WATERBURY, Vt.--(BUSINESS WIRE)--Keurig Green Mountain, Inc. (NASDAQ: GMCR), a leader in specialty coffee, coffee makers, teas and other beverages with its innovative brewing technology, today announced its business results for the 13 weeks ended June 27, 2015.
“While we are not pleased with our revenue growth, we delivered earnings at the high end of our previous guidance,” commented President and CEO, Brian Kelley. “We are taking decisive actions to adapt and compete more effectively in today’s rapidly-evolving, dynamic marketplace. We are implementing a multi-year productivity program that we are confident will enhance our operational effectiveness and enable us to fund incremental investment in innovation and brand building. In addition, our new Keurig K200 brewer is off to a strong start with its introduction this past quarter. We believe this addition, as well as the enhancements we’ve made to our entire At Home brewer line up will allow for continued growth in our U.S. installed base. We continue to believe that our hot system has the potential to reach more than 50 million U.S. households over time --more than double its size today. In addition, the upcoming launch of our Keurig KOLD system creates an even larger opportunity for long-term growth and value creation.”
Mr. Kelley continued, “Going forward, we will continue to maintain a strong, flexible capital structure and balance sheet to enable us to return significant value to our shareholders as we continue to invest in the business. Underscoring our commitment to delivering value to our shareholders, today we announced that our Board authorized an additional $1 billion share repurchase which adds to our existing plan. With innovative technology and a premier beverage brands portfolio, Keurig continues to be a recognized leader in the industry and we are confident we will continue our legacy of delivering disruptive and innovative products for the benefit of all Keurig constituents.”
Third Quarter Fiscal 2015 Financial Review
| ($ in millions except earnings per share) | Thirteen weeks ended | Thirty-nine weeks ended | ||||||||||||||||||||
| June 27, 2015 | June 28, 2014 |
% |
June 27, 2015 | June 28, 2014 |
% |
|||||||||||||||||
| Net sales | $ | 969.6 | $ | 1,022.4 | (5 | )% | $ | 3,483.1 | $ | 3,512.1 | (1 | )% | ||||||||||
| Operating income: | ||||||||||||||||||||||
| GAAP | $ | 161.4 | $ | 231.3 | (30 | )% | $ | 621.3 | $ | 718.5 | (14 | )% | ||||||||||
| Non-GAAP | $ | 176.3 | $ | 243.2 | (28 | )% | $ | 664.0 | $ | 753.2 | (12 | )% | ||||||||||
| Net income attributable to Keurig: | ||||||||||||||||||||||
| GAAP | $ | 113.6 | $ | 155.2 | (27 | )% | $ | 403.7 | $ | 455.5 | (11 | )% | ||||||||||
| Non-GAAP | $ | 124.7 | $ | 163.2 | (24 | )% | $ | 434.5 | $ | 479.1 | (9 | )% | ||||||||||
| Diluted income per share (EPS): | ||||||||||||||||||||||
| GAAP | $ | 0.73 | $ | 0.94 | (22 | )% | $ | 2.52 | $ | 2.88 | (13 | )% | ||||||||||
| Non-GAAP | $ | 0.80 | $ | 0.99 | (19 | )% | $ | 2.71 | $ | 3.03 | (11 | )% | ||||||||||
| Cash dividends declared per common share | $ | 0.2875 | $ | 0.25 | 15 | % | $ | 0.8625 | $ | 0.75 | 15 | % | ||||||||||
Net Sales by Product
Net sales of $970 million decreased 5%
versus the prior year period with declines in brewer sales and pod
sales. Foreign currency exchange rates negatively impacted sales by
approximately 1.5 percentage points. Excluding the impact of foreign
currency exchange rates, total net sales declined 4% and total Keurig
beverage system sales declined 4% compared to the prior year period.
Net sales for the domestic segment declined 4% in the quarter while sales in the Canada segment declined 14% on a reported basis and declined 3% excluding the impact of foreign currency exchange rates.
Total pod net sales declined 1% in the quarter while brewers and accessories net sales declined 26%. Other product net sales declined 12% compared to the prior year period.
| Net Sales by Product | Net sales (in millions) | |||||||||||||||
| Thirteen weeks ended | ||||||||||||||||
| June 27, 2015 | June 28, 2014 |
$ Increase |
% Increase |
|||||||||||||
| Pods | $ | 815.0 | $ | 826.3 | $ | (11.3 | ) | (1 | )% | |||||||
| Brewers and accessories | 95.0 | 128.0 | (33.0 | ) | (26 | )% | ||||||||||
| Subtotal | 910.0 | 954.3 | (44.3 | ) | (5 | )% | ||||||||||
| Other products | 59.6 | 68.1 | (8.5 | ) | (12 | )% | ||||||||||
| Total net sales | $ | 969.6 | $ | 1,022.4 | $ | (52.8 | ) | (5 | )% | |||||||
Pods
- The 1% decrease in the quarter in pod net sales compared to the prior year period was due to a 5% increase in equivalent servings2 volume and a 3 percentage point increase due to net price realization. This was offset by an 8 percentage point decrease due to product mix and a roughly 1 percentage point negative impact from foreign currency exchange rates.
Brewers and Accessories
- For the quarter, 1.36 million Keurig® system brewers were sold including 1.3 million sold by Keurig and 0.05 million reported sold by Keurig’s licensed brewer partners. This brewer shipment number does not account for consumer returns.
- The 26% decline in Keurig’s brewer and accessory net sales compared to the prior year period was primarily due to a 18% decline in brewer sales volume, driven by high levels of inventory at retail and timing of restocking the MINI Plus brewer. Brewer net price realization declined by 6 percentage points due to promotional efforts to reduce brewer inventory levels. Brewer mix negatively impacted brewer sales by 2 percentage points. Foreign currency exchange rates negatively impacted brewer net sales by roughly 1 percentage point.
- Additionally, accessory net sales declined 22% compared to the prior year period.
Other Products
- Sales of other products declined 12% during the quarter from the prior year period primarily due to the continuing demand shift from traditional coffee package formats to pods and the unfavorable impact of foreign currency exchange rates.
- For the quarter, gross margin declined 750 basis points versus prior year to 36.0% of net sales. The table below quantifies the changes in gross margin period to period. Obsolescence of finished goods includes an $18 million charge related to Keurig 2.0 brewers in the third quarter which impacted gross margin by 190 bps.
|
Change |
|||||
| Higher obsolescence expense of finished goods | -310 bps | ||||
| Unfavorable green coffee costs | -290 bps | ||||
| Mix primarily associated with brewers | -200 bps | ||||
| Shift in sales mix between pods, brewers and accessories and other products | +190 bps | ||||
| Net price realization primarily associated with pods | +110 bps | ||||
| Increased logistics expense | -90 bps | ||||
| Mix primarily associated with pods | -40 bps | ||||
| Net price realization primarily associated with brewers | -40 bps | ||||
| Foreign currency rates | -40 bps | ||||
| Other | -40 bps | ||||
- GAAP SG&A declined 12%, representing 19.4% of net sales for the quarter as compared to 20.9% in the prior year period. Non-GAAP SG&A decreased 14% representing 17.8% of sales for the quarter as compared to 19.7% in the prior period. The decrease in SG&A over the prior year period was driven by lower incentive compensation expense, lower marketing expense and a reduction in professional fees.
- GAAP operating income declined 30%, representing 16.6% of net sales for the quarter, compared to 22.6% in the prior year period.
- Non-GAAP operating income declined 28%, representing 18.2% of net sales in the quarter, compared to 23.8% in the prior year period.
- The Company’s effective income tax rate was 30.2% for the quarter as compared to 33.9% in the prior year period.
- Diluted weighted average shares outstanding for the third quarter were 155.6 million, down 6% from 164.7 million in the prior year period. The reduction in shares outstanding was driven by the Company’s share repurchases under its previously announced share repurchase authorizations including a $700 million accelerated share repurchase (ASR) program, open market purchases and 10(b)5-1 plans and the previously announced repurchase of 5.2 million shares from Luigi Lavazza S.p.A. on March 3, 2015.
- GAAP diluted EPS declined 22% from the prior year period to $0.73.
- Non-GAAP diluted EPS declined 19% from the prior year period to $0.80. Excluding the impact of foreign currency, non-GAAP diluted EPS decreased approximately 17% versus the prior year period.
Balance Sheet & Cash Flow Highlights
| Balance Sheet & Cash Flow Highlights ($ in millions) | June 27, 2015 | June 28, 2014 | % Change | |||||||||||
| Cash and cash equivalents, including restricted cash | $ | 80.6 | $ | 1,204.2 | (93 | )% | ||||||||
| Accounts receivables, net | $ | 441.3 | $ | 382.4 | 15 | % | ||||||||
| Inventories | $ | 688.7 | $ | 639.0 | 8 | % | ||||||||
| Raw material inventories | $ | 229.0 | $ | 179.9 | 27 | % | ||||||||
| Coffee | $ | 123.7 | $ | 85.8 | 44 | % | ||||||||
| Packaging & other raw materials | $ | 105.3 | $ | 94.1 | 12 | % | ||||||||
| Finished goods | $ | 459.7 | $ | 459.2 | 0 | % | ||||||||
| Brewers & accessories | $ | 279.4 | $ | 263.2 | 6 | % | ||||||||
| Pods | $ | 162.5 | $ | 168.5 | (4 | )% | ||||||||
| Other | $ | 17.8 | $ | 27.4 | (35 | )% | ||||||||
| Debt outstanding and capital lease and financing obligations | $ | 413.5 | $ | 273.9 | 51 | % | ||||||||
| Thirty-nine weeks net cash provided by operating activities | $ | 610.1 | $ | 823.8 | (26 | )% | ||||||||
| Thirty-nine weeks free cash flow (1) | $ | 272.0 | $ | 601.9 | (55 | )% | ||||||||
(1) Free cash flow is calculated by subtracting capital expenditures for fixed assets from net cash provided by operating activities as reported in the unaudited statement of cash flows.
Share Repurchase
On July 31, 2015, the Board of Directors approved a new share repurchase authorization of up to an additional $1 billion over the next two years, at such times and prices as determined appropriate by the Company's management in collaboration with the Board of Directors. The shares will be purchased with cash on hand, cash from operations, and funds available through our existing credit facility.
Productivity Program
The Company announced a multi-year productivity program intended to reduce structural costs and streamline organization structures to drive efficiency. The program is expected to generate approximately $300 million in savings over the next three years with approximately $100 million of savings in fiscal 2016. The program is expected to reduce the company’s workforce by approximately 5%.
Implementation of the productivity program is expected to result in cumulative pre-tax charges of $30-$35 million, beginning with an approximately $26 million charge in the fourth quarter of fiscal 2015. Of the total anticipated initial charge, approximately $20 million is expected to be cash expenditures.
Business Outlook and Other Forward-Looking Information
The Company updated its outlook for fiscal year 2015, provided its outlook for the fourth quarter and provided its preliminary outlook for fiscal year 2016.
Fiscal Year 2015 Outlook
- Net sales decline of low-single to mid-single-digits compared to fiscal year 2014
- An annual effective tax rate of approximately 34.5% to 35%
-
Non-GAAP EPS decline in the low-teens. This outlook:
- Includes an estimated $0.13 headwind from foreign currency exchange
- Excludes any restructuring or one-time charges related to the Company’s productivity initiative
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the Company’s pending securities and stockholder derivative class action litigation and antitrust litigation
- Free cash flow in the range of $150 million to $200 million
- Capital investment in the range of $400 million to $450 million
Fourth Quarter 2015
- Net sales growth decline of low-teens compared to the fourth quarter of fiscal year 2014
- An effective tax rate of approximately 36% to 36.5%
-
Non-GAAP EPS in a range of $0.70 to $0.75 which:
- Includes an estimated $0.03 headwind from foreign currency exchange
- Excludes any restructuring or one-time charges related to the Company’s productivity initiative
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the Company’s pending securities and stockholder derivative class action litigation and antitrust litigation
Fiscal Year 2016 Outlook
Based upon its preliminary estimates for fiscal 2016, the Company expects its hot business to deliver modest non-GAAP earnings per share growth over fiscal 2015 inclusive of the expected productivity savings. The Company expects that its investment in Keurig KOLD™ in 2016 will be at least $100 million and could be higher depending largely on pod manufacturing efficiencies and channel mix. Our fiscal year 2016 non-GAAP EPS excludes any restructuring or one-time charges related to the productivity program.
With regard to the first quarter of fiscal 2016, the Company expects non-GAAP earnings per share to decline versus the prior year quarter as the Company ships more hot appliances year over year, ships KOLD appliances, ramps production on KOLD pods and faces a significant coffee cost headwind in the first quarter of fiscal 2016.
The Company will update its outlook and provide more details related to fiscal 2016 on its fourth quarter earnings announcement.
Dividend Declaration
Keurig's Board has declared a regular quarterly cash dividend of $0.2875 per share of the Company's common stock. The quarterly cash dividend will be paid on October 29, 2015 to shareholders of record as of the close of business on September 29, 2015.
1 Certain items in this press release are designated as “Non-GAAP” and represent non-GAAP financial measures that exclude certain items. Please see the attached “GAAP to Non-GAAP Reconciliation” to find disclosure and reconciliation of non-GAAP financial measures, as well as a discussion in this release as to why the Company is presenting such non-GAAP measures.
2 Equivalent servings translates our multiple pod sizes, including K-Cup®, Vue® K-Carafe® and Bolt® pods, into a common serving.
Conference Call and Webcast
Keurig will be discussing these
financial results with analysts and investors in a conference call and
live webcast available via the Internet at 5:00 p.m. ET today, August 5,
2015. The call is accessible via live webcast from the events section of
the Investor Relations portion of the Company’s website at http://investor.keuriggreenmountain.com/events.cfm.
The Company archives the latest conference call for a period of time. A
replay of the conference call also will be available by telephone at
(719) 457-0820, passcode 6958877 from 9:00 p.m. ET on August 5, 2015
through 9:00 p.m. ET on Monday, August 10, 2015.
Use of Non-GAAP Financial Measures
In addition to reporting
financial results in accordance with generally accepted accounting
principles (GAAP), the Company provides non-GAAP operating results that
exclude legal and accounting expenses related to the pending securities
and stockholder derivative class action litigation, pending antitrust
litigation against the Company, and the now concluded SEC inquiry; and
non-cash acquisition-related items such as amortization of identifiable
intangibles, each of which include adjustments to show the tax impact of
excluding these items. In each case these amounts are not in accordance
with, or an alternative to, GAAP. The Company’s management believes that
these measures provide investors with transparency by helping illustrate
the underlying financial and business trends relating to the Company’s
results of operations and financial condition and comparability between
current and prior periods. Management uses the measures to establish and
monitor budgets and operational goals and to evaluate the performance of
the Company. Please see the “GAAP to Non-GAAP Reconciliation” table that
accompanies this document for a full reconciliation of the Company’s
GAAP to non-GAAP results.
About Keurig Green Mountain, Inc.
As a leader in
specialty coffee, coffee makers, teas and other beverages, Keurig Green
Mountain (NASDAQ: GMCR), is recognized for its award-winning beverages,
innovative brewing technology, and socially responsible business
practices. The Company has inspired consumer passion for its products by
revolutionizing beverage preparation at home and in the
workplace. Keurig supports local and global communities by investing in
sustainably-grown coffee and by its active involvement in a variety of
social and environmental projects. By helping consumers drink for
themselves, we believe we can brew a better world. For more information
visit: www.KeurigGreenMountain.com.
To purchase Keurig® products visit: www.Keurig.com or www.Keurig.ca.
Keurig routinely posts information that may be of importance to investors in the Investor Relations section of its website, www.KeurigGreenMountain.com, including news releases and its complete financial statements, as filed with the SEC. The Company encourages investors to consult this section of its website regularly for important information and news. Additionally, by subscribing to the Company's automatic email news release delivery, individuals can receive news directly from Keurig as it is released.
Forward-Looking Statements
Certain information in this press
release constitutes "forward-looking statements." Forward-looking
statements can be identified by the fact that they do not relate
strictly to historical or current facts. They often include words such
as "believes," "expects," "anticipates," "estimates," "intends,"
"plans," "seeks" or words of similar meaning, or future or conditional
verbs, such as "will," "should," "could," "may," "aims," "intends," or
"projects." However, the absence of these words or similar expressions
does not mean that a statement is not forward-looking. These statements
may relate to: the expected impact of raw material costs and our pricing
actions on our results of operations and gross margins, expected trends
in net sales and earnings performance and other financial measures,
estimates of future financial results, the expected productivity program
charges and working capital improvements, the success of introducing and
producing new product offerings, the impact of foreign exchange
fluctuations, the adequacy of internally generated funds and existing
sources of liquidity, such as the availability of bank financing, the
expected results of operations of businesses acquired by us, our ability
to issue debt or additional equity securities, projections for future
capital expenditures, our expectations regarding purchasing shares of
our common stock under the existing authorizations, projections of
payment of dividends, the impact of pending and future stockholder
claims and other litigation, and the impact of antitrust litigation
pending against the Company in the United States and Canada. A
forward-looking statement is neither a prediction nor a guarantee of
future events or circumstances, and those future events or circumstances
may not occur. Management believes that these forward-looking statements
are reasonable as and when made. However, caution should be taken not to
place undue reliance on any such forward-looking statements because such
statements speak only as of the date when made. We expressly disclaim
any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. In
addition, forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
our historical experience and our present expectations or projections.
These risks and uncertainties include, but are not limited to, those
described in Part I, "Item 1A. Risk Factors" and Part II "Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations" in our fiscal 2014 Annual Report filed on Form 10-K,
elsewhere in that report and those described from time to time in our
future reports filed with the Securities and Exchange Commission.
KGM-G
|
KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated Balance Sheets (Dollars in thousands, except per share data) |
||||||||||||
|
June 27, |
September 27, |
|||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 80,318 | $ | 761,214 | ||||||||
| Restricted cash and cash equivalents | 243 | 378 | ||||||||||
| Short-term investment | — | 100,000 | ||||||||||
|
Receivables, less uncollectible accounts and return allowances of
$36,186 and $66,120 |
441,273 | 621,451 | ||||||||||
| Inventories | 688,695 | 835,167 | ||||||||||
| Income taxes receivable | 26,344 | — | ||||||||||
| Other current assets | 98,950 | 69,272 | ||||||||||
| Deferred income taxes, net | 62,203 | 58,038 | ||||||||||
| Total current assets | 1,398,026 | 2,445,520 | ||||||||||
| Fixed assets, net | 1,324,408 | 1,171,425 | ||||||||||
| Intangibles, net | 454,786 | 365,444 | ||||||||||
| Goodwill | 773,825 | 755,895 | ||||||||||
| Deferred income taxes, net | 233 | 131 | ||||||||||
| Long-term restricted cash | 24,967 | — | ||||||||||
| Other long-term assets | 18,242 | 58,892 | ||||||||||
| Total assets | $ | 3,994,487 | $ | 4,797,307 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Current portion of long-term debt | $ | 302 | $ | 19,077 | ||||||||
| Current portion of capital lease and financing obligations | 3,184 | 2,226 | ||||||||||
| Accounts payable | 264,860 | 411,107 | ||||||||||
| Accrued expenses | 207,305 | 305,677 | ||||||||||
| Income tax payable | — | 53,586 | ||||||||||
| Dividend payable | 44,281 | 40,580 | ||||||||||
| Deferred income taxes, net | 270 | 340 | ||||||||||
| Other current liabilities | 4,521 | 10,395 | ||||||||||
| Total current liabilities | 524,723 | 842,988 | ||||||||||
| Long-term debt, less current portion | 295,205 | 140,937 | ||||||||||
| Capital lease and financing obligations, less current portion | 114,819 | 116,240 | ||||||||||
| Deferred income taxes, net | 208,140 | 202,936 | ||||||||||
| Other long-term liabilities | 53,277 | 23,085 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Redeemable noncontrolling interests | 4,466 | 12,440 | ||||||||||
| Stockholders’ equity: | ||||||||||||
|
Preferred stock, $0.10 par value: Authorized - 1,000,000 shares;
No shares issued or |
— | — | ||||||||||
|
Common stock, $0.10 par value: Authorized - 500,000,000 shares;
Issued and |
15,402 | 16,232 | ||||||||||
| Additional paid-in capital | 962,349 | 1,808,881 | ||||||||||
| Retained earnings | 1,964,095 | 1,687,619 | ||||||||||
| Accumulated other comprehensive loss | (147,989 | ) | (54,051 | ) | ||||||||
| Total stockholders’ equity | 2,793,857 | 3,458,681 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 3,994,487 | $ | 4,797,307 | ||||||||
|
KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated Statements of Operations (Dollars in thousands except per share data) |
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| Thirteen weeks ended | Thirty-nine weeks ended | |||||||||||||||||||
|
June 27,
2015 |
June 28,
2014 |
June 27,
2015 |
June 28,
2014 |
|||||||||||||||||
| Net sales | $ | 969,525 | $ | 1,022,371 | $ | 3,483,067 | $ | 3,512,113 | ||||||||||||
| Cost of sales | 620,265 | 577,779 | 2,210,877 | 2,146,042 | ||||||||||||||||
| Gross profit | 349,260 | 444,592 | 1,272,190 | 1,366,071 | ||||||||||||||||
| Selling and operating expenses | 115,040 | 127,855 | 427,902 | 421,075 | ||||||||||||||||
| General and administrative expenses | 72,861 | 85,390 | 223,025 | 226,537 | ||||||||||||||||
| Operating income | 161,359 | 231,347 | 621,263 | 718,459 | ||||||||||||||||
| Other income, net | 1,997 | 253 | 2,347 | 1,935 | ||||||||||||||||
| (Loss) gain on financial instruments, net | (1,814 | ) | (2,843 | ) | 5,110 | 4,618 | ||||||||||||||
| Gain (loss) on foreign currency, net | 1,706 | 8,849 | (16,178 | ) | (10,423 | ) | ||||||||||||||
| Interest expense | (386 | ) | (2,441 | ) | (1,754 | ) | (8,056 | ) | ||||||||||||
| Income before income taxes | 162,862 | 235,165 | 610,788 | 706,533 | ||||||||||||||||
| Income tax expense | (49,156 | ) | (79,789 | ) | (206,822 | ) | (250,369 | ) | ||||||||||||
| Net income | $ | 113,706 | $ | 155,376 | $ | 403,966 | $ | 456,164 | ||||||||||||
| Net income attributable to noncontrolling interests | 85 | 225 | 287 | 702 | ||||||||||||||||
| Net income attributable to Keurig | $ | 113,621 | $ | 155,151 | $ | 403,679 | $ | 455,462 | ||||||||||||
| Net income attributable to Keurig per common share: | ||||||||||||||||||||
| Basic | $ | 0.74 | $ | 0.95 | $ | 2.55 | $ | 2.93 | ||||||||||||
| Diluted | $ | 0.73 | $ | 0.94 | $ | 2.52 | $ | 2.88 | ||||||||||||
| Cash dividends declared per common share | $ | 0.2875 | $ | 0.25 | $ | 0.8625 | $ | 0.75 | ||||||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||||||
| Basic | 154,052,575 | 162,695,801 | 158,402,095 | 155,267,136 | ||||||||||||||||
| Diluted | 155,597,520 | 164,693,146 | 160,106,729 | 157,922,095 | ||||||||||||||||
|
KEURIG GREEN MOUNTAIN, INC. Unaudited Consolidated Statements of Cash Flows (Dollars in thousands) |
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| Thirty-nine | Thirty-nine | |||||||||||
| weeks ended | weeks ended | |||||||||||
| June 27, 2015 | June 28, 2014 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 403,966 | $ | 456,164 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization of fixed assets | 154,338 | 159,189 | ||||||||||
| Amortization of intangibles | 35,768 | 32,628 | ||||||||||
| Amortization of deferred financing fees | 4,238 | 4,238 | ||||||||||
| Unrealized (gain) loss on foreign currency, net | 1,184 | 5,869 | ||||||||||
| Loss (gain) on disposal of fixed assets | 489 | (603 | ) | |||||||||
| Provision for doubtful accounts | 4,020 | 2,294 | ||||||||||
| Provision for sales returns | 86,999 | 65,853 | ||||||||||
| Gain on derivatives, net | (12,968 | ) | (2,082 | ) | ||||||||
| Excess tax benefits from equity-based compensation plans | (21,082 | ) | (52,659 | ) | ||||||||
| Deferred income taxes | 5,936 | (1,206 | ) | |||||||||
| Deferred compensation and stock compensation | 31,292 | 23,488 | ||||||||||
| Other | 2,199 | 1,020 | ||||||||||
| Changes in assets and liabilities, net of acquisition: | ||||||||||||
| Receivables | 84,360 | 14,579 | ||||||||||
| Inventories | 137,718 | 34,433 | ||||||||||
| Income tax receivable/payable, net | (59,324 | ) | 62,656 | |||||||||
| Other current assets | (30,166 | ) | 2,622 | |||||||||
| Other long-term assets, net | 917 | 2,851 | ||||||||||
| Accounts payable and accrued expenses | (222,979 | ) | 28,117 | |||||||||
| Other current liabilities | (1,084 | ) | (10,419 | ) | ||||||||
| Other long-term liabilities | 4,281 | (5,264 | ) | |||||||||
| Net cash provided by operating activities | 610,102 | 823,768 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Change in restricted cash | 135 | 90 | ||||||||||
| Maturity of short-term investment | 100,000 | — | ||||||||||
| Acquisition, net of cash acquired | (180,698 | ) | — | |||||||||
| Capital expenditures for fixed assets | (338,124 | ) | (221,887 | ) | ||||||||
| Purchase of long-term investment | — | (10,000 | ) | |||||||||
| Other investing activities | (1,353 | ) | 1,235 | |||||||||
| Net cash used in investing activities | (420,040 | ) | (230,562 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Net change in revolving line of credit | 150,000 | — | ||||||||||
| Proceeds from sale of common stock | — | 1,348,414 | ||||||||||
| Proceeds from issuance of common stock under compensation plans | 18,618 | 33,143 | ||||||||||
| Repurchase of common stock | (918,356 | ) | (997,386 | ) | ||||||||
| Excess tax benefits from equity-based compensation plans | 21,082 | 52,659 | ||||||||||
| Payments on capital lease and financing obligations | (2,193 | ) | (1,444 | ) | ||||||||
| Repayment of long-term debt | (14,355 | ) | (9,798 | ) | ||||||||
| Dividends paid | (131,425 | ) | (77,705 | ) | ||||||||
| Other financing activities | (340 | ) | (436 | ) | ||||||||
| Net cash (used in) provided by financing activities | (876,969 | ) | 347,447 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 6,011 | 2,966 | ||||||||||
| Net (decrease) increase in cash and cash equivalents | (680,896 | ) | 943,619 | |||||||||
| Cash and cash equivalents at beginning of period | 761,214 | 260,092 | ||||||||||
| Cash and cash equivalents at end of period | $ | 80,318 | $ | 1,203,711 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
|
Fixed asset purchases included in accounts payable and not
disbursed |
$ | 42,792 | $ | 59,646 | ||||||||
| Dividends declared not paid at the end of each period | $ | 44,281 | $ | 40,653 | ||||||||
| Noncash investing and financing activities: | ||||||||||||
| Fixed assets acquired under capital lease and financing obligations | $ | 375 | $ | 33,821 | ||||||||
|
KEURIG GREEN MOUNTAIN, INC. |
|||||||||||
| Thirteen weeks ended | |||||||||||
| June 27, 2015 | June 28, 2014 | ||||||||||
| Selling and operating expenses | $ | 115,040 | $ | 127,855 | |||||||
| General and administrative expenses | 72,861 | 85,390 | |||||||||
| Total SG&A | $ | 187,901 | $ | 213,245 | |||||||
| Expenses related to SEC inquiry (1) | — | (1,181) | |||||||||
| Amortization of identifiable intangibles (2) | (12,600) | (10,686) | |||||||||
| Expenses related to antitrust litigation (3) | (2,310) | — | |||||||||
| Non-GAAP SG&A | $ | 172,991 | $ | 201,378 | |||||||
| Thirteen weeks ended | |||||||||||
| June 27, 2015 | June 28, 2014 | ||||||||||
| Operating income | $ | 161,359 | $ | 231,347 | |||||||
| Expenses related to SEC inquiry (1) | — | 1,181 | |||||||||
| Amortization of identifiable intangibles (2) | 12,600 | 10,686 | |||||||||
| Expenses related to antitrust litigation (3) | 2,310 | — | |||||||||
| Non-GAAP operating income | $ | 176,269 | $ | 243,214 | |||||||
| Thirteen weeks ended | |||||||||||
| June 27, 2015 | June 28, 2014 | ||||||||||
| Net income attributable to Keurig | $ | 113,621 | $ | 155,151 | |||||||
| After tax: | |||||||||||
| Expenses related to SEC inquiry (1) | — | 762 | |||||||||
| Amortization of identifiable intangibles (2) | 9,435 | 7,270 | |||||||||
| Expenses related to antitrust litigation (3) | 1,612 | — | |||||||||
| Non-GAAP net income attributable to Keurig | $ | 124,668 | $ | 163,183 | |||||||
| Thirteen weeks ended | |||||||||||
| June 27, 2015 | June 28, 2014 | ||||||||||
| Diluted income per share (EPS) | $ | 0.73 | $ | 0.94 | |||||||
| After tax: | |||||||||||
| Expenses related to SEC inquiry (1) | — | — | |||||||||
| Amortization of identifiable intangibles (2) | 0.06 | 0.04 | |||||||||
| Expenses related to antitrust litigation (3) | 0.01 | — | |||||||||
| Non-GAAP EPS | $ | 0.80 | $ | 0.99 | * | ||||||
* Does not sum due to rounding
(1) Represents legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation classified as general and administrative expense.
(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.
(3) Represents legal expenses related to antitrust litigation classified as general and administrative expense.
| Thirty-nine weeks ended | ||||||||||||
| June 27, 2015 | June 28, 2014 | |||||||||||
| Selling and operating expenses | $ | 427,902 | $ | 421,075 | ||||||||
| General and administrative expenses | 223,025 | 226,537 | ||||||||||
| Total SG&A | $ | 650,927 | $ | 647,612 | ||||||||
| Expenses related to SEC inquiry (1) | (1,442 | ) | (2,099 | ) | ||||||||
| Amortization of identifiable intangibles (2) | (35,768 | ) | (32,627 | ) | ||||||||
| Expenses related to antitrust litigation (3) | (5,542 | ) | — | |||||||||
| Non-GAAP SG&A | $ | 608,175 | $ | 612,886 | ||||||||
| Thirty-nine weeks ended | ||||||||||||
| June 27, 2015 | June 28, 2014 | |||||||||||
| Operating income | $ | 621,263 | $ | 718,459 | ||||||||
| Expenses related to SEC inquiry (1) | 1,442 | 2,099 | ||||||||||
| Amortization of identifiable intangibles (2) | 35,768 | 32,627 | ||||||||||
| Expenses related to antitrust litigation (3) | 5,542 | — | ||||||||||
| Non-GAAP operating income | $ | 664,015 | $ | 753,185 | ||||||||
| Thirty-nine weeks ended | ||||||||||||
| June 27, 2015 | June 28, 2014 | |||||||||||
| Net income attributable to Keurig | $ | 403,679 | $ | 455,462 | ||||||||
| After tax: | ||||||||||||
| Expenses related to SEC inquiry (1) | 927 | 1,347 | ||||||||||
| Amortization of identifiable intangibles (2) | 26,227 | 22,246 | ||||||||||
| Expenses related to antitrust litigation (3) | 3,699 | — | ||||||||||
| Non-GAAP net income attributable to Keurig | $ | 434,532 | $ | 479,055 | ||||||||
| Thirty-nine weeks ended | ||||||||||||
| June 27, 2015 | June 28, 2014 | |||||||||||
| Diluted income per share (EPS) | $ | 2.52 | $ | 2.88 | ||||||||
| After tax: | ||||||||||||
| Expenses related to SEC inquiry (1) | 0.01 | 0.01 | ||||||||||
| Amortization of identifiable intangibles (2) | 0.16 | 0.14 | ||||||||||
| Expenses related to antitrust litigation (3) | 0.02 | — | ||||||||||
| Non-GAAP EPS | $ | 2.71 | $ | 3.03 | ||||||||
(1) Represents legal and accounting expenses related to the SEC inquiry and pending securities and stockholder derivative class action litigation classified as general and administrative expense.
(2) Represents the amortization of intangibles related to the Company’s acquisitions classified as general and administrative expense.
(3) Represents legal expenses related to antitrust litigation classified as general and administrative expense.
