Plano, Texas, Nov. 13 - Dr Pepper Snapple Group, Inc. reported third quarter 2008 earnings of $0.41 per share compared to $0.61 per share in the prior year period.
The results reflect the company's first full quarter as a stand-alone business following its separation from Cadbury plc on May 7, 2008. Excluding restructuring costs in both years and transaction and separation related costs in the current year, the company earned $0.45 per share compared to $0.63 per share in the prior year period. Excluding the impact from the loss of glaceau product distribution, net sales increased 5% on the strength of 1% volume growth and the ongoing benefit of pricing actions taken earlier in the year. Segment operating profit declined 17%, primarily reflecting unfavorable comparisons of fountain/foodservice and other beverage concentrates discounts, the absence of glaceau product distribution and higher transportation costs. Income from operations declined 26%.
Year-to-date, the company earned $1.21 per share compared to $1.42 per share in the prior year period. Excluding restructuring and separation related items, the company earned $1.46 per share compared to $1.50 per share in the prior year period. The company generated $523 million of cash from operating activities and since its separation from Cadbury in May, 2008, it has repaid $295 million of its floating rate term loan obligations.
DPS President and CEO Larry Young said, "Without a doubt, this is one of the toughest environments the beverage industry has faced in many years. With disposable incomes falling, consumers are thinking harder about what they buy. Despite these headwinds, we demonstrated during the quarter that our portfolio of flavored beverages has room to grow and that our business continues to generate strong cash flow. While CSD volume was up 0.5%, demand for our premium-priced products slowed significantly resulting in performance that was below our expectations.
"In these uncertain times, we remain committed to our long-term goals -- leverage our strong portfolio of flavor brands, strengthen our route-to-market, rally around our customers and consumers and deliver results that outperform the industry. We continue to invest with an eye to the future and our recent organizational changes will ensure that we are better able to leverage our third-party and company-owned distribution models to drive process simplification, speed of decision making and total system profitability."
Summary of 2008 results % Growth vs 2007 % Growth vs 2007
Third Quarter Year to Date
------------- --------------
Volume (BCS) (1) (3)
Net sales ($)
Beverage Concentrates (3) (2)
Finished Goods 4 7
Bottling Group (5) (2)
Mexico and the Caribbean 7 7
--- ---
Net sales as reported (2) 1
Segment Operating Profit (17) (6)
Reported EPS (32) (14)
EPS excluding certain items (29) (3)
BCS - bottler case sales
Earnings per share Third Quarter Year to Date
reconciliation 2008 2007 % 2008 2007 %
------------------- ---------------------
Reported EPS $0.41 $0.61 (32) $1.21 $1.42 (14)
Items affecting
comparability
- Restructuring costs 0.02 0.03 0.07 0.09
- Transaction and
separation costs 0.02 -- 0.07 --
- Bridge loan fees and
expenses -- -- 0.06 --
- Separation related tax
items -- -- 0.04 --
----- ----- ----- ----- ----- -----
EPS excluding certain
items $0.45 $0.63* (29) $1.46* $1.50* (3)
* Does not sum due to rounding
Volume (BCS)Volume declined 1%. Excluding the impact of glaceau, volume grew 1% as carbonated soft drinks (CSDs) increased 0.5% and non-carbonated beverages (NCBs) increased 3%.
In CSDs, Dr Pepper volume was up slightly. "Core 4" brands -- 7UP, Sunkist, A&W and Canada Dry -- increased 1.5% driven primarily by Canada Dry which was up 8% as Green Tea Ginger Ale continued to gain momentum. 7UP volume was down 3% but showed improvement in its trend. In Mexico, Penafiel declined mid single-digits reflecting necessary pricing actions taken earlier in the year.
In NCBs, Hawaiian Punch volume increased 24% on second half promotional activities and favorable comparisons to the prior year period. A slowdown in consumer spending and increased price competition in the tea and enhanced water categories impacted performance of the company's premium-priced products with results that were below expectations. Snapple, including antioxidant waters, declined 7%. Issues with apple and lemon supplies, resulting from extensive crop damage, limited sales of Mott's sauce and Realemon/Realime. In Mexico, Aguafiel declined 20% reflecting high single-digit price increases and a more competitive environment.
In North America, excluding the impact of glaceau, volume increased 2% and in Mexico and the Caribbean, volume declined 4%.
Sales Volume
Sales volume declined 1%. Excluding the impact of glaceau, sales volume increased 1% in line with BCS trends.
Net sales
Net sales declined 2%. Excluding the impact of glaceau, net sales increased 5% driven by volume growth of 1% and mid single-digit price increases taken earlier in the year, partially offset by unfavorable comparisons of fountain/foodservice and other beverage concentrates discounts which were $19 million higher. Beverage concentrates price/mix decreased low single-digits. Finished goods price/mix decreased mid single-digits on higher sales of Hawaiian Punch and lower than expected performance of the company's premium-priced products. Bottling Group price/mix increased mid single-digits and Mexico and the Caribbean price/mix increased low double-digits.
Across all measured channels, as reported by ACNielsen, the company continues to lead the U.S. CSD category in dollar share growth with its share up 0.3 percentage points year-to-date.
Segment operating profit, corporate and other
Gross profit decreased 4% reflecting net sales declines and higher commodity costs. Cost of sales (COGS) per case increased 1%. The loss of glaceau product distribution reduced gross profit growth by 3 percentage points and COGS per case growth by 9 percentage points.
Segment operating profit declined 17% primarily reflecting unfavorable comparisons of fountain/foodservice and other beverage concentrates discounts ($19 million), the absence of glaceau product distribution ($17 million) and higher transportation costs ($15 million).
Below-the-line, costs were broadly in line with expectations. Restructuring costs related to previously announced actions were $7 million for the quarter. Transaction and other one-time separation costs totaled $9 million. Stock-based compensation expenses were $3 million for the quarter versus an $8 million gain in the prior year quarter due to a decrease in the fair value of options under the Cadbury stock plan. Other expenses were $4 million in the current quarter versus a $6 million gain in related party items in the prior year period.
Net interest expense increased $12 million to $56 million reflecting the company's new capital structure as a stand-alone company and the absence of related party interest income totaling $19 million.
The effective tax rate for the quarter was 35.8%, which included $5 million related to certain tax items that are indemnified by Cadbury, improved utilization of foreign and other tax credits and a favorable impact from territory mix. Year-to-date, the effective tax rate was 39.2%, which included $18 million of separation related and indemnified items.
Year-to-date, the company generated $523 million of cash from operating activities. Adjusted for certain items, cash provided by operating activities was $582 million up $218 million from the prior year on strong working capital performance. Since its separation from Cadbury in May 2008, the company has repaid $295 million of its floating rate term loan obligations.
2008 full-year guidance
Further reductions in consumer spending given a more challenging macro economic environment are impacting near- and medium-term forecast visibility. The company currently expects full year 2008 net sales growth of about 1% and earnings per share of approximately $1.54 to $1.57, or approximately $1.83 to $1.86 excluding certain items. This reflects deteriorating economic conditions in the U.S. and Mexico, the impact of a strengthening U.S. dollar and the loss of Hansen Natural product distribution.
The company continues to expect: restructuring costs of $0.10 per share; transaction and separation related costs of $0.08 per share; bridge loan fees and net interest in connection with the spin-off from Cadbury of $0.06 per share; and separation related tax items of $0.04 per share.
The company is negotiating its settlement with Hansen Natural under the provisions of the distribution agreement.
Despite a recent fall in commodity prices, the company still expects 2008 COGS inflation of approximately 6%, as lower commodity costs are being offset by higher concentrate component and other ingredient costs. Fuel is now expected to add approximately $35 million to distribution costs which are recorded in SG&A.
During the third quarter, the company entered into a series of interest rate swaps that effectively converted a substantial portion of its floating rate term loan to fixed rate through December 2009. The blended interest rate, including amortization of fees and expenses, for the fourth quarter is expected to be approximately 6.4%.
The earnings per share guidance assumes a full-year 2008 tax rate of approximately 39.4%, which reflects improved utilization of foreign and other tax credits and a favorable impact from territory mix. The tax rate includes approximately $13 million of charges related to certain tax items that are indemnified by Cadbury. A corresponding amount to reflect the indemnity is recorded as other income. In total, these two items have no impact on our total results. Additionally, the rate includes $11 million of items that were mainly identified on separation when the company established its stand-alone financial statements.
Capital spending is expected to be about 5% of net sales.
2009 items
The company expects to provide more details about 2009 on its fourth quarter earnings call.
Investors are reminded that 2009 will be the company's first full year as a stand-alone business. In establishing stand-alone operations, the company expects to incur approximately $25 million of higher general and administrative expenses, including stock-based compensation costs. Additionally, the absence of significant related party receivables from Cadbury will result in approximately $25 million of lower interest income.
The company's agreement with Hansen Natural ended November 10, 2008. Through this date, the company estimates its net sales and operating profit from distributing these products to be approximately $200 million and $40 million, respectively.
The blended interest rate for the company's debt obligations, including amortization of fees and expenses, is expected to be approximately 6.6%.
Capital spending is expected to be about 5% of net sales.
The company remains committed to using free cash to pay down its floating rate term loan obligations ahead of schedule.
DR PEPPER SNAPPLE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2008 and 2007
(Unaudited, in millions, except per share data)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
2008 2007 2008 2007
------- ------ ------ ------
Net sales $1,505 $1,535 $4,369 $4,347
Cost of sales 720 719 2,003 1,984
------- ------ ------ ------
Gross profit 785 816 2,366 2,363
Selling, general and administrative
expenses 542 496 1,586 1,527
Depreciation and amortization 28 21 84 69
Restructuring costs 7 11 31 36
Loss on disposal of property and
intangible assets, net (5) -- (3) --
------- ------ ------ ------
Income from operations 213 288 668 731
Interest expense 59 63 199 195
Interest income (3) (19) (30) (38)
Other (income) expense (7) (3) (8) (2)
------- ------ ------ ------
Income before provision for income
taxes and equity in earnings of
unconsolidated subsidiaries 164 247 507 576
Provision for income taxes 59 93 199 218
------- ------ ------ ------
Income before equity in earnings of
unconsolidated subsidiaries 105 154 308 358
Equity in earnings of unconsolidated
subsidiaries 1 -- 1 1
------- ------ ------ ------
Net income $106 $154 $309 $359
======= ====== ====== ======
Earnings per common share:
Basic $0.41 $0.61 $1.21 $1.42
Diluted $0.41 $0.61 $1.21 $1.42
Weighted average common shares
outstanding:
Basic 254.2 253.7 254.0 253.7
Diluted 254.2 253.7 254.0 253.7
DR PEPPER SNAPPLE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited, in millions)
For the Nine Months Ended
September 30,
-------------------------
2008 2007
----------- ------------
(As Restated)(1)
Operating activities:
Net income $309 $359
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation expense 102 89
Amortization expense 44 38
Employee stock-based expense, net of tax
benefit 5 10
Deferred income taxes 58 3
Write-off of deferred loan costs 21 --
Other, net 9 8
Changes in assets and liabilities:
Trade and other accounts receivable 3 (47)
Related party receivable 11 (8)
Inventories (6) (41)
Other current assets (32) (1)
Other non-current assets (9) 4
Accounts payable and accrued expenses 30 (48)
Related party payables (70) 350
Income taxes payable 47 9
Other non-current liabilities 1 (19)
------ ------
Net cash provided by operating activities 523 706
Investing activities:
Purchases of property, plant and equipment (203) (123)
Issuances of related party notes receivables (165) (1,829)
Repayment of related party notes receivables 1,540 525
Other, net 3 (23)
------ ------
Net cash provided by (used in) investing
activities 1,175 (1,450)
Financing activities:
Proceeds from issuance of related party
long-term debt 1,615 2,803
Proceeds from senior unsecured credit facility 2,200 --
Proceeds from senior unsecured notes 1,700 --
Proceeds from bridge loan facility 1,700 --
Repayment of related party long-term debt (4,664) (3,232)
Repayment of senior unsecured credit facility (295) --
Repayment of bridge loan facility (1,700) --
Deferred financing charges paid (106) --
Cash Distributions to Cadbury (2,065) (189)
Change in Cadbury's net investment 94 1,356
Other, net (2) 4
------ ------
Net cash (used in) provided by financing
activities (1,523) 742
Cash and cash equivalents - net change from:
Operating, investing and financing activities 175 (2)
Currency translation (3) 1
Cash and cash equivalents at beginning of
period 67 35
------ ------
Cash and cash equivalents at end of period $239 $34
====== ======
Supplemental cash flow disclosures of non-cash
investing and financing activities:
Settlement related to separation from Cadbury 150 --
Purchase accounting adjustment related to
prior year acquisitions 13 --
Transfers of property, plant, and equipment to
Cadbury -- 9
Transfers of operating assets and liabilities
to Cadbury -- 40
Reduction in long-term debt from Cadbury -- 257
Related entities acquisition payments -- 17
Note payable related to acquisition -- 38
Liabilities expected to be reimbursed by
Cadbury -- 12
Reclassifications for tax transactions -- 90
Supplemental cash flow disclosures:
Interest paid $120 $182
Income taxes paid 105 26
(1) Prior to the issuance of the Company's audited combined financial
statements as of the year ended December 31, 2007, the Company
determined that the unaudited condensed combined statements of cash
flows for the nine months ended September 30, 2007, needed to be
restated to eliminate previously reported cash flows of non-cash tax
reclassifications. As a result, net cash provided by operating
activities and net cash used in financing activities decreased by
$51 million in the interim period. The Company's combined financial
statements for the year ended December 31, 2007, issued with the Form
10 (effective April 22, 2008) appropriately reported the non-cash tax
reclassifications.
DR PEPPER SNAPPLE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2008 and December 31, 2007
(Unaudited, in millions except share and per share data)
September 30, December 31,
2008 2007
------------ -----------
Assets
Current assets:
Cash and cash equivalents $239 $67
Accounts receivable:
Trade (net of allowances of $16 and $20,
respectively) 521 538
Other 68 59
Related party receivable -- 66
Note receivable from related parties -- 1,527
Inventories 330 325
Deferred tax assets 68 81
Prepaid and other current assets 112 76
------ ------
Total current assets 1,338 2,739
Property, plant and equipment, net 945 868
Investments in unconsolidated subsidiaries 13 13
Goodwill 3,170 3,183
Other intangible assets, net 3,595 3,617
Other non-current assets 572 100
Non-current deferred tax assets 189 8
------ ------
Total assets $9,822 $10,528
====== ======
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $862 $812
Related party payable -- 175
Current portion of senior unsecured debt 35 --
Current portion of long-term debt payable
to related parties -- 126
Income taxes payable 6 22
------ ------
Total current liabilities 903 1,135
Long-term debt payable to third parties 3,587 19
Long-term debt payable to related parties -- 2,893
Deferred tax liabilities 1,276 1,324
Other non-current liabilities 726 136
------ ------
Total liabilities 6,492 5,507
Commitments and contingencies
Stockholders' equity:
Cadbury's net investment -- 5,001
Preferred stock, $.01 par value, 15,000,000
shares authorized, no shares issued -- --
Common stock, $.01 par value, 800,000,000 shares
authorized, 253,685,733 shares issued and
outstanding for 2008 and no shares issued
for 2007 3 --
Additional paid-in capital 3,163 --
Retained earnings 191 --
Accumulated other comprehensive income (27) 20
------ ------
Total equity 3,330 5,021
------ ------
Total liabilities and equity $9,822 $10,528
====== ======
DR PEPPER SNAPPLE GROUP, INC.
OPERATIONS BY OPERATING SEGMENT
For the Three and Nine Months Ended September 30, 2008 and 2007
(Unaudited, in millions)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
------- ------ ------ ------
Segment Results - Net Sales
Beverage Concentrates $329 $328 $1,001 $1,004
Finished Goods 428 413 1,254 1,174
Bottling Group 834 870 2,360 2,388
Mexico and the Caribbean 110 107 324 313
Intersegment eliminations and impact
of foreign currency(1) (196) (183) (570) (532)
------- ------ ------ ------
Net sales as reported $1,505 $1,535 $4,369 $4,347
======= ====== ====== ======
(1) Total segment net sales include Beverage Concentrates and Finished
Goods sales to the Bottling Group segment and Bottling Group segment
sales to Beverage Concentrates and Finished Goods. Intersegment
sales are eliminated in the unaudited Consolidated Statement of
Operations.
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
------- ------ ------ ------
Segment Results - Underlying
Operating Profit, Adjustments and
Interest Expense
Beverage Concentrates UOP $181 $193 $552 $541
Finished Goods UOP (1) 60 56 197 159
Bottling Group UOP(1) (7) 27 (23) 60
Mexico and the Caribbean UOP 27 26 77 75
LIFO inventory adjustment (3) (1) (17) (7)
Intersegment eliminations and impact
of foreign currency (5) 3 (10) (2)
Adjustments(2) (40) (16) (108) (95)
------- ------ ------ ------
Income from operations 213 288 668 731
Interest expense, net (56) (44) (169) (157)
Other expense 7 3 8 2
------- ------ ------ ------
Income before provision for income
taxes and equity in earnings of
unconsolidated subsidiaries as
reported $164 $247 $507 $576
======= ====== ====== ======
(1) Underlying Operating Profit (Loss) ("UOP") for the three and nine
months ended September 30, 2007, for the Bottling Group and Finished
Goods segment has been recast to reallocate $15 million and
$43 million, respectively, of intersegment profit allocations to
conform to the change in 2008 management reporting of segment UOP.
The allocations for the full year 2007 totaled $54 million.
(2) Adjustments consist of the following:
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
------- ------ ------ ------
Restructuring costs $(7) $(11) $(31) $(36)
Transaction costs and other one time
separation costs (9) -- (29) --
Unallocated general and
administrative expenses (14) (13) (24) (30)
Stock-based compensation expense (3) 8 (7) (14)
Amortization expense related to
intangible assets (7) (7) (21) (20)
Incremental pension costs (1) 1 (4) (1)
Gain on disposal of property and
intangible assets, net 5 -- 3 --
Other (4) 6 5 6
------- ------ ------ ------
Total $(40) $(16) $(108) $(95)
======= ====== ====== ======
DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
For the Three and Nine Months Ended September 30, 2008 and 2007
(Unaudited, dollars in millions)The financial measures listed below are not measures defined by U.S. GAAP. However, we believe investors should consider these measures as we believe they are indicative of our ongoing performance and how management evaluates our operational results and trends. Specifically, investors should consider the following with respect to our quarterly and year to date results:
-- Segment net results after adjustments
-- Our segment operating profit
-- Our effective tax rate without the impact of separation related and
indemnified items
-- Our 2008 EPS without the impact of restructuring costs, transaction
costs and other one time separation related costs, bridge loan fees and
expenses and incremental tax related to the separation; our 2007 EPS
without the impact of restructuring costs; and our 2008 EPS growth
without the impact of the aforementioned items.Net sales after adjustments for the Beverage Concentrates, Finished Goods and Bottling group segments is defined as net sales after intersegment eliminations and the impact of foreign currency. Segment operating profit is defined as income from operations before unallocated general and administrative expenses and other costs, restructuring costs, stock based- compensation expense, amortization expense related to intangible assets and other adjustments. We believe that segment operating profit and net sales after adjustments may be useful for investors in assessing our segment results. Segment operating profit and net sales after adjustments are not recognized measurements under U.S. GAAP. When evaluating our segment results, investors should not consider segment operating profit and net sales after adjustments in isolation of, or as a substitute for, measures of net income as determined in accordance with U.S. GAAP, such as net income or net cash provided by operating activities. Other companies may calculate segment operating profit and net sales after adjustments differently, and therefore our segment operating profit and net sales after adjustments may not be comparable to similarly titled measures reported by other companies. A reconciliation of segment operating profit to income before operations is provided below.
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------- -------------------------
Percentage Percentage
2008 2007 Change 2008 2007 Change
------- ------ ------- ------ ------ -------
Segment Results -
Net Sales
Beverage
Concentrates $329 $328 $1,001 $1,004
Intersegment
eliminations and
impact of foreign
currency (102) (93) (291) (280)
------- ------ ------ ------
Beverage Concentrates
after adjustments 227 235 (3)% 710 724 (2)%
Finished Goods 428 413 1,254 1,174
Intersegment
eliminations and
impact of foreign
currency (76) (74) (230) (214)
------- ------ ------ ------
Finished Goods after
adjustments 352 339 4% 1,024 960 7%
Bottling Group 834 870 2,360 2,388
Intersegment
eliminations and
impact of foreign
currency (22) (15) (58) (37)
------- ------ ------ ------
Bottling Group after
adjustments 812 855 (5)% 2,302 2,351 (2)%
Mexico & Caribbean 110 107 324 313
Intersegment
eliminations and
impact of foreign
currency 4 (1) 9 (1)
------- ------ ------ ------
Mexico & Caribbean
after adjustments 114 106 7% 333 312 7%
------- ------ ------ ------
Net sales as
reported $1,505 $1,535 (2)% $4,369 $4,347 1%
======= ====== ====== ======
DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
For the Three and Nine Months Ended September 30, 2008 and 2007
(Unaudited, dollars in millions)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- ------------------------
Percentage Percentage
2008 2007 Change 2008 2007 Change
------- ------ ------- ------ ------ -------
Segment Results -
Underlying Operating
Profit and Adjustments
Segment underlying
operating
profit(1) $261 $302 $803 $835
LIFO inventory
adjustment (3) (1) (17) (7)
Intersegment
eliminations and
impact of foreign
currency (5) 3 (10) (2)
------- ------ ------ ------
Segment operating
profit 253 304 (17)% 776 826 (6)%
Restructuring
costs (7) (11) (31) (36)
Transaction costs
and other one
time separation
costs (9) -- (29) --
Unallocated general
and administrative
expenses (14) (13) (24) (30)
Stock-based
compensation expense (3) 8 (7) (14)
Amortization expense
related to intangible
assets (7) (7) (21) (20)
Incremental pension
costs (1) 1 (4) (1)
Gain on disposal of
property and
intangible assets,
net 5 -- 3 --
Other (4) 6 5 6
------- ------ ------ ------
Income from operations
as reported $213 $288 (26)% $668 $731 (9)%
======= ====== ====== ======
(1) Amount represents the total of the underlying operating profit for
the four operating segments.Due to the loss of the distribution agreement for glaceau products in 2007, adjusted net sales excluding net sales related to glaceau for the three months ended September 30, 2007, illustrates the performance of the underlying business on a comparable basis. A reconciliation of net sales to adjusted net sales excluding glaceau is provided below:
For the Three Months Ended
September 30,
-----------------------------------
Amount Percentage
2008 2007 Change Change
------- ------ ------- -------
Net sales as reported $1,505 $1,535 $(30) (2)%
Less sales made under the
distribution agreement for glaceau
products -- 94
------- -------
Adjusted net sales, excluding
glaceau $1,505 $1,441 $64 5%
======= =======Adjusted net cash provided by operating activities is defined as reported net cash provided by operating activities less the effects of related party balances. We believe that cash provided by operating activities excluding related party transactions may be useful for investors in assessing our ongoing performance. The following table reconciles net cash provided by operating activities as reported to adjust net cash provided by operating activities:
For the Nine Months Ended
September 30,
------------------------------
Amount
2008 2007 Change
--------- -------- -------
Net cash provided by operating activities
as reported $523 $706 $(183)
Less:
Related party receivable 11 (8)
Related party payable (70) 350
--------- --------
Net cash provided by operating activities
adjusted for the effects in related party
balances $582 $364 $218
========= ========
DR PEPPER SNAPPLE GROUP, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
For the Three and Nine Months Ended September 30, 2008 and 2007 and 2008
Full-Year Guidance
(Unaudited)EPS excluding certain items for the three and nine months ended September 30, 2008 and 2007 is defined as reported EPS before items affecting comparability (as described below) and 2008 full year guidance EPS excluding certain items is defined as 2008 full year guidance EPS before items affecting comparability (as described below). We believe that EPS excluding certain items and 2008 full-year guidance excluding certain items may be useful for investors in assessing our ongoing performance. EPS excluding certain items is not a recognized measurement under U.S. GAAP. When evaluating our results, investors should not consider EPS excluding certain items in isolation of, or as a substitute for, EPS as determined in accordance with U.S. GAAP. Our EPS excluding certain items may not be comparable to similarly titled measures reported by other companies. Reconciliations of Reported EPS to EPS excluding certain items and 2008 full year guidance EPS to 2008 full year guidance EPS excluding certain items are as provided below:
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
Percentage Percentage
2008 2007 Change 2008 2007 Change
------ ------ -------- ------ ------ --------
Reported EPS $0.41 $0.61 (32)% $1.21 $1.42 (14)%
Items affecting
comparability:
Restructuring costs 0.02 0.03 0.07 0.09
Transaction and
separation costs 0.02 -- 0.07 --
Bridge loan fees and
expenses -- -- 0.06 --
Separation related
tax items -- -- 0.04 --
------ ------ ------ ------
EPS excluding certain
items $0.45 $0.63* (29)% $1.46* $1.50* (3)%
====== ====== ====== ======
Full Year 2008 Guidance 2008
--------------
2008 full-year guidance EPS $1.54 to $1.57
Items affecting comparability:
Restructuring costs 0.10
Transaction and separation costs 0.08
Bridge loan fees and expenses 0.06
Separation related tax items 0.04
------
2008 full-year guidance EPS
excluding certain items $1.83 to $1.86*
===============
* Does not sum due to rounding.