Keurig Dr Pepper Annual Report 2021 Form 10-K (NYSE:KDP) Published: February 25th, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED December 31, 2020 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 kdp-20201231_g1.jpg 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) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ 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 ☒ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common stock KDP The Nasdaq Stock Market LLC As of June 30, 2020, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's common equity held by non- affiliates of the registrant (treating directors, executive officers and beneficial owners of 10% or more of the registrant’s common stock outstanding as of that date, for this purpose, as affiliates) was approximately $13.7 billion (based on the closing sales price of the registrant's common stock on that date). As of February 23, 2021, there were 1,407,267,272 shares of the registrant's common stock, par value $0.01 per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the registrant's Annual Meeting of Stockholders are incorporated by reference in Part III. KEURIG DR PEPPER INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020 Page PART I Item 1 Business 1 Item 1A Risk Factors 10 Item 1B Unresolved Staff Comments 20 Item 2 Properties 21 Item 3 Legal Proceedings 21 Item 4 Mine Safety Disclosures 21 PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6 [Removed and Reserved] Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A Quantitative and Qualitative Disclosures About Market Risk 46 Item 8 Financial Statements and Supplementary Data 47 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 103 Item 9A Controls and Procedures 103 Item 9B Other Information 103 PART III Item 10 Directors, Executive Officers and Corporate Governance 103 Item 11 Executive Compensation 103 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 103 Item 13 Certain Relationships and Related Transactions and Director Independence 103 Item 14 Principal Accountant Fees and Services 103 PART IV Item 15 Exhibits and Financial Statement Schedules 105 KEURIG DR PEPPER INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020 MASTER GLOSSARY Term Definition 2009 Incentive Plan Keurig Dr Pepper Inc. Omnibus Incentive Plan of 2009 (formerly known as the Dr Pepper Snapple Group, Inc. Omnibus Stock Incentive Plan of 2009) 2019 Incentive Plan Keurig Dr Pepper Inc. Omnibus Incentive Plan of 2019 2018 KDP Term Loan The $2.4 billion term loan executed in conjunction with the DPS Merger on February 23, 2018 and refinanced with the 2019 KDP Term Loan on February 8, 2019 2019 KDP Term Loan The $2 billion term loan executed on February 8, 2019 in order to refinance the 2018 KDP Term Loan 2019 364-Day Credit Agreement The Company's $750 million credit agreement, which was entered into on May 29, 2019 and terminated on April 14, 2020 2020 364-Day Credit Agreement The Company's $1,500 million credit agreement, which was entered into on April 12, 2020 and replaced the 2019 364-Day Credit Agreement A Shoc Adrenaline Shoc, an equity method investment of KDP and a brand of energy drinks ABC The American Bottling Company, a wholly-owned subsidiary of KDP ABI Anheuser-Busch InBev SA/NV AOCI Accumulated other comprehensive income or loss ASU Accounting Standards Update Bedford Bedford Systems, LLC, an equity method investment of KDP and the maker of Drinkworks Big Red Big Red Group Holdings, LLC Big Red Acquisition The acquisition of Big Red by KDP Board The Board of Directors of KDP BodyArmor BA Sports Nutrition, LLC bps basis points Central States The Central States, Southeast and Southwest Areas Pension Fund Coca-Cola The Coca-Cola Company Core Core Nutrition LLC Core Acquisition The acquisition of Core by KDP in 2018 Costco Costco Wholesale Corporation CSD Carbonated soft drink DIO Days inventory outstanding DPO Days of payables outstanding DPS Dr Pepper Snapple Group, Inc. DPS Merger The 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 DPS Merger Date July 9, 2018 DSD Direct Store Delivery, the reporting unit whereby finished beverages are delivered directly to retailers 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. IRS Internal Revenue Service JAB JAB Holding Company S.a.r.l., and affiliates JPMorgan JPMorgan Chase Bank, N.A. KDP Credit Agreements Collectively, the KDP Revolver, the 364-day credit agreements, and term loans KDP Revolver The Company's $2,400 million revolving credit facility, which was entered into on February 28, 2018 Keurig Keurig Green Mountain, Inc., and the brand of our brewers KEURIG DR PEPPER INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2020 LIBOR London Interbank Offered Rate LifeFuels LifeFuels, Inc., an equity method investment Nasdaq The Nasdaq Stock Market LLC NCB Non-carbonated beverage Notes Collectively, the Company's senior unsecured notes NPD The NPD Group's Total Market Dataset NYSE New York Stock Exchange PCI Standard Payment Card Industry Data Security Standard PepsiCo PepsiCo, Inc. Peet's Peet's Coffee & Tea, Inc. PET Polyethylene terephthalate, which is used to make the Company's plastic bottles PRMB Post-retirement medical benefit Proposition 65 The State of California's Safe Drinking Water and Toxic Enforcement Act of 1986 Proxy Statement The definitive proxy statement for the Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2020, pursuant to Regulation 14A under the Exchange Act PSU Performance stock unit RSU Restricted stock unit RTD Ready to drink S&P Standard & Poors SEC Securities and Exchange Commission SG&A Selling, general and administrative TCJA Legislation commonly known as the Tax Cuts and Jobs Act of 2017 U.S. GAAP Accounting principles generally accepted in the U.S. Veyron SPE Veyron NE Beverage Licensing LLC VIE Variable interest entity Walmart Walmart Inc. Warehouse Direct, the reporting unit whereby finished beverages are shipped to retailer warehouses, and then delivered by the WD retailer through its own delivery system to its stores WIP Work-in-process References throughout this Annual Report on Form 10-K to "we", "our", "KDP" or "the Company" refer to Keurig Dr Pepper Inc. and all wholly-owned subsidiaries included in our audited Consolidated Financial Statements.