Exhibit 99.1
Keurig Green Mountain Reports Third Quarter Fiscal Year 2014 Results; Reaffirms 2014 Net Sales and Raises Earnings Per Share Outlook
- Net sales of $1.02 billion, up 6% from year ago
- GAAP operating income of $231 million, up 20% from year ago; Non-GAAP operating income of $243 million, up 18% from year ago
- GAAP diluted EPS of $0.94, up 24% from prior year period; Non-GAAP diluted EPS of $0.99, up 21% from prior year period
- Free cash flow of $127 million in the quarter and $602 million year to date with 132% free cash flow productivity as a percent of GAAP net income
- Declares quarterly cash dividend of $0.25
WATERBURY, Vt.--(BUSINESS WIRE)--August 6, 2014--Keurig Green Mountain, Inc., (Keurig) (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 28, 2014.
Performance Highlights
“We are very pleased with our outstanding non-GAAP net income growth of 31%, which exceeded our long-term growth target. Our free cash flow performance also was strong at $127 million,” said Brian Kelley, Keurig’s President and CEO. “We delivered net sales of approximately $1 billion for the quarter, driven by 9 percent currency-neutral growth of our core single serve business.”
“Our solid year-over-year brewer shipment growth of 13% and our 15% unit growth in portion packs is indicative of the continued expansion of the Keurig system across the U.S. and Canada,” stated Kelley. “We also are excited about the imminent launch of our new Keurig 2.0 hot platform; the addition of formerly unlicensed and new brands to the Keurig hot beverage system during the quarter; and, our progress on the new Keurig Cold beverage system.”
Third Quarter Fiscal 2014 Financial Review
Net sales for the third quarter of fiscal 2014 increased by $55.3 million, or 6%, to $1,022.4 million as compared to the prior year period. The 6% increase includes the unfavorable impact of foreign currency exchange rates which reduced net sales by approximately 1%.
| | | | | | | | |
| ($ in millions except earnings per share) | | Thirteen weeks ended | | | | Thirty-nine weeks ended | | |
| | June 28, 2014 | | June 29, 2013 | | %
Increase | | June 28, 2014 | | June 29, 2013 | | %
Increase |
| Net sales | | $ | 1,022.4 | | $ | 967.1 | | 6 % | | $ | 3,512.1 | | $ | 3,310.9 | | 6 % |
| Operating income: | | | | | | | | | | | | |
| GAAP | | $ | 231.3 | | $ | 193.3 | | 20 % | | $ | 718.5 | | $ | 587.9 | | 22 % |
| Non-GAAP | | $ | 243.2 | | $ | 205.7 | | 18 % | | $ | 753.2 | | $ | 624.9 | | 21 % |
| Net income attributable to Keurig: | | | | | | | | | | | | |
| GAAP | | $ | 155.2 | | $ | 116.3 | | 33 % | | $ | 455.5 | | $ | 356.3 | | 28 % |
| Non-GAAP | | $ | 163.2 | | $ | 124.7 | | 31 % | | $ | 479.1 | | $ | 381.6 | | 26 % |
| Diluted income per share: | | | | | | | | | | | | |
| GAAP | | $ | 0.94 | | $ | 0.76 | | 24 % | | $ | 2.88 | | $ | 2.33 | | 24 % |
| Non-GAAP | | $ | 0.99 | | $ | 0.82 | | 21 % | | $ | 3.03 | | $ | 2.50 | | 21 % |
| Cash dividends declared per common share | | $ | 0.25 | | $ | — | | N/A | | $ | 0.75 | | $ | — | | N/A |
| | | | | | | | | | | | |
| Note: Complete GAAP to Non-GAAP reconciliation tables provided with this release. |
| |
Net Sales by Product
The primary driver of the 6% increase in net sales for the third quarter of fiscal 2014 as compared to the prior year period was a $74.6 million, or 10%, increase in total portion pack net sales. This was partially offset by a $5.1 million, or 4%, decrease in Keurig® brewer and accessory net sales and a $14.2 million, or 17%, decrease in other product net sales.
| | | | | | | | |
| | Net sales (in millions) | | | | |
| | Thirteen weeks ended | | | | |
| | June 28, 2014 | | June 29, 2013 | | $ Increase
(Decrease) | | % Increase
(Decrease) |
| Portion Packs | | $ | 826.3 | | $ | 751.7 | | $ | 74.6 | | | 10 | % |
| Brewers and accessories | | | 128.0 | | | 133.1 | | | (5.1 | ) | | (4 | )% |
| Subtotal | | | 954.3 | | | 884.8 | | | 69.5 | | | 8 | % |
| Other products | | | 68.1 | | | 82.3 | | | (14.2 | ) | | (17 | )% |
| Total net sales | | $ | 1,022.4 | | $ | 967.1 | | $ | 55.3 | | | 6 | % |
| | | | | | | | | | | | | |
Portion Packs
- The 10% increase in portion pack-related net sales in the quarter over the prior year period was driven by an increase of approximately 15 percentage points due to sales volume partially offset by an approximately 3 percentage point decrease due to portion pack product mix and a roughly 2 percentage point decrease due to net price realization and the impact of foreign currency exchange.
Brewers and Accessories
- For the quarter, 1.7 million Keurig® system brewers were sold including 1.6 million sold by Keurig with 0.1 million reported sold by Keurig’s licensed brewer partners. This brewer shipment number does not account for consumer returns.
- The 4% decline in brewer and accessory net sales was driven by a 13 percentage point increase in brewer sales volume and a 3 percentage point increase due to brewer product mix. This was offset by a 21 percentage point decrease due to brewer net price realization with approximately half resulting from a strategic decision to drive brewer volume to be in an appropriate inventory position ahead of our Keurig® 2.0 launch and to further expand the installed base of our Keurig® hot platform. The other, approximately half, was due to a difficult year-over-year comparison from a reduction to our sales return reserve in the third quarter of fiscal year 2013 which reflected lower brewer sales returns.
- Additionally, accessory net sales increased by $2.3 million, or 26 percentage points, over the prior year period.
Other Products
- Sales of other products declined $14.2 million, or 17%, in the quarter over the prior year period primarily due to the continuing demand shift from traditional coffee package formats to portion packs.
- In the third quarter of fiscal year 2014, gross profit increased 9% and gross margin improved 140 basis points to 43.5% from 42.1% in the prior year period. The following table quantifies the changes in gross margin period to period:
| | |
| | Change from
Q3 2013 to
Q3 2014 |
| Favorable green coffee costs | | +330 bps |
| Logistics productivity | | +170 bps |
| Net price realization primarily associated with brewers | | -140 bps |
| Increased portion pack packaging material costs | | -130 bps |
| Change in estimate for charges related to a non-coffee purchase commitment in the prior year period | | -80 bps |
| Net price realization primarily associated with portion packs | | -70 bps |
| Other items | | +60 bps |
| | +140 bps |
| | |
- GAAP operating income grew by 20%, representing 22.6% of net sales in the third quarter of fiscal year 2014, up from 20.0% in the prior year period.
- Non-GAAP operating income grew by 18%, representing 23.8% of net sales in the third quarter of fiscal year 2014, up from 21.3% in the prior year period.
- The Company’s effective income tax rate was 33.9% for the third quarter of fiscal year 2014 as compared to 36.6% for the prior year period.
- Diluted weighted average shares outstanding for the third quarter of fiscal year 2014 were 164.7 million, up from 152.9 million in the prior year period as a result of 16.7 million shares issued as part of The Coca-Cola Company transaction which closed February 27, 2014 and the 1.4 million shares issued as part of the Luigi Lavazza S.p.A. transaction which closed April 7, 2014. The transaction-related dilution was offset, in part, by the Company’s share repurchases under its previously announced share repurchase authorizations including a $700 million accelerated share repurchase (ASR) agreement.
- GAAP diluted EPS increased 24% from the prior year period to $0.94; non-GAAP diluted EPS grew 21% from the prior year period to $0.99.
Balance Sheet & Cash Flow Highlights
“We have generated strong free cash flow of $602 million year to date,” said Frances G. Rathke, Keurig’s Chief Financial Officer. “We’re very pleased to be in a position to return significant cash to shareholders through both dividends and meaningful share repurchases while at the same time investing in our robust innovation pipeline.”
“To date this fiscal year, including the $700 million accelerated stock repurchase we announced last quarter, we’ve returned $1.1 billion in cash to shareholders through a combination of our share repurchases and dividends. At the same time, we have maintained an extremely strong balance sheet,” continued Rathke.
| | | | | | |
| Balance Sheet & Cash Flow Highlights | | | | | | |
| ($ in millions) | | June 28, 2014 | | June 29, 2013 | | % Change |
| Cash and cash equivalents, including restricted cash | | $ | 1,204.2 | | $ | 352.9 | | 241 | % |
| Accounts receivables, net | | $ | 382.4 | | $ | 333.6 | | 15 | % |
| Inventories | | $ | 639.0 | | $ | 586.3 | | 9 | % |
| Raw materials & supplies | | $ | 179.9 | | $ | 177.9 | | 1 | % |
| Coffee | | $ | 85.8 | | $ | 101.7 | | (16 | )% |
| Packaging & other raw materials | | $ | 94.1 | | $ | 76.2 | | 23 | % |
| Finished goods | | $ | 459.2 | | $ | 408.4 | | 12 | % |
| Brewers & accessories | | $ | 263.2 | | $ | 251.1 | | 5 | % |
| Portion Packs | | $ | 168.5 | | $ | 128.5 | | 31 | % |
| Other | | $ | 27.4 | | $ | 28.8 | | (5 | )% |
| Debt outstanding and capital lease and financing obligations | | $ | 273.9 | | $ | 317.3 | | (14 | )% |
| Thirty-nine weeks net cash provided by operating activities | | $ | 823.8 | | $ | 772.2 | | 7 | % |
| Thirty-nine weeks free cash flow (1) | | $ | 601.9 | | $ | 581.8 | | 3 | % |
(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 Repurchases
During the third quarter, the Company repurchased a total of 1.1 million shares from the open market at a cost of $117 million. From the inception of its Board authorized share repurchases through the end of the Company’s third fiscal quarter of 2014, the Company has repurchased a total of 16.5 million shares at a total cost of $1,052 million and an average price of $63.91. This was achieved through a combination of the ASR, open market purchases and 10(b)5-1 plans, including $490 million of ASR repurchases subject to final price adjustment. From the end of the third quarter through August 5, 2014 the Company has repurchased an additional approximately 210,000 shares at a total cost of $25 million through its 10(b)5-1 plan.
Dividend Declaration
Keurig’s Board of Directors has declared a regular quarterly cash dividend of $0.25 per share of the Company’s common stock. The quarterly cash dividend will be paid on October 31, 2014 to shareholders of record as of the close of business on October 3, 2014.
Business Outlook and Other Forward-Looking Information
The Company updated its outlook for fiscal year 2014:
- Reiterating net sales growth in the high single digits compared to fiscal year 2013
- An annual effective tax rate of approximately 35.6%
- Raising non-GAAP earnings per diluted share to a range of $3.71 to $3.78 from $3.63 to $3.73. This outlook:
- Includes the approximately $0.16 dilutive impact of the recent Coca-Cola and Lavazza equity transactions and includes share repurchases through August 5, 2014
- Includes an estimated $0.05 headwind from foreign currency exchange
- Excludes any additional actions the Company may take to offset dilution during the remainder of fiscal year 2014
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the SEC inquiry and the Company’s pending securities and stockholder derivative class action litigation
- On a currency-neutral basis and excluding the dilutive impact from recent equity transactions with Coca-Cola and Lavazza and absent any actions the Company may take to offset dilution, underlying earnings per share growth is projected to increase 16% to 18% over the prior year period.
- Free cash flow in the range of $300 million to $350 million, up from prior estimates of $250 million to $350 million.
- Capital investment in the range of $350 million to $400 million.
The Company also provided its outlook for its fourth quarter of fiscal year 2014 as follows:
- Net sales growth in the high single to low double digits over the fourth quarter of fiscal year 2013
- An effective tax rate of approximately 36.5% compared to last year’s fourth quarter tax rate of 27.8%
- Non-GAAP earnings per diluted share in a range of $0.68 to $0.75 which:
- Includes the approximately $0.06 dilutive impact of the recent Coca-Cola and Lavazza equity transactions and includes share repurchases through August 5, 2014
- Reflects an approximate $0.10 adverse effect from a significantly higher tax rate year over year
- Includes an estimated $0.01 headwind from foreign currency exchange
- Excludes any additional actions the Company may take to offset dilution during the quarter
- Excludes the amortization of identifiable intangibles related to the Company’s acquisitions and legal and accounting expenses related to the SEC inquiry and the Company’s pending securities and stockholder derivative class action litigation
- On a currency-neutral basis and excluding the dilutive impact of the recent equity transactions with Coca-Cola and Lavazza, and absent any actions the Company may take to offset dilution, underlying earnings per share growth is projected to decrease by 9% to 16% over the prior year period.
Conference Call and Webcast
Keurig Green Mountain 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 6, 2014. 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 6199523 from 9:00 p.m. ET on August 6, 2014 through 9:00 p.m. ET on Monday, August 11, 2014.
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 SEC inquiry and pending securities and stockholder derivative class action litigation; 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. 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 (Keurig) (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, the expected productivity 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, our expectations regarding purchasing shares of our common stock under the existing authorizations, projections of payment of dividends, the impact of the inquiry initiated by the SEC and any related litigation or additional governmental inquiry or enforcement proceedings, and the impact of any pending or future antitrust litigation. 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 Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A. Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission for the thirteen weeks ended June 28, 2014, and Part II "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our fiscal 2013 Annual Report filed on Form 10-K, as amended, and elsewhere in those reports and those described from time to time in our future reports filed with the Securities and Exchange Commission.
KGM-G, KGM-US, KGM-CA
| |
KEURIG GREEN MOUNTAIN, INC. |
| Unaudited Consolidated Balance Sheets |
| (Dollars in thousands, except per share data) |
| | June 28,
2014 | | September 28,
2013 |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 1,203,711 | | | $ | 260,092 | |
| Restricted cash and cash equivalents | | | 470 | | | | 560 | |
| Receivables, less uncollectible accounts and return allowances of $34,492 and $33,640 at June 28, 2014 and September 28, 2013, respectively | | | 382,382 | | | | 467,976 | |
| Inventories | | | 639,019 | | | | 676,089 | |
| Income taxes receivable | | | 1,725 | | | | 11,747 | |
| Other current assets | | | 63,680 | | | | 46,891 | |
| Deferred income taxes, net | | | 49,263 | | | | 58,137 | |
| Total current assets | | | 2,340,250 | | | | 1,521,492 | |
| | | | |
| Fixed assets, net | | | 1,105,648 | | | | 985,563 | |
| Intangibles, net | | | 389,419 | | | | 435,216 | |
| Goodwill | | | 773,706 | | | | 788,184 | |
| Deferred income taxes, net | | | 147 | | | | 149 | |
| Other long-term assets | | | 34,494 | | | | 30,944 | |
| | | | |
| Total assets | | $ | 4,643,664 | | | $ | 3,761,548 | |
| | | | |
| Liabilities and Stockholders’ Equity | | | | |
| Current liabilities: | | | | |
| Current portion of long-term debt | | $ | 17,675 | | | $ | 12,929 | |
| Current portion of capital lease and financing obligations | | | 2,021 | | | | 1,760 | |
| Accounts payable | | | 370,052 | | | | 312,170 | |
| Dividends payable | | | 40,653 | | | | — | |
| Accrued expenses | | | 239,845 | | | | 242,427 | |
| Deferred income taxes, net | | | 113 | | | | 233 | |
| Other current liabilities | | | 12,917 | | | | 27,544 | |
| Total current liabilities | | | 683,276 | | | | 597,063 | |
| | | | |
| Long-term debt, less current portion | | | 145,986 | | | | 160,221 | |
| Capital lease and financing obligations, less current portion | | | 108,177 | | | | 76,061 | |
| Deferred income taxes, net | | | 248,038 | | | | 252,867 | |
| Other long-term liabilities | | | 23,402 | | | | 28,721 | |
| | | | |
| Commitments and contingencies | | | | |
| | | | |
| Redeemable noncontrolling interests | | | 12,420 | | | | 11,045 | |
| | | | |
| Stockholders’ equity: | | | | |
| Preferred stock, $0.10 par value: Authorized - 1,000,000 shares; No shares issued or outstanding | | | — | | | | — | |
| Common stock, $0.10 par value: Authorized - 500,000,000 shares; Issued and outstanding - 162,612,596 and 150,265,809 shares at June 28, 2014 and September 28, 2013, respectively | | | 16,261 | | | | 15,026 | |
| Additional paid-in capital | | | 1,846,409 | | | | 1,387,322 | |
| Retained earnings | | | 1,587,707 | | | | 1,252,407 | |
| Accumulated other comprehensive loss | | | (28,012 | ) | | | (19,185 | ) |
| Total stockholders’ equity | | | 3,422,365 | | | | 2,635,570 | |
| | | | |
| Total liabilities and stockholders’ equity | | $ | 4,643,664 | | | $ | 3,761,548 | |
| | | | | | | | |
| |
| KEURIG GREEN MOUNTAIN, INC. |
| Unaudited Consolidated Statements of Operations |
| (Dollars in thousands except per share data) |
| | | | | | | | |
| | Thirteen weeks ended | | Thirty-nine weeks ended |
| | June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 |
| Net sales | | $ | 1,022,371 | | | $ | 967,072 | | | $ | 3,512,113 | | | $ | 3,310,923 | |
| Cost of sales | | | 577,779 | | | | 559,454 | | | | 2,146,042 | | | | 2,068,996 | |
| Gross profit | | | 444,592 | | | | 407,618 | | | | 1,366,071 | | | | 1,241,927 | |
| | | | | | | | |
| | | | | | | | |
| Selling and operating expenses | | | 127,855 | | | | 136,742 | | | | 421,075 | | | | 433,368 | |
| General and administrative expenses | | | 85,390 | | | | 77,532 | | | | 226,537 | | | | 220,670 | |
| Operating income | | | 231,347 | | | | 193,344 | | | | 718,459 | | | | 587,889 | |
| | | | | | | | |
| Other income, net | | | 253 | | | | 237 | | | | 1,935 | | | | 652 | |
| (Loss) gain on financial instruments, net | | | (2,843 | ) | | | 4,419 | | | | 4,618 | | | | 8,994 | |
| Gain (loss) on foreign currency, net | | | 8,849 | | | | (10,391 | ) | | | (10,423 | ) | | | (19,185 | ) |
| Interest expense | | | (2,441 | ) | | | (3,937 | ) | | | (8,056 | ) | | | (13,481 | ) |
| Income before income taxes | | | 235,165 | | | | 183,672 | | | | 706,533 | | | | 564,869 | |
| | | | | | | | |
| Income tax expense | | | (79,789 | ) | | | (67,226 | ) | | | (250,369 | ) | | | (207,907 | ) |
| Net income | | | 155,376 | | | | 116,446 | | | $ | 456,164 | | | $ | 356,962 | |
| | | | | | | | |
| Net income attributable to noncontrolling interests | | | 225 | | | | 174 | | | | 702 | | | | 686 | |
| | | | | | | | |
| Net income attributable to Keurig | | $ | 155,151 | | | $ | 116,272 | | | $ | 455,462 | | | $ | 356,276 | |
| | | | | | | | |
| Net income attributable to Keurig per common share: | | | | | | | | |
| Basic | | $ | 0.95 | | | $ | 0.78 | | | $ | 2.93 | | | $ | 2.39 | |
| Diluted | | $ | 0.94 | | | $ | 0.76 | | | $ | 2.88 | | | $ | 2.33 | |
| | | | | | | | |
| Cash dividends declared per common share | | $ | 0.25 | | | $ | — | | | $ | 0.75 | | | $ | — | |
| | | | | | | | |
| Weighted-average common shares outstanding: | | | | | | | | |
| Basic | | | 162,695,801 | | | | 149,825,581 | | | | 155,267,136 | | | | 149,307,144 | |
| Diluted | | | 164,693,146 | | | | 152,869,392 | | | | 157,922,095 | | | | 152,647,767 | |
| | | | | | | | | | | | | | | | |
| KEURIG GREEN MOUNTAIN, INC. |
| Unaudited Consolidated Statements of Cash Flows |
| (Dollars in thousands) |
| | Thirty-nine | | Thirty-nine |
| | weeks ended | | weeks ended |
| | June 28, 2014 | | June 29, 2013 |
| Cash flows from operating activities: | | | | |
| Net income | | $ | 456,164 | | | $ | 356,962 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Depreciation and amortization of fixed assets | | | 159,189 | | | | 137,734 | |
| Amortization of intangibles | | | 32,628 | | | | 34,234 | |
| Amortization of deferred financing fees | | | 4,238 | | | | 4,538 | |
| Unrealized loss on foreign currency, net | | | 5,869 | | | | 15,555 | |
| (Gain) loss on disposal of fixed assets | | | (603 | ) | | | 222 | |
| Provision for doubtful accounts | | | 2,294 | | | | 68 | |
| Provision for sales returns | | | 65,853 | | | | 59,209 | |
| Gain on derivatives, net | | | (2,082 | ) | | | (7,872 | ) |
| Excess tax benefits from equity-based compensation plans | | | (52,659 | ) | | | (47,845 | ) |
| Deferred income taxes | | | (1,206 | ) | | | 8,794 | |
| Deferred compensation and stock compensation | | | 23,488 | | | | 21,393 | |
| Other | | | 1,020 | | | | 881 | |
| Changes in assets and liabilities: | | | | |
| Receivables | | | 14,579 | | | | (32,732 | ) |
| Inventories | | | 34,433 | | | | 175,532 | |
| Income tax receivable/payable, net | | | 62,656 | | | | 48,905 | |
| Other current assets | | | 2,622 | | | | (34,634 | ) |
| Other long-term assets, net | | | 2,851 | | | | 3,311 | |
| Accounts payable and accrued expenses | | | 28,117 | | | | 39,082 | |
| Other current liabilities | | | (10,419 | ) | | | (2,469 | ) |
| Other long-term liabilities | | | (5,264 | ) | | | (8,633 | ) |
| Net cash provided by operating activities | | | 823,768 | | | | 772,235 | |
| | | | |
| Cash flows from investing activities: | | | | |
| Change in restricted cash | | | 90 | | | | 2,852 | |
| Capital expenditures for fixed assets | | | (221,887 | ) | | | (190,388 | ) |
| Purchase of long-term investment | | | (10,000 | ) | | | — | |
| Other investing activities | | | 1,235 | | | | 501 | |
| Net cash used in investing activities | | | (230,562 | ) | | | (187,035 | ) |
| | | | |
| Cash flows from financing activities: | | | | |
| Net change in revolving line of credit | | | — | | | | (226,210 | ) |
| Proceeds from sale of common stock | | | 1,348,414 | | | | — | |
| Proceeds from issuance of common stock under compensation plans | | | 33,143 | | | | 21,764 | |
| Repurchase of common stock | | | (997,386 | ) | | | (125,681 | ) |
| Excess tax benefits from equity-based compensation plans | | | 52,659 | | | | 47,845 | |
| Payments on capital lease and financing obligations | | | (1,444 | ) | | | (2,596 | ) |
| Repayment of long-term debt | | | (9,798 | ) | | | (6,640 | ) |
| Dividends paid | | | (77,705 | ) | | | — | |
| Other financing activities | | | (436 | ) | | | (1,006 | ) |
| Net cash provided by (used in) financing activities | | | 347,447 | | | | (292,524 | ) |
| | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 2,966 | | | | 1,240 | |
| | | | |
| Net increase in cash and cash equivalents | | | 943,619 | | | | 293,916 | |
| Cash and cash equivalents at beginning of period | | | 260,092 | | | | 58,289 | |
| Cash and cash equivalents at end of period | | $ | 1,203,711 | | | $ | 352,205 | |
| | | | |
| Supplemental disclosures of cash flow information: | | | | |
| Fixed asset purchases included in accounts payable and not disbursed at the end of each period | | $ | 59,646 | | | $ | 17,998 | |
| Dividends declared not paid at the end of each period | | $ | 40,653 | | | $ | — | |
| Noncash investing and financing activities: | | | | |
| Fixed assets acquired under capital lease and financing obligations | | $ | 33,821 | | | $ | 23,461 | |
| Settlement of acquisition related liabilities through release of restricted cash | | $ | — | | | $ | 9,227 | |
| | | | |
| |
| KEURIG GREEN MOUNTAIN, INC. |
| GAAP to Non-GAAP Reconciliation |
| (Dollars in thousands, except per share data) |
| | | | | | |
| | Thirteen weeks ended | |
| | June 28, 2014 | | | June 29, 2013 | |
| Operating income | | $ | 231,347 | | | $ | 193,344 | |
| Expenses related to SEC inquiry (1) | | | 1,181 | | | | 1,036 | |
| Amortization of identifiable intangibles (2) | | | 10,686 | | | | 11,295 | |
| Non-GAAP operating income | | $ | 243,214 | | | $ | 205,675 | |
| | | | | | |
| | Thirteen weeks ended | |
| | June 28, 2014 | | | June 29, 2013 | |
| Net income attributable to Keurig | | $ | 155,151 | | | $ | 116,272 | |
| After tax: | | | | | | |
| Expenses related to SEC inquiry (1) | | | 762 | | | | 657 | |
| Amortization of identifiable intangibles (2) | | | 7,270 | | | | 7,746 | |
| Non-GAAP net income attributable to Keurig | | $ | 163,183 | | | $ | 124,675 | |
| | | | | | |
| | Thirteen weeks ended | |
| | June 28, 2014 | | | June 29, 2013 | |
| Diluted income per share | | $ | 0.94 | | | $ | 0.76 | |
| After tax: | | | | | | |
| Expenses related to SEC inquiry (1) | | | — | | | | — | |
| Amortization of identifiable intangibles (2) | | | 0.04 | | | | 0.05 | |
| Non-GAAP net income per share | | $ | 0.99 | * | | $ | 0.82 | * |
| | | | | | | |
| * 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.
| |
| KEURIG GREEN MOUNTAIN, INC. |
| GAAP to Non-GAAP Reconciliation |
| (Dollars in thousands, except per share data) |
| | | | | |
| | Thirty-nine weeks ended | |
| | June 28, 2014 | | June 29, 2013 | |
| Operating income | | $ | 718,459 | | $ | 587,889 | |
| Expenses related to SEC inquiry (1) | | | 2,099 | | | 2,799 | |
| Amortization of identifiable intangibles (2) | | | 32,627 | | | 34,234 | |
| Non-GAAP operating income | | $ | 753,185 | | $ | 624,922 | |
| | | | | |
| | Thirty-nine weeks ended | |
| | June 28, 2014 | | June 29, 2013 | |
| Net income attributable to Keurig | | $ | 455,462 | | $ | 356,276 | |
| After tax: | | | | | |
| Expenses related to SEC inquiry (1) | | | 1,347 | | | 1,773 | |
| Amortization of identifiable intangibles (2) | | | 22,246 | | | 23,523 | |
| Non-GAAP net income attributable to Keurig | | $ | 479,055 | | $ | 381,572 | |
| | | | | |
| | Thirty-nine weeks ended | |
| | June 28, 2014 | | June 29, 2013 | |
| Diluted income per share | | $ | 2.88 | | $ | 2.33 | |
| After tax: | | | | | |
| Expenses related to SEC inquiry (1) | | | 0.01 | | | 0.01 | |
| Amortization of identifiable intangibles (2) | | | 0.14 | | | 0.15 | |
| Non-GAAP net income per share | | $ | 3.03 | | $ | 2.50 | * |
| | | | | | |
| * 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.
CONTACT:
Keurig Green Mountain, Inc.
Suzanne DuLong, 781-418-8075
Investor.Services@keurig.com
or
Katie Gilroy, 781-205-7345
Investor.Services@keurig.com
