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The "Street" has LAD coming in at 1.26 for the quarter that should be reported on or about February 21, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has LAD coming in at 1.26 for the quarter that should be reported on or about February 21, 2015! All post's welcome! The "Good Dr's In"!
Tupperware Brands Reports Fourth Quarter Results; Declares Regular Quarterly Dividend- Fourth quarter sales up 6% in local currency+, above guidance range, and down 5% in dollars versus last year.
- GAAP diluted E.P.S. $1.63 versus $1.74 prior year. Adjusted*, diluted E.P.S. $1.72, up 9% in local currency and 12 cents above high end of guidance range.
- Brazil annual sales exceed $200 million. China becomes ninth unit with over $100 million in annual sales.
- Board of Directors declares unchanged quarterly dividend of 68 cents per share.
ORLANDO, Fla., Jan. 28, 2015 /PRNewswire/ -- (TUP) Tupperware Brands Corporation today announced fourth quarter 2014 operating results.
View photo
.
Rick Goings, Chairman and CEO, commented, "Sales grew 6% this quarter in local currency with particularly robust growth in Argentina, Brazil, China and Indonesia, continuing positive momentum from the third quarter. Our emerging markets were up 10% in local currency and our established markets, while down 1% in local currency, showed sequential improvement of 3 percentage points from the third quarter. On top of good sales, I am proud of the way we were able to improve our value chain to close the quarter with $1.72 in earnings per share excluding items, higher than our guidance by 12 cents in spite of a 4 cent hit compared with our October guidance from foreign exchange headwinds."
Goings continued, "While there continue to be challenging external forces, this quarter's results demonstrated we can and will continue to navigate through the environments we find ourselves in, with our strong global management team using our growth levers: innovative and demonstrable premium products; an entertaining selling situation and direct-to-consumer fundamentals driven through the relationships of our 2.9 million sales force world-wide."
Fourth Quarter Executive Summary
•Fourth quarter 2014 net sales were $680 million. Emerging markets**, accounting for 64% of sales, achieved a 10% increase in local currency. Established markets were down 1% in local currency.
•GAAP net income of $82.3 million, down 8% versus prior year GAAP net income of $89.7 million. Excluding the impact of foreign currency rates on the comparison, net income was up 6% versus prior year. Adjusted diluted E.P.S. of $1.72 included a 23 cent negative impact versus 2013 from changes in foreign exchange rates, which was 4 cents worse than included in October's guidance. Earnings per share without items was down 5% versus last year in dollars and up 9% in local currency.
•In the fourth quarter, the Company returned $84 million to shareholders through a dividend payout of $34 million and the open market repurchase of 769 thousand shares for $50 million. Since 2007, 21.3 million shares have been repurchased for $1.3 billion, with $0.7 billion left under an authorization that runs until February 2017.
•Total sales force of 2.9 million was up 2% versus prior year at the end of the quarter, with stricter standards in a few markets negatively impacting the comparison.
Fourth Quarter Business Highlights
Europe: Strong increases by Avroy Shlain in South Africa, Italy, the Middle East, and Turkey offset by lower sales in Austria and Germany
•Segment sales were even in local currency (down 10% in dollars), a 1 point sequential improvement from the third quarter.
•Emerging markets were up 6% in local currency. Increases in Avroy Shlain in South Africa, up 10%; the small Middle East businesses, up 99%; and Turkey, up 9%, partly offset by CIS, down 3%, although continuing an improvement in trend.
•Established markets were down 2% in local currency. Germany was down 5%, a sequential improvement of 1 point from the third quarter. Austria's sales decreased, largely due to timing of programs that benefited the third quarter. Italy's local currency sales were up 8%, continuing a strong three quarter trend.
Asia Pacific: China, Indonesia, Japan and Korea sales up double digits
•Sales for the segment were up 7% in local currency (up 2% in dollars), driven by the emerging markets up 8% in local currency. Growth led by China, up 20%, Indonesia, the Company's largest business unit, up 16%; and Korea, up 15%, through a higher active sales force. Malaysia/Singapore was down 4% partly overcoming difficult externals. India was down 8% on lower activity. The sales force size gap in India narrowed by 7 points in the quarter to down 1%.
•Segment active sales force up 1% versus last year. The 6 percentage point difference between the sales and active seller comparisons was primarily related to a mix shift toward China that operates under an outlet model with very few active sellers and higher productivity and the absence of Nutrimetics Thailand that was closed in 2013, which had a much lower than average order size.
Tupperware North America: Sales increase by Tupperware U.S. and Canada offset by large business to business impact in Tupperware Mexico
•Segment sales down 2% in local currency (down 5% in dollars). Tupperware United States and Canada sales were up 7% in local currency with strong underlying indicators. Sales force size closed 3% above prior year.
•Tupperware Mexico sales down 11%, including lapping a large business to business sale in the fourth quarter of 2013. Core business was about even. Sales force size up 4% at the end of fourth quarter compared with prior year.
Beauty North America: BeautiControl sales up. Fuller Mexico sales down driven by lower sales force size
•Sales for the segment were down 6% in local currency (down 10% in dollars), of which 5 points was from the closing in April of the Armand Dupree business in the United States.
•BeautiControl sales were up 7%, primarily from higher sales force activity.
•Fuller Mexico local currency sales were down 4% from the prior year. Continued focus on stabilizing and growing the number of sales managers and total sales force size in a highly competitive and challenging external environment.
South America: Leveraged 10% larger sales force along with inflation driven price increases
•Segment sales up 38% in local currency (down 8% in dollars), driven by increases in Brazil and Argentina. Brazil was up 43% in local currency, primarily reflecting higher volume from a large sales force size advantage and a good activity rate.
•Argentina was up 56% primarily due to higher prices, including a continued mix shift towards housewares sales away from lower priced beauty products.
•Segment's active sales force was up 10%. The 28 point difference between the sales and active seller comparisons primarily reflected inflation related price increases throughout the segment and a mix shift towards Brazil that has a larger than average order size.
•Brazil profitability better than expected from better supply chain results compared with the third quarter.
2015 Outlook (Unaudited)
Based on current business trends and foreign currency rates, the Company's first quarter and fiscal 2015 full year guidance is provided below.
Company Level
13 Weeks Ended
13 Weeks
52 Weeks Ended
52 Weeks
Mar 28, 2015
Ended
Dec 26, 2015
Ended
Low
High
Mar 29, 2014
Low
High
Dec 27, 2014
USD Sales Growth vs Prior Year
(12)
%
(10)
%
—
%
(6)
%
(4)
%
(2)
%
GAAP EPS
0.89
$0.94
$1.02
$4.58
$4.68
$4.20
GAAP Pre-Tax ROS
10.2
%
10.5
%
10.7
%
12.6
%
12.6
%
11.4
%
Local Currency+ Sales Growth vs Prior Year
2
%
4
%
7
%
4
%
6
%
5
%
EPS Excluding Items*
$0.98
$1.03
$1.31
$4.90
$5.00
$5.38
Pre-Tax ROS Excluding Items*
11.3
%
11.6
%
13.5
%
13.5
%
13.5
%
13.9
%
FX Impact on EPS Comparison (a)
($0.29)
($0.29)
($0.83)
($0.83)
(a)
Impact of changes in foreign currency versus prior year are updated monthly and posted at: http://ir.tupperwarebrands.com/foreign-exchange-impact.cfm.
Full year 2015
Tax rate excluding items is expected to be 25.5%, and 25.3% on a U.S. GAAP basis.Reflects $50 million full-year open market share repurchases, all in the fourth quarter.Venezuela: •For full year 2015, in the table above, of the 83 cent negative year-over-year impact of changes in rates on diluted earnings per share, 23 cents relates to weaker rates for the Venezuelan bolivar. The bolivar to U.S. dollar exchange rate used in translating the Company's first quarter 2014 operating activity was 6.3 bolivars to the U.S. dollar, was 10.8 bolivars to the U.S. dollar in the second quarter and was 50.0 in the second half of 2014. The Company's outlook currently assumes it will also use 50.0 bolivars to the U.S. dollar to translate its future operating activity.
•As a unit accounted for as hyperinflationary under U.S. GAAP, Venezuela's functional currency is the U.S. dollar and the impact of changes in the bolivar to U.S. dollar exchange rate on the unit's net monetary assets are reflected as a transactional impact in the Company's net income rather than as a cumulative translation adjustment. The Company's first half 2014 U.S. GAAP income included $29.2 million of pretax expense related to net monetary asset amounts on its March and June 2014 balance sheets being translated at the 10.8 and 50.0 bolivars to the U.S. dollar rates, rather than the previous rates. During 2014, there was also a $17.5 million negative pretax impact of inventory being included in cost of sales at its historical exchange rate rather than the rate at which sales were translated. This was partially offset by a third quarter 2014 gain of $4.3 million from accessing cash at better rates than the 50.0 bolivars to the U.S. dollar. Assuming that the 50.0 bolivar to U.S. dollar exchange rate continues in 2015, there will be a negative translation impact on the Company's first and second quarter sales comparisons of 4.3 percentage points and 2.8 percentage points, respectively (1.8 percentage points on the full year comparison), and a negative impact on the diluted earnings per share comparisons with 2014 in the first quarter, second quarter, and full year of 12 cents, 11 cents and 23 cents, respectively. First quarter 2014 sales and segment profit in Venezuela were $33 million and $9 million, respectively. Second quarter 2014 sales and segment profit in Venezuela were $24 million and $9 million, respectively.
Segment Level
•For the full year, sales in local currency are expected to be about even in Europe and Tupperware North America, up mid to high single digit in Asia Pacific, down slightly in Beauty North America and up 20%+ in the South America segment.
•Pre-tax return on sales without items for the full year, versus 2014, is expected to be about even in Europe and Asia Pacific, down around 1 point in Tupperware North America, up about 2 points in Beauty North America, and down about 1.5 points in dollars and up about 1/2 point in local currency in South America.
Dividend Declaration
The Company's Board of Directors declared today the Company's regular quarterly dividend. The dividend declared was 68 cents per share, even with the previous quarter. It is payable on April 3, 2015 to shareholders of record as of March 18, 2015. The dividend is in line with the Company's targeted payout ratio of approximately 50% of trailing full year diluted earnings per share without items.
* See Non-GAAP Financial Measures Reconciliation Schedules.
** The Company classifies Established Market Units as those operating in Western Europe, including Scandinavia, the United States, Canada, Australia and Japan and its remaining units as Emerging Market Units.
+ Local currency changes are measured by comparing current year results with those of the prior year translated at the current year's foreign exchange rates.
Fourth Quarter Earnings Conference Call
Tupperware Brands will conduct a conference call today, Wednesday, January 28, 2015, at 8:30 am Eastern time. The conference call will be webcast and accessible, along with a copy of this news release, on www.tupperwarebrands.com.
Tupperware Brands Corporation is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship based selling method through an independent sales force of 2.9 million. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Armand Dupree, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo brands.
The Company's stock is listed on the New York Stock Exchange (TUP). Statements contained in this release, which are not historical fact and use predictive words such as "outlook", "guidance", "expects" or "target" are forward-looking statements. These statements involve risks and uncertainties that include recruiting and activity of the Company's independent sales forces, the success of new product introductions and promotional programs, governmental approvals of materials for use in food containers and beauty and personal care products, the success of buyers in obtaining financing or attracting tenants for commercial and residential developments, the effects of economic and political conditions generally and foreign exchange risk in particular and other risks detailed in the Company's periodic reports as filed in accordance with the Securities Exchange Act of 1934.
The Company updates each month the impact of changes in foreign exchange rates versus the prior year, posting it on; http://ir.tupperwarebrands.com/foreign-exchange-impact.cfm. Other than updating for changes in foreign currency exchange rates, the Company does not intend to update forward-looking information, except through its quarterly earnings releases, unless it expects diluted earnings per share for the current quarter, excluding items impacting comparability and changes versus its guidance of the impact of changes in foreign exchange rates, to be significantly below its previous guidance.
Non-GAAP Financial Measures
The Company has utilized non-GAAP financial measures in this release, which are provided to assist readers' understanding of the Company's results of operations. These amounts, identified as items impacting comparability, at times materially impact the comparability of the Company's results of operations. The adjusted information is intended to be indicative of Tupperware Brands' primary operations, and to assist readers in evaluating performance and analyzing trends across periods.
The non-GAAP financial measures exclude gains from the sale of property, plant and equipment and insurance settlements related to casualty losses, inventory obsolescence in conjunction with decisions to exit or significantly restructure businesses, asset retirement obligations, beginning in 2015 pension settlements and re-engineering and impairment charges. Further, while the Company is engaged in a multi-year program to sell land adjacent to its Orlando, Florida headquarters, and also disposes of other excess land and facilities periodically, these activities are not part of the Company's primary business operations. Additionally, amounts recognized in any given period are not indicative of amounts that may be recognized in any particular future period. For this reason, these amounts are excluded as indicated. Further, the Company excludes significant charges related to casualty losses caused by significant weather events, fires or similar circumstances. It also excludes any related gains resulting from the settlement of associated insurance claims. While these types of events can and do recur periodically, they are excluded from indicated financial information due to their distinction from ongoing business operations, inherent volatility and impact on the comparability of earnings across quarters. Also, the Company periodically records exit costs accounted for using the applicable accounting guidance for exit or disposal cost obligations and other amounts related to rationalizing its supply chain operations and other restructuring activities, including upon liquidation of operations in a country the recognition in income of amounts previously recorded in equity as a cumulative translation adjustment, and pension settlements, and believes these amounts are similarly volatile and impact the comparability of earnings across quarters. Therefore, they are also excluded from indicated financial information to provide what the Company believes represents a useful measure for analysis and predictive purposes.
The Company believes that excluding from indicated financial information costs incurred in connection with a significant change in its capital structure that is of a nature that would be expected to recur sporadically, also provides a useful measure for analysis and predictive purposes. The Venezuelan government over the last several years has severely restricted the ability to translate bolivars into U.S. dollars and has mandated at various levels the exchange rate for U.S. dollars. Due to the sporadic timing and magnitude of changes in the mandated exchange rates, the Company's non-GAAP measures exclude for analysis and predictive purposes, the impact from devaluations on the bolivar denominated net monetary assets and other balance sheet positions that impact near term income since they appear in the income statement at the exchange rate at which they were originally translated rather than the exchange rate at which current operating activity is being translated, as well as gains from obtaining U.S. dollars at exchange rates more favorable than those at which the bolivars were last recorded. These items have occurred recently for reporting purposes in the first quarter of 2013 and in first, second and third quarters of 2014.
The Company has also elected to present financial measures excluding the impact of amortizing the purchase accounting carrying value of certain definite-lived intangible assets, primarily the value of its Fuller trade name recorded in connection with the Company's December 2005 acquisition of the direct selling businesses of Sara Lee Corporation. The amortization expense related to these assets will continue for several years. Similarly, in connection with its evaluation of the carrying value of acquired intangible assets and goodwill, the Company has periodically recognized impairment charges. The Company believes that these types of non-cash charges will not be representative in any single reporting period of amounts recorded in prior reporting periods or expected to be recorded in future reporting periods. Therefore, they are excluded from indicated financial information to also provide a useful measure for analysis and predictive purposes.
As the impact of changes in exchange rates is an important factor in understanding period-to-period comparisons, the Company believes the presentation of results on a local currency basis, in addition to reported results, helps improve readers' ability to understand the Company's operating results and evaluate performance in comparison with prior periods. The Company presents local currency information that compares results between periods as if current period exchange rates had been the exchange rates in the prior period. This includes the impact on sales and earnings from currency devaluations in Venezuela. The Company uses results on a local currency basis as one measure to evaluate performance. The Company generally refers to such amounts as calculated on a local currency basis, as restated or excluding the impact of foreign currency. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a local currency basis may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
In information included with this release, the Company has referred to Adjusted EBITDA and a Debt/Adjusted EBITDA ratio, which are non-GAAP financial measures used in the Company's credit agreement. The Company uses these measures in its capital allocation decision process and in discussions with investors, analysts and other interested parties and therefore believes it is useful to disclose this amount and ratio. The Company's calculation of these measures is in accordance with its credit agreement, and is set forth in the reconciliation from GAAP amounts in an attachment to this release; however, the reader is cautioned that other companies define these measures in different ways, and consequently they will likely not be comparable with similarly labeled amounts disclosed by others.
TUPPERWARE BRANDS CORPORATION
FOURTH QUARTER SALES STATISTICS*
(UNAUDITED)
All Units
Reported
Sales
Inc/(Dec)%
Restated+
Sales
Inc/(Dec)%
Active
Sales
Force
Inc/(Dec)
vs. Q4 '13
%
Total
Sales
Force
Inc/(Dec)
vs. Q4 '13
%
Europe++
(10)
—
93,735
(5)
a
659,711
(2)
Asia Pacific++
2
7
254,290
1
b,c
1,077,204
5
TW North America
(5)
(2)
95,775
2
d
359,284
3
Beauty North America
(10)
(6)
223,614
(8)
e
447,855
(7)
e
South America
(8)
38
108,344
10
f
398,632
10
Total All Units
(5)
6
775,758
(1)
2,942,686
2
Emerging Market Units
Europe
(8)
6
61,995
(5)
a
472,739
(3)
Asia Pacific
5
8
219,164
—
b
958,077
4
TW North America
(15)
(11)
84,795
1
d
273,181
4
Beauty North America
(10)
(4)
198,016
(8)
381,088
(5)
South America
(8)
38
108,344
10
f
398,632
10
Total Emerging Market Units
(4)
10
672,314
(1)
2,483,717
2
Established Market Units
Europe++
(11)
(2)
31,740
(4)
186,972
1
Asia Pacific++
(7)
2
35,126
8
c
119,127
9
TW North America
5
7
10,980
9
86,103
3
Beauty North America
(11)
(11)
25,598
(4)
e
66,767
(16)
e
South America
—
—
—
—
—
—
Total Established Market Units
(7)
(1)
103,444
1
458,969
—
* Sales force statistics as collected by the Company and, in some cases, provided by distributors and sales force. The Company classifies Established Market Units as those operating in Western Europe, including Scandinavia, the United States, Canada, Australia and Japan, and its remaining units as Emerging Market Units. Active Sales Force is defined as the average number of people ordering in each cycle over the course of the quarter, and Total Sales Force is defined as the number of sales force members of the units as of the end of the quarter.
+ Local currency, or restated, changes are measured by comparing current year results with those of the prior year translated at the current year's foreign exchange rates.
++ Effective as of the beginning of 2014, Nutrimetics France is being managed by and reported in the Asia Pacific segment. Prior year information has been reclassified.
Notes
a The local currency sales increase in Europe emerging markets with less active sellers reflected higher sales force qualification standards in Russia, Middle East and North Africa and increased prices in Turkey.
b Higher sales with less active sellers in Asia emerging markets reflected a mix shift toward China that operates under an outlet model with very few active sellers and higher productivity from higher sales force qualification standards and the absence of Nutrimetics Thailand that was closed in 2013, which had a much lower than average order size.
c A larger increase in active sellers than local currency sales in Asia established markets reflected a shift away from Tupperware Australia/New Zealand that has the highest order size of the segment.
d Lower B2B sales by Tupperware Mexico had a negative impact on the local currency sales comparisons of 5, 11, 0.7 and 1 percentage points for Tupperware North America, Tupperware North America emerging markets, total Company and total emerging markets, respectively. This also negatively impacted the total and active sales force comparisons in these captions.
e In April 2014, the Company ceased operating its Armand Dupree business in the United States. This had a negative impact on the local currency sales comparisons of 4, 17, 0.5 and 1 percentage points for total Beauty North America, Beauty North America established markets, total Company and total established markets, respectively. This also negatively impacted the total and active sales force comparisons in these captions. There was also a significant negative impact on the total sales force size comparison of BeautiControl, as an ultimately ineffective promotional approach from 2013 was not repeated.
f The much higher local currency sales increase in South America, compared with the increase in active sellers, reflected inflation-driven price increases throughout the segment and a mix shift toward Brazil that has a larger than average order size.
TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions, except per share data)
13 Weeks Ended
52 Weeks Ended
Dec 27,
2014
Dec 28,
2013
Dec 27,
2014
Dec 28,
2013
Net sales
$
679.9
$
717.1
$
2,606.1
$
2,671.6
Cost of products sold
227.5
241.4
884.0
889.8
Gross margin
452.4
475.7
1,722.1
1,781.8
Delivery, sales and administrative expense
331.3
346.5
1,346.1
1,369.7
Re-engineering charges
2.7
2.2
11.0
9.3
Gain (loss) on disposal of assets
0.4
(0.4)
2.7
0.7
Operating income
118.8
126.6
367.7
403.5
Interest income
1.0
0.7
3.0
2.6
Interest expense
10.6
10.7
46.5
40.2
Other (income) expense
(0.3)
0.5
26.0
5.5
Income before income taxes
109.5
116.1
298.2
360.4
Provision for income taxes
27.2
26.4
83.8
86.2
Net income
$
82.3
$
89.7
$
214.4
$
274.2
Net income per common share:
Basic earnings per share
$
1.65
$
1.78
$
4.28
$
5.28
Diluted earnings per share
$
1.63
$
1.74
$
4.20
$
5.17
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions, except per share data)
13 Weeks Ended
Reported
Restated*
Foreign
52 Weeks Ended
Reported
Restated*
Foreign
Dec 27,
2014
Dec 28,
2013
%
%
Exchange
Dec 27,
2014
Dec 28,
2013
%
%
Exchange
Inc (Dec)
Inc (Dec)
Impact*
Inc (Dec)
Inc (Dec)
Impact*
Net Sales:
Europe
$
194.0
$
215.2
(10)
—
$
(21.5)
$
730.3
$
771.5
(5)
(1)
$
(32.9)
Asia Pacific
230.2
225.6
2
7
(10.6)
849.9
848.1
—
6
(48.3)
TW North America
90.4
94.9
(5)
(2)
(3.1)
349.9
358.0
(2)
—
(8.2)
Beauty North America
70.9
78.9
(10)
(6)
(3.8)
290.9
320.1
(9)
(6)
(9.5)
South America
94.4
102.5
(8)
38
(34.2)
385.1
373.9
3
36
(89.9)
$
679.9
$
717.1
(5)
6
$
(73.2)
$
2,606.1
$
2,671.6
(2)
5
$
(188.8)
Segment profit:
Europe
$
43.7
$
47.8
(9)
—
$
(4.2)
$
118.2
$
130.6
(10)
(5)
$
(6.3)
Asia Pacific
58.2
54.8
6
11
(2.5)
191.0
187.5
2
9
(12.7)
TW North America
18.9
21.7
(13)
(9)
(0.9)
68.3
65.9
4
7
(2.0)
Beauty North America
0.2
1.1
(87)
(80)
(0.4)
1.3
16.1
(92)
(91)
(1.2)
South America
18.5
19.4
(4)
48
(6.8)
27.1
68.9
(61)
(46)
(18.9)
139.5
144.8
(4)
7
(14.8)
405.9
469.0
(13)
(5)
(41.1)
Unallocated expenses
(18.1)
(16.1)
12
6
(0.8)
(55.9)
(62.4)
(11)
(14)
(2.8)
Gain (loss) on disposal of assets
0.4
(0.4)
—
—
—
2.7
0.7
+
+
—
Re-engineering charges
(2.7)
(2.2)
23
23
—
(11.0)
(9.3)
19
19
—
Interest expense, net
(9.6)
(10.0)
(3)
(3)
—
(43.5)
(37.6)
16
16
—
Income before taxes
109.5
116.1
(6)
9
(15.6)
298.2
360.4
(17)
(6)
(43.9)
Provision for income taxes
27.2
26.4
3
20
(3.7)
83.8
86.2
(3)
11
(10.4)
Net income
$
82.3
$
89.7
(8)
6
$
(11.9)
$
214.4
$
274.2
(22)
(11)
$
(33.5)
Net income per common share (diluted)
$
1.63
$
1.74
(6)
8
$
(0.23)
$
4.20
$
5.17
(19)
(7)
$
(0.64)
Weighted average number of diluted shares
50.6
51.5
51.0
53.1
* 2014 actual compared with 2013 translated at 2014 exchange rates
+ Greater than 100% change
TUPPERWARE BRANDS CORPORATION
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(In millions, except per share data)
13 Weeks Ended Dec 27, 2014
13 Weeks Ended Dec 28, 2013
Reported
Adj's
Excl Adj's
Reported
Adj's
Excl Adj's
Segment profit:
Europe
$
43.7
$
—
$
43.7
$
47.8
$
—
$
47.8
Asia Pacific
58.2
0.7
a
58.9
54.8
0.6
a
55.4
TW North America
18.9
—
18.9
21.7
—
21.7
Beauty North America
0.2
2.1
a,d
2.3
1.1
2.2
a
3.3
South America
18.5
0.4
a,b
18.9
19.4
0.1
a
19.5
139.5
3.2
142.7
144.8
2.9
147.7
Unallocated expenses
(18.1)
—
(18.1)
(16.1)
—
(16.1)
Gain (loss) on disposal of assets
0.4
(0.4)
c
—
(0.4)
0.4
c
—
Re-engineering charges
(2.7)
2.7
d
—
(2.2)
2.2
d
—
Interest expense, net
(9.6)
—
(9.6)
(10.0)
—
(10.0)
Income before taxes
109.5
5.5
115.0
116.1
5.5
121.6
Provision for income taxes
27.2
1.0
e
28.2
26.4
2.0
e
28.4
Net income
$
82.3
$
4.5
$
86.8
$
89.7
$
3.5
$
93.2
Net income per common share (diluted)
$
1.63
$
0.09
$
1.72
$
1.74
$
0.07
$
1.81
52 Weeks Ended Dec 27, 2014
52 Weeks Ended Dec 28, 2013
Reported
Adj's
Excl Adj's
Reported
Adj's
Excl Adj's
Segment profit:
Europe
$
118.2
$
0.1
a
$
118.3
$
130.6
$
0.1
a
$
130.7
Asia Pacific
191.0
3.1
a,d
194.1
187.5
1.3
a
188.8
TW North America
68.3
—
68.3
65.9
—
65.9
Beauty North America
1.3
10.5
a,d
11.8
16.1
3.2
a
19.3
South America
27.1
43.0
a,b
70.1
68.9
4.4
a,b
73.3
405.9
56.7
462.6
469.0
9.0
478.0
Unallocated expenses
(55.9)
—
(55.9)
(62.4)
—
(62.4)
Gain (loss) on disposal of assets
2.7
(2.7)
c
—
0.7
(0.7)
c
—
Re-engineering charges
(11.0)
11.0
d
—
(9.3)
9.3
d
—
Interest expense, net
(43.5)
—
(43.5)
(37.6)
—
(37.6)
Income before taxes
298.2
65.0
363.2
360.4
17.6
378.0
Provision for income taxes
83.8
4.8
e
88.6
86.2
3.5
e
89.7
Net income
$
214.4
$
60.2
$
274.6
$
274.2
$
14.1
$
288.3
Net income per common share (diluted)
$
4.20
$
1.18
$
5.38
$
5.17
$
0.26
$
5.43
a Amortization of intangibles of acquired beauty units.
b As a result of step devaluations in the Venezuelan bolivar from 5.3 bolivars per U.S. dollar to 6.3, 10.8 and 50.0 bolivars per U.S. dollar as of the end of January 2013, March 2014 and June 2014, respectively, the Company had impacts of $0.2 million and $42.4 million in the fourth quarter and year-to-date periods of 2014 and $4.2 million in the year-to-date period of 2013. These amounts related to expense from translating bolivar denominated net monetary assets at the lower exchange rates at the times of devaluations, along with the impact of recording in income amounts on the balance sheet when the devaluations occurred, primarily inventory, at which the amounts went on the balance sheet, rather than the exchange rates in use when they were included in income. In the third quarter of 2014, the Company received $5.6 million for approximately 51 million bolivars at an average exchange rate of 9.1 bolivars per U.S. dollar, which generated an exchange gain of $4.6 million.
c Gain on disposal of assets of $2.7 million in 2014 is primarily from the sale of land near the Orlando, FL headquarters in the first quarter and $1.1 million from the sale of a facility in Australia that resulted in proceeds in the second and fourth quarters. Gain on disposal of assets of $0.7 million in 2013 is primarily from the sale of land in Orlando.
d In both years, re-engineering and impairment charges were primarily related to severance costs incurred for headcount reduction in several of the Company's operations in connection with changes in its management and organizational structures, and in 2014, the decision to cease operating its Armand Dupree business in the United States, its Nutrimetics business in Thailand and a manufacturing plant in India.
e Provision for income taxes represents the net tax impact of adjusted amounts.
See note regarding non-GAAP financial measures in the attached press release.
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In millions)
52 Weeks Ended
52 Weeks Ended
December 27,
2014
December 28,
2013
Operating Activities:
Net cash provided by operating activities
$
282.1
$
323.5
Investing Activities:
Capital expenditures
(69.4)
(69.0)
Proceeds from disposal of property, plant & equipment
7.1
8.9
Net cash used in investing activities
(62.3)
(60.1)
Financing Activities:
Dividend payments to shareholders
(133.5)
(116.8)
Net proceeds from issuance of senior notes
—
200.0
Repurchase of common stock
(92.3)
(379.4)
Repayment of long-term debt and capital lease obligations
(3.0)
(2.5)
Net change in short-term debt
(2.2)
27.8
Debt issuance costs
—
(2.2)
Proceeds from exercise of stock options
15.7
21.0
Excess tax benefits from share-based payment arrangements
6.3
14.5
Net cash used in financing activities
(209.0)
(237.6)
Effect of exchange rate changes on cash and cash equivalents
(61.1)
(18.3)
Net change in cash and cash equivalents
(50.3)
7.5
Cash and cash equivalents at beginning of year
127.3
119.8
Cash and cash equivalents at end of period
$
77.0
$
127.3
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions)
Dec 27,
2014
Dec 28,
2013
Assets:
Cash and cash equivalents
$
77.0
$
127.3
Other current assets
669.3
651.7
Total current assets
746.3
779.0
Property, plant and equipment, net
290.3
300.9
Other assets
793.7
764.0
Total assets
$
1,830.3
$
1,843.9
Liabilities and Shareholders' Equity:
Short-term borrowings and current portion of long-term debt
$
221.4
$
235.4
Accounts payable and other current liabilities
578.9
502.1
Total current liabilities
800.3
737.5
Long-term debt
615.2
619.9
Other liabilities
231.4
233.6
Total shareholders' equity
183.4
252.9
Total liabilities and shareholders' equity
$
1,830.3
$
1,843.9
Debt to Adjusted EBITDA* Ratio as of and for the four quarters ended Dec 27, 2014: 1.95 times
* Adjusted EBITDA as defined in the Company's credit agreement under Consolidated EBITDA. See calculation attached to this release.
TUPPERWARE BRANDS CORPORATION
NON-GAAP FINANCIAL MEASURES OUTLOOK RECONCILIATION SCHEDULE
January 28, 2015
(UNAUDITED)
First Quarter
First Quarter
(In millions, except per share data)
2014 Actual
2015 Outlook
Range
Low
High
Income before income taxes
$
70.8
$
59.7
$
62.8
Income tax
$
18.6
$
15.0
$
15.8
Effective Rate
26
%
25
%
25
%
Net Income (GAAP)
$
52.2
$
44.7
$
47.0
% change from prior year
(14)%
(10)%
Adjustments(1):
Gain on disposal of assets
(1.8)
—
—
Re-engineering, restructuring and pension settlements
3.9
3.8
3.8
Net impact of Venezuelan bolivar devaluations
13.4
—
—
Acquired intangible asset amortization
2.9
2.7
2.7
Income tax(2)
(3.7)
(1.8)
(1.8)
Net Income (adjusted)
$
66.9
$
49.4
$
51.7
Exchange rate impact(3)
(14.9)
—
—
Net Income (adjusted and 2014 restated for currency changes)
$
52.0
$
49.4
$
51.7
% change from prior year
(5)%
(1)%
Net income (GAAP) per common share (diluted)
$
1.02
$
0.89
$
0.94
% change from prior year
(13)%
(8)%
Net Income (adjusted) per common share (diluted)
$
1.31
$
0.98
$
1.03
Net Income (adjusted & restated) per common share (diluted)
$
1.02
$
0.98
$
1.03
% change from prior year
(4)%
1
%
Average number of diluted shares (millions)
51.1
50.1
50.1
(1) Refer to Non-GAAP Financial Measures section of attached release for description of the general nature of adjustment items
(2) Represents income tax impact of adjustments on an item-by-item basis
(3) Difference between 2014 actual and 2014 translated at current currency exchange rates
TUPPERWARE BRANDS CORPORATION
NON-GAAP FINANCIAL MEASURES OUTLOOK RECONCILIATION SCHEDULE
January 28, 2015
(UNAUDITED)
Full Year
Full Year
(In millions, except per share data)
2014 Actual
2015 Outlook
Range
Low
High
Income before income taxes
$
298.2
$
307.1
$
313.7
Income tax
$
83.8
$
77.6
$
79.3
Effective Rate
28
%
25
%
25
%
Net Income (GAAP)
$
214.4
$
229.5
$
234.4
% change from prior year
7
%
9
%
Adjustments(1):
Gains on disposal of assets
$
(2.7)
$
—
$
—
Re-engineering, restructuring and pension settlements
13.4
11.3
11.3
Net impact of Venezuelan bolivar devaluations
42.4
—
—
Acquired intangible asset amortization
11.9
10.9
10.9
Income tax(2)
(4.8)
(6.4)
(6.4)
Net Income (adjusted)
$
274.6
$
245.3
$
250.2
Exchange rate impact(3)
(42.6)
—
—
Net Income (adjusted and 2014 restated for currency changes)
$
232.0
$
245.3
$
250.2
% change from prior year
6
%
8
%
Net income (GAAP) per common share (diluted)
$
4.20
$
4.58
$
4.68
% change from prior year
9
%
11
%
Net Income (adjusted) per common share (diluted)
$
5.38
$
4.90
$
5.00
Net Income (adjusted & restated) per common share (diluted)
$
4.55
$
4.90
$
5.00
% change from prior year
8
%
10
%
Average number of diluted shares (millions)
51.0
50.1
50.1
(1) Refer to Non-GAAP Financial Measures section of attached release for description of the general nature of adjustment items
(2) Represents income tax impact of adjustments on an item-by-item basis
(3) Difference between 2014 actual and 2014 translated at current currency exchange rates
TUPPERWARE BRANDS CORPORATION
ADJUSTED EBITDA AND DEBT/ADJUSTED EBITDA*
(UNAUDITED)
As of and for the four
quarters ended
December 27,
2014
Adjusted EBITDA:
Net income
$
214.4
Add:
Depreciation and amortization
63.7
Gross interest expense
46.5
Provision for income taxes
83.8
Pretax non-cash re-engineering and impairment charges
3.8
Equity compensation
18.9
Deduct:
Gains on land sales, insurance recoveries, etc.
(2.7)
Total Adjusted EBITDA
$
428.4
Consolidated total debt
$
836.6
Divided by adjusted EBITDA
428.4
Debt to Adjusted EBITDA Ratio
1.95
a
* Amounts and calculations are based on the definitions and provisions of the Company's $650 million Credit Agreement dated September 11, 2013 and, where applicable, are based on the trailing four quarter amounts. "Adjusted EBITDA" is calculated as defined for "Consolidated EBITDA" in the Credit Agreement.
a There is a $42.4 million impact on adjusted EBITDA from the Venezuelan bolivar devaluations as of the end of March and June 2014 that increased the debt to adjusted EBITDA ratio by 0.17.
Yahoo! Inc. (YHOO) today reported results for the quarter and full year ended December 31, 2014.
"I’m pleased to report that our performance in Q4 and in 2014 continues to show stability in our core business," said Marissa Mayer, CEO of Yahoo. "Our mobile strategy and focus has transformed Yahoo and yielded significant results. In Q4, we saw $254 million in mobile revenue, up 23% quarter-over-quarter. Across all of 2014, we saw gross mobile revenue of $1.26 billion and GAAP mobile revenue of $768 million. Our investment businesses - mobile, video, native, and social - collectively delivered more than $1.1 billion in GAAP revenue, up 95% year-over-year. These growth drivers have really focused our investments and energy on the future of digital advertising."
Q4 2013 Q4 2014 Full Year 2013 Full Year 2014
GAAP revenue $1,266 million $1,253 million $4,680 million $4,618 million
Revenue ex-TAC $1,200 million $1,179 million $4,426 million $4,401 million
GAAP income from operations $174 million $32 million $590 million $143 million
Non-GAAP income from operations $330 million $256 million $935 million $755 million
Adjusted EBITDA $478 million $409 million $1,564 million $1,362 million
Net earnings $348 million $166 million $1,366 million $7,522 million
GAAP net earnings per diluted share $0.33 $0.17 $1.26 $7.45
Non-GAAP net earnings per diluted share $0.46 $0.30 $1.52 $1.57
Business Highlights
• Yahoo closed the acquisition of BrightRoll, the leading programmatic video advertising platform in the U.S. Through the acquisition of BrightRoll, Yahoo is now the largest video advertising platform in the U.S. Less
4:37 pm Apple beats on the top & bottom line led by iPhones well ahead of estimates; tops Q1 gross margin guidance; guides Q2 revs in-line with estimates (AAPL) : Reports Q1 (Dec) earnings of $3.06 per share, $0.46 better than the Capital IQ Consensus Estimate of $2.60; revenues rose 29.5% year/year to $74.6 bln vs the $67.53 bln consensus with gross margins of 39.9% vs 38.4% est (Guidance of 37.5-38.5%)
•Co issues in-line guidance for Q2, sees Q2 revs of $52.0-55.0 bln vs. $53.75 bln Capital IQ Consensus Estimate; sees Q2 gross margins of 38.5-39.5% vs 38.7% ests.
•International sales accounted for 65% of the quarter's revenue.
•Q1 iPhones 74.5 mln vs 66.8 mln ests 51 mln last year
•Q1 iPads 21.4 mln vs 21.8 mln ests vs 26 mln last year.
•Q1 Macs 5.5 mln vs 5.5 mln ests vs 4.8 mln last year.
Possible AAPL suppliers that could see a reaction following earnings include: QCOM, SWKS, AVGO, INVN, NXPI, TXN, CRUS.
4:37 pm Apple beats on the top & bottom line led by iPhones well ahead of estimates; tops Q1 gross margin guidance; guides Q2 revs in-line with estimates (AAPL) : Reports Q1 (Dec) earnings of $3.06 per share, $0.46 better than the Capital IQ Consensus Estimate of $2.60; revenues rose 29.5% year/year to $74.6 bln vs the $67.53 bln consensus with gross margins of 39.9% vs 38.4% est (Guidance of 37.5-38.5%)
•Co issues in-line guidance for Q2, sees Q2 revs of $52.0-55.0 bln vs. $53.75 bln Capital IQ Consensus Estimate; sees Q2 gross margins of 38.5-39.5% vs 38.7% ests.
•International sales accounted for 65% of the quarter's revenue.
•Q1 iPhones 74.5 mln vs 66.8 mln ests 51 mln last year
•Q1 iPads 21.4 mln vs 21.8 mln ests vs 26 mln last year.
•Q1 Macs 5.5 mln vs 5.5 mln ests vs 4.8 mln last year.
Possible AAPL suppliers that could see a reaction following earnings include: QCOM, SWKS, AVGO, INVN, NXPI, TXN, CRUS.
Apple Reports Record First Quarter Results
Highest-ever revenue & earnings drive 48% increase in EPS
Growth led by record revenue from iPhone, Mac & App Store
.
Business Wire
Apple Inc.
4 hours ago
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CUPERTINO, Calif.--(BUSINESS WIRE)--
Apple® today announced financial results for its fiscal 2015 first quarter ended December 27, 2014. The Company posted record quarterly revenue of $74.6 billion and record quarterly net profit of $18 billion, or $3.06 per diluted share. These results compare to revenue of $57.6 billion and net profit of $13.1 billion, or $2.07 per diluted share, in the year-ago quarter. Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.
The results were fueled by all-time record revenue from iPhone® and Mac® sales as well as record performance of the App Store?. iPhone unit sales of 74.5 million also set a new record.
“We’d like to thank our customers for an incredible quarter, which saw demand for Apple products soar to an all-time high,” said Tim Cook, Apple’s CEO. “Our revenue grew 30 percent over last year to $74.6 billion, and the execution by our teams to achieve these results was simply phenomenal.”
“Our exceptional results produced EPS growth of 48 percent over last year, and $33.7 billion in operating cash flow during the quarter, an all-time record,” said Luca Maestri, Apple’s CFO. “We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months.”
Apple is providing the following guidance for its fiscal 2015 second quarter:
• revenue between $52 billion and $55 billion
• gross margin between 38.5 percent and 39.5 percent
• operating expenses between $5.4 billion and $5.5 billion
• other income/(expense) of $350 million
• tax rate of 26.3 percent
Apple’s board of directors has declared a cash dividend of $.47 per share of the Company’s common stock. The dividend is payable on February 12, 2015, to shareholders of record as of the close of business on February 9, 2015.
Apple will provide live streaming of its Q1 2015 financial results conference call beginning at 2:00 p.m. PST on January 27, 2015 at www.apple.com/quicktime/qtv/earningsq115. This webcast will also be available for replay for approximately two weeks thereafter.
This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), and tax rate. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 27, 2014, and its Form 10-Q for the fiscal quarter ended December 27, 2014 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.
NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.
© 2015 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone and App Store are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended
December 27, 2014
December 28, 2013
Net sales $ 74,599 $ 57,594
Cost of sales (1) 44,858 35,748
Gross margin 29,741 21,846
Operating expenses:
Research and development (1) 1,895 1,330
Selling, general and administrative (1) 3,600 3,053
Total operating expenses 5,495 4,383
Operating income 24,246 17,463
Other income/(expense), net 170 246
Income before provision for income taxes 24,416 17,709
Provision for income taxes 6,392 4,637
Net income $ 18,024 $ 13,072
Earnings per share:
Basic $ 3.08 $ 2.08
Diluted $ 3.06 $ 2.07
Shares used in computing earnings per share:
Basic 5,843,082 6,272,504
Diluted 5,881,803 6,310,161
Cash dividends declared per common share $ 0.47 $ 0.44
(1) Includes share-based compensation expense as follows:
Cost of sales $ 140 $ 109
Research and development $ 374 $ 289
Selling, general and administrative $ 374 $ 283
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in thousands and par value)
December 27, 2014
September 27, 2014
ASSETS:
Current assets:
Cash and cash equivalents $ 19,478 $ 13,844
Short-term marketable securities 12,985 11,233
Accounts receivable, less allowances of $87 and $86, respectively 16,709 17,460
Inventories 2,283 2,111
Deferred tax assets 5,046 4,318
Vendor non-trade receivables 13,267 9,759
Other current assets 13,635 9,806
Total current assets 83,403 68,531
Long-term marketable securities 145,492 130,162
Property, plant and equipment, net 20,392 20,624
Goodwill 4,629 4,616
Acquired intangible assets, net 4,370 4,142
Other assets 3,608 3,764
Total assets $ 261,894 $ 231,839
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $ 38,001 $ 30,196
Accrued expenses 22,724 18,453
Deferred revenue 8,987 8,491
Commercial paper 3,899 6,308
Total current liabilities 73,611 63,448
Deferred revenue – non-current 3,480 3,031
Long-term debt 32,504 28,987
Other non-current liabilities 28,971 24,826
Total liabilities 138,566 120,292
Commitments and contingencies
Shareholders' equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,826,419 and 5,866,161 shares issued and outstanding, respectively 24,187 23,313
Retained earnings 97,178 87,152
Accumulated other comprehensive income/(loss) 1,963 1,082
Total shareholders' equity 123,328 111,547
Total liabilities and shareholders' equity $ 261,894 $ 231,839
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Ended
December 27, 2014 December 28, 2013
Cash and cash equivalents, beginning of the period $ 13,844 $ 14,259
Operating activities:
Net income 18,024 13,072
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 2,575 2,144
Share-based compensation expense 888 681
Deferred income tax expense 2,197 1,253
Changes in operating assets and liabilities:
Accounts receivable, net 751 (1,098)
Inventories (172) (358)
Vendor non-trade receivables (3,508) (3,459)
Other current and non-current assets (1,648) (319)
Accounts payable 9,003 8,191
Deferred revenue 945 1,368
Other current and non-current liabilities 4,667 1,195
Cash generated by operating activities 33,722 22,670
Investing activities:
Purchases of marketable securities (44,915) (48,397)
Proceeds from maturities of marketable securities 2,807 5,556
Proceeds from sales of marketable securities 24,166 30,302
Payments made in connection with business acquisitions, net (23) (525)
Payments for acquisition of property, plant and equipment (3,217) (1,985)
Payments for acquisition of intangible assets (48) (59)
Other 65 5
Cash used in investing activities (21,165) (15,103)
Financing activities:
Proceeds from issuance of common stock 80 134
Excess tax benefits from equity awards 264 280
Taxes paid related to net share settlement of equity awards (512) (365)
Dividends and dividend equivalents paid (2,801) (2,769)
Repurchase of common stock (5,030) (5,029)
Proceeds from issuance of long-term debt, net 3,485 0
Repayments of commercial paper, net (2,409) 0
Cash used in financing activities (6,923) (7,749)
Increase/(decrease) in cash and cash equivalents 5,634 (182)
Cash and cash equivalents, end of the period $ 19,478 $ 14,077
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 3,869 $ 3,387
Cash paid for interest $ 202 $ 161
Apple Inc.
Q1 2015 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q1'15 Q4'14 Q1'14 Sequential Change Year/Year Change
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $30,566 $19,750 $24,789 55% 23%
Europe 17,214 10,350 14,335 66% 20%
Greater China 16,144 6,292 9,496 157% 70%
Japan 5,448 3,595 5,045 52% 8%
Rest of Asia Pacific 5,227 2,136 3,929 145% 33%
Total Apple $74,599 $42,123 $57,594 77% 30%
Q1'15 Q4'14 Q1'14 Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (1) 74,468 $51,182 39,272 $23,678 51,025 $32,498 90% 116% 46% 57%
iPad (1) 21,419 8,985 12,316 5,316 26,035 11,468 74% 69% - 18% - 22%
Mac (1) 5,519 6,944 5,520 6,625 4,837 6,395 0% 5% 14% 9%
Services (2) 4,799 4,608 4,397 4% 9%
Other Products (1)(3) 2,689 1,896 2,836 42% - 5%
Total Apple $74,599 $42,123 $57,594 77% 30%
(1)
Includes deferrals and amortization of related non-software services and software upgrade rights.
(2)
Includes revenue from the iTunes Store, the App Store, the Mac App Store, the iBooks Store, AppleCare, Apple Pay, licensing and other services.
(3)
Includes sales of iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories.
Contact:
Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
The "Street" has KKR coming in at .53 the quarter that should be reported on or about February 10, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has KKR coming in at .53 the quarter that should be reported on or about February 10, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has KKR coming in at .53 the quarter that should be reported on or about February 10, 2015! All post's welcome! The "Good Dr's In"!
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The purchase price is approximately $227 million, which Toro will pay primarily in cash except for $30 million that will be paid in the form of a three-year unsecured promissory note. Toro plans to fund the cash portion of the purchase price with cash on hand and borrowings under a new five-year unsecured revolving credit facility that includes a senior term loan. Toro expects this acquisition to be slightly accretive to fiscal 2015 earnings.
About The Toro Company
The Toro Company (TTC) is a leading worldwide provider of innovative turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions. With sales of more than $2 billion in fiscal 2013, Toro’s global presence extends to more than 90 countries through strong relationships built on integrity and trust, constant innovation and a commitment to helping customers enrich the beauty, productivity and sustainability of the land. Since 1914, the company has built a tradition of excellence around a number of strong brands to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties and agricultural fields. More information is available at www.thetorocompany.com.
LIVE CONFERENCE CALL
October 28, 2014 at 8:00 a.m. CDT
www.thetorocompany.com/invest
The Toro Company will conduct a call and webcast for investors beginning at 8:00 a.m. CDT on October 28, 2014 to discuss its agreement to acquire the BOSS snow and ice management business. The webcast will be available at www.streetevents.com or atwww.thetorocompany.com/invest. Webcast participants will need to complete a brief registration form and should allocate extra time before the webcast begins to register and, if necessary, download and install audio software.
Forward-Looking Statements
This news release contains forward-looking statements, which are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations of future events, and often can be identified by words such as “expect,” “anticipate,” “continue,” “plan,” “estimate,” “project,” “believe,” “should,” “could,” “will,” “would,” “possible,” “may,” “likely,” “intend,” and similar expressions or future dates. Some of the forward-looking statements in this release about Toro’s acquisition of the BOSS business include the anticipated timing for the consummation of the acquisition, plans for funding the acquisition purchase price and anticipated earnings impact. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied. The following are some of the factors known to Toro that could cause Toro’s actual results to differ materially from what Toro has anticipated in its forward-looking statements: delays in completing the acquisition of the BOSS business and the risk that the acquisition may not be completed at all; the failure by Toro to achieve the net sales, earnings, working capital, capital expenditure, growth prospects and any cost or revenue synergies expected from the acquisition or delays in the realization thereof; delays and challenges in integrating the businesses after the acquisition is completed, including risks associated with information or financial systems; operating costs and business disruption during the pendency of and following the acquisition, including adverse effects on employee relations or retention or on business relationships with third parties, including customers, distributors and dealers; loss of key personnel; violation of non-competition covenants by key individuals of the BOSS business; damage to the BOSS business facilities located in Iron Mountain, Michigan causing a material disruption to the operations; failure to comply with applicable international, federal or state product safety or other regulatory standards or requirements; unanticipated liabilities or exposures associated with the BOSS business for which Toro has not been indemnified or may not recover; infringement of intellectual property rights of others associated with the rights acquired in the acquisition; general adverse business, economic or competitive conditions; and other risks and uncertainties described in our most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We undertake no obligation to update forward-looking statements made herein to reflect events or circumstances after the date hereof.
Contact:
The Toro Company
Investor Relations
Amy Dahl, 952-887-8917
Managing Director, Corporate Communications and Investor Relations
amy.dahl@toro.com
or
Media Relations
Branden Happel, 952-887-8930
Senior Manager, Public Relations
branden.happel@toro.com
Jewett-Cameron Trading Company Ltd. Announces the Completion of its Share Repurchase Plan
PR Newswire Jewett-Cameron Trading Company Ltd.
November 17, 2014 4:15 PM
????
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NORTH PLAINS, Ore., Nov. 17, 2014 /PRNewswire/ -- Jewett-Cameron Trading Company Ltd. (the "Company") (JCTCF) today is announcing the completion of its 10b5-1 share repurchase plan previously announced on April 9, 2014. Between April 9, 2014 and November 14, 2014, the Company repurchased and is in the process of cancelling a total of 235,782 shares of its common stock. The total cost was $2,494,654 at an average share price of $10.58 per share. Once the remaining repurchased shares are cancelled, the Company will have a total of 2,585,661 common shares outstanding. As part of its ongoing consideration of alternative ways to leverage the Company's strong cash position, the Company's Board of Directors is currently evaluating the implementation of another 10b5-1 share repurchase plan.
About Jewett-Cameron Trading Company Ltd.
Jewett-Cameron Trading Company Ltd. was incorporated in British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation ("JCLC"), incorporated September 1953. Jewett-Cameron Trading Company, Ltd. acquired all the shares of JCLC through a stock-for-stock exchange on July 13, 1987, and at that time JCLC became a wholly owned subsidiary. Effective September 1, 2013, Jewett-Cameron reorganized certain of its subsidiaries. JCLC's name was changed to JC USA Inc. ("JC USA"), and a new subsidiary, Jewett-Cameron Company ("JCC"), was incorporated. JC USA has the following wholly owned subsidiaries: MSI-PRO Co. ("MSI"), incorporated April 1996, Jewett-Cameron Seed Company, ("JCSC"), incorporated October 2000, Greenwood Products, Inc. ("Greenwood"), incorporated February 2002, and Jewett-Cameron Company ("JCC"), incorporated September 2013. Jewett-Cameron Trading Company, Ltd. and its subsidiaries (the "Company") have no significant assets in Canada.
The Company, through its subsidiaries, operates out of facilities located in North Plains, Oregon. JCC's business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers and other retailers located primarily in the United States. Greenwood is a processor and distributor of industrial wood products used in a variety of markets and applications, including the marine and transportation markets. MSI is an importer and distributor of pneumatic air tools and industrial clamps in the United States. JCSC is a processor and distributor of agricultural seeds in the United States. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.
Safe Harbor Statement
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenues, certain statements and expectations regarding the asset acquisition, projected costs, prospects, plans and objectives of management are forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. There are a number of important factors that could cause Jewett-Cameron's actual results to differ materially from those indicated by such forward-looking statements which are described in the "Risk Factors" section of our most recent periodic report and registration statement filed with the SEC. We disclaim any intention or obligation to update any forward-looking statements.
For further information, contact:
Donald Boone
President/CEO, Jewett-Cameron Trading Company Ltd.
(503) 647-0110
Newell Rubbermaid Prices $850 Million Notes Offering
Newell Rubbermaid
November 14, 2014 5:05 PM
GlobeNewswire
????
ATLANTA, Nov. 14, 2014 (GLOBE NEWSWIRE) -- Newell Rubbermaid (NWL) today announced that it has priced a registered underwritten public offering of $850 million of notes, consisting of $350 million of notes due 2019 and $500 million of notes due 2024.
The notes due 2019 will pay interest semi-annually on June 1 and December 1, commencing June 1, 2015, at a rate of 2.875% per year and will mature on December 1, 2019.
The notes due 2024 will pay interest semi-annually on June 1 and December 1, commencing June 1, 2015, at a rate of 4.000% per year and will mature on December 1, 2024.
The offering is expected to close on November 19, 2014. The company plans to use the net proceeds (1) to redeem its $250,000,000 2.00% Notes due 2015 and the remaining $20,700,000 of its 10.60% Notes due 2019, (2) to purchase up to $100,000,000 of its 4.70% Notes due 2020 in a tender offer, (3) to reduce borrowings under its commercial paper program, (4) to reduce amounts outstanding under its receivables financing facility and (5) for general corporate purposes, which may include additions to working capital and possible acquisitions.
Barclays Capital Inc., J.P. Morgan Securities LLC and RBC Capital Markets, LLC are acting as joint book-running managers for the offering. The offering was made pursuant to Newell Rubbermaid's effective shelf registration statement. Copies of the prospectus supplement and accompanying prospectus may be obtained by visiting the SEC's website at www.sec.gov or by contacting Barclays Capital Inc. c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 (or by calling 1-888-603-5847 or emailing barclaysprospectus@broadridge.com), J.P. Morgan Securities LLC at 383 Madison Ave., New York, NY 10179, Attn: Investment Grade Syndicate Desk (or by calling 212-834-4533) or RBC Capital Markets, LLC, Three World Financial Center, 200 Vesey Street, New York, New York 10281, Attn: Debt Capital Markets (or by calling 866-375-6829 or by emailing usdebtcapitalmarkets@rbccm.com).
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2013 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Rubbermaid(R), Contigo(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R) and Dymo(R). As part of the company's Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company's Web site, www.newellrubbermaid.com.
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Corporate Communications
(770) 418-7251
Rates
Wireless Telecom Group Announces Third Quarter 2014 Financial Results, Including a 28% Increase in Year over Year Net Sales for the Nine Month Period
Business Wire Wireless Telecom Group, Inc.
3 hours ago
????
PARSIPPANY, N.J.--(BUSINESS WIRE)--
Wireless Telecom Group, Inc. (NYSE MKT: WTT) announced today results for the third quarter ended September 30, 2014.
For the quarter ended September 30, 2014, the Company reported net sales of $11,372,000, compared to $8,791,000 for the same period in 2013, an increase of 29%. Net sales in the Network Solutions segment were $8,034,000, compared to $6,272,000 for the same period in 2013, an increase of 28%. Net sales in the Test and Measurement segment were $3,338,000, compared to $2,519,000 for the same period in 2013, an increase of 33%.
For the nine months ended September 30, 2014, the Company reported net sales of $30,996,000, compared to $24,293,000 for the same period in 2013, an increase of 28%. Net sales in the Network Solutions segment were $22,026,000, compared to $16,020,000 for the same period in 2013, an increase of 38%. Net sales in the Test and Measurement segment were $8,970,000, compared to $8,273,000 for the same period in 2013, an increase of 8%.
The Company reported net income of $983,000 or $0.05 per diluted share for the third quarter of 2014, compared to net income of $1,090,000, or $0.04 per diluted share, for the third quarter of 2013, a decrease of 10%. The decrease was primarily due to the effects of the Company’s recognition of deferred tax benefits in 2013. The increase of $0.01 in net income per diluted share was due to a lower number of common shares outstanding in 2014.
The Company reported net income of $2,139,000 or $0.10 per diluted share for the first nine months of 2014, compared to net income of $2,494,000, or $0.10 per diluted share, for the first nine months of 2013, a decrease of 14%. The decrease was primarily due to the Company’s recognition of deferred tax benefits in 2013.
Tax expense for the nine months ended September 30, 2014 was $1,992,000 of which $1,537,000 was a non-cash reduction of the Company’s deferred tax asset. For the nine months ended September 30, 2013, the Company recognized a tax benefit of $585,000 which included a non-cash increase in the Company’s deferred tax asset of $916,000. The significant fluctuations in the Company’s tax provision/benefit are primarily due to the ongoing recognition and utilization of the Company’s net operating loss (“NOL”) carry forward generated in 2009.
Non-GAAP Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for the quarter ended September 30, 2014 was $2,377,000 compared to $1,078,000 for the quarter ended September 30, 2013, an increase of 121%.
Non-GAAP EBITDA for the nine months ended September 30, 2014 was $4,906,000 compared to $2,718,000 for the nine months ended September 30, 2013, an increase of 81%.
Our non-GAAP EBITDA results exclude the following: tax provision (benefit), depreciation and amortization and stock compensation expense, as well as expenses for interest, rental income from a property investment, a one-time gain from the sale of such property investment, a one-time gain from the sale of an investment security and certain non-recurring costs. A reconciliation of Net Income to non-GAAP EBITDA results is included as an attachment to this press release.
Paul Genova, CEO of Wireless Telecom Group, Inc. commented, “We are pleased with the results of both our business segments. Our Test and Measurement segment showed improvement in revenue growth and increased sales in our peak power instruments, including our new USB meter, while the Network Solutions segment has experienced increased demand for its low PIM, high quality components. As a result, the Company has made several improvements in its design, production and procurement processes to shorten delivery times and meet the overall market demand. While sales to wireless operators can fluctuate in the short term due to market conditions and carrier budgeting constraints regarding DAS deployments, we expect demand for our products to continue throughout the broadband coverage and capacity expansion of the worldwide infrastructure.”
Genova continued, “We remain focused on improvements in operating activities to generate increased operating income, which grew 174% over the previous year, as well as cash generation from operations which increased by $2.6 million in the first nine months of 2014.”
Genova continued, “As we reported in our second quarter of 2014, the Company repurchased 4.8 million shares of our common stock from our largest shareholder for $2.00 per share. We will continue to execute our strategic plan and pursue opportunities to deploy capital in order to create shareholder value.”
Use of Non-GAAP Financial Measures
This press release includes non-GAAP financial measures that are not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of our non-GAAP measures is included in an attachment to this press release.
Forward-Looking Statements
Except for historical information, the matters discussed in this news release may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include declarations regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results. Specifically, no assurances can be made with respect to the Company’s ability to: continue to experience strong order flow and grow profitability, including in its Network Solutions business segment; to shorten delivery times and meet the overall market demand through improvements in design, production and procurement processes; continue to experience demand for our products throughout the broadband coverage and capacity expansion of the worldwide infrastructure; continue to improve the Company’s operating activities and cash flows, and to execute on the Company’s strategic plan and pursue opportunities that will increase value to the Company’s shareholders. Further information regarding risks and uncertainties that could affect the Company’s results are identified in the Company's reports and registration statements filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2013.
About Wireless Telecom Group, Inc.
Wireless Telecom Group designs and manufactures radio frequency (RF) and microwave-based products for wireless and advanced communications industries and markets its products and services worldwide under the Boonton, Microlab and Noisecom brands. Its complementary suite of high performance components and instruments includes RF combiners and broadband combiner boxes for in-building distributed antenna systems deployments (DAS), RF power splitters and diplexers, hybrid couplers, peak power meters, signal analyzers, noise modules, precision noise and generators. The Company serves both commercial and government markets with workflow-oriented, WiFi, WiMAX, satellite, cable, radar, avionics, medical, and computing applications. Wireless Telecom Group is headquartered in Parsippany, New Jersey, in the New York City metropolitan area, and maintains a global network of Sales and Service offices for excellent product service and support. Wireless Telecom Group’s website address is http://www.wtcom.com.
See following Selected Financial Results
SELECTED FINANCIAL RESULTS (UNAUDITED)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30,
September 30,
2014
2013
2014
2013
Statement of Operations Data:
Net sales $11,372 $8,791 $30,996 $24,293
Gross profit 5,765 4,235 14,960 11,636
Operating expenses
Research and development 863 720 2,542 1,959
Sales and marketing 1,359 1,182 4,058 3,524
General and administrative 1,417 1,761 4,164 4,620
Total operating expenses 3,639 3,663 10,764 10,103
Operating income 2,126 572 4,196 1,533
Other expense (income) 28 (160) 65 (376)
Income before income taxes 2,098 732 4,131 1,909
Net income $983 $1,090 $2,139 $2,494
Net income per common share:
Basic $0.05 $0.05 $0.10 $0.10
Diluted $0.05 $0.04 $0.10 $0.10
Weighted average shares outstanding:
Basic 19,419 23,980 21,044 23,903
Diluted 20,430 24,605 22,229 24,441
Three months ended Nine months ended
September 30,
September 30,
2014
2013
2014
2013
Reconciliation of GAAP Net Income
to Non-GAAP EBITDA:
GAAP net income $983 $1,090 $2,139
$2,494
Tax provision (benefit) 1,115 (358) 1,992
(585)
Depreciation and amortization 125 80 362
248
Stock compensation expense 154 316 235
479
Interest - 16 -
115
Rental income - (32) -
(225)
Realized gain on sale of non-
marketable securities - - -
(162)
Realized gain on sale of building - (188) - (188)
Non-recurring costs (1)
- 154 178 542
Non-GAAP EBITDA $2,377 $1,078 $4,906
$2,718
(1) Includes professional fees related to our strategic business review
September 30, December 31,
2014 (UNAUDITED)
2013
Balance Sheet Data:
Cash & cash equivalents $9,317 $16,599
Working capital $24,281 $29,205
Total assets $36,755 $43,437
Total liabilities $3,620 $3,163
Shareholders’ equity $33,135 $40,274
Contact:
Wireless Telecom Group, Inc.
Robert Censullo, 973-386-9696
The "Street" has DG coming in at .80 for the quarter that should be reported on or about January 08, 2015! All post's welcome! The "Good Dr's In"!
The "Street" has DG coming in at .80 for the quarter that should be reported on or about January 08, 2015! All post's welcome! The "Good Dr's In"!
Newell Rubbermaid Announces Expansion and Extension of Stock Repurchase Program
Newell Rubbermaid5 hours ago GlobeNewswire
ATLANTA, Nov. 12, 2014 (GLOBE NEWSWIRE) -- Newell Rubbermaid ( NWL) announced today that its Board of Directors has approved an extension and expansion to the Company's on-going share repurchase program. Under the updated plan, effective immediately, Newell Rubbermaid is authorized to repurchase up to $500 million of its outstanding shares through the end of 2017. This $500 million is in addition to the approximately $37 million remaining to be repurchased under its previous $300 million share repurchase program as authorized in February 2014.
Michael Polk, president and chief executive officer of Newell Rubbermaid, stated, "We're very pleased with the Board's decision to approve the expansion of our existing stock repurchase program, as a demonstration of its ongoing confidence in the company's Growth Game Plan and long term growth outlook. Our strong balance sheet and robust free cash flow enable our commitment to return capital to shareholders while simultaneously making value-enhancing investments in the business for growth acceleration and margin development."
Under the program, the company's common shares may be purchased through a combination of a 10b5-1 automatic trading plan and discretionary purchases on the open market or in privately negotiated transactions. The amount and timing of any purchases will depend on a number of factors, including trading price, trading volume and general market conditions.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2013 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Rubbermaid(R), Contigo(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R) and Dymo(R). As part of the company's Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company's Web site, www.newellrubbermaid.com.
Caution Concerning Forward-Looking Statements
Statements in this press release that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income, operating margin or gross margin improvements or declines, Project Renewal, capital and other expenditures, cash flow, dividends, restructuring and restructuring-related costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, changes in exchange rates, product recalls, expected benefits and financial results from recently completed acquisitions and planned divestitures and management's plans, projections and objectives for future operations and performance. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation or escalation of the global economic slowdown or regional sovereign debt issues; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers' strong bargaining power; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands; product liability, product recalls or regulatory actions (including any fines or penalties resulting from governmental investigations into the circumstances related thereto); our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; a failure of one of our key information technology systems or related controls; the potential inability to attract, retain and motivate key employees; future events that could adversely affect the value of our assets and require impairment charges; our ability to improve productivity and streamline operations; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values, declining interest rates or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations, including exchange controls and pricing restrictions; our ability to realize the expected benefits and financial results from our recently acquired businesses and planned divestitures; and those factors listed in our most recently filed Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, and Exhibit 99.1 thereto. Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Corporate Communications
(770) 418-7251
Newell Rubbermaid Inc.? Watchlist
34.61-0.27(0.77%)
NYSEWed, Nov 12, 2014 4:03 PM EST
Newell Rubbermaid Appoints General Mills Executive Christopher O'Leary to Board of Directors
Newell Rubbermaid5 hours ago GlobeNewswire
ATLANTA, Nov. 12, 2014 (GLOBE NEWSWIRE) -- Newell Rubbermaid ( NWL) today announced the appointment of Christopher O'Leary, executive vice president and chief operating officer, International, of General Mills to the company's board of directors, effective November 11, 2014. O'Leary, age 55, will serve on Newell Rubbermaid's Nominating/Governance and Organizational Development & Compensation committees, raising the total number of directors to thirteen.
With more than twenty years of consumer products industry experience, O'Leary is a well-respected and accomplished marketing and operational executive. As chief operating officer, International, O'Leary oversees General Mills' businesses in over 100 countries around the world, comprised of iconic brands such as Pillsbury, Cheerios, Betty Crocker and Haagen-Dazs. Under his leadership, General Mills International has expanded to become a significant source of growth for General Mills over the last five years, with sales outside the U.S. almost doubling in size over that timeframe. Today fully one-third of General Mills' sales are now outside the U.S. As a result of recent acquisitions, such as Yoplait and Yoki, General Mills' sales outside the U.S. total more than $6 billion dollars, including the company's proportionate share of joint ventures.
Prior to his appointment to chief operating officer, International, O'Leary served as president of the Meals Division, president of the Betty Crocker Division and vice president of Corporate Development at General Mills. Previous to joining General Mills, O'Leary spent 17 years at PepsiCo, Inc., last serving as president and chief executive officer of the Hostess Frito-Lay business in Canada.
"Chris's consumer products and strategic experience will add a unique perspective to the Board to help drive our Growth Game Plan into action," said Michael Cowhig, Chairman of the Newell Rubbermaid Board of Directors. "I believe he will be an extremely valuable resource to the company and we look forward to his contributions."
"We are delighted Chris has joined the Board," said Michael Polk, President and Chief Executive Officer of Newell Rubbermaid. "Chris's perspective on markets around the world coupled with his deep marketing and brand building knowledge will be invaluable to me and my management team as we drive to make Newell Rubbermaid a faster growing, more profitable, and more global company."
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2013 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Rubbermaid(R), Contigo(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R) and Dymo(R). As part of the company's Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company's Web site, www.newellrubbermaid.com.
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Corporate Communications
(770) 418-7251
The "Street has AZZ coming in at .75 for the quarter that should be reported on or about January 08, 2015!
The "Street" has AZZ coming in at .75 for the quarter that should be reported on or about January 08, 2015!
DENTSPLY International Reports Third Quarter 2014 Results
DENTSPLY International Inc.
October 29, 2014 7:02 AM
GlobeNewswire Europe
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· Adjusted earnings per diluted share grew 9% to a third quarter record of $0.62
· Adjusted operating margin expanded 80 basis points to 18.7% from 17.9%
· Operating cash flow increased 17% to $148 million for the third quarter and grew 42% to $368 million through nine months
York, PA - October 29, 2014 - DENTSPLY International Inc. (XRAY) today announced sales and earnings for the three months ended September 30, 2014.
Third Quarter Results
Net sales in the third quarter of 2014 of $708 million increased 0.6% from $704 million in the third quarter of 2013. Net sales, excluding precious metals content, of $682 million increased 1.8% from $669 million in the third quarter of 2013.
Net income attributable to DENTSPLY International for the third quarter of 2014 was $75 million, or $0.52 per diluted share, compared to $80 million, or $0.55 per diluted share in the third quarter of 2013. Adjusted earnings per diluted share (a non-GAAP measure) increased 9% to a third quarter record $0.62 per diluted share from $0.57 per diluted share in the third quarter of 2013. A reconciliation of the non-GAAP measure to earnings per share calculated on a GAAP basis is provided in the attached table.
Bret Wise, Chairman and Chief Executive Officer, stated "We are pleased to deliver improved sales and earnings performance in the third quarter while operating in global market conditions that are generally stable. Our results reflect the significant opportunity we have at DENTSPLY to create value by leveraging our global cost structure and redirecting resources to the areas of greatest growth potential. Looking ahead, we see further opportunity to drive more efficient cash generation as we execute our plan to expand margins while also improving return on invested capital. With the performance to date, we are updating our full year outlook, calling for adjusted earnings per diluted share in the range of $2.49 to $2.53."
Additional Information
A conference call is scheduled to begin today at 8:30 a.m. (Eastern Time). Supplemental materials for reference during the call will be available for download in the investor relations section of DENTSPLY`s web site, at www.dentsply.com. Investors can access a webcast of the call via a link on DENTSPLY`s web site at www.dentsply.com. In order to participate in the call, dial (888) 312-3047 for domestic calls, or (719) 325-2100 for international calls. The Conference ID # is 8189257. During the call, participants will be able to discuss third quarter 2014 results with DENTSPLY`s Chairman and Chief Executive Officer, Bret Wise, President and Chief Financial Officer, Chris Clark, and Executive Vice President and Chief Operating Officer, Jim Mosch.
For those unable to listen to the live conference call, a rebroadcast will be available online at the DENTSPLY web site, and a dial-in replay will be available for one week following the call at (888) 203-1112 (for domestic calls) or (719) 457-0820 (for international calls), Replay Passcode # 8189257.
DENTSPLY International Inc. is a leading manufacturer and distributor of dental and other consumable medical device products. The Company believes it is the world`s largest manufacturer of consumable dental products for the professional dental market. For over 110 years, DENTSPLY`s commitment to innovation and professional collaboration has enhanced its portfolio of branded consumables and small equipment. Headquartered in the United States, the Company has global operations with sales in more than 120 countries. Visit www.dentsply.com for more information about DENTSPLY and its products.
This press release contains forward-looking information (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding future events or the future financial performance of the Company that involve substantial risks and uncertainties. Actual events or results may differ materially from those in the projections or other forward-looking information set forth herein as a result of certain risk factors. These risk factors include, without limitation; the continued strength of dental and medical markets, the timing, success and market reception for our new and existing products, uncertainty with respect to governmental actions with respect to dental and medical products, outcome of litigation and/or governmental enforcement actions, volatility in the capital markets or changes in our credit ratings, continued support of our products by influential dental and medical professionals, our ability to successfully integrate acquisitions, risks associated with foreign currency exchange rates, risks associated with our competitors` introduction of generic or private label products, our ability to accurately predict dealer and customer inventory levels, our ability to successfully realize the benefits of any cost reduction or restructuring efforts, our ability to obtain a supply of certain finished goods and raw materials from third parties and changes in the general economic environment that could affect the business. Changes in such assumptions or factors could produce significantly different results.
For additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements, please refer to the Company`s most recent Form 10-K and its subsequent periodic reports on Forms 10-Q filed with the Securities and Exchange Commission.
Non-US GAAP Financial Measures
In addition to the results reported in accordance with US GAAP, the Company provides adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share. The Company discloses adjusted net income attributable to DENTSPLY International to allow investors to evaluate the performance of the Company`s operations exclusive of certain items that impact the comparability of results from period to period and certain large non-cash charges related to purchased intangible assets. The Company believes that this information is helpful in understanding underlying operating trends and cash flow generation. The adjusted net income attributable to DENTSPLY International consists of net income attributable to DENTSPLY International adjusted to exclude the impact of the following:
(1) Acquisition related costs. These adjustments include costs related to integrating recently acquired businesses and specific costs related to the consummation of the acquisition process. These costs are irregular in timing and as such may not be indicative of past and future performance of the Company and are therefore excluded to allow investors to better understand underlying operating trends.
(2) Restructuring and other costs. These adjustments include both costs and income that are irregular in timing, amount and impact to the Company`s financial performance. As such, these items may not be indicative of past and future performance of the Company and are therefore excluded for the purpose of understanding underlying operating trends.
(3) Amortization of purchased intangible assets. This adjustment excludes the periodic amortization expense related to purchased intangible assets. Beginning in 2011, the Company began recording large non-cash charges related to the values attributed to purchased intangible assets. These charges have been excluded from adjusted net income attributed to DENTSPLY International to allow investors to evaluate and understand operating trends excluding these large non-cash charges.
(4) Income related to credit risk and fair value adjustments. These adjustments include both the cost and income impacts of adjustments in certain assets and liabilities that are recorded through net income which are due solely to the changes in fair value and credit risk. These items can be variable and driven more by market conditions than the Company`s operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.
(5) Certain fair value adjustments related to an unconsolidated affiliated company. This adjustment represents the fair value adjustment of the unconsolidated affiliated company`s convertible debt instrument held by the Company. The affiliate is accounted for under the equity method of accounting. The fair value adjustment is driven by open market pricing of the affiliate`s equity instruments, which has a high degree of variability and may not be indicative of the operating performance of the affiliate or the Company.
(6) Income tax related adjustments. These adjustments include both income tax expenses and income tax benefits that are representative of income tax adjustments mostly related to prior periods, as well as the final settlement of income tax audits. These adjustments are irregular in timing and amount and may significantly impact the Company`s operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.
Adjusted earnings per diluted common share is calculated by dividing adjusted net income attributable to DENTSPLY International by diluted weighted-average common shares outstanding. Adjusted net income attributable to DENTSPLY International and adjusted earnings per diluted common share are considered measures not calculated in accordance with US GAAP, and therefore are non-US GAAP measures. These non-US GAAP measures may differ from other companies. Income tax related adjustments may include the impact to adjust the interim effective income tax rate to the expected annual effective tax rate. The non-US GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
Net sales $ 708,240 $ 704,018 $ 2,203,579 $ 2,197,112
Net sales, excluding precious metal content 681,584 669,425 2,101,665 2,058,029
Cost of products sold 320,176 327,601 996,841 1,017,539
Gross profit 388,064 376,417 1,206,738 1,179,573
% of Net sales 54.8 % 53.5 % 54.8 % 53.7 %
% of Net sales, excluding precious metal content 56.9 % 56.2 % 57.4 % 57.3 %
Selling, general and administrative expenses 275,980 269,165 859,943 852,763
Restructuring and other costs 2,503 2,231 4,538 5,065
Operating income 109,581 105,021 342,257 321,745
% of Net sales 15.5 % 14.9 % 15.5 % 14.6 %
% of Net sales, excluding precious metal content 16.1 % 15.7 % 16.3 % 15.6 %
Net interest and other expense 12,065 10,885 32,602 40,337
Income before income taxes 97,516 94,136 309,655 281,408
Provision for income taxes 21,283 13,187 69,831 39,599
Equity in net (loss) income of
unconsolidated affiliated company (967 ) (83 ) (1,624 ) 320
Net income 75,266 80,866 238,200 242,129
% of Net sales 10.6 % 11.5 % 10.8 % 11.0 %
% of Net sales, excluding precious metal content 11.0 % 12.1 % 11.3 % 11.8 %
Less: Net (loss) income attributable to noncontrolling interests (7 ) 1,015 56 3,366
Net income attributable to DENTSPLY International $ 75,273 $ 79,851 $ 238,144 $ 238,763
% of Net sales 10.6 % 11.3 % 10.8 % 10.9 %
% of Net sales, excluding precious metal content 11.0 % 11.9 % 11.3 % 11.6 %
Earnings per common share:
Basic $ 0.53 $ 0.56 $ 1.68 $ 1.67
Dilutive $ 0.52 $ 0.55 $ 1.65 $ 1.65
Cash dividends declared per common share $ 0.06625 $ 0.06250 $ 0.19875 $ 0.18750
Weighted average common shares outstanding:
Basic 141,766 142,421 141,869 142,705
Dilutive 144,286 144,698 144,289 144,952
DENTSPLY INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2014 2013
Assets
Current Assets:
Cash and cash equivalents $ 97,652 $ 74,954
Accounts and notes receivable-trade, net 476,856 472,802
Inventories, net 422,485 438,559
Prepaid expenses and other current assets, net 260,708 157,487
Total Current Assets 1,257,701 1,143,802
Property, plant and equipment, net 606,924 637,172
Identifiable intangible assets, net 710,112 795,323
Goodwill, net 2,160,696 2,281,596
Other noncurrent assets, net 148,628 220,154
Total Assets $ 4,884,061 $ 5,078,047
Liabilities and Equity
Current liabilities $ 734,569 $ 796,405
Long-term debt 1,165,566 1,166,178
Deferred income taxes 215,482 238,394
Other noncurrent liabilities 272,200 299,096
Total Liabilities 2,387,817 2,500,073
Total DENTSPLY International Equity 2,495,108 2,535,053
Noncontrolling interests 1,136 42,921
Total Equity 2,496,244 2,577,974
Total Liabilities and Equity $ 4,884,061 $ 5,078,047
DENTSPLY INTERNATIONAL INC.
(In thousands)
Supplemental Summary Cash Flow Information:
Nine Months Ended September 30, 2014 and 2013
Nine Months Ended September 30,
2014 2013
Net Cash Provided by Operating Activities $ 367,780 $ 258,266
Net Cash Used in Investing Activities $ 76,405 $ 161,891
Net Cash Used in Financing Activities $ 264,371 $ 124,650
Depreciation $ 63,048 $ 61,545
Amortization $ 36,430 $ 34,700
Capital Expenditures $ 73,025 $ 73,500
Cash Dividends Paid $ 27,927 $ 25,895
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Income Summary:
The following tables present the reconciliation of reported US GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-US GAAP financial measures.
Three Months Ended September 30, 2014
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 109,581 16.1 %
Amortization of Purchased Intangible Assets 11,894 1.8 %
Restructuring and Other Costs 3,692 0.5 %
Acquisition-Related Activities 2,066 0.3 %
Adjusted Non-US GAAP Operating Income $ 127,233 18.7 %
Three Months Ended September 30, 2013
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 105,021 15.7 %
Amortization of Purchased Intangible Assets 11,237 1.7 %
Restructuring and Other Costs 2,285 0.3 %
Acquisition-Related Activities 1,173 0.2 %
Adjusted Non-US GAAP Operating Income $ 119,716 17.9 %
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Income Summary:
The following tables present the reconciliation of reported US GAAP operating income in total and on a percentage of net sales, excluding precious metal content, to the non-US GAAP financial measures.
Nine Months Ended September 30, 2014
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 342,257 16.3 %
Amortization of Purchased Intangible Assets 36,430 1.7 %
Restructuring and Other Costs 5,880 0.3 %
Acquisition-Related Activities 5,619 0.2 %
Adjusted Non-US GAAP Operating Income $ 390,186 18.5 %
Nine Months Ended September 30, 2013
Operating Income (Loss) Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 321,745 15.6 %
Amortization of Purchased Intangible Assets 34,652 1.7 %
Restructuring and Other Costs 5,343 0.3 %
Acquisition-Related Activities 4,442 0.2 %
Adjusted Non-US GAAP Operating Income $ 366,182 17.8 %
DENTSPLY INTERNATIONAL INC.
(In thousands, except per share amounts)
Earnings Summary:
The following tables present the reconciliation of reported US GAAP net income attributable to DENTSPLY International and on a per common share basis to the non-US GAAP financial measures.
Three Months Ended September 30, 2014
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 75,273 $ 0.52
Amortization of Purchased Intangible Assets, Net of Tax 8,417 0.06
Restructuring and Other Costs, Net of Tax 2,524 0.02
Acquisition-Related Activities, Net of Tax 1,394 0.01
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 817 0.01
Income Tax-Related Adjustments 595 -
Loss on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax 243 -
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 89,263 $ 0.62
Three Months Ended September 30, 2013
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 79,851 $ 0.55
Amortization of Purchased Intangible Assets, Net of Tax 7,851 0.06
Restructuring and Other Costs, Net of Tax 1,961 0.01
Acquisition-Related Activities, Net of Tax 744 0.01
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax (488 ) -
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax (829 ) (0.01 )
Income Tax-Related Adjustments (6,882 ) (0.05 )
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 82,208 $ 0.57
DENTSPLY INTERNATIONAL INC.
(In thousands, except per share amounts)
Earnings Summary:
The following tables present the reconciliation of reported US GAAP net income attributable to DENTSPLY International and on a per common share basis to the non-US GAAP financial measures.
Nine Months Ended September 30, 2014
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 238,144 $ 1.65
Amortization of Purchased Intangible Assets, Net of Tax 25,648 0.18
Restructuring and Other Costs, Net of Tax 4,112 0.03
Acquisition-Related Activities, Net of Tax 3,740 0.02
Income Tax-Related Adjustments 3,536 0.02
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 15 -
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax (792 ) -
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 274,403 $ 1.90
Nine Months Ended September 30, 2013
Net Per Diluted
Income Common Share
Net Income Attributable to DENTSPLY International $ 238,763 $ 1.65
Amortization of Purchased Intangible Assets, Net of Tax 24,229 0.17
Restructuring and Other Costs, Net of Tax 4,462 0.03
Acquisition-Related Activities, Net of Tax 2,843 0.02
Credit Risk and Fair Value Adjustments to Outstanding Derivatives, Net of Tax 2,702 0.02
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company, Net of Tax (1,347 ) (0.01 )
Income Tax-Related Adjustments (18,388 ) (0.13 )
Adjusted Non-US GAAP Net Income Attributable to DENTSPLY International $ 253,264 $ 1.75
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported US GAAP effective tax rate as a percentage of income before income taxes to the non-US GAAP financial measure.
Three Months Ended September 30, 2014
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 97,516 $ (21,283 ) 21.8 %
Amortization of Purchased Intangible Assets 11,894 (3,477 )
Acquisition-Related Activities 3,692 (1,168 )
Restructuring and Other Costs 2,066 (672 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives 1,331 (514 )
Loss on Fair Value Adjustments related to an Unconsolidated Affiliated Company 32 (10 )
Income Tax-Related Adjustments - 595
As Adjusted - Non-US GAAP Operating Results $ 116,531 $ (26,529 ) 22.8 %
Three Months Ended September 30, 2013
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 94,136 $ (13,187 ) 14.0 %
Amortization of Purchased Intangible Assets 11,237 (3,386 )
Restructuring and Other Costs 2,285 (324 )
Acquisition-Related Activities 1,173 (429 )
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company (8 ) 2
Credit Risk and Fair Value Adjustments to Outstanding Derivatives (794 ) 306
Income Tax-Related Adjustments - (6,882 )
As Adjusted - Non-US GAAP Operating Results $ 108,029 $ (23,900 ) 22.1 %
DENTSPLY INTERNATIONAL INC.
(In thousands)
Operating Tax Rate Summary:
The following tables present the reconciliation of reported US GAAP effective tax rate as a percentage of income before income taxes to the non-US GAAP financial measure.
Nine Months Ended September 30, 2014
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 309,655 $ (69,831 ) 22.6 %
Amortization of Purchased Intangible Assets 36,430 (10,782 )
Restructuring and Other Costs 5,880 (1,768 )
Acquisition-Related Activities 5,619 (1,879 )
Loss on Fair Value Adjustments related to an Unconsolidated Affiliated Company 170 (52 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives 24 (9 )
Income Tax-Related Adjustments - 3,536
As Adjusted - Non-US GAAP Operating Results $ 357,778 $ (80,785 ) 22.6 %
Nine Months Ended September 30, 2013
Pre-tax Income Income Tax Benefit (Expense) Percentage of Pre-Tax Income
As Reported - US GAAP Operating Results $ 281,408 $ (39,599 ) 14.1 %
Amortization of Purchased Intangible Assets 34,652 (10,423 )
Restructuring and Other Costs 5,343 (881 )
Acquisition-Related Activities 4,442 (1,599 )
Credit Risk and Fair Value Adjustments to Outstanding Derivatives 4,401 (1,699 )
Gain on Fair Value Adjustments related to an Unconsolidated Affiliated Company (20 ) 6
Income Tax-Related Adjustments - (18,388 )
As Adjusted - Non-US GAAP Operating Results $ 330,226 $ (72,583 ) 22.0 %
For further information contact:
Derek Leckow
Vice President
Investor Relations
(717) 849-7863
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: DENTSPLY International Inc. via GlobeNewswire
The Clorox Company Reports Sales and Profit Growth for Its First Quarter; Confirms Outlook for Sales and EPS From Continuing Operations
The Clorox CompanyOctober 31, 2014 8:30 AM
OAKLAND, CA--(Marketwired - Oct 31, 2014) - For its first quarter, which ended Sept. 30, The Clorox Company (NYSE: CLX) today reported 1 percent sales growth and 5 percent growth in diluted net earnings per share (EPS) from continuing operations. This excludes the impact of the previously announced discontinued operations of Corporación Clorox de Venezuela S.A. (Clorox Venezuela). On a currency-neutral basis, sales grew nearly 3 percent.
"I'm pleased with our solid start to the fiscal year," said Chairman and CEO Don Knauss. "In the first quarter, we continued to invest in incremental demand-building programs to reinforce the value of our brands. As a result, despite continuing headwinds, we delivered sales and profit growth for the quarter and saw improved market shares in a number of our categories."
As previously announced, Clorox Venezuela discontinued operations effective Sept. 22, 2014. For the current and year-ago quarters, the results from Clorox Venezuela are now included in discontinued operations on the company's financial statements. All results in this press release are reported on a continuing operations basis, unless otherwise stated. Some information in this release is reported on a non-GAAP basis. See "Non-GAAP Financial Information" below and the tables toward the end of this press release for more information and reconciliations of key first-quarter results to the most directly comparable financial measures calculated in accordance with generally accepted accounting principles in the U.S. (GAAP).
Fiscal First-Quarter Results
Following is a summary of key first-quarter results. All comparisons are with the first quarter of fiscal year 2014, unless otherwise stated.
$1.10 diluted EPS1% volume growth1% sales growth (nearly 3% growth on currency-neutral basis)
In the first quarter, Clorox delivered earnings from continuing operations of $145 million, or $1.10 diluted EPS, compared to $139 million, or $1.05 diluted EPS, in the year-ago quarter. Current-quarter results reflect the benefit of strong cost savings, price increases and volume growth as well as a one-time benefit of approximately 5 cents diluted EPS related to a one-time change in the company's long-term disability plan to make it more consistent with the marketplace. These factors were partially offset by the impact of higher manufacturing and logistics costs, continued incremental demand-building initiatives of $16 million, or 8 cents diluted EPS, and the impact of unfavorable foreign currency exchange rates.
In the first quarter, sales grew 1 percent, primarily due to the benefit of price increases in international markets and higher volume. These results were partially offset by the impact of unfavorable foreign currency exchange rates as well as higher trade promotion spending. Excluding the impact of nearly 2 percentage points from unfavorable foreign currency exchange rates, sales grew nearly 3 percent. Volume for the first quarter was up 1 percent, reflecting increased shipments in the International Division, Charcoal and Natural Personal Care businesses, partially offset by decreases in the Home Care and Laundry businesses.
The company's first-quarter gross margin decreased 70 basis points to 42.8 percent versus 43.5 percent in the year-ago quarter. The benefits of cost savings and price increases were more than offset by significantly higher manufacturing and logistics costs, with about half coming from the international markets, primarily Argentina, and the other half from the United States.
Net cash provided by continuing operations was $234 million for the quarter, compared with $184 million in the year-ago quarter. The year-over-year increase of $50 million was due to favorable changes in working capital, primarily related to a lower incentive compensation payment in the current quarter, as well as the timing of tax payments.
Key Segment Results
Following is a summary of key first-quarter results from continuing operations by reportable segment. All comparisons are with the first quarter of fiscal 2014, unless otherwise stated.
Cleaning
(Laundry, Home Care, Professional Products)
1% volume decrease2% sales decrease5% pretax earnings decrease
Lower volume in the segment reflected reduced shipments of Home Care and Laundry products. In Home Care, the decrease in volume was primarily due to a distribution loss of Clorox® disinfecting wipes at a major club customer earlier this calendar year. Wipes continued to perform strongly with many other customers. These results were partially offset by higher shipments of Clorox® toilet bowl cleaner due to strong merchandising activities. In Laundry, Clorox® bleach lost volume compared to 11 percent volume growth in the year-ago quarter due to the earlier introduction of its concentrated formula. Both the Laundry and Home Care businesses saw solid market share increases. The variance between net sales and volume was primarily due to higher trade promotion spending, primarily on Clorox® disinfecting wipes. Pretax earnings results primarily reflected lower sales, incremental demand-building investments, and higher costs for commodities and manufacturing and logistics. These factors were partially offset by the benefit of cost savings.
Household
(Bags and Wraps, Charcoal, Cat Litter)
4% volume growth5% sales growthFlat pretax earnings
Segment volume growth was driven primarily by higher shipments of Kingsford® charcoal due to strong customer promotions and consumption related to the U.S. Labor Day holiday. Also contributing to volume growth were gains in Bags and Wraps due to incremental merchandising and distribution gains on OdorShield® trash bags. These results were partially offset by lower shipments of Glad® base trash bags due to a shift to premium trash bags. The variance between volume and sales results was due primarily to the benefit of price increases. Pretax earnings results reflected the benefit of higher sales, price increases and cost savings, offset by incremental demand-building investments, and higher costs for manufacturing and logistics and commodities.
Lifestyle
(Dressings and Sauces, Water Filtration, Natural Personal Care)
Flat volume1% sales decrease6% pretax earnings growth
Volume results in the segment were driven primarily by strong gains in Natural Personal Care, largely due to innovation in Burt's Bees® lip- and face-care products, offset by lower shipments of Hidden Valley® salad dressings and Brita® products. Pretax earnings growth reflected lower selling and administrative expenses related to investments in the year-ago quarter in systems and processes to support the long-term growth of the Burt's Bees business, as well as lower commodity costs, partially offset by higher costs for manufacturing and logistics.
International
(All countries outside of the U.S.)
5% volume growthFlat sales (10% growth on currency-neutral basis)16% pretax earnings decrease ($5 million decrease)
The segment's volume growth reflected gains primarily in Latin America, Europe and Asia. Segment sales reflected the impact of unfavorable foreign currency exchange rates, primarily in Argentina, related to a significant currency devaluation earlier in the calendar year. While segment sales were flat, on a currency-neutral basis, segment sales grew about 10 percent. The variance between volume and sales was primarily due to the impact of unfavorable foreign currency exchange rates, partially offset by the benefit of price increases. Pretax earnings decreased due to the impact of increased manufacturing and logistics costs, unfavorable foreign currencies and higher selling and administrative expenses. These factors were partially offset by the benefit of higher volume, price increases and cost savings.
Discontinued Operations in Venezuela
As previously announced, Clorox Venezuela discontinued operations effective Sept. 22, 2014, as a result of pricing and other operating restrictions imposed by the Venezuelan government and related conditions that caused Clorox Venezuela to no longer be financially viable. Operating results, and the impact of exit and other costs related to the termination of the business, are included in discontinued operations in the company's financial statements.
In the first quarter, losses from discontinued operations net of income taxes were $55 million, or 42 cents diluted EPS, including net operating losses through Sept. 22, 2014, and the impact of exit and other costs related to the termination of the business. Net operating losses for the first quarter, excluding the impact of exit and other costs associated with exiting Venezuela, were $6 million. In addition, the company recorded pre-tax charges for the write-down or impairment of assets of $37 million, recognition of deferred foreign currency translation losses of $30 million, and labor and other exit costs of $6 million. These charges were offset by income tax benefits of $24 million.
The Company expects to recognize in discontinued operations $60 million to $65 million in after-tax exit costs and other related expenses during fiscal year 2015. The Company also expects to recognize in discontinued operations approximately $10 million to $15 million in additional after-tax costs in fiscal years 2016 through 2018. Net of anticipated tax benefits, total exit costs and other termination related expenses are expected to be approximately $70 million to $80 million. Cash-related exit costs, net of expected tax benefits, are expected to be $5 million to $10 million.
Before exiting Venezuela, the company had anticipated only a modest loss from Clorox Venezuela in fiscal year 2015, as anticipated price increases were expected to reduce the current year loss versus the prior year loss of $23 million. These expectations were based on the Venezuelan government's representations that significant price increases would be forthcoming much earlier in the year; however, the price increases ultimately approved were insufficient and would have caused Clorox Venezuela to continue operating at a significant loss. Nonetheless, based on the company's earlier expectations, reflecting financial results from Clorox Venezuela as discontinued operations does not have a material impact on the company's outlook for diluted EPS from continuing operations.
Clorox Updates EBIT Margin Outlook for Fiscal Year 2015
Sales about flat, or 1% to 3% increase on currency-neutral basis (unchanged)EBIT margin about flat (previously 25 basis points to 50 basis points expansion)$4.35 to $4.50 diluted EPS range (unchanged)
The company continues to anticipate fiscal year 2015 sales to be about flat, with the benefits of innovation and price increases offset by continuing category softness and the impact of foreign currency declines across most international markets, particularly in Argentina. On a currency-neutral basis, the company continues to anticipate sales growth in the range of 1 percent to 3 percent for the fiscal year.
Clorox now anticipates EBIT margin to be about flat for the fiscal year, versus the previous outlook of 25 basis points to 50 basis points expansion, due to the results from Clorox Venezuela being included in discontinued operations, and moderately higher commodity costs. Excluding Clorox Venezuela fiscal year 2014 EBIT margin increased by 60 basis points to 17.8 percent from 17.2 percent previously reported for that period.
Clorox now anticipates its effective fiscal year 2015 tax rate to be closer to 34 percent than the previous outlook in the range of 34 percent to 35 percent.
Net of all these factors, Clorox continues to anticipate fiscal 2015 diluted EPS from continuing operations in the range of $4.35 to $4.50.
For More Detailed Financial Information
Visit the Investors: Financial Reporting: Financial Results section of the company's website at TheCloroxCompany.com for the following:
Supplemental unaudited condensed volume and sales growth information
Supplemental unaudited condensed gross margin driver information
Supplemental unaudited reconciliation of certain non-GAAP financial information, including earnings from continuing operations before interest and taxes (EBIT) and earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA)
Supplemental balance sheet and cash flow information and free cash flow reconciliation (unaudited)
Supplemental price-change information
Schedule of unaudited quarterly and fiscal year 2014 condensed consolidated data
Supplemental unaudited quarterly results from continuing operations by reportable segments for fiscal year 2014 (Adjusted to reflect Clorox Venezuela results reclassified to discontinued operations)
Supplemental unaudited condensed fiscal year to date free cash flow information
Note: Percentage and basis-point changes noted in this press release are calculated based on rounded numbers. Supplemental materials are available in the Investors: Financial Reporting: Financial Results section of the company's website at TheCloroxCompany.com.
The Clorox Company
The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with about 7,700 employees worldwide and fiscal year 2014 sales of $5.5 billion. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products; Pine-Sol® cleaners; Liquid Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags, wraps and containers; Kingsford®charcoal; Hidden Valley® and KC Masterpiece® dressings and sauces; Brita® water-filtration products and Burt's Bees® natural personal care products. The company also markets brands for professional services, including Clorox Healthcare®, HealthLink®, Aplicare® and Dispatch®infection control products for the healthcare industry. More than 80 percent of the company's brands hold the No. 1 or No. 2 market share positions in their categories. Clorox's commitment to corporate responsibility includes making a positive difference in its communities. In fiscal year 2014, The Clorox Company and The Clorox Company Foundation contributed more than $16 million in combined cash grants, product donations, cause marketing and employee volunteerism. For more information, visit TheCloroxCompany.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and uncertainties. Except for historical information, matters discussed above, including statements about future volume, sales, costs, cost savings, earnings, cash flows, plans, objectives, expectations, growth, or profitability, are forward-looking statements based on management's estimates, assumptions and projections. Words such as "could," "may," "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," and variations on such words, and similar expressions, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed above. Important factors that could affect performance and cause results to differ materially from management's expectations are described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2014, as updated from time to time in the company's SEC filings. These factors include, but are not limited to: risks related to international operations, including political instability, particularly in Venezuela; government-imposed price controls or other regulations; foreign currency exchange rate controls, including periodic changes in such controls, fluctuations and devaluations; labor unrest and inflationary pressures, particularly in Argentina and other challenging markets; risks related to nationalization, further expropriation of assets, and other government action in Venezuela, and the possibility of similar actions in other foreign jurisdictions, including Argentina; intense competition in the company's markets; expectations or plans related to the announced changes in the company's leadership; worldwide, regional and local economic conditions and financial market volatility; volatility and increases in commodity costs such as resin, sodium hypochlorite and agricultural commodities and increases in energy, transportation or other costs; the ability of the company to drive sales growth, increase price and market share, grow its product categories and achieve favorable product and geographic mix; dependence on key customers and risks related to customer consolidation and ordering patterns; costs resulting from government regulations; the ability of the company to successfully manage global political, legal, tax and regulatory risks, including changes in regulatory or administrative activity; supply disruptions and other risks inherent in reliance on a limited base of suppliers; the ability of the company to implement and generate anticipated cost savings and efficiencies; the success of the company's business strategies; the impact of product liability claims, labor claims and other legal proceedings, including in foreign jurisdictions and the company's litigation related to its discontinued operations in Brazil; the ability of the company to develop and introduce commercially successful products; risks relating to acquisitions, new ventures and divestitures and associated costs, including the potential for asset impairment charges, including intangible assets and goodwill; risks related to reliance on information technology systems, including potential security breaches, cyber attacks or privacy breaches that result in the unauthorized disclosure of consumer, customer, employee or company information, or service interruptions; the company's ability to attract and retain key personnel; the company's ability to maintain its business reputation and the reputation of its brands; environmental matters including costs associated with the remediation of past contamination and the handling and/or transportation of hazardous substances; the impact of natural disasters, terrorism and other events beyond the company's control; the company's ability to maximize, assert and defend its intellectual property rights; any infringement or claimed infringement by the company of third-party intellectual property rights; the effect of the company's indebtedness and credit rating on its operations and financial results; the company's ability to maintain an effective system of internal controls; uncertainties relating to tax positions, tax disputes and changes in the company's tax rate; the accuracy of the company's estimates and assumptions on which its financial statement projections are based; the company's ability to pay and declare dividends or repurchase its stock in the future; and the impacts of potential stockholder activism.
The company's forward-looking statements in this press release are based on management's current views and assumptions regarding future events and speak only as of their dates. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws.
Non-GAAP Financial Information
This press release contains non-GAAP financial information relating to sales growth, diluted EPS, the debt to EBITDA ratio and EBIT margin. The company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP. See the end of this press release for these reconciliations.
The company disclosed these non-GAAP financial measures to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures exclude certain items that are included in the company's results reported in accordance with GAAP, including income taxes, interest income, interest expense and foreign exchange impact. The exclusion of foreign exchange impact is also referred to as currency-neutral. Management believes these non-GAAP financial measures provide useful additional information to investors about trends in the company's operations and are useful for period-over-period comparisons. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read in connection with the company's consolidated financial statements presented in accordance with GAAP.
For recent presentations made by company management and other investor materials, visit Investor Events on the company's website.
Condensed Consolidated Statements of Earnings (Unaudited)
Dollars in millions, except per share amounts
Three Months Ended
9/30/2014 9/30/2013
Net sales $ 1,352 $ 1,343
Cost of products sold 774 759
Gross profit 578 584
Selling and administrative expenses 180 194
Advertising costs 121 120
Research and development costs 30 31
Interest expense 26 26
Other expense, net 3 2
Earnings from continuing operations before income taxes 218 211
Income taxes on continuing operations 73 72
Earnings from continuing operations 145 139
Losses from discontinued operations, net of tax (55 ) (3 )
Net earnings $ 90 $ 136
Net earnings (losses) per share
Basic
Continuing operations $ 1.12 $ 1.07
Discontinued operations (0.42 ) (0.03 )
Basic net earnings per share $ 0.70 $ 1.04
Diluted
Continuing operations $ 1.10 $ 1.05
Discontinued operations (0.42 ) (0.02 )
Diluted net earnings per share $ 0.68 $ 1.03
Weighted average shares outstanding (in thousands)
Basic 129,312 130,074
Diluted 131,369 132,237
Reportable Segment Information
(Unaudited)
Dollars in millions
First Quarter Net Sales Earnings (Losses) from Continuing Operations Before Income Taxes
Three Months Ended Three Months Ended
9/30/14 9/30/13 (2) % Change(1) 9/30/14 9/30/13 (2) % Change(1)
Cleaning Segment $ 470 $ 479 -2% $ 124 $ 131 -5%
Household Segment 392 372 5% 52 52 0%
Lifestyle Segment 216 218 -1% 56 53 6%
International Segment 274 274 0% 26 31 -16%
Corporate - - - (40) (56) -29%
Total Company $ 1,352 $ 1,343 1% $ 218 $ 211 3%
(1) Percentages based on rounded numbers.
(2) As a result of Clorox Venezuela results being included in discontinued operations in the current fiscal quarter, the prior comparative period has been reclassified to conform with current quarter presentation.
Condensed Consolidated Balance Sheets
Dollars in millions
9/30/2014 6/30/2014 9/30/2013
(Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 355 $ 329 $ 323
Receivables, net 455 546 506
Inventories, net 397 386 439
Other current assets 144 134 152
Total current assets 1,351 1,395 1,420
Property, plant and equipment, net 947 977 1,007
Goodwill 1,087 1,101 1,108
Trademarks, net 539 547 553
Other intangible assets, net 60 64 70
Other assets 166 174 143
Total assets $ 4,150 $ 4,258 $ 4,301
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes and loans payable $ 53 $ 143 $ 286
Current maturities of long-term debt 575 575 -
Accounts payable 385 440 374
Accrued liabilities 478 472 468
Income taxes payable 42 8 42
Total current liabilities 1,533 1,638 1,170
Long-term debt 1,596 1,595 2,170
Other liabilities 762 768 762
Deferred income taxes 90 103 118
Total liabilities 3,981 4,104 4,220
Stockholders' equity
Common stock 159 159 159
Additional paid-in capital 702 709 673
Retained earnings 1,731 1,739 1,603
Treasury shares (2,007 ) (2,036 ) (1,986 )
Accumulated other comprehensive net losses (416 ) (417 ) (368 )
Stockholders' equity 169 154 81
Total liabilities and stockholders' equity $ 4,150 $ 4,258 $ 4,301
The tables below present the reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP and other supplemental information. See "Non-GAAP Financial Information" above for further information regarding the company's use of non-GAAP financial measures.
The reconciliations below are on a continuing operations basis
First-Quarter Sales Growth Reconciliation
Q1 Fiscal 2015 Q1 Fiscal 2014
Total Sales Growth - GAAP 0.6% 2.2%
Less: Foreign exchange -1.9 -1.5
Currency Neutral Sales Growth -Non-GAAP 2.5% 3.7%
The reconciliations below for fiscal year 2014 are provided as a reference point for the fiscal year 2015 outlook, and reflect the reclassification of Clorox Venezuela to discontinued operations in Q1FY15.
Fiscal Year EBIT Margin(1) Reconciliation
FY
Fiscal
2014
(as adjusted for discontinued operations) FY
Fiscal
2014
(as previously reported)
Earnings from continuing operations before income taxes - GAAP $ 884 $ 861
Interest Income -3 -3
Interest Expense 103 103
EBIT(1)- non-GAAP $ 984 $ 961
Net Sales $ 5,514 $ 5,591
EBIT margin(1)- non-GAAP 17.8 % 17.2 %
(1) EBIT represents earnings from continuing operations before interest and taxes. EBIT margin is the ratio of EBIT to net sales.
For Gross Margin Drivers, please refer to the Supplemental Information: Gross Margin Driver page in the Financial Results section of the company's website TheCloroxCompany.com.
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Lakes Entertainment Announces Results for Third Quarter 2014
Lakes Entertainment, Inc.November 7, 2014 6:30 AM
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MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. ( LACO) today announced results for the three and nine months ended September 28, 2014.
Third Quarter Results
Net losses for the third quarter of 2014 were $23.1 million, compared to net earnings of $19.6 million for the third quarter of 2013. Losses from operations were $22.8 million for the third quarter of 2014 compared to earnings from operations of $18.8 million for the third quarter of 2013. Basic and diluted losses per share were $1.72 for the third quarter of 2014 compared to basic and diluted earnings per share of $1.48 and $1.46, respectively, for the third quarter of 2013.
Lakes Entertainment reported third quarter 2014 net revenues of $15.9 million, compared to prior-year third quarter net revenues of $15.5 million. Third quarter 2014 net revenues were related to the operation of Rocky Gap Casino Resort near Cumberland, Maryland (“Rocky Gap”). Lakes acquired this property in August 2012 and gaming operations began on May 22, 2013. During the third quarter of 2013, net revenues of $14.1 million were related to the operation of Rocky Gap. Also included in prior-year third quarter net revenues were $1.4 million of management fees related to the management of the Red Hawk Casino, near Sacramento, California, owned by the Shingle Springs Band of Miwok Indians (the “Shingle Springs Tribe”). There were no management fees earned during the third quarter of 2014 due to the August 29, 2013 termination of the management agreement for the Red Hawk Casino.
During the third quarters of 2014 and 2013, property operating expenses for Rocky Gap were $8.9 million and $8.2 million, respectively, and primarily related to gaming operations, rooms, food and beverage and golf. The increase in property operating expenses resulted primarily from an increase in gaming-related expenses, most notably gaming taxes, due to the increase in gaming related revenue in the current year quarter.
For the third quarter of 2014, selling, general and administrative expenses were $5.5 million compared to $5.4 million for the third quarter of 2013. Included in these amounts were Lakes corporate selling, general and administrative expenses of $1.5 million and $1.3 million during the third quarters of 2014 and 2013, respectively. Lakes’ corporate selling, general and administrative expenses consist primarily of payroll and related expenses and professional fees. Rocky Gap selling, general and administrative expenses were $4.0 million and $4.1 million during the third quarters of 2014 and 2013, respectively.
Lakes recognized approximately $17.4 million in recovery of impairment charges during the third quarter of 2013 related to a $57.1 million payment it received on notes receivable from the Shingle Springs Tribe that had previously been impaired and were valued at $39.7 million as of the payment date.
During the third quarter of 2013, Lakes recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Shingle Springs Tribe due to the termination of the management agreement.
During the third quarter of 2014 Jerry Argovitz (“Argovitz”) was awarded approximately $2.4 million related to an arbitration action brought by Argovitz against Lakes. As a result, Lakes recognized charges related to arbitration award of $2.5 million during the third quarter of 2014, which included the $2.4 million award and $0.1 million of legal fees. The arbitration action was related to a previous agreement between Lakes and Argovitz.
Lakes recognized non-cash impairments and other losses of $21.0 million during the third quarter of 2014 related to its investment in Rock Ohio Ventures, LLC (“Rock Ohio”), a privately-held company, that owns 80% of the Horseshoe Casino Cleveland in Cleveland, Ohio; the Horseshoe Casino Cincinnati in Cincinnati, Ohio; the Thistledown Racino in North Randall, Ohio; and Turfway Park, a thoroughbred horseracing track located in Florence, Kentucky. Based on current information provided by Rock Ohio, Lakes has determined that there is now significant uncertainty surrounding the recovery of Lakes’ investment in Rock Ohio. The Ohio gaming properties have not performed as expected, which has led to forecasted potential working capital requirement issues that did not exist in prior quarters, based on information previously available to Lakes. As a result, Lakes determined that an other-than-temporary impairment had occurred and reduced the carrying value of the investment to its estimated fair value of zero as of September 28, 2014. Lakes recognized impairments and other losses of $3.4 million during the third quarter of 2013. Included in the impairments were $2.4 million related to intangible assets associated with the development and management agreement with the Shingle Springs Tribe, which were considered fully impaired upon the termination of the management agreement on August 29, 2013. In addition, receivables of approximately $1.0 million from related parties, that were directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during the third quarter of 2013.
Depreciation and amortization was $0.9 million for the third quarter of 2014 compared to $0.8 million for the third quarter of 2013.
Nine Month Results
Net losses for the nine months ended September 28, 2014 were $24.8 million, compared to net earnings of $19.5 million for the nine months ended September 29, 2013. Losses from operations were $24.1 million for the first nine months of 2014 compared to earnings from operations of $15.6 million for the first nine months of 2013. Basic and diluted losses were $1.85 per share for the nine months ended September 28, 2014 compared to basic and diluted earnings per share of $1.48 and $1.46, respectively for the nine months ended September 29, 2013.
Lakes Entertainment reported net revenues of $42.3 million for the first nine months of 2014, compared to net revenues of $27.3 million in the prior year period. Net revenues in the current year period were related to the operation of Rocky Gap. During the prior year period, net revenues of $19.5 million were related to the operation of Rocky Gap. Also included in the prior-year period were net revenues of $7.8 million in management fees related to the management of the Red Hawk Casino. There were no management fees earned during the current year period due to the August 29, 2013 termination of the management agreement for the Red Hawk Casino.
During the first nine months of 2014, property operating expenses for Rocky Gap which related primarily to gaming operations, rooms, food and beverage and golf were $24.4 million compared to $12.2 million in the prior-year period. The increase in property operating expenses was due to the addition of gaming in May of 2013.
For the nine months ended September 28, 2014, selling, general and administrative expenses were $16.9 million compared to $13.8 million for the nine months ended September 29, 2013. Included in these amounts were Lakes corporate selling, general and administrative expenses of $5.5 million and $5.3 million, during the first nine months of 2014 and 2013, respectively. Rocky Gap selling, general and administrative expenses were $11.4 million and $8.5 million during the first nine months of 2014 and 2013, respectively. Lakes’ 2014 and 2013 corporate selling, general and administrative expenses consist primarily of payroll and related expenses and professional fees, as well as $0.8 million of business development costs in 2014. The increase in Rocky Gap selling, general and administrative expenses was due primarily to increases in payroll and related expenses and marketing and advertising expenses related to the addition of gaming during May 2013.
Lakes recognized approximately $17.4 million in recovery of impairment charges during the third quarter of 2013 related to a $57.1 million payment it received on notes receivable from the Shingle Springs Tribe that had previously been impaired and were valued at $39.7 million as of the payment date.
During the nine months ended September 29, 2013, Lakes recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Shingle Springs Tribe due to the termination of the management agreement.
During the second quarter of 2014, Lakes entered into an agreement to sell its interest in Dania Casino & Jai Alai in Dania Beach, Florida for a total of $2.6 million. Per the agreement, on April 21, 2014, Lakes received $1.0 million in exchange for 40% of Lakes’ interest in the project. Upon the receipt of the payment during the second quarter of 2014, Lakes recognized a $1.0 million gain on sale of cost method investment since this asset had previously been written off. On October 17, 2014, Lakes was paid the entire remaining amount due at a discounted amount of approximately $1.4 million. Upon receipt of such payment, Lakes transferred its remaining ownership. Lakes will account for the receipt of this $1.4 million payment as a gain on sale of cost method investment in the fourth quarter of 2014.
Lakes recognized charges related to arbitration award of $2.5 million during the third quarter of 2014, which included the $2.4 million award and $0.1 million of legal fees. The award resulted from an arbitration action, related to a prior agreement, brought by Argovitz against Lakes.
Lakes recognized non-cash impairments and other losses of $21.0 million during the third quarter of 2014 related to its investment in Rock Ohio. Based on current information provided by Rock Ohio, Lakes has determined that there is now significant uncertainty surrounding the recovery of Lakes’ investment in Rock Ohio. The Ohio gaming properties have not performed as expected, which has led to forecasted potential working capital requirement issues that did not exist in prior quarters, based on information previously available to Lakes. As a result, Lakes determined that an other-than-temporary impairment had occurred and reduced the carrying value of the investment to its estimated fair value of zero as of September 28, 2014. Lakes recognized impairments and other losses of $3.4 million during the nine months ended September 29, 2013. Included in the impairments were $2.4 million related to intangible assets associated with the development and management agreement with the Shingle Springs Tribe, which were considered fully impaired upon the termination of the management agreement on August 29, 2013. In addition, receivables of approximately $1.0 million from related parties, that were directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during the nine months ended September 29, 2013.
During the nine months ended September 29, 2013, Lakes recognized preopening expenses of $1.2 million related to the Rocky Gap project. There were no preopening expenses during the current year period.
Depreciation and amortization was $2.6 million for the nine months ended September 28, 2014 compared to $1.5 million for the nine months ended September 29, 2013. The increase related to depreciation on Rocky Gap fixed assets.
Tim Cope, President and Chief Financial Officer of Lakes stated, "Rocky Gap operations continued to perform well during the third quarter of this year. During the quarter, we added 150 new parking spaces, completed the expansion of the fitness center and the remodel of the golf shop. Even with an increase of 19 more machines this year compared to 2013 we saw an increase in slot win per-unit per-day from $181 for the third quarter of 2013 to $199 for the third quarter of this year. The gaming facility features 577 video lottery terminals, 15 table games, two poker tables and a casino bar along with a lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, event center, restaurants, spa, the only Jack Nicklaus signature golf course in Maryland as well as a wide variety of outdoor and water activities.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, ”We are disappointed that the results of the Ohio gaming properties have now caused uncertainty surrounding the recovery of our investment in Rock Ohio and have resulted in the impairment of this investment during the third quarter.” Mr. Berman continued, “During the third quarter we announced that we had retained the services of Macquarie Capital as our financial advisor in connection with the evaluation of strategic alternatives aimed at enhancing shareholder value. With approximately $80 million in cash and short-term investments on our balance sheet, we continue to consider new ventures in order to maximize shareholder value.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. Lakes also has an investment in Rock Ohio Ventures, LLC’s casino and racino developments in Ohio, as well as Turfway Park in Florence, Kentucky.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made or to be made by Lakes Entertainment, Inc.) contains statements that are forward-looking, such as statements relating to plans for future expansion and other business development activities as well as other capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the company. These risks and uncertainties include, but are not limited to, need for potential future financing to meet Lakes’ development needs; Lakes operates in a highly competitive industry; possible changes in regulations; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes' management; and litigation costs. For more information, review the company's filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 28, 2014 December 29, 2013
Assets
Current assets:
Cash and cash equivalents $ 33,356 $ 37,897
Short-term investments 47,327 49,099
Income taxes receivable - 2,155
Other 2,359 1,774
Total current assets 83,042 90,925
Property and equipment, net 33,547 31,659
Other assets:
Investment in unconsolidated investee - 20,997
Gaming license 1,910 2,015
Land held for development 960 1,130
Income taxes receivable 2,155
-
Other 486 535
Total other assets 5,511 24,677
Total assets $ 122,100 $ 147,261
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt $ 1,367 $ 1,251
Other 3,820 3,610
Total current liabilities 5,187 4,861
Long-term debt, net 9,278 10,321
Total liabilities 14,465 15,182
Total shareholders' equity 107,635 132,079
Total liabilities and shareholders' equity $ 122,100 $ 147,261
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended Nine months ended
September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013
Revenues:
Management fees $ - $ 1,384 $ - $ 7,762
Gaming 12,072 10,445 33,460 13,633
Room 1,940 1,849 4,884 2,728
Food and beverage 1,835 1,665 4,660 2,566
Other operating 829 647 1,806 1,154
License fees and other 44 26 107 66
Gross revenues 16,720 16,016 44,917 27,909
Less promotional allowances 790 524 2,570 564
Net revenues 15,930 15,492 42,347 27,345
Costs and expenses:
Gaming 6,841 6,037 19,208 8,055
Room 226 255 509 580
Food and beverage 1,366 1,393 3,589 2,455
Other operating 470 483 1,131 1,116
Selling, general and administrative 5,455 5,398 16,918 13,782
Recovery of impairment on notes receivable - (17,382 ) - (17,382 )
Gain on extinguishment of liabilities - (3,752 ) - (3,752 )
Gain on sale of cost method investment - - (1,000 ) -
Impairments and other losses 20,997 3,356 20,997 3,356
Charges related to arbitration award 2,530 - 2,530 -
Preopening expenses - - - 1,163
Amortization of intangible assets related to Indian casino projects - 187 - 716
Gain on sale of land (66 ) - (66 ) -
Loss on disposal of property and equipment 37 - 61 143
Depreciation and amortization 896 759 2,613 1,476
Total costs and expenses 38,752 (3,266 ) 66,490 11,708
Earnings (loss) from operations (22,822 ) 18,758 (24,143 ) 15,637
Other income (expense):
Interest income 39 1,276 110 4,770
Interest expense (297 ) (450 ) (923 ) (922 )
Other 4 15 169 25
Total other income (expense), net (254 ) 841 (644 ) 3,873
Earnings (loss) before income taxes (23,076 ) 19,599 (24,787 ) 19,510
Income tax benefit - - - -
Net earnings (loss) $ (23,076 ) $ 19,599 $ (24,787 ) $ 19,510
Other comprehensive loss (3 ) (9 ) (2 ) (9 )
Comprehensive income (loss) $ (23,079 ) $ 19,590 $ (24,789 ) $ 19,501
Weighted-average common shares outstanding
Basic 13,389 13,232 13,376 13,225
Dilutive impact of stock options - 184 - 111
Diluted 13,389 13,416 13,376 13,336
Earnings (loss) per share
Basic $ (1.72 ) $ 1.48 $ (1.85 ) $ 1.48
Diluted $ (1.72 ) $ 1.46 $ (1.85 ) $ 1.46
Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
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NasdaqGMFri, Nov 7, 2014 3:59 PM EST
Newell Rubbermaid Announces Solid Third Quarter Results
Newell Rubbermaid 9 hours ago GlobeNewswire
2014 and 2015 Full Year Guidance reaffirmedNext phase of Project Renewal restructuring approvedIntention to sell Endicia(R) online postage business announcedThird Quarter Executive Summary
2.7 percent core sales growth, excluding foreign currency and the impact of acquisitions; 1.3 percent net sales growth including 60 basis points from Ignite acquisition 39.2 percent normalized gross margin compared to 37.8 percent in the prior year; 38.8 percent reported gross margin compared to 37.7 percent in the prior year• $0.58 normalized EPS compared to $0.52 in the prior year, an 11.5 percent increase despite significantly increased advertising investment and $0.05 of adverse foreign currency impact
$0.44 reported EPS compared to $0.66 in the prior year which included a $0.26 one-time gain on disposal of Hardware business• Repurchased 3.3 million shares at a cost of $103.9 million
• Announced next phase of Project Renewal to capture an incremental annualized $200 million in savings over three years at a cost of approximately $200 million
• Completed acquisition of Ignite Holdings, LLC and announced acquisition of bubba brands, inc., which closed in October
• Announced intention to divest Endicia online postage business and Calphalon(R) retail outlet stores and kitchen electrics businesses; statements of operations data presented for both current and prior year periods reflect these businesses as discontinued operations
ATLANTA, Oct. 31, 2014 (GLOBE NEWSWIRE) -- Newell Rubbermaid ( NWL) today announced its third quarter 2014 financial results.
"We delivered another solid quarter with good sales growth and strong earnings," said Michael Polk, Newell Rubbermaid's President and Chief Executive Officer. "Our strategy of accelerating advertising and promotion in support of our brands is working, delivering third quarter core sales growth of over 7 percent on our key Writing, Commercial Products and Tools segments and normalized earnings per share growth for the total company of over 11 percent. Since we began to significantly increase brand support in the second quarter of 2014, our global core growth has been 3.7 percent, despite exiting certain markets and product lines in Europe and pulling back on less profitable volume in North America."
"We have also made good progress on our cost structure, with Project Renewal on track to achieve over $270 million of cumulative annualized savings by the middle of 2015. Today, we announced the expansion of Project Renewal, which is designed to capture an incremental $200 million in savings by the end of 2017 in the areas of procurement, manufacturing, distribution, and further overhead reduction. We plan to deliver these savings by significantly reducing the complexity in our business and simplifying the way we bring our products to market. We plan to invest these new savings in strengthened capabilities and behind our brands in the fast growing emerging markets of Latin America and Asia."
Mr. Polk further commented, "Beyond delivering solid results and making Newell Rubbermaid a leaner, more nimble company, we have also taken steps to strengthen our portfolio. We completed the acquisitions of both Ignite Holdings and bubba brands which combined will generate full year 2014 net sales of more than $175 million in one of the fastest growing consumer durables categories in North America. The combination of the acquired Contigo(R), Avex(R) and bubba(R) brands with Rubbermaid(R) establishes our company as the leader across the key channels in the U.S. on-the-go hydration and thermal bottle market. We continue to actively manage our existing portfolio by focusing our investment on our most strategically important segments, reducing activities with marginal profitability and exiting certain businesses and markets. In this context, today we announced our intention to sell our Endicia online postage business. These actions strengthen our portfolio and sharpen our focus, making Newell Rubbermaid a faster growing, higher margin, and more profitable company."
Third Quarter 2014 Operating Results
Net sales in the third quarter were $1.48 billion compared with $1.47 billion in the prior year. Core sales grew 2.7 percent, excluding 200 basis points of negative foreign currency impacts and 60 basis points from the Ignite acquisition.
Reported gross margin was 38.8 percent, a 110 basis point improvement versus prior year.
Normalized gross margin was 39.2 percent, a 140 basis point improvement versus prior year, as the benefits of pricing, productivity and favorable segment mix more than offset input cost inflation and the impact of negative foreign currency.
Third quarter reported operating margin was 11.7 percent compared with 12.2 percent in the prior year. Reported operating income was $173.2 million versus $178.5 million.
Normalized operating margin declined 50 basis points to 14.3 percent compared with 14.8 percent in the prior year, despite a 190 basis point increase in SG&A largely related to increased advertising and promotion support at Back-to-School. Normalized operating income was $212.9 million compared with the prior year's $216.6 million.
The reported tax rate was 18.7 percent versus 24.6 percent in the prior year period. The normalized tax rate was 19.5 percent compared with 24.3 percent in the prior year due to the recognition of certain discrete tax benefits.
Normalized net income was $159.2 million, compared with $151.5 million in the prior year. Normalized diluted earnings per share were $0.58, an 11.5 percent increase versus $0.52 in the prior year. The improvement was primarily attributable to increased sales, gross margin expansion, a lower normalized tax rate, and the positive impact of fewer outstanding shares, partially offset by negative foreign currency impacts and a significant increase in Back-to-School advertising and promotion support.
Reported diluted earnings per share were $0.44, compared with the prior year's $0.66 per diluted share. Reported net income was $122.3 million, compared with $193.3 million in the prior year. The year over year decline in reported diluted earnings per share was primarily attributable to the absence of a 2013 gain on sale of the company's Hardware business, negative impact from foreign currency, and a significant increase in Back-to-School advertising and promotion support, partially offset by increased sales, gross margin expansion, lower restructuring costs, a lower tax rate, and the positive impact of fewer outstanding shares.
Operating cash flow was $339.2 million compared with $360.8 million in the prior year period.
A reconciliation of the "as reported" results to "normalized" results is included in the appendix.
Third Quarter 2014 Operating Segment Results
Writing net sales for the third quarter were $453.2 million, a 2.5 percent increase compared to prior year. Core sales increased 8.3 percent primarily driven by increased advertising and promotion support of Back-to-School, strong innovation and positive pricing in Latin America. About $15 million in net sales was pulled forward from the fourth quarter in anticipation of the company's planned October SAP implementation in Mexico and Venezuela, offsetting the adverse third quarter impact of about $15 million in net sales pulled forward to the second quarter in anticipation of significant marketing and merchandising support at Back-to-School. Normalized operating income was $109.4 million compared with $108.2 million in the prior year. Despite a 300 basis point increase in advertising and promotion, normalized operating margin decreased only 40 basis points to 24.1 percent as a result of gross margin improvement and tight overhead management.
Home Solutions net sales were $417.0 million, a 1.4 percent decline compared to prior year. The Ignite Holdings, LLC acquisition was completed on September 4 and contributed net sales of $9.0 million in the third quarter. Core sales declined 3.2 percent, as strong Rubbermaid Food Storage growth was more than offset by the absence of the 2013 inventory pipeline fill related to Black Friday merchandising and declines on certain lower margin Rubbermaid product lines. Normalized operating income was $64.0 million compared to $67.1 million in the prior year. Normalized operating margin decreased 60 basis points to 15.3 percent of sales as a result of increased advertising on Goody(R), Calphalon, and Rubbermaid Food Storage.
Tools net sales were $214.8 million, a 2.0 percent increase compared to prior year. Core sales increased 2.3 percent driven by good growth in Europe and double-digit growth in Latin America related to strong innovation and new distribution. Growth in Europe and Latin America was partially offset by a decline in North America related to the slower than expected consolidation of an Irwin(R) distribution center in the U.S. Normalized operating income was $23.5 million compared to $12.3 million in the prior year. Normalized operating margin was 10.9 percent of sales compared with 5.8 percent of sales in the prior year. The improvement in operating margin was primarily driven by favorable mix, positive pricing in Latin America and a reduction in advertising and promotion in North America during the Tools distribution center transition.
Commercial Products net sales were $218.0 million, an 11.1 percent increase compared to prior year. Core sales increased 11.3 percent driven by new innovations, pricing, and strong growth in Brazil and China. Operating income was $27.5 million compared to $23.5 million in the prior year. Operating margin was 12.6 percent of sales, compared with 12.0 percent of sales in the prior year. The increase in operating margin reflects the benefits of strong productivity, pricing and favorable channel mix.
Baby & Parenting net sales were $181.5 million, a 6.5 percent decline compared to prior year. Core sales declined 5.8 percent driven by planned product line exits in Western Europe, difficult market conditions in Eastern Europe and continued competition in Japan. Sales stabilized in North America. Normalized operating income was $10.6 million compared to $24.7 million in the prior year. Normalized operating income was 5.8 percent of sales compared with 12.7 percent of sales in the prior year. The decrease in normalized operating margin was largely due to a significant increase in advertising and promotion in North America, unfavorable mix due to continued weakness in Japan, and the adverse impact of foreign currency.
Expansion of Project Renewal
The company announced an expansion of Project Renewal designed to release costs in the areas of procurement, manufacturing and distribution, and through further overhead reduction. The company expects to deliver these incremental savings by significantly reducing the complexity in the business and simplifying the company's approach to bringing products and programs to market.
The expansion of Project Renewal is expected to generate incremental annualized cost savings of approximately $200 million when fully implemented by the end of 2017. The company expects to incur costs of approximately $200 million over the same period.
By the end of 2017, the company expects Project Renewal to deliver from $470 to $525 million of cumulative annualized savings. Cumulative costs of the expanded Project Renewal are now expected to be $540 to $575 million pretax, with cash costs of $510 to $540 million. The company is on track to realize annualized cost savings from the first two phases of Project Renewal of approximately $270 to $325 million by the middle of 2015.
Nine Month Results
Net sales for the nine months ended September 30, 2014 were $4.20 billion, an increase of 1.4 percent compared with $4.14 billion in the prior year.
Core sales increased 2.9 percent for the nine months excluding the 170 basis point adverse impact from foreign currency and the 20 basis point contribution from the Ignite acquisition.
Gross margin was 38.8 percent. Normalized gross margin was 39.2 percent, an increase of 90 basis points versus prior year.
Normalized operating margin of 14.0 percent represented an increase of 20 basis points compared with 13.8 percent in the prior year, primarily driven by pricing, productivity and favorable mix, partially offset by adverse foreign currency and a significant increase in advertising. Reported operating margin improved by 60 basis points to 11.7 percent due to lower restructuring and restructuring-related costs.
Reported net income was $325.8 million as compared with $357.3 million in the prior year. Reported EPS was $1.16 per diluted share as compared with $1.22 per diluted share in the prior year.
Normalized earnings were $1.51 per diluted share compared with $1.36 per diluted share in the prior year, an increase of 11.0 percent.
Operating cash flow was $343.3 million during the first nine months of 2014 compared with $301.0 million in the prior year.
A reconciliation of the "as reported" results to "normalized" results is included in the appendix.
Strategic Changes
The company announced its decision to pursue the sale of its Endicia online postage and Calphalon retail outlet stores and kitchen electrics businesses. The divestiture of these businesses will create a faster growing, higher margin and more focused portfolio, enabling accelerated performance. The related results of operations of these businesses are reported as discontinued operations in the company's statements of operations.
2014 Full Year Outlook
Newell Rubbermaid reaffirmed its full year 2014 guidance metrics:
• Core sales growth range of 3 to 4 percent;
• Normalized operating margin improvement of up to 40 basis points;
• Normalized EPS of $1.94 to $2.00; and
• Operating cash flow between $600 and $650 million.
The company now expects foreign exchange to have an adverse impact of about 180 basis points on 2014 net sales and approximately $0.17 per diluted share on normalized EPS. The foreign exchange adverse impact on reported EPS is expected to be approximately $0.29 per diluted share including the $0.12 charge included in reported EPS related to the adoption and continued use of the SICAD I rate for the company's Venezuelan operations. Subsequent to the first quarter, the company began using the exchange rate determined by periodic auctions for U.S. dollars conducted under Venezuela's SICAD I exchange mechanism (most recent auction 12.0 Bolivars per U.S. dollar).
The company also expects the newly announced businesses classified in discontinued operations to be one cent dilutive to normalized and reported EPS on the continuing business for the full year of 2014. Given the timing of the completion of the bubba brands acquisition, the company does not expect bubba to have a measurable impact on 2014 reported or normalized EPS.
The 2014 normalized EPS guidance range excludes between $100 and $120 million of Project Renewal restructuring and restructuring-related charges and other project costs. (A reconciliation of "expected reported" results to "normalized" results is included below.)
The company is on track to realize cumulative annualized cost savings of $270 to $325 million by the second quarter of 2015 related to the first two phases of Project Renewal. The majority of these savings is expected to be reinvested in the business to strengthen brand building and selling capabilities to accelerate growth.
Operating cash flow guidance assumes $100 to $120 million in restructuring and restructuring-related cash payments. Capital expenditures are projected at $150 to $175 million.
A reconciliation of the 2014 earnings outlook is as follows:
FY 2014
Diluted earnings per share $1.33 to $1.39
Restructuring and restructuring-related and other product costs 0.29 to 0.37
Costs associated with harness buckle recall 0.03
Venezuela exchange rate impacts 0.13
Pension settlement charge 0.10 to 0.14
Acquisition and integration costs 0.01
Advisory costs 0.01
Resolution of income tax contingencies (0.01)
Income from discontinued operations (0.01)
Normalized EPS $1.94 to $2.00
2015 Full Year Outlook
Newell Rubbermaid reiterated its 2015 full year core sales growth and normalized EPS guidance metrics as well:
Core sales growth 3.5% to 4.0%
Currency impact (2.0%) to (2.5%)
Impact of acquisitions 2.0% to 2.5%
Net sales growth 3.5% to 4.0%
Normalized EPS $2.16 to $2.22
The company expects foreign exchange to have a negative impact of about $0.14 to $0.16 per diluted share on normalized EPS for 2015. The company also expects businesses reported as discontinued operations to be about $0.02 to $0.03 dilutive to normalized and reported EPS for the full year of 2015. The company expects the bubba brands acquisition to be about $0.01 to $0.02 cents accretive to normalized and reported EPS in 2015.
A reconciliation of the 2015 earnings outlook is as follows:
FY 2015
Diluted earnings per share $1.86 to $1.92
Restructuring, restructuring-related and other project costs 0.25 to 0.35
Normalized EPS $2.16 to $2.22
Conference Call
The company's third quarter 2014 earnings conference call will be held today, October 31, 2014, at 9:00 a.m. ET. A link to the webcast is provided under Events & Presentations in the Investor Relations section of Newell Rubbermaid's Web site at www.newellrubbermaid.com. A replay of the webcast and a supporting slide presentation will be made available in the Investor Relations section on the company's Web site under Quarterly Earnings.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission and includes a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
The company uses certain non-GAAP financial measures that are included in this press release and the additional financial information both in explaining its results to stockholders and the investment community and in its internal evaluation and management of its businesses. The company's management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures (a) permit investors to view the company's performance using the same tools that management uses to evaluate the company's past performance, reportable business segments and prospects for future performance and (b) determine certain elements of management's incentive compensation.
The company's management believes that core sales provides a more complete understanding of underlying sales trends by providing sales on a consistent basis as it excludes the impacts of acquisitions and changes in foreign currency from year-over-year comparisons. As reflected in the Currency Analysis, the effect of foreign currency on reported sales is determined by applying a fixed exchange rate, calculated as the 12-month average in 2013, to the current and prior year local currency sales amounts, with the difference in these two amounts being the impact on core sales related to foreign currency, and the difference between the change in as reported sales and the change in core sales related to foreign currency reported as the currency impact. The company's management believes that "normalized" gross margin, "normalized" SG&A expense, "normalized" operating income, "normalized" earnings per share and "normalized" tax rates, which exclude restructuring and restructuring-related expenses and one-time and other events such as costs related to product recalls, the extinguishment of debt, certain tax benefits and charges, impairment charges, pension settlement charges, discontinued operations, costs related to the acquisition and integration of acquired businesses, advisory costs for process transformation and optimization initiatives, asset devaluations resulting from the adoption and continued use of the SICAD I Venezuelan Bolivar exchange rate and certain other items, are useful because they provide investors with a meaningful perspective on the current underlying performance of the company's core ongoing operations. The company also uses core sales, normalized gross margin and normalized earnings per share as the three performance criteria in its management cash bonus plan.
The company determines the tax effect of the items excluded from normalized diluted earnings per share by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected.
While the company believes that these non-GAAP financial measures are useful in evaluating the company's performance, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2013 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Contigo(R), Rubbermaid(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R) and Dymo(R). As part of the company's Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company's Web site, www.newellrubbermaid.com.
Caution Concerning Forward-Looking Statements
Statements in this press release that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income, operating margin or gross margin improvements or declines, Project Renewal, capital and other expenditures, cash flow, dividends, restructuring and restructuring-related costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, changes in exchange rates, product recalls, expected benefits and financial results from recently completed acquisitions and planned divestitures and management's plans, projections and objectives for future operations and performance. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation or escalation of the global economic slowdown or regional sovereign debt issues; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers' strong bargaining power; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands; product liability, product recalls or regulatory actions (including any fines or penalties resulting from governmental investigations into the circumstances related thereto); our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; a failure of one of our key information technology systems or related controls; the potential inability to attract, retain and motivate key employees; future events that could adversely affect the value of our assets and require impairment charges; our ability to improve productivity and streamline operations; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values, declining interest rates or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations, including exchange controls and pricing restrictions; our ability to realize the expected benefits and financial results from our recently acquired businesses and planned divestitures; and those factors listed in our most recently filed Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, and Exhibit 99.1 thereto. Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Three Months Ended September 30,
YOY
2014 2013 % Change
Net sales $ 1,484.5 $ 1,466.1 1.3%
Cost of products sold 907.8 913.6
GROSS MARGIN 576.7 552.5 4.4%
% of sales 38.8% 37.7%
Selling, general & administrative expenses 383.8 342.7 12.0%
% of sales 25.9% 23.4%
Restructuring costs 19.7 31.3
OPERATING INCOME 173.2 178.5 (3.0)%
% of sales 11.7% 12.2%
Nonoperating expenses:
Interest expense, net 14.3 15.7
Other expense, net 7.7 0.7
22.0 16.4 34.1%
INCOME BEFORE INCOME TAXES 151.2 162.1 (6.7)%
% of sales 10.2% 11.1%
Income taxes 28.3 39.9 (29.1)%
Effective rate 18.7% 24.6%
NET INCOME FROM CONTINUING OPERATIONS 122.9 122.2 0.6%
% of sales 8.3% 8.3%
(Loss) income from discontinued operations, net of tax (0.6) 71.1
NET INCOME $ 122.3 $ 193.3 (36.7)%
8.2% 13.2%
EARNINGS PER SHARE:
Basic
Income from continuing operations $ 0.45 $ 0.42
(Loss) income from discontinued operations $ -- $ 0.25
Net income $ 0.45 $ 0.67
Diluted
Income from continuing operations $ 0.44 $ 0.42
(Loss) income from discontinued operations $ -- $ 0.24
Net income $ 0.44 $ 0.66
AVERAGE SHARES OUTSTANDING:
Basic 273.5 290.1
Diluted 276.4 292.9
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Nine Months Ended September 30,
YOY
2014 2013 % Change
Net sales $ 4,201.0 $ 4,141.7 1.4%
Cost of products sold 2,571.7 2,558.5
GROSS MARGIN 1,629.3 1,583.2 2.9%
% of sales 38.8% 38.2%
Selling, general & administrative expenses 1,094.9 1,027.8 6.5%
% of sales 26.1% 24.8%
Restructuring costs 43.2 97.7
OPERATING INCOME 491.2 457.7 7.3%
% of sales 11.7% 11.1%
Nonoperating expenses:
Interest expense, net 43.7 45.3
Other expense, net 45.1 17.9
88.8 63.2 40.5%
INCOME BEFORE INCOME TAXES 402.4 394.5 2.0%
% of sales 9.6% 9.5%
Income taxes 78.7 94.5 (16.7)%
Effective rate 19.6% 24.0%
NET INCOME FROM CONTINUING OPERATIONS 323.7 300.0 7.9%
% of sales 7.7% 7.2%
Income from discontinued operations, net of tax 2.1 57.3
NET INCOME $ 325.8 $ 357.3 (8.8)%
7.8% 8.6%
EARNINGS PER SHARE:
Basic
Income from continuing operations $ 1.17 $ 1.03
Income from discontinued operations $ 0.01 $ 0.20
Net income $ 1.18 $ 1.23
Diluted
Income from continuing operations $ 1.16 $ 1.02
Income from discontinued operations $ 0.01 $ 0.20
Net income $ 1.16 $ 1.22
AVERAGE SHARES OUTSTANDING:
Basic 277.2 290.3
Diluted 279.9 293.4
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
September 30, September 30,
Assets: 2014 2013
Cash and cash equivalents $ 132.6 $ 197.4
Accounts receivable, net 1,158.3 1,056.9
Inventories, net 789.4 822.6
Deferred income taxes 144.8 152.9
Prepaid expenses and other 152.3 154.4
Total Current Assets 2,377.4 2,384.2
Property, plant and equipment, net 525.3 523.1
Goodwill 2,439.5 2,351.4
Other intangible assets, net 733.6 619.2
Other assets 273.4 275.0
Total Assets $ 6,349.2 $ 6,152.9
Liabilities and Stockholders' Equity:
Accounts payable $ 579.1 $ 575.1
Accrued compensation 136.9 145.3
Other accrued liabilities 704.6 692.3
Short-term debt 517.0 29.2
Current portion of long-term debt 251.1 0.9
Total Current Liabilities 2,188.7 1,442.8
Long-term debt 1,418.7 1,671.1
Other noncurrent liabilities 712.8 845.9
Stockholders' Equity - Parent 2,025.5 2,189.6
Stockholders' Equity - Noncontrolling Interests 3.5 3.5
Total Stockholders' Equity 2,029.0 2,193.1
Total Liabilities and Stockholders' Equity $ 6,349.2 $ 6,152.9
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Nine Months Ended September 30,
2014 2013
Operating Activities:
Net income $ 325.8 $ 357.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 114.4 119.4
Net gain from sale of discontinued operations, including impairments (0.4) (86.1)
Non-cash restructuring costs 5.6 3.9
Deferred income taxes (0.7) 76.3
Stock-based compensation expense 21.3 27.7
Other, net 63.1 27.3
Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures:
Accounts receivable (40.9) 35.6
Inventories (111.8) (195.7)
Accounts payable 11.6 74.7
Accrued liabilities and other (44.7) (139.4)
Net cash provided by operating activities $ 343.3 $ 301.0
Investing Activities:
Proceeds from sale of discontinued operations and noncurrent assets $ 8.0 $ 180.9
Acquisitions and acquisition-related activity (312.9) --
Capital expenditures (101.0) (85.7)
Other (2.5) 1.8
Net cash (used in) provided by investing activities $ (408.4) $ 97.0
Financing Activities:
Net short-term borrowings $ 343.1 $ (180.9)
Repurchase and retirement of shares of common stock (262.6) (119.2)
Cash dividends (136.1) (132.1)
Excess tax benefits related to stock-based compensation 7.6 14.1
Other stock-based compensation activity, net 45.0 35.9
Net cash used in financing activities $ (3.0) $ (382.2)
Currency rate effect on cash and cash equivalents $ (25.6) $ (2.2)
(Decrease) increase in cash and cash equivalents $ (93.7) $ 13.6
Cash and cash equivalents at beginning of period 226.3 183.8
Cash and cash equivalents at end of period $ 132.6 $ 197.4
Newell Rubbermaid Inc.
Financial Worksheet- Segment Reporting
(In Millions)
2014 2013
Reconciliation (1,2)
Reconciliation (1)
Year-over-year changes
Reported Excluded Normalized Operating
Reported Excluded Normalized Operating Net Sales Normalized OI
Net Sales OI Items OI Margin Net Sales OI Items OI Margin $ % $ %
Q1:
Writing $ 348.2 $ 76.1 $ -- $ 76.1 21.9% $ 328.5 $ 60.6 $ -- $ 60.6 18.4% $ 19.7 6.0% $ 15.5 25.6%
Home Solutions 316.4 26.8 -- 26.8 8.5% 332.0 34.7 -- 34.7 10.5% (15.6) (4.7)% (7.9) (22.8)%
Tools 187.8 21.4 -- 21.4 11.4% 188.6 18.7 -- 18.7 9.9% (0.8) (0.4)% 2.7 14.4%
Commercial Products 182.6 13.8 -- 13.8 7.6% 183.1 21.6 -- 21.6 11.8% (0.5) (0.3)% (7.8) (36.1)%
Baby & Parenting 179.3 5.4 11.0 16.4 9.1% 189.6 23.9 -- 23.9 12.6% (10.3) (5.4)% (7.5) (31.4)%
Restructuring Costs -- (12.0) 12.0 --
-- (34.4) 34.4 --
--
--
Corporate -- (26.8) 7.7 (19.1)
-- (29.3) 6.6 (22.7)
--
3.6 15.9%
Total $ 1,214.3 $ 104.7 $ 30.7 $ 135.4 11.2% $ 1,221.8 $ 95.8 $ 41.0 $ 136.8 11.2% $ (7.5) (0.6)% $ (1.4) (1.0)%
2014 2013
Reconciliation (1,2,3)
Reconciliation (1)
Year-over-year changes
Reported Excluded Normalized Operating
Reported Excluded Normalized Operating Net Sales Normalized OI
Net Sales OI Items OI Margin Net Sales OI Items OI Margin $ % $ %
Q2:
Writing $ 489.3 $ 129.1 $ 4.0 $ 133.1 27.2% $ 464.5 $ 121.4 $ -- $ 121.4 26.1% $ 24.8 5.3% $ 11.7 9.6%
Home Solutions 383.4 48.7 -- 48.7 12.7% 391.5 53.9 -- 53.9 13.8% (8.1) (2.1)% (5.2) (9.6)%
Tools 222.3 29.9 -- 29.9 13.5% 198.0 18.3 -- 18.3 9.2% 24.3 12.3% 11.6 63.4%
Commercial Products 223.5 36.2 -- 36.2 16.2% 203.6 21.9 -- 21.9 10.8% 19.9 9.8% 14.3 65.3%
Baby & Parenting 183.7 12.2 0.4 12.6 6.9% 196.2 23.8 -- 23.8 12.1% (12.5) (6.4)% (11.2) (47.1)%
Restructuring Costs -- (11.5) 11.5 --
-- (32.0) 32.0 --
--
--
Corporate -- (31.3) 10.5 (20.8)
-- (23.9) 2.1 (21.8)
--
1.0 4.6%
Total $ 1,502.2 $ 213.3 $ 26.4 $ 239.7 16.0% $ 1,453.8 $ 183.4 $ 34.1 $ 217.5 15.0% $ 48.4 3.3% $ 22.2 10.2%
2014 2013
Reconciliation (1,2,3,4)
Reconciliation (1)
Year-over-year changes
Reported Excluded Normalized Operating
Reported Excluded Normalized Operating Net Sales Normalized OI
Net Sales OI Items OI Margin Net Sales OI Items OI Margin $ % $ %
Q3:
Writing $ 453.2 $ 108.3 $ 1.1 $ 109.4 24.1% $ 442.2 $ 107.9 $ 0.3 $ 108.2 24.5% $ 11.0 2.5% $ 1.2 1.1%
Home Solutions 417.0 60.9 3.1 64.0 15.3% 422.8 67.1 -- 67.1 15.9% (5.8) (1.4)% (3.1) (4.6)%
Tools 214.8 22.1 1.4 23.5 10.9% 210.6 12.3 -- 12.3 5.8% 4.2 2.0% 11.2 91.1%
Commercial Products 218.0 27.5 -- 27.5 12.6% 196.3 23.5 -- 23.5 12.0% 21.7 11.1% 4.0 17.0%
Baby & Parenting 181.5 8.2 2.4 10.6 5.8% 194.2 23.9 0.8 24.7 12.7% (12.7) (6.5)% (14.1) (57.1)%
Restructuring Costs -- (19.7) 19.7 --
-- (31.3) 31.3 --
--
--
Corporate -- (34.1) 12.0 (22.1)
-- (24.9) 5.7 (19.2)
--
(2.9) (15.1)%
Total $ 1,484.5 $ 173.2 $ 39.7 $ 212.9 14.3% $ 1,466.1 $ 178.5 $ 38.1 $ 216.6 14.8% $ 18.4 1.3% $ (3.7) (1.7)%
2014 2013
Reconciliation (1,2,3,4)
Reconciliation (1)
Year-over-year changes
Reported Excluded Normalized Operating
Reported Excluded Normalized Operating Net Sales Normalized OI
Net Sales OI Items OI Margin Net Sales OI Items OI Margin $ % $ %
YTD:
Writing $ 1,290.7 $ 313.5 $ 5.1 $ 318.6 24.7% $ 1,235.2 $ 289.9 $ 0.3 $ 290.2 23.5% $ 55.5 4.5% $ 28.4 9.8%
Home Solutions 1,116.8 136.4 3.1 139.5 12.5% 1,146.3 155.7 -- 155.7 13.6% (29.5) (2.6)% (16.2) (10.4)%
Tools 624.9 73.4 1.4 74.8 12.0% 597.2 49.3 -- 49.3 8.3% 27.7 4.6% 25.5 51.7%
Commercial Products 624.1 77.5 -- 77.5 12.4% 583.0 67.0 -- 67.0 11.5% 41.1 7.0% 10.5 15.7%
Baby & Parenting 544.5 25.8 13.8 39.6 7.3% 580.0 71.6 0.8 72.4 12.5% (35.5) (6.1)% (32.8) (45.3)%
Restructuring Costs -- (43.2) 43.2 --
-- (97.7) 97.7 --
--
--
Corporate -- (92.2) 30.2 (62.0)
-- (78.1) 14.4 (63.7)
--
1.7 2.7%
Total $ 4,201.0 $ 491.2 $ 96.8 $ 588.0 14.0% $ 4,141.7 $ 457.7 $ 113.2 $ 570.9 13.8% $ 59.3 1.4% $ 17.1 3.0%
(1) Excluded items consist of organizational change implementation, restructuring-related, and restructuring costs. Organizational change implementation and restructuring-related costs of $25.7 million and restructuring costs of $43.2 million incurred during 2014 relate to Project Renewal. Excluded items for 2014 also include $5.9 million of advisory costs for process transformation and optimization. For 2013, organizational change implementation and restructuring-related costs of $15.5 million and restructuring costs of $97.7 million relate to Project Renewal.
(2) Baby & Parenting normalized operating income for 2014 excludes charges of $13.8 million relating to the Graco product recall.
(3) Writing normalized operating income for 2014 excludes charges of $5.1 million associated with Venezuelan inventory resulting from changes in the exchange rate for the Venezuelan Bolivar.
(4) Home Solutions normalized operating income for 2014 excludes $3.1 million of acquisition and integration charges associated with the acquisition of Ignite Holdings, LLC.
Newell Rubbermaid Inc.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
CERTAIN LINE ITEMS
(in millions, except per share data)
Three Months Ended September 30, 2014
GAAP Measure
Restructuring and Charge resulting Inventory charge Advisory costs for Acquisition
Non-GAAP Measure
Product restructuring-related from the devaluation of the from the devaluation of the process transformation and integration Discontinued
Percentage
Reported recall costs (1) costs (2) Venezuelan Bolivar (3) Venezuelan Bolivar (4) and optimization (5) costs (6) operations (7) Normalized* of Sales
Cost of products sold $ 907.8 $ (2.7) $ (1.4) $ -- $ (1.1) $ -- $ -- $ -- $ 902.6 60.8%
Gross margin $ 576.7 $ 2.7 $ 1.4 $ -- $ 1.1 $ -- $ -- $ -- $ 581.9 39.2%
Selling, general & administrative expenses $ 383.8 $ 0.3 $ (6.1) $ -- $ -- $ (5.9) $ (3.1) $ -- $ 369.0 24.9%
Operating income $ 173.2 $ 2.4 $ 27.2 $ -- $ 1.1 $ 5.9 $ 3.1 $ -- $ 212.9 14.3%
Nonoperating expenses $ 22.0 $ -- $ -- $ (6.9) $ -- $ -- $ -- $ -- $ 15.1
Income before income taxes $ 151.2 $ 2.4 $ 27.2 $ 6.9 $ 1.1 $ 5.9 $ 3.1 $ -- $ 197.8
Income taxes (8) $ 28.3 $ 0.9 $ 6.7 $ (0.3) $ (0.1) $ 2.2 $ 0.9 $ -- $ 38.6
Net income from continuing operations $ 122.9 $ 1.5 $ 20.5 $ 7.2 $ 1.2 $ 3.7 $ 2.2 $ -- $ 159.2
Net income $ 122.3 $ 1.5 $ 20.5 $ 7.2 $ 1.2 $ 3.7 $ 2.2 $ 0.6 $ 159.2
Diluted earnings per share** $ 0.44 $ 0.01 $ 0.07 $ 0.03 $ -- $ 0.01 $ 0.01 $ -- $ 0.58
Three Months Ended September 30, 2013
GAAP Measure Restructuring and
Non-GAAP Measure
restructuring-related Discontinued Non-recurring
Percentage
Reported costs (2) operations (7) tax items (9) Normalized* of Sales
Cost of products sold $ 913.6 $ (1.1) $ -- $ -- $ 912.5 62.2%
Gross margin $ 552.5 $ 1.1 $ -- $ -- $ 553.6 37.8%
Selling, general & administrative expenses $ 342.7 $ (5.7) $ -- $ -- $ 337.0 23.0%
Operating income $ 178.5 $ 38.1 $ -- $ -- $ 216.6 14.8%
Income before income taxes $ 162.1 $ 38.1 $ -- $ -- $ 200.2
Income taxes (8) $ 39.9 $ 5.7 $ -- $ 3.1 $ 48.7
Net income from continuing operations $ 122.2 $ 32.4 $ -- $ (3.1) $ 151.5
Net income $ 193.3 $ 32.4 $ (71.1) $ (3.1) $ 151.5
Diluted earnings per share** $ 0.66 $ 0.11 $ (0.24) $ (0.01) $ 0.52
* Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**Totals may not add due to rounding.
(1) During the three months ended September 30, 2014, the Company recognized a $2.4 million charge associated with the Graco product recall.
(2) Restructuring and restructuring-related costs during the three months ended September 30, 2014 include $7.5 million of organizational change implementation and restructuring-related costs and $19.7 million of restructuring costs incurred in connection with Project Renewal. Restructuring and restructuring-related costs during the three months ended September 30, 2013 include $6.8 million of organizational change implementation and restructuring-related costs and $31.3 million of restructuring costs incurred in connection with Project Renewal.
(3) During the three months ended September 30, 2014, the Company recognized foreign exchange losses of $6.9 million resulting from changes in the exchange rate for the Venezuelan Bolivar, which under hyperinflationary accounting is recorded in the Statement of Operations.
(4) During the three months ended September 30, 2014, the Company recognized an increase of $1.1 million in cost of products sold resulting from increased costs of inventory due to changes in the exchange rate for the Venezuelan Bolivar.
(5) During the three months ended September 30, 2014, the Company recognized $5.9 million of advisory costs for process transformation and optimization initiatives.
(6) During the three months ended September 30, 2014, the Company recognized $3.1 million of costs associated with the acquisition and integration of Ignite Holdings, LLC.
(7) During the three months ended September 30, 2014, the Company recognized net losses, including impairments, of $0.6 million in discontinued operations primarily related to Endicia and certain Culinary businesses. During the three months ended September 30, 2013, the Company recognized net income of $71.1 million in discontinued operations, primarily relating to the operations of the Hardware, Teach, Endicia and certain Culinary businesses and a gain on the sale of the Hardware business.
(8) The Company determined the tax effect of the items excluded from normalized results by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected.
(9) During the three months ended September 30, 2013, the Company recognized non-recurring income tax benefits of $3.1 million resulting from the resolution of various income tax contingencies and the expiration of various statutes of limitation.
Newell Rubbermaid Inc.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
CERTAIN LINE ITEMS
(in millions, except per share data)
Nine Months Ended September 30, 2014
GAAP Measure
Restructuring and Charge resulting Inventory charge Advisory costs for Acquisition
Non-GAAP Measure
Product restructuring-related from the devaluation of the from the devaluation of the process transformation and integration Discontinued Non-recurring
Percentage
Reported recall costs (1) costs (2) Venezuelan Bolivar (3) Venezuelan Bolivar (4) and optimization (5) costs (6) operations (7) tax items (8) Normalized* of Sales
Cost of products sold $ 2,571.7 $ (11.3) $ (1.6) $ -- $ (5.1) $ -- $ -- $ -- $ -- $ 2,553.7 60.8%
Gross margin $ 1,629.3 $ 11.3 $ 1.6 $ -- $ 5.1 $ -- $ -- $ -- $ -- $ 1,647.3 39.2%
Selling, general & administrative expenses $ 1,094.9 $ (2.5) $ (24.1) $ -- $ -- $ (5.9) $ (3.1) $ -- $ -- $ 1,059.3 25.2%
Operating income $ 491.2 $ 13.8 $ 68.9 $ -- $ 5.1 $ 5.9 $ 3.1 $ -- $ -- $ 588.0 14.0%
Nonoperating expenses $ 88.8 $ -- $ -- $ (45.6) $ -- $ -- $ -- $ -- $ -- $ 43.2
Income before income taxes $ 402.4 $ 13.8 $ 68.9 $ 45.6 $ 5.1 $ 5.9 $ 3.1 $ -- $ -- $ 544.8
Income taxes (9) $ 78.7 $ 5.1 $ 17.2 $ 13.6 $ 1.3 $ 2.2 $ 0.9 $ -- $ 3.3 $ 122.3
Net income from continuing operations $ 323.7 $ 8.7 $ 51.7 $ 32.0 $ 3.8 $ 3.7 $ 2.2 $ -- $ (3.3) $ 422.5
Net income $ 325.8 $ 8.7 $ 51.7 $ 32.0 $ 3.8 $ 3.7 $ 2.2 $ (2.1) $ (3.3) $ 422.5
Diluted earnings per share** $ 1.16 $ 0.03 $ 0.18 $ 0.11 $ 0.01 $ 0.01 $ 0.01 $ (0.01) $ (0.01) $ 1.51
Nine Months Ended September 30, 2013
GAAP Measure Restructuring and Charge resulting
Non-GAAP Measure
restructuring-related from the devaluation of the Discontinued Non-recurring
Percentage
Reported costs (2) Venezuelan Bolivar (3) operations (7) tax items (8) Normalized* of Sales
Cost of products sold $ 2,558.5 $ (1.1) $ -- $ -- $ -- $ 2,557.4 61.7%
Gross margin $ 1,583.2 $ 1.1 $ -- $ -- $ -- $ 1,584.3 38.3%
Selling, general & administrative expenses $ 1,027.8 $ (14.4) $ -- $ -- $ -- $ 1,013.4 24.5%
Operating income $ 457.7 $ 113.2 $ -- $ -- $ -- $ 570.9 13.8%
Nonoperating expenses $ 63.2 $ -- $ (11.1) $ -- $ -- $ 52.1
Income before income taxes $ 394.5 $ 113.2 $ 11.1 $ -- $ -- $ 518.8
Income taxes (9) $ 94.5 $ 14.2 $ 4.1 $ -- $ 7.9 $ 120.7
Net income from continuing operations $ 300.0 $ 99.0 $ 7.0 $ -- $ (7.9) $ 398.1
Net income $ 357.3 $ 99.0 $ 7.0 $ (57.3) $ (7.9) $ 398.1
Diluted earnings per share** $ 1.22 $ 0.34 $ 0.02 $ (0.20) $ (0.03) $ 1.36
* Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**Totals may not add due to rounding.
(1) During the nine months ended September 30, 2014, the Company recognized $13.8 million of charges associated with the Graco product recall.
(2) Restructuring and restructuring-related costs during the nine months ended September 30, 2014 include $25.7 million of organizational change implementation and restructuring-related costs and $43.2 million of restructuring costs incurred in connection with Project Renewal. Restructuring and restructuring-related costs during the nine months ended September 30, 2013 include $15.5 million of organizational change implementation and restructuring-related costs and $97.7 million of restructuring costs incurred in connection with Project Renewal.
(3) During the nine months ended September 30, 2014 and 2013, the Company recognized foreign exchange losses of $45.6 million and $11.1 million, respectively, resulting from the devaluation of and subsequent changes in the exchange rate for the Venezuelan Bolivar, which under hyperinflationary accounting is recorded in the Statement of Operations.
(4) During the nine months ended September 30, 2014, the Company recognized an increase of $5.1 million in cost of products sold resulting from increased costs of inventory due to changes in the exchange rate for the Venezuelan Bolivar.
(5) During the nine months ended September 30, 2014, the Company recognized $5.9 million of advisory costs for process transformation and optimization initiatives.
(6) During the nine months ended September 30, 2014, the Company recognized $3.1 million of costs associated with the acquisition and integration of Ignite Holdings, LLC.
(7) During the nine months ended September 30, 2014, the Company recognized net income, net of impairments, of $2.1 million in discontinued operations, which include the results of operations of Endicia and certain Culinary businesses. During the nine months ended September 30, 2013, the Company recognized net income of $57.3 million in discontinued operations, primarily relating to the operations, including impairments, of the Hardware, Teach, Endicia and certain Culinary businesses and a gain on the sale of the Hardware business.
(8) During the nine months ended September 30, 2014 and 2013, the Company recognized non-recurring income tax benefits of $3.3 million and $7.9 million, respectively, resulting from the resolution of various income tax contingencies and the expiration of various statutes of limitation.
(9) The Company determined the tax effect of the items excluded from normalized results by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected.
Newell Rubbermaid Inc.
Three Months Ended September 30, 2014
In Millions
Currency Analysis
By Segment
Net Sales,
As Reported Core
Sales (1)
Year-Over-Year Increase (Decrease)
Increase
Increase Less Inc. (Dec.) Excl. Currency Excluding Including Currency
Core Sales
2014 2013 (Decrease) 2014 2013 (Decrease) Acquisitions Acquisitions Impact Currency Currency Impact Acquisitions Growth (1)
Writing $ 453.2 $ 442.2 $ 11.0 $ 481.6 $ 444.8 $ 36.8 $ -- $ 36.8 $ (25.8) 8.3% 2.5% (5.8)% 0.0% 8.3%
Home Solutions 417.0 422.8 (5.8) 419.1 423.6 (4.5) 9.0 (13.5) (1.3) (1.1)% (1.4)% (0.3)% 2.1% (3.2)%
Tools 214.8 210.6 4.2 218.3 213.4 4.9 -- 4.9 (0.7) 2.3% 2.0% (0.3)% 0.0% 2.3%
Commercial Products 218.0 196.3 21.7 219.0 196.7 22.3 -- 22.3 (0.6) 11.3% 11.1% (0.2)% 0.0% 11.3%
Baby & Parenting 181.5 194.2 (12.7) 183.3 194.5 (11.2) -- (11.2) (1.5) (5.8)% (6.5)% (0.7)% 0.0% (5.8)%
Total Company $ 1,484.5 $ 1,466.1 $ 18.4 $ 1,521.3 $ 1,473.0 $ 48.3 $ 9.0 $ 39.3 $ (29.9) 3.3% 1.3% (2.0)% 0.6% 2.7%
Win Bigger Businesses Core Sales Growth (2) $ 886.0 $ 849.1 $ 36.9 $ 918.9 $ 854.9 $ 64.0 $ -- $ 64.0 $ (27.1) 7.5% 4.3% (3.2)% 0.0% 7.5%
By Geography
United States $ 1,034.3 $ 1,015.3 $ 19.0 $ 1,034.3 $ 1,015.3 $ 19.0 $ 9.0 $ 10.0 $ -- 1.9% 1.9% 0.0% 0.9% 1.0%
Canada 79.0 84.8 (5.8) 82.6 85.7 (3.1) -- (3.1) (2.7) (3.6)% (6.8)% (3.2)% 0.0% (3.6)%
Total North America 1,113.3 1,100.1 13.2 1,116.9 1,101.0 15.9 9.0 6.9 (2.7) 1.4% 1.2% (0.2)% 0.8% 0.6%
Europe, Middle East and Africa 156.1 162.5 (6.4) 157.8 162.5 (4.7) -- (4.7) (1.7) (2.9)% (3.9)% (1.0)% 0.0% (2.9)%
Latin America 116.0 104.3 11.7 144.2 108.2 36.0 -- 36.0 (24.3) 33.3% 11.2% (22.1)% 0.0% 33.3%
Asia Pacific 99.1 99.2 (0.1) 102.4 101.3 1.1 -- 1.1 (1.2) 1.1% (0.1)% (1.2)% 0.0% 1.1%
Total International 371.2 366.0 5.2 404.4 372.0 32.4 -- 32.4 (27.2) 8.7% 1.4% (7.3)% 0.0% 8.7%
Total Company $ 1,484.5 $ 1,466.1 $ 18.4 $ 1,521.3 $ 1,473.0 $ 48.3 $ 9.0 $ 39.3 $ (29.9) 3.3% 1.3% (2.0)% 0.6% 2.7%
(1) "Core Sales" is determined by applying a fixed exchange rate, calculated as the 12-month average in 2013, to the current and prior year local currency sales amounts, with the difference between the change in "As Reported" sales and the change in "Core Sales" reported in the table as "Currency Impact". Core Sales Growth excludes the impact of currency and acquisitions.
(2) Win Bigger businesses include Writing, Tools, and Commercial Products segments.
Newell Rubbermaid Inc.
Nine Months Ended September 30, 2014
In Millions
Currency Analysis
By Segment
Net Sales,
As Reported Core
Sales (1)
Year-Over-Year
Increase (Decrease)
Increase
Increase Less Inc. (Dec.) Excl. Currency Excluding Including Currency
Core Sales
2014 2013 (Decrease) 2014 2013 (Decrease) Acquisitions Acquisitions Impact Currency Currency Impact Acquisitions Growth (1)
Writing $ 1,290.7 $ 1,235.2 $ 55.5 $ 1,341.8 $ 1,236.5 $ 105.3 $ -- $ 105.3 $ (49.8) 8.5% 4.5% (4.0)% 0.0% 8.5%
Home Solutions 1,116.8 1,146.3 (29.5) 1,123.5 1,146.1 (22.6) 9.0 (31.6) (6.9) (2.0)% (2.6)% (0.6)% 0.8% (2.8)%
Tools 624.9 597.2 27.7 632.0 597.3 34.7 -- 34.7 (7.0) 5.8% 4.6% (1.2)% 0.0% 5.8%
Commercial Products 624.1 583.0 41.1 626.2 583.5 42.7 -- 42.7 (1.6) 7.3% 7.0% (0.3)% 0.0% 7.3%
Baby & Parenting 544.5 580.0 (35.5) 547.4 580.2 (32.8) -- (32.8) (2.7) (5.7)% (6.1)% (0.4)% 0.0% (5.7)%
Total Company $ 4,201.0 $ 4,141.7 $ 59.3 $ 4,270.9 $ 4,143.6 $ 127.3 $ 9.0 $ 118.3 $ (68.0) 3.1% 1.4% (1.7)% 0.2% 2.9%
Win Bigger Businesses Core Sales Growth (2) $ 2,539.7 $ 2,415.4 $ 124.3 $ 2,600.0 $ 2,417.3 $ 182.7 $ -- $ 182.7 $ (58.4) 7.6% 5.1% (2.5)% 0.0% 7.6%
By Geography
United States $ 2,884.1 $ 2,810.7 $ 73.4 $ 2,884.1 $ 2,810.7 $ 73.4 $ 9.0 $ 64.4 $ -- 2.6% 2.6% 0.0% 0.3% 2.3%
Canada 208.9 230.0 (21.1) 220.8 229.5 (8.7) -- (8.7) (12.4) (3.8)% (9.2)% (5.4)% 0.0% (3.8)%
Total North America 3,093.0 3,040.7 52.3 3,104.9 3,040.2 64.7 9.0 55.7 (12.4) 2.1% 1.7% (0.4)% 0.3% 1.8%
Europe, Middle East and Africa 508.3 510.7 (2.4) 501.0 516.0 (15.0) -- (15.0) 12.6 (2.9)% (0.5)% 2.4% 0.0% (2.9)%
Latin America 310.8 281.7 29.1 366.0 280.4 85.6 -- 85.6 (56.5) 30.5% 10.3% (20.2)% 0.0% 30.5%
Asia Pacific 288.9 308.6 (19.7) 299.0 307.0 (8.0) -- (8.0) (11.7) (2.6)% (6.4)% (3.8)% 0.0% (2.6)%
Total International 1,108.0 1,101.0 7.0 1,166.0 1,103.4 62.6 -- 62.6 (55.6) 5.7% 0.6% (5.1)% 0.0% 5.7%
Total Company $ 4,201.0 $ 4,141.7 $ 59.3 $ 4,270.9 $ 4,143.6 $ 127.3 $ 9.0 $ 118.3 $ (68.0) 3.1% 1.4% (1.7)% 0.2% 2.9%
(1) "Core Sales" is determined by applying a fixed exchange rate, calculated as the 12-month average in 2013, to the current and prior year local currency sales amounts, with the difference between the change in "As Reported" sales and the change in "Core Sales" reported in the table as "Currency Impact". Core Sales Growth excludes the impact of currency and acquisitions.
(2) Win Bigger businesses include Writing, Tools, and Commercial Products segments.
Newell Rubbermaid Inc.
Six Months Ended September 30, 2014
In Millions
Currency Analysis
By Segment
Three Months Ended June 30, 2014
Net Sales,
As Reported Core
Sales (1)
Year-Over-Year Increase (Decrease)
Increase
Increase Less Inc. (Dec.) Excl. Currency Excluding Including Currency
Core Sales
2014 2013 (Decrease) 2014 2013 (Decrease) Acquisitions Acquisitions Impact Currency Currency Impact Acquisitions Growth (1)
Writing $ 489.3 $ 464.5 $ 24.8 $ 508.8 $ 466.2 $ 42.6 $ -- $ 42.6 $ (17.8) 9.1% 5.3% (3.8)% 0.0% 9.1%
Home Solutions 383.4 391.5 (8.1) 386.1 391.2 (5.1) -- (5.1) (3.0) (1.3)% (2.1)% (0.8)% 0.0% (1.3)%
Tools 222.3 198.0 24.3 223.5 198.0 25.5 -- 25.5 (1.2) 12.9% 12.3% (0.6)% 0.0% 12.9%
Commercial Products 223.5 203.6 19.9 224.1 204.0 20.1 -- 20.1 (0.2) 9.9% 9.8% (0.1)% 0.0% 9.9%
Baby & Parenting 183.7 196.2 (12.5) 184.2 197.5 (13.3) -- (13.3) 0.8 (6.7)% (6.4)% 0.3% 0.0% (6.7)%
Total Company $ 1,502.2 $ 1,453.8 $ 48.4 $ 1,526.7 $ 1,456.9 $ 69.8 $ -- $ 69.8 $ (21.4) 4.8% 3.3% (1.5)% 0.0% 4.8%
Win Bigger Businesses Core Sales Growth (2) $ 935.1 $ 866.1 $ 69.0 $ 956.4 $ 868.2 $ 88.2 $ -- $ 88.2 $ (19.2) 10.2% 8.0% (2.2)% 0.0% 10.2%
Total Company Three Months Ended September 30, 2014 1,484.5 1,466.1 18.4 1,521.3 1,473.0 48.3 9.0 39.3 (29.9) 3.3% 1.3% (2.0)% 0.6% 2.7%
Total Company Six Months Ended September 30, 2014 $ 2,986.7 $ 2,919.9 $ 66.8 $ 3,048.0 $ 2,929.9 $ 118.1 $ 9.0 $ 109.1 $ (51.3) 4.0% 2.3% (1.7)% 0.3% 3.7%
Win Bigger Three Months Ended September 30, 2014 (2) 886.0 849.1 36.9 918.9 854.9 64.0 -- 64.0 (27.1) 7.5% 4.3% (3.2)% 0.0% 7.5%
Win Bigger Six Months Ended September 30, 2014 (2) $ 1,821.1 $ 1,715.2 $ 105.9 $ 1,875.3 $ 1,723.1 $ 152.2 $ -- $ 152.2 $ (46.3) 8.8% 6.2% (2.6)% 0.0% 8.8%
(1) "Core Sales" is determined by applying a fixed exchange rate, calculated as the 12-month average in 2013, to the current and prior year local currency sales amounts, with the difference between the change in "As Reported" sales and the change in "Core Sales" reported in the table as "Currency Impact". Core Sales Growth excludes the impact of currency and acquisitions.
(2) Win Bigger businesses include Writing, Tools, and Commercial Products segments.
FinanceInvestment & Company Information
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Global Communications
(770) 418-7251
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WisdomTree Announces Third Quarter 2014 Results
WisdomTree Investments, Inc. 3 hours ago GlobeNewswire
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$0.08 diluted net income EPS
Pre-tax income increases 35% and revenues increase 19% from year ago quarter
Declares $0.08 quarterly dividend and $100 million share buyback program
Lowers baseline U.S. tax rate to approximately 38%
NEW YORK, Oct. 31, 2014 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. ( WETF), an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager, today reported net income of $10.6 million or $0.08 per diluted EPS in the third quarter. Pre-tax income was $20.3 million in the third quarter, an increase of 35.4% from the third quarter of 2013 and 0.6% from the second quarter of 2014. Pre-tax income is comparable to previous periods since prior to 2014, the Company did not record tax expense because of its net operating losses.
Included in the quarter was a loss of $1.5 million, or $0.01 per diluted EPS, associated with the Company's European listed ETP business, which was acquired in April 2014. The Company also lowered its U.S. income tax rate to approximately 38% from 45% (see "Income Taxes" for further discussion).
WisdomTree CEO and President Jonathan Steinberg said, "WisdomTree reported another quarter of record revenues and strong financial results. Despite the challenging market, net inflow levels increased from the second quarter to $748 million."
Mr. Steinberg continued, "The growing scale and positive momentum of our business is driving powerful cash generation. In addition, we are lowering our tax rate which will increase our earnings going forward, further propelling WisdomTree to a position of financial strength. As a result, we believe the time is right to institute a new component of our capital management program."
Capital Return Program - Quarterly Dividend and Share Buyback
The Company's Board of Directors declared a quarterly cash dividend of $0.08 per share of the Company's common stock. The dividend will be paid on November 26, 2014, to stockholders of record as of the close of business on November 12, 2014.
The Board also authorized the Company to purchase up to $100 million of its common stock over three years, including purchases to offset future equity grants made under the Company's equity plans. Purchases under this program will be made in open market or privately negotiated transactions. This authority may be exercised from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program may be suspended or terminated at any time without prior notice.
"We have structured a capital management plan which reflects WisdomTree's strength, strategy and commitment to our shareholders. With $164 million in cash and investments, we are confident we can continue to profitably grow the business and reinvest aggressively for future growth while continuing to generate surplus cash," added Mr. Steinberg.
Summary Operating and Financial Highlights
Three Months Ended Change From
Sep. 30, Jun. 30, Sep. 30,
Jun. 30, Sep. 30,
Operating Highlights 2014 2014 2013 2014 2013
U.S. listed ETFs($, in billions):
AUM $35.8 $35.5 $31.4 0.9% 14.3%
Net inflows/(outflows) $0.7 $0.3 $1.2 124.0% (35.5%)
Average AUM $35.6 $34.1 $30.5 4.1% 16.7%
Average advisory fee 0.52% 0.51% 0.51% 0.01 0.01
Market share of industry inflows 1.5% 0.6% 2.2% 0.9 (0.7)
European listed ETPs($, in millions):
AUM $123.2 $113.2 -- 8.8% --
Net inflows/(outflows) $19.2 $17.7 -- 8.7% --
Average advisory fee 0.79% 0.82% -- (0.03) --
Financial Highlights($, in millions, except per share amounts):
Consolidated Results:
Total revenues $47.1 $44.1 $39.6 6.8% 18.9%
Pre-tax income $20.3 $20.1 $15.0 0.6% 35.4%
Net income $10.6 $10.6 $15.0 0.2% (29.0%)
Diluted earnings per share $0.08 $0.08 $0.11 -- ($0.03)
Pre-tax margin 43.0% 45.6% 37.8% (2.6) 5.2
U.S. listed ETFs:
Total revenues $46.9 $43.9 $39.6 6.7% 18.3%
Pre-tax income $21.8 $21.7 $15.0 0.6% 45.9%
Gross margin1 (non-GAAP) 82.2% 82.4% 76.9% (0.2) 5.3
Pre-tax margin 46.6% 49.4% 37.8% (2.8) 8.8
1 Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.
Recent Business Developments
• On September 18, 2014, WisdomTree announced six of its ETFs are available on Schwab ETF OneSource
• On August 12, 2014, WisdomTree announced a strategic alliance with leading Australian ETP provider BetaShares
• On October 24, 2014, WisdomTree Europe announced the launch of 4 UCITS ETFs on the London Stock Exchange (LSE)
Assets Under Management and Net Inflows
U.S. listed ETF assets under management ("AUM") were $35.8 billion at September 30, 2014, up 14.3% from September 30, 2013 primarily due to inflow levels. U.S. listed AUM was up 0.9% from June 30, 2014 primarily due to $0.7 billion of net inflows partly offset by $0.4 billion of negative market movement.
European listed AUM was $123.2 million, up 8.8% from $113.2 million at June 30, 2014 primarily due to $19.2 million of net inflows partly offset by $9.2 million of negative market movement.
Performance
In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, 86% of the $35.3 billion invested in our ETFs and 56% (29 of 52) of our ETFs outperformed their comparable Morningstar average since inception as of September 30, 2014.
For more information about WisdomTree ETFs including standardized performance, pleaseclick here or visit www.wisdomtree.com.
Third Quarter Financial Discussion
Revenues
Total revenues increased 18.9% from the third quarter of 2013 and 6.8% compared to the second quarter of 2014 to $47.1 million primarily due to higher average AUM and average fee capture. Included in the third quarter was $0.2 million in revenues from our European listed ETPs, which were acquired in April 2014. Our average advisory fee for our U.S. listed ETFs was 0.52% as compared to 0.51% for the third quarter of 2013 and 0.51% in the second quarter of 2014.
Margins
Gross margin for our U.S. listed ETFs, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 82.2% in the third quarter of 2014 as compared to 76.9% in the third quarter of 2013 and 82.4% in the second quarter of 2014. The increase was primarily due to beneficial pricing changes for our fund accounting, administration and custody services, which took effect April 2014.
Pre-tax margin was 43.0% in the third quarter of 2014 as compared to 37.8% in the third quarter of 2013 and 45.6% in the second quarter of 2014. Pre-tax margin for our U.S. listed ETFs was 46.6% in the quarter.
Expenses
Total expenses increased 8.9% from the third quarter of 2013 and 11.9% compared to the second quarter of 2014 to $26.9 million. Included in the quarter was $1.8 million of expenses associated with our European listed ETPs.
• Compensation and benefits expense increased 3.5% from the third quarter of 2013 to $10.0 million as lower accrued incentive compensation due to our inflow levels were offset by higher headcount related expenses to support our growth. In addition, we incurred higher compensation costs due to our acquisition of Boost in April 2014. This expense increased 32.3% as compared to the second quarter of 2014 primarily due to higher accrued incentive compensation and headcount related expenses. Our global headcount was 114 at the end of the third quarter of 2014.
• Fund management and administration expense decreased 3.7% from the third quarter of 2013 to $8.5 million. This decrease was primarily due to the transfer of our fund accounting, administration and custody services to State Street, despite the higher average AUM. Partly offsetting this decrease was $0.3 million of expenses for our European listed ETPs. This expense increased 8.3% from the second quarter of 2014 primarily due to variable costs related to higher average AUM. We had 69 U.S. listed ETFs and 42 European listed ETPs at the end of the third quarter of 2014.
• Marketing and advertising expense increased 64.5% from the third quarter of 2013 and 22.6% from the second quarter of 2014 to $3.3 million primarily due to higher levels of advertising related activities to support our growth.
• Sales and business development expense decreased 2.0% from the third quarter of 2013 and 25.9% from the second quarter of 2014 to $1.3 million primarily due to lower spending for sales and product development related initiatives.
• Professional and consulting fees increased $0.8 million from the third quarter of 2013 to $1.4 million primarily due to higher strategic corporate consulting costs. This expense decreased 24.8% compared to the second quarter of 2014. The second quarter of 2014 included advisory and other costs associated with our transaction to acquire Boost, which we completed in April 2014.
• Occupancy, communication and equipment expense increased 22.0% from the third quarter of 2013 to $0.9 million primarily due to costs for new office space which we began to occupy in January 2014. This expense was relatively unchanged compared to the second quarter of 2014.
• Depreciation and amortization expense increased $0.1 million to $0.2 million from the third quarter of 2013 primarily due to amortization of leasehold improvements for our new office space. This expense was essentially unchanged compared to the second quarter of 2014.
• Third-party sharing arrangements expense decreased 50.0% to $0.2 million in the third quarter of 2014 as compared to the third quarter of 2013 primarily due to lower fees to our third party marketing agent in Latin America. This expense was relatively unchanged as compared to the second quarter of 2014.
• Other expenses remained relatively unchanged as compared to the third quarter of 2013 and second quarter of 2014 at $1.1 million.
Income Taxes
The Company completed state tax planning which resulted in a reduction of its current baseline operating tax rate in the U.S. from 45% to approximately 38%. As a result, the Company recorded a charge to tax expense to reduce the value of its deferred tax asset, which had previously been recorded at a 45% rate. In addition, the Company accounted for non-deductible expenses associated with its acquisition of Boost in April 2014. As a result of these items, the Company recorded a charge of $1.3 million to tax expense. Management will discuss income taxes further on its conference call.
Balance Sheet
As of September 30, 2014, the Company had total assets of $202.2 million which consisted primarily of cash and cash equivalents of $151.3 million and investments of $12.2 million. There were approximately 131.9 million shares of common stock outstanding as of September 30, 2014. Fully diluted weighted average shares outstanding were 138.3 million for the third quarter.
Conference Call
WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 31, 2014 at 9:00 a.m. ET. The call-in number will be (877) 303-7209. Anyone outside the U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
In particular, forward-looking statements in this press release may include statements about:
• anticipated trends, conditions and investor sentiment in the global markets and ETPs;
• anticipated levels of inflows into and outflows out of our ETPs;
• our ability to deliver favorable rates of return to investors;
• our ability to develop new products and services;
• our ability to maintain current vendors or find new vendors to provide services to U.S. at favorable costs;
• our ability to successfully expand our business into non-U.S. markets;
• timing of payment of our cash income taxes;
• competition in our business; and
• the effect of laws and regulations that apply to our business.
Our business is subject to many risks and uncertainties, including without limitation:
• We have only a limited operating history and, as a result, recent historical growth may not provide an accurate representation of the growth we may experience in the future, which may make it difficult to evaluate our future prospects.
• Challenging market conditions associated with declining prices of securities can adversely affect our business by reducing the market value of the assets we manage or causing customers to sell their fund shares and trigger redemptions.
• Fluctuations in the amount and mix of our AUM may negatively impact revenue and operating margin.
• Most of our assets under management are held in our U.S. listed ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to currency exchange rate risks.
• We derive a substantial portion of our revenue from products invested in emerging markets and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets.
• We derive a substantial amount of our revenue from products invested in securities of Japanese companies and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets and currency fluctuations between the Japanese Yen and the U.S. Dollar.
• We derive a majority of our revenue from a limited number of products -- in particular one fund, WisdomTree Japan Hedged Equity Fund, that accounted for approximately 30% of our ETF AUM -- and, as a result, our operating results are particularly exposed to the performance of those funds, investor sentiment toward the strategies pursued by those funds and our ability to maintain the assets under management of those funds.
• Our ETPs and ETFs have a limited track record, and poor investment performance could cause our revenue to decline.
• We depend on other third parties to provide many critical services to operate our business and our ETPs and ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm our customers.
Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, please see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this press release.
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, "WisdomTree"), is an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. WisdomTree currently has approximately $35.9 billion in assets under management globally.
WisdomTree(R) is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended % Change From Nine Months Ended
Sep. 30,
2014 Jun. 30,
2014 Sep. 30,
2013 Jun. 30,
2014 Sep. 30,
2013 Sep. 30,
2014 Sep. 30,
2013 %
Change
Revenues
Advisory fees $ 46,942 $ 43,938 $ 39,437 6.8% 19.0% $ 133,489 $ 105,691 26.3%
Other income 172 190 193 -9.5% -10.9% 673 611 10.1%
Total revenues 47,114 44,128 39,630 6.8% 18.9% 134,162 106,302 26.2%
Expenses
Compensation and benefits 9,990 7,551 9,648 32.3% 3.5% 26,896 26,577 1.2%
Fund management and administration 8,465 7,818 8,794 8.3% -3.7% 25,451 26,123 -2.6%
Marketing and advertising 3,341 2,726 2,031 22.6% 64.5% 8,645 6,164 40.2%
Sales and business development 1,279 1,727 1,305 -25.9% -2.0% 4,307 4,626 -6.9%
Professional and consulting fees 1,383 1,840 542 -24.8% 155.2% 5,018 1,812 176.9%
Occupancy, communication and equipment 882 853 723 3.4% 22.0% 2,635 1,691 55.8%
Depreciation and amortization 207 201 84 3.0% 146.4% 600 249 141.0%
Third party sharing arrangements 187 115 374 62.6% -50.0% 312 913 -65.8%
Other 1,123 1,164 1,164 -3.5% -3.5% 3,429 3,086 11.1%
Total expenses 26,857 23,995 24,665 11.9% 8.9% 77,293 71,241 8.5%
Income before taxes 20,257 20,133 14,965 0.6% 35.4% 56,869 35,061 62.2%
Income tax expense 9,634 9,531 -- -- -- 5,440 -- --
Net income $ 10,623 $ 10,602 $ 14,965 0.2% -29.0% $ 51,429 $ 35,061 46.7%
Income before taxes per share - basic $ 0.15 $ 0.15 $ 0.12
$ 0.43 $ 0.28
Income before taxes per share - diluted $ 0.15 $ 0.15 $ 0.11
$ 0.41 $ 0.25
Net income per share - basic $ 0.08 $ 0.08 $ 0.12
$ 0.39 $ 0.28
Net income per share - diluted $ 0.08 $ 0.08 $ 0.11
$ 0.37 $ 0.25
Weighted average common shares - basic 131,778 131,533 126,509
131,418 125,909
Weighted average common shares - diluted 138,346 138,258 140,097
138,476 139,805
WISDOMTREE INVESTMENTS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
U.S. Listed Business
U.S.
Listed
Business European
Listed
Business
Total
% Change From
Q3/14 Q3/14 Q3/14 Q3/14 Q2/14 Q3/13 Q2/14 Q3/13
Revenues
Advisory fees $ 46,659 $ 283 $ 46,942 $ 46,659 $ 43,753 $ 39,437 6.6% 18.3%
Other income 224 (52) 172 224 182 193 23.1% 16.1%
Total revenues 46,883 231 47,114 46,883 43,935 39,630 6.7% 18.3%
Expenses
Compensation and benefits 9,250 740 9,990 9,250 7,026 9,648 31.7% -4.1%
Fund management and administration 8,139 326 8,465 8,139 7,625 8,794 6.7% -7.4%
Marketing and advertising 3,244 97 3,341 3,244 2,675 2,031 21.3% 59.7%
Sales and business development 1,185 94 1,279 1,185 1,653 1,305 -28.3% -9.2%
Professional and consulting fees 945 438 1,383 945 1,026 542 -7.9% 74.4%
Occupancy, communication and equipment 809 73 882 809 807 723 0.2% 11.9%
Depreciation and amortization 206 1 207 206 199 84 3.5% 145.2%
Third party sharing arrangements 187 -- 187 187 115 374 62.6% -50.0%
Other 1,088 35 1,123 1,088 1,105 1,164 -1.5% -6.5%
Total expenses 25,053 1,804 26,857 25,053 22,231 24,665 12.7% 1.6%
Income/(loss) before taxes 21,830 (1,573) 20,257 21,830 21,704 14,965 0.6% 45.9%
Income tax expense/(benefit) 9,662 (28) 9,634 9,662 9,873 -- -2.1% n/a
Net income/(loss) $ 12,168 $ (1,545) $ 10,623 $ 12,168 $ 11,831 $ 14,965 2.8% -18.7%
Pretax margin 46.6%
43.0%
Gross margin 82.2%
81.6%
WISDOMTREE INVESTMENTS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
U.S. Listed Business
U.S.
Listed
Business European
Listed
Business
Total
%
9M/14 9M/14 9M/14 9M/14 9M/13 Change
Revenues
Advisory fees $ 133,021 $ 468 $ 133,489 $ 133,021 $ 105,691 26%
Other income 717 (44) 673 717 611 17%
Total revenues 133,738 424 134,162 133,738 106,302 26%
Expenses
Compensation and benefits 25,631 1,265 26,896 25,631 26,577 -4%
Fund management and administration 24,932 519 25,451 24,932 26,123 -5%
Marketing and advertising 8,497 148 8,645 8,497 6,164 38%
Sales and business development 4,139 168 4,307 4,139 4,626 -11%
Professional and consulting fees 3,766 1,252 5,018 3,766 1,812 108%
Occupancy, communication and equipment 2,516 119 2,635 2,516 1,691 49%
Depreciation and amortization 597 3 600 597 249 140%
Third party sharing arrangements 312 -- 312 312 913 -66%
Other 3,335 94 3,429 3,335 3,086 8%
Total expenses 73,725 3,568 77,293 73,725 71,241 3%
Income/(loss) before taxes 60,013 (3,144) 56,869 60,013 35,061 71%
Income tax expense/(benefit) 5,810 (370) 5,440 5,810 -- n/a
Net income/(loss) $ 54,203 $ (2,774) $ 51,429 $ 54,203 $ 35,061 55%
Pretax margin 44.9%
42.4%
Gross margin 81.1%
80.8%
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
September 30,
2014 December 31,
2013
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 151,287 $ 104,316
Accounts receivable 16,268 18,100
Other current assets 2,208 1,320
Total current assets 169,763 123,736
Fixed assets, net 10,263 6,252
Investments 12,224 11,748
Deferred tax asset, net 8,253 --
Goodwill 1,676 --
Other noncurrent assets 56 55
Total assets $ 202,235 $ 141,791
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Fund management and administration payable $ 8,833 $ 10,394
Compensation and benefits payable 7,062 14,278
Accounts payable and other liabilities 4,956 4,384
Total current liabilities 20,851 29,056
Other noncurrent liabilities:
Acquisition payable 1,757 --
Deferred rent payable 5,326 3,706
Total liabilities 27,934 32,762
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 250,000 shares authorized: issued: 133,516 and 132,247 outstanding: 131,947 and 130,350 1,335 1,322
Additional paid-in capital 198,040 184,201
Accumulated other comprehensive loss (9) --
Accumulated deficit (25,065) (76,494)
Total stockholders' equity 174,301 109,029
Total liabilities and stockholders' equity $ 202,235 $ 141,791
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
2014 September 30,
2013
Cash flows from operating activities
Net income $ 51,429 $ 35,061
Non-cash items included in net income:
Income tax expense 5,396 --
Depreciation and amortization 600 249
Stock-based compensation 6,122 5,186
Deferred rent 1,620 111
Accretion to interest income and other (76) 108
Changes in operating assets and liabilities:
Accounts receivable 2,049 (3,683)
Other assets (811) (720)
Fund management and administration payable (1,579) 3,697
Compensation and benefits payable (7,510) 7,235
Accounts payable and other liabilities (590) 471
Net cash provided by operating activities 56,650 47,715
Cash flows from investing activities
Purchase of fixed assets (4,580) (1,118)
Purchase of investments (1,384) (3,358)
Cash acquired on acquisition 1,349 --
Proceeds from the redemption of investments 868 2,693
Net cash used in investing activities (3,747) (1,783)
Cash flows from financing activities
Shares repurchased (6,259) (1,413)
Proceeds from exercise of stock options 341 1,349
Net cash used in financing activities (5,918) (64)
Decrease in cash flows due to changes in foreign exchange rate (14) --
Net increase in cash and cash equivalents 46,971 45,868
Cash and cash equivalents - beginning of period 104,316 41,246
Cash and cash equivalents - end of period $ 151,287 $ 87,114
Supplemental disclosure of cash flow information
Cash paid for taxes $ 66 $ 33
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
Three Months Ended Nine Months Ended
September 30,
2014 June 30,
2014 September 30,
2013 September 30,
2014 September 30,
2013
U.S. LISTED ETFs
Total ETFs (in millions)
Beginning of period assets 35,500 33,884 28,975 34,884 18,286
Inflows/(outflows) 748 334 1,160 580 12,015
Market appreciation/(depreciation) (425) 1,282 1,217 359 1,051
End of period assets 35,823 35,500 31,352 35,823 31,352
Average assets during the period 35,554 34,141 30,473 34,518 26,932
Revenue Days 92 91 92 273 273
ETF Industry and Market Share (in billions)
ETF industry net inflows 48.5 57.7 53.7 120.7 121.3
WisdomTree market share of industry inflows 1.5% 0.6% 2.2% 0.5% 9.9%
International Hedged Equity ETFs (in millions)
Beginning of period assets 12,557 12,612 10,270 13,348 1,258
Inflows/(outflows) 799 (502) 752 285 9,199
Market appreciation/(depreciation) 615 447 459 338 1,024
End of period assets 13,971 12,557 11,481 13,971 11,481
Average assets during the period 12,654 12,189 11,175 12,631 7,744
US Equity ETFs (in millions)
Beginning of period assets 8,052 7,505 5,777 7,181 4,371
Inflows/(outflows) 84 221 273 494 1,111
Market appreciation/(depreciation) (197) 326 221 264 789
End of period assets 7,939 8,052 6,271 7,939 6,271
Average assets during the period 8,067 7,721 6,214 7,655 5,502
Emerging Markets Equity ETFs (in millions)
Beginning of period assets 7,606 6,753 7,172 7,448 7,332
Inflows/(outflows) 270 388 286 26 1,111
Market appreciation/(depreciation) (381) 465 245 21 (740)
End of period assets 7,495 7,606 7,703 7,495 7,703
Average assets during the period 7,878 7,088 7,289 7,247 7,719
International Developed Equity ETFs (in millions)
Beginning of period assets 5,340 4,830 2,633 3,864 2,474
Inflows/(outflows) (452) 518 205 878 401
Market appreciation/(depreciation) (394) (8) 312 (248) 275
End of period assets 4,494 5,340 3,150 4,494 3,150
Average assets during the period 5,016 5,135 2,888 4,833 2,782
Fixed Income ETFs (in millions)
Beginning of period assets 1,376 1,610 2,437 1,906 2,118
Inflows/(outflows) 69 (278) (320) (515) 266
Market appreciation/(depreciation) (66) 44 (22) (12) (289)
End of period assets 1,379 1,376 2,095 1,379 2,095
Average assets during the period 1,385 1,435 2,246 1,522 2,466
Currency ETFs (in millions)
Beginning of period assets 406 422 547 979 611
Inflows/(outflows) (35) (21) (48) (605) (98)
Market appreciation/(depreciation) (9) 5 3 (12) (11)
End of period assets 362 406 502 362 502
Average assets during the period 380 413 515 468 586
Alternative Strategy ETFs (in millions)
Beginning of period assets 163 152 139 158 122
Inflows/(outflows) 13 8 12 17 25
Market appreciation/(depreciation) 7 3 (1) 8 3
End of period assets 183 163 150 183 150
Average assets during the period 174 160 146 162 133
Average ETF assets during the period
International hedged equity ETFs 36% 36% 37% 37% 29%
US equity ETFs 23% 23% 20% 22% 20%
Emerging markets equity ETFs 22% 21% 24% 21% 29%
International developed equity ETFs 14% 15% 9% 14% 10%
Fixed income ETFs 4% 4% 7% 4% 9%
Currency ETFs 1% 1% 2% 1% 2%
Alternative strategy ETFs 0% 0% 1% 1% 1%
Total 100% 100% 100% 100% 100%
Average ETF advisory fee during the period
Alternative strategy ETFs 0.94% 0.94% 0.94% 0.94% 0.94%
Emerging markets equity ETFs 0.68% 0.67% 0.66% 0.67% 0.66%
International developed equity ETFs 0.56% 0.57% 0.56% 0.56% 0.56%
Fixed income ETFs 0.55% 0.55% 0.55% 0.55% 0.55%
International hedged equity ETFs 0.50% 0.50% 0.49% 0.50% 0.49%
Currency ETFs 0.49% 0.49% 0.50% 0.49% 0.50%
US equity ETFs 0.35% 0.35% 0.35% 0.35% 0.35%
Blended total 0.52% 0.51% 0.51% 0.52% 0.52%
Number of ETFs - end of the period
International developed equity ETFs 17 17 16 17 16
US equity ETFs 13 13 13 13 13
Fixed income ETFs 12 12 6 12 6
International hedged equity ETFs 12 12 4 12 4
Emerging markets equity ETFs 7 7 7 7 7
Currency ETFs 6 6 5 6 5
Alternative strategy ETFs 2 2 2 2 2
Total 69 69 53 69 53
EUROPEAN LISTED ETPs
Total ETPs (in thousands)
Beginning of period assets*** 113,244 96,817
96,817
Inflows/(outflows) 19,192 17,658
36,850
Market appreciation/(depreciation) (9,226) (1,231)
(10,457)
End of period assets 123,210 113,244
123,210
Average ETP advisory fee during the period 0.79% 0.82%
0.80%
Number of ETPs - end of the period 42 38
42
Global headcount 114 103 84 114 84
Note: Previously issued statistics may be restated due to trade adjustments
Source: Investment Company Institute, Bloomberg, WisdomTree
***Q1 and 9 month stats began April 16, 2014
Non-GAAP Financial Measurements
In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. The non-GAAP financial measurements included in this release include gross margin, gross margin percentage and our operating results for our U.S. listed ETF business. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. We disclose gross margin as a non-GAAP financial measurement to allow investors to analyze our revenues less the direct costs paid to third parties attributable to those revenues. We disclose the results of our U.S. listed ETF business to allow investors to better compare our results to the prior year as in April 2014, we acquired Boost ETP, a UK based ETP sponsor.
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP to NON-GAAP RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended For the Nine Months Ended
Sep. 30,
2014 Jun. 30,
2014 Sep. 30,
2013 Sep. 30,
2014 Sep. 30,
2013
GAAP total revenue $ 47,114 $ 44,128 $ 39,630 $ 134,162 $ 106,302
Fund management and administration (8,465) (7,818) (8,794) (25,451) (26,123)
Third party sharing arrangements (187) (115) (374) (312) (913)
Gross margin $ 38,462 $ 36,195 $ 30,462 $ 108,399 $ 79,266
Gross margin percentage 81.6% 82.0% 76.9% 80.8% 74.6%
U.S. listed ETFs:
GAAP total revenue $ 46,883 $ 43,935
Fund management and administration (8,139) (7,625)
Third party sharing arrangements (187) (115)
Gross margin $ 38,557 $ 36,195
Gross margin percentage 82.2% 82.4%
FinanceInvestment & Company Information
Contact:
WisdomTree Investments, Inc.
Stuart Bell / Jessica Zaloom
+1.917.267.3702 / +1.917.267.3735
sbell@wisdomtree.com / jzaloom@wisdomtree.com
Macau Operations
In the third quarter of 2014, net revenues were $942.3 million, a 5.6% decrease from the $997.6 million generated in the third quarter of 2013. Adjusted property EBITDA in the third quarter of 2014 was $325.5 million, down 1.1% from $329.1 million in the third quarter of 2013.
Table games results in Macau are segregated into two distinct reporting categories, the VIP segment and the mass market segment.
Table games turnover in the VIP segment was $25.1 billion for the third quarter of 2014, a 17.4% decrease from $30.3 billion in the third quarter of 2013. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.78%, within the expected range of 2.7% to 3.0% and below the 3.04% experienced in the third quarter of 2013.
Table games win in the mass market segment increased by 36.4% to $327.2 million in the third quarter of 2014. Mass market table games win per unit per day increased by 38.0% to $17,759 from $12,872 in the third quarter of 2013. Drop in the mass market segment was $641.2 million in the third quarter of 2014, up 1.7% from the 2013 third quarter, while the segment’s win percentage of 51.0% compares to 38.0% in last year’s third quarter and sequentially to 45.6% in the second quarter of 2014. Customers purchase mass market gaming chips at either the gaming tables or the casino cage. Chips purchased at the casino cage are excluded from table games drop and will increase the expected win percentage. With the increased purchases at the casino cage, we believe the relevant indicator of volumes in the mass market segment should be actual table games win rather than win percentage.
Slot machine handle of $1.4 billion for the third quarter of 2014 was 23.2% above the prior-year quarter, and slot win increased 31.9% compared to the prior-year period. Win per unit per day was 97.1% higher at $1,358, compared to $689 in the third quarter of 2013, due in part to a reduction in the number of units on the casino floor.
For the third quarter of 2014, we achieved an average daily rate (ADR) of $327, 5.5% above the $310 reported in the 2013 third quarter. Occupancy at Wynn Macau of 98.5% compares to 95.8% in the prior-year period, and revenue per available room (REVPAR) rose 8.4% to $322 in the 2014 quarter from $297 in last year’s third quarter. Non-casino revenues, before promotional allowances, increased 1.4% during the quarter to $99.1 million.
Wynn Palace Project in Macau
The Company is currently constructing Wynn Palace, a fully integrated resort containing a 1,700-room hotel, performance lake, meeting space, casino, spa, retail offerings, and food and beverage outlets in the Cotai area of Macau. In July 2013, we signed a $2.6 billion guaranteed maximum price (GMP) contract for the project’s construction. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is approximately $4.1 billion. We expect to open our resort on Cotai in the first half of 2016.
During the third quarter of 2014, we invested approximately $301.1 million in our Cotai project, taking the total investment to date to $1.4 billion.
Wynn Resorts, Limited Reports Third Quarter 2014 Results
Wynn Resorts, Limited 46 minutes ago
LAS VEGAS--(BUSINESS WIRE)--
Wynn Resorts, Limited ( WYNN) today reported financial results for the third quarter ended September 30, 2014.
Net revenues for the third quarter of 2014 were $1,370.0 million, compared to $1,390.1 million in the third quarter of 2013. The decline was the result of a 5.6% net revenue decrease from our Macau Operations, partially offset by a 9.0% increase in net revenues from our Las Vegas Operations. Adjusted property EBITDA (1) was $458.8 million for the third quarter of 2014, a 5.3% increase from $435.6 million in the third quarter of 2013.
On a US GAAP basis, net income attributable to Wynn Resorts for the third quarter of 2014 was $191.4 million, or $1.88 per diluted share, compared to net income attributable to Wynn Resorts of $182.0 million, or $1.79 per diluted share, in the third quarter of 2013.
Adjusted net income attributable to Wynn Resorts, Limited (2) in the third quarter of 2014 was $199.2 million, or $1.95 per diluted share (adjusted EPS), compared to an adjusted net income attributable to Wynn Resorts of $187.0 million, or $1.84 per diluted share, in the third quarter of 2013.
Wynn Resorts also announced today that the Company has approved a new quarterly cash dividend of $1.50 per common share, a 20% increase from its previous regular dividend. The Company has also approved an additional cash dividend of $1.00 per share. The total dividend of $2.50 per share will be payable on November 25, 2014, to stockholders of record on November 12, 2014.
Macau Operations
In the third quarter of 2014, net revenues were $942.3 million, a 5.6% decrease from the $997.6 million generated in the third quarter of 2013. Adjusted property EBITDA in the third quarter of 2014 was $325.5 million, down 1.1% from $329.1 million in the third quarter of 2013.
Table games results in Macau are segregated into two distinct reporting categories, the VIP segment and the mass market segment.
Table games turnover in the VIP segment was $25.1 billion for the third quarter of 2014, a 17.4% decrease from $30.3 billion in the third quarter of 2013. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.78%, within the expected range of 2.7% to 3.0% and below the 3.04% experienced in the third quarter of 2013.
Table games win in the mass market segment increased by 36.4% to $327.2 million in the third quarter of 2014. Mass market table games win per unit per day increased by 38.0% to $17,759 from $12,872 in the third quarter of 2013. Drop in the mass market segment was $641.2 million in the third quarter of 2014, up 1.7% from the 2013 third quarter, while the segment’s win percentage of 51.0% compares to 38.0% in last year’s third quarter and sequentially to 45.6% in the second quarter of 2014. Customers purchase mass market gaming chips at either the gaming tables or the casino cage. Chips purchased at the casino cage are excluded from table games drop and will increase the expected win percentage. With the increased purchases at the casino cage, we believe the relevant indicator of volumes in the mass market segment should be actual table games win rather than win percentage.
Slot machine handle of $1.4 billion for the third quarter of 2014 was 23.2% above the prior-year quarter, and slot win increased 31.9% compared to the prior-year period. Win per unit per day was 97.1% higher at $1,358, compared to $689 in the third quarter of 2013, due in part to a reduction in the number of units on the casino floor.
For the third quarter of 2014, we achieved an average daily rate (ADR) of $327, 5.5% above the $310 reported in the 2013 third quarter. Occupancy at Wynn Macau of 98.5% compares to 95.8% in the prior-year period, and revenue per available room (REVPAR) rose 8.4% to $322 in the 2014 quarter from $297 in last year’s third quarter. Non-casino revenues, before promotional allowances, increased 1.4% during the quarter to $99.1 million.
Wynn Palace Project in Macau
The Company is currently constructing Wynn Palace, a fully integrated resort containing a 1,700-room hotel, performance lake, meeting space, casino, spa, retail offerings, and food and beverage outlets in the Cotai area of Macau. In July 2013, we signed a $2.6 billion guaranteed maximum price (GMP) contract for the project’s construction. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is approximately $4.1 billion. We expect to open our resort on Cotai in the first half of 2016.
During the third quarter of 2014, we invested approximately $301.1 million in our Cotai project, taking the total investment to date to $1.4 billion.
Las Vegas Operations
For the quarter ended September 30, 2014, net revenues were $427.8 million, a 9.0% increase from $392.5 million in the third quarter of 2013. Adjusted property EBITDA rose 25.1% to $133.3 million, up from $106.5 million generated in the comparable period in 2013.
Net casino revenues in the third quarter of 2014 were $178.6 million, a 10.5% increase from the third quarter of 2013. Table games drop of $640.9 million was down 5.2% from $676.3 million in the 2013 quarter. Table games win percentage was 25.7%, above both the property’s expected range of 21% to 24% and the 22.6% reported in the 2013 quarter. Slot machine handle of $788.1 million was 7.4% above the $733.5 million in the comparable period of 2013, and net slot win was up 3.5%.
Room revenues were up 7.2% to $102.5 million during the quarter, versus $95.7 million in the third quarter of 2013. ADR increased 6.8% to $267 from $250, and occupancy improved to 89.3% from 87.9% in the third quarter of 2013. REVPAR was $238 in the 2014 third quarter, 8.2% above the $220 reported in the prior-year quarter.
Food and beverage revenues in the third quarter of 2014 were $136.4 million, up 5.8% from the 2013 third quarter. Entertainment, retail and other revenues improved 1.8% from last year’s quarter to $59.1 million.
Balance Sheet and Other
Our total cash and investment securities balance at September 30, 2014 was $3.1 billion. Total debt outstanding at the end of the quarter was $7.3 billion, including $3.0 billion of Wynn Las Vegas debt, $2.4 billion of Wynn Macau debt and $1.9 billion at the parent company.
Additionally, on September 17, 2014, the Massachusetts Gaming Commission designated the Company the award winner of the Greater Boston (Region A) gaming license. This license is reliant on the outcome of a ballot vote on November 4, 2014, to uphold the state's expanded gaming law.
Conference Call Information
The Company will hold a conference call to discuss its results on October 28, 2014 at 1:30 p.m. PT (4:30 p.m. ET). Interested parties are invited to join the call by accessing a live audio webcast at http://www.wynnresorts.com.
Forward-looking Statements
This release contains forward-looking statements regarding operating trends and future results of operations. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those we express in these forward-looking statements, including, but not limited to, our dependence on existing management, results of regulatory or enforcement actions and probity investigations, pending or future legal proceedings, uncertainties over the development and success of new gaming and resort properties, adverse tourism trends, general global macroeconomic conditions, changes in gaming laws or regulations, volatility and weakness in world-wide credit and financial markets, and our substantial indebtedness and leverage. Additional information concerning potential factors that could affect the Company’s financial results is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and the Company’s other periodic reports filed with the Securities and Exchange Commission. The Company is under no obligation to (and expressly disclaims any such obligation to) update or revise its forward-looking statements as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
(1) “Adjusted property EBITDA” is earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, corporate expenses, intercompany golf course and water rights leases, stock-based compensation, and other non-operating income and expenses, and includes equity in income from unconsolidated affiliates. Adjusted property EBITDA is presented exclusively as a supplemental disclosure because management believes that it is widely used to measure the performance, and as a basis for valuation, of gaming companies. Management uses adjusted property EBITDA as a measure of the operating performance of its segments and to compare the operating performance of its properties with those of its competitors. The Company also presents adjusted property EBITDA because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements. Gaming companies have historically reported EBITDA as a supplement to financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”). In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Wynn Resorts, Limited, have historically excluded from their EBITDA calculations pre-opening expenses, property charges, corporate expenses and stock-based compensation, that do not relate to the management of specific casino properties. However, adjusted property EBITDA should not be considered as an alternative to operating income as an indicator of the Company’s performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. Unlike net income, adjusted property EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. The Company has significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in adjusted property EBITDA. Also, Wynn Resorts’ calculation of adjusted property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
(2) "Adjusted net income attributable to Wynn Resorts, Limited" is net income before pre-opening costs, property charges and other, and certain other non-operating income and expenses. Adjusted net income attributable to Wynn Resorts, Limited and adjusted net income per share attributable to Wynn Resorts, Limited (“adjusted EPS”) are presented as supplemental disclosures because management believes that these non-GAAP financial measures are widely used to measure the performance, and as a principal basis for valuation, of gaming companies. These measures are used by management and/or evaluated by some investors, in addition to income and EPS computed in accordance with GAAP, as an additional basis for assessing period-to-period results of our business. Adjusted net income attributable to Wynn Resorts, Limited and adjusted net income attributable to Wynn Resorts, Limited per share may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
The Company has included schedules in the tables that accompany this release that reconcile (i) net income attributable to Wynn Resorts, Limited to adjusted net income attributable to Wynn Resorts, Limited, and (ii) operating income to adjusted property EBITDA and adjusted property EBITDA to net income attributable to Wynn Resorts, Limited.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2014 2013 2014 2013
Operating revenues:
Casino $ 1,071,829 $ 1,105,595 $ 3,389,557 $ 3,228,246
Rooms 135,734 123,078 413,565 372,931
Food and beverage 160,531 152,218 476,676 461,474
Entertainment, retail and other 100,916 105,144 306,411 309,738
Gross revenues 1,469,010 1,486,035 4,586,209 4,372,389
Less: promotional allowances (99,000 ) (95,923 ) (290,523 ) (271,350 )
Net revenues 1,370,010 1,390,112 4,295,686 4,101,039
Operating costs and expenses:
Casino 647,460 699,897 2,112,430 2,062,507
Rooms 39,235 33,646 112,239 101,020
Food and beverage 91,214 84,118 266,853 253,458
Entertainment, retail and other 40,612 45,478 125,025 128,760
General and administrative 126,834 105,026 366,631 332,316
Provision (benefit) for doubtful accounts 4,695 11,325 (743 ) 7,104
Pre-opening costs 6,718 706 14,792 1,592
Depreciation and amortization 79,027 93,325 234,037 279,061
Property charges and other 1,640 2,613 13,674 13,571
Total operating costs and expenses 1,037,435 1,076,134 3,244,938 3,179,389
Operating income 332,575 313,978 1,050,748 921,650
Other income (expense):
Interest income 5,814 3,215 16,072 11,595
Interest expense, net of capitalized interest (79,048 ) (73,549 ) (236,069 ) (222,690 )
Increase (decrease) in swap fair value 2,360 (3,525 ) (1,451 ) 13,131
Loss on extinguishment of debt (3,573 ) — (7,356 ) (26,578 )
Equity in income from unconsolidated affiliates 567 288 1,173 879
Other (801 ) 1,123 (405 ) 4,385
Other income (expense), net (74,681 ) (72,448 ) (228,036 ) (219,278 )
Income before income taxes 257,894 241,530 822,712 702,372
(Provision) benefit for income taxes (4,888 ) 7,281 (8,261 ) 11,299
Net income 253,006 248,811 814,451 713,671
Less: net income attributable to noncontrolling interest (61,600 ) (66,791 ) (192,243 ) (198,903 )
Net income attributable to Wynn Resorts, Limited $ 191,406 $ 182,020 $ 622,208 $ 514,768
Basic and diluted income per common share:
Net income attributable to Wynn Resorts, Limited:
Basic $ 1.90 $ 1.81 $ 6.17 $ 5.12
Diluted $ 1.88 $ 1.79 $ 6.10 $ 5.07
Weighted average common shares outstanding:
Basic 100,959 100,685 100,899 100,470
Diluted 101,999 101,547 101,986 101,526
Dividends declared per common share: $ 1.25 $ 1.00 $ 3.75 $ 3.00
WYNN RESORTS, LIMITED AND SUBSIDIARIES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED
TO ADJUSTED NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2014 2013 2014 2013
Net income attributable to Wynn Resorts, Limited $ 191,406 $ 182,020 $ 622,208 $ 514,768
Pre-opening costs
6,718 706 14,792 1,592
Loss on extinguishment of debt 3,573 — 7,356 26,578
(Increase) decrease in swap fair value (2,360 ) 3,525 1,451 (13,131 )
Property charges and other 1,640 2,613 13,674 13,571
Adjustment for noncontrolling interest (1,796 ) (1,820 ) (8,474 ) 2,227
Adjusted net income attributable to Wynn Resorts, Limited (2) $ 199,181 $ 187,044 $ 651,007 $ 545,605
Adjusted net income attributable to Wynn Resorts, Limited per diluted share $ 1.95 $ 1.84 $ 6.38 $ 5.37
WYNN RESORTS, LIMITED AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO ADJUSTED PROPERTY EBITDA
AND ADJUSTED PROPERTY EBITDA TO NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED
(in thousands)
(unaudited)
Three Months Ended September 30, 2014
Macau
Operations
Las Vegas
Operations
Corporate
and Other
Total
Operating income $ 234,928 $ 69,932 $ 27,715 $ 332,575
Pre-opening costs 6,718 — — 6,718
Depreciation and amortization 32,348 45,148 1,531 79,027
Property charges and other 2,097 (457 ) — 1,640
Management and royalty fees 36,088 6,424 (42,512 ) —
Corporate expenses and other 9,404 11,189 7,290 27,883
Stock-based compensation 3,946 838 5,585 10,369
Equity in income from unconsolidated affiliates — 176 391 567
Adjusted Property EBITDA(1) $ 325,529 $ 133,250 $ — $ 458,779
Three Months Ended September 30, 2013
Macau
Operations
Las Vegas
Operations
Corporate
and Other
Total
Operating income $ 249,146 $ 29,099 $ 35,733 $ 313,978
Pre-opening costs 706 — — 706
Depreciation and amortization 30,012 61,720 1,593 93,325
Property charges and other 2,337 276 — 2,613
Management and royalty fees 39,602 5,892 (45,494 ) —
Corporate expenses and other 6,188 7,343 5,976 19,507
Stock-based compensation 1,115 2,149 1,940 5,204
Equity in income from unconsolidated affiliates — 36 252 288
Adjusted Property EBITDA(1) $ 329,106 $ 106,515 $ — $ 435,621
Three months ended September 30,
2014 2013
Adjusted Property EBITDA(1) $ 458,779 $ 435,621
Pre-opening costs (6,718 ) (706 )
Depreciation and amortization (79,027 ) (93,325 )
Property charges and other (1,640 ) (2,613 )
Corporate expenses and other (27,883 ) (19,507 )
Stock-based compensation (10,369 ) (5,204 )
Interest income 5,814 3,215
Interest expense, net of capitalized interest (79,048 ) (73,549 )
Increase (decrease) in swap fair value 2,360 (3,525 )
Loss on extinguishment of debt (3,573 ) —
Other (801 ) 1,123
(Provision) benefit for income taxes (4,888 ) 7,281
Net income 253,006 248,811
Less: Net income attributable to noncontrolling interest (61,600 ) (66,791 )
Net income attributable to Wynn Resorts, Limited $ 191,406 $ 182,020
WYNN RESORTS, LIMITED AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO ADJUSTED PROPERTY EBITDA
AND ADJUSTED PROPERTY EBITDA TO NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED
(in thousands)
(unaudited)
Nine Months Ended September 30, 2014
Macau
Operations
Las Vegas
Operations
Corporate
and Other
Total
Operating income $ 737,568 $ 218,870 $ 94,310 $ 1,050,748
Pre-opening costs 14,792 — — 14,792
Depreciation and amortization 95,614 133,864 4,559 234,037
Property charges and other 14,310 (636 ) — 13,674
Management and royalty fees 118,463 18,920 (137,383 ) —
Corporate expenses and other 29,271 29,759 24,652 83,682
Stock-based compensation 6,840 2,773 13,101 22,714
Equity in income from unconsolidated affiliates — 412 761 1,173
Adjusted Property EBITDA(1) $ 1,016,858 $ 403,962 $ — $ 1,420,820
Nine Months Ended September 30, 2013
Macau
Operations
Las Vegas
Operations
Corporate
and Other
Total
Operating income $ 716,908 $ 119,069 $ 85,673 $ 921,650
Pre-opening costs 1,592 — — 1,592
Depreciation and amortization 88,835 185,425 4,801 279,061
Property charges and other 3,503 10,095 (27 ) 13,571
Management and royalty fees 116,478 17,720 (134,198 ) —
Corporate expenses and other 19,334 23,373 17,902 60,609
Stock-based compensation 3,255 6,629 25,188 35,072
Equity in income from unconsolidated affiliates — 218 661 879
Adjusted Property EBITDA(1) $ 949,905 $ 362,529 $ — $ 1,312,434
Nine months ended September 30,
2014 2013
Adjusted Property EBITDA(1) $ 1,420,820 $ 1,312,434
Pre-opening costs (14,792 ) (1,592 )
Depreciation and amortization (234,037 ) (279,061 )
Property charges and other (13,674 ) (13,571 )
Corporate expenses and other (83,682 ) (60,609 )
Stock-based compensation (22,714 ) (35,072 )
Interest income 16,072 11,595
Interest expense, net of capitalized interest (236,069 ) (222,690 )
(Decrease) increase in swap fair value (1,451 ) 13,131
Loss on extinguishment of debt (7,356 ) (26,578 )
Other (405 ) 4,385
(Provision) benefit for income taxes (8,261 ) 11,299
Net income 814,451 713,671
Less: Net income attributable to noncontrolling interest (192,243 ) (198,903 )
Net income attributable to Wynn Resorts, Limited $ 622,208 $ 514,768
WYNN RESORTS, LIMITED AND SUBSIDIARIES
SUPPLEMENTAL DATA SCHEDULE
Three Months Ended September 30,
Nine Months Ended September 30,
2014 2013 2014 2013
Room statistics for Macau operations:
Occupancy 98.5 % 95.8 % 98.3 % 95.0 %
Average daily rate (ADR)(a) $ 327 $ 310 $ 333 $ 313
Revenue per available room (REVPAR)(b) $ 322 $ 297 $ 327 $ 297
Other information for Macau operations:
Table games win per unit per day(c) $ 24,696 $ 25,927 $ 26,825 $ 25,351
Slot machine win per unit per day(d) $ 1,358 $ 689 $ 1,120 $ 742
Average number of table games 451 487 466 490
Average number of slot machines 588 879 684 864
Room statistics for Las Vegas operations:
Occupancy 89.3 % 87.9 % 88.5 % 85.9 %
Average daily rate (ADR)(a) $ 267 $ 250 $ 275 $ 259
Revenue per available room (REVPAR)(b) $ 238 $ 220 $ 243 $ 222
Other information for Las Vegas operations:
Table games win per unit per day(c) $ 7,619 $ 7,031 $ 7,396 $ 7,027
Table games win % 25.7 % 22.6 % 24.5 % 23.7 %
Slot machine win per unit per day(d) $ 277 $ 258 $ 275 $ 234
Average number of table games 235 236 233 234
Average number of slot machines 1,864 1,935 1,855 2,082
(a) ADR is average daily rate and is calculated by dividing total room revenue including the retail value of promotional allowances (less service charges, if any) by total rooms occupied including complimentary rooms.
(b) REVPAR is revenue per available room and is calculated by dividing total room revenue including the retail value of promotional allowances (less service charges, if any) by total rooms available.
(c) Table games win per unit per day is shown before discounts and commissions, as applicable.
(d) Slot machine win per unit per day is calculated as gross slot win minus progressive accruals and free play.
Professional ServicesFinance
Contact:
Wynn Resorts, Limited
Lewis Fanger, 702-770-7555
Vice President
investorrelations@wynnresorts.com
TrueBlue Reports 2014 Third Quarter Results
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Business Wire
TrueBlue, Inc.
October 23, 2014 8:00 AM
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TACOMA, Wash.--(BUSINESS WIRE)--
TrueBlue, Inc. (TBI) today reported results for the third quarter of 2014.
• Revenue was $633 million, up 40 percent compared to revenue of $451 million for the third quarter in 2013.
• Net income was $21 million compared to $19 million for the third quarter of 2013.
• Adjusted net income* was $22 million, or $0.54 per diluted share, compared to $19 million, or $0.48 per diluted share, for the third quarter of 2013.
• Adjusted EBITDA* was $42 million, up 25 percent compared to $33 million for the third quarter of 2013.
“We are pleased with the success of our growth strategies, which produced strong revenue and profit growth this quarter,” TrueBlue CEO Steve Cooper said. “Our team continues to focus on providing more value to customers through the specialized services we offer. In addition, we have a proven track record of acquiring companies with complementary service offerings that enable our customers to better manage their workforce.”
TrueBlue completed its acquisition of Seaton on June 30, 2014, the first day of its third quarter. TrueBlue refers to Seaton’s industry-leading brands, Staff Management | SMX, PeopleScout and HRX, as its Outsourcing Solutions group. TrueBlue is now the largest industrial staffing provider in the U.S.
“We are excited about the opportunities to expand our EBITDA margin through operational efficiency and the use of technology,” Cooper said. “This reduces the dependency on our branch footprint while allowing us to still deliver excellent service.”
TrueBlue has consolidated 52 branches year to date, resulting in 708 branches in operation at the end of the quarter.
TrueBlue estimates revenue in the range of $695 million to $705 million and adjusted net income* per diluted share of $0.44 to $0.49 for the fourth quarter of 2014.
Management will discuss third quarter 2014 results on a conference call at 6 a.m. PT (9 a.m. ET), today, Thursday, Oct. 23. The conference call can be accessed on TrueBlue’s web site: www.trueblue.com
* This is a non-GAAP financial measure that excludes non-recurring acquisition and integration costs for which a reconciliation is provided along with the financial statements accompanying this release.
About TrueBlue
TrueBlue (TBI) is a leading staffing, recruiting and workforce management company. The company fills individual positions on demand, staffs entire facilities, and manages outsourced recruiting processes and staffing vendor programs for a wide variety of clients. The company’s specialized workforce solutions meet clients’ needs for a reliable, efficient workforce, and it serves a wide variety of industries. TrueBlue connects as many as 500,000 people to work each year. Learn more about TrueBlue at www.trueblue.com.
Forward-looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Examples of such factors can be found in our reports filed with the SEC, including the information under the heading ‘Risk Factors’ in our Annual Report on Form 10-K for the fiscal year ended Dec. 27, 2013. Additional risk factors resulting from the acquisition of Seaton will be included in our Form 10-Q. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
13 Weeks Ended 39 Weeks Ended
September 26 September 27 September 26 September 27
2014 2013 2014 2013
Revenue from services $ 633,365 $ 451,169 $ 1,482,655 $ 1,219,977
Cost of services 473,766 327,641 1,103,914 897,937
Gross profit 159,599 123,528 378,741 322,040
Selling, general and administrative expenses 120,318 90,767 308,654 268,538
Depreciation and amortization 9,719 4,771 20,126 15,133
Income from operations 29,562 27,990 49,961 38,369
Interest and other income (expense), net (409 ) 416 385 1,167
Income before tax expense 29,153 28,406 50,346 39,536
Income tax expense 8,243 9,454 11,696 9,124
Net income $ 20,910 $ 18,952 $ 38,650 $ 30,412
Net income per common share
Basic $ 0.51 $ 0.47 $ 0.95 $ 0.76
Diluted $ 0.51 $ 0.47 $ 0.94 $ 0.75
Weighted average shares outstanding
Basic 40,793 40,330 40,701 40,085
Diluted 41,038 40,670 40,971 40,395
TRUEBLUE, INC.
SELECTED FINANCIAL DATA
(Unaudited, in thousands)
13 Weeks Ended
September 26, 2014
September 27, 2013
Legacy TrueBlue Seaton (1) Total Company Legacy TrueBlue
Revenue from services $ 484,729 $ 148,636 $ 633,365 $ 451,169
Adjusted EBITDA (2) 34,932 6,688 41,620 33,394
Non-recurring acquisition costs (3) 2,339 633
EBITDA (2) 39,281 32,761
Depreciation and amortization 9,719 4,771
Interest income (expense), net (409 ) 416
Income before tax expense $ 29,153 $ 28,406
(1) Seaton was acquired effective June 30, 2014. Therefore, the comparative prior year amounts are not presented.
(2) EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization from net income (loss). Adjusted EBITDA further excludes from EBITDA non-recurring costs related to the purchase, integration, reorganization and shutdown activities related to acquisitions. EBITDA and Adjusted EBITDA are key measures used by management in evaluating performance. EBITDA and Adjusted EBITDA should not be considered a measure of financial performance in isolation or as an alternative to income from operations in the Consolidated Statements of Operations in accordance with GAAP, and, as presented, may not be comparable to similarly titled measures of other companies.
(3) Non-recurring acquisition costs for the 13 weeks ended September 26, 2014 related to the acquisition and integration of Seaton. The acquisition was completed effective June 30, 2014, the first day of our third quarter. The non-recurring acquisition costs for the prior year related to the acquisition and integration of TWC.
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
September 26 December 27
2014
2013
Assets
Current assets:
Cash and cash equivalents $ 29,244 $ 122,003
Marketable securities 1,746 14,745
Accounts receivable, net 310,926 199,519
Other current assets 35,629 20,191
Total current assets 377,545 356,458
Property and equipment, net 79,304 54,473
Restricted cash and investments 152,281 154,558
Other assets, net 391,597 153,972
Total assets $ 1,000,727 $ 719,461
Liabilities and shareholders' equity
Current liabilities $ 177,958 $ 121,409
Long-term debt 174,950 29,656
Other long-term liabilities 207,853 175,036
Total liabilities 560,761 326,101
Shareholders' equity 439,966 393,360
Total liabilities and shareholders' equity $ 1,000,727 $ 719,461
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
39 Weeks Ended
September 26 September 27
2014 2013
Cash flows from operating activities
Net income $ 38,650 $ 30,412
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization 20,126 15,133
Provision for doubtful accounts 9,619 8,785
Stock-based compensation 8,902 6,428
Deferred income taxes 6,077 (1,694 )
Other operating activities (148 ) 1,213
Changes in operating assets and liabilities, net of acquisition
Accounts receivable (26,391 ) (24,776 )
Income taxes (3,179 ) 6,580
Other assets (6,510 ) (4,703 )
Accounts payable and other accrued expenses (1,687 ) (6,728 )
Accrued wages and benefits 11,373 11,419
Workers' compensation claims reserve 532 2,785
Other liabilities 2,539 423
Net cash provided by operating activities 59,903 45,277
Cash flows from investing activities
Capital expenditures (10,213 ) (10,350 )
Acquisition of business, net of cash acquired (307,972 ) (54,872 )
Purchases of marketable securities (25,057 ) (35,300 )
Sales and maturities of marketable securities 43,917 205
Change in restricted cash and cash equivalents 10,020 (1,338 )
Purchases of restricted investments (18,196 ) (9,175 )
Maturities of restricted investments 10,588 13,337
Net cash used in investing activities (296,913 ) (97,493 )
Cash flows from financing activities
Net proceeds from stock option exercises and employee stock purchase plans 1,673 8,731
Common stock repurchases for taxes upon vesting of restricted stock (3,021 ) (2,653 )
Proceeds from note payable 186,994 34,000
Payments on debt and other liabilities (41,700 ) (8,115 )
Other 1,242 720
Net cash provided by financing activities 145,188 32,683
Effect of exchange rates on cash (937 ) (435 )
Net change in cash and cash equivalents (92,759 ) (19,968 )
CASH AND CASH EQUIVALENTS, beginning of period 122,003 129,513
CASH AND CASH EQUIVALENTS, end of period $ 29,244 $ 109,545
TRUEBLUE, INC.
RECONCILIATION OF GAAP NET INCOME PER DILUTED SHARE TO ADJUSTED NET INCOME PER DILUTED SHARE
(Unaudited)
13 Weeks Ended
September 26 September 27
2014 2013
GAAP Net income $ 20,910 $ 18,952
Non-recurring acquisition costs, net of income tax (1) 1,404 380
Adjusted Net income $ 22,314 $ 19,332
GAAP Net income per diluted share $ 0.51 $ 0.47
Non-recurring acquisition costs per diluted share, net of income tax (1) 0.03 0.01
Adjusted net income per diluted share (2) $ 0.54 $ 0.48
(1) Non-recurring acquisition costs for the current quarter related to the acquisition and integration of Seaton. The acquisition was completed on June 30, 2014, the first business day of our third quarter. The non-recurring acquisition costs for the prior year related to the acquisition and integration of TWC. The impact on net income per diluted share is net of income taxes at 40%.
(2) Adjusted net income and adjusted net income per diluted share are non-GAAP financial measures which exclude non-recurring costs for the purchase, integration, reorganization, and shutdown activities related to acquisitions, and which is used by management in communicating comparable performance. Adjusted net income and adjusted net income per diluted share should not be considered measures of financial performance in isolation or as an alternative to net income and net income per share in the Consolidated Statements of Operations in accordance with GAAP, and, as presented, may not be comparable to similarly titled measures of other companies.
Contact:
TrueBlue, Inc.
Derrek Gafford, 253-680-8214
EVP & CFO
or
Stacey Burke, 253-680-8291
VP of Corporate Communications
Tupperware Brands Reports Third Quarter Results
Tupperware Brands Corporation October 22, 2014 7:00 AM GlobeNewswire
•Third quarter sales up 4% in local currency+ and down 2% in dollars versus last year.
•GAAP diluted E.P.S. $0.63 versus $0.95 prior year. Adjusted*, diluted E.P.S. $0.90, up 5% in local currency.
ORLANDO, Fla., Oct. 22, 2014 (GLOBE NEWSWIRE) -- ( TUP) Tupperware Brands Corporation today announced third quarter 2014 operating results.
Rick Goings, Chairman and CEO, commented, "Sales grew 4% this quarter in local currency with double-digit growth in Brazil, China, and Indonesia along with sequential improvements in CIS and Germany. This gave us an overall improvement from our 3% local currency sales increase in the second quarter. Our emerging markets grew 8% in local currency. While this was down from the double-digit growth we have seen in the past, we expect to get back to that trend line as early as the fourth quarter. We continue to implement initiatives for improvement in our challenged units and have seen positive trend changes in the underlying performance indicators in many of these."
Goings continued, "Our business model, with its four pillars: innovative premium products; an entertaining selling situation, or party; a compelling sales force earning opportunity; and leveraging of direct-to-consumer fundamentals, driven by our 2.9 million global sales force, is well positioned to deliver sales and profit growth."
Third Quarter Executive Summary
• Third quarter 2014 net sales were $589 million. Emerging markets**, accounting for 70% of sales, achieved an 8% increase in local currency. Established markets were down 4% in local currency.
• GAAP net income of $32.3 million down 35% versus prior year GAAP net income of $49.9 million. Excluding foreign currency, net income was down 24% versus prior year. Adjusted diluted E.P.S. of $0.90 included a 14 cent negative impact versus 2013 from changes in foreign exchange rates, which was 2 cents worse than included in July's guidance.
• Third quarter cash flow from operating and investing activities was $31 million, versus $37 million in the prior year, primarily reflecting the impact on net income of weaker exchange rates versus the U.S. dollar.
• In the third quarter, the Company returned $44 million to shareholders through a dividend payout of $34 million and the open market repurchase of 135 thousand shares for $10 million. Since 2007, 20.5 million shares have been repurchased for $1.2 billion, with $0.8 billion left under an authorization that runs until February 2017.
• Total sales force of 2.9 million was up 5% versus prior year at the end of the quarter, with continued advantages in most units.
Third Quarter Business Highlights
Europe: Strong increases by Avroy Shlain in South Africa, the Middle East and Turkey, offset by the impact of lower sales force activity primarily in CIS, Germany and Tupperware South Africa
• Segment sales down 6% versus prior year in dollars and down 1% versus prior year in local currency, a 4 point sequential improvement from the second quarter.
• Emerging markets were down 1% in local currency. Increases in Avroy Shlain in South Africa, up 17%, the Middle East, up 37%, and Turkey, up 9% largely offset by CIS, down 14%, and Tupperware South Africa, down 19% both primarily due to less active sellers.
• Established markets were down 1% in local currency. Germany was down 6%, an improvement from down 29% in second quarter. Italy's local currency sales were up 4%. France's local currency sales were up 1% and the unit ended the quarter with a double digit sales force size advantage.
• Profitability negatively impacted by severance and incremental promotional costs.
Asia Pacific: China and Indonesia sales up double digits
• Sales for the segment were up 1% in dollars and up 3% in local currency, driven by the emerging markets up 5% in local currency, led by China, up 24% and Indonesia, the Company's largest business unit, up 14%. Malaysia/Singapore down 7%, predominately due to a holiday related timing shift into the second quarter. India, was down 15%, on lower activity. Continued focus in India on the top end sales force leaders on recruiting, training and activating sales force members.
• Established markets, comprising 17% of the sales in the segment, were down 7% in local currency primarily from Tupperware Japan, down 21% on lower activity.
• Segment active sales force down 2%. The 5 percentage point difference between the sales and active seller comparisons was primarily related to a mix shift toward China and Indonesia that have much higher average order sizes than the segment overall and away from India, which has a lower order size.
Tupperware North America: Sales increases by both Tupperware Mexico and Tupperware U.S. and Canada
• Segment sales up 5% in dollars and up 6% in local currency. Tupperware Mexico sales up 9% on higher active sales force. Sales force size was up 4% at the end of third quarter compared with prior year.
• Tupperware United States and Canada sales were up 3% in local currency. The focus continued on building and strengthening the sales force structure and leadership levels. Sales force size closed 4% above prior year.
Beauty North America: Fuller Mexico shows continued stabilization
• Sales for the segment were down 7% in dollars and 6% in local currency versus prior year, of which 4 points was from the closing in April of the Armand Dupree business in the United States. Without the Armand Dupree impact, the segment would have been down 2%.
• Fuller Mexico local currency sales were up 1% from prior year. Continued focus on stabilizing and growing the number of sales managers and total sales force size.
• BeautiControl sales were down 11%, primarily from lower sales force activity.
South America: Leveraged 11% sales force increase along with inflation driven price increases
• Segment sales down 8% in dollars and up 25% in local currency, driven by Argentina and Brazil. Brazil was up 21% in local currency primarily by leveraging a larger sales force size. The sales growth in Brazil resulted from both volume and price increases.
• Argentina was up 45% primarily due to higher prices and continued mix shift towards housewares sales at higher price points.
• Segment's active sales force up 3%. The 22 point difference between the sales and active seller comparisons primarily reflected inflation related price increases throughout the segment.
• Profitability negatively impacted by incremental costs in the Brazil supply chain and lower sales prices in Venezuela.
2014 Outlook (Unaudited)
Based on current business trends and foreign currency rates, the Company's fourth quarter and fiscal 2014 full year guidance is provided below.
Company Level
13 Weeks Ended 13 Weeks 52 Weeks Ended 52 Weeks
Dec 27, 2014 Ended Dec 27, 2014 Ended
Low High Dec 28, 2013 Low High Dec 28, 2013
USD Sales Growth vs Prior Year (6)% (4)% 1% (3)% (2)% 3%
GAAP EPS $1.45 $1.50 $1.74 $4.02 $4.07 $5.17
GAAP Pre-Tax ROS 14.5% 14.7% 16.2% 11.0% 11.1% 13.5%
Local Currency+ Sales Growth vs Prior Year 3% 5% 5% 4% 5% 6%
EPS Excluding Items* $1.55 $1.60 $1.81 $5.21 $5.26 $5.43
Pre-Tax ROS Excluding Items* 15.4% 15.6% 17.0% 13.5% 13.6% 14.1%
FX Impact on EPS Comparison (a) ($0.19) ($0.19)
($0.60) ($0.60)
(a) Impact of changes in foreign currency versus prior year are updated monthly and posted at: http://ir.tupperwarebrands.com/foreign-exchange-impact.cfm.
Full year 2014
• Net interest expense is expected to be around $44 million.
• Tax rate excluding items is expected to be 24.4%, and 28.3% on a U.S. GAAP basis.
• Reflects $105 million full-year open market share repurchases, of which $71 million will be in the fourth quarter.
• Venezuela: • For full year 2014, in the table above, of the 60 cent negative year-over-year impact of changes in rates on diluted earnings per share, 21 cents relates to weaker rates for the Venezuelan bolivar. The bolivar to U.S. dollar exchange rate used in translating the Company's first quarter 2014 operating activity was 6.3 bolivars to the U.S. dollar, was 10.8 bolivars to the U.S. dollar in the second quarter and was 50.0 in the third quarter. The Company currently assumes it will also use the SICAD II rate, currently 50 bolivars to the U.S. dollar, to translate its future operating activity.
• As a unit accounted for as hyperinflationary under U.S. GAAP, Venezuela's functional currency is the U.S. dollar and the impact of changes in the bolivar to U.S. dollar exchange rate on the unit's net monetary assets are reflected as a transactional impact in the Company's net income rather than as a cumulative translation adjustment. The Company's first half 2014 U.S. GAAP income included $29 million of pretax expense related to net monetary asset amounts on its March and June 2014 balance sheets being translated at the 10.8 and 50.0 bolivars to the U.S. dollar rates, rather than the previous rates. There was also an $11 million negative pretax impact in third quarter 2014 of inventory being included in cost of sales at its historical exchange rate rather than the rate at which sales were translated. This was partially offset by a gain of $4.6 million from accessing cash at better rates than the 50.0 bolivars to the U.S. dollar. Assuming that the 50.0 bolivar to U.S. dollar exchange rate continues in 2015, there will be a negative translation impact on the Company's first half 2015 versus 2014 sales comparison of 3.5 percentage points (1.8 percentage points on the full year comparison) and a negative impact on the diluted earnings per share comparison of 23 cents. Fourth quarter 2013 sales and segment profit in Venezuela were $30 million and $7 million, respectively.
Segment Level
• For the full year, sales in local currency are expected to be down slightly in Europe, up mid-single digit in Asia Pacific, about even in Tupperware North America, down mid-single digit in Beauty North America and up 30+ percent in the South America segment.
• Pre-tax return on sales without items for the full year, versus 2013, is expected to be down about 1 1/2 points in Europe, to be up slightly in Asia Pacific, to be up one percentage point plus in Tupperware North America, and to decrease a little over one percentage point in Beauty North America and about 2.5 points in South America.
• The main reductions in forecast full year profitability versus the Company's July guidance were for higher promotional spending in Europe and supply chain costs in Brazil.
Full Year 2015 (Unaudited)
The Company's current expectation for 2015 local currency sales growth is 4% to 6%. Earnings guidance will be provided in January in the Company's fourth quarter 2014 earnings release.
Based on current foreign exchange rates, the impact on the 2015 versus 2014 sales comparison would be about 4.4 percentage points negative and earnings per share would be 37 cents negative. Of these impacts 1.8 percentage points on sales and 23 cents per share are related to first half 2014 results in Venezuela, when sales were $57 million and segment profit was $19 million.
* See Non-GAAP Financial Measures Reconciliation Schedules.
** The Company classifies Established Market Units as those operating in Western Europe, including Scandinavia, the United States, Canada, Australia and Japan and its remaining units as Emerging Market Units.
+ Local currency changes are measured by comparing current year results with those of the prior year translated at the current year's foreign exchange rates.
Third Quarter Earnings Conference Call
Tupperware Brands will conduct a conference call today, Wednesday, October 22, 2014, at 8:30 am Eastern time. The conference call will be webcast and accessible, along with a copy of this news release, on www.tupperwarebrands.com.
Tupperware Brands Corporation is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship based selling method through an independent sales force of 2.9 million. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Armand Dupree, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo brands.
The Company's stock is listed on the New York Stock Exchange ( TUP). Statements contained in this release, which are not historical fact and use predictive words such as "outlook", "guidance", "expects" or "target" are forward-looking statements. These statements involve risks and uncertainties that include recruiting and activity of the Company's independent sales forces, the success of new product introductions and promotional programs, governmental approvals of materials for use in food containers and beauty and personal care products, the success of buyers in obtaining financing or attracting tenants for commercial and residential developments, the effects of economic and political conditions generally and foreign exchange risk in particular and other risks detailed in the Company's periodic reports as filed in accordance with the Securities Exchange Act of 1934.
The Company updates each month the impact of changes in foreign exchange rates versus the prior year, posting it on; http://ir.tupperwarebrands.com/foreign-exchange-impact.cfm. Other than updating for changes in foreign currency exchange rates, the Company does not intend to update forward-looking information, except through its quarterly earnings releases, unless it expects diluted earnings per share for the current quarter, excluding items impacting comparability and changes versus its guidance of the impact of changes in foreign exchange rates, to be significantly below its previous guidance.
Non-GAAP Financial Measures
The Company has utilized non-GAAP financial measures in this release, which are provided to assist readers' understanding of the Company's results of operations. These amounts, identified as items impacting comparability, at times materially impact the comparability of the Company's results of operations. The adjusted information is intended to be indicative of Tupperware Brands' primary operations, and to assist readers in evaluating performance and analyzing trends across periods.
The non-GAAP financial measures exclude gains from the sale of property, plant and equipment and insurance settlements related to casualty losses, inventory obsolescence in conjunction with decisions to exit or significantly restructure businesses, asset retirement obligations, and re-engineering and impairment charges. Further, while the Company is engaged in a multi-year program to sell land adjacent to its Orlando, Florida headquarters, and also disposes of other excess land and facilities periodically, these activities are not part of the Company's primary business operations. Additionally, amounts recognized in any given period are not indicative of amounts that may be recognized in any particular future period. For this reason, these amounts are excluded as indicated. Further, the Company excludes significant charges related to casualty losses caused by significant weather events, fires or similar circumstances. It also excludes any related gains resulting from the settlement of associated insurance claims. While these types of events can and do recur periodically, they are excluded from indicated financial information due to their distinction from ongoing business operations, inherent volatility and impact on the comparability of earnings across quarters. Also, the Company periodically records exit costs accounted for using the applicable accounting guidance for exit or disposal cost obligations and other amounts related to rationalizing its supply chain operations and other restructuring activities, including upon liquidation of operations in a country the recognition in income of amounts previously recorded in equity as a cumulative translation adjustment, and believes these amounts are similarly volatile and impact the comparability of earnings across quarters. Therefore, they are also excluded from indicated financial information to provide what the Company believes represents a useful measure for analysis and predictive purposes.
The Company believes that excluding from indicated financial information costs incurred in connection with a significant change in its capital structure that is of a nature that would be expected to recur sporadically, also provides a useful measure for analysis and predictive purposes. The Venezuelan government over the last several years has severely restricted the ability to translate bolivars into U.S. dollars and has mandated at various levels the exchange rate for U.S. dollars. Due to the sporadic timing and magnitude of changes in the mandated exchange rates, the Company's non-GAAP measures exclude for analysis and predictive purposes, the impact from devaluations on the bolivar denominated net monetary assets and other balance sheet positions that impact near term income since they appear in the income statement at the exchange rate at which they were originally translated rather than the exchange rate at which current operating activity is being translated, as well as gains from obtaining U.S. dollars at exchange rates more favorable than those at which the bolivars were last recorded. These items have occurred recently for reporting purposes in the first quarter of 2013 and in 2014.
The Company has also elected to present financial measures excluding the impact of amortizing the purchase accounting carrying value of certain definite-lived intangible assets, primarily the value of its Fuller trade name recorded in connection with the Company's December 2005 acquisition of the direct selling businesses of Sara Lee Corporation. The amortization expense related to these assets will continue for several years. Similarly, in connection with its evaluation of the carrying value of acquired intangible assets and goodwill, the Company has periodically recognized impairment charges. The Company believes that these types of non-cash charges will not be representative in any single reporting period of amounts recorded in prior reporting periods or expected to be recorded in future reporting periods. Therefore, they are excluded from indicated financial information to also provide a useful measure for analysis and predictive purposes.
As the impact of changes in exchange rates is an important factor in understanding period-to-period comparisons, the Company believes the presentation of results on a local currency basis, in addition to reported results, helps improve readers' ability to understand the Company's operating results and evaluate performance in comparison with prior periods. The Company presents local currency information that compares results between periods as if current period exchange rates had been the exchange rates in the prior period. This includes the impact on sales and earnings from currency devaluations in Venezuela. The Company uses results on a local currency basis as one measure to evaluate performance. The Company generally refers to such amounts as calculated on a local currency basis, as restated or excluding the impact of foreign currency. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a local currency basis may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
In information included with this release, the Company has referred to Adjusted EBITDA and a Debt/Adjusted EBITDA ratio, which are non-GAAP financial measures used in the Company's credit agreement. The Company uses these measures in its capital allocation decision process and in discussions with investors, analysts and other interested parties and therefore believes it is useful to disclose this amount and ratio. The Company's calculation of these measures is in accordance with its credit agreement, and is set forth in the reconciliation from GAAP amounts in an attachment to this release; however, the reader is cautioned that other companies define these measures in different ways, and consequently they will likely not be comparable with similarly labeled amounts disclosed by others.
TUPPERWARE BRANDS CORPORATION
THIRD QUARTER SALES STATISTICS*
(UNAUDITED)
All Units Reported
Sales
Inc/(Dec)% Restated+
Sales
Inc/(Dec)% Active
Sales
Force Inc/(Dec)
vs. Q3 '13
%
Total
Sales
Force Inc/(Dec)
vs. Q3 '13
%
Europe++ (6) (1) 82,430 (8) a 685,845 8 a,b
Asia Pacific++ 1 3 235,130 (2) c 1,031,504 4
TW North America 5 6 100,419 5
354,118 4
Beauty North America (7) (6) 222,685 (5) e 449,288 (4) e
South America (8) 25 107,445 3 f 393,309 11
Total All Units (2) 4 748,109 (2) e 2,914,064 5 e
Emerging Market Units
Europe (9) (1) 58,047 (10) a 505,640 10 a
Asia Pacific 3 5 204,117 (3) c 919,970 4
TW North America 8 9 90,348 5
267,951 4
Beauty North America — 1 200,222 (3)
377,210 (3)
South America (8) 25 107,445 3 f 393,309 11
Total Emerging Market Units (1) 8 660,179 (2)
2,464,080 5
Established Market Units
Europe++ (3) (1) 24,383 (5)
180,205 5 b
Asia Pacific++ (9) (7) 31,013 8 d 111,534 6
TW North America 2 3 10,071 3
86,167 4
Beauty North America (24) (23) 22,463 (22) e 72,078 (9) e
South America — — — —
— —
Total Established Market Units (5) (4) 87,930 (5) e 449,984 3 e
* Sales force statistics, as collected by the Company and, in some cases, provided by distributors and sales force. The Company classifies Established Market Units as those operating in Western Europe, including Scandinavia, the United States, Canada, Australia and Japan, and its remaining units as Emerging Market Units. Active Sales Force is defined as the average number of people ordering in each cycle over the course of the quarter, and Total Sales Force is defined as the number of sales force members of the units as of the end of the quarter.
+ Local currency, or restated, changes are measured by comparing current year results with those of the prior year translated at the current year's foreign exchange rates.
++ Effective as of the beginning of 2014, Nutrimetics France is being managed by and reported in the Asia Pacific segment. Prior year information has been reclassified.
Notes
a The larger decrease in active sellers compared with local currency sales in Europe emerging markets was primarily from a change in the product program and promotional approach in CIS that has led to a smaller, more productive active sales force. The increase in total sellers versus decrease in active sellers in this caption reflected the lower number of active sellers in CIS, along with less active sellers in Tupperware South Africa in connection with a transportation strike that affected the Company's ability to deliver product.
b A higher total sales force, but lower number of active sellers in Europe established markets in large part reflected sales force response to programs in Germany that, in turn, led to higher sales per active seller.
c Local currency sales increase above active seller increase reflected a mix shift toward China and Indonesia, which have higher than average order sizes, including in China because it operates an outlet model without a traditional sales force, and away from India that has a lower than average order size.
d Lower sales with a larger number of active sellers in Asia Pacific established markets, reflected the activation of a large number of casual sellers in Nutrimetics Australia, which based on its model, has a much higher number of active sellers, but a much lower average order size than the units in this caption overall.
e In April 2014, the Company ceased operating its Armand Dupree business in the United States. This had a negative impact on the local currency sales comparisons of 4, 14, 0.5 and 2 points for total Beauty North America, Beauty North America established markets, total Company and total established markets, respectively. This also negatively impacted the total and active sales force comparisons in these captions.
f The much higher local currency sales increase in South America, compared with the increase in active sellers, reflected inflation driven price increases throughout the segment and a mix shift in Argentina toward the sale of housewares at higher price points and away from beauty and personal care products.
TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions, except per share data) 13 Weeks Ended 39 Weeks Ended
Sep 27, Sep 28, Sep 27, Sep 28,
2014 2013 2014 2013
Net sales $ 588.7 $ 603.2 $ 1,926.2 $ 1,954.5
Cost of products sold 209.2 199.6 656.5 648.4
Gross margin 379.5 403.6 1,269.7 1,306.1
Delivery, sales and administrative expense 321.7 325.4 1,014.8 1,023.2
Re-engineering charges 2.6 2.7 8.3 7.1
Gains on disposal of assets — 0.9 2.3 1.1
Operating income 55.2 76.4 248.9 276.9
Interest income 0.8 0.6 2 1.9
Interest expense 11.9 10.3 35.9 29.5
Other (income) expense (3.8) 1.5 26.3 5.0
Income before income taxes 47.9 65.2 188.7 244.3
Provision for income taxes 15.6 15.3 56.6 59.8
Net income $ 32.3 $ 49.9 $ 132.1 $ 184.5
Net income per common share:
Basic earnings per share $ 0.64 $ 0.97 $ 2.63 $ 3.52
Diluted earnings per share $ 0.63 $ 0.95 $ 2.59 $ 3.44
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions, except per share data) 13 Weeks Ended Reported Restated* Foreign 39 Weeks Ended Reported Restated* Foreign
Sep 27, Sep 28, % % Exchange Sep 27, Sep 28, % % Exchange
2014 2013 Inc (Dec) Inc (Dec) Impact* 2014 2013 Inc (Dec) Inc (Dec) Impact*
Net Sales:
Europe $ 136.7 $ 144.7 (6) (1) $ (6.4) $ 536.3 $ 556.3 (4) (2) $ (11.4)
Asia Pacific 209.6 207.3 1 3 (3.1) 619.7 622.5 — 6 (37.7)
TW North America 84.6 80.6 5 6 (0.8) 259.5 263.1 (1) 1 (5.1)
Beauty North America 68.8 73.9 (7) (6) (0.6) 220.0 241.2 (9) (7) (5.7)
South America 89.0 96.7 (8) 25 (25.7) 290.7 271.4 7 35 (55.7)
$ 588.7 $ 603.2 (2) 4 $ (36.6) $ 1,926.2 $ 1,954.5 (1) 5 $ (115.6)
Segment profit (loss):
Europe $ 6.3 $ 11.1 (43) (37) $ (1.1) $ 74.5 $ 82.8 (10) (8) $ (2.1)
Asia Pacific 45.4 43.7 4 6 (0.8) 132.8 132.7 — 8 (10.2)
TW North America 16.0 14.9 7 8 (0.1) 49.4 44.2 12 15 (1.1)
Beauty North America (1.2) 1.5 — — (0.1) 1.1 15.0 (92) (92) (0.8)
South America 5.6 21.8 (74) (61) (7.2) 8.6 49.5 (83) (77) (12.1)
72.1 93.0 (22) (14) (9.3) 266.4 324.2 (18) (11) (26.3)
Unallocated expenses (10.5) (16.3) (35) (37) (0.5) (37.8) (46.3) (18) (22) (2.0)
Gains on disposal of assets — 0.9 (100) (100) — 2.3 1.1 + + —
Re-engineering charges (2.6) (2.7) (2) (2) — (8.3) (7.1) 17 17 —
Interest expense, net (11.1) (9.7) 15 15 — (33.9) (27.6) 23 23 —
Income before taxes 47.9 65.2 (27) (14) (9.8) 188.7 244.3 (23) (13) (28.3)
Provision for income taxes 15.6 15.3 2 20 (2.3) 56.6 59.8 (5) 7 (6.8)
Net income $ 32.3 $ 49.9 (35) (24) $ (7.5) $ 132.1 $ 184.5 (28) (19) $ (21.5)
Net income per common share (diluted) $ 0.63 $ 0.95 (34) (22) $ (0.14) $ 2.59 $ 3.44 (25) (15) $ (0.40)
Weighted average number of diluted shares 51.0 52.4
51.1 53.6
* 2014 actual compared with 2013 translated at 2014 exchange rates
+ Greater than 100% change
TUPPERWARE BRANDS CORPORATION
NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(In millions, except per share data) 13 Weeks Ended Sep 27, 2014 13 Weeks Ended Sep 28, 2013
Reported Adj's
Excl Adj's Reported Adj's
Excl Adj's
Segment profit (loss):
Europe $6.3 $ —
$ 6.3 $ 11.1 $ —
$ 11.1
Asia Pacific 45.4 0.7 a 46.1 43.7 0.3 a 44.0
TW North America 16.0 —
16.0 14.9 —
14.9
Beauty North America (1.2) 2.2 a 1.0 1.5 0.8 a 2.3
South America 5.6 6.7 a,b 12.3 21.8 0.1 a 21.9
72.1 9.6
81.7 93.0 1.2
94.2
Unallocated expenses (10.5) —
(10.5) (16.3) —
(16.3)
Gains on disposal of assets — —
— 0.9 (0.9) c —
Re-engineering charges (2.6) 2.6 d — (2.7) 2.7 d —
Interest expense, net (11.1) —
(11.1) (9.7) —
(9.7)
Income before taxes 47.9 12.2
60.1 65.2 3.0
68.2
Provision for income taxes 15.6 (1.3) e 14.3 15.3 0.5 e 15.8
Net income $ 32.3 $ 13.5
$ 45.8 $ 49.9 $ 2.5
$ 52.4
Net income per common share (diluted) $ 0.63 $ 0.27
$ 0.90 $ 0.95 $ 0.05
$ 1.00
39 Weeks Ended Sep 27, 2014 39 Weeks Ended Sep 28, 2013
Reported Adj's
Excl Adj's Reported Adj's
Excl Adj's
Segment profit:
Europe $ 74.5 $ —
$ 74.5 $ 82.8 $ —
$ 82.8
Asia Pacific 132.8 2.4 a,d 135.2 132.7 0.6 a 133.3
TW North America 49.4 —
49.4 44.2 —
44.2
Beauty North America 1.1 8.3 a,d 9.4 15.0 1.1 a 16.1
South America 8.6 42.6 a,b 51.2 49.5 4.3 a,b 53.8
266.4 53.3
319.7 324.2 6.0
330.2
Unallocated expenses (37.8) —
(37.8) (46.3) —
(46.3)
Gains on disposal of assets 2.3 (2.3) c — 1.1 (1.1) c —
Re-engineering charges (8.3) 8.3 d — (7.1) 7.1 d —
Interest expense, net (33.9) —
(33.9) (27.6) —
(27.6)
Income before taxes 188.7 59.3
248.0 244.3 12.0
256.3
Provision for income taxes 56.6 3.6 e 60.2 59.8 1.5 e 61.3
Net income $ 132.1 $ 55.7
$ 187.8 $ 184.5 $ 10.5
$195.0
Net income per common share (diluted) $ 2.59 $ 1.09
$ 3.68 $ 3.44 $ 0.20
$ 3.64
a Amortization of intangibles of acquired beauty units.
b As a result of step devaluations in the Venezuelan bolivar from 5.3 bolivars per U.S. dollar to 6.3, 10.8 and 50.0bolivars per U.S. dollar as of the end of January 2013, March 2014 and June 2014, respectively, the Company had impacts of $10.6 million and $42.2 million in the third quarter and year-to-date periods of 2014 and $4.2 million in the year-to-date period of 2013. These amounts related to expense from translating bolivar denominated net monetary assets at the lower exchange rates at the times of devaluations, along with the impact of recording in income amounts on the balance sheet when the devaluations occurred, primarily inventory, at which the amounts went on the balance sheet, rather than the exchange rates in use when they were included in income. In the third quarter of 2014, the Company received $5.6 million for approximately 51 million bolivars at an average exchange rate of 9.1 bolivars per U.S. dollar, which generated an exchange gain of $4.6 million.
c Gain on disposal of assets of $2.3 million in 2014 is primarily from the sale of land near the Orlando, FL headquarters in the first quarter and $0.5 from the sale of a facility in Australia in the second quarter. Gain on disposal of assets of $1.1 million in 2013, is primarily from the sale of land for $0.9 in the third quarter.
d In both years, re-engineering and impairment charges were primarily related to severance costs incurred for headcount reduction in several of the Company's operations in connection with changes in its management and organizational structures, and in 2014, the decision to cease operating its Armand Dupree business in the United States, its Nutrimetics business in Thailand and a manufacturing plant in India.
e Provision for income taxes represents the net tax impact of adjusted amounts.
See note regarding non-GAAP financial measures in the attached press release.
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In millions) 39 Weeks Ended 39 Weeks Ended
September 27,
2014 September 28,
2013
Operating Activities:
Net cash provided by operating activities $ 87.5 $ 126.0
Investing Activities:
Capital expenditures (46.0) (42.9)
Proceeds from disposal of property, plant & equipment 6.1 8.4
Net cash used in investing activities (39.9) (34.5)
Financing Activities:
Dividend payments to shareholders (99.4) (84.9)
Net proceeds from issuance of senior notes — 200.0
Repurchase of common stock (41.7) (303.7)
Repayment of long-term debt and capital lease obligations (2.5) (1.9)
Net change in short-term debt 84.9 87.3
Debt issuance costs — (2.1)
Proceeds from exercise of stock options 14.0 18.9
Excess tax benefits from share-based payment arrangements 8.8 13.6
Net cash used in financing activities (35.9) (72.8)
Effect of exchange rate changes on cash and cash equivalents (49.6) (12.5)
Net change in cash and cash equivalents (37.9) 6.2
Cash and cash equivalents at beginning of year 127.3 119.8
Cash and cash equivalents at end of period $ 89.4 $ 126.0
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions) Sep 27,
2014 Dec 28,
2013
Assets:
Cash and cash equivalents $ 89.4 $ 127.3
Other current assets 703.6 651.7
Total current assets 793.0 779.0
Property, plant and equipment, net 292.8 300.9
Other assets 771.0 764.0
Total assets $ 1,856.8 $ 1,843.9
Liabilities and Shareholders' Equity:
Short-term borrowings and current portion of long-term debt $ 314.6 $ 235.4
Accounts payable and other current liabilities 451.0 502.1
Total current liabilities 765.6 737.5
Long-term debt 616.4 619.9
Other liabilities 219.0 233.6
Total shareholders' equity 255.8 252.9
Total liabilities and shareholders' equity $ 1,856.8 $ 1,843.9
Debt to Adjusted EBITDA* Ratio as of and for the four quarters ended Sep 27, 2014: 2.13 times
* Adjusted EBITDA as defined in the Company's credit agreement under Consolidated EBITDA. See calculation attached to this release.
TUPPERWARE BRANDS CORPORATION
NON-GAAP FINANCIAL MEASURES OUTLOOK RECONCILIATION SCHEDULE
October 22, 2014
(UNAUDITED)
Fourth Quarter Fourth Quarter
(In millions, except per share data) 2013 Actual 2014 Outlook
Range
Low High
Income before income taxes $ 116.1 $ 98.1 $ 101.5
Income tax $ 26.4 $ 24.6 $ 25.5
Effective Rate 23% 25% 25%
Net Income (GAAP) $ 89.7 $ 73.5 $ 76.0
% change from prior year (18)% (15)%
Adjustments(1):
Loss on disposal of assets 0.4 — —
Re-engineering and other restructuring costs 2.2 2.7 2.7
Acquired intangible asset amortization 2.9 2.9 2.9
Income tax(2) (2.0) (0.7) (0.7)
Net Income (adjusted) $ 93.2 $ 78.4 $ 80.9
Exchange rate impact(3) (10.1) — —
Net Income (adjusted and 2013 restated for currency changes) $ 83.1 $ 78.4 $ 80.9
% change from prior year (6)% (3)%
Net income (GAAP) per common share (diluted) $ 1.74 $ 1.45 $ 1.50
% change from prior year (17)% (14)%
Net Income (adjusted) per common share (diluted) $ 1.81 $ 1.55 $ 1.60
Net Income (adjusted & restated) per common share (diluted) $ 1.62 $ 1.55 $ 1.60
% change from prior year (4)% (1)%
Average number of diluted shares (millions) 51.5 50.7 50.7
(1) Refer to Non-GAAP Financial Measures section of attached release for description of the general nature of adjustment items
(2) Represents income tax impact of adjustments on an item-by-item basis
(3) Difference between 2013 actual and 2013 translated at current currency exchange rates
See the note related to Venezuela exchange rate on the following page.
TUPPERWARE BRANDS CORPORATION
NON-GAAP FINANCIAL MEASURES OUTLOOK RECONCILIATION SCHEDULE
October 22, 2014
(UNAUDITED)
Full Year Full Year
(In millions, except per share data) 2013 Actual 2014 Outlook
Range
Low High
Income before income taxes $ 360.4 $ 286.8 $ 290.2
Income tax $ 86.2 $ 81.2 $ 82.1
Effective Rate 24% 28% 28%
Net Income (GAAP) $ 274.2 $ 205.6 $ 208.1
% change from prior year (25)% (24)%
Adjustments(1):
Gains on disposal of assets $ (0.7) $ (2.3) $ (2.3)
Re-engineering and other restructuring costs 9.3 14.8 14.8
Net impact of Venezuelan bolivar devaluations 4.2 40.6 40.6
Acquired intangible asset amortization 4.8 11.9 11.9
Income tax(2) (3.5) (4.4) (4.4)
Net Income (adjusted) $ 288.3 $ 266.2 $ 268.7
Exchange rate impact(3) (31.7)% — —
Net Income (adjusted and 2013 restated for currency changes) $ 256.6 $ 266.2 $ 268.7
% change from prior year 4% 5%
Net income (GAAP) per common share (diluted) $ 5.17 $ 4.02 $ 4.07
% change from prior year (22)% (21)%
Net Income (adjusted) per common share (diluted) $ 5.43 $ 5.21 $ 5.26
Net Income (adjusted & restated) per common share (diluted) $ 4.83 $ 5.21 $ 5.26
% change from prior year 8% 9%
Average number of diluted shares (millions) 53.1 51.1 51.1
(1) Refer to Non-GAAP Financial Measures section of attached release for description of the general nature of adjustment items
(2) Represents income tax impact of adjustments on an item-by-item basis
(3) Difference between 2013 actual and 2013 translated at current currency exchange rates
As it related to Venezuela, the Company's outlook includes operating activity translated at 6.3 Bs/$, 10.8 Bs/$ and 50.0 Bs/$ in the first quarter, second quarter and second half of 2014, respectively.
TUPPERWARE BRANDS CORPORATION
ADJUSTED EBITDA AND DEBT/ADJUSTED EBITDA*
(UNAUDITED)
As of and for the four
quarters ended
September 27,
2014
Adjusted EBITDA:
Net income $ 221.8
Add:
Depreciation and amortization 64.0
Gross interest expense 46.6
Provision for income taxes 83.0
Pretax non-cash re-engineering and impairment charges 3.8
Equity compensation 19.1
Deduct:
Gains on land sales, insurance recoveries, etc. (1.9)
Total Adjusted EBITDA $ 436.4
Consolidated total debt $ 931.0
Divided by adjusted EBITDA 436.4
Debt to Adjusted EBITDA Ratio 2.13 a
* Amounts and calculations are based on the definitions and provisions of the Company's $650 million Credit Agreement dated September 11, 2013 and, where applicable, are based on the trailing four quarter amounts. "Adjusted EBITDA" is calculated as defined for "Consolidated EBITDA" in the Credit Agreement.
a There is a $46.3 million impact on adjusted EBITDA from the Venezuelan bolivar devaluations as of the end of March and June 2014 that increased the debt to adjusted EBITDA ratio by 0.20.
View photo
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Consumer DiscretionaryFinanceTupperwareforeign exchange ratesNorth America
Contact:
Tupperware Brands Corp.
14901 S. Orange Blossom Trail
Orlando, FL 32837
Investor Contact: Lien Nguyen (407) 826-4475
Newell Rubbermaid Announces Completion of bubba brands
Newell Rubbermaid
October 22, 2014 4:30 PM
ATLANTA, Oct. 22, 2014 (GLOBE NEWSWIRE) -- Newell Rubbermaid (NWL) today completed its acquisition of the assets of bubba brands, inc. ("bubba"), a wholly owned subsidiary of In Zone Holdings, Inc., for a purchase price of $83 million, subject to customary working capital adjustments. A leading designer and marketer of durable beverage containers, bubba is expected to deliver over $50 million of net sales in 2014. The acquisition is expected to be accretive to Newell Rubbermaid's net sales growth rate, normalized operating income margin and normalized EPS within the first year.
"We are pleased to welcome bubba to the Newell Rubbermaid family. We look forward to leveraging this innovative brand, in combination with the Contigo(R), Avex(R) and Rubbermaid(R) brands, to further strengthen our leadership position in the fast-growing durable beverage container market and bolster our growth agenda as we drive our Growth Game Plan strategy into action," said Newell Rubbermaid President and CEO Michael Polk.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2013 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Rubbermaid(R), Contigo(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R) and Dymo(R). As part of the company's Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company's Web site, www.newellrubbermaid.com.
About In Zone Holdings, Inc. and bubba brands
In Zone Holdings, Inc. is the parent company to Atlanta-based bubba brands and healthy children's beverage company good2grow (www.good2grow.com). bubba brands was founded in 1997 with a singular commitment: to make drinkware that people love. Beginning with its first product, the bubba keg, the line expanded to include mugs, tumblers, sport bottles, sport jugs and kids drink bottles. bubba brands is a leader in the thermal and hydration beverageware category and its products are widely available through national retailers, sporting goods, specialty stores and direct-to-consumer. For more information, visit www.bubbabrands.com.
Caution Concerning Forward-Looking Statements
This news release contains forward-looking information based on management's current views and assumptions regarding the anticipated benefits of the transaction, including bubba's financial contribution to the Company's financial results, and the Company's expected investments in the bubba business. Actual events may differ materially. Factors that may affect actual results include, but are not limited to, the ability of the Company to integrate the bubba business with the Company's existing businesses and realize the expected financial results and accretive effect of the transaction, and reaction of the Company's customers, competitors, suppliers and employees to the transaction. Please refer to the cautionary statements set forth in the "Forward-Looking Statements" section of the Company's most recently filed Quarterly Report on Form 10-Q as well as the risk factors set forth in Exhibit 99.1 thereto, for other factors that could affect our business.
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Corporate Communications
Stanley Black & Decker Reports 3Q 2014 Results
Stanley Black & Decker October 22, 2014 6:00 AM
NEW BRITAIN, Conn.--(BUSINESS WIRE)--
Stanley Black & Decker ( SWK) today announced third quarter 2014 financial results.
3Q’14 Revenues Up 5% To $2.9 Billion; Organic Growth Of 6% Operating Margin Expanded 230 Basis Points To 13.8%; Excluding Charges, Operating Margin Expanded 120 Basis Points To 14.1% 3Q’14 Diluted GAAP EPS Was $1.50; Excluding Charges, 3Q’14 Diluted EPS Was $1.55 CDIY Achieved 10% Organic Growth; Record Operating Margin Of 16.5%, Excluding Charges Increasing 2014 Full Year Free Cash Flow Guidance To Approximately $800 Million From At Least $675 Million Reiterating Mid-Point While Tightening 2014 Full Year EPS Guidance Range Of $5.40 To $5.46 On A GAAP Basis ($5.52 To $5.58, Excluding Charges) 3Q’14 Key Points:
Net sales for the period were $2.9 billion, up 5% versus the prior year, primarily attributable to volume (+5%) and price (+1%), partially offset by currency (-1%). The gross margin rate for the quarter was 36.2%. Excluding charges the gross margin rate was also 36.2%, up 20 basis points from the prior year rate of 36.0%, as favorable volume, price, productivity and cost actions more than offset unfavorable currency and lower Security margins. SG&A expenses were 22.4% of sales. Excluding charges, SG&A expenses were 22.1% of sales, compared to 23.1% in 3Q’13. Operating margin rate was 13.8%. Excluding charges, operating margin rate was 14.1%, up 120 basis points from 3Q’13, as actions taken to improve profitability and generate operating leverage more than offset slightly higher than expected unfavorable currency. The tax rate was 19.1%. Excluding charges, the tax rate was 18.8% due to a larger portion of earnings in lower taxed jurisdictions and changes in required foreign tax reserves due to statute expirations. Working capital turns for the quarter were 6.4, up 0.5 turns from 3Q’13. Free cash flow for the quarter was $189 million, a $178 million increase over 3Q’13. Stanley Black & Decker’s Chairman and CEO, John F. Lundgren, commented, “Our strong third quarter results demonstrate the benefits of our focus on driving organic growth, margin expansion and operating leverage through new product vitality accompanied by diligent price and cost management. These efforts have allowed us to maintain operating momentum while overcoming persistent challenges relating to currency and a volatile macro backdrop, particularly within emerging markets. During the quarter, our CDIY and Industrial businesses posted impressive top and bottom line results, and Security continued to make progress on its multi-year business transformation. Strong underlying growth, earnings and cash flow momentum position us well for the future.”
3Q’14 Segment Results
($ in M) 3Q' 14 Segment Results
Sales Profit Charges1
Profit
Ex-
Charges1
Profit Rate Profit Rate
Ex-
Charges1
CDIY $1,454 $239.7 $0.1 $239.8 16.5% 16.5%
Industrial $866 $136.2 $1.2 $137.4 15.7% 15.9%
Security $582 $63.9 $0.3 $64.2 11.0% 11.0%
1 See Merger And Acquisition (M&A) One-Time Charges On Page 5
CDIY net sales increased 9% versus 3Q’13 as a result of volume (+9%) and price (+1%), partially offset by currency (-1%). Organic growth in North America (+12%) recovered from a second quarter negatively impacted by poor weather while Europe continued its momentum, growing 11% organically. North American volume benefitted from strong underlying tool demand driven by new products as well as expanded retail offerings and partnerships. In addition, outdoor product volume was stronger than expected as some of the volume lost in the second quarter due to cold weather was recovered this quarter. Europe maintained its strong quarterly organic growth momentum attributable to continued market share gains from new product introductions and an expanded retail footprint. Organic growth within the emerging markets was up 2% as Latin America, Russia and Turkey, among others, remain challenged. Excluding charges, overall segment profit rate was a record 16.5%, up from the 3Q’13 rate of 15.1%, as volume leverage, price, productivity and cost management more than offset currency pressures. Industrial net sales increased 5% versus 3Q’13 as a result of volume (+4%) and price (+1%). Organic sales for the Industrial and Automotive Repair (“IAR”) business were up 7% with strength in both North America and Europe. Engineered Fastening achieved 5% organic growth driven primarily by strong global automotive revenues in excess of global light vehicle production. Infrastructure organic growth was down 1% as solid hydraulic tools growth was offset by the expected slowdown in on-shore oil & gas activity and project delays due to the geopolitical situations in Russia, Ukraine and the Middle East. Overall Industrial segment profit rate excluding charges was 15.9%, up 170 basis points from the 3Q’13 rate of 14.2% reflecting favorable volume leverage, productivity gains, and cost control, partially offset by currency. Security net sales decreased 3% versus 3Q’13 as lower volume (-3%) and currency (-1%) were partially offset by price (+1%). Organic growth within North America and emerging markets (“NA & EM”) increased 1% as commercial electronics and automatic doors provided uplift. Europe declined 7% organically due to continued lower installation and recurring revenues in various regions, most notably Southern Europe. Europe order rates were up high single digits for the quarter and attrition levels improved sequentially remaining within the target range of 10%-12%. Security segment profit rate excluding charges was 11.0%, consistent with the 2Q’14 rate and down 120 basis points from the 3Q’13 rate of 12.2%. The year-over-year decrease in the rate resulted from volume deleveraging and lower recurring revenue mix in Europe as well as project mix within North America. Southern Europe’s results adversely impacted the year over year rate decline for the overall Security segment by approximately 70 basis points.
President and Chief Operating Officer, James M. Loree, commented, “We again posted a solid quarter of organic growth and margin expansion along with strong cash flow. CDIY organic growth accelerated in the third quarter, contributing to record operating margin, and Industrial posted strong results as a result of robust sales and operating leverage in Engineered Fastening and IAR. Company-wide, emerging markets growth was positive for the quarter despite a choppy and slowing environment. Our mid-price point product launches position us for continued share gain in these somewhat slower markets.
“There were encouraging signs with respect to the Security business. Europe’s OM and order growth rates increased sequentially despite the ongoing challenges present in Southern Europe, while the momentum in CSS North America’s Vertical Solutions continued to grow. To ensure on-going progress, we expect to complete our review of the strategic alternatives for Southern Europe during 4Q’14 while implementing selected leadership adjustments within NA and EM to tighten execution and facilitate the global rollout of the Vertical Solutions.”
Updated 2014 Outlook And Initial 2015 Commentary
Donald Allan Jr., Senior Vice President and CFO, commented, “We are reiterating the mid-point while tightening our previously communicated 2014 EPS outlook range to $5.52 - $5.58 on an adjusted basis or $5.40 - $5.46 on a GAAP basis. The mid-point of our full year EPS outlook remains unchanged as we expect the stronger than expected operational performance including our continued focus on indirect cost control and price management to offset the unfavorable impact of the current challenging macro environment, which is causing further currency pressure. We now estimate the full year currency impact to be approximately $75 million, up from our prior estimate of $60 million. In addition, we are raising our 2014 free cash flow estimate to approximately $800 million from the prior estimate of at least $675 million as we expect lower one-time restructuring payments, solid working capital performance, and slightly lower levels of capital expenditures.
“While it is premature to provide detail guidance for 2015 at this time, the continued strengthening of the U.S. dollar and slowing emerging market economic growth is a known headwind of approximately $50 - $75 million to 2015 operating margin growth. However, we have a demonstrated track record of responding to these types of currency and macro economic pressures with surgical cost reduction actions. In this regard, we are currently considering several initiatives which would largely, if not completely, offset these headwinds. Such actions, if taken, would likely require additional restructuring charges of $10 - $25 million in excess of our current 2014 estimate of $25 million.”
The Company remains committed to its capital allocation plan of modest debt deleveraging in 2014, returning up to $1 billion of capital to shareholders through 2015, and supporting a strong and growing dividend. These actions combined with near-term operational improvements are expected to improve cash flow return on investment by approximately 250 basis points through 2015.
Merger And Acquisition (M&A) One-Time Charges
Total one-time charges in 3Q’14 of $8.4 million (net of a $0.2 million restructuring credit) primarily relate to integration and consulting costs. Gross margin includes $0.1 million of these one-time charges while SG&A includes $8.1 million. $1.6 million of these costs that impact the Company’s operating margin are included in segment results, with the remainder in corporate overhead. Also included in one-time charges are $0.4 million in Other, net.
The Company will host a conference call with investors today, Wednesday, October 22, at 8:00am ET. A slide presentation which will accompany the call will be available at www.stanleyblackanddecker.com and will remain available after the call.
You can also access the slides via the Stanley Black & Decker Investor Relations iPad & iPhone app from the Apple App Store by searching for “SWK Investor Relations”.
The call will be accessible by telephone at 1 (800) 708-4540, from outside the U.S. at +1 (847) 619-6397, and via the Internet at www.stanleyblackanddecker.com. To participate, please register on the web site at least fifteen minutes prior to the call and download and install any necessary audio software. Please use the conference identification number 3821-2772. A replay will also be available two hours after the call and can be accessed at 1 (888) 843-7419 or +1 (630) 652-3042 using the passcode 3821-2772#. The replay will also be available as a podcast within 24 hours and can be accessed on our website and via iTunes.
Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.
These results reflect the Company’s continuing operations. In 3Q’13, the Company classified two small businesses within the Security and Industrial segments as held for sale based on management's intention to sell these businesses. The business within the Industrial segment was sold in February 2014. The operating results of the business within the Industrial segment, including the loss on sale, have been reported as discontinued operations for 3Q’13. The operating results of the business within the Security segment have been reported as discontinued operations for 3Q’14 and 3Q’13. Total sales reported as discontinued operations were $5.2 million and $8.9 million for 3Q’14 and 3Q’13, respectively.
The Company recast 2013 segment net sales and profit between the CDIY and Industrial segments to align reporting with the current management of the Company’s operations in the emerging markets to be comparable with the current year presentation. There is no impact to the consolidated financial statements of the Company as a result of this segment realignment.
Organic sales growth is defined as total sales growth less the sales of companies acquired in the past twelve months and any foreign currency impacts. Operating margin is defined as sales less cost of sales and selling, general and administrative expenses. Management uses operating margin and its percentage of net sales as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level. Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important indicator of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items. The normalized statement of operations and business segment information, as reconciled to GAAP on pages 12 to 15 for 2014 and 2013, are considered relevant to aid analysis of the Company’s operating performance and earnings results aside from the material impact of the one-time charges and payments associated with the Black & Decker merger, the Niscayah and Infastech acquisitions and other smaller acquisitions of the Company. Normalized free cash flow, as reconciled from the associated GAAP measures on page 10 for 2014 and 2013 is considered a meaningful pro forma metric to aid the understanding of the Company’s cash flow performance aside from the material impact of the M&A-related payments and charges.
CAUTIONARY STATEMENTS
Under the Private Securities Litigation Reform Act of 1995
Statements in this press release that are not historical, including but not limited to those regarding the Company’s ability to: (i) achieve full year 2014 diluted EPS of $5.52 - $5.58 ($5.40 - $5.46 on a GAAP basis); (ii) generate approximately $800 million of free cash flow for 2014 ; (iii) return up to $1 billion of capital to shareholders through 2015 and deliver a strong and growing dividend; and (iv) improve our cash flow return on investment by 250 basis points through 2015 (collectively, the “Results”); are “forward looking statements” and subject to risk and uncertainty.
The Company’s ability to deliver the Results as described above is based on current expectations and involves inherent risks and uncertainties, including factors listed below and other factors that could delay, divert, or change any of them, and could cause actual outcomes and results to differ materially from current expectations. In addition to the risks, uncertainties and other factors discussed in this press release, the risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied in the forward looking statements include, without limitation, those set forth under Item 1A Risk Factors of the Company’s Annual Report on Form 10-K and any material changes thereto set forth in any subsequent Quarterly Reports on Form 10-Q, or those contained in the Company’s other filings with the Securities and Exchange Commission, and those set forth below.
The Company’s ability to deliver the Results is dependent, or based, upon: (i) the Company’s ability to execute its integration plans and achieve synergies primarily from the Infastech acquisition sufficient to generate $0.10 of EPS accretion in 2014; (ii) the Company’s ability to generate organic net sales increases of approximately 3-4% in 2014; (iii) the Company’s ability to continue to identify and execute upon sales opportunities to increase its CDIY, IAR and Security businesses in the emerging markets while minimizing associated costs; (iv) the Company’s ability to achieve a tax rate of approximately 21% in 2014; (v) the Company’s ability to hold margins in the Security business to a modest decrease for 2014; (vi) the Company’s ability to execute cost reduction actions and control indirect expenses; (vii) the Company’s ability to limit one-time restructuring charges to $25 million in 2014; (viii) full year 2014 operating margin currency impact of approximately $75 million; (ix) successful integration of acquisitions completed in 2012 and 2013, and any additional acquisitions completed during the year, as well as integration of existing businesses; (x) the continued acceptance of technologies used in the Company’s products and services; (xi) the Company’s ability to manage existing Sonitrol franchisee and Mac Tools relationships; (xii) the Company’s ability to minimize costs associated with any sale or discontinuance of a business or product line, including any severance, restructuring, legal or other costs; (xiii) the proceeds realized with respect to any business or product line disposals; (xiv) the extent of any asset impairments with respect to any businesses or product lines that are sold or discontinued; (xv) the success of the Company’s efforts to manage freight costs, steel and other commodity costs as well as capital expenditures; (xvi) the Company’s ability to sustain or increase prices in order to, among other things, offset or mitigate the impact of steel, freight, energy, non-ferrous commodity and other commodity costs and any inflation increases and/or currency impacts; (xvii) the Company’s ability to generate free cash flow and maintain a strong debt to capital ratio; (xviii) the Company’s ability to identify and effectively execute productivity improvements and cost reductions, while minimizing any associated restructuring charges; (xix) the Company’s ability to obtain favorable settlement of tax audits; (xx) the ability of the Company to generate earnings sufficient to realize future income tax benefits during periods when temporary differences become deductible; (xxi) the continued ability of the Company to access credit markets under satisfactory terms; (xxii) the Company’s ability to negotiate satisfactory price and payment terms under which the Company buys and sells goods, services, materials and products; (xxiii) the Company’s ability to successfully develop, market and achieve sales from new products and services; and (xxiv) the availability of cash to repurchase shares when conditions are right.
The Company’s ability to deliver the Results is also dependent upon: (i) the success of the Company’s marketing and sales efforts, including the ability to develop and market new and innovative products at the right price points in both existing and new markets; (ii) the ability of the Company to maintain or improve production rates in the Company’s manufacturing facilities, respond to significant changes in product demand and fulfill demand for new and existing products; (iii) the Company’s ability to continue improvements in working capital through effective management of accounts receivable and inventory levels; (iv) the ability to continue successfully managing and defending claims and litigation; (v) the success of the Company’s efforts to mitigate any adverse earnings impact resulting from increases generated by, for example, increases in the cost of energy or significant Chinese Renminbi or other currency fluctuations; (vi) the geographic distribution of the Company’s earnings; (vii) the commitment to and success of the Stanley Fulfillment System; and (viii) successful implementation with expected results of cost reduction programs.
The Company’s ability to achieve the Results will also be affected by external factors. These external factors include: challenging global geopolitical and macroeconomic environment; the economic environment of emerging markets, particularly Latin America, Russia and Turkey; pricing pressure and other changes within competitive markets; the continued consolidation of customers particularly in consumer channels; inventory management pressures on the Company’s customers; the impact the tightened credit markets may have on the Company or its customers or suppliers; the extent to which the Company has to write off accounts receivable or assets or experiences supply chain disruptions in connection with bankruptcy filings by customers or suppliers; increasing competition; changes in laws, regulations and policies that affect the Company, including, but not limited to trade, monetary, tax and fiscal policies and laws; the timing and extent of any inflation or deflation; the impact of poor weather conditions on sales; currency exchange fluctuations; the impact of dollar/foreign currency exchange and interest rates on the competitiveness of products and the Company’s debt program; the strength of the U.S. and European economies; the extent to which world-wide markets associated with homebuilding and remodeling stabilize and rebound; the impact of events that cause or may cause disruption in the Company’s supply, manufacturing, distribution and sales networks such as war, terrorist activities, and political unrest; and recessionary or expansive trends in the economies of the world in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
THIRD QUARTER YEAR TO DATE
2014 2013 2014 2013
NET SALES $ 2,902.2 $ 2,758.3 $ 8,427.2 $ 8,091.7
COSTS AND EXPENSES
Cost of sales 1,852.1 1,770.7 5,363.6 5,189.9
Gross margin 1,050.1 987.6 3,063.6 2,901.8
% of Net Sales 36.2 % 35.8 % 36.4 % 35.9 %
Selling, general and administrative 650.2 669.6 1,960.8 2,011.5
% of Net Sales 22.4 % 24.3 % 23.3 % 24.9 %
Operating margin 399.9 318.0 1,102.8 890.3
% of Net Sales 13.8 % 11.5 % 13.1 % 11.0 %
Other - net 61.8 66.6 182.0 208.8
Restructuring (credits) charges (0.2 ) 28.5 (5.6 ) 40.6
Income from operations 338.3 222.9 926.4 640.9
Interest - net 40.4 36.1 121.6 109.1
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 297.9 186.8 804.8 531.8
Income taxes on continuing operations 56.8 17.3 177.3 80.3
NET EARNINGS FROM CONTINUING OPERATIONS 241.1 169.5 627.5 451.5
Less: net (loss) earnings attributable to non-controlling interests (0.3 ) (0.3 ) 0.8 (0.9 )
NET EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE
TO COMMON SHAREOWNERS 241.4 169.8 626.7 452.4
NET LOSS FROM DISCONTINUED OPERATIONS (4.7 ) (3.8 ) (11.6 ) (18.2 )
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREOWNERS $ 236.7 $ 166.0 $ 615.1 $ 434.2
BASIC EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations $ 1.54 $ 1.10 $ 4.01 $ 2.91
Discontinued operations (0.03 ) (0.02 ) (0.07 ) (0.12 )
Total basic earnings per share of common stock $ 1.51 $ 1.07 $ 3.94 $ 2.80
DILUTED EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Continuing operations $ 1.50 $ 1.07 $ 3.92 $ 2.85
Discontinued operations (0.03 ) (0.02 ) (0.07 ) (0.11 )
Total diluted earnings per share of common stock $ 1.47 $ 1.04 $ 3.85 $ 2.74
DIVIDENDS PER SHARE $ 0.52 $ 0.50 $ 1.52 $ 1.48
AVERAGE SHARES OUTSTANDING (in thousands)
Basic 156,628 155,043 156,278 155,140
Diluted 160,582 158,925 159,755 158,717
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
September 27, December 28,
2014 2013
ASSETS
Cash and cash equivalents $ 486.8 $ 496.2
Accounts and notes receivable, net 1,861.1 1,633.0
Inventories, net 1,758.0 1,485.2
Assets held for sale 4.7 10.1
Other current assets 341.5 344.2
Total current assets 4,452.1 3,968.7
Property, plant and equipment, net 1,448.1 1,485.3
Goodwill and other intangibles, net 10,355.9 10,632.9
Other assets 477.7 448.2
Total assets $ 16,733.8 $ 16,535.1
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term borrowings $ 432.7 $ 402.6
Accounts payable 1,713.5 1,575.9
Accrued expenses 1,236.4 1,236.2
Liabilities held for sale 4.7 6.3
Total current liabilities 3,387.3 3,221.0
Long-term debt 3,856.8 3,799.4
Other long-term liabilities 2,445.7 2,634.2
Stanley Black & Decker, Inc. shareowners' equity 6,960.8 6,799.2
Non-controlling interests' equity 83.2 81.3
Total liabilities and equity $ 16,733.8 $ 16,535.1
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
THIRD QUARTER YEAR TO DATE
2014 2013 2014 2013
OPERATING ACTIVITIES
Net earnings from continuing operations $ 241.1 $ 169.5 $ 627.5 $ 451.5
Net loss from discontinued operations (4.7 ) (3.8 ) (11.6 ) (18.2 )
Depreciation and amortization 112.6 108.8 337.4 322.7
Changes in working capital1 (168.6 ) (244.2 ) (443.0 ) (371.6 )
Other 68.7 69.3 24.0 (248.1 )
Net cash provided by operating activities 249.1 99.6 534.3 136.3
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures (60.2 ) (88.7 ) (179.4 ) (245.3 )
Proceeds from sale of business / assets 5.8 1.0 12.8 96.5
Acquisitions, net of cash acquired - (16.7 ) (3.2 ) (926.6 )
Proceeds from issuances of common stock 23.4 32.3 51.0 138.7
Net short-term (repayments) borrowings (48.8 ) (70.9 ) 33.8 1,199.5
Net investment hedge settlements (29.2 ) 5.3 (65.0 ) 7.0
Cash dividends on common stock (81.4 ) (77.5 ) (240.5 ) (235.0 )
Purchases of common stock for treasury (1.3 ) (7.8 ) (20.7 ) (32.6 )
Payment on forward share purchase contract - - - (350.0 )
Other (86.3 ) 30.8 (132.5 ) (35.4 )
Net cash used in investing and financing activities (278.0 ) (192.2 ) (543.7 ) (383.2 )
Decrease in Cash and Cash Equivalents (28.9 ) (92.6 ) (9.4 ) (246.9 )
Cash and Cash Equivalents, Beginning of Period 515.7 561.7 496.2 716.0
Cash and Cash Equivalents, End of Period $ 486.8 $ 469.1 $ 486.8 $ 469.1
Free Cash Flow Computation2
Operating cash inflow $ 249.1 $ 99.6 $ 534.3 $ 136.3
Less: capital and software expenditures (60.2 ) (88.7 ) (179.4 ) (245.3 )
Free cash inflow (outflow) (before dividends) $ 188.9 $ 10.9 $ 354.9 $ (109.0 )
Merger & Acquisition-related charges and payments4 29.5 65.6 116.1 282.3
Free cash inflow, normalized (before dividends)3 $ 218.4 $ 76.5 $ 471.0 $ 173.3
1 The change in working capital is comprised of accounts receivable, inventory, accounts payable and deferred revenue.
2,3 Free cash flow is defined as cash flow from operations less capital and software expenditures. Management considers free cash flow an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners. Free cash flow does not include deductions for mandatory debt service, other borrowing activity, discretionary dividends on the Company’s common stock and business acquisitions, among other items. Normalized free cash flow, as reconciled above, is considered a meaningful pro forma metric to aid the understanding of the Company's cash flow performance aside from the material impact of merger and acquisition-related activities.
4 Merger & Acquisition-related charges and payments relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
THIRD QUARTER YEAR TO DATE
2014 2013 2014 2013
NET SALES
Construction & DIY $ 1,453.5 $ 1,332.0 $ 4,062.9 $ 3,874.0
Industrial 866.2 825.9 2,607.4 2,421.3
Security 582.5 600.4 1,756.9 1,796.4
Total $ 2,902.2 $ 2,758.3 $ 8,427.2 $ 8,091.7
SEGMENT PROFIT
Construction & DIY $ 239.7 $ 198.4 $ 627.0 $ 574.3
Industrial 136.2 114.6 416.8 321.6
Security 63.9 61.4 180.5 173.5
Segment Profit 439.8 374.4 1,224.3 1,069.4
Corporate Overhead (39.9 ) (56.4 ) (121.5 ) (179.1 )
Total $ 399.9 $ 318.0 $ 1,102.8 $ 890.3
Segment Profit as a Percentage of Net Sales
Construction & DIY 16.5 % 14.9 % 15.4 % 14.8 %
Industrial 15.7 % 13.9 % 16.0 % 13.3 %
Security 11.0 % 10.2 % 10.3 % 9.7 %
Segment Profit 15.2 % 13.6 % 14.5 % 13.2 %
Corporate Overhead (1.4 %) (2.0 %) (1.4 %) (2.2 %)
Total 13.8 % 11.5 % 13.1 % 11.0 %
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
THIRD QUARTER 2014
Reported Merger &
Acquisition-
Related
Charges1
Normalized3
Gross margin $ 1,050.1 $ 0.1 $ 1,050.2
% of Net Sales 36.2 % 36.2 %
Selling, general and administrative 650.2 (8.1 ) $ 642.1
% of Net Sales 22.4 % 22.1 %
Operating margin 399.9 8.2 408.1
% of Net Sales 13.8 % 14.1 %
Earnings from continuing operations before income taxes 297.9 8.4 306.3
Income taxes on continuing operations 56.8 0.7 57.5
Net earnings from continuing operations 241.4 7.7 249.1
Diluted earnings per share of common stock $ 1.50 $ 0.05 $ 1.55
1 Merger and acquisition-related charges relate primarily to integration and consulting costs.
THIRD QUARTER 2013
Reported Merger &
Acquisition
-Related and
Other
Charges2
Normalized3
Gross margin $ 987.6 $ 5.3 $ 992.9
% of Net Sales 35.8 % 36.0 %
Selling, general and administrative 669.6 (31.9 ) 637.7
% of Net Sales 24.3 % 23.1 %
Operating margin 318.0 37.2 355.2
% of Net Sales 11.5 % 12.9 %
Earnings from continuing operations before income taxes 186.8 67.2 254.0
Income taxes on continuing operations 17.3 16.0 33.3
Net earnings from continuing operations 169.8 51.3 221.1
Diluted earnings per share of common stock $ 1.07 $ 0.32 $ 1.39
2 Merger and acquisition-related and other charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
3 The normalized 2014 and 2013 information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company’s margin and earnings results aside from the material impact of the merger & acquisition-related and other charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EARNINGS FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars Except Per Share Amounts)
YEAR TO DATE 2014
Reported Merger &
Acquisition-
Related
Charges1
Normalized3
Gross margin $ 3,063.6 $ 1.5 $ 3,065.1
% of Net Sales 36.4 % 36.4 %
Selling, general and administrative 1,960.8 (19.7 ) 1,941.1
% of Net Sales 23.3 % 23.0 %
Operating margin 1,102.8 21.2 1,124.0
% of Net Sales 13.1 % 13.3 %
Earnings from continuing operations before income taxes 804.8 16.4 821.2
Income taxes on continuing operations 177.3 (3.2 ) 174.1
Net earnings from continuing operations 626.7 19.6 646.3
Diluted earnings per share of common stock $ 3.92 $ 0.13 $ 4.05
1 Merger and acquisition-related charges relate primarily to integration and consulting costs, as well as employee-related matters.
YEAR TO DATE 2013
Reported Merger &
Acquisition-
Related and
Other
Charges2
Normalized3
Gross margin $ 2,901.8 $ 26.4 $ 2,928.2
% of Net Sales 35.9 % 36.2 %
Selling, general and administrative 2,011.5 (90.3 ) 1,921.2
% of Net Sales 24.9 % 23.7 %
Operating margin 890.3 116.7 1,007.0
% of Net Sales 11.0 % 12.4 %
Earnings from continuing operations before income taxes 531.8 178.6 710.4
Income taxes on continuing operations 80.3 50.0 130.3
Net earnings from continuing operations 452.4 128.6 581.0
Diluted earnings per share of common stock $ 2.85 $ 0.81 $ 3.66
2 Merger and acquisition-related and other charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs, as well as a restructuring reversal due to the termination of a previously approved restructuring action.
3 The normalized 2014 and 2013 information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company’s margin and earnings results aside from the material impact of the merger & acquisition-related and other charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
THIRD QUARTER 2014
Reported Merger &
Acquisition-
Related
Charges1
Normalized3
SEGMENT PROFIT
Construction & DIY $ 239.7 $ 0.1 $ 239.8
Industrial 136.2 1.2 137.4
Security 63.9 0.3 64.2
Segment Profit 439.8 1.6 441.4
Corporate Overhead (39.9 ) 6.6 (33.3 )
Total $ 399.9 $ 8.2 $ 408.1
Segment Profit as a Percentage of Net Sales
Construction & DIY 16.5 % 16.5 %
Industrial 15.7 % 15.9 %
Security 11.0 % 11.0 %
Segment Profit 15.2 % 15.2 %
Corporate Overhead (1.4 %) (1.1 %)
Total 13.8 % 14.1 %
1 Merger and acquisition-related charges relate primarily to integration and consulting costs.
THIRD QUARTER 2013
Reported Merger &
Acquisition-
Related
Charges2
Normalized3
SEGMENT PROFIT
Construction & DIY $ 198.4 $ 3.1 $ 201.5
Industrial 114.6 2.3 116.9
Security 61.4 11.9 73.3
Segment Profit 374.4 17.3 391.7
Corporate Overhead (56.4 ) 19.9 (36.5 )
Total $ 318.0 $ 37.2 $ 355.2
Segment Profit as a Percentage of Net Sales
Construction & DIY 14.9 % 15.1 %
Industrial 13.9 % 14.2 %
Security 10.2 % 12.2 %
Segment Profit 13.6 % 14.2 %
Corporate Overhead (2.0 %) (1.3 %)
Total 11.5 % 12.9 %
2 Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
3 The normalized 2014 and 2013 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company's segment profit results aside from the material impact of the merger and acquisition-related charges.
STANLEY BLACK & DECKER, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP SEGMENT PROFIT FINANCIAL MEASURES TO CORRESPONDING
NON-GAAP FINANCIAL MEASURES
(Unaudited, Millions of Dollars)
YEAR TO DATE 2014
Reported Merger &
Acquisition-
Related
Charges1
Normalized3
SEGMENT PROFIT
Construction & DIY $ 627.0 $ 0.7 $ 627.7
Industrial 416.8 4.6 421.4
Security 180.5 3.8 184.3
Segment Profit 1,224.3 9.1 1,233.4
Corporate Overhead (121.5 ) 12.1 (109.4 )
Total $ 1,102.8 $ 21.2 $ 1,124.0
Segment Profit as a Percentage of Net Sales
Construction & DIY 15.4 % 15.4 %
Industrial 16.0 % 16.2 %
Security 10.3 % 10.5 %
Segment Profit 14.5 % 14.6 %
Corporate Overhead (1.4 %) (1.3 %)
Total 13.1 % 13.3 %
1 Merger and acquisition-related charges relate primarily to integration and consulting costs, as well as employee-related matters.
YEAR TO DATE 2013
Reported Merger &
Acquisition-
Related
Charges2
Normalized3
SEGMENT PROFIT
Construction & DIY $ 574.3 $ 9.2 $ 583.5
Industrial 321.6 20.8 342.4
Security 173.5 27.1 200.6
Segment Profit 1,069.4 57.1 1,126.5
Corporate Overhead (179.1 ) 59.6 (119.5 )
Total $ 890.3 $ 116.7 $ 1,007.0
Segment Profit as a Percentage of Net Sales
Construction & DIY 14.8 % 15.1 %
Industrial 13.3 % 14.1 %
Security 9.7 % 11.2 %
Segment Profit 13.2 % 13.9 %
Corporate Overhead (2.2 %) (1.5 %)
Total 11.0 % 12.4 %
2 Merger and acquisition-related charges relate primarily to the Black & Decker merger and Niscayah and Infastech acquisitions, including facility closure-related charges, employee-related charges and integration costs.
3 The normalized 2014 and 2013 business segment information, as reconciled to GAAP above, is considered relevant to aid analysis of the Company's segment profit results aside from the material impact of the merger and acquisition-related charges.
Company EarningsFinance
Contact:
Contact:
Stanley Black & Decker
Greg Waybright, (860) 827-3833
Vice President, Investor & Government Relations
greg.waybright@sbdinc.com
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KKR & Co. L.P. Announces Third Quarter 2014 ResultsRealization Activity Drives Strong Year-to-Date Distributable Earnings
KKR & Co. L.P. 4 hours ago
NEW YORK--(BUSINESS WIRE)--
GAAP net income (loss) attributable to KKR & Co. L.P. was $89.9 million for the quarter ended September 30, 2014, down from $204.7 million in the quarter ended September 30, 2013. GAAP net income (loss) attributable to KKR & Co. L.P. was $478.2 million for the nine months ended September 30, 2014, up from $413.3 million in the nine months ended September 30, 2013.
Total distributable earnings was $504.8 million and $1,652.6 million for the quarter and nine months ended September 30, 2014, respectively, up from $251.1 million and $945.5 million in the comparable periods of 2013.
Distribution per common unit was $0.45 and $1.55 for the quarter and nine months ended September 30, 2014, respectively, up from $0.23 and $0.92 in the comparable periods of 2013.
Economic net income (“ENI”) was $508.7 million for the quarter ended September 30, 2014, down from $613.7 million in the quarter ended September 30, 2013. ENI was $1,640.6 million for the nine months ended September 30, 2014, up from $1,405.9 million in the nine months ended September 30, 2013.
ENI after taxes per adjusted unit(1) was $0.50 for the quarter ended September 30, 2014, down from $0.80 in the quarter ended September 30, 2013. ENI after taxes per adjusted unit was $1.81 for the nine months ended September 30, 2014, up from $1.79 in the nine months ended September 30, 2013.
Fee and yield earnings were $207.9 million and $524.9 million for the quarter and nine months ended September 30, 2014, respectively, up from $105.3 million and $293.7 million in the comparable periods of 2013.
Book value was $10.5 billion on a total reportable segment basis as of September 30, 2014 or $12.51 per adjusted unit.
Return on equity and cash return on equity were 24.7% and 23.3%, respectively, on a trailing twelve month basis.
Assets under management (“AUM”) and fee paying assets under management (“FPAUM”) totaled $96.1 billion and $81.4 billion as of September 30, 2014, respectively.
KKR & Co. L.P. ( KKR) today reported its third quarter 2014 results.
For the three, nine and trailing twelve months ended September 30, 2014, the carrying value of our private equity portfolio appreciated 2.2%, 10.5%, and 19.2%, respectively.
KKR declares a distribution of $0.45 per common unit, which includes $0.18 of realized cash carry, the 18th consecutive quarter that realized cash carry has been a component of the distribution.
“Our realization activity in the first nine months of 2014 drove a 68% increase in our year-to-date distribution per unit to $1.55,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Additionally, our investment portfolio and balance sheet continue to perform, resulting in a 25% return on equity and 23% cash return on equity over the last twelve months.”
___________________________________________________________________________________________________
Note: Certain financial measures, including FRE, ENI, ENI after taxes, fee and yield earnings, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits B and C for a reconciliation of such measures to financial results prepared in accordance with GAAP.
(1) KKR’s reporting of ENI after taxes now includes a reduction for equity-based charges.
GAAP RESULTS
GAAP results for the quarter and nine months ended September 30, 2014, included net income attributable to KKR & Co. L.P. of $89.9 million and $478.2 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.20 and $1.21, respectively, on a diluted basis. For the quarter and nine months ended September 30, 2013, net income attributable to KKR & Co. L.P. was $204.7 million and $413.3 million, respectively, and net income attributable to KKR & Co. L.P. per common unit was $0.66 and $1.40, respectively, on a diluted basis. The decrease in net income in the quarter ended September 30, 2014 was primarily due to a decrease in investment income, partially offset by an increase in fees and an increase in KKR & Co. L.P.’s ownership percentage in the KKR business. The increase in net income in the nine months ended September 30, 2014 was primarily due to (i) an increase in investment income; (ii) higher fees; and (iii) an increase in KKR & Co. L.P.’s ownership percentage in the KKR business.
SEGMENT RESULTS*
KEY METRICS
(Amounts in millions, except per adjusted unit amounts)
Quarter Ended Nine Months Ended
September 30, 2014 September 30, 2013 % Change September 30, 2014 September 30, 2013 % Change
Total Distributable Earnings
Fees $ 309 $ 275 $ 891 $ 733
Realized Cash Carry 246 82 995 440
Net Realized Investment Income 245 103 720 406
Total Cash Revenues $ 800 $ 459 74 % $ 2,606 $ 1,578 65 %
Total Cash Expenses and Other 295 208 953 633
Total Distributable Earnings
$ 505 $ 251 101 % $ 1,653 $ 946 75 %
Estimated Current Corporate Income Taxes 30 30 82 72
Distributable Earnings, net of taxes $ 475 $ 221 115 % $ 1,571 $ 875 80 %
Distributable Earnings, net of taxes per unit $ 0.59 $ 0.32 84 % $ 2.03 $ 1.27 60 %
Distribution per unit $ 0.45 $ 0.23 96 % $ 1.55 $ 0.92 68 %
Payout ratio 76 % 72 % 76 % 73 %
Economic Net Income
Management, Monitoring and Transaction Fees, Net $ 301 $ 274 $ 854 $ 697
Performance Income 310 353 1,096 861
Investment Income 207 303 648 635
Total Segment Revenues $ 819 $ 930 (12 %) $ 2,598 $ 2,192 19 %
Total Segment Expenses and Other 399 359 1,170 917
Economic Net Income, After-Taxes $ 419 $ 571 (27 %) $ 1,428 $ 1,276 12 %
Economic Net Income, After-Taxes per Adjusted Unit $ 0.50 $ 0.80 (38 %) $ 1.81 $ 1.79 1 %
Fee and Yield Earnings $ 208 $ 105 98 % $ 525 $ 294 79 %
Other
Book Value per Adjusted Unit $ 12.51 $ 10.07 24 %
Last Twelve Months Ended
September 30, 2014 September 30, 2013
Return on Equity 25 % 23 %
Cash Return on Equity
23 % 20 %
________________________________________________________________________________________________
* All segment financial information presented in this release reflects a new presentation as of the second quarter of 2014 following the closing of the acquisition of KFN.
Private Markets
AUM was $59.2 billion as of September 30, 2014, a decrease of $0.2 billion, compared to AUM of $59.4 billion as of June 30, 2014. The decrease was primarily attributable to distributions to the limited partners of our private equity funds arising from realizations which were offset by appreciation in the fair value of our private equity portfolio and new capital raised.
FPAUM was $45.6 billion as of September 30, 2014, a decrease of $0.6 billion, compared to FPAUM of $46.2 billion as of June 30, 2014. The decrease was primarily attributable to distributions to the limited partners of our private equity funds arising from realizations which were partially offset by new capital raised.
Total segment revenues were $631.6 million for the quarter ended September 30, 2014, a decrease of $156.9 million compared to total segment revenues of $788.5 million for the quarter ended September 30, 2013. Total segment revenues were $2,005.1 million for the nine months ended September 30, 2014, an increase of $197.7 million compared to total segment revenues of $1,807.4 million for the nine months ended September 30, 2013. The decrease in revenues in the quarter ended September 30, 2014 was principally attributable to a lower level of both total investment income and carried interest reflecting a lower level of appreciation in our private equity portfolio in the 2014 period. While the value of our private equity portfolio increased in the 2014 period, the amount of appreciation was less than that in the prior period. The increase in revenues in the nine months ended September 30, 2014 was principally attributable to a higher level of carried interest reflecting the initial recognition of carried interest in our North America Fund XI and Asian Fund II in the 2014 period.
ENI was $399.0 million for the quarter ended September 30, 2014, a decrease of $132.8 million compared to ENI of $531.8 million for the quarter ended September 30, 2013. ENI was $1,260.6 million for the nine months ended September 30, 2014, an increase of $84.2 million compared to ENI of $1,176.4 million for the nine months ended September 30, 2013. The decrease in the quarter ended September 30, 2014 was principally attributable to a lower level of total investment income reflecting a lower level of appreciation in our private equity portfolio and a lower level of carried interest. The decrease was partially offset by a lower level of allocations to the carry pool driven by a lower level of carried interest. The increase in the nine months ended September 30, 2014 was principally attributable to a higher level of carried interest reflecting the initial recognition of carried interest in our North America Fund XI and Asian Fund II in the 2014 period, partially offset by higher allocations to the carry pool driven by the higher level of carried interest.
Public Markets
AUM was $37.0 billion as of September 30, 2014, a decrease of $1.5 billion, compared to AUM of $38.5 billion as of June 30, 2014. FPAUM was $35.8 billion as of September 30, 2014, an increase of $2.3 billion, compared to FPAUM of $33.5 billion as of June 30, 2014. For AUM, the decrease was primarily attributable to distributions and redemptions which were partially offset by new capital raised. For FPAUM, the increases were primarily attributable to the inclusion of $2.6 billion of CLOs partially owned by KKR that were not previously included in FPAUM, partially offset by distributions and redemptions in our credit strategies.
Total segment revenues were $93.6 million for the quarter ended September 30, 2014, an increase of $10.1 million compared to total segment revenues of $83.5 million for the quarter ended September 30, 2013. Total segment revenues were $396.4 million for the nine months ended September 30, 2014, an increase of $127.1 million compared to total segment revenues of $269.3 million for the nine months ended September 30, 2013. The increase in the quarter ended September 30, 2014 was principally attributable to a higher level of management fees reflecting new capital raised and acquisitions. The increase in the nine months ended September 30, 2014 was principally attributable to a higher level of management fees reflecting new capital raised and acquisitions as well as higher total investment income primarily relating to the inclusion of KKR Financial Holdings LLC (“KFN”) during the 2014 periods beginning on May 1, 2014.
ENI was $48.1 million for the quarter ended September 30, 2014, an increase of $10.5 million compared to ENI of $37.6 million for the quarter ended September 30, 2013. ENI was $251.5 million for the nine months ended September 30, 2014, an increase of $103.2 million compared to ENI of $148.3 million for the nine months ended September 30, 2013. The increase in the quarter ended September 30, 2014 was principally attributable to a higher level of management fees reflecting new capital raised and acquisitions. The increase in the nine months ended September 30, 2014 was principally attributable to a higher level of management fees reflecting new capital raised and acquisitions as well as higher total investment income primarily relating to the inclusion of KFN during the 2014 periods beginning on May 1, 2014.
Capital Markets and Other
Total segment revenues were $93.4 million for the quarter ended September 30, 2014, an increase of $35.4 million compared to total segment revenues of $58.0 million for the quarter ended September 30, 2013. Total segment revenues were $196.5 million for the nine months ended September 30, 2014, an increase of $80.9 million compared to total segment revenues of $115.6 million for the nine months ended September 30, 2013. The increase in total segment revenues was primarily driven by higher overall capital markets transaction activity.
ENI was $61.6 million for the quarter ended September 30, 2014, an increase of $17.2 million compared to ENI of $44.4 million for the quarter ended September 30, 2013. ENI was $128.5 million for the nine months ended September 30, 2014, an increase of $47.2 million compared to ENI of $81.3 million for the nine months ended September 30, 2013. The increase in both periods was principally attributable to higher transaction fees driven by higher overall capital markets transaction activity, partially offset by higher compensation expense.
CAPITAL AND LIQUIDITY
As of September 30, 2014, KKR had $2.1 billion of cash and short-term investments and $2.5 billion of outstanding debt and preferred share obligations on a total reportable segment basis. This includes KFN’s debt obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares of $373.8 million, which are non-recourse to KKR beyond the assets of KFN.As of September 30, 2014,KKR had a $750.0 million revolving credit facility, which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of September 30, 2014. On October 22, 2014, KKR refinanced its $750.0 million corporate credit facility with a new credit facility providing for availability of $1.0 billion of borrowings and maturing in October 2019.
As of September 30, 2014, KKR’s portion of total uncalled commitments to its investment funds was $862.1 million. See Exhibit A for details.
DISTRIBUTION
A distribution of $0.45 per common unit has been declared, comprised of (i) $0.10 per common unit from after-tax FRE, (ii) $0.18 per common unit from realized cash carry, (iii) $0.10 per common unit from KKR’s net realized investment income and(iv) $0.07 per common unit from KFN’s net realized investment income. The distribution will be paid on November 18, 2014 to unitholders of record as of the close of business on November 3, 2014.
CONFERENCE CALL
A conference call to discuss KKR's financial results will be held on Thursday, October 23, 2014 at 10:00 a.m. EDT. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Center section of KKR's website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR's website or by dialing (855) 859-2056 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 13870720, beginning approximately two hours after the broadcast.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Investor Center on the website.
ABOUT KKR
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. ( KKR), please visit KKR's website at www.kkr.com.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, FRE, total distributable earnings, ENI, ENI after taxes, fee and yield earnings, fee and yield EBITDA, equity invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments, net realized principal investment income and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships such as Prisma, Nephila, Avoca or KFN; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on February 24, 2014, quarterly reports on Form 10-Q for subsequent quarters and other filings with the SEC, which are available at www.sec.gov.
KKR
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
Quarter Ended Nine Months Ended
September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Revenues
Fees $ 344,768 $ 220,028 $ 897,064 $ 537,644
Expenses
Compensation and Benefits 320,423 329,182 1,010,191 860,905
Occupancy and Related Charges 15,501 17,637 46,968 46,036
General, Administrative and Other 168,486 108,676 505,747 279,906
Total Expenses 504,410 455,495 1,562,906 1,186,847
Investment Income (Loss)
Net Gains (Losses) from Investment Activities 298,259 2,230,401 4,242,289 4,598,755
Dividend Income 599,020 121,059 968,626 370,014
Interest Income 260,292 114,861 638,124 352,250
Interest Expense (96,618 ) (25,056 ) (197,346 ) (72,693 )
Total Investment Income (Loss) 1,060,953 2,441,265 5,651,693 5,248,326
Income (Loss) Before Taxes 901,311 2,205,798 4,985,851 4,599,123
Income Taxes 29,267 7,644 57,145 25,525
Net Income (Loss) 872,044 2,198,154 4,928,706 4,573,598
Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests (2,462 ) 9,169 1,366 25,992
Net Income (Loss) Attributable to
Noncontrolling Interests 784,568 1,984,245 4,449,146 4,134,293
Net Income (Loss) Attributable to KKR & Co. L.P. $ 89,938 $ 204,740 $ 478,194 $ 413,313
Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic $ 0.21 $ 0.73 $ 1.31 $ 1.53
Diluted (a) $ 0.20 $ 0.66 $ 1.21 $ 1.40
Weighted Average Common Units Outstanding
Basic 419,961,455 282,148,802 364,127,956 270,484,224
Diluted (a) 452,019,742 308,135,191 396,232,828 296,181,070
__________________________________________________________________________________
(a) KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit since the exchange of these units would not dilute KKR’s respective ownership interests in the KKR Group Partnerships.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
Quarter Ended Nine Months Ended
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 173,912 $ 178,674 $ 173,245 $ 547,979 $ 490,384
Monitoring Fees 30,449 29,610 33,010 96,422 93,985
Transaction Fees 158,564 84,305 129,127 406,385 232,211
Fee Credits (61,811 ) (49,830 ) (61,782 ) (196,309 ) (119,598 )
Total Management, Monitoring and Transaction Fees, Net 301,114 242,759 273,600 854,477 696,982
Performance Income
Realized Carried Interest 246,026 555,488 81,532 995,064 439,527
Incentive Fees 8,009 11,478 1,225 36,506 35,664
Unrealized Carried Interest 56,192 (137,826 ) 270,237 64,013 385,466
Total Performance Income 310,227 429,140 352,994 1,095,583 860,657
Investment Income (Loss)
Net Realized Gains (Losses) 162,795 221,661 103,545 566,184 404,751
Net Unrealized Gains (Losses) (37,833 ) (119,935 ) 200,706 (72,009 ) 228,437
Total Realized and Unrealized 124,962 101,726 304,251 494,175 633,188
Net Interest and Dividends 82,254 60,432 (779 ) 153,850 1,532
Total Investment Income (Loss) 207,216 162,158 303,472 648,025 634,720
Total Segment Revenues 818,557 834,057 930,066 2,598,085 2,192,359
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 108,790 91,444 92,229 309,149 247,827
Realized Allocation to Carry Pool 98,411 222,195 32,613 398,026 175,811
Unrealized Allocation to Carry Pool 22,696 (53,435 ) 112,899 27,951 165,741
Total Compensation and Benefits 229,897 260,204 237,741 735,126 589,379
Occupancy and Related Charges 14,458 14,757 15,674 43,404 42,063
Other Operating Expenses 60,272 54,311 60,884 167,384 150,541
Total Segment Expenses 304,627 329,272 314,299 945,914 781,983
Income (Loss) attributable to noncontrolling interests 5,189 3,206 2,020 11,597 4,444
Economic Net Income (Loss) (a) $ 508,741 $ 501,579 $ 613,747 $ 1,640,574 $ 1,405,932
Provision for Income Taxes 47,361 6,330 11,950 90,272 45,553
Equity-based Charges 42,090 40,877 31,227 122,320 84,581
Economic Net Income (Loss), After Taxes (b) $ 419,290 $ 454,372 $ 570,570 $ 1,427,982 $ 1,275,798
Economic Net Income (Loss), After Taxes Per Adjusted Unit $ 0.50 $ 0.57 $ 0.80 $ 1.81 $ 1.79
Weighted Average Adjusted Units (Fully Diluted Basis) (a) 835,957,683 800,747,528 715,781,663 787,502,790 714,171,641
Assets Under Management $ 96,149,900 $ 97,957,900 $ 90,169,200 $ 96,149,900 $ 90,169,200
Fee Paying Assets Under Management $ 81,356,700 $ 79,656,300 $ 73,611,900 $ 81,356,700 $ 73,611,900
Equity Invested and Syndicated Capital $ 4,751,400 $ 2,345,500 $ 2,848,700 $ 10,474,200 $ 5,562,500
Uncalled Commitments $ 17,555,400 $ 19,784,200 $ 22,718,400 $ 17,555,400 $ 22,718,400
Other Information
Fee Related Earnings $ 125,603 $ 93,725 $ 106,038 $ 371,046 $ 292,215
Plus: Net Interest and Dividends 82,254 60,432 (779 ) 153,850 1,532
Fee and Yield Earnings (a) $ 207,857 $ 154,157 $ 105,259 $ 524,896 $ 293,747
Plus: Depreciation and Amortization 3,777 4,140 3,601 11,952 10,990
Plus: Core Interest Expense 23,347 19,205 16,215 60,952 48,658
Fee and Yield EBITDA (a) $ 234,981 $ 177,502 $ 125,075 $ 597,800 $ 353,395
Total Distributable Earnings (a) $ 504,817 $ 700,973 $ 251,137 $ 1,652,598 $ 945,527
GAAP interest expense $ 96,618 $ 65,997 $ 25,056 $ 197,346 $ 72,693
Less: interest expense related to debt obligations
from investment financing arrangements and KFN 73,271 46,792 8,841 136,394 24,035
Core Interest Expense (a) $ 23,347 $ 19,205 $ 16,215 $ 60,952 $ 48,658
_____________________________________________________________________________________________
(a) See definitions for economic net income (loss), adjusted units, fee and yield earnings, fee and yield EBITDA, total distributable earnings and core interest expense under “Notes to Reportable Segments.”
(b) Represents economic net income (loss) after reductions for income taxes and equity-based charges.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINACIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
Quarter Ended Nine Months Ended
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 107,443 $ 111,542 $ 119,410 $ 342,024 $ 340,715
Monitoring Fees 30,449 29,610 33,010 96,422 93,985
Transaction Fees 67,772 45,340 54,968 206,132 96,611
Fee Credits (58,810 ) (43,478 ) (46,597 ) (182,626 ) (97,153 )
Total Management, Monitoring and Transaction Fees, Net 146,854 143,014 160,791 461,952 434,158
Performance Income
Realized Carried Interest 236,126 555,488 81,532 960,414 439,527
Incentive Fees - - - - -
Unrealized Carried Interest 53,776 (163,564 ) 256,215 35,988 340,254
Total Performance Income 289,902 391,924 337,747 996,402 779,781
Investment Income (Loss)
Net Realized Gains (Losses) 165,047 207,892 104,061 549,137 401,750
Net Unrealized Gains (Losses) 8,293 (122,729 ) 194,270 (43,763 ) 210,154
Total Realized and Unrealized 173,340 85,163 298,331 505,374 611,904
Net Interest and Dividends 21,463 22,760 (8,344 ) 41,415 (18,410 )
Total Investment Income (Loss) 194,803 107,923 289,987 546,789 593,494
Total Segment Revenues 631,559 642,861 788,525 2,005,143 1,807,433
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 59,991 56,522 65,400 183,411 164,917
Realized Allocation to Carry Pool 94,451 222,195 32,613 384,166 175,811
Unrealized Allocation to Carry Pool 21,729 (63,730 ) 107,290 16,742 147,656
Total Compensation and Benefits 176,171 214,987 205,303 584,319 488,384
Occupancy and Related Charges 11,460 11,764 13,367 34,784 35,935
Other Operating Expenses 44,619 39,589 37,586 124,267 105,516
Total Segment Expenses 232,250 266,340 256,256 743,370 629,835
Income (Loss) attributable to noncontrolling interests 342 335 433 1,192 1,242
Economic Net Income (Loss) $ 398,967 $ 376,186 $ 531,836 $ 1,260,581 $ 1,176,356
Assets Under Management $ 59,168,300 $ 59,417,000 $ 59,678,300 $ 59,168,300 $ 59,678,300
Fee Paying Assets Under Management $ 45,591,600 $ 46,167,300 $ 49,889,500 $ 45,591,600 $ 49,889,500
Equity Invested $ 2,389,200 $ 1,454,400 $ 1,805,800 $ 6,395,400 $ 3,718,300
Uncalled Commitments $ 14,907,300 $ 17,109,800 $ 21,103,800 $ 14,907,300 $ 21,103,800
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINACIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
Quarter Ended Nine Months Ended
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 66,469 $ 67,132 $ 53,835 $ 205,955 $ 149,669
Monitoring Fees - - - - -
Transaction Fees 3,262 7,350 20,534 16,634 30,883
Fee Credits (3,001 ) (6,352 ) (15,185 ) (13,683 ) (22,445 )
Total Management, Monitoring and Transaction Fees, Net 66,730 68,130 59,184 208,906 158,107
Performance Income
Realized Carried Interest 9,900 - - 34,650 -
Incentive Fees 8,009 11,478 1,225 36,506 35,664
Unrealized Carried Interest 2,416 25,738 14,022 28,025 45,212
Total Performance Income 20,325 37,216 15,247 99,181 80,876
Investment Income (Loss)
Net Realized Gains (Losses) (630 ) 14,284 979 19,133 6,128
Net Unrealized Gains (Losses) (46,118 ) 3,751 4,653 (27,553 ) 13,981
Total Realized and Unrealized (46,748 ) 18,035 5,632 (8,420 ) 20,109
Net Interest and Dividends 53,335 33,822 3,481 96,734 10,229
Total Investment Income (Loss) 6,587 51,857 9,113 88,314 30,338
Total Segment Revenues 93,642 157,203 83,544 396,401 269,321
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 26,787 26,904 18,606 80,436 60,296
Realized Allocation to Carry Pool 3,960 - - 13,860 -
Unrealized Allocation to Carry Pool 967 10,295 5,609 11,209 18,085
Total Compensation and Benefits 31,714 37,199 24,215 105,505 78,381
Occupancy and Related Charges 2,518 2,544 1,906 7,234 5,063
Other Operating Expenses 10,929 11,474 19,670 30,910 36,643
Total Segment Expenses 45,161 51,217 45,791 143,649 120,087
Income (Loss) attributable to noncontrolling interests 335 385 202 1,242 935
Economic Net Income (Loss) $ 48,146 $ 105,601 $ 37,551 $ 251,510 $ 148,299
Assets Under Management $ 36,981,600 $ 38,540,900 $ 30,490,900 $ 36,981,600 $ 30,490,900
Fee Paying Assets Under Management $ 35,765,100 $ 33,489,000 $ 23,722,400 $ 35,765,100 $ 23,722,400
Equity Invested $ 442,200 $ 724,400 $ 326,400 $ 1,900,700 $ 862,100
Uncalled Commitments $ 2,648,100 $ 2,674,400 $ 1,614,600 $ 2,648,100 $ 1,614,600
Gross Dollars Invested $ 1,122,100 $ 768,200 $ 1,506,900 $ 2,880,000 $ 2,732,200
...
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINACIAL INFORMATION
CAPITAL MARKETS AND OTHER SEGMENT (UNAUDITED)
(Amounts in thousands)
Quarter Ended Nine Months Ended
September 30, 2014
June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ - $ - $ - $ - $ -
Monitoring Fees - - - - -
Transaction Fees 87,530 31,615 53,625 183,619 104,717
Fee Credits - - - - -
Total Management, Monitoring and Transaction Fees, Net 87,530 31,615 53,625 183,619 104,717
Performance Income
Realized Carried Interest - - - - -
Incentive Fees - - - - -
Unrealized Carried Interest - - - - -
Total Performance Income - - - - -
Investment Income (Loss)
Net Realized Gains (Losses) (1,622 ) (515 ) (1,495 ) (2,086 ) (3,127 )
Net Unrealized Gains (Losses) (8 ) (957 ) 1,783 (693 ) 4,302
Total Realized and Unrealized (1,630 ) (1,472 ) 288 (2,779 ) 1,175
Net Interest and Dividends 7,456 3,850 4,084 15,701 9,713
Total Investment Income (Loss) 5,826 2,378 4,372 12,922 10,888
Total Segment Revenues 93,356 33,993 57,997 196,541 115,605
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 22,012 8,018 8,223 45,302 22,614
Realized Allocation to Carry Pool - - - - -
Unrealized Allocation to Carry Pool - - - - -
Total Compensation and Benefits 22,012 8,018 8,223 45,302 22,614
Occupancy and Related Charges 480 449 401 1,386 1,065
Other Operating Expenses 4,724 3,248 3,628 12,207 8,382
Total Segment Expenses 27,216 11,715 12,252 58,895 32,061
Income (Loss) attributable to noncontrolling interests 4,512 2,486 1,385 9,163 2,267
Economic Net Income (Loss) $ 61,628 $ 19,792 $ 44,360 $ 128,483 $ 81,277
Syndicated Capital $ 1,920,000 $ 166,700 $ 716,500 $ 2,178,100 $ 982,100
KKR
BALANCE SHEET
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
As of
September 30, 2014
As of
December 31, 2013
Cash and short-term investments $ 2,140,056 $ 2,161,097
Investments 9,221,448 (a) 4,980,265
Unrealized carry 1,248,605 (b) 1,179,338 (b)
Other assets 905,746 662,357
Total assets $ 13,515,855 $ 8,983,057
Debt obligations - KKR $ 1,500,000 $ 1,000,000
Debt obligations - KFN 657,310 -
Preferred shares - KFN 373,750 -
Other liabilities 382,925 149,196
Total liabilities
2,913,985 1,149,196
Noncontrolling interests 123,617 71,261
Book value $ 10,478,253 $ 7,762,600
Book value per adjusted unit $ 12.51 $ 10.83
(a) See schedule of investments that follows on the next page.
(b) Unrealized Carry As of September 30, 2014
As of December 31, 2013
Private Markets $ 1,169,447 $ 1,116,996
Public Markets 79,158 62,342
Total
$ 1,248,605 $ 1,179,338
KKR
SCHEDULE OF INVESTMENTS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except percentage amounts)
As of September 30, 2014
Investments Cost Fair Value
Fair Value as a
Percentage of
Total Investments
Private Equity Co-Investments $ 2,302,767 $ 2,703,230 29.3 %
Private Equity Funds 903,401 1,098,504 11.9 %
Private Equity Total 3,206,168 3,801,734 41.2 %
Energy 814,165 926,853 10.1 %
Real Estate 288,385 313,400 3.4 %
Infrastructure 51,436 56,012 0.6 %
Real Assets Total 1,153,986 1,296,265 14.1 %
Private Markets Total 4,360,154 5,097,999 55.3 %
Alternative Credit 898,790 967,903 10.6 %
CLOs 1,544,225 1,506,631 16.3 %
Liquid Credit 278,468 305,129 3.3 %
Credit Total 2,721,483 2,779,663 30.2 %
Other 56,700 57,100 0.6 %
Public Markets Total 2,778,183 2,836,763 30.8 %
Specialty Finance 229,293 234,419 2.5 %
Other 1,008,673 1,052,267 11.4 %
Capital Markets and Other Total 1,237,966 1,286,686 13.9 %
Total Investments $ 8,376,303 $ 9,221,448 100.0 %
Significant Aggregate Portfolio Company Investments:(a)
First Data Corporation $ 1,061,332 $ 998,749 10.8 %
Alliance Boots GmbH 221,684 690,564 7.5 %
Biomet, Inc. 164,644 213,142 2.3 %
HCA Inc. 29,455 176,526 1.9 %
Kion Group GmbH 103,033 137,560 1.5 %
1,580,148 2,216,541 24.0 %
Other Investments 6,796,155 7,004,907 76.0 %
Total Investments $ 8,376,303 $ 9,221,448 100 %
____________________________________________________________________________________________
(a) The significant aggregate portfolio company investments include the top five private equity investments in portfolio companies (other than investments expected to be syndicated or transferred to a fund) based on their fair market value as of September 30, 2014. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company.
KKR
ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)
Private
Markets
Segment
Public Markets
Segment
Total
Reportable
Segments
Quarter Ended September 30, 2014
June 30, 2014 $ 59,417,000 $ 38,540,900 $ 97,957,900
New Capital Raised 745,900 1,955,200 2,701,100
Distributions (1,989,400 ) (2,901,000 ) (d) (4,890,400 )
Change in Value 994,800 (613,500 ) 381,300
September 30, 2014 $ 59,168,300 $ 36,981,600 $ 96,149,900
Nine Months Ended September 30, 2014
December 31, 2013 $ 61,242,900 $ 33,077,400 $ 94,320,300
New Capital Raised 2,449,000 5,022,000 7,471,000
Acquisitions (a) - 8,423,000 8,423,000
KFN Acquisition (b) - (4,511,900 ) (4,511,900 )
Distributions (8,624,200 ) (5,288,600 ) (e) (13,912,800 )
Net Changes in Fee Base of Certain Funds (c) (933,800 ) - (933,800 )
Change in Value 5,034,400 259,700 5,294,100
September 30, 2014 $ 59,168,300 $ 36,981,600 $ 96,149,900
Trailing Twelve Months Ended September 30, 2014
September 30, 2013 $ 59,678,300 $ 30,490,900 $ 90,169,200
New Capital Raised 3,743,100 7,545,800 11,288,900
Acquisitions (a) - 8,423,000 8,423,000
KFN Acquisition (b) - (4,511,900 ) (4,511,900 )
Distributions (11,713,100 ) (6,023,700 ) (f) (17,736,800 )
Net Changes in Fee Base of Certain Funds (c) (933,800 ) - (933,800 )
Change in Value 8,393,800 1,057,500 9,451,300
September 30, 2014 $ 59,168,300 $ 36,981,600 $ 96,149,900
______________________________________________________________________________________________
* Excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest.
(a) Represents the AUM of Avoca.
(b) Certain assets that were externally managed prior to the acquisition of KFN are now reported on the balance sheet and excluded from AUM.
(c) Represents the impact of certain funds entering the post-investment period.
(d) Includes $879.4 million of redemptions by fund investors.
(e) Includes $2,167.8 million of redemptions by fund investors.
(f) Includes $2,495.1 million of redemptions by fund investors.
KKR
FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)
Private
Markets
Segment
Public Markets
Segment
Total
Reportable
Segments
Quarter Ended September 30, 2014
June 30, 2014 $ 46,167,300 $ 33,489,000 $ 79,656,300
New Capital Raised 662,300 4,097,800 (d) 4,760,100
Distributions (1,021,200 ) (1,055,900 ) (e) (2,077,100 )
Change in Value (216,800 ) (765,800 ) (982,600 )
September 30, 2014 $ 45,591,600 $ 35,765,100 $ 81,356,700
Nine Months Ended September 30, 2014
December 31, 2013 $ 50,156,300 $ 27,241,200 $ 77,397,500
New Capital Raised 2,019,300 6,857,100 8,876,400
Acquisitions (a) - 7,971,000 7,971,000
KFN Acquisition (b) - (2,684,700 ) (2,684,700 )
Distributions (5,388,100 ) (3,386,000 ) (f) (8,774,100 )
Net Changes in Fee Base of Certain Funds (c) (964,700 ) - (964,700 )
Change in Value (231,200 ) (233,500 ) (464,700 )
September 30, 2014 $ 45,591,600 $ 35,765,100 $ 81,356,700
Trailing Twelve Months Ended September 30, 2014
September 30, 2013 $ 49,889,500 $ 23,722,400 $ 73,611,900
New Capital Raised 3,489,100 10,330,800 13,819,900
Acquisitions (a) - 7,971,000 7,971,000
KFN Acquisition (b) - (2,684,700 ) (2,684,700 )
Distributions (6,715,100 ) (3,977,100 ) (g) (10,692,200 )
Net Changes in Fee Base of Certain Funds (c) (964,700 ) - (964,700 )
Change in Value (107,200 ) 402,700 295,500
September 30, 2014 $ 45,591,600 $ 35,765,100 $ 81,356,700
______________________________________________________________________________________________
* Excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest.
(a) Represents the FPAUM of Avoca.
(b) Certain assets that were externally managed prior to the acquisition of KFN are now reported on the balance sheet and excluded from FPAUM.
(c) Represents the impact of certain funds entering the post-investment period.
(d) Includes $2.6 billion of CLOs partially owned by KKR that were not previously included in FPAUM and was not new capital raised during the quarter.
(e) Includes $879.4 million of redemptions by fund investors.
(f) Includes $2,167.8 million of redemptions by fund investors.
(g) Includes $2,495.1 million of redemptions by fund investors.
KKR
INVESTMENT VEHICLE SUMMARY (a)(UNAUDITED)
As of September 30, 2014
(Amounts in millions, except percentages)
Investment Period Amount
Commencement Date
End Date Commitment Uncalled Commitments Percentage Committed by General Partner Invested Realized Remaining Cost Remaining Fair Value
Private Markets
Private Equity Funds
Asian Fund II 4/2013 4/2019 $ 5,825.0 $ 4,050.0 1.3 % $ 1,775.0 $ - $ 1,775.0 $ 2,104.7
North America Fund XI 9/2012 9/2018 8,718.4 4,494.2 2.9 % 4,224.2 185.5 4,224.2 5,036.2
China Growth Fund 11/2010 11/2016 1,010.0 507.5 1.0 % 502.5 42.4 485.0 549.0
E2 Investors (Annex Fund) 8/2009 11/2013 209.0 13.2 4.5 % 195.8 144.4 54.5 279.2
European Fund III 3/2008 3/2014 6,204.8 624.3 4.6 % 5,580.5 2,232.9 4,464.4 6,450.4
Asian Fund 7/2007 4/2013 3,983.3 139.8 2.5 % 3,843.5 4,054.6 2,471.0 3,636.5
2006 Fund 9/2006 9/2012 17,642.2 553.1 2.1 % 17,089.1 13,634.2 9,839.0 15,204.7
European Fund II 11/2005 10/2008 5,750.8 - 2.1 % 5,750.8 5,475.2 1,554.2 2,652.8
Millennium Fund 12/2002 12/2008 6,000.0 - 2.5 % 6,000.0 11,332.0 1,318.7 2,263.6
European Fund 12/1999 12/2005 3,085.4 - 3.2 % 3,085.4 8,736.6 - 40.8
Total Private Equity Funds 58,428.9 10,382.1 48,046.8 45,837.8 26,186.0 38,217.9
Co-Investment Vehicles Various Various 3,287.4 699.1 Various 2,588.3 1,031.4 2,266.9 2,900.6
Total Private Equity
61,716.3 11,081.2 50,635.1 46,869.2 28,452.9 41,118.5
Real Assets
Energy Income and Growth Fund
9/2013 9/2018 1,974.2 1,614.1 12.8 % 360.1 32.4 336.6 359.0
Natural Resources Fund Various Various 891.6 198.5 Various 693.1 95.1 619.9 433.1
Global Energy Opportunities Various Various 1,028.8 905.0 Various 123.8 27.7 118.8 75.5
Infrastructure Fund Various Various 1,041.1 272.9 4.8 % 768.2 69.6 768.2 814.0
Infrastructure Co-Investments Various Various 1,104.5 - Various 1,104.5 279.0 1,104.5 1,377.7
Real Estate Partners Americas 5/2013 12/2016 1,289.1 835.6 15.5 % 453.5 180.1 393.2 443.1
Real Assets 7,329.3 3,826.1 3,503.2 683.9 3,341.2 3,502.4
Private Markets Total 69,045.6 14,907.3 54,138.3 47,553.1 31,794.1 44,620.9
Public Markets
Special Situations Vehicles Various Various 4,725.1 1,609.1 Various 3,116.0 1,043.8 2,540.6 2,991.4
Mezzanine Fund 3/2010 8/2015 987.0 268.6 4.6 % 718.4 235.3 599.5 726.8
Direct Lending Vehicles Various Various 1,345.7 770.4 Various 575.3 63.3 575.3 625.3
Public Markets Total 7,057.8 2,648.1 4,409.7 1,342.4 3,715.4 4,343.5
Grand Total $ 76,103.4 $ 17,555.4 $ 58,548.0 $ 48,895.5 $ 35,509.5 $ 48,964.4
_____________________________________________________________________________________________
(a) Reflects investment vehicles for which KKR has the ability to earn carried interest.
KKR
DISTRIBUTION CALCULATION (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
Quarter Ended Nine Months Ended
September 30, 2014 June 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Cash Revenues
Fees $ 309,123 $ 254,237 $ 274,825 $ 890,983 $ 732,646
Realized cash carry 246,026 555,488 81,532 995,064 439,527
Net realized investment income - KKR (ex-KFN) 192,146 245,711 102,766 630,749 406,283
Net realized investment income - KFN 52,903 36,382 - 89,285 -
Total Cash Revenues 800,198 1,091,818 459,123 2,606,081 1,578,456
Cash Expenses
Cash compensation and benefits 108,790 91,444 92,229 309,149 247,827
Realized cash carry allocated to carry pool 98,411 222,195 32,613 398,026 175,811
Occupancy and related charges 14,458 14,757 15,674 43,404 42,063
Other operating expenses 60,272 54,311 60,884 167,384 150,541
Total Cash Expenses 281,931 382,707 201,400 917,963 616,242
Cash income (loss) before noncontrolling interests and local taxes 518,267 709,111 257,723 1,688,118 962,214
Less: local income taxes (8,261 ) (4,932 ) (4,566 ) (23,923 ) (12,243 )
Less: noncontrolling interests (5,189 ) (3,206 ) (2,020 ) (11,597 ) (4,444 )
Total Distributable Earnings 504,817 700,973 251,137 1,652,598 945,527
Less: estimated current corporate income taxes (29,505 ) (19,025 ) (30,140 ) (81,975 ) (72,005 )
Distributable Earnings, net of taxes 475,312 681,948 220,997 1,570,623 873,522
Less: Undistributed net realized investment income - KKR (ex-KFN) (115,288 ) (147,427 ) (61,660 ) (378,450 ) (243,770 )
Distributed Earnings $ 360,024 $ 534,521 $ 159,337 $ 1,192,173 $ 629,752
Distributable Earnings, net of taxes per KKR & Co. L.P. common unit $ 0.59 $ 0.85 $ 0.32 $ 2.03 $ 1.27
Distribution per KKR & Co. L.P. common unit $ 0.45 $ 0.67 $ 0.23 $ 1.55 $ 0.92
Components of Distribution per KKR & Co. L.P. Common unit
After-tax FRE $ 0.10 $ 0.09 $ 0.10 $ 0.34 $ 0.30
Realized Cash Carry $ 0.18 $ 0.41 $ 0.07 $ 0.76 $ 0.38
Distributed Net Realized Investment Income - KKR (ex-KFN) $ 0.10 $ 0.12 $ 0.06 $ 0.33 $ 0.24
Distributed Net Realized Investment Income - KFN $ 0.07 $ 0.05 $ - $ 0.12 $ -
Fee and yield earnings distribution per KKR & Co. L.P. common unit $ 0.18 $ 0.15 $ 0.10 $ 0.49 $ 0.30
Adjusted Units Eligible For Distribution 808,698,012 803,719,050 689,795,274
Payout Ratio 75.7 % 78.4 % 72.1 % 75.9 % 72.1 %
DISTRIBUTION POLICY
KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of the KKR’s investment management business, 40% of the net realized investment income of KKR (other than KFN), and 100% of the net realized investment income of KFN, in each case in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other obligations. For purposes of KKR’s distribution policy, its distributions are expected to consist of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, (iii) 40% of the net realized investment income from KKR (other than KFN) and (iv) 100% of the net realized investment income from KFN. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) non-controlling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.
The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P., which may change the distribution policy at any time, and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR & Co. L.P. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships.
KKR
Notes to Reportable Segments (Unaudited)
The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.
Fee related earnings (“FRE”) is comprised of (i) total management, monitoring and transaction fees, net, plus incentive fees, less (ii) cash compensation and benefits, occupancy and related charges and other operating expenses. This measure is used by management as an alternative measurement of the operating earnings of KKR and its business segments before carried interest and related carry pool allocations and investment income. We believe this measure is useful to unitholders as it provides additional insight into the operating profitability of our fee generating management companies and capital markets businesses. The components of FRE on a segment basis differ from the equivalent GAAP amounts on a consolidated basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the KKR & Co. L.P. 2010 Equity Incentive Plan (“Equity Incentive Plan”); (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items.
Economic net income (loss) (“ENI”)is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of carried interest and related carry pool allocations and investment income. ENI is comprised of total segment revenues less total segment expenses and certain economic interests in KKR’s segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the Equity Incentive Plan or other securities that are exchangeable for common units of KKR & Co. L.P.; (v) the exclusion of certain non-recurring items; (vi) the exclusion of investment income (loss) relating to noncontrolling interests; and (vii) the exclusion of income taxes.
Fee and Yield Earningsis comprised of FRE and net interest and dividends from KKR’s business segments. This measure is used by management as a measure of the cash earnings of KKR and its business segments’ investment income. We believe this measure is useful to unitholders as it provides insight into the amount of KKR’s cash earnings, significant portions of which tend to be more recurring than realized carried interest and net realized gains from quarter to quarter.
Fee and Yield EBITDAis comprised of Fee and Yield Earnings before the impact of depreciation of fixed assets and core interest expense. This is used by management as another measure of the cash earnings of KKR and its business segments investment income. We believe this measure is also useful to unitholders as it provides insight into the amount of KKR’s cash earnings before the impact of interest expense, significant portions of which tend to be more recurring than realized carried interest and realized investment income from quarter to quarter.
Net realized investment income – KKR (ex-KFN) refers to net cash income from (i) realized investment gains and losses excluding certain realized investment losses to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009, (ii) dividend income, and (iii) interest income net of interest expense in each case generated by KKR (excluding KFN). This term describes a portion of KKR’s quarterly distribution and excludes net realized investment income of KFN.
Net realized investment income – KFNrefers to net cash income from (i) realized investment gains and losses, (ii) dividend income and (iii) interest income net of interest expense less certain general and administrative expenses incurred in the generation of net realized investment income in each case generated by KFN. This term describes a portion of KKR’s quarterly distribution.
Investmentsis a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.
Total distributable earnings is the sum of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, (iii) net realized investment income — KKR (ex-KFN) and (iv) net realized investment income — KFN; less (i) applicable local income taxes, if any, and (ii) noncontrolling interests. We believe this measure is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses), and amounts available for distribution to KKR unitholders. However, total distributable earnings is not a measure that calculates actual distributions under KKR’s current distribution policy.
Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR’s capital raising activities and the overall activity in its investment funds. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR’s investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR’s fixed income products; (iv) the value of outstanding CLOs (excluding CLOs wholly-owned by KKR); and (v) the fair value of other assets managed by KKR. AUM excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest. KKR’s definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.
Fee paying AUM (“FPAUM”)represents only those assets under management from which KKR receives management fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. This relates to KKR’s capital raising activities and the overall activity in its investment funds or CLOs, for only those funds or CLOs where KKR receives fees (i.e., excluding vehicles that receive only carried interest or general partner capital). FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Equity investedis the aggregate amount of equity capital that has been invested by KKR’s investment funds and carry-yielding co-investment vehicles and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investments among its investment funds and carry-yielding co-investment vehicles and replaces committed dollars invested. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR’s investment funds, including investments made using investment financing arrangements.
Gross dollars invested is the aggregate amount of capital that has been invested by all of KKR’s Public Markets investment vehicles in our private credit non-liquid strategies and is used as a measure of investment activity for a portion of KKR’s Public Markets segment in a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of capital across private credit non-liquid strategies for all the investment vehicles in the Public Markets segment. Such amounts include capital invested by fund investors and co-investors with respect to which KKR’s Public Markets business is entitled to a fee or carried interest.
Syndicated capitalis generally the aggregate amount of capital in transactions originated by KKR investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in equity invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR’s Capital Markets and Other segment and across its investment platform.
Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements.
Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. (including equity awards issued under the Equity Incentive Plan), KKR Holdings and other holders of securities exchangeable into common units of KKR & Co. L.P. and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units, equity awards issued under the Equity Incentive Plan and other exchangeable securities had been exchanged for common units of KKR & Co. L.P.
Core interest expenseis used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s investment funds, investment vehicles and principal investments and also excludes interest expense incurred by KFN. The financing arrangements excluded from core interest expense are not direct obligations of the general partners of KKR’s private equity funds or its management companies, and in the case of debt obligations of KFN are non-recourse to KKR beyond the assets of KFN. On a segment basis, interest expense is included in net interest and dividends within total investment income. We believe this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds, other noncontrolling interest holders and KFN. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations other than the debt obligations of KFN.
Book valueis a measure of the net assets of KKR’s reportable segments and is used by management primarily in assessing the unrealized value of KKR’s investment portfolio, including carried interest, as well as KKR’s overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from KKR & Co. L.P. partners’ capital on a GAAP basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings.
Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR’s available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.
Return on equity measures the amount of net income generated as a percentage of capital invested in KKR’s business. Return on equity is calculated by dividing Economic Net Income (Loss), After Taxes on a trailing twelve-month basis by the average book value during the period.
Cash return on equity measures the amount of cash income generated as a percentage of capital invested in KKR’s business. Cash return on equity is calculated by dividing Distributable Earnings, net of taxes on a trailing twelve-month basis by the average book value during the period.
KKR
EXHIBIT A
KKR'S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS
(Amounts in thousands)
Uncalled Commitments
Private Markets
Energy Income and Growth Fund $ 208,500
North America Fund XI 169,700
Real Estate Partners Americas 136,000
Asian Fund II 51,800
European Fund III 47,300
2006 Fund 23,400
Infrastructure 10,600
Natural Resources 8,200
Other Private Equity Funds 9,400
Co-Investment Vehicles 29,300
Total Private Markets Commitments 694,200
Public Markets
Special Situations Vehicles 89,000
Direct Lending Vehicles 64,400
Mezzanine Fund 12,200
Other Credit Vehicles 2,300
Total Public Markets Commitments 167,900
Total Uncalled Commitments $ 862,100
KKR
EXHIBIT B
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT - BASIC (GAAP BASIS)
TO ENI AFTER TAXES PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
Quarter Ended
September 30, 2014 June 30, 2014 September 30, 2013
Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic $ 0.21 $ 0.47 $ 0.73
Weighted Average Common Units Outstanding - Basic 419,961,455 377,542,161 282,148,802
Net income (loss) attributable to KKR & Co. L.P. 89,938 178,215 204,740
Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P.
100,910 186,776 300,169
Plus: Non-cash equity-based charges 83,950 92,957 85,215
Plus: Amortization of intangibles and other, net 204,676 37,455 15,979
Plus: Income taxes 29,267 6,176 7,644
Economic net income (loss) 508,741 501,579 613,747
Less: Provision for income taxes 47,361 6,330 11,950
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 42,090 40,877 31,227
Economic net income (loss) after taxes 419,290 454,372 570,570
Weighted Average Adjusted Units 835,957,683 800,747,528 715,781,663
Economic net income (loss) after taxes per adjusted unit $ 0.50 $ 0.57 $ 0.80
Nine Months Ended
September 30, 2014 September 30, 2013
Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic $ 1.31 $ 1.53
Weighted Average Common Units Outstanding - Basic 364,127,956 270,484,224
Net income (loss) attributable to KKR & Co. L.P. 478,194 413,313
Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P.
588,500 662,387
Plus: Non-cash equity-based charges 254,435 247,183
Plus: Amortization of intangibles and other, net 262,300 57,524
Plus: Income taxes 57,145 25,525
Economic net income (loss) 1,640,574 1,405,932
Less: Provision for income taxes 90,272 45,553
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 122,320 84,581
Economic net income (loss) after taxes 1,427,982 1,275,798
Weighted Average Adjusted Units 787,502,790 714,171,641
Economic net income (loss) after taxes per adjusted unit $ 1.81 $ 1.79
KKR
EXHIBIT B (CONTINUED)
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS)
TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE AND YIELD EARNINGS, FEE AND YIELD EBITDA, TOTAL DISTRIBUTABLE EARNINGS, AND TOTAL EBITDA
(UNAUDITED)
(Amounts in thousands)
Quarter Ended
September 30, 2014 June 30, 2014 September 30, 2013
Net income (loss) attributable to KKR & Co. L.P. $ 89,938 $ 178,215 $ 204,740
Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P.
100,910 186,776 300,169
Plus: Non-cash equity-based charges 83,950 92,957 85,215
Plus: Amortization of intangibles and other, net 204,676 37,455 15,979
Plus: Income taxes 29,267 6,176 7,644
Economic net income (loss) 508,741 501,579 613,747
Plus: Income attributable to segment noncontrolling interests 5,189 3,206 2,020
Less: Total investment income (loss) 207,216 162,158 303,472
Less: Net carried interest 181,111 248,902 206,257
Fee related earnings 125,603 93,725 106,038
Plus: Net interests and dividends 82,254 60,432 (779 )
Fee and yield earnings 207,857 154,157 105,259
Plus: Depreciation and amortization 3,777 4,140 3,601
Plus: Core interest expense 23,347 19,205 16,215
Fee and yield EBITDA 234,981 177,502 125,075
Less: Depreciation and amortization 3,777 4,140 3,601
Less: Core interest expense 23,347 19,205 16,215
Less: Net interests and dividends 82,254 60,432 (779 )
Plus: Realized cash carry, net of realized cash carry allocated to carry pool 147,615 333,293 48,919
Plus: Net realized investment income - KKR (ex-KFN) 192,146 245,711 102,766
Plus: Net realized investment income - KFN 52,903 36,382 -
Less: Local income taxes and noncontrolling interests 13,450 8,138 6,586
Total distributable earnings 504,817 700,973 251,137
Plus: Depreciation and amortization 3,777 4,140 3,601
Plus: Core interest expense 23,347 19,205 16,215
Plus: Local income taxes and noncontrolling interests 13,450 8,138 6,586
Total EBITDA $ 545,391 $ 732,456 $ 277,539
Nine Months Ended
September 30, 2014 September 30, 2013
Net income (loss) attributable to KKR & Co. L.P. $ 478,194 $ 413,313
Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P.
588,500 662,387
Plus: Non-cash equity-based charges 254,435 247,183
Plus: Amortization of intangibles and other, net 262,300 57,524
Plus: Income taxes 57,145 25,525
Economic net income (loss) 1,640,574 1,405,932
Plus: Income attributable to segment noncontrolling interests 11,597 4,444
Less: Total investment income (loss) 648,025 634,720
Less: Net carried interest 633,100 483,441
Fee related earnings 371,046 292,215
Plus: Net interests and dividends 153,850 1,532
Fee and yield earnings 524,896 293,747
Plus: Depreciation and amortization 11,952 10,990
Plus: Core interest expense 60,952 48,658
Fee and yield EBITDA 597,800 353,395
Less: Depreciation and amortization 11,952 10,990
Less: Core interest expense 60,952 48,658
Less: Net interests and dividends 153,850 1,532
Plus: Realized cash carry, net of realized cash carry allocated to carry pool 597,038 263,716
Plus: Net realized investment income - KKR (ex-KFN) 630,749 406,283
Plus: Net realized investment income - KFN 89,285 -
Less: Local income taxes and noncontrolling interests 35,520 16,687
Total distributable earnings 1,652,598 945,527
Plus: Depreciation and amortization 11,952 10,990
Plus: Core interest expense 60,952 48,658
Plus: Local income taxes and noncontrolling interests 35,520 16,687
Total EBITDA $ 1,761,022 $ 1,021,862
KKR
EXHIBIT B (CONTINUED)
RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS)
TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
As of As of
September 30, 2014 December 31, 2013
KKR & Co. L.P. partners’ capital $ 5,486,179 $ 2,722,010
Noncontrolling interests held by KKR Holdings L.P. 4,887,534 5,116,761
Equity impact of KKR Management Holdings Corp. and other 104,540 (76,171 )
Book value 10,478,253 7,762,600
Adjusted units 837,651,175 716,676,699
Book value per adjusted unit $ 12.51 $ 10.83
RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS)
TO CASH AND SHORT-TERM INVESTMENTS (UNAUDITED)
(Amounts in thousands)
As of As of
September 30, 2014 December 31, 2013
Cash and cash equivalents $ 1,472,760 $ 1,306,383
Liquid short-term investments 667,296 854,714
Cash and short-term investments $ 2,140,056 $ 2,161,097
KKR
EXHIBIT C
RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING - BASIC TO WEIGHTED AVERAGE ADJUSTED UNITS (UNAUDITED)
The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units.
Quarter Ended
September 30, 2014 June 30, 2014 September 30, 2013
Weighted Average GAAP Common Units Outstanding - Basic 419,961,455 377,542,161 282,148,802
Adjustments:
Weighted Average Unvested Common Units(a) 26,862,703 27,536,748 25,986,389
Weighted Average Other Exchangeable Securities 5,195,584 5,100,929 -
Weighted Average GAAP Common Units Outstanding - Diluted 452,019,742 410,179,838 308,135,191
Adjustments:
Weighted Average KKR Holdings Units (b) 383,937,941 390,567,690 407,646,472
Weighted Average Adjusted Units 835,957,683 800,747,528 715,781,663
Nine Months Ended
September 30, 2014 September 30, 2013
Weighted Average GAAP Common Units Outstanding - Basic 364,127,956 270,484,224
Adjustments:
Weighted Average Unvested Common Units(a) 27,917,101 25,696,846
Weighted Average Other Exchangeable Securities 4,187,771 -
Weighted Average GAAP Common Units Outstanding - Diluted 396,232,828 296,181,070
Adjustments:
Weighted Average KKR Holdings Units (b) 391,269,962 417,990,571
Weighted Average Adjusted Units 787,502,790 714,171,641
RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING - BASIC TO ADJUSTED UNITS AND ADJUSTED UNITS ELIGIBLE FOR DISTRIBUTION (UNAUDITED)
The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units and Adjusted Units Eligible for Distribution.
As of As of
September 30, 2014 December 31, 2013
GAAP Common Units Outstanding - Basic 424,041,543 288,143,327
Unvested Common Units(a) 26,116,449 24,164,354
Other Exchangeable Securities 5,195,584 -
GAAP Common Units Outstanding - Diluted 455,353,576 312,307,681
Adjustments:
KKR Holdings Units (b) 382,297,599 404,369,018
Adjusted Units 837,651,175 716,676,699
Adjustments:
Unvested Common Units (26,116,449 ) (24,164,354 )
Unvested Other Exchangeable Securities (2,836,714 ) -
Adjusted Units Eligible For Distribution 808,698,012 692,512,345
________________________________________________________________________________________________
(a) Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under its equity incentive plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.
(b) Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.
KKR
Contact:
Investor Relations:
Kohlberg Kravis Roberts & Co. L.P.
Craig Larson
+1 (877) 610-4910 (U.S.) / +1 (212) 230-9410
investor-relations@kkr.com
Yahoo Reports Third Quarter 2014 Results
Business Wire
Yahoo! Inc.
SUNNYVALE, Calif.--(BUSINESS WIRE)--
Yahoo! Inc. (YHOO) today reported results for the quarter ended September 30, 2014.
Q3 2013 Q3 2014
Percent
Change
GAAP revenue $1,139 million $1,148 million 1%
Revenue ex-TAC $1,081 million $1,094 million 1%
GAAP income from operations
$93 million
$42 million (55)%
Non-GAAP income from operations $173 million $156 million (10)%
GAAP net earnings per diluted share $0.28 $6.70 N/M
Non-GAAP net earnings per diluted share $0.34 $0.52
52%
N/M – Not meaningful
"We had a good, solid third quarter. We delivered $1.094 billion in revenue ex-TAC and $1.148 billion in GAAP revenue. This represents 1% growth in revenue ex-TAC and 1% growth in GAAP revenue. We achieved this revenue growth through strong growth in our new areas of investment – mobile, social, native and video - despite industry headwinds in some of our large, legacy businesses,” said Marissa Mayer, CEO of Yahoo. “I am also pleased to report today that our revenue in mobile is now material. In Q3, we saw mobile revenues in excess of $200 million on a GAAP basis. Further, we estimate that our gross revenues in mobile will exceed $1.2 billion in revenue this year. We have invested deeply in mobile and we are seeing those investments pay off. Not only are our mobile products attracting praise and engagement from users and industry awards, they are generating meaningful revenue for Yahoo.”
GAAP revenue was $1,148 million for the third quarter of 2014, a 1 percent increase from the third quarter of 2013. Revenue excluding traffic acquisition costs (“revenue ex-TAC”) was $1,094 million for the third quarter of 2014, a 1 percent increase compared to the third quarter of 2013. Less
Sentiment: Hold
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Reply to 4th Quarter Results by drmicrocaps •Oct 28, 2013 8:17 PM
Sanderson Farms, Inc. Reports Results for Third Quarter of Fiscal 2014
Business Wire
Sanderson Farms, Inc.
August 26, 2014 6:30 AM
LAUREL, Miss.--(BUSINESS WIRE)--
Sanderson Farms, Inc. (SAFM) today reported results for the third fiscal quarter and nine months ended July 31, 2014.
Net sales for the third quarter of fiscal 2014 were $768.4 million compared with $739.0 million for the same period a year ago. For the quarter, the Company reported net income of $76.1 million, or $3.30 per share, compared with net income of $67.9 million, or $2.95 per share, for the third quarter of fiscal 2013.
Net sales for the first nine months of fiscal 2014 were $2,014.0 million compared with $1,955.9 million for the first nine months of fiscal 2013. Net income for the first nine months of fiscal 2014 totaled $155.9 million, or $6.76 per share, compared with net income of $85.3 million, or $3.71 per share, for the first nine months of last year.
“Sanderson Farms’ financial results for the third quarter of fiscal 2014 reflect continued favorable market conditions,” said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. “Market prices for poultry products were higher than the third quarter of fiscal 2013, as the Georgia Dock whole bird price remained historically high during the quarter. The higher Georgia Dock price reflects good retail grocery store demand. While boneless breast meat prices peaked below last year’s high, they remained above $2.00 per pound through June and into July.”
Overall market prices for poultry products were higher in the third quarter of fiscal 2014 compared with prices in the third quarter of fiscal 2013. As measured by a simple average of the Georgia dock price for whole chickens, prices increased 5.3 percent compared with the third quarter of fiscal 2013. Less
Sentiment: Buy
Vitesse Reports Third Quarter Fiscal Year 2014 Results
• Net revenues totaled $27.2 million, an increase of 6% sequentially
• New product revenue of $13.9 million, an increase of 21% sequentially and 79% from the third quarter last year
• New product design wins grew over 45% in first nine months of the fiscal year compared to same period last year
• Cash is $71.6 million at June 30, 2014 strengthened by $26.6 million of public offering net proceeds
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Business Wire
Vitesse Semiconductor Corporation
August 5, 2014 4:00 PM
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CAMARILLO, Calif.--(BUSINESS WIRE)--
Vitesse Semiconductor Corporation (VTSS), a leading provider of advanced IC solutions for Carrier, Enterprise and Internet of Things (IoT) networks, reported its financial results for the third quarter of fiscal year 2014, ended June 30, 2014.
“Our recent performance has increased our confidence that Vitesse is well-positioned for significant and sustained long-term revenue growth and profitability. New product revenue momentum continues, growing 21% sequentially and 79% over the year ago quarter, and now comprises over 50% of total revenue. The inflection point in our business is now clearly evident, as the growth of our new product portfolio again outstripped the decline of our legacy business, resulting in total revenue growth of 6% sequentially and 3% from the year ago quarter,” said Chris Gardner, CEO of Vitesse. “At the same time, we have substantially strengthened our balance sheet, positioning us to retire all of our near-term debt and further our growth initiatives. Vitesse now has the infrastructure and the resources to support a much larger base of customers. Coupled with our substantial operating leverage, margins on our future growth will flow to the bottom line.”
“The markets are validating our technology focus and strategy. Today, we see Ethernet virtually everywhere, creating opportunities for Vitesse in areas such as Gigabit Wi-Fi, IoT, storage, and automotive. Because our new Ethernet product portfolio can serve these markets now, we are adding new customers at an accelerating pace while increasing opportunities and design wins with existing customers.”
Third Quarter Fiscal Year 2014 Financial Results Summary
• Total net revenue was $27.2 million, compared to $25.6 million in the second quarter of fiscal year 2014 and $26.4 million in the third quarter of fiscal year 2013.
• Product revenue was $26.0 million, compared to $24.9 million in the second quarter of fiscal year 2014 and $26.3 million in the third quarter of fiscal year 2013.
• The product lines contributed the following as a percentage of product revenue as compared to the second quarter of fiscal year 2014: • Carrier Networking products: 46.3% versus 47.6%
• Enterprise Networking products: 53.5% versus 51.7%
• Intellectual property revenue totaled $1.1 million, compared to $0.7 million in the second quarter of fiscal year 2014 and $0.1 million in the third quarter of fiscal year 2013.
• Product margins were 52.9%, compared to 55.9%, in the second quarter of fiscal year 2014 and 55.6% in the third quarter of fiscal year 2013. Total gross margins were 54.9%, compared to 57.1%, in the second quarter of fiscal year 2014 and 55.8% in the third quarter of fiscal year 2013.
• Operating expenses were $17.4 million, compared to $19.0 million in the second quarter of fiscal year 2014 and $19.0 million in the third quarter of fiscal year 2013.
• Operating loss was $2.5 million, compared to operating loss of $4.4 million in the second quarter of fiscal year 2014 and $4.3 million in the third quarter of fiscal year 2013.
• Non-GAAP operating loss was $0.9 million, compared to non-GAAP operating loss of $2.7 million in the second quarter of fiscal year 2014 and non-GAAP operating loss of $3.1 million in the third quarter of fiscal year 2013.
• Net loss was $4.4 million, or $0.07 per basic and fully diluted share. This compares to net loss of $5.8 million, or $0.10 per basic and fully diluted share, in the second quarter of fiscal year 2014, and net loss of $6.4 million, or $0.17 per basic and fully diluted share, in the third quarter of fiscal year 2013.
• Non-GAAP net loss was $2.7 million, or $0.04 per basic and fully diluted share, compared to non-GAAP net loss of $4.1 million, or $0.07 per basic and fully diluted share, for the second quarter of fiscal year 2014, and non-GAAP net loss of $5.2 million, or $0.13 per basic and fully diluted share, in the third quarter of fiscal year 2013.
Balance Sheet Data at June 30, 2014 as Compared to September 30, 2013
On June 17, 2014, Vitesse completed a public offering of its common stock and received net proceeds of $26.6 million.
• Cash and restricted cash were $71.6 million, compared to $69.0 million.
• Accounts receivable was $10.1 million, compared to $9.8 million.
• Inventory was $11.2 million, compared to $10.7 million.
• Total debt was $48.7 million, compared to $60.8 million.
Financial Outlook
For the fourth quarter of fiscal year 2014, ending September 30, 2014, Vitesse expects revenue to be in the range of $26.5 million to $29.0 million and product margins to be between 56% and 58%. GAAP operating expenses are expected to be between $18.5 million and $19.5 million.
August 5, 2014 Conference Call Information
A conference call is scheduled for today, August 5, 2014, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to review the financial results for the third quarter of fiscal year 2014.
To listen to the conference call via telephone, dial 888.428.9473 (U.S. toll-free) or 719.457.2083 (International) and provide the passcode 5286628. Participants should dial in at least 10 minutes prior to the start of the call. To listen via the Internet, the webcast can be accessed through the investor section of the Vitesse corporate web site at www.vitesse.com.
The playback of the conference call will be available approximately two hours after the call concludes and will be accessible on the Vitesse corporate web site or by calling 877.870.5176 (U.S. toll-free) or 858.384.5517 (International) and entering the passcode 5286628. The audio replay will be available for seven days.
About Vitesse
Vitesse (VTSS) designs a diverse portfolio of high-performance semiconductor solutions for Carrier, Enterprise and IoT networks worldwide. Vitesse products enable the fastest-growing network infrastructure markets including Mobile Access/IP Edge, Cloud Computing, SMB/SME Enterprise and IoT Networking. Visit www.vitesse.com or follow us on Twitter @VitesseSemi.
Vitesse is a trademark of Vitesse Semiconductor Corporation in the United States and other jurisdictions. All other trademarks or registered trademarks mentioned herein are the property of their respective holders.
VTSS-F
Cautions Regarding Forward Looking Statements
All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements that are based on our current expectations, estimates and projections about our business and industry, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” and similar terms, and variations or negatives of these words. Examples of forward-looking statements in this release include the Company’s financial outlook for its fourth quarter of fiscal year 2014, potential new markets for the Company's products and anticipated new product and total revenue growth. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that could affect the Company’s forward-looking statements include, among other things: identification of feasible new product initiatives, management of R&D efforts and the resulting successful development of new products and product platforms; acceptance by customers of the Company’s products; reliance on key suppliers; rapid technological change in the industries in which the Company operates; and competitive factors, including pricing pressures and the introduction by others of new products with similar or better functionality than the Company’s products. These and other risks are more fully described in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which should be read in conjunction herewith for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Measures
A non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results.
We provide non-GAAP measures of non-GAAP operating expenses, non-GAAP income (loss) from operations and non-GAAP net income (loss) as a supplement to financial results based on GAAP operating expenses, GAAP income (loss) from operations and GAAP net income (loss). The Company believes that the additional non-GAAP measures are useful to investors for the purpose of financial analysis. We believe the presentation of non-GAAP measures provides investors with additional insight into underlying operating results and prospects for the future by excluding gains, losses and other charges that are considered by management to be outside of the Company’s core operating results. Management uses these measures internally to evaluate the Company’s in-period operating performance before taking into account these non-operating gains, losses and charges. In addition, the measures are used for planning and forecasting of the Company’s performance in future periods.
In deriving non-GAAP operating expenses from GAAP operating expenses, we exclude stock-based compensation charges and amortization of intangible assets. In deriving non-GAAP income (loss) from operations from GAAP income (loss) from operations, we exclude stock-based compensation charges and amortization of intangible assets. In deriving non-GAAP net income (loss) from GAAP net income (loss), we further exclude loss on extinguishment of debt and gain on the embedded derivative. Stock-based compensation charges, amortization of intangible assets, loss on extinguishment of debt, and gain on the embedded derivative represent charges that recur in amounts unrelated to the Company’s operations.
The non-GAAP financial measures we provide have certain limitations because they do not reflect all of the costs associated with the operation of our business as determined in accordance with GAAP. Non-GAAP operating expenses, non-GAAP income (loss) from operations and non-GAAP net income (loss) are in addition to, and are not a substitute for or superior to, operating expenses, income (loss) from operations and net income (loss), which are prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. A detailed reconciliation of the non-GAAP measures to the most directly comparable GAAP measure is set forth below. Investors are encouraged to review these reconciliations to appropriately incorporate the non-GAAP measures and the limitations of these measures into their analyses. For complete information on stock-based compensation, amortization of intangible assets, loss on extinguishment of debt, and the change in the fair value of our embedded derivatives, please see our Form 10-Q for the quarterly period ended June 30, 2014 and Form 10-K for the year ended September 30, 2013.
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, 2014 September 30, 2013
(in thousands, except par value)
ASSETS
Current assets:
Cash $ 70,812 $ 68,863
Accounts receivable 10,101 9,807
Inventory, net 11,237 10,692
Restricted cash 793 101
Prepaid expenses and other current assets 2,175 1,796
Total current assets 95,118 91,259
Property, plant and equipment, net 2,944 3,107
Other intangible assets, net 1,569 1,170
Other assets 3,548 3,425
$ 103,179 $ 98,961
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 7,693 $ 7,436
Accrued expenses and other current liabilities 12,060 12,245
Current portion of debt, net 32,375 —
Deferred revenue 3,030 2,215
Total current liabilities 55,158 21,896
Other long-term liabilities 470 407
Long-term debt, net 16,328 16,366
Convertible subordinated debt, net — 44,384
Total liabilities 71,956 83,053
Stockholders’ equity:
Preferred stock, $0.01 par value: 10,000 shares authorized; no shares issued or outstanding — —
Common stock, $0.01 par value: 250,000 shares authorized; 67,342 and 57,545 shares outstanding at June 30, 2014 and September 30, 2013, respectively 673 575
Additional paid-in-capital 1,922,468 1,891,661
Accumulated deficit (1,891,918 ) (1,876,328 )
Total stockholders’ equity 31,223 15,908
$ 103,179 $ 98,961
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended June 30, Nine Months Ended June 30,
2014 2013 2014 2013
(in thousands, except per share data)
Net revenues:
Product revenues $ 26,012 $ 26,285 $ 75,744 $ 74,879
Intellectual property revenues 1,139 133 4,082 2,019
Net revenues 27,151 26,418 79,826 76,898
Costs and expenses:
Cost of product revenues 12,254 11,666 33,909 34,010
Engineering, research and development 10,006 11,706 31,581 31,987
Selling, general and administrative 7,330 7,257 23,189 22,617
Amortization of intangible assets 88 80 267 266
Costs and expenses 29,678 30,709 88,946 88,880
Loss from operations (2,527 ) (4,291 ) (9,120 ) (11,982 )
Other expense (income):
Interest expense, net 1,510 1,983 4,706 5,919
Gain on compound embedded derivative — — — (803 )
Loss on extinguishment of debt — — 1,594 —
Other expense, net 18 31 111 5
Other expense, net 1,528 2,014 6,411 5,121
Loss before income tax expense (benefit) (4,055 ) (6,305 ) (15,531 ) (17,103 )
Income tax expense (benefit) 333 129 59 (790 )
Net loss $ (4,388 ) $ (6,434 ) $ (15,590 ) $ (16,313 )
Net loss per common share - basic and diluted $ (0.07 ) $ (0.17 ) $ (0.27 ) $ (0.47 )
Weighted average common shares outstanding - basic and diluted 59,965 38,630 58,631 34,601
VITESSE SEMICONDUCTOR CORPORATION
UNAUDITED RECONCILIATION OF GAAP RESULTS TO NON-GAAP RESULTS
Three Months Ended June 30, Nine Months Ended June 30,
2014 2013 2014 2013
(in thousands, except per share data)
UNAUDITED RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
GAAP net loss $ (4,388 ) $ (6,434 ) $ (15,590 ) $ (16,313 )
Adjustments:
Stock-based compensation charges 1,586 1,156 4,466 3,305
Amortization of intangible assets 88 80 267 266
Gain on compound embedded derivative — — — (803 )
Loss on extinguishment of debt — — 1,594 —
Total GAAP to non-GAAP adjustments 1,674 1,236 6,327 2,768
Non-GAAP net loss $ (2,714 ) $ (5,198 ) $ (9,263 ) $ (13,545 )
Net loss per common share - basic and diluted:
GAAP net loss per common share $ (0.07 ) $ (0.17 ) $ (0.27 ) $ (0.47 )
Adjustments 0.03 0.04 0.11 0.08
Non-GAAP net loss per common share $ (0.04 ) $ (0.13 ) $ (0.16 ) $ (0.39 )
UNAUDITED RECONCILIATION OF GAAP LOSS FROM OPERATIONS TO NON-GAAP LOSS FROM OPERATIONS
GAAP loss from operations $ (2,527 ) $ (4,291 ) $ (9,120 ) $ (11,982 )
Adjustments:
Stock-based compensation charges 1,586 1,156 4,466 3,305
Amortization of intangible assets 88 80 267 266
Total GAAP to non-GAAP adjustments 1,674 1,236 4,733 3,571
Non-GAAP loss from operations $ (853 ) $ (3,055 ) $ (4,387 ) $ (8,411 )
UNAUDITED RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
GAAP operating expenses:
Engineering, research and development $ 10,006 $ 11,706 $ 31,581 $ 31,987
Selling, general and administrative 7,330 7,257 23,189 22,617
Amortization of intangible assets 88 80 267 266
Total GAAP operating expenses 17,424 19,043 55,037 54,870
Adjustments:
Stock-based compensation charges 1,376 995 3,847 2,846
Amortization of intangible assets 88 80 267 266
Total GAAP to non-GAAP adjustments 1,464 1,075 4,114 3,112
Non-GAAP operating expenses $ 15,960 $ 17,968 $ 50,923 $ 51,758
Contact:
Company Contact:
Vitesse Semiconductor
Marty McDermut, 1.805.388.3700
www.vitesse.com
invest@vitesse.com
or
Agency Contact:
LHA
Kirsten Chapman, 1.415.433.3777
www.lhai.com
VTSS@lhai.com
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The "Street" has SWK coming in at 1.50 for the quarter that should be reported on or about October 22, 2014! All post's welcome! The "Good Dr's In"!
The "Street" has AAPL coming in at 1.38 for the quarter that should be reported on or about October 20, 2014! All post's welcome! The "Good Dr's In"!
Newell Rubbermaid October 17, 2014 9:15 AM GlobeNewswire
ATLANTA, Oct. 17, 2014 (GLOBE NEWSWIRE) -- Newell Rubbermaid ( NWL) announced today that it has signed a definitive agreement to acquire the assets of bubba brands, inc. ("bubba"), a wholly owned subsidiary of In Zone Holdings, Inc.
A leading designer and marketer of durable beverage containers, bubba is expected to deliver over $50 million of net sales in 2014. The acquisition will expand Newell Rubbermaid's presence in on-the-go thermal and hydration beverageware, leveraging the company's recent acquisition of the Contigo(R) and Avex(R) brands, and is expected to be accretive to Newell Rubbermaid's net sales growth rate, normalized operating income margin and normalized EPS within the first year.
Newell Rubbermaid President and CEO Michael Polk said, "The acquisition of bubba further strengthens our position as a leader in one of the fastest-growing consumer durables categories in North America. We are excited to add this innovative brand to the portfolio. In combination with the Contigo, Avex and Rubbermaid(R) brands, the agreement to acquire bubba represents a tremendous opportunity to strengthen our growth agenda as we drive our Growth Game Plan strategy into action."
The acquisition will be financed through organic cash flow and available borrowings and is expected to close this month, subject to customary closing conditions. Additional details will be provided during the company's third quarter 2014 earnings call on October 31.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of consumer and commercial products with 2013 sales of $5.7 billion and a strong portfolio of leading brands, including Sharpie(R), Paper Mate(R), Rubbermaid Commercial Products(R), Irwin(R), Lenox(R), Parker(R), Waterman(R), Rubbermaid(R), Contigo(R), Levolor(R), Calphalon(R), Goody(R), Graco(R), Aprica(R) and Dymo(R). As part of the company's Growth Game Plan, Newell Rubbermaid is making sharper portfolio choices and investing in new marketing and innovation to accelerate performance.
This press release and additional information about Newell Rubbermaid are available on the company's Web site, www.newellrubbermaid.com.
Caution Concerning Forward-Looking Statements
This news release contains forward-looking information based on management's current views and assumptions. Actual events may differ materially. Factors that may affect actual results include, but are not limited to: whether and when the closing conditions will be satisfied and whether and when the transaction will close, whether and when the Company will be able to realize the expected financial results and accretive effect of the transaction, and how customers, competitors, suppliers and employees will react to the transaction. Please refer to the cautionary statements set forth in the "Forward-Looking Statements" section of the Company's most recently filed Quarterly Report on Form 10-Q as well as the risk factors set forth in Exhibit 99.1 thereto, for other factors that could affect our business.
Consumer DiscretionaryMergers, Acquisitions & TakeoversNewell Rubbermaid
Contact:
Nancy O'Donnell
Vice President, Investor Relations
(770) 418-7723
Nicole Quinlan
Senior Manager, Corporate Communications
(770) 418-7251
The "Street" has YAHOO coming in at .32 for the quarter that should be reported on or about October 21, 2014! All post's welcome! The "Good Dr's In"!