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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                     TO             

Commission file number 001-33829
Keurig Dr Pepper Inc.
(Exact name of registrant as specified in its charter)
Delaware98-0517725
(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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stockKDPThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.
Large Accelerated Filer Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes      No    
As of July 27, 2021, there were 1,417,476,953 shares of the registrant's common stock, par value $0.01 per share, outstanding.



KEURIG DR PEPPER INC.
FORM 10-Q
TABLE OF CONTENTS
   Page
 
  
  
  
  
  
 
 
 
 
 
 
s-i

KEURIG DR PEPPER INC.
MASTER GLOSSARY
TermDefinition
2019 KDP Term Loan$2 billion aggregate principal amount, with the ability to make voluntary and mandatory prepayments, due on February 8, 2023
2020 364-Day Credit AgreementThe Company's $1,500 million credit agreement, which was entered into on April 12, 2020 and terminated on March 26, 2021
2021 364-Day Credit AgreementThe Company's $1,500 million credit agreement, which was entered into on March 26, 2021 and contains a term-out option
A ShocA Shoc Beverage LLC, an equity method investment of KDP, or Adrenaline Shoc energy drinks
ABCThe American Bottling Company, a wholly-owned subsidiary of KDP
ABIAnheuser-Busch InBev SA/NV
Annual Report
Annual Report on Form 10-K for the year ended December 31, 2020
AOCIAccumulated other comprehensive income or loss
ASUAccounting Standards Update
BedfordBedford Systems, LLC, an equity method investment of KDP and the maker of Drinkworks
BodyArmorBA Sports Nutrition, LLC, an equity method investment of KDP
bpsbasis points
CSDCarbonated soft drink
DIODays inventory outstanding
DPODays of payables outstanding
DPSDr Pepper Snapple Group, Inc.
DPS MergerThe combination of the business operations of Keurig and DPS that was consummated on July 9, 2018 through a reverse merger transaction, whereby a wholly-owned special purpose merger subsidiary of DPS merged with and into the direct parent of Keurig
DSDDirect Store Delivery, the operating segment whereby finished beverages are delivered directly to retailers
DSODays sales outstanding
EPSEarnings per share
Exchange ActSecurities Exchange Act of 1934, as amended
FFSFountain Foodservice, an operating segment of KDP which serves the fountain channel, such as restaurants
FASBFinancial Accounting Standards Board
FXForeign exchange
GoldmanGoldman Sachs & Co. LLC
IRiInformation Resources, Inc.
JABJAB Holding Company S.a.r.l. and affiliates
KDPKeurig Dr Pepper Inc.
KDP Credit AgreementsCollectively, the KDP Revolver, the 2019 364-Day Credit Agreement, the 2020 364-Day Credit Agreement, the 2021 364-Day Credit Agreement, and the 2019 KDP Term Loan
KDP RevolverThe Company's $2,400 million revolving credit facility, which was entered into on February 28, 2018
KeurigKeurig Green Mountain, Inc., and the brand of our brewers
LIBORLondon Interbank Offered Rate
LifeFuelsLifeFuels, Inc., an equity method investment
NCBNon-carbonated beverage
NotesCollectively, the Company's senior unsecured notes
Peet'sPeet's Coffee & Tea, Inc.
PETPolyethylene terephthalate, which is used to make the Company's plastic bottles
Proposition 65The State of California's Safe Drinking Water and Toxic Enforcement Act of 1986
RSURestricted share unit
RTDReady to drink
SECSecurities and Exchange Commission
SG&ASelling, general and administrative
U.S. GAAPAccounting principles generally accepted in the U.S.
Veyron SPEVeyron NE Beverage Licensing LLC
WDWarehouse Direct, the operating segment whereby finished beverages are shipped to retailer warehouses, and then delivered by the retailer through its own delivery system to its stores
s-ii

Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1.Financial Statements (Unaudited)

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Second QuarterFirst Six Months
(in millions, except per share data)2021202020212020
Net sales$3,140 $2,864 $6,042 $5,477 
Cost of sales1,370 1,302 2,672 2,463 
Gross profit1,770 1,562 3,370 3,014 
Selling, general and administrative expenses1,039 1,001 2,000 2,029 
Other operating income, net(3) (4)(42)
Income from operations734 561 1,374 1,027 
Interest expense125 157 265 310 
Loss on early extinguishment of debt 2 105 4 
Impairment of investments and note receivable   86 
Other (income) expense, net(4)(4)(7)16 
Income before provision for income taxes613 406 1,011 611 
Provision for income taxes165 108 238 157 
Net income448 298 773 454 
Less: Net income attributable to non-controlling interest    
Net income attributable to KDP$448 $298 $773 $454 
Earnings per common share:    
Basic$0.32 $0.21 $0.55 $0.32 
Diluted0.31 0.21 0.54 0.32 
Weighted average common shares outstanding:  
Basic1,417.4 1,407.2 1,413.4 1,407.1 
Diluted1,428.1 1,421.5 1,426.9 1,420.8 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

Table of Contents

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 Second QuarterFirst Six Months
(in millions)2021202020212020
Net income$448 $298 $773 $454 
Other comprehensive income
Foreign currency translation adjustments112 151 128 (432)
Net change in pension and post-retirement liability, net of tax of $, $, $ and $, respectively
   (1)
Net change in cash flow hedges, net of tax of $(48), $, $(26) and $, respectively
(148)1 (77)1 
Total other comprehensive income (loss)(36)152 51 (432)
Comprehensive income412 450 824 22 
Less: Comprehensive income attributable to non-controlling interest    
Comprehensive income attributable to KDP$412 $450 $824 $22 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Table of Contents

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 June 30,December 31,
(in millions, except share and per share data)20212020
Assets
Current assets:  
Cash and cash equivalents$167 $240 
Restricted cash and restricted cash equivalents3 15 
Trade accounts receivable, net1,075 1,048 
Inventories897 762 
Prepaid expenses and other current assets474 323 
Total current assets2,616 2,388 
Property, plant and equipment, net2,420 2,212 
Investments in unconsolidated affiliates86 88 
Goodwill20,272 20,184 
Other intangible assets, net23,983 23,968 
Other non-current assets926 894 
Deferred tax assets41 45 
Total assets$50,344 $49,779 
Liabilities and Stockholders' Equity
Current liabilities:  
Accounts payable$3,976 $3,740 
Accrued expenses1,019 1,040 
Structured payables144 153 
Short-term borrowings and current portion of long-term obligations1,323 2,345 
Other current liabilities455 416 
Total current liabilities6,917 7,694 
Long-term obligations11,721 11,143 
Deferred tax liabilities5,972 5,993 
Other non-current liabilities1,491 1,119 
Total liabilities26,101 25,949 
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, 1,417,441,055 and 1,407,260,676 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
14 14 
Additional paid-in capital21,743 21,677 
Retained earnings2,357 2,061 
Accumulated other comprehensive income128 77 
Total stockholders' equity24,242 23,829 
Non-controlling interest1 1 
Total equity24,243 23,830 
Total liabilities and equity$50,344 $49,779 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 First Six Months
(in millions)20212020
Operating activities:  
Net income$773 $454 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation expense206 183 
Amortization of intangibles67 66 
Other amortization expense80 76 
Provision for sales returns32 20 
Deferred income taxes(12)(29)
Employee stock-based compensation expense48 42 
Loss on early extinguishment of debt105 4 
Gain on disposal of property, plant and equipment(4)(40)
Unrealized (gain) loss on foreign currency(15)12 
Unrealized (gain) loss on derivatives(72)76 
Equity in loss of unconsolidated affiliates1 18 
Impairment on investments and note receivable of unconsolidated affiliate 86 
Other, net3 36 
Changes in assets and liabilities:  
Trade accounts receivable(41)58 
Inventories(131)(101)
Income taxes receivable and payables, net(65)69 
Other current and non-current assets(131)(234)
Accounts payable and accrued expenses293 260 
Other current and non-current liabilities2 6 
Net change in operating assets and liabilities(73)58 
Net cash provided by operating activities1,139 1,062 
Investing activities:  
Purchases of property, plant and equipment(204)(276)
Proceeds from sales of property, plant and equipment15 202 
Purchases of intangibles(12)(15)
Issuance of related party note receivable(2)(6)
Other, net3 3 
Net cash used in investing activities$(200)$(92)

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KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, CONTINUED)
 First Six Months
(in millions)20212020
Financing activities:  
Proceeds from issuance of Notes
$2,150 $1,500 
Repayments of Notes
(3,595)(250)
Proceeds from issuance of commercial paper2,776 5,518 
Repayments of commercial paper(1,453)(6,354)
Proceeds from KDP Revolver
 1,850 
Repayments of KDP Revolver
 (1,850)
Proceeds from sale of stock by JAB 22 
Repayments of 2019 KDP Term Loan
(425)(730)
Proceeds from structured payables73 86 
Repayments of structured payables(81)(227)
Cash dividends paid(424)(423)
Proceeds from issuance of common stock140  
Tax withholdings related to net share settlements(125) 
Payments on finance leases(27)(24)
Other, net(37)(19)
Net cash used in financing activities(1,028)(901)
Cash, cash equivalents, restricted cash, and restricted cash equivalents:  
Net change from operating, investing and financing activities(89)69 
Effect of exchange rate changes4 (3)
Beginning balance255 111 
Ending balance$170 $177 
Supplemental cash flow disclosures of non-cash investing activities:
Capital expenditures included in accounts payable and accrued expenses$213 $180 
Supplemental cash flow disclosures of non-cash financing activities:
Dividends declared but not yet paid265 212 
Finance lease additions289 26 
Supplemental cash flow disclosures:
Cash paid for interest259 240 
Cash paid for income taxes305 118 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

 Common Stock IssuedAdditional
Paid-In Capital
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' EquityNon-controlling InterestTotal
Equity
(in millions, except per share data)SharesAmount
Balance as of January 1, 20211,407.3 $14 $21,677 $2,061 $77 $23,829 $1 $23,830 
Net income   325  325  325 
Other comprehensive income    87 87  87 
Dividends declared, $0.15 per share
   (212) (212) (212)
Issuance of common stock4.3  140   140  140 
Shares issued under employee stock-based compensation plans and other5.7        
Stock-based compensation and stock options exercised  (99)  (99) (99)
Balance as of March 31, 2021
1,417.3 14 21,718 2,174 164 24,070 1 24,071 
Net income   448  448  448 
Other comprehensive income    (36)(36) (36)
Dividends declared, $0.1875 per share
   (265) (265) (265)
Shares issued under employee stock-based compensation plans and other0.1        
Stock-based compensation and stock options exercised  25   25  25 
Balance as of June 30, 2021
$1,417.4 $14 $21,743 $2,357 $128 $24,242 $1 $24,243 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




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KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED, CONTINUED)
 Common Stock IssuedAdditional
Paid-In Capital
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' EquityNon-controlling InterestTotal Equity
(in millions, except per share data)SharesAmount
Balance as of January 1, 2020
1,406.8 $14 $21,557 $1,582 $104 $23,257 $ $23,257 
Net income— — — 156 — 156 — 156 
Other comprehensive loss— — — — (584)(584)— (584)
Dividends declared, $0.15 per share
— — — (211)— (211)— (211)
Shares issued under stock-based compensation plans and other0.3 — — — — — — — 
Stock-based compensation and stock options exercised— — 22 — — 22 — 22 
Balance as of March 31, 2020
1,407.1 14 21,579 1,527 (480)22,640  22,640 
Net income— — — 298 — 298 — 298 
Other comprehensive income— — — — 152 152 — 152 
Dividends declared, $0.15 per share
— — — (212)— (212)— (212)
Proceeds from controlling shareholder stock transactions— — 22 — — 22 — 22 
Shares issued under employee stock-based compensation plans and other0.1 — — — — — — — 
Stock-based compensation and stock options exercised— — 23 — — 23 — 23 
Balance as of June 30, 2020
1,407.2 $14 $21,624 $1,613 $(328)$22,923 $ $22,923 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. General
ORGANIZATION
References in this Quarterly Report on Form 10-Q to "KDP" or "the Company" refer to Keurig Dr Pepper Inc. and all entities included in the unaudited condensed consolidated financial statements. Definitions of terms used in this Quarterly Report on Form 10-Q are included within the Master Glossary.
This Quarterly Report on Form 10-Q refers to some of KDP's owned or licensed trademarks, trade names and service marks, which are referred to as the Company's brands. All of the product names included herein are either KDP registered trademarks or those of the Company's licensors.
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting principally of normal recurring adjustments, considered necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with KDP's consolidated financial statements and accompanying notes, included in the Company's Annual Report.
Except as otherwise specified, references to the "second quarter" indicate the Company's quarterly periods ended June 30, 2021 and 2020.
PRINCIPLES OF CONSOLIDATION
KDP consolidates all wholly owned subsidiaries.
The Company consolidates investments in companies in which it holds the majority interest. In these cases, the third party equity interest is referred to as non-controlling interest. Non-controlling interests are presented as a separate component within equity in the unaudited Condensed Consolidated Balance Sheets, and net income attributable to the non-controlling interests are presented separately in the unaudited Condensed Consolidated Statements of Income.
The Company uses the equity method to account for investments in companies if the investment provides the Company with the ability to exercise significant influence over operating and financial policies of the investee. Consolidated net income includes KDP's proportionate share of the net income or loss of these companies. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors or similar governing body, participation in policy-making decisions and material intercompany transactions.
KDP eliminates from its financial results all intercompany transactions between entities included in the unaudited condensed consolidated financial statements.
USE OF ESTIMATES
The process of preparing KDP's unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.
RECLASSIFICATIONS
The Company reclassified amounts in the Financing Activities section of the unaudited condensed consolidated Statement of Cash Flows for the first six months of 2020 in order to conform to current year presentation. Refer to Note 2 for additional information about changes to the maturities of KDP’s commercial paper.
(in millions)Prior PresentationFirst Six Months of 2020
Proceeds from commercial paperNet (repayment) issuance of commercial paper$5,518 
Repayments of commercial paperNet (repayment) issuance of commercial paper(6,354)
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KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
RECENTLY ADOPTED PROVISIONS OF U.S. GAAP
As of January 1, 2021, the Company adopted 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. The objective of the new standard is to clarify the interaction of the accounting for equity securities, investments accounted for under the equity method of accounting and the accounting for certain forward contracts and purchased options accounted for under different topics in U.S. GAAP. The adoption of the standard did not impact KDP's consolidated financial statements.
2. Long-term Obligations and Borrowing Arrangements
The following table summarizes the Company's long-term obligations:
(in millions)June 30, 2021December 31, 2020
Notes
$11,721 $13,065 
Term loan 423 
Subtotal11,721 13,488 
Less - current portion (2,345)
Long-term obligations$11,721 $11,143 
The following table summarizes the Company's short-term borrowings and current portion of long-term obligations:
(in millions)June 30, 2021December 31, 2020
Commercial paper notes$1,323 $ 
Revolving credit facilities  
Current portion of long-term obligations:
Notes
 2,246 
Term loan 99 
Short-term borrowings and current portion of long-term obligations$1,323 $2,345 

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KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
SENIOR UNSECURED NOTES 
The Company's Notes consisted of the following:
(in millions, except %)
IssuanceMaturity DateRateJune 30, 2021December 31, 2020
2021 Merger NotesMay 25, 20213.551%$ $1,750 
2021-A NotesNovember 15, 20213.200% 250 
2021-B NotesNovember 15, 20212.530% 250 
2022 NotesNovember 15, 20222.700% 250 
2023 Merger NotesMay 25, 20234.057%1,000 2,000 
2023 NotesDecember 15, 20233.130%500 500 
2024 Notes(1)
March 15, 20240.750%1,150  
2025 Merger NotesMay 25, 20254.417%1,000 1,000 
2025 NotesNovember 15, 20253.400%500 500 
2026 NotesSeptember 15, 20262.550%400 400 
2027 NotesJune 15, 20273.430%500 500 
2028 Merger NotesMay 25, 20284.597%2,000 2,000 
2030 NotesMay 1, 20303.200%750 750 
2031 NotesMarch 15, 20312.250%500  
2038 NotesMay 1, 20387.450%125