|
|
Keurig Dr Pepper Inc.
|
|
||
|
(Exact name of registrant as specified in its charter)
|
|
Delaware
|
98-0517725
|
||
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. employer identification number)
|
||
|
|
|
|
|
53 South Avenue
|
|
|
|
Burlington,
|
Massachusetts
|
|
|
01803
|
|
|
(Address of principal executive offices)
|
|||
|
(781)
|
418-7000
|
|
(Registrant's telephone number, including area code)
|
|
Title of each class
|
|
Trading Symbol
|
|
Name of each exchange on which registered
|
Common stock
|
|
KDP
|
|
New York Stock Exchange
|
|
Term
|
|
Definition
|
2019 Incentive Plan
|
|
Keurig Dr Pepper Inc. Omnibus Incentive Plan of 2019
|
2019 KDP Term Loan
|
|
The Company refinanced the 2018 KDP Term Loan on February 8, 2019 and entered into the 2019 KDP Term Loan Agreement
|
2019 KDP Term Loan Agreement
|
|
The agreement executed on February 8, 2019 between KDP and the Term Loan Lenders in order to refinance the 2018 KDP Term Loan with the 2019 KDP Term Loan
|
2019 364-Day Credit Agreement
|
|
The Company's $750 million credit agreement, which was entered into on May 29, 2019
|
2020 364-Day Credit Agreement
|
|
The Company's $1,500 million credit agreement, which was entered into on April 12, 2020
|
2030 Notes
|
|
$750 million aggregate principal amount of 3.20% senior unsecured notes due May 1, 2030
|
2050 Notes
|
|
$750 million aggregate principal amount of 3.80% senior unsecured notes due May 1, 2050
|
A Shoc
|
|
Adrenaline Shoc
|
ABI
|
|
Anheuser-Busch InBev SA/NV
|
Annual Report
|
|
Annual Report on Form 10-K for the year ended December 31, 2019
|
AOCI
|
|
Accumulated other comprehensive income or loss
|
ASU
|
|
Accounting Standards Update
|
ASU 2016-13
|
|
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
ASU 2018-13
|
|
Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements
|
ASU 2020-01
|
|
Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815
|
ASU 2020-04
|
|
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
|
Bai Acquisition
|
|
The acquisition of Bai by DPS
|
Bedford
|
|
Bedford Systems, LLC
|
Big Red Acquisition
|
|
The acquisition of Big Red by KDP
|
BodyArmor
|
|
BA Sports Nutrition, LLC
|
bps
|
|
basis points
|
Company
|
|
Keurig Dr Pepper Inc.
|
Core
|
|
Core Nutrition LLC
|
Core Acquisition
|
|
The acquisition of Core by KDP
|
CSD
|
|
Carbonated soft drink
|
DIO
|
|
Days inventory outstanding
|
DPO
|
|
Days of payables outstanding
|
DPS
|
|
Dr Pepper Snapple Group, Inc.
|
DPS Merger
|
|
The acquisition of DPS by Maple, whereby Merger Sub merged with and into Maple, with Maple surviving the merger as a wholly-owned subsidiary of DPS as of July 9, 2018
|
DPS Merger Agreement
|
|
The Agreement and Plan of Merger by and among DPS, Maple and Merger Sub to effect the DPS Merger
|
DSD
|
|
Direct Store Delivery
|
DSO
|
|
Days sales outstanding
|
EPS
|
|
Earnings per share
|
Exchange Act
|
|
Securities Exchange Act of 1934, as amended
|
FASB
|
|
Financial Accounting Standards Board
|
FX
|
|
Foreign exchange
|
IRi
|
|
Information Resources, Inc.
|
JAB
|
|
JAB Holding Company S.a.r.l.
|
JP Morgan
|
|
JPMorgan Chase Bank, N.A.
|
KDP
|
|
Keurig Dr Pepper Inc.
|
KDP Credit Agreements
|
|
Collectively, the KDP Revolver, the 2019 364-Day Credit Agreement, and the 2019 KDP Term Loan
|
KDP Revolver
|
|
The Company's $2,400 million revolving credit facility, which was entered into on February 28, 2018
|
LIBOR
|
|
London Interbank Offered Rate
|
Maple
|
|
Maple Parent Holdings Corp.
|
Merger Sub
|
|
Salt Merger Sub, Inc.
|
NCB
|
|
Non-carbonated beverage
|
Notes
|
|
Collectively, the Company's senior unsecured notes
|
Parent
|
|
Keurig Dr Pepper, Inc.
|
RSU
|
|
Restricted stock unit
|
RTD
|
|
Ready to drink
|
S&P
|
|
Standard & Poors
|
SEC
|
|
Securities and Exchange Commission
|
SG&A
|
|
Selling, general and administrative
|
Term Loan Lenders
|
|
The lenders party to the 2019 KDP Term Loan, with JP Morgan as the administrative agent of the 2019 KDP Term Loan Agreement
|
U.S.
|
|
United States
|
U.S. GAAP
|
|
Accounting principles generally accepted in the U.S.
|
WD
|
|
Warehouse Direct
|
WIP
|
|
Work-in-process
|
ITEM 1.
|
Financial Statements (Unaudited)
|
|
First Quarter
|
||||||
(in millions, except per share data)
|
2020
|
|
2019
|
||||
Net sales
|
$
|
2,613
|
|
|
$
|
2,504
|
|
Cost of sales
|
1,161
|
|
|
1,106
|
|
||
Gross profit
|
1,452
|
|
|
1,398
|
|
||
Selling, general and administrative expenses
|
1,028
|
|
|
911
|
|
||
Other operating income, net
|
(42
|
)
|
|
(11
|
)
|
||
Income from operations
|
466
|
|
|
498
|
|
||
Interest expense
|
153
|
|
|
169
|
|
||
Loss on early extinguishment of debt
|
2
|
|
|
9
|
|
||
Impairment on investment and note receivable
|
86
|
|
|
—
|
|
||
Other expense, net
|
20
|
|
|
5
|
|
||
Income before provision for income taxes
|
205
|
|
|
315
|
|
||
Provision for income taxes
|
49
|
|
|
85
|
|
||
Net income
|
$
|
156
|
|
|
$
|
230
|
|
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.11
|
|
|
$
|
0.16
|
|
Diluted
|
0.11
|
|
|
0.16
|
|
||
Weighted average common shares outstanding:
|
|
|
|
||||
Basic
|
1,407.0
|
|
|
1,406.3
|
|
||
Diluted
|
1,420.1
|
|
|
1,417.7
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Comprehensive (loss) income
|
$
|
(428
|
)
|
|
$
|
323
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions, except share and per share data)
|
2020
|
|
2019
|
||||
Assets
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
197
|
|
|
$
|
75
|
|
Restricted cash and restricted cash equivalents
|
26
|
|
|
26
|
|
||
Trade accounts receivable, net
|
1,037
|
|
|
1,115
|
|
||
Inventories
|
682
|
|
|
654
|
|
||
Prepaid expenses and other current assets
|
335
|
|
|
403
|
|
||
Total current assets
|
2,277
|
|
|
2,273
|
|
||
Property, plant and equipment, net
|
2,017
|
|
|
2,028
|
|
||
Investments in unconsolidated affiliates
|
105
|
|
|
151
|
|
||
Goodwill
|
19,898
|
|
|
20,172
|
|
||
Other intangible assets, net
|
23,706
|
|
|
24,117
|
|
||
Other non-current assets
|
811
|
|
|
748
|
|
||
Deferred tax assets
|
29
|
|
|
29
|
|
||
Total assets
|
$
|
48,843
|
|
|
$
|
49,518
|
|
Liabilities and Stockholders' Equity
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,238
|
|
|
$
|
3,176
|
|
Accrued expenses
|
960
|
|
|
939
|
|
||
Structured payables
|
258
|
|
|
321
|
|
||
Short-term borrowings and current portion of long-term obligations
|
1,957
|
|
|
1,593
|
|
||
Other current liabilities
|
445
|
|
|
445
|
|
||
Total current liabilities
|
6,858
|
|
|
6,474
|
|
||
Long-term obligations
|
12,431
|
|
|
12,827
|
|
||
Deferred tax liabilities
|
5,917
|
|
|
6,030
|
|
||
Other non-current liabilities
|
997
|
|
|
930
|
|
||
Total liabilities
|
26,203
|
|
|
26,261
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,407,079,951 and 1,406,852,305 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
14
|
|
|
14
|
|
||
Additional paid-in capital
|
21,579
|
|
|
21,557
|
|
||
Retained earnings
|
1,527
|
|
|
1,582
|
|
||
Accumulated other comprehensive (loss) income
|
(480
|
)
|
|
104
|
|
||
Total stockholders' equity
|
22,640
|
|
|
23,257
|
|
||
Total liabilities and stockholders' equity
|
$
|
48,843
|
|
|
$
|
49,518
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
156
|
|
|
$
|
230
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation expense
|
98
|
|
|
85
|
|
||
Amortization of intangibles
|
33
|
|
|
31
|
|
||
Other amortization expense
|
32
|
|
|
36
|
|
||
Provision for sales returns
|
7
|
|
|
9
|
|
||
Deferred income taxes
|
(5
|
)
|
|
1
|
|
||
Employee stock-based compensation expense
|
19
|
|
|
14
|
|
||
Loss on early extinguishment of debt
|
2
|
|
|
9
|
|
||
Gain on disposal of property, plant and equipment
|
(43
|
)
|
|
—
|
|
||
Unrealized loss (gain) on foreign currency
|
22
|
|
|
(17
|
)
|
||
Unrealized loss on derivatives
|
43
|
|
|
7
|
|
||
Equity in loss of unconsolidated affiliates
|
15
|
|
|
15
|
|
||
Impairment on investment and note receivable of unconsolidated affiliate
|
86
|
|
|
—
|
|
||
Other, net
|
22
|
|
|
(4
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
42
|
|
|
126
|
|
||
Inventories
|
(38
|
)
|
|
(36
|
)
|
||
Income taxes receivable and payables, net
|
(29
|
)
|
|
68
|
|
||
Other current and non-current assets
|
(179
|
)
|
|
(102
|
)
|
||
Accounts payable and accrued expenses
|
150
|
|
|
125
|
|
||
Other current and non-current liabilities
|
(19
|
)
|
|
(6
|
)
|
||
Net change in operating assets and liabilities
|
(73
|
)
|
|
175
|
|
||
Net cash provided by operating activities
|
414
|
|
|
591
|
|
||
Investing activities:
|
|
|
|
||||
Issuance of related party note receivable
|
(6
|
)
|
|
(7
|
)
|
||
Purchases of property, plant and equipment
|
(151
|
)
|
|
(62
|
)
|
||
Proceeds from sales of property, plant and equipment
|
201
|
|
|
18
|
|
||
Purchases of intangibles
|
(15
|
)
|
|
(2
|
)
|
||
Other, net
|
5
|
|
|
8
|
|
||
Net cash provided by (used in) investing activities
|
34
|
|
|
(45
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from unsecured credit facility
|
1,000
|
|
|
—
|
|
||
Proceeds from term loan
|
—
|
|
|
2,000
|
|
||
Net (repayment) issuance of commercial paper
|
(387
|
)
|
|
594
|
|
||
Proceeds from structured payables
|
44
|
|
|
78
|
|
||
Payments on structured payables
|
(107
|
)
|
|
(9
|
)
|
||
Payments on senior unsecured notes
|
(250
|
)
|
|
(250
|
)
|
||
Repayment of term loan
|
(405
|
)
|
|
(2,758
|
)
|
||
Payments on finance leases
|
(13
|
)
|
|
(10
|
)
|
||
Cash dividends paid
|
(212
|
)
|
|
(211
|
)
|
||
Other, net
|
2
|
|
|
10
|
|
||
Net cash used in financing activities
|
(328
|
)
|
|
(556
|
)
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from:
|
|
|
|
||||
Operating, investing and financing activities
|
120
|
|
|
(10
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(8
|
)
|
|
10
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
111
|
|
|
139
|
|
||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
223
|
|
|
$
|
139
|
|
|
Common Stock Issued
|
|
Additional
Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
Stockholders' Equity
|
|||||||||||||
(in millions, except per share data)
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance as of January 1, 2020
|
1,406.8
|
|
|
$
|
14
|
|
|
$
|
21,557
|
|
|
$
|
1,582
|
|
|
$
|
104
|
|
|
$
|
23,257
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
156
|
|
|
—
|
|
|
156
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(584
|
)
|
|
(584
|
)
|
|||||
Dividends declared, $0.15 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(211
|
)
|
|
—
|
|
|
(211
|
)
|
|||||
Shares issued under employee stock-based compensation plans and other
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation and stock options exercised
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||
Balance as of March 31, 2020
|
1,407.1
|
|
|
$
|
14
|
|
|
$
|
21,579
|
|
|
$
|
1,527
|
|
|
$
|
(480
|
)
|
|
$
|
22,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of January 1, 2019
|
1,405.9
|
|
|
$
|
14
|
|
|
$
|
21,471
|
|
|
$
|
1,178
|
|
|
$
|
(130
|
)
|
|
$
|
22,533
|
|
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|
—
|
|
|
230
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93
|
|
|
93
|
|
|||||
Dividends declared, $0.15 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(211
|
)
|
|
—
|
|
|
(211
|
)
|
|||||
Measurement period adjustment
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Shares issued under stock-based compensation plans and other
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation and stock options exercised
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||
Balance as of March 31, 2019
|
1,406.7
|
|
|
$
|
14
|
|
|
$
|
21,505
|
|
|
$
|
1,192
|
|
|
$
|
(37
|
)
|
|
$
|
22,674
|
|
(in millions)
|
|
Prior Presentation
|
|
Revised Presentation
|
|
First Quarter of 2019
|
||
Net cash provided by operating activities:
|
|
|
|
|
|
|
||
Amortization of intangibles
|
|
Amortization expense
|
|
Amortization of intangibles
|
|
$
|
31
|
|
Other amortization expense(1)
|
|
Amortization expense
|
|
Other amortization expense
|
|
36
|
|
|
Amortization of deferred financing fees
|
|
Amortization expense
|
|
Other, net
|
|
4
|
|
|
Amortization of bond fair value
|
|
Amortization expense
|
|
Other, net
|
|
7
|
|
|
Equity in loss of unconsolidated affiliates
|
|
Other, net
|
|
Equity in loss of unconsolidated affiliates
|
|
15
|
|
|
Net cash provided by (used in) investing activities:
|
|
|
|
|
|
|
||
Proceeds from sales of property, plant and equipment
|
|
Other, net
|
|
Proceeds from sales of property, plant and equipment
|
|
18
|
|
|
Purchase of intangibles
|
|
Other, net
|
|
Purchases of intangibles
|
|
(2
|
)
|
|
Net cash provided by (used in) financing activities:
|
|
|
|
|
|
|
||
Proceeds from stock options exercised
|
|
Proceeds from stock options exercised
|
|
Other, net
|
|
8
|
|
(1)
|
Primarily includes amortization of customer rebates and upfront payments.
|
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Senior unsecured notes
|
$
|
11,559
|
|
|
$
|
11,802
|
|
Term loan
|
970
|
|
|
1,372
|
|
||
Subtotal
|
12,529
|
|
|
13,174
|
|
||
Less - current portion
|
(98
|
)
|
|
(347
|
)
|
||
Long-term obligations
|
$
|
12,431
|
|
|
$
|
12,827
|
|
|
Fair Value Hierarchy Level
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
(in millions)
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|||||||||
Commercial paper notes
|
2
|
|
$
|
859
|
|
|
$
|
859
|
|
|
$
|
1,246
|
|
|
$
|
1,246
|
|
Revolving credit facilities
|
2
|
|
1,000
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
||||
Current portion of long-term obligations:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior unsecured notes
|
2
|
|
—
|
|
|
—
|
|
|
250
|
|
|
250
|
|
||||
Term loan
|
2
|
|
98
|
|
|
98
|
|
|
97
|
|
|
97
|
|
||||
Short-term borrowings and current portion of long-term obligations
|
|
|
$
|
1,957
|
|
|
$
|
1,957
|
|
|
$
|
1,593
|
|
|
$
|
1,593
|
|
(in millions)
|
|
|
|
|
|
Fair Value Hierarchy Level
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
Issuance
|
|
Maturity Date
|
|
Rate
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|||||||||
2020 Notes(1)
|
|
January 15, 2020
|
|
2.000%
|
|
2
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
250
|
|
2021 Merger Notes
|
|
May 25, 2021
|
|
3.551%
|
|
2
|
|
1,750
|
|
|
1,766
|
|
|
1,750
|
|
|
1,785
|
|
||||
2021-A Notes
|
|
November 15, 2021
|
|
3.200%
|
|
2
|
|
250
|
|
|
250
|
|
|
250
|
|
|
254
|
|
||||
2021-B Notes
|
|
November 15, 2021
|
|
2.530%
|
|
2
|
|
250
|
|
|
247
|
|
|
250
|
|
|
251
|
|
||||
2022 Notes
|
|
November 15, 2022
|
|
2.700%
|
|
2
|
|
250
|
|
|
247
|
|
|
250
|
|
|
251
|
|
||||
2023 Merger Notes
|
|
May 25, 2023
|
|
4.057%
|
|
2
|
|
2,000
|
|
|
2,075
|
|
|
2,000
|
|
|
2,110
|
|
||||
2023 Notes
|
|
December 15, 2023
|
|
3.130%
|
|
2
|
|
500
|
|
|
504
|
|
|
500
|
|
|
514
|
|
||||
2025 Merger Notes
|
|
May 25, 2025
|
|
4.417%
|
|
2
|
|
1,000
|
|
|
1,059
|
|
|
1,000
|
|
|
1,090
|
|
||||
2025 Notes
|
|
November 15, 2025
|
|
3.400%
|
|
2
|
|
500
|
|
|
507
|
|
|
500
|
|
|
521
|
|
||||
2026 Notes
|
|
September 15, 2026
|
|
2.550%
|
|
2
|
|
400
|
|
|
387
|
|
|
400
|
|
|
400
|
|
||||
2027 Notes
|
|
June 15, 2027
|
|
3.430%
|
|
2
|
|
500
|
|
|
503
|
|
|
500
|
|
|
520
|
|
||||
2028 Merger Notes
|
|
May 25, 2028
|
|
4.597%
|
|
2
|
|
2,000
|
|
|
2,184
|
|
|
2,000
|
|
|
2,253
|
|
||||
2038 Notes
|
|
May 1, 2038
|
|
7.450%
|
|
2
|
|
125
|
|
|
187
|
|
|
125
|
|
|
167
|
|
||||
2038 Merger Notes
|
|
May 25, 2038
|
|
4.985%
|
|
2
|
|
500
|
|
|
559
|
|
|
500
|
|
|
587
|
|
||||
2045 Notes
|
|
November 15, 2045
|
|
4.500%
|
|
2
|
|
550
|
|
|
580
|
|
|
550
|
|
|
605
|
|
||||
2046 Notes
|
|
December 15, 2046
|
|
4.420%
|
|
2
|
|
400
|
|
|
417
|
|
|
400
|
|
|
435
|
|
||||
2048 Merger Notes
|
|
May 25, 2048
|
|
5.085%
|
|
2
|
|
750
|
|
|
886
|
|
|
750
|
|
|
905
|
|
||||
Principal amount
|
|
|
|
|
|
|
|
$
|
11,725
|
|
|
$
|
12,358
|
|
|
$
|
11,975
|
|
|
$
|
12,898
|
|
Unamortized debt issuance costs and fair value adjustment for Notes assumed in the DPS Merger
|
|
|
|
(166
|
)
|
|
|
|
(173
|
)
|
|
|
||||||||||
Carrying amount
|
|
|
|
|
|
|
|
$
|
11,559
|
|
|
|
|
$
|
11,802
|
|
|
|
(1)
|
On January 15, 2020, the Company repaid the 2020 Notes at maturity, using commercial paper notes.
|
(in millions)
|
|
|
|
Fair Value Hierarchy Level
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||
Issuance
|
|
Maturity Date
|
|
|
Available Balances
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|||||||||||
2019 KDP Term Loan(1)
|
|
February 2023
|
|
2
|
|
$
|
—
|
|
|
$
|
975
|
|
|
$
|
975
|
|
|
$
|
1,380
|
|
|
$
|
1,380
|
|
KDP Revolver(2)
|
|
February 2023
|
|
2
|
|
1,400
|
|
|
1,000
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|||||
2019 364-Day Credit Agreement
|
|
May 2020
|
|
2
|
|
750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Principal amount
|
|
|
|
|
|
|
|
$
|
1,975
|
|
|
$
|
1,975
|
|
|
$
|
1,380
|
|
|
$
|
1,380
|
|
||
Unamortized discounts and debt issuance costs
|
|
|
|
(5
|
)
|
|
|
|
(8
|
)
|
|
|
||||||||||||
Carrying amount
|
|
|
|
|
|
|
|
$
|
1,970
|
|
|
|
|
$
|
1,372
|
|
|
|
(1)
|
The Company borrowed $380 million of commercial paper to voluntarily prepay a portion of its outstanding obligations under the 2019 KDP Term Loan. As a result of these voluntary prepayments, the Company recorded a $2 million loss on early extinguishment during the first quarter of 2020
|
(2)
|
The KDP Revolver has $200 million letters of credit availability and none utilized as of March 31, 2020.
|
|
First Quarter
|
||||||
(in millions, except %)
|
2020
|
|
2019
|
||||
Weighted average commercial paper borrowings
|
$
|
1,670
|
|
|
$
|
1,748
|
|
Weighted average borrowing rates
|
1.85
|
%
|
|
2.90
|
%
|
(in millions)
|
Coffee Systems
|
|
Packaged Beverages
|
|
Beverage Concentrates
|
|
Latin America Beverages
|
|
Total
|
||||||||||
Balance as of January 1, 2020
|
$
|
9,775
|
|
|
$
|
5,301
|
|
|
$
|
4,526
|
|
|
$
|
570
|
|
|
$
|
20,172
|
|
Foreign currency translation
|
(74
|
)
|
|
(57
|
)
|
|
(37
|
)
|
|
(112
|
)
|
|
(280
|
)
|
|||||
Acquisitions
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||
Balance as of March 31, 2020
|
$
|
9,701
|
|
|
$
|
5,250
|
|
|
$
|
4,489
|
|
|
$
|
458
|
|
|
$
|
19,898
|
|
(in millions)
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Brands(1)
|
|
$
|
19,569
|
|
|
$
|
19,948
|
|
Trade names
|
|
2,479
|
|
|
2,479
|
|
||
Contractual arrangements
|
|
120
|
|
|
122
|
|
||
Distribution rights
|
|
19
|
|
|
16
|
|
||
Total
|
|
$
|
22,187
|
|
|
$
|
22,565
|
|
(1)
|
The decrease of $379 million in brands with indefinite lives was due to foreign currency translation during the first quarter of 2020.
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
(in millions)
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
||||||||||||
Acquired technology
|
$
|
1,146
|
|
|
$
|
(273
|
)
|
|
$
|
873
|
|
|
$
|
1,146
|
|
|
$
|
(255
|
)
|
|
$
|
891
|
|
Customer relationships
|
632
|
|
|
(109
|
)
|
|
523
|
|
|
638
|
|
|
(102
|
)
|
|
536
|
|
||||||
Trade names
|
126
|
|
|
(58
|
)
|
|
68
|
|
|
128
|
|
|
(55
|
)
|
|
73
|
|
||||||
Contractual arrangements
|
24
|
|
|
(4
|
)
|
|
20
|
|
|
24
|
|
|
(3
|
)
|
|
21
|
|
||||||
Brands
|
15
|
|
|
(2
|
)
|
|
13
|
|
|
10
|
|
|
(2
|
)
|
|
8
|
|
||||||
Distribution rights
|
24
|
|
|
(2
|
)
|
|
22
|
|
|
24
|
|
|
(1
|
)
|
|
23
|
|
||||||
Total
|
$
|
1,967
|
|
|
$
|
(448
|
)
|
|
$
|
1,519
|
|
|
$
|
1,970
|
|
|
$
|
(418
|
)
|
|
$
|
1,552
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Amortization expense for intangible assets with definite lives
|
$
|
33
|
|
|
$
|
31
|
|
|
Remainder of 2020
|
|
For the Years Ending December 31,
|
||||||||||||||||||||
(in millions)
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025
|
|||||||||||||
Expected amortization expense for intangible assets with definite lives
|
$
|
100
|
|
|
$
|
133
|
|
|
$
|
133
|
|
|
$
|
132
|
|
|
$
|
123
|
|
|
$
|
111
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|||||
(in millions)
|
|
Ownership Interest
|
|
2020
|
|
2019
|
|||||
BodyArmor
|
|
12.5
|
%
|
|
$
|
51
|
|
|
$
|
52
|
|
Bedford
|
|
30.0
|
%
|
|
1
|
|
|
46
|
|
||
Dyla LLC
|
|
12.4
|
%
|
|
13
|
|
|
13
|
|
||
Force Holdings LLC
|
|
33.3
|
%
|
|
5
|
|
|
5
|
|
||
Beverage startup companies
|
|
(various)
|
|
|
30
|
|
|
30
|
|
||
Other
|
|
(various)
|
|
|
5
|
|
|
5
|
|
||
Investments in unconsolidated affiliates
|
|
|
|
$
|
105
|
|
|
$
|
151
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Keurig 2.0 exit
|
$
|
—
|
|
|
$
|
1
|
|
DPS integration program
|
53
|
|
|
60
|
|
||
Total restructuring and integration charges
|
$
|
53
|
|
|
$
|
61
|
|
(in millions)
|
Workforce Reduction Costs
|
||
Balance as of January 1, 2020
|
$
|
15
|
|
Charges to expense
|
12
|
|
|
Cash payments
|
(2
|
)
|
|
Non-cash adjustment items
|
(2
|
)
|
|
Balance as of March 31, 2020
|
$
|
23
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2020
|
|
2019
|
||||
Interest rate contracts
|
|
|
|
||||
Receive-fixed, pay-variable interest rate swaps(1)
|
$
|
—
|
|
|
$
|
50
|
|
Receive-variable, pay-fixed interest rate swaps(2)
|
450
|
|
|
575
|
|
||
FX contracts
|
471
|
|
|
523
|
|
||
Commodity contracts
|
317
|
|
|
150
|
|
(1)
|
During the first quarter of 2020, the Company elected to terminate $50 million notional amount of receive-fixed, pay-variable interest rate swaps and received cash of $18 million.
|
(2)
|
During the first quarter of 2020, the Company elected to terminate $575 million notional amount of receive-variable, pay-fixed interest rate swaps and received cash of $2 million.
|
(in millions)
|
Fair Value Hierarchy Level
|
|
Balance Sheet Location
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Assets:
|
|
|
|
|
|
|
|
||||
Interest rate contracts
|
2
|
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
1
|
|
FX contracts
|
2
|
|
Prepaid expenses and other current assets
|
|
19
|
|
|
—
|
|
||
Commodity contracts
|
2
|
|
Prepaid expenses and other current assets
|
|
7
|
|
|
30
|
|
||
Interest rate contracts
|
2
|
|
Other non-current assets
|
|
—
|
|
|
18
|
|
||
FX contracts
|
2
|
|
Other non-current assets
|
|
14
|
|
|
—
|
|
||
Commodity contracts
|
2
|
|
Other non-current assets
|
|
6
|
|
|
1
|
|
||
|
|
|
|
|
|
|
|
|
|||
Liabilities:
|
|
|
|
|
|
|
|
||||
Interest rate contracts
|
2
|
|
Other current liabilities
|
|
$
|
2
|
|
|
$
|
—
|
|
FX contracts
|
2
|
|
Other current liabilities
|
|
—
|
|
|
2
|
|
||
Commodity contracts
|
2
|
|
Other current liabilities
|
|
37
|
|
|
10
|
|
||
Interest rate contracts
|
2
|
|
Other non-current liabilities
|
|
3
|
|
|
—
|
|
||
FX contracts
|
2
|
|
Other non-current liabilities
|
|
—
|
|
|
3
|
|
||
Commodity contracts
|
2
|
|
Other non-current liabilities
|
|
13
|
|
|
1
|
|
|
|
|
First Quarter
|
||||||
(in millions)
|
Income Statement Location
|
|
2020
|
|
2019
|
||||
Interest rate contracts
|
Interest expense
|
|
$
|
4
|
|
|
$
|
2
|
|
FX contracts
|
Cost of sales
|
|
(23
|
)
|
|
2
|
|
||
FX contracts
|
Other expense, net
|
|
(17
|
)
|
|
6
|
|
||
Commodity contracts
|
Cost of sales
|
|
17
|
|
|
15
|
|
||
Commodity contracts
|
SG&A expenses
|
|
45
|
|
|
(14
|
)
|
||
Total
|
|
|
$
|
26
|
|
|
$
|
11
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Operating lease cost
|
$
|
28
|
|
|
$
|
20
|
|
Finance lease cost
|
|
|
|
||||
Amortization of right-of-use assets
|
11
|
|
|
10
|
|
||
Interest on lease liabilities
|
4
|
|
|
4
|
|
||
Variable lease cost(1)
|
6
|
|
|
6
|
|
||
Short-term lease cost
|
—
|
|
|
1
|
|
||
Sublease income
|
(1
|
)
|
|
—
|
|
||
Total lease cost
|
$
|
48
|
|
|
$
|
41
|
|
(1)
|
Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation.
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
26
|
|
|
$
|
18
|
|
Operating cash flows from finance leases
|
4
|
|
|
4
|
|
||
Financing cash flows from finance leases
|
13
|
|
|
10
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||
Weighted average discount rate
|
|
|
|
||
Operating leases
|
4.7
|
%
|
|
4.6
|
%
|
Finance leases
|
5.0
|
%
|
|
5.4
|
%
|
Weighted average remaining lease term
|
|
|
|
||
Operating leases
|
11 years
|
|
|
8 years
|
|
Finance leases
|
12 years
|
|
|
12 years
|
|
(in millions)
|
Operating Leases
|
|
Finance Leases
|
||||
Remainder of 2020
|
$
|
60
|
|
|
$
|
41
|
|
2021
|
85
|
|
|
44
|
|
||
2022
|
74
|
|
|
39
|
|
||
2023
|
66
|
|
|
38
|
|
||
2024
|
64
|
|
|
36
|
|
||
2025
|
57
|
|
|
32
|
|
||
Thereafter
|
326
|
|
|
165
|
|
||
Total future minimum lease payments
|
732
|
|
|
395
|
|
||
Less: imputed interest
|
(157
|
)
|
|
(89
|
)
|
||
Present value of minimum lease payments
|
$
|
575
|
|
|
$
|
306
|
|
|
First Quarter
|
||||||
(in millions, except per share data)
|
2020
|
|
2019
|
||||
Basic EPS:
|
|
|
|
||||
Net income
|
$
|
156
|
|
|
$
|
230
|
|
Weighted average common shares outstanding
|
1,407.0
|
|
|
1,406.3
|
|
||
Earnings per common share — basic
|
$
|
0.11
|
|
|
$
|
0.16
|
|
Diluted EPS:
|
|
|
|
||||
Net income
|
$
|
156
|
|
|
$
|
230
|
|
Weighted average common shares outstanding
|
1,407.0
|
|
|
1,406.3
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Stock options
|
0.4
|
|
|
0.8
|
|
||
RSUs
|
12.7
|
|
|
10.6
|
|
||
Weighted average common shares outstanding and common stock equivalents
|
1,420.1
|
|
|
1,417.7
|
|
||
Earnings per common share — diluted
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
|
|
|
||||
Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation
|
0.3
|
|
|
—
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Total stock-based compensation expense
|
$
|
19
|
|
|
$
|
14
|
|
Income tax benefit recognized in the Statements of Income
|
(4
|
)
|
|
(3
|
)
|
||
Stock-based compensation expense, net of tax
|
$
|
15
|
|
|
$
|
11
|
|
|
RSUs
|
|
Weighted Average Grant Date Fair Value
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(in millions)
|
|||||
Outstanding as of December 31, 2019
|
21,492,786
|
|
|
$
|
18.14
|
|
|
2.6
|
|
$
|
622
|
|
Granted
|
5,597,154
|
|
|
22.99
|
|
|
|
|
|
|||
Vested and released
|
(25,082
|
)
|
|
24.80
|
|
|
|
|
1
|
|
||
Forfeited
|
(390,712
|
)
|
|
21.63
|
|
|
|
|
|
|||
Outstanding as of March 31, 2020
|
26,674,146
|
|
|
$
|
19.10
|
|
|
2.6
|
|
$
|
647
|
|
(in millions)
|
Foreign Currency Translation Adjustments
|
|
Pension and PRMB Liabilities
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||
Balance as of January 1, 2020
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
104
|
|
Other comprehensive loss
|
(583
|
)
|
|
(1
|
)
|
|
(584
|
)
|
|||
Balance as of March 31, 2020
|
$
|
(479
|
)
|
|
$
|
(1
|
)
|
|
$
|
(480
|
)
|
|
|
|
|
|
|
||||||
Balance as of January 1, 2019
|
$
|
(126
|
)
|
|
$
|
(4
|
)
|
|
$
|
(130
|
)
|
Other comprehensive income
|
93
|
|
|
—
|
|
|
93
|
|
|||
Balance as of March 31, 2019
|
$
|
(33
|
)
|
|
$
|
(4
|
)
|
|
$
|
(37
|
)
|
(in millions)
|
March 31, 2020
|
December 31, 2019
|
|||||
Cash and cash equivalents
|
$
|
197
|
|
|
$
|
75
|
|
Restricted cash and restricted cash equivalents(1)
|
26
|
|
|
26
|
|
||
Non-current restricted cash and restricted cash equivalents included in Other non-current assets
|
—
|
|
|
10
|
|
||
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows
|
$
|
223
|
|
|
$
|
111
|
|
(1)
|
Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Core Acquisition, Bai Acquisition and Big Red Acquisition. Amounts held in escrow are expected to be released within one year.
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Supplemental cash flow disclosures of non-cash investing activities:
|
|
|
|
||||
Measurement period adjustment of Core purchase price
|
$
|
—
|
|
|
$
|
(11
|
)
|
Capital expenditures included in accounts payable and accrued expenses
|
177
|
|
|
154
|
|
||
Supplemental cash flow disclosures of non-cash financing activities:
|
|
|
|
||||
Dividends declared but not yet paid
|
211
|
|
|
211
|
|
||
Finance lease additions
|
10
|
|
|
7
|
|
||
Supplemental cash flow disclosures:
|
|
|
|
||||
Cash paid for interest(1)
|
—
|
|
|
64
|
|
||
Cash paid for income taxes
|
81
|
|
|
25
|
|
(1)
|
Cash paid for interest includes amounts paid and received related to the Company's interest rate swap contracts and the termination of such contracts. Refer to Note 7 for additional information.
|
(in millions)
|
Allowance for Expected Credit Loss
|
||
Balance as of January 1, 2019
|
$
|
8
|
|
Charges to bad debt expense
|
2
|
|
|
Write-offs and adjustments
|
(1
|
)
|
|
Balance as of December 31, 2019
|
$
|
9
|
|
Charges to bad debt expense
|
10
|
|
|
Write-offs and adjustments
|
—
|
|
|
Balance as of March 31, 2020
|
$
|
19
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2020
|
|
2019
|
||||
Trade accounts receivable, net:
|
|
|
|
||||
Trade and other accounts receivable
|
$
|
1,056
|
|
|
$
|
1,124
|
|
Allowance for expected credit losses
|
(19
|
)
|
|
(9
|
)
|
||
Total trade accounts receivable, net
|
$
|
1,037
|
|
|
$
|
1,115
|
|
Inventories:
|
|
|
|
||||
Raw materials
|
$
|
215
|
|
|
$
|
215
|
|
WIP
|
6
|
|
|
8
|
|
||
Finished goods
|
478
|
|
|
447
|
|
||
Total
|
699
|
|
|
670
|
|
||
Allowance for excess and obsolete inventories
|
(17
|
)
|
|
(16
|
)
|
||
Total Inventories
|
$
|
682
|
|
|
$
|
654
|
|
Prepaid expenses and other current assets:
|
|
|
|
||||
Other receivables
|
$
|
53
|
|
|
$
|
65
|
|
Customer incentive programs
|
78
|
|
|
12
|
|
||
Derivative instruments
|
26
|
|
|
31
|
|
||
Prepaid marketing
|
30
|
|
|
17
|
|
||
Spare parts
|
50
|
|
|
49
|
|
||
Assets held for sale(1)
|
3
|
|
|
165
|
|
||
Income tax receivable
|
7
|
|
|
4
|
|
||
Other
|
88
|
|
|
60
|
|
||
Total prepaid expenses and other current assets
|
$
|
335
|
|
|
$
|
403
|
|
Other non-current assets:
|
|
|
|
||||
Customer incentive programs
|
$
|
77
|
|
|
$
|
33
|
|
Marketable securities - trading(2)
|
31
|
|
|
40
|
|
||
Operating lease right-of-use assets
|
576
|
|
|
497
|
|
||
Derivative instruments
|
20
|
|
|
19
|
|
||
Equity securities without readily determinable fair values
|
1
|
|
|
1
|
|
||
Non-current restricted cash and restricted cash equivalents
|
—
|
|
|
10
|
|
||
Related party notes receivable(3)
|
1
|
|
|
50
|
|
||
Other
|
105
|
|
|
98
|
|
||
Total other non-current assets
|
$
|
811
|
|
|
$
|
748
|
|
(1)
|
The decrease was due to the assets included in sale-leaseback transactions that closed during the period. Refer to Note 8 for additional information about the transactions. Remainder of amounts were comprised of property, plant and equipment expected to be sold within the next twelve months.
|
(2)
|
Fair values of marketable securities are determined using quoted market prices from daily exchange traded markets, based on the closing price as of the balance sheet date, and are classified as Level 1. The fair value of marketable securities was $31 million and $40 million as of March 31, 2020 and December 31, 2019, respectively.
|
(3)
|
Refer to Note 4 for additional information.
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2020
|
|
2019
|
||||
Accrued expenses:
|
|
|
|
||||
Customer rebates & incentives
|
$
|
304
|
|
|
$
|
362
|
|
Accrued compensation
|
130
|
|
|
183
|
|
||
Insurance reserve
|
36
|
|
|
39
|
|
||
Accrued interest
|
164
|
|
|
54
|
|
||
Accrued professional fees
|
37
|
|
|
31
|
|
||
Other accrued expenses
|
289
|
|
|
270
|
|
||
Total accrued expenses
|
$
|
960
|
|
|
$
|
939
|
|
Other current liabilities:
|
|
|
|
||||
Dividends payable
|
$
|
211
|
|
|
$
|
212
|
|
Income taxes payable
|
46
|
|
|
75
|
|
||
Operating lease liability
|
73
|
|
|
69
|
|
||
Finance lease liability
|
42
|
|
|
41
|
|
||
Derivative instruments
|
39
|
|
|
12
|
|
||
Holdback liabilities
|
25
|
|
|
25
|
|
||
Other
|
9
|
|
|
11
|
|
||
Total other current liabilities
|
$
|
445
|
|
|
$
|
445
|
|
Other non-current liabilities:
|
|
|
|
||||
Pension and post-retirement liability
|
$
|
27
|
|
|
$
|
29
|
|
Insurance reserves
|
69
|
|
|
66
|
|
||
Operating lease liability
|
501
|
|
|
427
|
|
||
Finance lease liability
|
264
|
|
|
269
|
|
||
Derivative instruments
|
16
|
|
|
4
|
|
||
Deferred compensation liability
|
31
|
|
|
40
|
|
||
Other
|
89
|
|
|
95
|
|
||
Total other non-current liabilities
|
$
|
997
|
|
|
$
|
930
|
|
•
|
Coffee Transactions include transactions with Peet's Coffee, Caribou Coffee, Panera Bread and Krispy Kreme Doughnuts. The Company manufactures portion packs containing a selection of coffee and tea varieties under Peet’s Coffee brands for sale in the U.S. and Canada. As part of this agreement, Peet’s Coffee issues purchase orders to the Company for portion packs to be supplied to Peet’s Coffee and sold in select channels. In turn, the Company places purchase orders for Peet’s Coffee raw materials to manufacture portion packs for sale by the Company in select channels. The Company licenses the Caribou Coffee, Panera Bread and Krispy Kreme Doughnuts trademarks for use in the Keurig system in the Company owned channels.
|
•
|
Restaurant Transactions include transactions with Caribou Coffee, Panera Bread, Einstein Bros Bagels and Krispy Kreme Doughnuts. The Company sells various beverage concentrates and packaged beverages to these companies.
|
•
|
The Coffee Systems segment reflects sales in the U.S. and Canada of the manufacture and distribution of finished goods relating to the Company's coffee system, K-Cup pods and brewers.
|
•
|
The Packaged Beverages segment reflects sales in the U.S. and Canada from the manufacture and distribution of finished beverages and other products, including sales of the Company's own brands and third-party brands, through both the DSD system and the WD system.
|
•
|
The Beverage Concentrates segment reflects sales of the Company's branded concentrates and syrup to third-party bottlers primarily in the U.S. and Canada. Most of the brands in this segment are carbonated soft drink brands.
|
•
|
The Latin America Beverages segment reflects sales in Mexico, the Caribbean, and other international markets from the manufacture and distribution of concentrates, syrup and finished beverages.
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Segment Results – Net sales
|
|
|
|
||||
Coffee Systems
|
$
|
973
|
|
|
$
|
968
|
|
Packaged Beverages
|
1,217
|
|
|
1,116
|
|
||
Beverage Concentrates
|
306
|
|
|
304
|
|
||
Latin America Beverages
|
117
|
|
|
116
|
|
||
Net sales
|
$
|
2,613
|
|
|
$
|
2,504
|
|
|
|
First Quarter
|
||||||
(in millions)
|
|
2020
|
|
2019
|
||||
Segment Results – Income from operations
|
|
|
|
|
||||
Coffee Systems
|
|
$
|
272
|
|
|
$
|
293
|
|
Packaged Beverages
|
|
189
|
|
|
149
|
|
||
Beverage Concentrates
|
|
197
|
|
|
201
|
|
||
Latin America Beverages
|
|
27
|
|
|
11
|
|
||
Unallocated corporate costs
|
|
(219
|
)
|
|
(156
|
)
|
||
Income from operations
|
|
$
|
466
|
|
|
$
|
498
|
|
(in millions)
|
Coffee Systems
|
|
Packaged Beverages
|
|
Beverage Concentrates
|
|
Latin America Beverages
|
|
Total
|
||||||||||
For the first quarter of 2020:
|
|
|
|
|
|
|
|
|
|
||||||||||
CSD(1)
|
$
|
—
|
|
|
$
|
563
|
|
|
$
|
302
|
|
|
$
|
82
|
|
|
$
|
947
|
|
NCB(1)
|
—
|
|
|
562
|
|
|
2
|
|
|
35
|
|
|
599
|
|
|||||
K-Cup pods(2)
|
791
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
791
|
|
|||||
Appliances
|
127
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|||||
Other
|
55
|
|
|
92
|
|
|
2
|
|
|
—
|
|
|
149
|
|
|||||
Net sales
|
$
|
973
|
|
|
$
|
1,217
|
|
|
$
|
306
|
|
|
$
|
117
|
|
|
$
|
2,613
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the first quarter of 2019:
|
|
|
|
|
|
|
|
|
|
||||||||||
CSD(1)
|
$
|
—
|
|
|
$
|
522
|
|
|
$
|
298
|
|
|
$
|
80
|
|
|
$
|
900
|
|
NCB(1)
|
—
|
|
|
501
|
|
|
2
|
|
|
36
|
|
|
539
|
|
|||||
K-Cup pods(2)
|
793
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
793
|
|
|||||
Appliances
|
123
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|||||
Other
|
52
|
|
|
93
|
|
|
4
|
|
|
—
|
|
|
149
|
|
|||||
Net sales
|
$
|
968
|
|
|
$
|
1,116
|
|
|
$
|
304
|
|
|
$
|
116
|
|
|
$
|
2,504
|
|
(2)
|
Represents net sales from owned brands, partner brands and private label owners. Net sales for partner brands and private label owners are contractual and long term in nature.
|
•
|
Net income decreased $74 million to $156 million for the first quarter of 2020 as compared to $230 million in the prior year period, driven primarily by a non-cash impairment charge of $86 million associated with our Bedford investment.
|
•
|
Adjusted net income increased 12.7% to $408 million for the first quarter of 2020 as compared to Adjusted net income of $362 million in the prior year period, driven primarily by productivity and merger synergies and strong volume/mix growth, which reflected particular strength in the Packaged Beverages segment, which included a benefit from the impact of COVID-19 late in the quarter, partially offset by a slowdown in the Beverages Concentrates and Coffee Systems segments, both of which experienced a modest unfavorable impact from COVID-19 late in the quarter.
|
•
|
Diluted EPS decreased 31.3% to $0.11 per diluted share as compared to $0.16 in the prior year period.
|
•
|
Adjusted diluted EPS increased 16.0% to $0.29 per diluted share as compared to Adjusted diluted EPS of $0.25 per diluted share in the prior year period.
|
•
|
During the first quarter of 2020, we made net repayments of $42 million related to our commercial paper notes, KDP Revolver, 2019 KDP Term Loan and our 2020 Notes. Additionally, we repaid $107 million and added $44 million of structured payables during the first quarter of 2020.
|
•
|
In April 2020, we completed a strategic refinancing that extended our debt maturities and enhanced our liquidity profile, including a $1.5 billion senior unsecured notes issuance and the refinancing and upsizing of our 2019 364-Day Credit Agreement. The proactive refinancing, which did not change our total debt balance or deleveraging commitments, increased our excess liquidity to a level that we believe will exceed our liquidity needs, even in the event of a protracted downturn.
|
|
First Quarter
|
|
Dollar
|
|
Percentage
|
|||||||||
($ in millions, except per share amounts)
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
2,613
|
|
|
$
|
2,504
|
|
|
$
|
109
|
|
|
4.4
|
%
|
Cost of sales
|
1,161
|
|
|
1,106
|
|
|
55
|
|
|
5.0
|
|
|||
Gross profit
|
1,452
|
|
|
1,398
|
|
|
54
|
|
|
3.9
|
|
|||
Selling, general and administrative expenses
|
1,028
|
|
|
911
|
|
|
117
|
|
|
12.8
|
|
|||
Other operating income, net
|
(42
|
)
|
|
(11
|
)
|
|
(31
|
)
|
|
NM
|
|
|||
Income from operations
|
466
|
|
|
498
|
|
|
(32
|
)
|
|
(6.4
|
)
|
|||
Interest expense
|
153
|
|
|
169
|
|
|
(16
|
)
|
|
(9.5
|
)
|
|||
Loss on early extinguishment of debt
|
2
|
|
|
9
|
|
|
(7
|
)
|
|
(77.8
|
)
|
|||
Impairment on investment and note receivable
|
86
|
|
|
—
|
|
|
86
|
|
|
NM
|
|
|||
Other expense, net
|
20
|
|
|
5
|
|
|
15
|
|
|
NM
|
|
|||
Income before provision for income taxes
|
205
|
|
|
315
|
|
|
(110
|
)
|
|
(34.9
|
)
|
|||
Provision for income taxes
|
49
|
|
|
85
|
|
|
(36
|
)
|
|
(42.4
|
)
|
|||
Net income
|
$
|
156
|
|
|
$
|
230
|
|
|
(74
|
)
|
|
(32.2
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
0.11
|
|
|
$
|
0.16
|
|
|
$
|
(0.05
|
)
|
|
(31.3
|
)%
|
Diluted
|
0.11
|
|
|
0.16
|
|
|
(0.05
|
)
|
|
(31.3
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
Gross margin
|
55.6
|
%
|
|
55.8
|
%
|
|
|
|
|
(20 bps)
|
|
|||
Operating margin
|
17.8
|
%
|
|
19.9
|
%
|
|
|
|
|
(210 bps)
|
|
|||
Effective tax rate
|
23.9
|
%
|
|
27.0
|
%
|
|
|
|
(310 bps)
|
|
|
First Quarter
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions, except per share amounts)
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Adjusted income from operations
|
$
|
684
|
|
|
$
|
621
|
|
|
$
|
63
|
|
|
10.1
|
|
Adjusted interest expense
|
120
|
|
|
124
|
|
|
(4
|
)
|
|
(3.2
|
)
|
|||
Adjusted provision for income taxes
|
136
|
|
|
128
|
|
|
8
|
|
|
6.3
|
|
|||
Adjusted net income
|
408
|
|
|
362
|
|
|
46
|
|
|
12.7
|
|
|||
Adjusted diluted EPS
|
0.29
|
|
|
0.25
|
|
|
0.04
|
|
|
16.0
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Adjusted operating margin
|
26.2
|
%
|
|
24.8
|
%
|
|
|
|
140 bps
|
|
||||
Adjusted effective tax rate
|
25.0
|
%
|
|
26.1
|
%
|
|
|
|
(110 bps)
|
|
(in millions)
|
First Quarter
|
||||||
Segment Results — Net sales
|
2020
|
|
2019
|
||||
Coffee Systems
|
$
|
973
|
|
|
$
|
968
|
|
Packaged Beverages
|
1,217
|
|
|
1,116
|
|
||
Beverage Concentrates
|
306
|
|
|
304
|
|
||
Latin America Beverages
|
117
|
|
|
116
|
|
||
Net sales
|
$
|
2,613
|
|
|
$
|
2,504
|
|
|
|
|
|
||||
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Segment Results — Income from Operations
|
|
|
|
||||
Coffee Systems
|
$
|
272
|
|
|
$
|
293
|
|
Packaged Beverages
|
189
|
|
|
149
|
|
||
Beverage Concentrates
|
197
|
|
|
201
|
|
||
Latin America Beverages
|
27
|
|
|
11
|
|
||
Unallocated corporate costs
|
(219
|
)
|
|
(156
|
)
|
||
Income from operations
|
$
|
466
|
|
|
$
|
498
|
|
|
First Quarter
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
973
|
|
|
$
|
968
|
|
|
$
|
5
|
|
|
0.5
|
%
|
Income from operations
|
272
|
|
|
293
|
|
|
(21
|
)
|
|
(7.2
|
)
|
|||
Operating margin
|
28.0
|
%
|
|
30.3
|
%
|
|
|
|
(230 bps)
|
|
||||
Adjusted income from operations
|
347
|
|
|
335
|
|
|
12
|
|
|
3.6
|
|
|||
Adjusted operating margin
|
35.7
|
%
|
|
34.6
|
%
|
|
|
|
110 bps
|
|
|
First Quarter
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
1,217
|
|
|
$
|
1,116
|
|
|
$
|
101
|
|
|
9.1
|
%
|
Income from operations
|
189
|
|
|
149
|
|
|
40
|
|
|
26.8
|
|
|||
Operating margin
|
15.5
|
%
|
|
13.4
|
%
|
|
|
|
|
210 bps
|
|
|||
Adjusted income from operations
|
203
|
|
|
160
|
|
|
43
|
|
|
26.9
|
|
|||
Adjusted operating margin
|
16.7
|
%
|
|
14.3
|
%
|
|
|
|
240 bps
|
|
|
First Quarter
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
306
|
|
|
$
|
304
|
|
|
$
|
2
|
|
|
0.7
|
%
|
Income from operations
|
197
|
|
|
201
|
|
|
(4
|
)
|
|
(2.0
|
)
|
|||
Operating margin
|
64.4
|
%
|
|
66.1
|
%
|
|
|
|
(170 bps)
|
|
||||
Adjusted income from operations
|
197
|
|
|
201
|
|
|
(4
|
)
|
|
(2.0
|
)
|
|||
Adjusted operating margin
|
64.4
|
%
|
|
66.1
|
%
|
|
|
|
(170 bps)
|
|
|
First Quarter
|
|
Dollar
|
|
Percent
|
|||||||||
(in millions)
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Net sales
|
$
|
117
|
|
|
$
|
116
|
|
|
$
|
1
|
|
|
0.9
|
%
|
Income from operations
|
27
|
|
|
11
|
|
|
16
|
|
|
145.5
|
|
|||
Operating margin
|
23.1
|
%
|
|
9.5
|
%
|
|
|
|
1,360 bps
|
|
||||
Adjusted income from operations
|
27
|
|
|
12
|
|
|
15
|
|
|
125.0
|
|
|||
Adjusted operating margin
|
23.1
|
%
|
|
10.3
|
%
|
|
|
|
1,280 bps
|
|
|
First Quarter
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Net cash provided by operating activities
|
$
|
414
|
|
|
$
|
591
|
|
Net cash provided by (used in) investing activities
|
34
|
|
|
(45
|
)
|
||
Net cash used in financing activities
|
(328
|
)
|
|
(556
|
)
|
Component
|
|
Calculation (on a trailing twelve month basis)
|
DIO
|
|
(Average inventory divided by cost of sales) * Number of days in the period
|
DSO
|
|
(Accounts receivable divided by net sales) * Number of days in the period
|
DPO
|
|
(Accounts payable * Number of days in the period) divided by cost of sales and SG&A expenses
|
|
|
March 31,
|
||||
|
|
2020
|
|
2019
|
||
DIO
|
|
52
|
|
|
53
|
|
DSO
|
|
34
|
|
|
37
|
|
DPO
|
|
133
|
|
|
125
|
|
Cash conversion cycle
|
|
(47
|
)
|
|
(35
|
)
|
•
|
Our ability to access our committed financing arrangements, including our KDP Revolver and our 2020 364-Day Credit Agreement, which have availability of $3,900 million as of April 30, 2020;
|
•
|
Our ability to issue unsecured uncommitted commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $2,400 million;
|
•
|
Our intention to drive significant cash flow generation to enable rapid deleveraging within three years from the DPS Merger;
|
•
|
A significant downgrade in our credit ratings could limit a financial institution's willingness to participate in our accounts payable program and reduce the attractiveness of the accounts payable program to participating suppliers who may sell payment obligations from us to financial institutions, which could impact our accounts payable program;
|
•
|
Our continued integration of DPS;
|
•
|
Our continued capital expenditures;
|
•
|
Our continued payment of dividends;
|
•
|
Seasonality of our operating cash flows, which could impact short-term liquidity;
|
•
|
Fluctuations in our tax obligations;
|
•
|
Future equity investments; and
|
•
|
Future mergers or acquisitions of brand ownership companies, regional bottling companies, distributors and/or distribution rights to further extend our geographic coverage.
|
Rating Agency
|
Long-Term Debt Rating
|
Commercial Paper Rating
|
Outlook
|
Date of Last Change
|
Moody's
|
Baa2
|
P-2
|
Negative
|
May 11, 2018
|
S&P
|
BBB
|
A-2
|
Stable
|
May 14, 2018
|
|
Payments Due in Year
|
||||||||||||||||||||||||||
(in millions)
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
Long-term obligations(1)
|
$
|
12,700
|
|
|
$
|
75
|
|
|
$
|
2,350
|
|
|
$
|
350
|
|
|
$
|
3,200
|
|
|
$
|
—
|
|
|
$
|
6,725
|
|
Interest payments
|
4,687
|
|
|
481
|
|
|
457
|
|
|
410
|
|
|
353
|
|
|
295
|
|
|
2,691
|
|
|||||||
Operating leases(2)
|
732
|
|
|
60
|
|
|
85
|
|
|
74
|
|
|
66
|
|
|
64
|
|
|
383
|
|
|||||||
Purchase obligations(3)
|
1,531
|
|
|
1,001
|
|
|
158
|
|
|
111
|
|
|
93
|
|
|
84
|
|
|
84
|
|
(1)
|
Amounts represent payments for the senior unsecured notes issued by us and the term loan credit agreement. Refer to Note 2 of the Notes to our Unaudited Condensed Consolidated Financial Statements for additional information.
|
(2)
|
Amounts represent minimum rental commitments under our non-cancelable operating leases. Refer to Note 8 for additional information.
|
(3)
|
Amounts represent payments under agreements to purchase goods or services that are legally binding and that specify all significant terms, including capital obligations and long-term contractual obligations.
|
|
For the First Quarter of 2020
|
||||||||||||||
(in millions)
|
Parent and Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
Net sales
|
$
|
1,523
|
|
|
$
|
1,122
|
|
|
$
|
(32
|
)
|
|
$
|
2,613
|
|
Gross profit
|
891
|
|
|
561
|
|
|
—
|
|
|
1,452
|
|
||||
Income before equity in earnings of consolidated subsidiaries
|
97
|
|
|
108
|
|
|
—
|
|
|
205
|
|
||||
Equity in earnings of subsidiaries, net of tax
|
75
|
|
|
81
|
|
|
—
|
|
|
156
|
|
||||
Net income
|
$
|
156
|
|
|
$
|
81
|
|
|
$
|
(81
|
)
|
|
$
|
156
|
|
|
March 31, 2020
|
||||||||||||||
(in millions)
|
Parent and Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets
|
$
|
1,584
|
|
|
$
|
1,175
|
|
|
$
|
(482
|
)
|
|
$
|
2,277
|
|
Non-current assets
|
28,059
|
|
|
19,752
|
|
|
(1,245
|
)
|
|
46,566
|
|
||||
Investments in Non-Guarantors
|
14,824
|
|
|
—
|
|
|
(14,824
|
)
|
|
—
|
|
||||
Total assets
|
$
|
44,467
|
|
|
$
|
20,927
|
|
|
$
|
(16,551
|
)
|
|
$
|
48,843
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
$
|
4,520
|
|
|
$
|
2,820
|
|
|
$
|
(482
|
)
|
|
$
|
6,858
|
|
Non-current liabilities
|
17,307
|
|
|
3,283
|
|
|
(1,245
|
)
|
|
19,345
|
|
||||
Total liabilities
|
21,827
|
|
|
6,103
|
|
|
(1,727
|
)
|
|
26,203
|
|
||||
Stockholders' equity
|
22,640
|
|
|
14,824
|
|
|
(14,824
|
)
|
|
22,640
|
|
||||
Total liabilities and equity
|
$
|
44,467
|
|
|
$
|
20,927
|
|
|
$
|
(16,551
|
)
|
|
$
|
48,843
|
|
|
December 31, 2019
|
||||||||||||||
(in millions)
|
Parent and Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets
|
$
|
1,404
|
|
|
$
|
1,273
|
|
|
$
|
(404
|
)
|
|
$
|
2,273
|
|
Non-current assets
|
28,180
|
|
|
20,430
|
|
|
(1,365
|
)
|
|
47,245
|
|
||||
Investments in Non-Guarantors
|
15,321
|
|
|
—
|
|
|
(15,321
|
)
|
|
—
|
|
||||
Total assets
|
$
|
44,905
|
|
|
$
|
21,703
|
|
|
$
|
(17,090
|
)
|
|
$
|
49,518
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
$
|
3,942
|
|
|
$
|
2,936
|
|
|
$
|
(404
|
)
|
|
$
|
6,474
|
|
Non-current liabilities
|
17,707
|
|
|
3,445
|
|
|
(1,365
|
)
|
|
19,787
|
|
||||
Total liabilities
|
21,649
|
|
|
6,381
|
|
|
(1,769
|
)
|
|
26,261
|
|
||||
Stockholders' equity
|
23,256
|
|
|
15,322
|
|
|
(15,321
|
)
|
|
23,257
|
|
||||
Total liabilities and equity
|
$
|
44,905
|
|
|
$
|
21,703
|
|
|
$
|
(17,090
|
)
|
|
$
|
49,518
|
|
|
Cost of sales
|
|
Gross profit
|
|
Gross margin
|
|
Selling, general and administrative expenses
|
|
Income from operations
|
|
Operating margin
|
||||||||||
Reported
|
$
|
1,161
|
|
|
$
|
1,452
|
|
|
55.6
|
%
|
|
$
|
1,028
|
|
|
$
|
466
|
|
|
17.8
|
%
|
Items Affecting Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mark to market
|
(15
|
)
|
|
15
|
|
|
|
|
(43
|
)
|
|
58
|
|
|
|
||||||
Amortization of intangibles
|
—
|
|
|
—
|
|
|
|
|
(33
|
)
|
|
33
|
|
|
|
||||||
Stock compensation
|
—
|
|
|
—
|
|
|
|
|
(7
|
)
|
|
7
|
|
|
|
||||||
Restructuring and integration costs
|
—
|
|
|
—
|
|
|
|
|
(52
|
)
|
|
52
|
|
|
|
||||||
Productivity
|
(16
|
)
|
|
16
|
|
|
|
|
(38
|
)
|
|
54
|
|
|
|
||||||
Nonroutine legal matters
|
—
|
|
|
—
|
|
|
|
|
(9
|
)
|
|
9
|
|
|
|
||||||
COVID-19
|
(1
|
)
|
|
1
|
|
|
|
|
(4
|
)
|
|
5
|
|
|
|
||||||
Adjusted GAAP
|
$
|
1,129
|
|
|
$
|
1,484
|
|
|
56.8
|
%
|
|
$
|
842
|
|
|
$
|
684
|
|
|
26.2
|
%
|
|
Interest expense
|
|
Loss on early extinguishment of debt
|
|
Impairment on investment and note receivable
|
|
Income before provision for income taxes
|
|
Provision for income taxes
|
|
Effective tax rate
|
|
Net income
|
|
Weighted Average Diluted shares
|
|
Diluted earnings per share
|
|||||||||||||||
Reported
|
$
|
153
|
|
|
$
|
2
|
|
|
$
|
86
|
|
|
$
|
205
|
|
|
$
|
49
|
|
|
23.9
|
%
|
|
$
|
156
|
|
|
1,420.1
|
|
$
|
0.11
|
|
Items Affecting Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Mark to market
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
82
|
|
|
21
|
|
|
|
|
61
|
|
|
|
|
0.04
|
|
||||||||
Amortization of intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
9
|
|
|
|
|
24
|
|
|
|
|
0.02
|
|
||||||||
Amortization of deferred financing costs
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
—
|
|
||||||||
Amortization of fair value debt adjustment
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
6
|
|
|
2
|
|
|
|
|
4
|
|
|
|
|
—
|
|
||||||||
Stock compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
1
|
|
|
|
|
6
|
|
|
|
|
—
|
|
||||||||
Restructuring and integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
14
|
|
|
|
|
38
|
|
|
|
|
0.03
|
|
||||||||
Productivity
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
15
|
|
|
|
|
39
|
|
|
|
|
0.03
|
|
||||||||
Loss on early extinguishment of debt
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
2
|
|
|
|
|
—
|
|
||||||||
Investment impairment
|
—
|
|
|
—
|
|
|
(86
|
)
|
|
86
|
|
|
21
|
|
|
|
|
65
|
|
|
|
|
0.05
|
|
||||||||
Nonroutine legal matters
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
2
|
|
|
|
|
7
|
|
|
|
|
—
|
|
||||||||
COVID-19
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
|
|
4
|
|
|
|
|
—
|
|
||||||||
Adjusted GAAP
|
$
|
120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
544
|
|
|
$
|
136
|
|
|
25.0
|
%
|
|
$
|
408
|
|
|
1,420.1
|
|
$
|
0.29
|
|
|
Cost of sales
|
|
Gross profit
|
|
Gross margin
|
|
Selling, general and administrative expenses
|
|
Income from operations
|
|
Operating margin
|
||||||||||
Reported
|
$
|
1,106
|
|
|
$
|
1,398
|
|
|
55.8
|
%
|
|
$
|
911
|
|
|
$
|
498
|
|
|
19.9
|
%
|
Items Affecting Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mark to market
|
(12
|
)
|
|
12
|
|
|
|
|
12
|
|
|
—
|
|
|
|
||||||
Amortization of intangibles
|
—
|
|
|
—
|
|
|
|
|
(31
|
)
|
|
31
|
|
|
|
||||||
Stock compensation
|
—
|
|
|
—
|
|
|
|
|
(7
|
)
|
|
7
|
|
|
|
||||||
Restructuring and integration costs
|
(1
|
)
|
|
1
|
|
|
|
|
(60
|
)
|
|
61
|
|
|
|
||||||
Productivity
|
(3
|
)
|
|
3
|
|
|
|
|
(6
|
)
|
|
9
|
|
|
|
||||||
Nonroutine legal matters
|
—
|
|
|
—
|
|
|
|
|
(7
|
)
|
|
7
|
|
|
|
||||||
Inventory step-up
|
(3
|
)
|
|
3
|
|
|
|
|
—
|
|
|
3
|
|
|
|
||||||
Malware incident
|
(2
|
)
|
|
2
|
|
|
|
|
(3
|
)
|
|
5
|
|
|
|
||||||
Adjusted GAAP
|
$
|
1,085
|
|
|
$
|
1,419
|
|
|
56.7
|
%
|
|
$
|
809
|
|
|
$
|
621
|
|
|
24.8
|
%
|
|
Interest expense
|
|
Loss on early extinguishment of debt
|
|
Other expense (income), net
|
|
Income before provision for income taxes
|
|
Provision for income taxes
|
|
Effective tax rate
|
|
Net income
|
|
Weighted Average Diluted shares
|
|
Diluted earnings per share
|
|||||||||||||||
Reported
|
$
|
169
|
|
|
$
|
9
|
|
|
$
|
5
|
|
|
$
|
315
|
|
|
$
|
85
|
|
|
27.0
|
%
|
|
$
|
230
|
|
|
1,417.7
|
|
$
|
0.16
|
|
Items Affecting Comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Mark to market
|
(29
|
)
|
|
—
|
|
|
2
|
|
|
27
|
|
|
7
|
|
|
|
|
20
|
|
|
|
|
0.01
|
|
||||||||
Amortization of intangibles
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
8
|
|
|
|
|
23
|
|
|
|
|
0.02
|
|
||||||||
Amortization of deferred financing costs
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
—
|
|
||||||||
Amortization of fair value debt adjustment
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
7
|
|
|
1
|
|
|
|
|
6
|
|
|
|
|
—
|
|
||||||||
Stock compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
2
|
|
|
|
|
5
|
|
|
|
|
—
|
|
||||||||
Restructuring and integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
15
|
|
|
|
|
46
|
|
|
|
|
0.03
|
|
||||||||
Productivity
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
2
|
|
|
|
|
7
|
|
|
|
|
—
|
|
||||||||
Transaction costs
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
|
|
4
|
|
|
|
|
—
|
|
||||||||
Loss on early extinguishment of debt
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
9
|
|
|
2
|
|
|
|
|
7
|
|
|
|
|
—
|
|
||||||||
Nonroutine legal matters
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
2
|
|
|
|
|
5
|
|
|
|
|
—
|
|
||||||||
Inventory step-up
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
—
|
|
||||||||
Malware incident
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
|
|
4
|
|
|
|
|
—
|
|
||||||||
Adjusted GAAP
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
490
|
|
|
$
|
128
|
|
|
26.1
|
%
|
|
$
|
362
|
|
|
1,417.7
|
|
$
|
0.25
|
|
(in millions)
|
Reported
|
|
Items Affecting Comparability
|
|
Adjusted GAAP
|
||||||
For the first quarter of 2020:
|
|
|
|
|
|
||||||
Income from Operations
|
|
|
|
|
|
||||||
Coffee Systems
|
$
|
272
|
|
|
$
|
75
|
|
|
$
|
347
|
|
Packaged Beverages
|
189
|
|
|
14
|
|
|
203
|
|
|||
Beverage Concentrates
|
197
|
|
|
—
|
|
|
197
|
|
|||
Latin America Beverages
|
27
|
|
|
—
|
|
|
27
|
|
|||
Unallocated corporate costs
|
(219
|
)
|
|
129
|
|
|
(90
|
)
|
|||
Total income from operations
|
$
|
466
|
|
|
$
|
218
|
|
|
$
|
684
|
|
(in millions)
|
Reported
|
|
Items Affecting Comparability
|
|
Adjusted GAAP
|
||||||
For the first quarter of 2019:
|
|
|
|
|
|
||||||
Income from Operations
|
|
|
|
|
|
||||||
Coffee Systems
|
$
|
293
|
|
|
$
|
42
|
|
|
$
|
335
|
|
Packaged Beverages
|
149
|
|
|
11
|
|
|
160
|
|
|||
Beverage Concentrates
|
201
|
|
|
—
|
|
|
201
|
|
|||
Latin America Beverages
|
11
|
|
|
1
|
|
|
12
|
|
|||
Unallocated corporate costs
|
(156
|
)
|
|
69
|
|
|
(87
|
)
|
|||
Total income from operations
|
$
|
498
|
|
|
$
|
123
|
|
|
$
|
621
|
|
|
|
|
Hypothetical Change in Interest Rates(1)
|
|
Annual Impact to Interest Expense
|
1-percent decrease
|
|
$24 million decrease
|
1-percent increase
|
|
$24 million increase
|
(1)
|
We pay an average floating rate, which fluctuates periodically, based on LIBOR and a credit spread, as a result of variable rate debt instruments. See Notes 2 and 7 of the Notes to our Unaudited Condensed Consolidated Financial Statements for further information.
|
•
|
Significant reductions in demand or significant volatility in demand for one or more of our products, which may be caused by, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine or other restrictions, store closures, or financial hardship, shifts in demand away from one or more of our higher priced products to lower priced products, or stockpiling or similar activity, reduced options for marketing and promotion of products or other restrictions in connection with the COVID-19 pandemic; if prolonged, such impacts can further increase the difficulty of operating our business, including accurately planning and forecasting;
|
•
|
Inability to meet our consumers' and customers’ needs and achieve cost targets due to disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements, such as raw materials or purchased finished goods, logistics, reduction or loss of workforce due to the insufficiency or failure of our safety protocols, or other manufacturing and distribution capability;
|
•
|
Failure of third parties, including those located in international locations, on which we rely, including our suppliers, bottlers, distributors, contract manufacturers, third-party service providers, contractors, commercial banks and external business partners, to meet their obligations to us or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties; or
|
•
|
Significant changes in the conditions in markets in which we manufacture, sell or distribute our products, including quarantines, governmental or regulatory actions, closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our employees’ ability to perform necessary business functions, restrict or prevent consumers from having access to our products, or otherwise prevent our third-party bottlers, distributors, partners, suppliers, or customers from sufficiently staffing operations, including operations necessary for the production, distribution, sale, and support of our products.
|
2.00% Senior Note due 2020 (in global form), dated November 20, 2012, in the principal amount of $250 million (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on November 20, 2012) and incorporated herein by reference).
|
|
2.70% Senior Note due 2022 (in global form), dated November 20, 2012, in the principal amount of $250 million (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on November 20, 2012) and incorporated herein by reference).
|
|
Fifth Supplemental Indenture, dated as of November 9, 2015, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on November 10, 2015) and incorporated herein by reference).
|
|
3.40% Senior Note due 2025 (in global form), dated November 9, 2015, in the principal amount of $500,000,000 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on November 10, 2015) and incorporated herein by reference).
|
|
4.50% Senior Note due 2045 (in global form), dated November 9, 2015, in the principal amount of $250,000,000 (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on November 10, 2015) and incorporated herein by reference).
|
|
Sixth Supplemental Indenture, dated as of September 16, 2016, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on September 16, 2016) and incorporated herein by reference).
|
|
2.55% Senior Note due 2026 (in global form), dated September 16, 2016, in the principal amount of $400,000,000 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on September 16, 2016) and incorporated herein by reference).
|
|
Seventh Supplemental Indenture, dated as of December 14, 2016, among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
|
2.53% Senior Note due 2021 (in global form), dated December 14, 2016, in the principal amount of $250,000,000 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
|
3.13% Senior Note due 2023 (in global form), dated December 14, 2016, in the principal amount of $500,000,000 (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
|
3.43% Senior Note due 2027 (in global form), dated December 14, 2016, in the principal amount of $400,000,000 (filed as Exhibit 4.4 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
|
4.42% Senior Note due 2046 (in global form), dated December 14, 2016, in the principal amount of $400,000,000 (filed as Exhibit 4.5 to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference).
|
|
Eighth Supplemental Indenture, dated as of January 31, 2017, among Bai Brands LLC, a New Jersey limited liability company, 184 Innovations Inc., a Delaware corporation (each as a new subsidiary guarantor under the Indenture dated April 30, 2008 (as referenced in Item 4.1 in this Exhibit Index), Dr Pepper Snapple Group, Inc., each other then-existing Guarantor under the Indenture) and Wells Fargo, National Bank, N.A., as trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on February 2, 2017) and incorporated herein by reference).
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Ninth Supplemental Indenture, dated as of June 15, 2017, among Dr Pepper Snapple Group, Inc., the guarantors party thereto, and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on June 15, 2017) and incorporated herein by reference).
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Investor Rights Agreement by and among Keurig Dr Pepper Inc. and The Holders Listed on Schedule A thereto, dated as of July 9, 2018 (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Base Indenture, dated as of May 25, 2018 between Maple Escrow Subsidiary and Wells Fargo Bank, N.A. as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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First Supplemental Indenture (including the form of note), dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and Maple Parent Holdings Corp. as parent guarantor, and Wells Fargo Bank, N.A., as trustee relating to the 2021 Notes (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Second Supplemental Indenture (including the form of note), dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and Maple Parent Holdings Corp. as parent guarantor, and Wells Fargo Bank, N.A., as trustee relating to the 2023 Notes (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Third Supplemental Indenture (including the form of note), dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and Maple Parent Holdings Corp. as parent guarantor, and Wells Fargo Bank, N.A., as trustee relating to the 2025 Notes (filed as Exhibit 4.4 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Fourth Supplemental Indenture (including the form of note), dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and Maple Parent Holdings Corp. as parent guarantor, and Wells Fargo Bank, N.A., as trustee relating to the 2028 Notes (filed as Exhibit 4.5 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Fifth Supplemental Indenture (including the form of note), dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and Maple Parent Holdings Corp. as parent guarantor, and Wells Fargo Bank, N.A., as trustee relating to the 2038 Notes (filed as Exhibit 4.6 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Sixth Supplemental Indenture (including the form of note), dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and Maple Parent Holdings Corp. as parent guarantor, and Wells Fargo Bank, N.A., as trustee relating to the 2048 Notes (filed as Exhibit 4.7 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Seventh Supplemental Indenture, dated as of July 9, 2018, among Keurig Dr Pepper Inc., the subsidiary guarantors thereto, and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.8 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Registration Rights Agreement, dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman Sachs & Co. LLC and Citigroup Global Markets Inc., as representative of the several purchasers of the Notes (filed as Exhibit 4.9 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Joinder to the Registration Rights Agreement, dated as of May 25, 2018, among Maple Escrow Subsidiary, Inc. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman Sachs & Co. LLC and Citigroup Global Markets Inc., as representative of the several purchasers of the Notes (filed as Exhibit 4.10 to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference).
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Description of registered securities (filed as Exhibit 4.40 to the Company's Annual Report on Form 10-K (filed on February 27, 2020) and incorporated herein by reference).
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Tenth Supplemental Indenture (including 3.20% Senior Notes Due 2030 and 3.80% Senior Notes Due 2050 (in global form)), dated as of April 13, 2020, among Keurig Dr Pepper Inc., the subsidiary guarantors thereto, and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on April 13, 2020) and incorporated herein by reference).
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Term Loan Agreement, dated as of February 8, 2019, among Keurig Dr Pepper Inc., the banks party thereto and JPMorgan Chase, Bank, N.A., as administrative agent (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (filed on February 11, 2019) and incorporated herein by reference).
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Credit Agreement, dated as of May 29, 2019, among Keurig Dr Pepper Inc., the banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (filed on May 29, 2019) and incorporated herein by reference).
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Amended and Restated Employment Agreement, dated as of July 2, 2018, by and between Keurig Green Mountain, Inc. and Robert J. Gamgort (filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q (filed on November 8, 2018) and incorporated herein by reference). ++
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Employment Agreement, dated as of April 12, 2016, by and between Keurig Green Mountain, Inc. and Ozan Dokmecioglu (filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q (filed on November 8, 2018) and incorporated herein by reference). ++
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Restricted Stock Unit Award Terms and Conditions under the Keurig Dr Pepper Omnibus Incentive Plan of 2009 (filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q (filed on November 8, 2018) and incorporated herein by reference). ++
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Matching Restricted Stock Unit Award Terms and Conditions under the Keurig Dr Pepper Omnibus Incentive Plan of 2009 (filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q (filed on November 8, 2018) and incorporated herein by reference). ++
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Directors' Restricted Stock Unit Award Terms and Conditions under the Keurig Dr Pepper Omnibus Incentive Plan of 2009 (filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q (filed on November 8, 2018) and incorporated herein by reference). ++
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Keurig Dr Pepper Inc. Omnibus Stock Incentive Plan of 2019 (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (filed on June 11, 2019) and incorporated herein by reference).++
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Restricted Stock Unit Award Terms and Conditions under the Keurig Dr Pepper Omnibus Stock Incentive Plan of 2019 (filed as Exhibit 10.13 to the Company's Quarterly Report on Form 10-Q (filed on August 8, 2019) and incorporated herein by reference).++
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Matching Restricted Stock Unit Award Terms and Conditions under the Keurig Dr Pepper Omnibus Stock Incentive Plan of 2019 (filed as Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q (filed on August 8, 2019) and incorporated herein by reference).++
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Keurig Dr Pepper Inc. Severance Pay Plan for Executives, effective as of January 1, 2020 (filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K (filed on February 27, 2020) and incorporated herein by reference).++
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Credit Agreement, dated as of April 14, 2020, among Keurig Dr Pepper Inc., the banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (filed on April 15, 2020) and incorporated herein by reference).
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22.1*
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List of Guarantor Subsidiaries
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31.1*
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Certification of Chief Executive Officer of Keurig Dr Pepper Inc. pursuant to Rule 13a-14(a) or 15d-14(a) promulgated under the Exchange Act.
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31.2*
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Certification of Chief Financial Officer of Keurig Dr Pepper Inc. pursuant to Rule 13a-14(a) or 15d-14(a) promulgated under the Exchange Act.
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32.1**
|
Certification of Chief Executive Officer of Keurig Dr Pepper Inc. pursuant to Rule 13a-14(b) or 15d-14(b) promulgated under the Exchange Act, and Section 1350 of Chapter 63 of Title 18 of the United States Code.
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32.2**
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Certification of Chief Financial Officer of Keurig Dr Pepper Inc. pursuant to Rule 13a-14(b) or 15d-14(b) promulgated under the Exchange Act, and Section 1350 of Chapter 63 of Title 18 of the United States Code.
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101*
|
The following financial information from Keurig Dr Pepper Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statement of Changes in Stockholders' Equity, and (vi) the Notes to Condensed Consolidated Financial Statements. The Instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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104*
|
The cover page from this Quarterly Report on Form 10-Q, formatted as Inline XBRL.
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Keurig Dr Pepper Inc.
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||
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By:
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/s/ Ozan Dokmecioglu
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Name:
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Ozan Dokmecioglu
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Title:
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Chief Financial Officer of Keurig Dr Pepper Inc.
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(Principal Financial Officer)
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Date: April 30, 2020
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Name of Guarantor Subsidiary
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Jurisdiction of Formation
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1
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234DP Aviation, LLC
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Delaware
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2
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A&W Concentrate Company
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Delaware
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3
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Bai Brands LLC
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New Jersey
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4
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Beverages Delaware Inc.
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Delaware
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5
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DP Beverages Inc.
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Delaware
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6
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DPS Americas Beverages, LLC
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Delaware
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7
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DPS Beverages, Inc.
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Delaware
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8
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DPS Holdings Inc.
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Delaware
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9
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Dr Pepper/Seven Up Beverage Sales Company
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Texas
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10
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Dr Pepper/Seven Up Manufacturing Company
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Delaware
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11
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Dr Pepper/Seven Up, Inc.
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Delaware
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12
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Mott's Delaware LLC
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Delaware
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13
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Mott's LLP
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Delaware
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14
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Nantucket Allserve, LLC
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Delaware
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15
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Snapple Beverage Corp.
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Delaware
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16
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Splash Transport, Inc.
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Delaware
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17
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The American Bottling Company
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Delaware
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/s/ Robert J. Gamgort
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Date: April 30, 2020
|
Robert J. Gamgort
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Chief Executive Officer and President of
Keurig Dr Pepper Inc.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Keurig Dr Pepper Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Ozan Dokmecioglu
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Date: April 30, 2020
|
Ozan Dokmecioglu
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|
Chief Financial Officer of Keurig Dr Pepper Inc.
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(1)
|
the Quarterly Report on Form 10-Q of the Company for the first quarterly period ended March 31, 2020, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
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(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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/s/ Robert J. Gamgort
|
|
Date: April 30, 2020
|
Robert J. Gamgort
|
|
|
Chief Executive Officer and President of
Keurig Dr Pepper Inc.
|
|
(1)
|
the Quarterly Report on Form 10-Q of the Company for the first quarterly period ended March 31, 2020, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
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(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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/s/ Ozan Dokmecioglu
|
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Date: April 30, 2020
|
Ozan Dokmecioglu
|
|
|
Chief Financial Officer of Keurig Dr Pepper Inc.
|