Dr Pepper Snapple Group Reports Fourth Quarter and Full Year 2012 Results and Raises Quarterly Dividend

Net sales increased 2% for the quarter and the year.

Reported EPS were $0.81 for the quarter. Core EPS were $0.82 for the quarter.

For the full year, the company repurchased $400 million of its common stock.

The company raises quarterly dividend 12% from $0.34 to $0.38 per common share.

PLANO, Texas--()--Dr Pepper Snapple Group, Inc. (NYSE: DPS) reported fourth quarter 2012 EPS of $0.81 compared to $0.77 in the prior year period. Excluding unrealized commodity mark-to-market losses in both years and certain items affecting comparability in the prior year period, Core EPS were $0.82 compared to $0.84 in the prior year.

For the quarter, reported net sales increased 2% reflecting favorable price/mix, partially offset by a 1% decline in sales volumes. Foreign currency added approximately 1 percentage point to net sales growth. Reported segment operating profit (SOP) increased 5%, or $19 million, as the contributions from net sales growth, ongoing productivity improvements and lower marketing investments were partially offset by planned increases in labor and benefits and a higher LIFO inventory provision of $6 million. The year ago quarter included an $18 million provision for a certain legal matter. Reported income from operations for the quarter was $292 million, including $1 million of unrealized commodity mark-to-market losses. Reported income from operations was $271 million in the prior year period, including $7 million of unrealized commodity mark-to-market losses and the previously disclosed legal provision.

For the year, reported net sales increased 2%. Reported income from operations was $1,092 million, compared to $1,024 million in the prior year period. For the year, the company reported earnings of $2.96 per diluted share compared to $2.74 per diluted share in the prior year period. Excluding a $17 million unrealized commodity mark-to-market gain in the current year and a $23 million unrealized commodity mark-to-market loss in the prior year period and certain items affecting comparability in both years, Core EPS were $2.92 compared to $2.85 in the prior year period.

DPS President and CEO Larry Young said, “As I look back on 2012, I am proud of the team’s continuing ability to outperform the CSD category, growing dollar share as measured by Nielsen and closing distribution gaps across CSDs, teas and juices.”

Young continued, “Our employees have embraced Rapid Continuous Improvement (RCI), and it continues to drive tangible operational and financial improvements. Moving forward, nothing is more important than reinvigorating the CSD category and giving lapsed consumers a reason to come back to the brands they know and love. Our new TEN platform provides consumers the great taste and full mouth-feel of a regular CSD, but with only 10 calories per 12 ounce serving. These products have been well-received by both consumers and our retail and bottling partners and, collectively with Dr Pepper TEN, give us great confidence that we can bring excitement and lapsed users back to the category.”

EPS reconciliation   Fourth Quarter       Full Year
  2012     2011     Percent

Change

      2012     2011     Percent

Change

Reported EPS $0.81     $0.77     5       $2.96     $2.74     8
 

Unrealized commodity mark-to-market net (gain)/loss

0.01 0.02 (0.04) 0.06
 
Items affecting comparability

- Depreciation adjustment on capital lease

- - 0.02 -
- Foreign deferred tax benefit - - (0.02) -
 
- Legal Provision - 0.05 - 0.05
------ ------ ------ ------ ------ ------
Core EPS   $0.82     $0.84     (2)       $2.92     $2.85     2

EPS – earnings per share

Net sales and SOP in the tables and commentary below are presented on a currency neutral basis. For a reconciliation of non-GAAP to GAAP measures see pages A-5 through A-10 accompanying this release.

Summary of 2012 results

(Percent change)

  As Reported       Currency Neutral
  Fourth

Quarter

    Full Year       Fourth

Quarter

    Full Year
BCS Volume   -     (1)       -     (1)
Sales Volume   (1)     (2)       (1)     (2)
Net Sales   2     2       1     2
SOP   5     2       5     3

BCS - bottler case sales

BCS Volume

For the quarter, both carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) BCS volume was flat.

In CSDs, Dr Pepper volume decreased 1% as we cycled the national rollout of Dr Pepper TEN in the prior year period. Our Core 5 brands increased 3% led by a high-single digit increase in Canada Dry. Sunkist soda and A&W increased low-single digits, while Sun Drop declined by a mid-single digit. 7UP was flat in the quarter. All other CSD brands increased 1% for the quarter. Fountain foodservice volume grew 1%, cycling 5% volume growth in the prior year period.

In NCBs, Clamato grew 34%, Aguafiel increased 6% and Mott’s posted a 2% increase in volume. Snapple grew 1% in the quarter, cycling 10% growth in the prior year. These increases were offset by an 8% decline in Hawaiian Punch volumes.

By geography, U.S. and Canada volume was flat and Mexico and the Caribbean volume increased 8%.

For the year, BCS volume decreased 1%. CSD volume was flat and NCBs declined 5%. Dr Pepper volumes were flat, as growth from the 2011 launch of Dr Pepper TEN and new availabilities in fountain foodservice offset declines in the base business. The Core 5 brands were flat as a mid-single digit increase in Canada Dry was offset by a double-digit decline in Sun Drop and low-single digit declines in 7UP and Sunkist soda. A&W volume was flat for the year. All other CSD brands were flat for the year. Fountain foodservice volume grew 3% cycling a mid-single digit increase in the prior year. In NCBs, Hawaiian Punch declined 17% and Mott’s volume declined 7% as retail pricing increased on both brands. These declines were partially offset by a 15% increase in Clamato and a 3% increase in Snapple driven by both packaging and product innovation. By geography, U.S. and Canada volume decreased 1% and Mexico and Caribbean volume increased 2%.

Sales volume

Sales volume decreased 1% for the quarter and 2% for the year.

2012 Segment results
(Percent Change)

  As Reported
Fourth Quarter       Full Year
 

Sales
Volume

   

Net
Sales

   

SOP

     

Sales
Volume

   

Net
Sales

   

SOP

Beverage Concentrates   (2)     2     5       (2)     2     (1)
Packaged Beverages   (1)     -     2       (2)     2     4
Latin America Beverages   8     11     56       2     -     19
Total   (1)     2     5       (2)     2     2
                     

2012 Segment results
(Percent Change)

  Currency Neutral
Fourth Quarter       Full Year
 

Sales
Volume

   

Net
Sales

   

SOP

     

Sales
Volume

   

Net
Sales

   

SOP

Beverage Concentrates   (2)     2     5       (2)     2     (1)
Packaged Beverages   (1)     -     3       (2)     2     4
Latin America Beverages   8     7     56       2     5     50
Total   (1)     1     5       (2)     2     3
                     

Beverage Concentrates

Net sales for the quarter increased 2% as concentrate price increases taken earlier in the year and favorable mix were offset by a 2% volume decline with lower concentrate buy-in ahead of the 2013 price increase. SOP increased 5% reflecting net sales growth and lower marketing investments as we cycled the national launch of Dr Pepper TEN in the prior year period.

Packaged Beverages

Net sales were flat for the quarter as a 1% volume decline and higher trade spending were offset by favorable product and package mix. SOP increased 3% on a favorable legal provision comparison and ongoing productivity improvements that were partially offset by certain increases in labor and benefits costs and a higher LIFO inventory provision of $6 million.

Latin America Beverages

Net sales for the quarter increased 7% reflecting an 8% increase in sales volumes. SOP increased 56% reflecting net sales growth and favorable operating leverage from ongoing RCI productivity improvements partially offset by higher commodity costs.

Corporate and other items

For the quarter, corporate costs totaled $73 million, including a $1 million unrealized commodity mark-to-market loss. Corporate costs in the prior year period were $76 million, including a $7 million unrealized commodity mark-to-market loss.

For the year, corporate costs totaled $261 million, including $17 million of unrealized commodity mark-to-market gains. Corporate costs in the prior year period were $306 million, including a $23 million unrealized commodity mark-to-market loss.

Net interest expense increased $2 million for the quarter compared to the prior year, as the company refinanced low floating rate debt in November 2011.

For the quarter, the effective tax rate was 35.4%. For the year, the effective tax rate was 35.7% compared to 34.6% in the prior year, which included a $19 million benefit related to the PepsiCo, Inc. (PepsiCo) and The Coca-Cola Company (Coca-Cola) transactions.

Cash flow

For the year, the company generated $458 million of cash from operating activities, after making tax payments of $531 million related to the PepsiCo and Coca-Cola licensing agreements. Capital spending totaled $193 million compared to $215 million in the prior year period. The company returned $684 million to shareholders in the form of stock repurchases ($400 million) and dividends ($284 million).

Dividend Increase

Today the company announced that its Board of Directors declared a quarterly dividend of $0.38 per share on the company’s common stock – a 12% increase in the dividend rate. The dividend is payable in U.S. dollars on April 5, 2013, to shareholders of record as of close of business on March 15, 2013.

2013 full year guidance

The company expects full year reported net sales growth of approximately 3% and diluted earnings per share to be in the $3.04 to $3.12 range, excluding the impact of commodity mark-to-market gains and losses.

Brand investments associated with the launch of our TEN platform are expected to exceed $30 million.

Packaging and ingredient costs are expected to increase COGS by 2%, on a constant volume/mix basis.

The company expects its effective tax rate to be approximately 37%.

The company expects capital spending to be approximately 3.5% of net sales.

Definitions

Bottler case sales (BCS) volume: Sales of finished beverages, in equivalent 288 fluid ounce cases, sold by the company and its bottling partners to retailers and independent distributors and excludes contract manufacturing volume. Volume for products sold by the company and its bottling partners is reported on a monthly basis, with the fourth quarter comprising October, November and December.

Sales volume: Sales of concentrates and finished beverages, in equivalent 288 fluid ounce cases, shipped by the company to its bottlers, retailers and independent distributors and includes contract manufacturing volume.

Pricing refers to the impact of list price changes.

Unrealized mark-to-market: We recognize the change in the fair value of open commodity derivative positions between periods in corporate unallocated expenses, as these instruments do not qualify for hedge accounting treatment. As the underlying commodity is delivered, the realized gains and losses are subsequently reflected in the segment results.

EPS represents diluted earnings per share.

Core Earnings is defined as earnings adjusted for the unrealized mark-to-market impact of commodity derivatives and certain items that are excluded for comparison to prior year periods.

Core EPS represents core earnings per share.

Forward-looking statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, statements about future events, future financial performance including earnings estimates, plans, strategies, expectations, prospects, competitive environment, regulation, and cost and availability of raw materials. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” or the negative of these terms or similar expressions. These forward-looking statements have been based on our current views with respect to future events and financial performance. Our actual financial performance could differ materially from those projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and our financial performance may be better or worse than anticipated. Given these uncertainties, you should not put undue reliance on any forward-looking statements. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011, and our other filings with the Securities and Exchange Commission. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We do not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, after the date of this release, except to the extent required by applicable securities laws.

Conference Call

At 10 a.m. (CST) today, the company will host a conference call with investors to discuss fourth quarter and full year results and the outlook for 2013. The conference call and slide presentation will be accessible live through DPS’s website at http://www.drpeppersnapple.com and will be archived for replay for a period of 14 days.

In discussing financial results and guidance, the company may refer to certain non-GAAP measures. Reconciliations of any such non-GAAP measures to the most directly comparable financial measures in accordance with GAAP can be found on pages A-5 through A-10 accompanying this release and under "Financial Press Releases" on the company's website at http://www.drpeppersnapple.com in the “Investors” section.

About Dr Pepper Snapple Group

Dr Pepper Snapple Group (NYSE: DPS) is a leading producer of flavored beverages in North America and the Caribbean. Our success is fueled by more than 50 brands that are synonymous with refreshment, fun and flavor. We have 6 of the top 10 non-cola soft drinks, and 13 of our 14 leading brands are No. 1 or No. 2 in their flavor categories. In addition to our flagship Dr Pepper and Snapple brands, our portfolio includes 7UP, A&W, Canada Dry, Clamato, Crush, Hawaiian Punch, Mott's, Mr & Mrs T mixers, Peñafiel, Rose's, Schweppes, Squirt and Sunkist soda. To learn more about our iconic brands and Plano, Texas-based company, please visit www.DrPepperSnapple.com. For our latest news and updates, follow us at www.Facebook.com/DrPepperSnapple or www.Twitter.com/DrPepperSnapple.

       
DR PEPPER SNAPPLE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Twelve Months Ended December 31, 2012 and 2011
(Unaudited, in millions except per share data)
 
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
2012     2011 2012     2011
Net sales $ 1,484 $ 1,461 $ 5,995 $ 5,903
Cost of sales   605     604     2,500     2,485  
Gross profit 879 857 3,495 3,418
Selling, general and administrative expenses 555 553 2,268 2,257
Depreciation and amortization 29 31 124 126
Other operating expense, net   3     2     11     11  
Income from operations 292 271 1,092 1,024
Interest expense 31 29 125 114
Interest income (1 ) (1 ) (2 ) (3 )
Other income, net   (1 )   (3 )   (9 )   (12 )
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries 263 246 978 925
Provision for income taxes   93     80     349     320  
Income before equity in earnings of unconsolidated subsidiaries 170 166 629 605
Equity in earnings of unconsolidated subsidiaries, net of tax               1  
Net income $ 170   $ 166   $ 629   $ 606  
Earnings per common share:
Basic $ 0.82 $ 0.78 $ 2.99 $ 2.77
Diluted 0.81 0.77 2.96 2.74
Weighted average common shares outstanding:
Basic 207.6 216.0 210.6 218.7
Diluted 209.4 218.2 212.3 221.2
Cash dividends declared per common share $ 0.34 $ 0.32 $ 1.36 $ 1.21
 

A-1

 
     
DR PEPPER SNAPPLE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2012 and 2011
(Unaudited, in millions except share and per share data)
 
December 31, December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 366 $ 701
Accounts receivable:
Trade, net 552 585
Other 50 50
Inventories 197 212
Deferred tax assets 66 96
Prepaid expenses and other current assets   104     113  
Total current assets 1,335 1,757
Property, plant and equipment, net 1,202 1,152
Investments in unconsolidated subsidiaries 14 13
Goodwill 2,983 2,980
Other intangible assets, net 2,684 2,677
Other non-current assets 580 573
Non-current deferred tax assets   130     131  
Total assets $ 8,928   $ 9,283  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 283 $ 265
Deferred revenue 65 65
Current portion of long-term obligations 250 452
Income taxes payable 45 530
Other current liabilities   589     603  
Total current liabilities 1,232 1,915
Long-term obligations 2,554 2,256
Non-current deferred tax liabilities 630 586
Non-current deferred revenue 1,386 1,449
Other non-current liabilities   846     814  
Total liabilities 6,648 7,020
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized, no shares issued
Common stock, $.01 par value, 800,000,000 shares authorized, 205,292,657 and 212,130,239 shares issued and outstanding for 2012 and 2011, respectively 2 2
Additional paid-in capital 1,308 1,631
Retained earnings 1,080 740
Accumulated other comprehensive loss   (110 )   (110 )
Total stockholders' equity   2,280     2,263  
Total liabilities and stockholders' equity $ 8,928   $ 9,283  
 

A-2

 
   
DR PEPPER SNAPPLE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2012 and 2011
(Unaudited, in millions)
 
For the
Twelve Months Ended
December 31,
2012     2011
Operating activities:
Net income

$

629

$ 606
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense

203

198
Amortization expense

37

34
Amortization of deferred revenue

(65

)

(65 )
Employee stock-based compensation expense

35

34
Deferred income taxes

91

(498 )
Other, net

(18

)

24
Changes in assets and liabilities:
Trade accounts receivable

36

(55 )
Other accounts receivable

1

(18 )
Inventories

17

29
Other current and non-current assets

(21

)

(21 )
Other current and non-current liabilities

(29

)

1
Trade accounts payable

10

(30 )
Income taxes payable  

(468

)

  521  
Net cash provided by operating activities

458

760
Investing activities:
Purchase of property, plant and equipment

(193

)

(215 )
Purchase of intangible assets

(7

)

(3 )
Investments in unconsolidated subsidiaries

(2 )
Proceeds from disposals of property, plant and equipment  

7

    3  
Net cash used in investing activities

(193

)

(217 )
Financing activities:
Proceeds from senior unsecured notes and senior unsecured credit facility

500

1,000
Repayment of senior unsecured notes and senior unsecured credit facility

(450

)

(400 )
Repurchase of shares of common stock

(400

)

(522 )
Dividends paid

(284

)

(251 )
Proceeds from stock options exercised

22

20
Excess tax benefit on stock-based compensation

16

10
Deferred financing charges paid

(4

)

(6 )
Other, net  

(3

)

  (3 )
Net cash used in financing activities

(603

)

(152 )
Cash and cash equivalents — net change from:
Operating, investing and financing activities

(338

)

391
Effect of exchange rate changes on cash and cash equivalents

3

(5 )
Cash and cash equivalents at beginning of year  

701

    315  
Cash and cash equivalents at end of year

$

366

  $ 701  
Supplemental cash flow disclosures of non-cash investing and financing activities:
Capital expenditures included in other current liabilities

$

73

$ 53
Dividends declared but not yet paid

70

68
Capital lease additions

49

Supplemental cash flow disclosures:
Interest paid

$

115

$ 104
Income taxes paid

724

278
 

A-3

 
         
DR PEPPER SNAPPLE GROUP, INC.
OPERATIONS BY OPERATING SEGMENT
For the Three and Twelve Months Ended December 31, 2012 and 2011
(Unaudited, in millions)
 

For the Three Months Ended
December 31,

For the Twelve Months Ended
December 31,

2012     2011 2012     2011
Segment Results – Net sales
Beverage Concentrates $ 333 $ 325 $ 1,221 $ 1,193
Packaged Beverages 1,044 1,040 4,358 4,292
Latin America Beverages   107     96     416     418  
Net sales $ 1,484   $ 1,461   $ 5,995   $ 5,903  
 
 

For the Three Months Ended
December 31,

For the Twelve Months Ended
December 31,

2012 2011 2012 2011
Segment Results – SOP
Beverage Concentrates $ 223 $ 212 $ 774 $ 779
Packaged Beverages 131 128 539 519
Latin America Beverages   14     9     51     43  
Total SOP 368 349 1,364 1,341
Unallocated corporate costs 73 76 261 306
Other operating expense, net   3     2     11     11  
Income from operations 292 271 1,092 1,024
Interest expense, net 30 28 123 111
Other income, net   (1 )   (3 )   (9 )   (12 )
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries $ 263   $ 246   $ 978   $ 925  
 

A-4

 

DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
(Unaudited)

The company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP measures, that reflect the way management evaluates the business, may provide investors with additional information regarding the company's results, trends and ongoing performance on a comparable basis. Specifically, investors should consider the following with respect to our quarterly results:

Net sales and Segment Operating Profit, as adjusted: Net sales and Segment Operating Profit are on a currency neutral basis.

Free Cash Flow: Free cash flow is defined as net cash provided by operating activities adjusted for capital spending and certain items excluded for comparison to prior year periods. The certain item excluded for the twelve months ended December 31, 2012 and 2011, relates to the tax payments resulting from the licensing agreements with PepsiCo and Coca-Cola.

Core Earnings: Core Earnings is defined as Reported Earnings adjusted for the unrealized mark-to-market impact of commodity derivatives and certain items that are excluded for comparison to prior year periods. The certain items excluded for the twelve months ended December 31, 2012, are (i) a separation-related foreign deferred tax benefit and (ii) a depreciation adjustment associated with the reassessment of a capital lease executed prior to the separation from Cadbury. The certain item excluded for the twelve months ended December 31, 2011, is a legal provision related to a previously disclosed legal matter.

The tables on the following pages provide these reconciliations.

A-5

   
RECONCILIATION OF NET SALES AND SOP
AS REPORTED TO AS ADJUSTED
(Unaudited)
 
For the Three Months Ended December 31, 2012
Beverage     Packaged     Latin

America

   
Percent change Concentrates Beverages Beverages Total
Reported net sales 2% 11% 2%
Impact of foreign currency (4)% (1)%
Net sales, as adjusted 2% 7% 1%
 
 
For the Three Months Ended December 31, 2012
Beverage Packaged Latin

America

Percent change Concentrates Beverages Beverages Total
Reported segment operating profit 5% 2% 56% 5%
Impact of foreign currency 1%
Segment operating profit, as adjusted 5% 3% 56% 5%
 
 
For the Twelve Months Ended December 31, 2012
Beverage Packaged Latin

America

Percent change Concentrates Beverages Beverages Total
Reported net sales 2% 2% 2%
Impact of foreign currency 5%
Net sales, as adjusted 2% 2% 5% 2%
 
 
For the Twelve Months Ended December 31, 2012
Beverage Packaged Latin

America

Percent change Concentrates Beverages Beverages Total
Reported segment operating profit (1)% 4% 19% 2%
Impact of foreign currency 31% 1%
Segment operating profit, as adjusted (1)% 4% 50% 3%
 
       
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(Unaudited, in millions)
 
For the
Twelve Months Ended
December 31,  
2012     2011 Change
Net Cash Provided by Operating Activities

$

458

$ 760 $ (302 )
Purchase of property, plant and equipment

(193

)

(215 )
Tax payments resulting from the licensing arrangements with PepsiCo and Coca-Cola  

531

    54  
Free Cash Flow

$

796

  $ 599   $ 197
 

A-6

 
 
RECONCILIATION OF NET INCOME TO CORE EARNINGS
(Unaudited, in millions except per share data)
 
For the Three Months Ended December 31, 2012
Reported     Mark to Market     Core
Net sales $ 1,484 $ $ 1,484
Cost of sales   605         605  
Gross profit 879 879

Selling, general and administrative expenses

555 (1 ) 554
Depreciation and amortization 29 29
Other operating expense, net   3         3  
Income from operations 292 1 293
Interest expense 31 31
Interest income (1 ) (1 )
Other income, net   (1 )       (1 )
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries 263 1 264
Provision for income taxes   93         93  
Income before equity in earnings of unconsolidated subsidiaries 170 1 171
Equity in earnings of unconsolidated subsidiaries, net of tax            
Net income $ 170   $ 1   $ 171  
Earnings per common share:
Diluted $ 0.81 $ 0.01 $ 0.82
 

A-7

 
 
RECONCILIATION OF NET INCOME TO CORE EARNINGS - (Continued)
(Unaudited, in millions except per share data)
 
For the Three Months Ended December 31, 2011
Reported     Mark to Market     Legal Provision     Core
Net sales $ 1,461 $ $ $ 1,461
Cost of sales   604     (8 )       596  
Gross profit 857 8 865
Selling, general and administrative expenses 553 1 (18 ) 536
Depreciation and amortization 31 31
Other operating expense, net   2             2  
Income from operations 271 7 18 296
Interest expense 29 29
Interest income (1 ) (1 )
Other income, net   (3 )           (3 )
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries 246 7 18 271
Provision for income taxes   80     3     7     90  
Income before equity in earnings of unconsolidated subsidiaries 166 4 11 181
Equity in earnings of unconsolidated subsidiaries, net of tax                
Net income $ 166   $ 4   $ 11   $ 181  
Earnings per common share:
Diluted $ 0.77 $ 0.02 $ 0.05 $ 0.84
 

A-8

 
 
RECONCILIATION OF NET INCOME TO CORE EARNINGS - (Continued)
(Unaudited, in millions except per share data)
 
For the Twelve Months Ended December 31, 2012
Reported     Mark to Market     Depreciation Adjustment     Foreign Deferred Tax     Total Adjustments     Core
Net sales $ 5,995 $ $ $ $ $ 5,995
Cost of sales   2,500     15     (2 )       13     2,513  
Gross profit 3,495 (15 ) 2 (13 ) 3,482
Selling, general and administrative expenses 2,268 2 2 2,270
Depreciation and amortization 124 (6 ) (6 ) 118
Other operating expense, net   11                     11  
Income from operations 1,092 (17 ) 8 (9 ) 1,083
Interest expense 125 125
Interest income (2 ) (2 )
Other income, net   (9 )                   (9 )
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries 978 (17 ) 8 (9 ) 969
Provision for income taxes   349     (6 )   3     4     1     350  
Income before equity in earnings of unconsolidated subsidiaries 629 (11 ) 5 (4 ) (10 ) 619
Equity in earnings of unconsolidated subsidiaries, net of tax                        
Net income $ 629   $ (11 ) $ 5   $ (4 ) $ (10 ) $ 619  
Earnings per common share:
Diluted $ 2.96 $ (0.04 ) $ 0.02 $ (0.02 ) $ (0.04 ) $ 2.92
 

A-9

 
 
RECONCILIATION OF NET INCOME TO CORE EARNINGS - (Continued)
(Unaudited, in millions except per share data)
 
For the Twelve Months Ended December 31, 2011
Reported     Mark to Market     Legal Provision     Core
Net sales $ 5,903 $ $ $ 5,903
Cost of sales   2,485     (22 )       2,463  
Gross profit 3,418 22 3,440
Selling, general and administrative expenses 2,257 (1 ) (18 ) 2,238
Depreciation and amortization 126 126
Other operating expense, net   11             11  
Income from operations 1,024 23 18 1,065
Interest expense 114 114
Interest income (3 ) (3 )
Other income, net   (12 )           (12 )
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries 925 23 18 966
Provision for income taxes   320     9     7     336  
Income before equity in earnings of unconsolidated subsidiaries 605 14 11 630
Equity in earnings of unconsolidated subsidiaries, net of tax   1             1  
Net income $ 606   $ 14   $ 11   $ 631  
Earnings per common share:
Diluted $ 2.74 $ 0.06 $ 0.05 $ 2.85
 

A-10

Contacts

Dr Pepper Snapple Group, Inc.
Media Relations:
Tina Barry, 972-673-7931
or
Greg Artkop, 972-673-8470
or
Investor Relations:
Carolyn Ross, 972-673-7935

Sharing

Contacts

Dr Pepper Snapple Group, Inc.
Media Relations:
Tina Barry, 972-673-7931
or
Greg Artkop, 972-673-8470
or
Investor Relations:
Carolyn Ross, 972-673-7935