The Kraft Heinz Company Reports Fourth Quarter and Full Year 2015 Results
Kraft Heinz Reports Solid Financial Performance with Integration on Track
-
Q4 GAAP net sales increased 155% due to the merger of Kraft and
Heinz; Pro Forma Organic
Net Sales (1) decreased 3.1% - Q4 GAAP operating income increased 266%; Adjusted Pro Forma EBITDA(1) grew 20.3% on a constant currency basis, including an approximate 4.5 percentage point benefit from a 53rd week of shipments
-
Q4 GAAP diluted EPS was
$0.23 ; Adjusted Pro Forma EPS(1) was$0.62 , including an approximate$0.03 benefit from a 53rd week of shipments
"The important integration work and financial results we delivered in
2015 set a solid base on which we can drive sustainable growth across
our global business," said
Q4 2015 Financial Summary
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||
|
|
Actual | FX | Divestitures |
53rd |
Organic | ||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||
GAAP net sales | $ | 7,124 | $ | 2,799 | 154.5 | % | ||||||||||||||
GAAP operating income | 1,287 | 352 | 265.6 | % | ||||||||||||||||
GAAP diluted EPS | $ | 0.23 | $ | (0.04 | ) | nm | ||||||||||||||
Pro forma net sales | $ | 7,124 | $ | 7,496 | (5.0 | )% | (6.1) pp | (0.5) pp | 4.7 pp | (3.1 | )% | |||||||||
Adjusted Pro Forma EBITDA | 1,875 | 1,690 | 10.9 | % | ||||||||||||||||
Adjusted Pro Forma EPS(2) | $ | 0.62 | $ | 0.56 | 10.7 | % | ||||||||||||||
Pro forma net sales were
Adjusted Pro Forma EBITDA increased 10.9 percent versus the year-ago
period to
Adjusted Pro Forma EPS increased 10.7 percent versus the year-ago period
to
Q4 2015 Business Segment Highlights
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||
|
|
Actual | FX | Divestitures |
53rd |
Organic | ||||||||||||||
(in millions) | ||||||||||||||||||||
Pro forma net sales | $ | 5,082 | $ | 5,072 | 0.2 | % | 0.0 pp | 0.0 pp | 4.6 pp | (4.4 | )% | |||||||||
Segment Adjusted EBITDA | 1,346 | 1,138 | 18.3 | % | ||||||||||||||||
United States Segment Adjusted EBITDA increased 18.3 percent versus the
year-ago period to
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||
|
|
Actual | FX | Divestitures |
53rd |
Organic | ||||||||||||||
(in millions) | ||||||||||||||||||||
Pro forma net sales | $ | 632 | $ | 753 | (16.1 | )% | (15.4) pp | 0.0 pp | 4.1 pp | (4.8 | )% | |||||||||
Segment Adjusted EBITDA | 167 | 180 | (7.2 | )% | ||||||||||||||||
Canada Segment Adjusted EBITDA decreased 7.2 percent versus the year-ago
period to
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||
|
|
Actual | FX | Divestitures |
53rd |
Organic | ||||||||||||||
(in millions) | ||||||||||||||||||||
Pro forma net sales | $ | 640 | $ | 748 | (14.4 | )% | (7.8) pp | (4.2) pp | 3.5 pp | (5.9 | )% | |||||||||
Segment Adjusted EBITDA | 248 | 240 | 3.3 | % | ||||||||||||||||
Europe Segment Adjusted EBITDA increased 3.3 percent versus the year-ago
period to
Rest of World(5)
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||
|
|
Actual | FX | Divestitures |
53rd |
Organic | ||||||||||||||
(in millions) | ||||||||||||||||||||
Pro forma net sales | $ | 770 | $ | 923 | (16.6 | )% | (32.7) pp | 0.0 pp | 6.5 pp | 9.6 | % | |||||||||
Segment Adjusted EBITDA | 172 | 196 | (12.2 | )% | ||||||||||||||||
Rest of World pro forma net sales were
Rest of World Segment Adjusted EBITDA decreased 12.2 percent versus the
year-ago period to
End Notes
(1) Pro Forma Organic
(2) The Company revised Q4 2014 Adjusted Pro Forma EPS to
(3) The Company's key commodities in
(4) Cost savings initiatives include the Company's integration, restructuring and ongoing productivity efforts.
(5) Rest of World is comprised of three operating segments:
Webcast and Conference Call Information
A webcast of
ABOUT
Forward-Looking Statements
This press release contains a number of forward-looking statements. Words such as "deliver," "drive," "grow," "invest," "accelerate," "believe," "will," and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our plans, investments, execution, growth and integration. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond the Company's control.
Important factors that may affect the Company's business and operations
and that may cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, increased
competition; the Company's ability to maintain, extend and expand its
reputation and brand image; the Company's ability to differentiate its
products from other brands; the consolidation of retail customers; the
Company's ability to predict, identify and interpret changes in consumer
preferences and demand; the Company's ability to drive revenue growth in
its key product categories, increase its market share, or add products;
an impairment of the carrying value of goodwill or other
indefinite-lived intangible assets; volatility in commodity, energy and
other input costs; changes in the Company's management team or other key
personnel; the Company's inability to realize the anticipated benefits
from the Company's cost savings initiatives; changes in relationships
with significant customers and suppliers; execution of the Company's
international expansion strategy; changes in laws and regulations; legal
claims or other regulatory enforcement actions; product recalls or
product liability claims; unanticipated business disruptions; failure to
successfully integrate the Company; the Company's ability to complete or
realize the benefits from potential and completed acquisitions,
alliances, divestitures or joint ventures; economic and political
conditions in the nations in which the Company operates; the volatility
of capital markets; increased pension, labor and people-related
expenses; volatility in the market value of all or a portion of the
derivatives that the Company uses; exchange rate fluctuations;
disruptions in information technology networks and systems; the
Company's inability to protect intellectual property rights; impacts of
natural events in the locations in which the Company or its customers,
suppliers or regulators operate; the Company's indebtedness and ability
to pay such indebtedness; the Company's dividend payments on its Series
A Preferred Stock; tax law changes or interpretations; pricing actions;
and other factors. For additional information on these and other factors
that could affect the Company's forward-looking statements, see the
Company's risk factors, as they may be amended from time to time, set
forth in its filings with the
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information (the
"financial information") presented in this release illustrates the
estimated effects of the merger (the "2015 Merger") consummated on
The financial information was prepared using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the completion of the acquisition. The Company utilized estimated fair values at the closing date of the 2015 Merger for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed. Our purchase price allocation is substantially complete with the exception of identifiable intangible assets, certain income tax accounts and goodwill. During the measurement period, the Company will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ materially from these preliminary estimates.
The historical consolidated financial statements have been adjusted in the accompanying financial information to give effect to unaudited pro forma events that are (1) directly attributable to the 2015 Merger, (2) factually supportable and (3) expected to have a continuing impact on the results of operations of the combined company.
The financial information has been prepared based upon currently
available information and assumptions deemed appropriate by management.
This financial information is not necessarily indicative of what the
Company's results of operations actually would have been had the 2015
Merger been completed as of
This financial information should be read in conjunction with historical
financial statements and accompanying notes filed with the
Non-GAAP Financial Measures
To supplement the financial information, the Company has presented Pro
Forma Organic
The non-GAAP financial measures presented in this release may differ
from non-GAAP financial measures presented by other companies, and other
companies may not define these non-GAAP financial measures in the same
way. Pro Forma Organic
The Company defines Pro Forma Organic
The Company defines Adjusted Pro Forma EBITDA as pro forma operating
income/(loss) excluding the impacts of depreciation and amortization
(including amortization of postretirement benefit plan prior service
credits), integration and restructuring expenses, merger costs,
unrealized gains/(losses) on commodity hedges, equity award compensation
expense, impairment losses, gains/(losses) on the sale of a business and
nonmonetary currency devaluation. The Company also presents Adjusted Pro
Forma EBITDA on a constant currency basis. The Company calculates the
impact of currency on Adjusted Pro Forma EBITDA by holding exchange
rates constant at the previous year's exchange rate, with the exception
of
The Company defines Adjusted Pro Forma EPS as pro forma diluted EPS excluding the impacts of integration and restructuring expenses, merger costs, unrealized gains/(losses) on commodity hedges, impairment losses, gains/(losses) on the sale of a business, nonmonetary currency devaluation and the timing of preferred dividends. Management uses Adjusted Pro Forma EPS to assess operating performance on a consistent basis.
See the attached schedules for supplemental financial data, which includes the financial information, the non-GAAP financial measures and corresponding reconciliations for the relevant periods.
Schedule 1 |
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Consolidated Statements of Income | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
|
|
|
|
|||||||||||||
Net sales | $ | 7,124 | $ | 2,799 | $ | 18,338 | $ | 10,922 | ||||||||
Cost of products sold | 4,720 | 1,904 | 12,577 | 7,645 | ||||||||||||
Gross profit | 2,404 | 895 | 5,761 | 3,277 | ||||||||||||
Selling, general and administrative expenses | 1,117 | 543 | 3,122 | 1,709 | ||||||||||||
Operating income | 1,287 | 352 | 2,639 | 1,568 | ||||||||||||
Interest expense | 266 | 182 | 1,321 | 686 | ||||||||||||
Other (income)/expense, net | (9 | ) | (1 | ) | 305 | 79 | ||||||||||
Income from continuing operations before income taxes | 1,030 | 171 | 1,013 | 803 | ||||||||||||
Provision for income taxes | 382 | 6 | 366 | 131 | ||||||||||||
Net income | 648 | 165 | 647 | 672 | ||||||||||||
Net income attributable to noncontrolling interest | 3 | 2 | 13 | 15 | ||||||||||||
Net income attributable to |
645 | 163 | 634 | 657 | ||||||||||||
Preferred dividends(1) | 360 | 180 | 900 | 720 | ||||||||||||
Net income/(loss) attributable to common shareholders | $ | 285 | $ | (17 | ) | $ | (266 | ) | $ | (63 | ) | |||||
Basic shares outstanding | 1,214 | 377 | 786 | 377 | ||||||||||||
Diluted shares outstanding | 1,225 | 377 | 786 | 377 | ||||||||||||
Per share data applicable to common shareholders: | ||||||||||||||||
Basic earnings/(loss) per share | $ | 0.23 | $ | (0.04 | ) | $ | (0.34 | ) | $ | (0.17 | ) | |||||
Diluted earnings/(loss) per share | $ | 0.23 | $ | (0.04 | ) | $ | (0.34 | ) | $ | (0.17 | ) |
Note: The consolidated statements of income for the years ended
(1) Cash distributions for Series A Preferred Stock totaled
Schedule 2 |
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|||||||||||||||
Pro Forma Condensed Combined Statements of Income | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
For the Quarter Ended | For the Year Ended | ||||||||||||||
|
|
|
|
||||||||||||
Net sales | $ | 7,124 | $ | 7,496 | $ | 27,447 | $ | 29,122 | |||||||
Cost of products sold(1) | 4,720 | 5,284 | 18,299 | 20,146 | |||||||||||
Gross profit | 2,404 | 2,212 | 9,148 | 8,976 | |||||||||||
Selling, general and administrative expenses(2) | 1,117 | 1,291 | 4,613 | 4,593 | |||||||||||
Operating income | 1,287 | 921 | 4,535 | 4,383 | |||||||||||
Interest expense | 266 | 288 | 1,528 | 1,113 | |||||||||||
Other (income)/expense, net | (9 | ) | (9 | ) | 289 | 57 | |||||||||
Income before income taxes | 1,030 | 642 | 2,718 | 3,213 | |||||||||||
Provision for income taxes | 382 | 137 | 944 | 880 | |||||||||||
Net income | 648 | 505 | 1,774 | 2,333 | |||||||||||
Net income attributable to noncontrolling interest | 3 | 2 | 13 | 15 | |||||||||||
Net income attributable to |
$ | 645 | $ | 503 | $ | 1,761 | $ | 2,318 | |||||||
Preferred dividends(3) | 360 | 180 | 900 | 720 | |||||||||||
Net income attributable to common shareholders | $ | 285 | $ | 323 | $ | 861 | $ | 1,598 | |||||||
Basic common shares outstanding | 1,214 | 1,192 | 1,202 | 1,192 | |||||||||||
Diluted common shares outstanding | 1,225 | 1,222 | 1,222 | 1,222 | |||||||||||
Per share data applicable to common shareholders: | |||||||||||||||
Basic earnings per share | $ | 0.23 | $ | 0.27 | $ | 0.72 | $ | 1.34 | |||||||
Diluted earnings per share | $ | 0.23 | $ | 0.26 | $ | 0.70 | $ | 1.31 |
Note: The pro forma condensed combined statements of income for the
quarters and years ended
(1) Integration & restructuring expenses in cost of products sold were
as follows:
(2) Integration & restructuring expenses in selling, general and
administrative expenses were as follows:
(3) Cash distributions for Series A Preferred Stock totaled
|
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Schedule 3 |
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Reconciliation of Pro |
|||||||||||||||||||
For the Quarter Ended | |||||||||||||||||||
(dollars in millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Pro Forma |
Impact of |
Impact of |
Impact of |
Pro Forma |
Price | Volume/Mix | |||||||||||||
|
|||||||||||||||||||
|
$ | 5,082 | $ | — | $ | — | $ | 233 | $ | 4,849 | |||||||||
|
632 | (116) | — | 31 | 717 | ||||||||||||||
|
640 | (59) | — | 25 | 674 | ||||||||||||||
Rest of World | 770 | (139) | — | 51 | 858 | ||||||||||||||
$ | 7,124 | $ | (314) | $ | — | $ | 340 | $ | 7,098 | ||||||||||
|
|||||||||||||||||||
|
$ | 5,072 | $ | — | $ | — | $ | — | $ | 5,072 | |||||||||
|
753 | — | — | — | 753 | ||||||||||||||
|
748 | — | 32 | — | 716 | ||||||||||||||
Rest of World | 923 | 140 | — | — | 783 | ||||||||||||||
$ | 7,496 | $ | 140 | $ | 32 | $ | — | $ | 7,324 | ||||||||||
Year-over-year growth rates | |||||||||||||||||||
|
0.2% | 0.0 pp | 0.0 pp | 4.6 pp | (4.4)% | 0.2 pp | (4.6) pp | ||||||||||||
|
(16.1)% | (15.4) pp | 0.0 pp | 4.1 pp | (4.8)% | 2.3 pp | (7.1) pp | ||||||||||||
|
(14.4)% | (7.8) pp | (4.2) pp | 3.5 pp | (5.9)% | 0.4 pp | (6.3) pp | ||||||||||||
Rest of World | (16.6)% | (32.7) pp | 0.0 pp | 6.5 pp | 9.6% | 3.2 pp | 6.4 pp | ||||||||||||
(5.0)% | (6.1) pp | (0.5) pp | 4.7 pp | (3.1)% | 0.7 pp | (3.8) pp |
Note: The reconciliation of pro forma net sales to Pro Forma Organic
(1) The Company increased Europe Pro Forma Organic
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Schedule 4 |
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Reconciliation of Pro |
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For the Year Ended | |||||||||||||||||||
(dollars in millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Pro Forma |
Impact of |
Impact of |
Impact of |
Pro Forma |
Price | Volume/Mix | |||||||||||||
|
|||||||||||||||||||
|
$ | 19,284 | $ | — | $ | — | $ | 233 | $ | 19,051 | |||||||||
|
2,386 | (378) | — | 31 | 2,733 | ||||||||||||||
|
2,485 | (340) | 42 | 25 | 2,758 | ||||||||||||||
Rest of World | 3,292 | (503) | — | 51 | 3,744 | ||||||||||||||
$ | 27,447 | $ | (1,221) | $ | 42 | $ | 340 | $ | 28,286 | ||||||||||
|
|||||||||||||||||||
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$ | 19,635 | $ | — | $ | — | $ | — | $ | 19,635 | |||||||||
|
2,811 | — | — | — | 2,811 | ||||||||||||||
|
2,973 | — | 107 | — | 2,866 | ||||||||||||||
Rest of World | 3,703 | 274 | — | — | 3,429 | ||||||||||||||
$ | 29,122 | $ | 274 | $ | 107 | $ | — | $ | 28,741 | ||||||||||
Year-over-year growth rates | |||||||||||||||||||
|
(1.8)% | 0.0 pp | 0.0 pp | 1.2 pp | (3.0)% | 0.0 pp | (3.0) pp | ||||||||||||
|
(15.1)% | (13.4) pp | 0.0 pp | 1.1 pp | (2.8)% | 2.2 pp | (5.0) pp | ||||||||||||
|
(16.4)% | (11.4) pp | (2.1) pp | 0.9 pp | (3.8)% | 0.7 pp | (4.5) pp | ||||||||||||
Rest of World | (11.1)% | (21.8) pp | 0.0 pp | 1.5 pp | 9.2% | 6.3 pp | 2.9 pp | ||||||||||||
(5.8)% | (5.2) pp | (0.2) pp | 1.2 pp | (1.6)% | 1.0 pp | (2.6) pp |
Note: The reconciliation of pro forma net sales to Pro Forma Organic
(1) The Company increased Europe Pro Forma Organic
Schedule 5 |
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Reconciliation of Pro Forma Operating Income to Adjusted Pro Forma EBITDA | ||||||||||||||||
(in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
|
|
|
|
|||||||||||||
Pro forma operating income | $ | 1,287 | $ | 921 | $ | 4,535 | $ | 4,383 | ||||||||
Depreciation and amortization (excluding integration and restructuring expenses) | 160 | 230 | 779 | 924 | ||||||||||||
Integration and restructuring expenses | 436 | 241 | 1,117 | 743 | ||||||||||||
Merger costs | 1 | 19 | 194 | 68 | ||||||||||||
Unrealized (gains)/losses on commodity hedges | (18 | ) | 92 | (41 | ) | 79 | ||||||||||
Impairment losses | — | 159 | 58 | 221 | ||||||||||||
Gain on sale of business | — | — | (21 | ) | — | |||||||||||
Nonmonetary currency devaluation | 8 | — | 57 | — | ||||||||||||
Equity award compensation expense (excluding integration and restructuring expenses) | 1 | 28 | 61 | 108 | ||||||||||||
Adjusted Pro Forma EBITDA | $ | 1,875 | $ | 1,690 | $ | 6,739 | $ | 6,526 | ||||||||
Segment Adjusted EBITDA: | ||||||||||||||||
|
$ | 1,346 | $ | 1,138 | $ | 4,783 | $ | 4,499 | ||||||||
|
167 | 180 | 541 | 615 | ||||||||||||
|
248 | 240 | 909 | 898 | ||||||||||||
Rest of World | 172 | 196 | 670 | 689 | ||||||||||||
General corporate expenses | (58 | ) | (64 | ) | (164 | ) | (175 | ) | ||||||||
Adjusted Pro Forma EBITDA | $ | 1,875 | $ | 1,690 | $ | 6,739 | $ | 6,526 |
Note: The reconciliation of pro forma operating income to Adjusted Pro Forma EBITDA reflects the results of Kraft and Heinz as if they had been combined in all periods presented.
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Schedule 6 |
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Reconciliation of Adjusted Pro Forma EBITDA to Constant Currency Adjusted Pro Forma EBITDA | ||||||||||||
For the Quarter Ended | ||||||||||||
(dollars in millions) | ||||||||||||
(Unaudited) | ||||||||||||
Adjusted Pro Forma |
Impact of Currency |
Constant Currency |
||||||||||
|
||||||||||||
|
$ | 1,346 | $ | — | $ | 1,346 | ||||||
|
167 | (30 | ) | 197 | ||||||||
|
248 | (32 | ) | 280 | ||||||||
Rest of World | 172 | (30 | ) | 202 | ||||||||
General corporate expenses | (58 | ) | — | (58 | ) | |||||||
$ | 1,875 | $ | (92 | ) | $ | 1,967 | ||||||
|
||||||||||||
|
$ | 1,138 | $ | — | $ | 1,138 | ||||||
|
180 | — | 180 | |||||||||
|
240 | — | 240 | |||||||||
Rest of World | 196 | 55 | 141 | |||||||||
General corporate expenses | (64 | ) | — | (64 | ) | |||||||
$ | 1,690 | $ | 55 | $ | 1,635 | |||||||
Year-over-year growth rates |
||||||||||||
|
18.3 | % | 0.0 pp | 18.3 | % | |||||||
|
(7.2 | )% | (16.6) pp | 9.4 | % | |||||||
|
3.3 | % | (13.4) pp | 16.7 | % | |||||||
Rest of World | (12.2 | )% | (55.5) pp | 43.3 | % | |||||||
General corporate expenses | (9.4 | )% | 0.0 pp | (9.4 | )% | |||||||
10.9 | % | (9.4) pp | 20.3 | % |
Note: The reconciliation of Adjusted Pro Forma EBITDA to Constant Currency Adjusted Pro Forma EBITDA reflects the results of Kraft and Heinz as if they had been combined in all periods presented.
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Schedule 7 |
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Reconciliation of Adjusted Pro Forma EBITDA to Constant Currency Adjusted Pro Forma EBITDA | ||||||||||||
For the Year Ended | ||||||||||||
(dollars in millions) | ||||||||||||
(Unaudited) | ||||||||||||
Adjusted Pro Forma |
Impact of Currency |
Constant Currency |
||||||||||
|
||||||||||||
|
$ | 4,783 | $ | — | $ | 4,783 | ||||||
|
541 | (90 | ) | 631 | ||||||||
|
909 | (128 | ) | 1,037 | ||||||||
Rest of World | 670 | (84 | ) | 754 | ||||||||
General corporate expenses | (164 | ) | — | (164 | ) | |||||||
$ | 6,739 | $ | (302 | ) | $ | 7,041 | ||||||
|
||||||||||||
|
$ | 4,499 | $ | — | $ | 4,499 | ||||||
|
615 | — | 615 | |||||||||
|
898 | — | 898 | |||||||||
Rest of World | 689 | 101 | 588 | |||||||||
General corporate expenses | (175 | ) | — | (175 | ) | |||||||
$ | 6,526 | $ | 101 | $ | 6,425 | |||||||
Year-over-year growth rates |
||||||||||||
|
6.3 | % | 0.0 pp | 6.3 | % | |||||||
|
(12.0 | )% | (14.6) pp | 2.6 | % | |||||||
|
1.2 | % | (14.3) pp | 15.5 | % | |||||||
Rest of World | (2.8 | )% | (31.0) pp | 28.2 | % | |||||||
General corporate expenses | (6.3 | )% | 0.0 pp | (6.3 | )% | |||||||
3.3 | % | (6.3) pp | 9.6 | % |
Note: The reconciliation of Adjusted Pro Forma EBITDA to Constant Currency Adjusted Pro Forma EBITDA reflects the results of Kraft and Heinz as if they had been combined in all periods presented.
Schedule 8 |
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Reconciliation of Pro Forma Diluted EPS to Adjusted Pro Forma EPS | |||||||||||||||
(Unaudited) | |||||||||||||||
For the Quarter Ended | For the Year Ended | ||||||||||||||
|
|
|
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Pro forma diluted EPS | $ | 0.23 | $ | 0.26 | $ | 0.70 | $ | 1.31 | |||||||
Integration and restructuring expenses | 0.24 | 0.15 | 0.61 | 0.47 | |||||||||||
Merger costs | — | 0.02 | 0.49 | 0.04 | |||||||||||
Unrealized (gains)/losses on commodity hedges | (0.01 | ) | 0.05 | (0.02 | ) | 0.05 | |||||||||
Impairment losses | — | 0.08 | 0.03 | 0.11 | |||||||||||
Gain on sale of business | — | — | (0.01 | ) | — | ||||||||||
Nonmonetary currency devaluation | 0.01 | — | 0.24 | — | |||||||||||
Additional preferred dividends(1) | 0.15 | — | 0.15 | — | |||||||||||
Adjusted Pro Forma EPS(2) | $ | 0.62 | $ | 0.56 | $ | 2.19 | $ | 1.98 |
Note: The reconciliation of pro forma diluted EPS to Adjusted Pro Forma EPS reflects the results of Kraft and Heinz as if they had been combined in all periods presented.
(1) Cash distributions for Series A Preferred Stock totaled
(2) The Company revised Adjusted Pro Forma EPS for the quarter and year
ended
Schedule 9 |
||||||||
|
||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in millions) | ||||||||
(Unaudited) | ||||||||
|
|
|||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 4,837 | $ | 2,298 | ||||
Trade receivables | 871 | 690 | ||||||
Sold receivables | 583 | 161 | ||||||
Inventories | 2,618 | 1,185 | ||||||
Other current assets | 871 | 581 | ||||||
Total current assets | 9,780 | 4,915 | ||||||
Property, plant and equipment, net | 6,524 | 2,365 | ||||||
|
43,051 | 14,959 | ||||||
Intangible assets, net | 62,120 | 13,188 | ||||||
Other assets | 1,498 | 1,144 | ||||||
TOTAL ASSETS | $ | 122,973 | $ | 36,571 | ||||
LIABILITIES AND EQUITY | ||||||||
Trade payables | $ | 2,844 | $ | 1,651 | ||||
Accrued marketing | 856 | 297 | ||||||
Accrued postemployment costs | 328 | 15 | ||||||
Income taxes payable | 417 | 232 | ||||||
Interest payable | 401 | 167 | ||||||
Dividends payable | 762 | — | ||||||
Other current liabilities | 1,324 | 730 | ||||||
Total current liabilities |
6,932 | 3,092 | ||||||
Long-term debt | 25,151 | 13,358 | ||||||
Deferred income taxes | 21,497 | 3,867 | ||||||
Accrued postemployment costs | 2,405 | 287 | ||||||
Other liabilities | 752 | 282 | ||||||
TOTAL LIABILITIES | 56,737 | 20,886 | ||||||
Redeemable noncontrolling interest | 23 | 29 | ||||||
9.00% Series A cumulative redeemable preferred stock | 8,320 | 8,320 | ||||||
Equity: | ||||||||
Common stock, |
12 | 4 | ||||||
Warrants | — | 367 | ||||||
Additional paid-in capital | 58,375 | 7,320 | ||||||
Retained earnings/(deficit) | — | — | ||||||
Accumulated other comprehensive income/(losses) | (671 | ) | (574 | ) | ||||
|
(31 | ) | — | |||||
Total shareholders' equity | 57,685 | 7,117 | ||||||
Noncontrolling interest | 208 | 219 | ||||||
TOTAL EQUITY | 57,893 | 7,336 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 122,973 | $ | 36,571 |
Note: The condensed consolidated balance sheet at
Schedule 10 |
||||||||||||||||||
|
||||||||||||||||||
Pro Forma Condensed Combined Statement of Income | ||||||||||||||||||
For the Quarter Ended |
||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Historical |
Historical |
Pro Forma |
Pro Forma | |||||||||||||||
Net sales | $ | 2,799 | $ | 4,697 | $ | — | $ | 7,496 | ||||||||||
Cost of products sold | 1,904 | 4,208 | (828 | ) | (1) | 5,284 | ||||||||||||
Gross profit | 895 | 489 | 828 | 2,212 | ||||||||||||||
Selling, general and administrative expenses | 543 | 1,102 | (354 | ) | (2) | 1,291 | ||||||||||||
Operating income/(loss) | 352 | (613 | ) | 1,182 | 921 | |||||||||||||
Interest expense | 182 | 126 | (20 | ) | (3) | 288 | ||||||||||||
Other (income) | (1 | ) | (8 | ) | — | (9 | ) | |||||||||||
Income/(loss) before income taxes | 171 | (731 | ) | 1,202 | 642 | |||||||||||||
Provision for/(benefit from) income taxes | 6 | (332 | ) | 463 | (4) | 137 | ||||||||||||
Net income/(loss) | 165 | (399 | ) | 739 | 505 | |||||||||||||
Net income attributable to noncontrolling interest | 2 | — | — | 2 | ||||||||||||||
Net income/(loss) attributable to |
$ | 163 | $ | (399 | ) | $ | 739 | $ | 503 | |||||||||
Preferred dividend | 180 | — | — | 180 | ||||||||||||||
Net (loss)/income attributable to common shareholders | $ | (17 | ) | $ | (399 | ) | $ | 739 | $ | 323 | ||||||||
Basic common shares outstanding | 1,192 | |||||||||||||||||
Diluted common shares outstanding | 1,222 | |||||||||||||||||
Per share data applicable to common shareholders: | ||||||||||||||||||
Basic earnings per share | $ | 0.27 | ||||||||||||||||
Diluted earnings per share | $ | 0.26 |
(1) Represents the change to align Kraft to
(2) Reflects 2015 Merger-related adjustments including the change to
align Kraft to
(3) Represents the incremental change in interest expense resulting from the fair value adjustment of Kraft's long-term debt in connection with the 2015 Merger, including the elimination of the historical amortization of deferred financing fees and amortization of original issuance discount.
(4) Represents the income tax effect of pro forma adjustments utilizing a 38.5% weighted average statutory tax rate.
Schedule 11 |
|||||||||||||||||
|
|||||||||||||||||
Pro Forma Condensed Combined Statement of Income | |||||||||||||||||
For the Year Ended |
|||||||||||||||||
(in millions, except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Historical |
Historical |
Pro Forma |
Pro Forma | ||||||||||||||
Net sales | $ | 10,922 | $ | 18,200 | $ | — | $ | 29,122 | |||||||||
Cost of products sold | 7,645 | 13,248 | (747 | ) | (1) | 20,146 | |||||||||||
Gross profit | 3,277 | 4,952 | 747 | 8,976 | |||||||||||||
Selling, general and administrative expenses | 1,709 | 3,062 | (178 | ) | (2) | 4,593 | |||||||||||
Operating income | 1,568 | 1,890 | 925 | 4,383 | |||||||||||||
Interest expense | 686 | 507 | (80 | ) | (3) | 1,113 | |||||||||||
Other expense/(income), net | 79 | (22 | ) | — | 57 | ||||||||||||
Income before income taxes | 803 | 1,405 | 1,005 | 3,213 | |||||||||||||
Provision for income taxes | 131 | 363 | 386 | (4) | 880 | ||||||||||||
Net income | 672 | 1,042 | 619 | 2,333 | |||||||||||||
Net income attributable to noncontrolling interest | 15 | — | — | 15 | |||||||||||||
Net income attributable to |
$ | 657 | $ | 1,042 | $ | 619 | $ | 2,318 | |||||||||
Preferred dividends | 720 | — | — | 720 | |||||||||||||
Net (loss)/income attributable to common shareholders | $ | (63 | ) | $ | 1,042 | $ | 619 | $ | 1,598 | ||||||||
Basic common shares outstanding | 1,192 | ||||||||||||||||
Diluted common shares outstanding | 1,222 | ||||||||||||||||
Per share data applicable to common shareholders: | |||||||||||||||||
Basic earnings per share | $ | 1.34 | |||||||||||||||
Diluted earnings per share | $ | 1.31 |
(1) Represents the change to align Kraft to
(2) Reflects 2015 Merger-related adjustments including the change to
align Kraft to
(3) Represents the incremental change in interest expense resulting from the fair value adjustment of Kraft's long-term debt in connection with the 2015 Merger, including the elimination of the historical amortization of deferred financing fees and amortization of original issuance discount.
(4) Represents the income tax effect of pro forma adjustments utilizing a 38.5% weighted average statutory tax rate.
Schedule 12 |
|||||||||||||||||
|
|||||||||||||||||
Pro Forma Condensed Combined Statement of Income | |||||||||||||||||
For the Year Ended |
|||||||||||||||||
(in millions, except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
|
Historical |
Pro Forma |
Pro Forma | ||||||||||||||
Net sales | $ | 18,338 | $ | 9,109 | $ | — | $ | 27,447 | |||||||||
Cost of products sold | 12,577 | 6,103 | (381 | ) | (2) | 18,299 | |||||||||||
Gross profit | 5,761 | 3,006 | 381 | 9,148 | |||||||||||||
Selling, general and administrative expenses | 3,122 | 1,532 | (41 | ) | (3) | 4,613 | |||||||||||
Operating income | 2,639 | 1,474 | 422 | 4,535 | |||||||||||||
Interest expense | 1,321 | 247 | (40 | ) | (4) | 1,528 | |||||||||||
Other expense/(income), net | 305 | (16 | ) | — | 289 | ||||||||||||
Income before income taxes | 1,013 | 1,243 | 462 | 2,718 | |||||||||||||
Provision for income taxes | 366 | 400 | 178 | (5) | 944 | ||||||||||||
Net income | 647 | 843 | 284 | 1,774 | |||||||||||||
Net income attributable to noncontrolling interest | 13 | — | — | 13 | |||||||||||||
Net income attributable to |
$ | 634 | $ | 843 | $ | 284 | $ | 1,761 | |||||||||
Preferred dividend(6) | 900 | — | — | 900 | |||||||||||||
Net (loss)/income attributable to common shareholders | $ | (266 | ) | $ | 843 | $ | 284 | $ | 861 | ||||||||
Basic common shares outstanding | 1,202 | ||||||||||||||||
Diluted common shares outstanding | 1,222 | ||||||||||||||||
Per share data applicable to common shareholders: | |||||||||||||||||
Basic earnings per share | $ | 0.72 | |||||||||||||||
Diluted earnings per share | $ | 0.70 |
(1) Historical Kraft activity reflects activity for the period from
(2) Represents the change to align Kraft to
(3) Reflects 2015 Merger-related adjustments including the change to
align Kraft to
(4) Represents the incremental change in interest expense resulting from the fair value adjustment of Kraft's long-term debt in connection with the 2015 Merger, including the elimination of the historical amortization of deferred financing fees and amortization of original issuance discount.
(5) Represents the income tax effect of pro forma adjustments utilizing a 38.5% weighted average statutory tax rate.
(6) Cash distributions for Series A Preferred Stock totaled
View source version on businesswire.com: http://www.businesswire.com/news/home/20160225006600/en/
Michael.Mullen@kraftheinzcompany.com
or
ir@kraftheinzcompany.com
Source:
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