© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Zhongling Cao
Dave Saucier
Yoshives Belizaire
Shawn Parker
History
Dr. Pepper was created in 1885 by Charles Alderton at Morrison’s
Old Corner Drug Store in Waco, Texas.
Nearly a 100 years later , three New York- area food storeowners
created a unique addle soda they named Snapple.
In 2006, Cadbury Schweppes purchased Dr Pepper and Snapple.
In May 2008 Cadbury Schweppes spun off Cadbury Schweppes
Americas Beverages into an independent company, called the Dr
Pepper Snapple group.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Existing Mission Statement
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Existing Vision Statement
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Company Current Strategy
Build and enhance leading Brands
Focus-on opportunities in high growth and high margin areas
Increase presence in high margin channels and packages
Leverage our integrated business model
Strengthen our route-to-market through acquisitions
Improve operating efficiency
RCI- Rapid Continuous Improvement
Health and Wellness initiative
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Vision Statement
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Mission Statement
At Dr. Pepper Snapple Group it is our mission to be the domestic leader
(3) in the flavored beverage industry (2). Our established and reputable
brand (6) allows us to deliver high quality beverages (7) to faithful and
potential customers (1). We will achieve this through effective
marketing, strong distribution channels, and fruitful partnerships. We
will continue to invest in our employees (9) as well as the communities
we operate in while remaining environmentally friendly (8). By
implementing the best technology (4) we are committed to reducing
costs in order to ensure sustained profits (5).
1. Customers 4.Technology 7. Self-concept
2. Products
5. Survival Growth & Profitability
8. Concern for Public Image
3. Markets 6. Philosophy 9. Concern for Employees
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
External Audit
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Industry Market Analysis
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Opportunities
1. Pepsi and Coke distribute other brands globally.
2. Americans are looking for more low/no calorie drinks, this market grew
1.2% in 2010.
3. Consumers are looking for nutrient enriched beverages.
4. There are over 300 Soft Drink manufactures .
5. Owning bottling distribution networks reduces cost and dependence on
other companies.
6. Strategic alliances with restaurants and fast food chains are readily
available.
7. The US beverage market to expect grow by 0.9 percent in 2011.
8. Growth to international market.
9. Countries such as India and China has over 9% GDP growth in 2010.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Threats
1. New York City is looking to banning sugary drinks.
2. Increasing cost of commodities, especially the volatile sugar industry and
sugar tax.
3. Some legislators are proposing tax on sugared soft drinks.
4. U.S consumption of soft drinks in 2011 is the lowest since 1996, The
carbonated soft drinks market is expected to decrease 2.2% by 2015.
5. Operate in a discretionary item industry, very volatile.
6. Highly competitive market.
7. The health issue with some of their products for example sodas.
8. The Institute of Medicine, a government-chartered organization, which
stated that food and beverage companies are using television ads to entice
kids into eating and drinking unhealthful quantities.
9. Diet Pepsi experienced an 8% decrease in 2011 in sales according to
beverage digest.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Competitive Profile Matrix
Dr. Pepper
Snapple
Critical Success factors
Advertising
Organization
Structure
Customer Service
Global Expansion
Financial Position
Management
Experience
Customer Loyalty
Market Share
Product Quality
E-commerce
Price Competitiveness
Totals
Coca Cola
Weights
Rating
0.0 to 1.0
1 to 4
Weighted
Score
0.1
0.08
0.07
0.06
0.08
0.09
2
3
3
3
1
2
0.2
0.24
0.21
0.18
0.08
0.18
3
4
4
3
4
4
0.3
0.32
0.28
0.18
0.32
0.36
4
4
4
3
3
3
0.4
0.32
0.28
0.18
0.24
0.27
0.08
0.07
0.1
0.1
0.08
0.09
3
3
2
3
3
3
0.24
0.21
0.2
0.3
0.24
0.27
2.55
4
3
4
4
4
3
0.32
0.21
0.4
0.4
0.32
0.27
3.68
4
3
3
3
4
3
0.32
0.21
0.3
0.3
0.32
0.27
3.41
1
Rating
Pepsi
1 to 4
Rating
Weighted
Weighted
Score
1 to 4
Score
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
External Factor Evaluation
External Opportunities
1.
2.
3.
4.
5.
Pepsi and Coke distribute other brands globally
Americans are looking for more low/no calorie drinks, this market grew 1.2% in 2010
Consumers are looking for nutrient enriched beverages
There are over 300 Soft Drink manufactures
Strategic alliances with restaurants and fast food chains are readily available.
6. Owning bottling distribution networks reduces cost and dependence on other companies
7. The US beverage market grew by 0.9 percent in 2011
8. Growth to international market.
9. Countries such as India and China has over 9% GDP growth in 2010.
0.05
0.08
0.07
0.06
0.06
3
2
1
2
2
0.15
0.16
0.07
0.12
0.12
0.05
0.06
0.05
0.05
3
1
2
2
0.04 1
0.15
0.06
0.1
0.1
0
0.04
0.06
0.05
0.06
0.07
0.05
0.05
3
1
1
1
2
2
0.18
0.05
0.06
0.07
0.1
0.1
0.03 2
0.06 2
1
0.06
0.12
External Threats
1. New York City is looking to banning sugary drinks
2. U.S consumption of soft drinks in 2011 is the lowest since 1996, The carbonated soft
drinks market is expected to decrease 2.2% by 2015
3. Some legislators are proposing tax on sugared soft drinks
4. Increasing cost of commodities, especially the volatile sugar industry and sugar tax.
5. Operate in a discretionary item industry, very volatile.
6. Highly competitive market.
7. The health issue with some of their products for example sodas.
8. The Institute of Medicine, a government-chartered organization, which stated that food
and beverage companies are using television ads to entice kids into eating and drinking
unhealthful quantities.
9. Diet Pepsi experienced an 8% decrease in 2011 in sales according to beverage digest.
Totals
1.81
Internal Audit
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Organization Structure
Larry Young
President, CEO, and
Director
EVP
and
CFO
SVP and
CIO
EVP and
General
Counsel
EVP
Corporate
Affairs
EVP Human
Resources
President
Beverage
Concentrates
President
Packaged
Beverages
Latin America
Beverages
Division
Manager
EVP of R&D
Information
Technology
Manager
Manager, IT
Quality
Assurance
Network
Engineer
Branch
Manager
Technical Support
& Systems
Programing
Senior Project
Engineer
EVP
Marketing
EVP Supply
Chain
Director IT
Program
Operations
Manager
Director of
Human
Resources
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Financial-Income Statement
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Financial – Balance Sheet
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Financial – Balance Sheet
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Net Worth Analysis
Stockholders' Equity
$2,459
Net Income x 5
2,640
(Share Price/EPS) x Net Income
7,886
Number of Shares Outstanding x Share Price
7,863
Method Average
$5,212
In millions
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Ratio Analysis
Liquidity Ratios
DPS
PEP
KO
Current Ratio
Quick Ratio
0.98
0.80
1.11
0.89
1.17
1.02
0.72
2.60
0.69
8.01
0.68
2.19
0.94
9.23
1.00
2.33
0.45
11.53
30.63
4.83
0.64
9.87
36.98
36.38
3.03
0.85
9.15
39.90
34.13
2.38
0.48
7.93
46.04
0.60
18.19%
9.37%
5.96%
21.47%
2.20
14.89
0.54
14.41%
10.96%
9.30%
29.79%
3.40
17.96
0.64
24.06%
34.65%
16.19%
37.71%
5.12
6.01
1.90%
-4.86%
0.46%
500.00%
33.79%
6.00%
4.20%
6.78%
13.32%
73.05%
73.56%
7.32%
Leverage Ratios
Debt-to-Total Assets Ratio
Debt-to-Equity Ratio
Long-Term Debt-to-Equity Ratio
Times-Interest-Earned Ratio
Activity Ratios
Inventory Turns
Fixed Assets Turnover
Total Assets Turnover
Accounts Receivable Turnover
Average Collection Period
Profitability Ratios
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Return on Total Assets
Return on Stockholders equity
Earning per Share
Price-Earnings Ratio
Growth Rations (yearly)
Sales
Net Income
Earnings per Share
Dividends per Share
Strengths
1.
2.
3.
4.
5.
Owns 6 of the top 10 non-cola drinks.
9 of their top 12 brands are number 1 in their flavor category.
Snapple brand grew 10% in 2010.
Pay above average dividends, raising 500% in 2010 to $.90.
Has 21 manufacturing / bottle facilities located in the United States,
Canada, Mexico, and the Caribbean’s .
6. Overall Dr. Pepper Snapple group is the #1 company in the flavored CSD
market. Dr. Pepper is the #2 flavored CSD and Snapple is the leading
ready-to-drink tea.
7. The Company’s combination of brand ownership, bottling and
distribution gives it inherently more control over the value chain and
thus a competitive advantage.
8. Has more than 50 brands under Dr. Pepper Snapple group.
9. Dr. Pepper’s brand is spanning more than 125 years.
10.22% increase on EPS
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Weaknesses
1. Low market share in Carbonated Beverage industry.
2. Does not have low calorie or sports drinks.
3. Does not have a strong water brand.
4. 71% of its volume is distributed by Coca-Cola and PepsiCo.
5. We are not a global company like Pepsi and Coca Cola, only operating in
North America and the Caribbean.
6. Is considered the third top brand for soft drinks.
7. Only rank #20 in beverage industry worldwide.
8. Too focused on every drink production.
9. Dr. Pepper wasn't list in top 20 most nutrition beverage company.
10.Revenues increased 1.8% in 2010 while net income decreased 5%.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Internal Factor Evaluation
Key Internal Factor
Internal Strengths
Weights Rating Weighted
Score
3 or 4
1.Owns 6 of the top 10 non-cola drinks.
0.04 3
2.9 of their top 12 brands are number 1 in their flavor category.
0.05 3
3.Snapple brand grew 10% in 2010.
0.04 4
4.Pay above average dividends, raising 500% in 2010 to $.90.
0.05 4
5.Has 21 manufacturing / bottle facilities located in the United States, Canada, Mexico, and the Caribbean’s. 0.04 3
6.Overall Dr. Pepper Snapple group is the #1 company in the flavored CSD market. Dr. Pepper is the #2
flavored CSD and Snapple is the leading ready-to-drink tea.
0.07 4
7.The Company’s combination of brand ownership, bottling and distribution gives it inherently more
control over the value chain and thus a competitive advantage.
0.05 3
8.Has more than 50 brands under Dr. Pepper Snapple group.
0.07 4
9.Dr. Pepper Snapple group's brand is spanning more than 200 years.
0.04 4
10.22% increase on EPS.
0.04 4
Internal Weaknesses
1 or 2
1.Low market share in Carbonated Beverage industry.
0.06 1
2.Does not have low calorie or sports drinks.
0.05 1
3.Does not have a strong water brand.
0.04 1
4.71% of its volume is distributed by Coca-Cola and PepsiCo.
0.05 2
5.We are not a global company like Pepsi and Coca Cola, only operating in North America and the
Caribbean.
0.06 2
6.Is considered the third top brand for soft drinks.
0.06 2
7.Only rank #20 in beverage industry worldwide.
0.05 1
8.Too focused on every drink production.
0.04 1
9.Wasn't list in top 20 most nutrition beverage company?
0.06 1
10.Revenues increased 1.8% in 2010 while net income decreased 5%.
0.04 1
Totals
1
0.12
0.15
0.16
0.2
0.12
0.28
0.15
0.28
0.16
0.16
0.06
0.05
0.04
0.1
0.12
0.12
0.05
0.04
0.06
0.04
2.46
Strategy Formulation
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
SWOT Matrix
SO Strategies
WO Strategies
1. Develop more non-cola, low calorie drinks. (S1, S6, O2)
1. Produce more healthy drink. (W9, O2, O3, O7)
2. Enter new market such as India, China or other Asian
countries that has large GDP growth. (S5, O8, O10)
2. Develop sports drink. (W2, O2, O3, O7)
3. Partner with restaurants and fast food chain. (S8,O5)
3. Develop water drink. (W3, O2, O3, O7)
ST Strategies
WT Strategies
1. Start to brand off more on Snapple than there soft drinks 1. Invest more in healthier products like a sports
since Snapple brand is growing and soft drinks are
drink, or flavored water.(W2,W3,T2,T7)
decreasing. (S3,T2,T7)
2. Us the advantages of other countries manufacturing
facilities to produce products to help avoid taxes on sugar.
(S5, S7,T3,T4)
2. The company should be more independent and
not really so much on there competitors to sell
there products (W4,T6)
3. Us brand threw advertisement with celebrities to help
3. Advertise there other brands more like
sell product like Snapple, and show that there products are Snapple, Hawaiian Punch, and Mott’s
healthy and good for you. (S1,S6,T7,T9)
(W6,W7,T8)
4. Purchase vineyards and produce wine (W7, T2)
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Space Matrix
Financial Position
Cash flow
Working capital
Inventory turnover
EPS
Leverage
Liquidity
Score
4
2
7
3
3
2
3.50
Stability Position
Score
Technological changes
-3
Rate of inflation
-3
Demand variability
-4
Competitive pressure
-3
Barriers to entry
-6
Price elasticity of demand -5
-4.00
Competitive Position
Market share
Product quality
Customer loyalty
Technology know-how
Product life cycle
Capacity utilization
Score
-4
-1
-3
-4
-2
-4
-3.00
Industry Position
Score
Growth potential
3
Profit potential
3
Financial stability
4
Extent leverage
4
Resource utilization
3
Ease of entry into market
5
3.67
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Space Matrix
FP
Conservative
Aggressive
+6
+5
+4
+3
+2
+1
CP
-6
-5
-4
-3
-2
-1
+1
+2
+3
+4
+5
+6
IP
-1
-2
-3
-4
Defensive
-5
-6
Competitive
SP
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Grand Strategy Matrix
Rapid Growth Market
Quadrant I
Quadrant II
Possible Strategies:
1. Backwards,
Forwards, or
Horizontal
Integration
2. Market Penetration
3. Market
Development
4. Product
Development
5. Diversification
(Related)
Quadrant IV
Quadrant III
Slow Growth Market
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Matrix Analysis
Alternative Starategies
Forward Integration
Backward integration
Horizontal Integration
Market Penetration
Product Development
Market Development
Related Diversification
Unrelated Diversification
Retrenchment
Divestiture
Liquidation
IE SPACE
x
x
x
x
x
x
GRAND
x
x
x
x
x
x
x
BCG COUNT
2
2
2
2
2
2
1
0
0
0
0
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Alternative Strategies
Product Development
Forward Integration
• The company should be more independent
and not really so much on their competitors
to sell their products (W4,T6)
• Develop more non-cola, low calorie drinks.
(S1, S6, O2)
Horizontal Integration
Market Development
• Use the advantages of other countries
manufacturing facilities to produce products
to help avoid taxes on sugar. (S5, S7,T3,T4)
• Enter new market such as India, China or
other Asian countries that has large GDP
growth. (S5, O8, O10)
Market Penetration
Related Diversification
• Advertise with celebrities to help sell
product like Snapple, and show that there
products are healthy and good for you.
(S1,S6,T7,T9)
• Advertise their other brands more like
Snapple, Hawaiian Punch, and Mott’s
(W6,W7,T8)
• Concentrate marketing efforts on Snapple
rather than soft drinks since Snapple brand
is growing and soft drinks are decreasing.
(S3,T2,T7)
• Develop sports drink. (W2, O2, O3, O7)
• Produce more healthy drinks. (W9, O2, O3,
O7)
• Develop a luxury water. (W3, O2, O3, O7)
• Develop a flavored water.(W2,W3,T2,T7)
• Purchase vineyards and produce wine. (W7,
T2)
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
QSPM
Develop new
products in
non CSD
Key factors
Weight
AS
Create
strategic
alliances
TAS
AS
Purchase
vineyards and
produce wine
TAS
AS
TAS
0.27
1 to 4
-
-
External
Pepsi and Coke distribute other brands globally
Americans are looking for more low/no calorie drinks, this
market grew 1.2% in 2010
1 to 4
0.09 2
0.18
1 to 4
3
0.11
4
0.44
-
-
-
-
Consumers are looking for nutrient enriched beverages
There are over 300 Soft Drink manufactures
Strategic alliances with restaurants and fast food chains are
readily available.
Owning bottling distribution networks reduces cost and
dependence on other companies
The US beverage market grew by 0.9 percent in 2011
U.S consumption of soft drinks in 2011 is the lowest since
1996, The carbonated soft drinks market is expected to
decrease 2.2% by 2015
Increasing cost of commodities, especially the volatile sugar
industry and sugar tax.
Operate in a discretionary item industry, very volatile.
Highly competitive market.
The health issue with some of their products for example
sodas.
0.11
0.06
4
-
0.44
-
3
0.18
2
-
0.22
-
0.07
-
-
4
0.28
3
0.21
0.08
0.06
1
1
0.08
0.06
3
2
0.24
0.12
3
-
0.24
-
0.08
3
0.24
1
0.08
2
0.16
0.11
0.10
0.08
1
0.08
4
0.32
4
1
0.44
0.08
0.05
4
0.2
-
-
2
0.1
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
QSPM
Develop new
products in
non CSD
Key factors
Internal
Owns 6 of the top 10 non-cola drinks
9 of their top 12 brands are number 1 in their flavor category
Snapple brand grew 10% in 2010
Has 21 manufacturing / bottle facilities located in the United
States, Canada, Mexico, and the Caribbean’s .
Overall Dr. Pepper Snapple group is the #1 company in the
flavored CSD market. Dr. Pepper is the #2 flavored CSD and
Snapple is the leading ready-to-drink tea.
Has more than 50 brands under Dr. Pepper Snapple group.
Low market share in Carbonated Beverage industry
Does not have low calorie or sports drinks
Does not have a strong water brand
71% of its volume is distributed by Coca-Cola and PepsiCo
Is considered the third top brand for soft drinks.
Only rank #20 in beverage industry worldwide.
Weight AS
TAS
Create
Strategic
alliances
AS TAS
Purchase
Vineyards and
produce wine
AS
TAS
0.08
-
-
3
0.24
-
-
0.08
0.07
3
0.21
3
-
0.24
-
-
-
0.09
-
-
2
0.18
1
0.09
0.09
-
-
-
-
-
-
0.07
-
-
1
0.07
-
-
0.07
0.11
0.1
4
4
0.44
0.4
3
-
0.21
-
-
-
0.11
0.07
0.06
3
0.18
4
2
0.44
0.12
2
0.12
1
2.95
2.99
1.66
Objective
Continue with the current strategies that the company
already has but also:
Expand our brands
Create more strategic alliances
Expand our market share
Increase awareness nutritional line of products
Look for feasible and equally beneficial mergers and
acquisitions
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Strategic
Dr. Pepper Snapple group will invest more in R&D to develop a new
sports drink that is high in electrolytes and low in sodium to compete
against PowerAde and Gatorade.
Dr. Pepper Snapple Group will seek out new technology to create the
purest best tasting artesian/luxury water on the market to compete with
FIJI and EVIAN also expand market with current water Deja Blue.
Dr. Pepper Snapple Group will invest in R&D to create a Snapple drink
that helps relieve the symptoms of a mild Hangover. It will have caffeine
to energize you, natural vitamins to cure headaches and upset stomachs
and taste great.
Dr. Pepper Snapple Group will aggressively Market their healthier
drinks as the “smart choice” for the refreshment needs.
Dr. Pepper Snapple Group will actively seek out mergers and acquisitions
like Red Bull, and Hansen Natural which owns Monster plus others
carbonated beverages.
Dr. Pepper Snapple Group will develop low Calorie Soft Drinks
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
3 Year Goal and Annual Objective
Year 1:
• Develop products and test with focus group. $16 million
• Increase advertising efforts for our nutritional drinks, campaign with
theme “smart choice” with people like Jillian Michaels or Mario
Lopez and other celebrities that are physically fit.
• Develop Social media sites and advertise within and on other sites.
• Purchase more retail space, create alliances with school districts and
universities for the smart choice option for their students.
• Search out mergers and acquisitions.
Year 2
• Roll out new products with huge marketing campaign.
• Finalize merger and acquisitions.
• At the end of the year evaluate new products and Smart Choice
Campaign, refocus.
Year 3
• Continue to re-evaluate current strategy and adjust for changes to
environment.
• Continue to develop and market new products.
• Continue to look for mergers and acquisitions
Strategy Selection with Year 1 Cost
Total funding needed to implement new strategies
We are going to double the funding to the R&D department
from 16million to 32 million annually.
We are going to increase or advertising budget by 50% from
445 million to 671 million to really push our new products as
well as our currently “Smart Choice” products.
Total Cost for recommended strategy $250 million.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
EPS/EBIT
Recessio
n
Normal
Recession
Boom
Common Stock Financing
EBIT
Interest
EBT
Taxes
EAT
# Shares
EPS
800
128
672
242
430
248
1.73
Recession
1,000
128
872
314
558
248
2.25
Normal
1,400
128
1,272
458
814
302
Boom2.70
800
129
671
241
429
247
1.74
1,000
129
871
313
557
247
2.25
Close Price for Dr Pepper Snapple 12/31/10
EPS for Disney on October 11,2011
Initial Shares Outstanding
Dividends on Preferred Stock
Funds Needed
90% of Funds Needed
10% of Funds Needed
Interest Rate
Current Tax Rate
1,400
128
1,272
458
814
247
3.29
32.71
2.19
240.4
0.90
250
225
25
5%
36%
Boom
Debt Financing
EBIT
Interest
EBT
Taxes
EAT
# Shares
EPS
800
141
660
237
422
240.4
1.76
Recession
90% Stock – 10% Debt Financing
EBIT
Interest
EBT
Taxes
EAT
# Shares
EPS
Normal
1,000
141
860
309
550
240.4
2.29
Normal
1,400
141
1,260
453
806
240.4
3.35
Boom
90% Debet – 10% Stock
EBIT
Interest
EBT
Taxes
EAT
# Share
EPS
800
139
661
238
423
241
1.75
1,000
139
861
310
551
241
2.28
1,400
128
1,272
458
814
241
3.38
Conclusion
The best option for Dr Pepper Snapple is to implement
their strategy by financing the entire project. It
reflects a higher EPS for the company in all categories
with the exception of a boom economy. Given the
current economy, we can expect normal earnings.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Projected Income Statement
For the Year Ended December 31,
Projected
2011
Reasoning
(In millions, except per share data)
$
5,531
$ 5,636
$6,200 10% Increase
2,234
2,243
2,480
Average % of 2009-10 (10%)
3,297
3,393
3,720
Increase 250M
2,135
2,233
2,483
(Advertising:220M/R&D:30M)
117
127
137
8% Increase--New Brand Depreciation
—
—
—
—
—
—
(40)
8
8
1,085
1,025
1,092
Additional Interest from Financing 250M-->
243
128
141
13M
(4)
(3)
(3)
—
100
—
(22)
(21)
(21)
2009
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Impairment of goodwill and intangible assets
Restructuring costs
Other operating expense (income), net
Income (loss) from operations
Interest expense
Interest income
Loss on early extinguishment of debt
Other income, net
Income (loss) before income taxes and equity in
earnings
Provision for income taxes
Income (loss) before equity in earnings
Equity in earnings, net of tax
Net income (loss)
Earnings (loss) per common share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
Cash dividends declared per common share
2010
$
868
315
553
2
555
$
$
2.18
2.17
$
254.2
255.2
0.15
$
821
294
527
1
528
975
351
624
1
$625
$
$
2.19
2.17
$2.60
$2.58
$
240.4
242.6
0.90
240.4
242.6
$0.90
Average Tax Rate 36%
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Projected Balance Sheet
2009
2010
Projected
2011
ASSETS
Current assets:
Cash and cash equivalents
$
Accounts receivable:
Trade, net
Other
Inventories
Deferred tax assets
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Investments in unconsolidated
subsidiaries
Goodwill
Other intangible assets, net
Other non-current assets
Non-current deferred tax assets
$
280 $
540
32
262
53
112
315
381 Fudge #
536
35
244
57
122
$
1,309 $
1,480
1,109
1,168
6% Increase - Mixing, Bottling,
1238 Distribution Space
9
2,983
2,702
543
151
11
2,984
2,691
552
144
$
1,279
616 Increase 15% (Distribution)
39 Increase 10%
256 Increase 5% - New Products (RCI)
60 Increase 5% - New Products
128 Increase 5% - New Products
11
2999 .5% increase - New Product
2691
563 % Increase of Prior 2 Years (2%)
144
Projected Balance Sheet
LIABILITIES AND STOCKHOLDERS’ EQUITY
2009
2010
Current liabilities:
851
Accounts payable and accrued expenses
850
65
Deferred revenue
—
404
Current portion of long-term obligations
—
18
Income taxes payable
4
$
854 $ 1,338 $
Total current liabilities
1,687
Long-term obligations
2,960
1,083
Non-current deferred tax liabilities
1,038
1,515
Non-current deferred revenue
—
777
Other non-current liabilities
737
Total liabilities
$ 5,589 $ 6,400 $
Commitments and contingencies
Stockholders’ equity:
—
Preferred stock, $.01 par value, 15,000,000
shares authorized, no shares issued
—
2
Common stock, $.01 par value, 800,000,000
shares authorized, 223,936,156 and
254,109,047 shares issued and outstanding
for 2010 and 2009, respectively
3
2,085
Additional paid-in capital
3,156
400
Retained earnings
87
(28)
Accumulated other comprehensive loss
(59)
2,459
Total stockholders’ equity
$ 3,187
Total liabilities and stockholders’
equity
$ 8,776 $ 8,859 $
Projected 2011
868 2% Increase (Supply)
65
Increase by 1/5 of 20M (60 month term
454 financing)
18
1,405
1,887 Increase by 4/5 of 20M
1,083
1,515
777
6,667
—
2
2,085
400
(28)
2,459
9,126
Projected Ratios
Dr Pepper Snapple
2010
Projected
Liquidity Ratios
Current Ratio
Quick Ratio
0.98
0.80
1.05
0.85
0.72
2.60
0.69
8.01
0.73
2.71
0.77
6.91
0.60
0.18
5.96%
21.47%
2.20
0.60
0.18
6.84%
25.38%
2.60
1.90%
-4.86%
0.46%
10.01%
18.18%
25.11%
Leverage Ratios
Debt-to-Total Assets Ratio
Debt-to-Equity Ratio
Long-Term Debt-to-Equity Ratio
Times-Interest-Earned Ratio
Profitability Ratios
Gross Profit Margin
Operating Profit Margin
Return on Total Assets
Return on Stockholders' Equity
Earnings per Share
Growth Rations (yearly from previous)
Sales
Net Income
Earnings per Share
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Strategic Evaluation
How are we going to evaluate or strategy?
Through KPI’s
- Market share increase in targeted areas of at least 3%
annually
- Revenue increase of at least 10% annually
- Increase in customer satisfaction in taste tests
- Social media footprint, increase views and likes 5 fold annually.
- Increase of 15% EPS annually
- Increase of at least $.02 dividend quarterly to investors.
- At least one acquisition bi-annually in distribution and
beverage market.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Stock Performance
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Update
Introduction of Dr. Pepper Ten and other brands,
http://youtu.be/2l5OVWZ7QWE
Consistent revenue, EPS and net income gains by increasing store placement and
promotions designed at the on-the-go driver
DPS has 13 of 14 leading brands are number 1 or 2 in their flavor category
Returned 684 million back to shareholders in 2012, 400 million in buyback and
284 in dividends.
Increased dividend for the 5th time since going public.
Since 2011 RCI has reduced days sale of inventory by 40%, and closed 10 outside
warehouses freeing up resources to grow the business. They also have cut the
fleet delivery miles by more than 1 million, removing 3.7 millions pounds of
greenhouse gas emissions from the atmosphere.
© 2013, Yoshives Belizaire, Zhongling Cao, Shawn Parker, Dave Saucier, UMFK
Questions??