What changed in this filing

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Item 1. Financial Statements

2024-10-24 compared with 2024-07-25 · 159 added, 98 removed, 694 unchanged (27% of the section changed)

3 unchanged sentences

( UNAUDITED )

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions, except per share data) 2024 2023 2024 2023

3 unchanged sentences

Selling, general and administrative expenses 1,245 1,217 3,716 3,654

Other operating expense (income), net 16 — 15 ( 5 )

Impairment of intangible assets — 2 — 2

Other operating (income) expense, net ( 7 ) ( 4 ) 8 ( 9 )

Income from operations 902 896 2,528 2,249

14 unchanged sentences

( UNAUDITED )

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

10 unchanged sentences

( UNAUDITED )

June 30, December 31,

September 30, December 31,

(in millions, except share and per share data) 2024 2023

1 unchanged sentence

Cash and cash equivalents $ 552 $ 267

Restricted cash and restricted cash equivalents 8 —

Trade accounts receivable, net 1,448 1,368

24 unchanged sentences

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, 1,355,763,506 and 1,390,446,043 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 2,000,000,000 shares authorized, 1,356,443,009 and 1,390,446,043 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 19,692 20,788

7 unchanged sentences

( UNAUDITED )

First Six Months

First Nine Months

(in millions) 2024 2023

10 unchanged sentences

Unrealized loss (gain) on foreign currency 14 ( 4 )

Unrealized loss (gain) on derivatives 36 ( 31 )

Unrealized loss on derivatives 23 44

Settlements of interest rate contracts — 54

Equity in earnings of unconsolidated affiliates ( 22 ) ( 24 )

Earned equity from distribution arrangements ( 64 ) ( 2 )

Impairment of intangible assets — 2

Other, net 9 ( 3 )

9 unchanged sentences

Investing activities:

Acquisitions of businesses ( 85 ) —

Purchases of property, plant and equipment ( 398 ) ( 271 )

8 unchanged sentences

( UNAUDITED, CONTINUED)

First Six Months

First Nine Months

(in millions) 2024 2023

11 unchanged sentences

Net cash used in financing activities ( 504 ) ( 697 )

Cash and cash equivalents:

Cash, cash equivalents, restricted cash, and restricted cash equivalents:

Net change from operating, investing and financing activities 328 ( 288 )

6 unchanged sentences

Equity received in exchange for modification of related party contract 19 —

Acquisitions of businesses 18 —

Transaction costs included in accounts payable and accrued expenses — 13

32 unchanged sentences

1,355.8 $ 14 $ 19,683 $ 4,944 $ 77 $ 24,718

Net income — — — 616 — 616

Other comprehensive loss — — — — ( 63 ) ( 63 )

Dividends declared, $ 0.23 per share

— — — ( 311 ) — ( 311 )

Shares issued under employee stock-based compensation plans and other 0.6 — — — — —

Tax withholdings related to net share settlements — — ( 15 ) — — ( 15 )

Stock-based compensation and stock options exercised — — 24 — — 24

Balance as of September 30, 2024

1,356.4 $ 14 $ 19,692 $ 5,249 $ 14 $ 24,969

Common Stock Issued Additional

23 unchanged sentences

1,396.9 $ 14 $ 21,009 $ 3,948 $ 297 $ 25,268 $ ( 1 ) $ 25,267

Net income — — — 518 — 518 — 518

Other comprehensive loss — — — — ( 126 ) ( 126 ) — ( 126 )

Dividends declared, $ 0.215 per share

— — — ( 300 ) — ( 300 ) — ( 300 )

Repurchases of common stock, inclusive of excise tax obligation — — 1 — — 1 — 1

Shares issued under employee stock-based compensation plans and other 1.4 — — — — — — —

Tax withholdings related to net share settlements — — ( 25 ) — — ( 25 ) — ( 25 )

Stock-based compensation and stock options exercised — — 29 — — 29 — 29

Non-controlling interest surrender of shares — — — ( 1 ) — ( 1 ) 1 —

Balance as of September 30, 2023

1,398.3 $ 14 $ 21,014 $ 4,165 $ 171 $ 25,364 $ — $ 25,364

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

13 unchanged sentences

These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and accompanying notes included in our Annual Report.

References to the "second quarter" indicate the quarterly periods ended June 30, 2024 and 2023.

References to the "third quarter" indicate the quarterly periods ended September 30, 2024 and 2023.

USE OF ESTIMATES

5 unchanged sentences

Actual amounts may differ from these estimates .

RECLASSIFICATIONS

We reclassified amounts in the Financing Activities section of the unaudited condensed consolidated Statement of Cash Flows for the first six months of 2023 in order to conform to current year presentation, as maturities for the Company’s commercial paper program in both periods are 90 days or less.

(in millions) Prior Presentation First Six Months of 2023

Net (repayment) issuance of commercial paper Proceeds from issuance of commercial paper $ 18,187

Net (repayment) issuance of commercial paper Repayments of commercial paper ( 17,598 )

Long-term Obligations and Borrowing Arrangements

The following table summarizes our long-term obligations:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

$ 12,942 $ 11,095

1 unchanged sentence

Long-term obligations $ 12,413 $ 9,945

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The following table summarizes our short-term borrowings and current portion of long-term obligations:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Commercial paper notes $ 1,943 $ 2,096

1 unchanged sentence

Short-term borrowings and current portion of long-term obligations $ 2,472 $ 3,246

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

SENIOR UNSECURED NOTES

Our Notes consisted of the following:

(in millions, except %) Maturity Date Rate June 30, 2024 December 31, 2023

(in millions, except %) Maturity Date Rate September 30, 2024 December 31, 2023

2024 Notes March 15, 2024 0.750 % $ — $ 1,150

36 unchanged sentences

Amounts Outstanding

(in millions) Maturity Date Capacity June 30, 2024 December 31, 2023

(in millions) Maturity Date Capacity September 30, 2024 December 31, 2023

Revolving Credit Agreement (1)

February 23, 2027 $ 4,000 $ — $ —

(1) The Revolving Credit Agreement has $ 200 million letters of credit available, none of which were utilized as of June 30, 2024.

As of June 30, 2024, KDP was in compliance with its minimum interest coverage ratio relating to the Revolving Credit Agreement .

(1) The Revolving Credit Agreement has $ 200 million letters of credit available, none of which were utilized as of September 30, 2024.

As of September 30, 2024, KDP was in compliance with its minimum interest coverage ratio relating to the Revolving Credit Agreement .

Commercial Paper Program

The following table provides information about our weighted average borrowings under our commercial paper program:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions, except %) 2024 2023 2024 2023

3 unchanged sentences

In addition to the portion of the Revolving Credit Agreement reserved for issuance of letters of credit, KDP has an incremental letter of credit facility.

Under this facility, $ 150 million is available for the issuance of letters of credit, $ 56 million of which was utilized as of June 30, 2024 and $ 94 million of which remains available for use.

Under this facility, $ 150 million is available for the issuance of letters of credit, $ 74 million of which was utilized as of September 30, 2024 and $ 76 million of which remains available for use.

FAIR VALUE DISCLOSURES

2 unchanged sentences

The difference between the fair value and the carrying value represents the theoretical net premium or discount that would be paid or received to retire all the Notes and related unamortized costs to be incurred at such date.

The fair value of our Notes was $ 12,027 million and $ 10,486 million as of June 30, 2024 and December 31, 2023, respectively.

The fair value of our Notes was $ 12,531 million and $ 10,486 million as of September 30, 2024 and December 31, 2023, respectively.

KALIL ACQUISITION

Overview and Purchase Price

On May 30, 2024, we entered into an agreement with Kalil, under which we agreed to acquire all of Kalil’s production, sales, and distribution assets for total consideration of $ 103 million, subject to certain adjustments outlined in the agreement.

Kalil is an independent bottler with bottling and distribution rights in Arizona to key KDP brands, including Canada Dry, 7UP, A&W, Snapple, and Core Hydration.

On August 9, 2024, we completed the Kalil Acquisition, and approximately $ 8 million of cash was held back and placed in escrow.

KEURIG DR PEPPER INC.

1 unchanged sentence

(UNAUDITED, CONTINUED)

Allocation of Consideration Exchanged

Our preliminary allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed in the Kalil Acquisition is based on estimated fair values as of August 9, 2024.

The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed in the Kalil Acquisition as of September 30, 2024:

(in millions) Fair Value

Inventory (1)

Property, plant, and equipment (2)

Other intangible assets 38

Total consideration exchanged 103

Holdback placed in Escrow (3)

Acquisition of business $ 95

(1) As of September 30, 2024, we accrued the $ 10 million as a payable to Kalil, which is included as a non-cash investing activity within the supplemental cash flow disclosures of the unaudited condensed consolidated statement of cash flows for the first nine months of 2024.

(2) We preliminarily valued real property using the cost approach and land using the sales comparison approach, a form of the market approach.

We preliminarily valued personal property using a combination of the cost approach and the sales comparison approach.

(3) The amount held in escrow is included within the Restricted cash and restricted cash equivalents line of the unaudited condensed consolidated balance sheet as of September 30, 2024 and is considered a non-cash investing activity within the supplemental cash flow disclosures of the unaudited condensed consolidated statement of cash flows for the first nine months of 2024.

The Kalil Acquisition preliminarily resulted in $ 10 million of goodwill.

The preliminary goodwill to be recognized is primarily attributable to the assembled workforce.

The goodwill created in the Kalil Acquisition is expected to be deductible for tax purposes.

Goodwill and Other Intangible Assets

4 unchanged sentences

Balance as of January 1, 2024 $ 8,714 $ 8,622 $ 2,866 $ 20,202

Acquisitions (1)

Foreign currency translation — — ( 134 ) ( 134 )

Balance as of June 30, 2024 $ 8,714 $ 8,622 $ 2,745 $ 20,081

Balance as of September 30, 2024 $ 8,724 $ 8,622 $ 2,732 $ 20,078

(1) Acquisition activity during the first nine months of 2024 represents the goodwill recorded as a result of the Kalil Acquisition.

Refer to Note 3 for additional information .

INTANGIBLE ASSETS OTHER THAN GOODWILL

The net carrying amounts of intangible assets other than goodwill with indefinite lives are as follows:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

$ 19,280 $ 19,476

2 unchanged sentences

Total $ 21,988 $ 22,109

(1) The change in brands with indefinite lives was driven by foreign currency translation of $ 155 million during the first six months of 2024.

(1) The change in brands with indefinite lives was driven by unfavorable foreign currency translation impacts of $ 196 million during the first nine months of 2024.

(2) The change in distribution rights with indefinite lives was primarily driven by acquired distribution rights related to Electrolit of $ 49 million.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The net carrying amounts of intangible assets other than goodwill with definite lives are as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount

7 unchanged sentences

Amortization expense for intangible assets with definite lives was as follows:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

Amortization expense $ 33 $ 34 $ 100 $ 103

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

KDP is exposed to market risks arising from adverse changes in interest rates, commodity prices, and FX rates.

19 unchanged sentences

Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are generally reported in interest expense in the unaudited Condensed Consolidated Statements of Income.

As of June 30, 2024, economic interest rate derivative instruments have maturities ranging from September 2024 to July 2043.

As of September 30, 2024, economic interest rate derivative instruments have maturities ranging from December 2024 to July 2043.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Cash Flow Hedges

5 unchanged sentences

Additionally, the balance sheets of our Canadian and Mexican businesses are subject to exposure from movements in exchange rates.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Economic Hedges

3 unchanged sentences

Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same caption of the unaudited Condensed Consolidated Statements of Income as the associated risk.

As of June 30, 2024, these FX contracts have maturities ranging from July 2024 to March 2025.

As of September 30, 2024, these FX contracts have maturities ranging from October 2024 to September 2026.

Cash Flow Hedges

3 unchanged sentences

The intent of these FX contracts is to provide predictability in the Company's overall cost structure.

As of June 30, 2024, these FX contracts have maturities ranging from July 2024 to December 2025.

As of September 30, 2024, these FX contracts have maturities ranging from October 2024 to December 2025.

Economic Hedges

4 unchanged sentences

Unrealized gains and losses are recognized as a component of unallocated corporate costs until our reportable segments are affected by the completion of the underlying transaction, at which time the gain or loss is reflected as a component of the respective segment's income from operations.

As of June 30, 2024, these commodity contracts have maturities ranging from July 2024 to January 2026.

As of September 30, 2024, these commodity contracts have maturities ranging from October 2024 to July 2026.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS

The following table presents the notional amounts of our outstanding derivative instruments by type:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Interest rate contracts

11 unchanged sentences

Therefore, we have categorized these contracts as Level 2.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Not Designated as Hedging Instruments

1 unchanged sentence

All such instruments are considered Level 2 within the fair value hierarchy.

(in millions) Balance Sheet Location June 30, 2024 December 31, 2023

(in millions) Balance Sheet Location September 30, 2024 December 31, 2023

FX contracts Prepaid expenses and other current assets $ 1 $ 5

7 unchanged sentences

Commodity contracts Other non-current liabilities 5 11

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Designated as Hedging Instruments

1 unchanged sentence

All such instruments are designated Level 2 within the fair value hierarchy.

(in millions) Balance Sheet Location June 30, 2024 December 31, 2023

(in millions) Balance Sheet Location September 30, 2024 December 31, 2023

FX contracts Prepaid expenses and other current assets $ 16 $ 1

1 unchanged sentence

FX contracts Other current liabilities 2 14

FX contracts Other non-current liabilities 1 —

IMPACT OF DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS

2 unchanged sentences

Amounts include both realized and unrealized gains and losses.

Income Statement Location Second Quarter First Six Months

Income Statement Location Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

4 unchanged sentences

Commodity contracts SG&A expenses 20 ( 20 ) 11 ( 2 )

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

IMPACT OF CASH FLOW HEDGES

The following table presents the amount of (gains) losses, net, reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income related to derivative instruments designated as cash flow hedging instruments during the periods presented:

Income Statement Location Second Quarter First Six Months

Income Statement Location Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

2 unchanged sentences

We expect to reclassify approximately $ 13 million and $ 16 million of pre-tax net gains from AOCI into net income during the next twelve months related to interest rate contracts and FX contracts, respectively.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The following table presents the components of lease cost:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

5 unchanged sentences

Short-term lease cost 1 1 2 1

Sublease income ( 1 ) — ( 1 ) —

Total lease cost $ 92 $ 78 $ 272 $ 227

1 unchanged sentence

The following table presents supplemental cash flow and other information about our leases:

First Six Months

First Nine Months

(in millions) 2024 2023

7 unchanged sentences

The following table presents information about our weighted average discount rate and remaining lease term:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Weighted average discount rate

7 unchanged sentences

(UNAUDITED, CONTINUED)

Future minimum lease payments for non-cancellable leases that have commenced and are reflected on the unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 were as follows:

Future minimum lease payments for non-cancellable leases that have commenced and are reflected on the unaudited Condensed Consolidated Balance Sheets as of September 30, 2024 were as follows:

(in millions) Operating Leases Finance Leases

5 unchanged sentences

SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED

As of June 30, 2024, we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $ 238 million.

These leases are expected to commence between the third quarter of 2024 through 2027, with initial lease terms ranging from 1 year to 10 years.

As of September 30, 2024, we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $ 227 million.

These leases are expected to commence between the fourth quarter of 2024 through 2027, with initial lease terms ranging from 5 years to 11 years.

Our operating and reportable segments consist of the following:

14 unchanged sentences

Information about our operations by reportable segment is as follows:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

24 unchanged sentences

Coffee International Total

For the second quarter of 2024:

For the third quarter of 2024:

$ 2,351 $ 12 $ 348 $ 2,711

3 unchanged sentences

Net sales $ 2,390 $ 976 $ 525 $ 3,891

For the second quarter of 2023:

For the third quarter of 2023:

$ 2,232 $ — $ 348 $ 2,580

3 unchanged sentences

Net sales $ 2,270 $ 1,012 $ 523 $ 3,805

For the first six months of 2024:

For the first nine months of 2024:

$ 6,785 $ 26 $ 1,041 $ 7,852

3 unchanged sentences

Net sales $ 6,890 $ 2,837 $ 1,554 $ 11,281

For the first six months of 2023:

For the first nine months of 2023:

$ 6,498 $ — $ 932 $ 7,430

11 unchanged sentences

The following table presents basic and diluted EPS and shares outstanding:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions, except per share data) 2024 2023 2024 2023

8 unchanged sentences

The components of stock-based compensation expense are presented below:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

10 unchanged sentences

Forfeited ( 1,251,163 ) 29.23

Outstanding as of June 30, 2024 14,486,522 $ 29.49 2.2 $ 484

As of June 30, 2024, there was $ 211 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.4 years.

Outstanding as of September 30, 2024 12,915,851 $ 29.77 2.2 $ 484

As of September 30, 2024, there was $ 187 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.3 years.

KEURIG DR PEPPER INC.

2 unchanged sentences

The following table summarizes our investments in unconsolidated affiliates:

June 30, December 31,

September 30, December 31,

(in millions) 2024 2023

7 unchanged sentences

(2) In May 2024, we modified our sales agent contract with Tractor.

In exchange, we received additional equity interests, raising our total interest to 23.0 % as of June 30, 2024.

In exchange, we received additional equity interests, raising our total interest to 23.0 % as of September 30, 2024.

Our effective tax rates were as follows:

Second Quarter First Six Months

Third Quarter First Nine Months

2024 2023 2024 2023

Effective tax rate 23.2 % 22.0 % 23.4 % 19.9 %

The change in our effective tax rate was largely driven by a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions and the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment.

For the first nine months of 2024, the change in our effective tax rate was driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions.

KEURIG DR PEPPER INC.

4 unchanged sentences

(in millions) Foreign Currency Translation Adjustments Pension and Post-Retirement Benefit Liabilities Cash Flow Hedges Accumulated Other Comprehensive Income

For the second quarter of 2024:

For the third quarter of 2024:

Beginning balance $ ( 55 ) $ ( 14 ) $ 146 $ 77

2 unchanged sentences

Total other comprehensive (loss) income ( 69 ) — 6 ( 63 )

Balance as of June 30, 2024 $ ( 55 ) $ ( 14 ) $ 146 $ 77

For the second quarter of 2023:

Balance as of September 30, 2024 $ ( 124 ) $ ( 14 ) $ 152 $ 14

For the third quarter of 2023:

Beginning balance $ 181 $ ( 10 ) $ 126 $ 297

Other comprehensive income (loss) 159 — ( 12 ) 147

Other comprehensive (loss) income ( 135 ) — 7 ( 128 )

Amounts reclassified from AOCI — — 2 2

Total other comprehensive income (loss) 159 — ( 17 ) 142

Balance as of June 30, 2023 $ 181 $ ( 10 ) $ 126 $ 297

For the first six months of 2024:

Total other comprehensive (loss) income ( 135 ) — 9 ( 126 )

Balance as of September 30, 2023 $ 46 $ ( 10 ) $ 135 $ 171

For the first nine months of 2024:

Beginning balance $ 202 $ ( 14 ) $ 127 $ 315

2 unchanged sentences

Total other comprehensive (loss) income ( 326 ) — 25 ( 301 )

Balance as of June 30, 2024 $ ( 55 ) $ ( 14 ) $ 146 $ 77

For the first six months of 2023:

Balance as of September 30, 2024 $ ( 124 ) $ ( 14 ) $ 152 $ 14

For the first nine months of 2023:

Beginning balance $ ( 86 ) $ ( 10 ) $ 225 $ 129

2 unchanged sentences

Total other comprehensive income (loss) 132 — ( 90 ) 42

Balance as of June 30, 2023 $ 181 $ ( 10 ) $ 126 $ 297

Balance as of September 30, 2023 $ 46 $ ( 10 ) $ 135 $ 171

The following table presents the amount of (gains) losses reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income:

Second Quarter First Six Months

(in millions) Income Statement Caption 2024 2023 2024 2023

Income Statement Caption Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

Pension and PRMB liabilities SG&A expenses $ 1 $ — $ 1 $ —

Income tax benefit — — — —

Total, net of tax 1 — 1 —

Cash Flow Hedges:

5 unchanged sentences

Total, net of tax $ ( 4 ) $ 2 $ ( 7 ) $ ( 56 )

(1) Amounts reclassified from AOCI into interest expense during the first six months of 2023 include the realized gains associated with the termination of forward starting swaps designated as cash flow hedges of approximately $ 66 million.

(1) Amounts reclassified from AOCI into interest expense during the first nine months of 2023 include the realized gains associated with the termination of forward starting swaps designated as cash flow hedges of approximately $ 66 million.

KEURIG DR PEPPER INC.

4 unchanged sentences

The tables below provide selected financial information from the unaudited Condensed Consolidated Balance Sheets:

June 30, December 31,

September 30, December 31,

(in millions) 2024 2023

25 unchanged sentences

The following table presents the amount of unrealized mark-to-market (gains) losses, net, on our equity securities recognized in the unaudited Condensed Consolidated Statements of Income related to these securities during the periods presented.

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

5 unchanged sentences

(UNAUDITED, CONTINUED)

June 30, December 31,

September 30, December 31,

(in millions) 2024 2023

25 unchanged sentences

We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions.

Outstanding obligations confirmed as valid included in accounts payable as of June 30, 2024 and December 31, 2023 were $ 1,815 million and $ 2,389 million, respectively.

Outstanding obligations confirmed as valid included in accounts payable as of September 30, 2024 and December 31, 2023 were $ 1,786 million and $ 2,389 million, respectively.

KEURIG DR PEPPER INC.

4 unchanged sentences

Reserves are recorded for specific legal proceedings when the Company determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated.

We had litigation reserves of $ 8 million and $ 12 million, respectively, as of June 30, 2024 and December 31, 2023.

We had litigation reserves of $ 2 million and $ 12 million, respectively, as of September 30, 2024 and December 31, 2023.

We have also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made.

25 unchanged sentences

Additionally, as the timelines in these cases may be beyond our control, we can provide no assurance as to whether or when there will be material developments in these matters.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Restructuring

6 unchanged sentences

The program is expected to incur charges of approximately $ 55 million, primarily driven by severance costs, which are expected to be incurred through 2024, and the sign-on bonus for Mr.

Cofer as our new Chief Operating Officer.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

2024 Network Optimization

In March 2024, we announced the closure of our manufacturing facility in Williston, Vermont, with operations and employees to be relocated to other existing manufacturing locations, in order to more effectively and efficiently meet the needs of consumers and customers.

The relocation began during the second quarter of 2024, and the restructuring program is expected to incur pre-tax restructuring charges in an estimated range of $ 30 million to $ 40 million , primarily comprised of asset related costs, through the third quarter of 2024.

In March 2024, we announced a restructuring program designed to more effectively and efficiently meet the needs of consumers and customers.

The program initially included the closure of our manufacturing facility in Williston, Vermont, with operations and employees relocating to other existing manufacturing locations.

The relocation began during the second quarter of 2024 and was completed in the third quarter of 2024.

In July 2024, we also announced the closure of our Windsor, Virginia manufacturing facility, which is expected to begin in the first quarter of 2025.

Our restructuring program also encompasses other costs intended to optimize our manufacturing and distribution footprint throughout our operations.

The restructuring program is expected to incur pre-tax restructuring charges in an estimated range of $ 125 million to $ 145 million, primarily comprised of asset related costs, through the second quarter of 2025.

RESTRUCTURING CHARGES

Restructuring and integration expenses for the defined programs during the periods presented were as follows:

Second Quarter First Six Months

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

9 unchanged sentences

Cash payments ( 11 )

Balance as of June 30, 2024 $ 27

Balance as of September 30, 2024 $ 27

Transactions with Related Parties

2 unchanged sentences

In connection with this offering, we repurchased 35 million shares at the per-share price paid by the underwriter, for a total of $ 1,012 million, which was effected under our existing share repurchase program.

Subsequent Event

On October 23, 2024, we entered into a definitive agreement with GHOST, and certain other parties named therein, to acquire a controlling interest in GHOST.

Under the terms of the agreement, we will initially purchase a 60 % stake in GHOST for aggregate consideration of $ 990 million and, upon the closing of that transaction, we will enter into a subsequent agreement with GHOST, which will require the remaining equityholders of GHOST to sell their resulting 40 % stake in GHOST to us in 2028.

The transaction is subject to customary closing conditions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements