
|
1,649
|
|
(1)
|
The preliminary purchase price excludes the impact of the Company's pre-existing ownership interest.
|
•
|
$90 million
, which will be held in escrow to secure indemnification obligations of the sellers relating to the accuracy of representations and warranties and a working capital adjustment to be settled 90 days after the acquisition date. As of January 31, 2018,
$80 million
less any working capital adjustment 90 days after the acquisition date will be released. The remaining
$10 million
will be released approximately 4 years after the acquisition date, subject to certain administrative conditions, and
|
•
|
$13 million
of unrecognized compensation associated with the Predecessor PIUs related to the performance of certain counterparties, which will be held in escrow and released over the next
18 months
.
|
(in millions)
|
|
Fair Value
|
|
Useful Life
|
||
Property, plant & equipment
|
|
$
|
4
|
|
|
5 - 10 years
|
Customer relationships
|
|
30
|
|
|
7 years
|
|
Non-compete agreements
|
|
22
|
|
|
2 - 4 years
|
|
Brands
|
|
1,073
|
|
|
Indefinite
|
|
Goodwill
|
|
565
|
|
|
Indefinite
|
|
Assumed liabilities, net of acquired assets
|
|
(4
|
)
|
|
N/A
|
|
Total
|
|
$
|
1,690
|
|
|
|
|
For the Three Months Ended March 31,
|
||
(in millions)
|
2017
|
||
Net sales - Bai Brands
|
$
|
35
|
|
Intercompany sales to Packaged Beverages Excluding Bai
|
(24
|
)
|
|
Incremental impact to consolidated net sales
|
$
|
11
|
|
|
For the Three Months Ended March 31,
|
||
(in millions)
|
2017
|
||
Net loss - Bai Brands
|
$
|
(5
|
)
|
Impact of intercompany activity with Packaged Beverages Excluding Bai
(1)
|
(6
|
)
|
|
Incremental impact to consolidated net income
|
$
|
(11
|
)
|
(1)
|
Impact of intercompany activity includes the elimination of intercompany net sales and the deferral of gross profit recognition on shipments of product still in Packaged Beverages Excluding Bai as of March 31, 2017, net of tax.
|
3
.
|
Inventories
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Raw materials
|
$
|
80
|
|
|
$
|
77
|
|
Spare parts
|
21
|
|
|
22
|
|
||
Work in process
|
6
|
|
|
5
|
|
||
Finished goods
|
171
|
|
|
130
|
|
||
Inventories at first in first out cost
|
278
|
|
|
234
|
|
||
Reduction to LIFO cost
|
(32
|
)
|
|
(32
|
)
|
||
Inventories
|
$
|
246
|
|
|
$
|
202
|
|
4
.
|
Prepaid Expenses and Other Current Assets and Other Current Liabilities
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Prepaid expenses and other current assets:
|
|
|
|
||||
Customer incentive programs
|
$
|
82
|
|
|
$
|
24
|
|
Derivative instruments
|
17
|
|
|
19
|
|
||
Prepaid income taxes
|
4
|
|
|
18
|
|
||
Current assets held for sale
|
1
|
|
|
1
|
|
||
Other
|
76
|
|
|
39
|
|
||
Total prepaid expenses and other current assets
|
$
|
180
|
|
|
$
|
101
|
|
Other current liabilities:
|
|
|
|
||||
Customer rebates and incentives
|
$
|
220
|
|
|
$
|
280
|
|
Accrued compensation
|
76
|
|
|
134
|
|
||
Insurance liability
|
39
|
|
|
36
|
|
||
Interest accrual
|
53
|
|
|
24
|
|
||
Dividends payable
|
107
|
|
|
97
|
|
||
Derivative instruments
|
8
|
|
|
2
|
|
||
Holdback liability to former Bai Brands shareholders
(1)
|
87
|
|
|
—
|
|
||
Other
|
106
|
|
|
97
|
|
||
Total other current liabilities
|
$
|
696
|
|
|
$
|
670
|
|
(1)
|
Refer to Note 2 for additional information
on holdback liability to former Bai Brands shareholders as of
March 31,
2017
.
|
5
.
|
Goodwill and Other Intangible Assets
|
(in millions)
|
Beverage Concentrates
|
|
WD Reporting Unit
(1)
|
|
DSD Reporting Unit
(1)
|
|
Bai
|
|
Latin America Beverages
|
|
Total
|
||||||||||||
Balance as of January 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill
|
$
|
1,733
|
|
|
$
|
1,222
|
|
|
$
|
189
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
3,168
|
|
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
||||||
|
1,733
|
|
|
1,222
|
|
|
9
|
|
|
—
|
|
|
24
|
|
|
2,988
|
|
||||||
Foreign currency impact
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||||
Acquisition activity
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
||||||
Balance as of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill
|
1,733
|
|
|
1,222
|
|
|
189
|
|
|
—
|
|
|
29
|
|
|
3,173
|
|
||||||
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
||||||
|
1,733
|
|
|
1,222
|
|
|
9
|
|
|
—
|
|
|
29
|
|
|
2,993
|
|
||||||
Foreign currency impact
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Acquisition activity
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
565
|
|
|
—
|
|
|
565
|
|
||||||
Balance as of March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill
|
1,733
|
|
|
1,222
|
|
|
189
|
|
|
565
|
|
|
31
|
|
|
3,740
|
|
||||||
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
||||||
|
$
|
1,733
|
|
|
$
|
1,222
|
|
|
$
|
9
|
|
|
$
|
565
|
|
|
$
|
31
|
|
|
$
|
3,560
|
|
(1)
|
The Packaged Beverages Excluding Bai operating segment is comprised of two reporting units, the Direct Store Delivery ("
DSD
") system and the Warehouse Direct ("
WD
") system.
|
(2)
|
Goodwill was recorded to the Latin America Beverages reporting unit during 2016 as a result of the step acquisition of Industria Embotelladora de Bebidas Mexicanas and Embotelladora Mexicana de Agua, S.A. de C.V.
|
(3)
|
Goodwill was recorded to Bai during the quarter ended March 31, 2017 as a result of the Bai Brands Merger.
Refer to Note 2 for additional information
about the Bai Brands Merger.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
|
|
Net
|
|
Gross
|
|
Accumulated
|
|
Net
|
||||||||||||
(in millions)
|
Amount
|
|
Amortization
|
|
Amount
|
|
Amount
|
|
Amortization
|
|
Amount
|
||||||||||||
Intangible assets with indefinite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Brands
(1)
|
$
|
3,697
|
|
|
$
|
—
|
|
|
$
|
3,697
|
|
|
$
|
2,621
|
|
|
$
|
—
|
|
|
$
|
2,621
|
|
Distribution rights
|
28
|
|
|
—
|
|
|
28
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||||
Intangible assets with definite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
(1)
|
106
|
|
|
(77
|
)
|
|
29
|
|
|
76
|
|
|
(76
|
)
|
|
—
|
|
||||||
Non-compete agreements
(1)
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Distribution rights
|
17
|
|
|
(9
|
)
|
|
8
|
|
|
16
|
|
|
(8
|
)
|
|
8
|
|
||||||
Brands
|
29
|
|
|
(29
|
)
|
|
—
|
|
|
29
|
|
|
(29
|
)
|
|
—
|
|
||||||
Bottler agreements
|
19
|
|
|
(19
|
)
|
|
—
|
|
|
19
|
|
|
(19
|
)
|
|
—
|
|
||||||
Total
|
$
|
3,918
|
|
|
$
|
(134
|
)
|
|
$
|
3,784
|
|
|
$
|
2,788
|
|
|
$
|
(132
|
)
|
|
$
|
2,656
|
|
(1)
|
As a result of the Bai Brands Merger, the Company recorded indefinite lived brand assets of
$1,073 million
and definite lived non-compete agreements and customer relationships of
$22 million
and
$30 million
, respectively.
Refer to Note 2 for additional information
. The remaining
$3 million
increase in brands with indefinite lives is due to foreign currency translation.
|
Year
|
Aggregate Amortization Expense
(in millions)
|
||
April 1, 2017 through December 31, 2017
|
$
|
4
|
|
2018
|
16
|
|
|
2019
|
13
|
|
|
2020
|
9
|
|
|
2021
|
6
|
|
6
.
|
Debt
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Senior unsecured notes
|
$
|
4,320
|
|
|
$
|
4,325
|
|
Capital lease obligations
|
157
|
|
|
153
|
|
||
Subtotal
|
4,477
|
|
|
4,478
|
|
||
Less - current portion
|
(10
|
)
|
|
(10
|
)
|
||
Long-term obligations
|
$
|
4,467
|
|
|
$
|
4,468
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Commercial paper
|
$
|
—
|
|
|
$
|
—
|
|
Current portion of long-term obligations:
|
|
|
|
||||
Capital lease obligations
|
10
|
|
|
10
|
|
||
Short-term borrowings and current portion of long-term obligations
|
$
|
10
|
|
|
$
|
10
|
|
(in millions)
|
|
|
|
|
|
Principal Amount
|
|
Carrying Amount
|
||||||||
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
||||||
Issuance
|
|
Maturity Date
|
|
Rate
|
|
2017
|
|
2017
|
|
2016
|
||||||
2018 Notes
|
|
May 1, 2018
|
|
6.82%
|
|
364
|
|
|
364
|
|
|
364
|
|
|||
2019 Notes
|
|
January 15, 2019
|
|
2.60%
|
|
250
|
|
|
249
|
|
|
249
|
|
|||
2020 Notes
|
|
January 15, 2020
|
|
2.00%
|
|
250
|
|
|
247
|
|
|
247
|
|
|||
2021-A Notes
|
|
November 15, 2021
|
|
3.20%
|
|
250
|
|
|
249
|
|
|
249
|
|
|||
2021-B Notes
|
|
November 15, 2021
|
|
2.53%
|
|
250
|
|
|
246
|
|
|
246
|
|
|||
2022 Notes
|
|
November 15, 2022
|
|
2.70%
|
|
250
|
|
|
270
|
|
|
273
|
|
|||
2023 Notes
|
|
December 15, 2023
|
|
3.13%
|
|
500
|
|
|
494
|
|
|
495
|
|
|||
2025 Notes
|
|
November 15, 2025
|
|
3.40%
|
|
500
|
|
|
495
|
|
|
495
|
|
|||
2026 Notes
|
|
September 15, 2026
|
|
2.55%
|
|
400
|
|
|
396
|
|
|
396
|
|
|||
2027 Notes
|
|
June 15, 2027
|
|
3.43%
|
|
400
|
|
|
397
|
|
|
397
|
|
|||
2038 Notes
|
|
May 1, 2038
|
|
7.45%
|
|
250
|
|
|
269
|
|
|
270
|
|
|||
2045 Notes
|
|
November 15, 2045
|
|
4.50%
|
|
250
|
|
|
247
|
|
|
247
|
|
|||
2046 Notes
|
|
December 15, 2046
|
|
4.42%
|
|
400
|
|
|
397
|
|
|
397
|
|
|||
|
|
|
|
|
|
$
|
4,314
|
|
|
$
|
4,320
|
|
|
$
|
4,325
|
|
(in millions)
|
Amount Utilized
|
|
Balances Available
|
||||
Revolver
|
$
|
—
|
|
|
$
|
500
|
|
Letters of credit
|
—
|
|
|
75
|
|
•
|
commodity prices affecting the cost of raw materials and fuels, which are recorded in cost of sales and
SG&A
expenses, respectively.
|
|
|
|
|
|
|
|
|
Impact to the carrying value
|
||||||||||
($ in millions)
|
|
|
|
|
|
Method of
|
|
|
|
of long-term debt
|
||||||||
|
|
Hedging
|
|
Number of
|
|
measuring
|
|
Notional
|
|
March 31,
|
|
December 31,
|
||||||
Period entered
|
|
relationship
|
|
instruments
|
|
effectiveness
|
|
value
|
|
2017
|
|
2016
|
||||||
November 2011
|
|
2019 Notes
|
|
2
|
|
Short cut method
|
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
November 2011
|
|
2021-A Notes
|
|
2
|
|
Short cut method
|
|
150
|
|
|
—
|
|
|
—
|
|
|||
November 2012
|
|
2020 Notes
|
|
5
|
|
Short cut method
|
|
120
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
February 2015
|
|
2038 Notes
|
|
1
|
|
Regression
|
|
100
|
|
|
21
|
|
|
22
|
|
|||
December 2016
|
|
2021-B Notes
|
|
2
|
|
Short cut method
|
|
250
|
|
|
(3
|
)
|
|
(2
|
)
|
|||
December 2016
|
|
2023 Notes
|
|
2
|
|
Short cut method
|
|
150
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
January 2017
|
|
2022 Notes
(1)
|
|
4
|
|
Regression
|
|
250
|
|
|
22
|
|
|
24
|
|
|||
|
|
|
|
|
|
|
|
$
|
1,120
|
|
|
$
|
36
|
|
|
$
|
41
|
|
(1)
|
In October 2016, the Company de-designated the hedging relationships between the four outstanding interest rate swaps and the 2022 Notes. The Company will amortize
$25 million
into earnings over the remaining term of the 2022 Notes which represents the increase to the carrying value of the debt upon de-designation consisting of changes in fair market value of the debt, pull to par adjustments and ineffectiveness recorded under the previous hedging relationship. The Company recorded the change in the fair value of the interest rate swaps after de-designation into interest expense.
|
(in millions)
|
Balance Sheet Location
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Assets:
|
|
|
|
|
|
||||
Derivative instruments designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Interest rate contracts
|
Prepaid expenses and other current assets
|
|
$
|
3
|
|
|
$
|
6
|
|
Interest rate contracts
|
Other non-current assets
|
|
30
|
|
|
21
|
|
||
Derivative instruments not designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Interest rate contracts
|
Prepaid expenses and other current assets
|
|
—
|
|
|
4
|
|
||
Commodity contracts
|
Prepaid expenses and other current assets
|
|
14
|
|
|
9
|
|
||
Interest rate contracts
|
Other non-current assets
|
|
—
|
|
|
8
|
|
||
Commodity contracts
|
Other non-current assets
|
|
14
|
|
|
12
|
|
||
Total assets
|
|
|
$
|
61
|
|
|
$
|
60
|
|
Liabilities:
|
|
|
|
|
|
||||
Derivative instruments designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Interest rate contracts
|
Other current liabilities
|
|
$
|
2
|
|
|
$
|
1
|
|
Foreign exchange forward contracts
|
Other current liabilities
|
|
6
|
|
|
—
|
|
||
Interest rate contracts
|
Other non-current liabilities
|
|
6
|
|
|
7
|
|
||
Derivative instruments not designated as hedging instruments under U.S. GAAP:
|
|
|
|
|
|
||||
Commodity contracts
|
Other current liabilities
|
|
—
|
|
|
1
|
|
||
Commodity contracts
|
Other non-current liabilities
|
|
2
|
|
|
—
|
|
||
Total liabilities
|
|
|
$
|
16
|
|
|
$
|
9
|
|
|
Amount of Loss Recognized in
|
|
Amount of Loss Reclassified from AOCL into Income
|
|
Location of Loss Reclassified from AOCL into Income
|
||||
(in millions)
|
Other Comprehensive Loss ("OCI")
|
|
|
||||||
|
|
|
|
|
|
||||
For the three months ended March 31, 2017:
|
|
|
|
|
|
||||
Interest rate contracts
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
(5
|
)
|
|
—
|
|
|
Cost of sales
|
||
Total
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
||||
For the three months ended March 31, 2016:
|
|
|
|
|
|
||||
Interest rate contracts
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
Interest expense
|
Foreign exchange forward contracts
|
(2
|
)
|
|
—
|
|
|
Cost of sales
|
||
Total
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
Amount of Gain
|
|
Location of Gain
|
||
(in millions)
|
|
Recognized in Income
|
|
Recognized in Income
|
||
For the three months ended March 31, 2017:
|
|
|
|
|
||
Interest rate contracts
|
|
$
|
4
|
|
|
Interest expense
|
Total
|
|
$
|
4
|
|
|
|
|
|
|
|
|
||
For the three months ended March 31, 2016:
|
|
|
|
|
||
Interest rate contracts
|
|
$
|
4
|
|
|
Interest expense
|
Total
|
|
$
|
4
|
|
|
|
|
|
Amount of Gain (Loss)
|
|
Location of Gain (Loss)
|
||
(in millions)
|
|
Recognized in Income
|
|
Recognized in Income
|
||
For the three months ended March 31, 2017:
|
|
|
|
|
||
Commodity contracts
(1)
|
|
$
|
21
|
|
|
Cost of sales
|
Commodity contracts
(1)
|
|
(13
|
)
|
|
SG&A expenses
|
|
Interest rate contracts
(2)
|
|
1
|
|
|
Interest expense
|
|
Total
|
|
$
|
9
|
|
|
|
|
|
|
|
|
||
For the three months ended March 31, 2016:
|
|
|
|
|
||
Commodity contracts
(1)
|
|
$
|
(1
|
)
|
|
Cost of sales
|
Commodity contracts
(1)
|
|
—
|
|
|
SG&A expenses
|
|
Total
|
|
$
|
(1
|
)
|
|
|
(1)
|
Commodity contracts include both realized and unrealized gains and losses.
|
(2)
|
Represents gains on the interest rate contracts related to the 2022 Notes prior to re-designation of hedging relationship in January 2017.
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Other non-current assets:
|
|
|
|
||||
Customer incentive programs
|
$
|
58
|
|
|
$
|
57
|
|
Marketable securities - trading
|
44
|
|
|
35
|
|
||
Derivative instruments
|
44
|
|
|
41
|
|
||
Cost method investments
(1)
|
1
|
|
|
16
|
|
||
Non-current restricted cash and restricted cash equivalents
(2)
|
16
|
|
|
—
|
|
||
Other
|
43
|
|
|
34
|
|
||
Total other non-current assets
|
$
|
206
|
|
|
$
|
183
|
|
Other non-current liabilities:
|
|
|
|
||||
Long-term payables due to Mondelēz International, Inc.
|
$
|
21
|
|
|
$
|
21
|
|
Long-term pension and post-retirement liability
|
43
|
|
|
41
|
|
||
Insurance liability
|
66
|
|
|
67
|
|
||
Derivative instruments
|
8
|
|
|
7
|
|
||
Deferred compensation liability
|
44
|
|
|
35
|
|
||
Holdback liability to former Bai Brands shareholders
(2)
|
16
|
|
|
—
|
|
||
Acquired contingent liabilities
(2)
|
21
|
|
|
—
|
|
||
Other
|
39
|
|
|
38
|
|
||
Total other non-current liabilities
|
$
|
258
|
|
|
$
|
209
|
|
(1)
|
Decrease in cost method investments resulted from our consummation of the Bai Brands Merger, as we had a cost method investment in Bai Brands as of
December 31,
2016
.
Refer to Note 2 for additional information
regarding the Bai Brands Merger and treatment of our previously held interest in Bai Brands.
|
(2)
|
Refer to Note 2 for additional information
on non-current restricted cash and restricted cash equivalents, the corresponding holdback liability to former Bai Brands shareholders, and the acquired contingent liabilities, as of
March 31,
2017
.
|
|
March 31, 2017
|
||||||||||
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
33
|
|
|
—
|
|
|||
Marketable securities - trading
|
44
|
|
|
—
|
|
|
—
|
|
|||
Total assets
|
$
|
44
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
8
|
|
|
—
|
|
|||
Foreign exchange forward contracts
|
—
|
|
|
6
|
|
|
—
|
|
|||
Total liabilities
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
December 31, 2016
|
||||||||||
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
39
|
|
|
—
|
|
|||
Marketable securities - trading
|
35
|
|
|
—
|
|
|
—
|
|
|||
Total assets
|
$
|
35
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Commodity contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Interest rate contracts
|
—
|
|
|
8
|
|
|
—
|
|
|||
Foreign exchange forward contracts
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total liabilities
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
Fair Value Hierarchy Level
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
(in millions)
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
(1)
|
1
|
|
$
|
73
|
|
|
$
|
73
|
|
|
$
|
1,787
|
|
|
$
|
1,787
|
|
Restricted cash and restricted cash equivalents
(1)
|
1
|
|
103
|
|
|
103
|
|
|
—
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt – 2018 Notes
(2)
|
2
|
|
364
|
|
|
384
|
|
|
364
|
|
|
389
|
|
||||
Long-term debt – 2019 Notes
(2)
|
2
|
|
249
|
|
|
253
|
|
|
249
|
|
|
254
|
|
||||
Long-term debt – 2020 Notes
(2)
|
2
|
|
247
|
|
|
249
|
|
|
247
|
|
|
248
|
|
||||
Long-term debt – 2021-A Notes
(2)
|
2
|
|
249
|
|
|
256
|
|
|
249
|
|
|
256
|
|
||||
Long-term debt – 2021-B Notes
(2)
|
2
|
|
246
|
|
|
249
|
|
|
246
|
|
|
248
|
|
||||
Long-term debt – 2022 Notes
(2)
|
2
|
|
270
|
|
|
247
|
|
|
273
|
|
|
247
|
|
||||
Long-term debt – 2023 Notes
(2)
|
2
|
|
494
|
|
|
502
|
|
|
495
|
|
|
500
|
|
||||
Long-term debt – 2025 Notes
(2)
|
2
|
|
495
|
|
|
502
|
|
|
495
|
|
|
498
|
|
||||
Long-term debt – 2026 Notes
(2)
|
2
|
|
396
|
|
|
373
|
|
|
396
|
|
|
370
|
|
||||
Long-term debt – 2027 Notes
(2)
|
2
|
|
397
|
|
|
399
|
|
|
397
|
|
|
398
|
|
||||
Long-term debt – 2038 Notes
(2)
|
2
|
|
269
|
|
|
343
|
|
|
270
|
|
|
347
|
|
||||
Long-term debt – 2045 Notes
(2)
|
2
|
|
247
|
|
|
250
|
|
|
247
|
|
|
253
|
|
||||
Long-term debt – 2046 Notes
(2)
|
2
|
|
397
|
|
|
403
|
|
|
397
|
|
|
407
|
|
(1)
|
Cash equivalents and restricted cash equivalents are composed of certificates of deposit, time deposits and other interest-bearing investments with original maturity dates of three months or less. Cash equivalents and restricted cash equivalents are recorded at cost, which approximates fair value.
|
(2)
|
The fair value amounts of long term debt were based on current market rates available to the
Company
. The difference between the fair value and the carrying value represents the theoretical net premium or discount that would be paid or received to retire all debt and related unamortized costs to be incurred at such date. The carrying amount includes the unamortized discounts and issuance costs on the issuance of debt and impact of interest rate swaps designated as fair value hedges and other hedge related adjustments.
Refer to Note 7 for additional information
regarding the notes subject to fair value hedges.
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Total stock-based compensation expense
|
$
|
6
|
|
|
$
|
11
|
|
Income tax benefit recognized in the statement of income
|
(2
|
)
|
|
(4
|
)
|
||
Stock-based compensation expense, net of tax
|
$
|
4
|
|
|
$
|
7
|
|
|
Stock Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding as of January 1, 2017
|
1,342,921
|
|
|
$
|
70.83
|
|
|
7.93
|
|
$
|
27
|
|
Granted
|
423,745
|
|
|
94.62
|
|
|
|
|
|
|||
Exercised
|
(324,922
|
)
|
|
51.91
|
|
|
|
|
14
|
|
||
Forfeited or expired
|
(5,751
|
)
|
|
88.06
|
|
|
|
|
|
|||
Outstanding as of March 31, 2017
|
1,435,993
|
|
|
82.06
|
|
|
8.56
|
|
23
|
|
||
Exercisable as of March 31, 2017
|
611,415
|
|
|
69.72
|
|
|
7.60
|
|
17
|
|
|
RSUs
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding as of January 1, 2017
|
1,218,244
|
|
|
$
|
71.08
|
|
|
0.80
|
|
$
|
110
|
|
Granted
|
385,417
|
|
|
94.62
|
|
|
|
|
|
|||
Vested and released
|
(608,388
|
)
|
|
57.89
|
|
|
|
|
58
|
|
||
Forfeited
|
(10,060
|
)
|
|
82.60
|
|
|
|
|
|
|||
Outstanding as of March 31, 2017
|
985,213
|
|
|
88.32
|
|
|
1.53
|
|
96
|
|
|
PSUs
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding as of January 1, 2017
|
374,618
|
|
|
$
|
64.86
|
|
|
0.89
|
|
$
|
34
|
|
Granted
|
119,879
|
|
|
77.97
|
|
|
|
|
|
|||
Performance adjustment
(1)
|
146,313
|
|
|
51.68
|
|
|
|
|
|
|||
Vested and released
|
(292,626
|
)
|
|
51.68
|
|
|
|
|
28
|
|
||
Forfeited
|
(1,128
|
)
|
|
59.78
|
|
|
|
|
|
|||
Outstanding as of March 31, 2017
|
347,056
|
|
|
69.96
|
|
|
1.74
|
|
34
|
|
(1)
|
For
PSU
s which vested during the
three months ended
March 31, 2017
, the Company awarded additional
PSU
s, as actual results measured at the end of the performance period exceeded target performance levels.
|
|
For the Three Months Ended March 31,
|
||||||
(in millions, except per share data)
|
2017
|
|
2016
|
||||
Basic EPS:
|
|
|
|
||||
Net income
|
$
|
177
|
|
|
$
|
182
|
|
Weighted average common shares outstanding
|
183.4
|
|
|
187.6
|
|
||
Earnings per common share — basic
|
$
|
0.97
|
|
|
$
|
0.97
|
|
Diluted EPS:
|
|
|
|
||||
Net income
|
$
|
177
|
|
|
$
|
182
|
|
Weighted average common shares outstanding
|
183.4
|
|
|
187.6
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Stock options
|
0.3
|
|
|
0.3
|
|
||
RSUs
|
0.7
|
|
|
0.9
|
|
||
PSUs
|
0.2
|
|
|
0.2
|
|
||
Weighted average common shares outstanding and common stock equivalents
|
184.6
|
|
|
189.0
|
|
||
Earnings per common share — diluted
|
$
|
0.96
|
|
|
$
|
0.96
|
|
(in millions)
|
Foreign Currency Translation
|
|
Change in Pension Liability
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Loss
|
||||||||
Balance as of January 1, 2016
|
$
|
(125
|
)
|
|
$
|
(36
|
)
|
|
$
|
(34
|
)
|
|
$
|
(195
|
)
|
OCI before reclassifications
|
(39
|
)
|
|
(5
|
)
|
|
—
|
|
|
(44
|
)
|
||||
Amounts reclassified from AOCL
|
—
|
|
|
4
|
|
|
6
|
|
|
10
|
|
||||
Net current year OCI
|
(39
|
)
|
|
(1
|
)
|
|
6
|
|
|
(34
|
)
|
||||
Balance as of December 31, 2016
|
(164
|
)
|
|
(37
|
)
|
|
(28
|
)
|
|
(229
|
)
|
||||
OCI before reclassifications
|
25
|
|
|
(1
|
)
|
|
(3
|
)
|
|
21
|
|
||||
Amounts reclassified from AOCL
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Net current year OCI
|
25
|
|
|
—
|
|
|
(2
|
)
|
|
23
|
|
||||
Balance as of March 31, 2017
|
$
|
(139
|
)
|
|
$
|
(37
|
)
|
|
$
|
(30
|
)
|
|
$
|
(206
|
)
|
|
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
Location of Loss Reclassified from AOCL into Income
|
|
2017
|
|
2016
|
||||
Loss on cash flow hedges:
|
|
|
|
|
|
||||
Interest rate contracts
|
Interest expense
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Foreign exchange forward contracts
|
Cost of sales
|
|
—
|
|
|
—
|
|
||
Total
|
|
|
(2
|
)
|
|
(2
|
)
|
||
Income tax benefit
|
|
|
(1
|
)
|
|
(1
|
)
|
||
Total
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
||||
Defined benefit pension and postretirement plan items:
|
|
|
|
|
|
||||
Amortization of actuarial losses, net
|
SG&A expenses
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Total
|
|
|
(1
|
)
|
|
(1
|
)
|
||
Income tax benefit
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
Total reclassifications
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Cash and cash equivalents
|
$
|
73
|
|
|
$
|
1,787
|
|
Restricted cash and restricted cash equivalents
(1)
|
87
|
|
|
—
|
|
||
Non-current restricted cash and restricted cash equivalents included in Other non-current assets
(1)
|
16
|
|
|
—
|
|
||
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows
|
$
|
176
|
|
|
$
|
1,787
|
|
(1)
|
Amounts included in restricted cash and restricted cash equivalents represent the holdback held in escrow in connection with the Bai Brands Merger.
Refer to Note 2 for additional information
on the Bai Brands Merger.
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Supplemental cash flow disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Dividends declared but not yet paid
|
$
|
107
|
|
|
$
|
99
|
|
Capital expenditures included in accounts payable and other current liabilities
|
9
|
|
|
10
|
|
||
Holdback liability for acquisition of business
|
103
|
|
|
—
|
|
||
Capital lease additions
|
7
|
|
|
6
|
|
||
Supplemental cash flow disclosures:
|
|
|
|
||||
Interest paid
|
$
|
13
|
|
|
$
|
13
|
|
Income taxes paid
|
7
|
|
|
33
|
|
•
|
The Beverage Concentrates segment reflects sales of the
Company
's branded concentrates and syrup to third-party bottlers primarily in the
U.S.
and Canada. Most of the brands in this segment are carbonated soft drink brands.
|
•
|
The Packaged Beverages Excluding Bai segment reflects sales in the
U.S.
and Canada from the manufacture and distribution of finished beverages and other products, including sales of the
Company
's own brands and third-party brands, through both the Direct Store Delivery system and the Warehouse Direct system.
|
•
|
The Bai segment reflects sales of Bai Brands finished goods to third party distributors, primarily in the U.S., as net sales to the Packaged Beverages Excluding Bai segment are eliminated in consolidation.
Refer to Note 2 for additional information
regarding the impact of Bai Brands on the Company's net sales presented in the
unaudited Condensed Consolidated
Statements of Operations.
|
•
|
The Latin America Beverages segment reflects sales in Mexico, the Caribbean, and other international markets from the manufacture and distribution of concentrates, syrup and finished beverages.
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Segment Results – Net sales
|
|
|
|
||||
Beverage Concentrates
|
$
|
294
|
|
|
$
|
287
|
|
Packaged Beverages
|
1,118
|
|
|
1,097
|
|
||
Latin America Beverages
|
98
|
|
|
103
|
|
||
Net sales
|
$
|
1,510
|
|
|
$
|
1,487
|
|
|
For the Three Months Ended March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Segment Results – SOP
|
|
|
|
||||
Beverage Concentrates
|
$
|
186
|
|
|
$
|
187
|
|
Packaged Beverages
|
141
|
|
|
175
|
|
||
Latin America Beverages
|
11
|
|
|
15
|
|
||
Total SOP
|
338
|
|
|
377
|
|
||
Unallocated corporate costs
|
81
|
|
|
64
|
|
||
Other operating income, net
|
(28
|
)
|
|
—
|
|
||
Income from operations
|
285
|
|
|
313
|
|
||
Interest expense, net
|
39
|
|
|
33
|
|
||
Other income, net
|
(2
|
)
|
|
(1
|
)
|
||
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
$
|
248
|
|
|
$
|
281
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2017
|
|
2016
|
||||
Identifiable operating assets
|
|
|
|
|
|
||
Beverage Concentrates
|
$
|
4,168
|
|
|
$
|
4,108
|
|
Packaged Beverages
|
5,253
|
|
|
3,474
|
|
||
Latin America Beverages
|
343
|
|
|
312
|
|
||
Segment total
|
9,764
|
|
|
7,894
|
|
||
Corporate and other
|
221
|
|
|
1,874
|
|
||
Total identifiable operating assets
|
9,985
|
|
|
9,768
|
|
||
Investments in unconsolidated subsidiaries
|
23
|
|
|
23
|
|
||
Total assets
|
$
|
10,008
|
|
|
$
|
9,791
|
|
|
Condensed Consolidating Statements of Income
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,407
|
|
|
$
|
136
|
|
|
$
|
(33
|
)
|
|
$
|
1,510
|
|
Cost of sales
|
—
|
|
|
564
|
|
|
76
|
|
|
(33
|
)
|
|
607
|
|
|||||
Gross profit
|
—
|
|
|
843
|
|
|
60
|
|
|
—
|
|
|
903
|
|
|||||
Selling, general and administrative expenses
|
2
|
|
|
577
|
|
|
42
|
|
|
—
|
|
|
621
|
|
|||||
Depreciation and amortization
|
—
|
|
|
23
|
|
|
2
|
|
|
—
|
|
|
25
|
|
|||||
Other operating (income) expense, net
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||||
Income from operations
|
(2
|
)
|
|
271
|
|
|
16
|
|
|
—
|
|
|
285
|
|
|||||
Interest expense
|
63
|
|
|
19
|
|
|
—
|
|
|
(42
|
)
|
|
40
|
|
|||||
Interest income
|
(16
|
)
|
|
(27
|
)
|
|
—
|
|
|
42
|
|
|
(1
|
)
|
|||||
Other (income) expense, net
|
(4
|
)
|
|
(1
|
)
|
|
3
|
|
|
—
|
|
|
(2
|
)
|
|||||
Income (loss) before provision (benefit) for income taxes and equity in earnings of subsidiaries
|
(45
|
)
|
|
280
|
|
|
13
|
|
|
—
|
|
|
248
|
|
|||||
Provision (benefit) for income taxes
|
(16
|
)
|
|
83
|
|
|
4
|
|
|
—
|
|
|
71
|
|
|||||
Income (loss) before equity in earnings of subsidiaries
|
(29
|
)
|
|
197
|
|
|
9
|
|
|
—
|
|
|
177
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
206
|
|
|
9
|
|
|
—
|
|
|
(215
|
)
|
|
—
|
|
|||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
177
|
|
|
$
|
206
|
|
|
$
|
9
|
|
|
$
|
(215
|
)
|
|
$
|
177
|
|
|
Condensed Consolidating Statements of Income
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2016
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
1,367
|
|
|
$
|
124
|
|
|
$
|
(4
|
)
|
|
$
|
1,487
|
|
Cost of sales
|
—
|
|
|
548
|
|
|
58
|
|
|
(4
|
)
|
|
602
|
|
|||||
Gross profit
|
—
|
|
|
819
|
|
|
66
|
|
|
—
|
|
|
$
|
885
|
|
||||
Selling, general and administrative expenses
|
—
|
|
|
497
|
|
|
49
|
|
|
—
|
|
|
546
|
|
|||||
Depreciation and amortization
|
—
|
|
|
25
|
|
|
1
|
|
|
—
|
|
|
26
|
|
|||||
Other operating (income) expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income from operations
|
—
|
|
|
297
|
|
|
16
|
|
|
—
|
|
|
313
|
|
|||||
Interest expense
|
53
|
|
|
17
|
|
|
—
|
|
|
(37
|
)
|
|
33
|
|
|||||
Interest income
|
(13
|
)
|
|
(23
|
)
|
|
(1
|
)
|
|
37
|
|
|
—
|
|
|||||
Other expense (income), net
|
(2
|
)
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
|||||
Income (loss) before provision (benefit) for income taxes and equity in earnings of subsidiaries
|
(38
|
)
|
|
304
|
|
|
15
|
|
|
—
|
|
|
281
|
|
|||||
Provision (benefit) for income taxes
|
(14
|
)
|
|
109
|
|
|
4
|
|
|
—
|
|
|
99
|
|
|||||
Income (loss) before equity in earnings of subsidiaries
|
(24
|
)
|
|
195
|
|
|
11
|
|
|
—
|
|
|
182
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
206
|
|
|
11
|
|
|
—
|
|
|
(217
|
)
|
|
—
|
|
|||||
Equity in earnings of unconsolidated subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
182
|
|
|
$
|
206
|
|
|
$
|
11
|
|
|
$
|
(217
|
)
|
|
$
|
182
|
|
|
Condensed Consolidating Statements of Comprehensive Income
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Comprehensive income (loss)
|
$
|
200
|
|
|
$
|
227
|
|
|
$
|
30
|
|
|
$
|
(257
|
)
|
|
$
|
200
|
|
|
Condensed Consolidating Statements of Comprehensive Income
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2016
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Comprehensive income (loss)
|
$
|
190
|
|
|
$
|
215
|
|
|
$
|
33
|
|
|
$
|
(248
|
)
|
|
$
|
190
|
|
|
Condensed Consolidating Balance Sheets
|
||||||||||||||||||
|
As of March 31, 2017
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
73
|
|
Restricted cash and cash equivalents
|
—
|
|
|
87
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|||||
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade, net
|
—
|
|
|
545
|
|
|
61
|
|
|
—
|
|
|
606
|
|
|||||
Other
|
8
|
|
|
37
|
|
|
10
|
|
|
—
|
|
|
55
|
|
|||||
Related party receivable
|
19
|
|
|
33
|
|
|
—
|
|
|
(52
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
217
|
|
|
29
|
|
|
—
|
|
|
246
|
|
|||||
Prepaid expenses and other current assets
|
388
|
|
|
169
|
|
|
15
|
|
|
(392
|
)
|
|
180
|
|
|||||
Total current assets
|
415
|
|
|
1,111
|
|
|
165
|
|
|
(444
|
)
|
|
1,247
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
985
|
|
|
140
|
|
|
—
|
|
|
1,125
|
|
|||||
Investments in consolidated subsidiaries
|
8,288
|
|
|
322
|
|
|
—
|
|
|
(8,610
|
)
|
|
—
|
|
|||||
Investments in unconsolidated subsidiaries
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||
Goodwill
|
—
|
|
|
3,537
|
|
|
23
|
|
|
—
|
|
|
3,560
|
|
|||||
Other intangible assets, net
|
—
|
|
|
3,733
|
|
|
51
|
|
|
—
|
|
|
3,784
|
|
|||||
Long-term receivable, related parties
|
3,225
|
|
|
5,246
|
|
|
—
|
|
|
(8,471
|
)
|
|
—
|
|
|||||
Other non-current assets
|
75
|
|
|
114
|
|
|
20
|
|
|
(3
|
)
|
|
206
|
|
|||||
Non-current deferred tax assets
|
20
|
|
|
—
|
|
|
63
|
|
|
(20
|
)
|
|
63
|
|
|||||
Total assets
|
$
|
12,023
|
|
|
$
|
15,071
|
|
|
$
|
462
|
|
|
$
|
(17,548
|
)
|
|
$
|
10,008
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
316
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
353
|
|
Related party payable
|
26
|
|
|
16
|
|
|
10
|
|
|
(52
|
)
|
|
—
|
|
|||||
Deferred revenue
|
—
|
|
|
69
|
|
|
2
|
|
|
(7
|
)
|
|
64
|
|
|||||
Short-term borrowings and current portion of long-term obligations
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Income taxes payable
|
—
|
|
|
409
|
|
|
—
|
|
|
(385
|
)
|
|
24
|
|
|||||
Other current liabilities
|
167
|
|
|
480
|
|
|
49
|
|
|
—
|
|
|
696
|
|
|||||
Total current liabilities
|
193
|
|
|
1,300
|
|
|
98
|
|
|
(444
|
)
|
|
1,147
|
|
|||||
Long-term obligations to third parties
|
4,320
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
4,467
|
|
|||||
Long-term obligations to related parties
|
5,246
|
|
|
3,225
|
|
|
—
|
|
|
(8,471
|
)
|
|
—
|
|
|||||
Non-current deferred tax liabilities
|
—
|
|
|
862
|
|
|
—
|
|
|
(20
|
)
|
|
842
|
|
|||||
Non-current deferred revenue
|
—
|
|
|
1,078
|
|
|
26
|
|
|
(3
|
)
|
|
1,101
|
|
|||||
Other non-current liabilities
|
71
|
|
|
171
|
|
|
16
|
|
|
—
|
|
|
258
|
|
|||||
Total liabilities
|
9,830
|
|
|
6,783
|
|
|
140
|
|
|
(8,938
|
)
|
|
7,815
|
|
|||||
Total stockholders' equity
|
2,193
|
|
|
8,288
|
|
|
322
|
|
|
(8,610
|
)
|
|
2,193
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
12,023
|
|
|
$
|
15,071
|
|
|
$
|
462
|
|
|
$
|
(17,548
|
)
|
|
$
|
10,008
|
|
|
Condensed Consolidating Balance Sheets
|
||||||||||||||||||
|
As of December 31, 2016
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
1,736
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
1,787
|
|
Restricted cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade, net
|
—
|
|
|
540
|
|
|
55
|
|
|
—
|
|
|
595
|
|
|||||
Other
|
3
|
|
|
39
|
|
|
9
|
|
|
—
|
|
|
51
|
|
|||||
Related party receivable
|
15
|
|
|
37
|
|
|
—
|
|
|
(52
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
178
|
|
|
24
|
|
|
—
|
|
|
202
|
|
|||||
Prepaid and other current assets
|
379
|
|
|
84
|
|
|
7
|
|
|
(369
|
)
|
|
101
|
|
|||||
Total current assets
|
397
|
|
|
2,614
|
|
|
146
|
|
|
(421
|
)
|
|
2,736
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
1,007
|
|
|
131
|
|
|
—
|
|
|
1,138
|
|
|||||
Investments in consolidated subsidiaries
|
8,067
|
|
|
302
|
|
|
—
|
|
|
(8,369
|
)
|
|
—
|
|
|||||
Investments in unconsolidated subsidiaries
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||
Goodwill
|
—
|
|
|
2,972
|
|
|
21
|
|
|
—
|
|
|
2,993
|
|
|||||
Other intangible assets, net
|
—
|
|
|
2,609
|
|
|
47
|
|
|
—
|
|
|
2,656
|
|
|||||
Long-term receivable, related parties
|
3,209
|
|
|
5,077
|
|
|
—
|
|
|
(8,286
|
)
|
|
—
|
|
|||||
Other non-current assets
|
64
|
|
|
107
|
|
|
12
|
|
|
—
|
|
|
183
|
|
|||||
Non-current deferred tax assets
|
20
|
|
|
—
|
|
|
62
|
|
|
(20
|
)
|
|
62
|
|
|||||
Total assets
|
$
|
11,757
|
|
|
$
|
14,711
|
|
|
$
|
419
|
|
|
$
|
(17,096
|
)
|
|
$
|
9,791
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
276
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
303
|
|
Related party payable
|
31
|
|
|
14
|
|
|
7
|
|
|
(52
|
)
|
|
—
|
|
|||||
Deferred revenue
|
—
|
|
|
63
|
|
|
1
|
|
|
—
|
|
|
64
|
|
|||||
Short-term borrowings and current portion of long-term obligations
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Income taxes payable
|
—
|
|
|
372
|
|
|
1
|
|
|
(369
|
)
|
|
4
|
|
|||||
Other current liabilities
|
128
|
|
|
502
|
|
|
40
|
|
|
—
|
|
|
670
|
|
|||||
Total current liabilities
|
159
|
|
|
1,237
|
|
|
76
|
|
|
(421
|
)
|
|
1,051
|
|
|||||
Long-term obligations to third parties
|
4,325
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
4,468
|
|
|||||
Long-term obligations to related parties
|
5,077
|
|
|
3,209
|
|
|
—
|
|
|
(8,286
|
)
|
|
—
|
|
|||||
Non-current deferred tax liabilities
|
(1
|
)
|
|
833
|
|
|
—
|
|
|
(20
|
)
|
|
812
|
|
|||||
Non-current deferred revenue
|
—
|
|
|
1,091
|
|
|
26
|
|
|
—
|
|
|
1,117
|
|
|||||
Other non-current liabilities
|
63
|
|
|
131
|
|
|
15
|
|
|
—
|
|
|
209
|
|
|||||
Total liabilities
|
9,623
|
|
|
6,644
|
|
|
117
|
|
|
(8,727
|
)
|
|
7,657
|
|
|||||
Total stockholders' equity
|
2,134
|
|
|
8,067
|
|
|
302
|
|
|
(8,369
|
)
|
|
2,134
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
11,757
|
|
|
$
|
14,711
|
|
|
$
|
419
|
|
|
$
|
(17,096
|
)
|
|
$
|
9,791
|
|
|
Condensed Consolidating Statements of Cash Flows
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(23
|
)
|
|
$
|
122
|
|
|
$
|
8
|
|
|
$
|
(10
|
)
|
|
$
|
97
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisition of business
|
—
|
|
|
(1,548
|
)
|
|
—
|
|
|
—
|
|
|
(1,548
|
)
|
|||||
Cash acquired in step acquisition of unconsolidated subsidiaries
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Purchase of property, plant and equipment
|
—
|
|
|
(15
|
)
|
|
(1
|
)
|
|
—
|
|
|
(16
|
)
|
|||||
Investment in unconsolidated subsidiaries
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Purchase of intangible assets
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Proceeds from disposals of property, plant and equipment
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Issuance of related party notes receivable
|
—
|
|
|
(169
|
)
|
|
—
|
|
|
169
|
|
|
—
|
|
|||||
Other, net
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Net cash (used in) provided by investing activities
|
(7
|
)
|
|
(1,730
|
)
|
|
(1
|
)
|
|
169
|
|
|
(1,569
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of related party debt
|
169
|
|
|
—
|
|
|
—
|
|
|
(169
|
)
|
|
—
|
|
|||||
Repurchase of shares of common stock
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||||
Dividends paid
|
(97
|
)
|
|
—
|
|
|
(10
|
)
|
|
10
|
|
|
(97
|
)
|
|||||
Tax withholdings related to net share settlements of certain stock awards
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||
Proceeds from stock options exercised
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Deferred financing charges paid
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Capital lease payments
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net cash (used in) provided by financing activities
|
30
|
|
|
(3
|
)
|
|
(10
|
)
|
|
(159
|
)
|
|
(142
|
)
|
|||||
Cash and cash equivalents — net change from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating, investing and financing activities
|
—
|
|
|
(1,611
|
)
|
|
(3
|
)
|
|
—
|
|
|
(1,614
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
—
|
|
|
1,736
|
|
|
51
|
|
|
—
|
|
|
1,787
|
|
|||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
—
|
|
|
$
|
126
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
176
|
|
|
Condensed Consolidating Statements of Cash Flows
|
||||||||||||||||||
|
For the Three Months Ended March 31, 2016
|
||||||||||||||||||
(in millions)
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Total
|
||||||||||
Operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
185
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
197
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property, plant and equipment
|
—
|
|
|
(22
|
)
|
|
(5
|
)
|
|
—
|
|
|
(27
|
)
|
|||||
Investments in unconsolidated subsidiaries
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Proceeds from disposals of property, plant and equipment
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Issuance of related party notes receivable
|
—
|
|
|
(800
|
)
|
|
—
|
|
|
800
|
|
|
—
|
|
|||||
Other, net
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Net cash (used in) provided by investing activities
|
(8
|
)
|
|
(827
|
)
|
|
(5
|
)
|
|
800
|
|
|
(40
|
)
|
|||||
Financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of related party debt
|
800
|
|
|
—
|
|
|
—
|
|
|
(800
|
)
|
|
—
|
|
|||||
Repayment of senior unsecured notes
|
(500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|||||
Repurchase of shares of common stock
|
(179
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(179
|
)
|
|||||
Dividends paid
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|||||
Tax withholdings related to net share settlements of certain stock awards
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|||||
Proceeds from stock options exercised
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||
Capital lease payments
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Other, net
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
8
|
|
|
(3
|
)
|
|
—
|
|
|
(800
|
)
|
|
(795
|
)
|
|||||
Cash and cash equivalents — net change from:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating, investing and financing activities
|
—
|
|
|
(645
|
)
|
|
7
|
|
|
—
|
|
|
(638
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
—
|
|
|
859
|
|
|
52
|
|
|
—
|
|
|
911
|
|
|||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
—
|
|
|
$
|
214
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
275
|
|
•
|
On January 31, 2017, we completed the Bai Brands Merger for a purchase price of
$1.69 billion
. For the
three months ended March 31, 2017
, the impact of the Bai Brands Merger decreased diluted earnings per share in total by $0.07. The drivers of this decrease include the associated transaction and integration expenses, the ongoing operations of Bai Brands, and the interest expense associated with the financing to complete the Bai Brands Merger decreased diluted earnings per share by
$0.07
,
$0.06
, and
$0.04
, respectively, while the gain on the step-acquisition of Bai Brands increased diluted earnings per share by
$0.10
. The impact of the ongoing operations of Bai Brands includes the incremental profit margin benefit we experienced in the first quarter as the brand owner partially offset by the
$9 million
initial profit in stock adjustment related to Bai Brands inventories.
|
•
|
As of January 1, 2017, we adopted a new accounting standard which changed the recognition of excess tax benefits related to stock awards. For the
three months ended March 31, 2017
, the impact of the new accounting standard increased dilutive earnings per share by
$0.10
.
|
•
|
During the
three months ended March 31, 2017
and
2016
, we repurchased
0.3 million
and
2.0 million
shares of our common stock valued at approximately
$28 million
and
$179 million
, respectively.
|
|
For the Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
2017
|
|
2016
|
|
Dollar
|
|
Percentage
|
|||||||||||||
($ in millions)
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Change
|
|
Change
|
|||||||||
Net sales
|
$
|
1,510
|
|
|
100.0
|
%
|
|
$
|
1,487
|
|
|
100.0
|
%
|
|
$
|
23
|
|
|
2
|
%
|
Cost of sales
|
607
|
|
|
40.2
|
|
|
602
|
|
|
40.5
|
|
|
5
|
|
|
1
|
|
|||
Gross profit
|
903
|
|
|
59.8
|
|
|
885
|
|
|
59.5
|
|
|
18
|
|
|
2
|
|
|||
Selling, general and administrative expenses
|
621
|
|
|
41.1
|
|
|
546
|
|
|
36.7
|
|
|
75
|
|
|
14
|
|
|||
Other operating income, net
|
(28
|
)
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
NM
|
|
|||
Income from operations
|
285
|
|
|
18.9
|
|
|
313
|
|
|
21.0
|
|
|
(28
|
)
|
|
(9
|
)
|
|||
Interest expense
|
40
|
|
|
2.6
|
|
|
33
|
|
|
2.2
|
|
|
7
|
|
|
21
|
|
|||
Provision for income taxes
|
71
|
|
|
4.7
|
|
|
99
|
|
|
6.7
|
|
|
(28
|
)
|
|
(28
|
)
|
|||
Effective tax rate
|
28.6
|
%
|
|
NM
|
|
|
35.2
|
%
|
|
NM
|
|
|
NM
|
|
|
NM
|
|
•
|
$11 million
of acquired Bai Brands shipments to third party distributors since the Merger, which increased net sales by
1.00%
;
|
•
|
Favorable product, package and segment mix, which increased net sales by
1.00%
;
|
•
|
Higher net pricing, which increased net sales by
0.25%
;
|
•
|
Increase in shipments, which increased net sales by
0.25%
; and
|
•
|
Unfavorable foreign currency translation of
$9 million
, which decreased net sales by
0.50%
.
|
•
|
Favorable comparison in our mark-to-market activity on commodity derivative contracts, which raised our gross margin by
1.1%
;
|
•
|
Lower commodity costs, led by packaging, which increased our gross margin by
0.2%
;
|
•
|
Ongoing productivity improvements, which increased our gross margin by
0.2%
;
|
•
|
Unfavorable product, package and segment mix, which decreased our gross margin by
0.6%
;
|
•
|
An increase in our other manufacturing costs, which reduced our gross margin by
0.5%
; and
|
•
|
Unfavorable foreign currency effects, which lowered our gross margin by
0.1%
.
|
|
For the Three Months Ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Segment Results — Net sales
|
|
|
|
||||
Beverage Concentrates
|
$
|
294
|
|
|
$
|
287
|
|
Packaged Beverages
|
1,118
|
|
|
1,097
|
|
||
Latin America Beverages
|
98
|
|
|
103
|
|
||
Net sales
|
$
|
1,510
|
|
|
$
|
1,487
|
|
|
|
|
|
||||
|
For the Three Months Ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Segment Results — SOP
|
|
|
|
||||
Beverage Concentrates
|
$
|
186
|
|
|
$
|
187
|
|
Packaged Beverages
|
141
|
|
|
175
|
|
||
Latin America Beverages
|
11
|
|
|
15
|
|
||
Total SOP
|
338
|
|
|
377
|
|
||
Unallocated corporate costs
|
81
|
|
|
64
|
|
||
Other operating income, net
|
(28
|
)
|
|
—
|
|
||
Income from operations
|
285
|
|
|
313
|
|
||
Interest expense, net
|
39
|
|
|
33
|
|
||
Other income, net
|
(2
|
)
|
|
(1
|
)
|
||
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries
|
$
|
248
|
|
|
$
|
281
|
|
|
For the Three Months Ended
|
|
|
|
|
|||||||||
|
March 31,
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
294
|
|
|
$
|
287
|
|
|
$
|
7
|
|
|
2
|
%
|
SOP
|
186
|
|
|
187
|
|
|
(1
|
)
|
|
(1
|
)
|
|
For the Three Months Ended
|
|
|
|
|
|||||||||
|
March 31,
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
1,118
|
|
|
$
|
1,097
|
|
|
$
|
21
|
|
|
2
|
%
|
SOP
|
141
|
|
|
175
|
|
|
(34
|
)
|
|
(19
|
)
|
|
For the Three Months Ended
|
|
|
|
|
|||||||||
|
March 31,
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
98
|
|
|
$
|
103
|
|
|
$
|
(5
|
)
|
|
(5
|
)%
|
SOP
|
11
|
|
|
15
|
|
|
(4
|
)
|
|
(27
|
)
|
•
|
our continued repurchases of our outstanding common stock pursuant to our repurchase programs;
|
•
|
continued payment of dividends;
|
•
|
continued capital expenditures;
|
•
|
seasonality of our operating cash flows could impact short-term liquidity;
|
•
|
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
;
|
•
|
the integration of Bai Brands following completion of the Bai Brands Merger;
|
•
|
fluctuations in our tax obligations;
|
•
|
future equity investments in allied brands; and
|
•
|
future mergers or acquisitions of regional bottling companies, distributors and/or distribution rights to further extend our geographic coverage.
|
Rating Agency
|
Long-Term Debt Rating
|
Commercial Paper Rating
|
Outlook
|
Date of Last Change
|
Moody's
|
Baa1
|
P-2
|
Stable
|
May 18, 2011
|
S&P
|
BBB+
|
A-2
|
Stable
|
November 13, 2013
|
|
For the Three Months Ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
97
|
|
|
$
|
197
|
|
Net cash used in investing activities
|
(1,569
|
)
|
|
(40
|
)
|
||
Net cash used in financing activities
|
(142
|
)
|
|
(795
|
)
|
Total Shareholder Distributions
|
|
Our Board declared dividends aggregating $0.58 and $0.53 per share on outstanding common stock during the three months ended March 31, 2017 and 2016, respectively, and we continued common stock repurchases based upon authorizations from our Board. Refer to Part II, Item 2 of this Quarterly Report on Form 10-Q for additional information regarding these repurchases.
|
|
The following chart details these payments during the three months ended March 31, 2017 and 2016.
|
|
Payments Due in Year
|
||||||||||||||||||||||||||
(in millions)
|
Total
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
After 2021
|
||||||||||||||
Bai Brands Merger consideration
(1)
|
103
|
|
|
6
|
|
|
87
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|||||||
Purchase obligations
(2)
|
1,139
|
|
|
616
|
|
|
220
|
|
|
140
|
|
|
90
|
|
|
31
|
|
|
42
|
|
|||||||
Total
|
$
|
1,242
|
|
|
$
|
622
|
|
|
$
|
307
|
|
|
$
|
140
|
|
|
$
|
100
|
|
|
$
|
31
|
|
|
$
|
42
|
|
(1)
|
Amounts represent the holdback liability to the former shareholders of Bai Brands, which is held in escrow. Please refer to
Note 2 of the Notes to our Unaudited Condensed Consolidated Financial Statements
for further information.
|
(2)
|
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
|
||||
Hypothetical Change in Interest Rates
|
|
Annual Impact to Interest Expense
|
|
Change in Fair Value
(2)
|
1-percent decrease
(1)
|
|
$11 million decrease
|
|
$78 million increase
|
1-percent increase
|
|
$11 million increase
|
|
$71 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 7 of the Notes to our Unaudited Condensed Consolidated Financial Statements
for further information. As we would not expect LIBOR to fall below zero, we calculated the hypothetical change in the interest rate to zero.
|
(in thousands, except per share data)
|
|
Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs
(1)
|
||||||
Period
|
|
|
|
|
||||||||||
January 1, 2017 – January 31, 2017
|
|
26
|
|
|
$
|
89.78
|
|
|
26
|
|
|
$
|
1,129,654
|
|
February 1, 2017 – February 28, 2017
|
|
123
|
|
|
93.66
|
|
|
123
|
|
|
1,118,090
|
|
||
March 1, 2017 – March 31, 2017
|
|
150
|
|
|
94.02
|
|
|
150
|
|
|
1,103,987
|
|
||
For the quarter ended March 31, 2017
|
|
299
|
|
|
93.51
|
|
|
299
|
|
|
|
(1)
|
As previously disclosed, the
Board
has authorized us to repurchase an aggregate amount of up to
$5 billion
of our outstanding common stock in prior years. This column discloses the dollar value of shares available to be repurchased pursuant to these programs during the indicated time periods. As of
March 31, 2017
, there was a remaining balance of approximately
$1,104 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).
|
2.2
|
Agreement and Plan of Merger, dated as of November 21, 2016, by and among Bai Brands LLC, Dr Pepper Snapple Group, Inc., Superfruit Merger Sub, LLC and Fortis Advisors LLC, (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K (filed on November 23, 2016) and incorporated herein by reference).
|
2.3
|
Amendment No. 1, dated as of January 31, 2017, to the Agreement and Plan of Merger, dated as of November 21, 2016, by and among Bai Brands LLC, Dr Pepper Snapple Group, Inc., Superfruit Merger Sub, LLC and Fortis Advisors LLC, (filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K (filed on January 31, 2017) 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
|
Certificate of Second Amendment to Amended and Restated Certificate of Incorporation of Dr Pepper Snapple Group, Inc. effective as of May 19, 2016 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K (filed May 20, 2016) and incorporated herein by reference.
|
3.4
|
Amended and Restated By-Laws of Dr Pepper Snapple Group, Inc. effective as of January 25, 2016 (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K (filed January 25, 2016) 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
|
Fourth Supplemental Indenture, dated as of January 31, 2017, among Bai Brands LLC, a New Jersey limited liability company, 184 Innovations Inc., a Delaware corporation (each as a new subsidiary guarantors under the Indenture dated April 30, 2008 (as referenced in Item 4.1 in this Exhibit Index), Dr Pepper Snapple Group, Inc., each other then-existing Guarantor under the Indenture and Wells Fargo, National Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed February 2, 2017) and incorporated herein by reference).
|
4.11
|
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).
|
4.12
|
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).
|
4.13
|
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).
|
4.14
|
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).
|
4.15
|
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).
|
4.16
|
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).
|
4.17
|
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).
|
4.18
|
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).
|
4.19
|
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).
|
4.20
|
Fifth Supplemental Indenture, dated as of November 9, 2015, 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 10, 2015) and incorporated herein by reference).
|
4.21
|
3.40% Senior Note due 2025 (in global form), dated November 9, 2015, in the principal amount of $500,000,000 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on November 10, 2015) and incorporated herein by reference).
|
4.22
|
4.50% Senior Note due 2045 (in global form), dated November 9, 2015, in the principal amount of $250,000,000 (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on November 10, 2015) and incorporated herein by reference).
|
4.23
|
Sixth Supplemental Indenture, dated as of September 16, 2016, 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 September 16, 2016) and incorporated herein by reference).
|
4.24
|
2.55% Senior Note due 2026 (in global form), dated September 16, 2016, in the principal amount of $400,000,000 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on September 16, 2016) and incorporated herein by reference).
|
4.25
|
Seventh Supplemental Indenture, dated as of December 14, 2016, 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 December 14, 2016) and incorporated herein by reference).
|
4.26
|
2.53% Senior Note due 2021 (in global form), dated December 14, 2016, in the principal amount of $250,000,000 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
4.27
|
3.13% Senior Note due 2023 (in global form), dated December 14, 2016, in the principal amount of $500,000,000 (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
4.28
|
3.43% Senior Note due 2027 (in global form), dated December 14, 2016, in the principal amount of $400,000,000 (filed as Exhibit 4.4 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
4.29
|
4.42% Senior Note due 2046 (in global form), dated December 14, 2016, in the principal amount of $400,000,000 (filed as Exhibit 4.5 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
4.30
|
Eighth Supplemental Indenture, dated as of January 31, 2017, among Bai Brands LLC, a New Jersey limited liability company, 184 Innovations Inc., a Delaware corporation (each as a new subsidiary guarantor under the Indenture dated April 30, 2008 (as referenced in Item 4.1 in this Exhibit Index), Dr Pepper Snapple Group, Inc., each other then-existing Guarantor under the Indenture) and Wells Fargo, National Bank, N.A., as trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on February 2, 2017) and incorporated herein by reference).
|
10.1*
|
Executive Employment Agreement, dated as of October 15, 2007, between CBI Holdings Inc. (now known as DPS Holdings Inc.) and James L. Baldwin.
|
10.2
|
Assumption Agreement, dated January 31, 2017 by Bai Brands, LLC and 184 Innovations, Inc. (filed as Exhibit 10.1 to the Company's Current Report on Form 8–K (filed on February 2, 2017) and incorporated herein by reference).
|
10.3
|
Credit Agreement, dated as of March 16, 2017, among the Company, the lenders and issuing banks party thereto; JPMorgan Chase Bank, N.A., as administrative agent; and the syndication agents, documentation agents, joint lead arrangers and joint borrowers, as identified in the Credit Agreement (filed as Exhibit 10.1 to the Company's Current Report on Form 8–K (filed on March 17, 2017) and incorporated herein by reference).
|
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 March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three months ended March 31, 2017 and 2016, (ii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016, (iii) Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, (v) Condensed Consolidated Statement of Changes in Stockholders' Equity for the three months ended March 31, 2017, and (vi) 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: April 26, 2017
|
|
|
|
|
|
For the Three Months Ended March 31,
|
|
For the Years Ended December 31,
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
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
(2)
|
$
|
248
|
|
|
$
|
1,283
|
|
|
$
|
1,184
|
|
|
$
|
1,073
|
|
|
$
|
542
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Add/(deduct):
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges
|
44
|
|
|
164
|
|
|
132
|
|
|
125
|
|
|
138
|
|
|||||
Amortization of capitalized interest
|
1
|
|
|
3
|
|
|
3
|
|
|
4
|
|
|
4
|
|
|||||
Capitalized interest
|
—
|
|
|
(3
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||||
Total earnings available for fixed charges
|
$
|
293
|
|
|
$
|
1,447
|
|
|
$
|
1,318
|
|
|
$
|
1,200
|
|
|
$
|
683
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
40
|
|
|
$
|
147
|
|
|
$
|
117
|
|
|
$
|
109
|
|
|
$
|
123
|
|
Capitalized interest
|
—
|
|
|
3
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|||||
Interest component of rental expense
(1)
|
4
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|
14
|
|
|||||
Total fixed charges
|
$
|
44
|
|
|
$
|
164
|
|
|
$
|
132
|
|
|
$
|
125
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
6.6x
|
|
|
8.8x
|
|
|
10.0x
|
|
|
9.6x
|
|
|
4.9x
|
|
(1)
|
Represents a reasonable estimate of the interest component of rental expense incurred by us.
|
(2)
|
Due to the completion of the IRS audit for our 2006-2008 federal income tax returns in August 2013, we recognized $430 million of other expense, net, as we no longer anticipate collecting amounts from Mondelēz. Additionally, in June 2013, a bill was enacted by the Canadian government, which reduced amounts amortized for income tax purposes. As a result, we recognized $38 million of indemnity income due to the reduction of our long-term liability to Mondelēz.
|
|
/s/ Larry D. Young
|
|
Date: April 26, 2017
|
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: April 26, 2017
|
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
first quarterly period
ended
March 31, 2017
, 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: April 26, 2017
|
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
first quarterly period
ended
March 31, 2017
, 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: April 26, 2017
|
Martin M. Ellen
|
|
|
Executive Vice President and Chief Financial Officer of Dr Pepper Snapple Group, Inc.
|
|