Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 23, 2018 | |
DEI [Abstract] | ||
Entity Registrant Name | Dr Pepper Snapple Group, Inc. | |
Entity Central Index Key | 1,418,135 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 180,221,324 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Income Statement [Abstract] | |||
Net sales | $ 1,594 | $ 1,510 | [1],[2] |
Cost of sales | 681 | 607 | |
Gross profit | 913 | 903 | |
Selling, general and administrative expenses | 626 | 620 | |
Depreciation and amortization | 27 | 25 | |
Other operating expense (income), net | 1 | (28) | |
Income from operations | 259 | 286 | |
Interest expense | 41 | 40 | |
Interest income | (1) | (1) | |
Other income, net | 0 | (1) | |
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | 219 | 248 | |
Provision for income taxes | 54 | 71 | |
Income before equity in loss of unconsolidated subsidiaries | 165 | 177 | |
Equity in loss of unconsolidated subsidiaries, net of tax | (6) | 0 | |
Net income | $ 159 | $ 177 | |
Earnings per common share: | |||
Basic | $ 0.88 | $ 0.97 | |
Diluted | $ 0.88 | $ 0.96 | |
Weighted average common shares outstanding: | |||
Basic | 179.9 | 183.4 | |
Diluted | 180.8 | 184.6 | |
Cash dividends declared per common share | $ 0.58 | $ 0.58 | |
[1] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. | ||
[2] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Comprehensive income | $ 178 | $ 200 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 | |
Current assets: | |||
Cash and cash equivalents | $ 13 | $ 61 | |
Restricted Cash and Cash Equivalents, Current | [1] | 16 | 18 |
Accounts receivable: | |||
Trade, net | 700 | 668 | |
Other | 49 | 42 | |
Inventories | 243 | 229 | |
Prepaid expenses and other current assets | 225 | 99 | |
Total current assets | 1,246 | 1,117 | |
Property, plant and equipment, net | 1,198 | 1,198 | |
Investments in unconsolidated subsidiaries | 36 | 24 | |
Goodwill | 3,564 | 3,561 | |
Other intangible assets, net | 3,784 | 3,781 | |
Other non-current assets | 286 | 279 | |
Deferred tax assets | 65 | 62 | |
Total assets | 10,179 | 10,022 | |
Current liabilities: | |||
Accounts payable | 377 | 365 | |
Deferred revenue | 64 | 64 | |
Short-term borrowings and current portion of long-term obligations | 383 | 79 | |
Income taxes payable | 39 | 11 | |
Other current liabilities | 761 | 719 | |
Total current liabilities | 1,624 | 1,238 | |
Long-term obligations | 4,135 | 4,400 | |
Deferred tax liabilities | 623 | 614 | |
Non-current deferred revenue | 1,038 | 1,055 | |
Other non-current liabilities | 273 | 264 | |
Total liabilities | 7,693 | 7,571 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | 0 | 0 | |
Common stock, $0.01 par value, 800,000,000 shares authorized, 180,218,713 and 179,743,028 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 2 | 2 | |
Additional paid-in capital | 0 | 0 | |
Retained earnings | 2,667 | 2,651 | |
Accumulated other comprehensive loss | (183) | (202) | |
Total stockholders' equity | 2,486 | 2,451 | |
Total liabilities and stockholders' equity | $ 10,179 | $ 10,022 | |
[1] | (1)Current and non-current restricted cash and restricted cash equivalents primarily includes the holdback held in escrow in connection with the Bai Brands Merger. Refer to Note 2 for additional information on the Bai Brands Merger. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Stockholders' equity: | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 180,218,713 | 179,743,028 |
Common stock, shares outstanding | 180,218,713 | 179,743,028 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities: | ||
Net income | $ 159 | $ 177 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 50 | 49 |
Amortization expense | 9 | 11 |
Amortization of deferred revenue | (16) | (16) |
Employee stock-based compensation expense | 10 | 6 |
Deferred income taxes | 20 | 30 |
Gain on step acquisition of unconsolidated subsidiaries | 0 | (28) |
Unrealized (gain) loss on derivatives | 11 | (5) |
Other, net | 9 | 4 |
Changes in assets and liabilities, net of effects of acquisition: | ||
Trade accounts receivable | (30) | 18 |
Other accounts receivable | (7) | 5 |
Inventories | (13) | (16) |
Other current and non-current assets | (139) | (85) |
Other current and non-current liabilities | (4) | (92) |
Trade accounts payable | 17 | 19 |
Income taxes payable | 27 | 20 |
Net cash provided by operating activities | 103 | 97 |
Investing activities: | ||
Acquisition of business | (2) | (1,548) |
Cash acquired in step acquisition of unconsolidated subsidiaries | 0 | 3 |
Purchase of property, plant and equipment | (41) | (16) |
Purchase of intangible assets | (3) | (1) |
Investment in unconsolidated subsidiaries | (19) | (1) |
Proceeds from disposals of property, plant and equipment | 1 | 1 |
Other, net | (4) | (7) |
Net cash used in investing activities | (68) | (1,569) |
Financing activities: | ||
Net issuance of commercial paper | 54 | 0 |
Repurchase of shares of common stock | 0 | (28) |
Dividends paid | (104) | (97) |
Tax withholdings related to net share settlements of certain stock awards | (21) | (30) |
Proceeds from stock options exercised | 2 | 17 |
Deferred financing charges paid | 0 | (1) |
Capital lease payments | (4) | (3) |
Net cash used in financing activities | (73) | (142) |
Cash and cash equivalents - net change from: | ||
Operating, investing and financing activities | (38) | (1,614) |
Effect of exchange rate changes on cash and cash equivalents | 1 | 3 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 121 | $ 176 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) shares in Millions, $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total Equity [Member] |
Shares issued at beginning of period at Dec. 31, 2017 | 179.7 | |||||
Total equity at beginning of period at Dec. 31, 2017 | $ 2,451 | $ 2 | $ 0 | $ 2,651 | $ (202) | $ 2,451 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued under employee stock-based compensation plans and other | 0.5 | |||||
Net income | 159 | 159 | ||||
Other comprehensive income | 19 | 19 | 19 | |||
Value of dividend equivalent units outstanding | 1 | |||||
Dividends declared, cash | (106) | (105) | ||||
Share-based Goods and Nonemployee Services Transaction, Stockholders' Equity | 2 | 2 | ||||
Stock options exercised and stock-based compensation, net of tax | (3) | (6) | (9) | |||
Shares issued at end of period at Mar. 31, 2018 | 180.2 | |||||
Total equity at end of period at Mar. 31, 2018 | $ 2,486 | $ 2 | $ 0 | $ 2,667 | $ (183) | $ 2,486 |
Consolidated Statements of Cha8
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per share | $ 0.58 | $ 0.58 |
General
General | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
General | General References in this Quarterly Report on Form 10-Q to " DPS " or "the Company " refer to Dr Pepper Snapple Group, Inc. and all entities included in the unaudited condensed consolidated financial statements . This Quarterly Report on Form 10-Q refers to some of DPS ' 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 DPS ' 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 accounting principles generally accepted in the United States of America (" 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 the Company 's audited consolidated financial statements and the notes thereto in the Company 's Annual Report on Form 10-K for the year ended December 31, 2017 ("Annual Report"). PRINCIPLES OF CONSOLIDATION DPS consolidates all wholly owned subsidiaries. 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 DPS' 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. The Company is also required to consolidate entities that are variable interest entities (“ VIE s”) of which DPS is the primary beneficiary. Judgments are made in assessing whether the Company is the primary beneficiary, including determination of the activities that most significantly impact the VIE ’s economic performance. The Company eliminates from its financial results all intercompany transactions between entities included in the unaudited condensed consolidated financial statements and the intercompany transactions with its equity method investees. USE OF ESTIMATES The process of preparing DPS ' 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 . FAIR VALUE Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Based upon the transparency of inputs to the valuation of an asset or liability, a three-level hierarchy has been established for fair value measurements. The three-level hierarchy for disclosure of fair value measurements is as follows: Level 1 - Quoted market prices in active markets for identical assets or liabilities. Level 2 - Observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 - Valuations with one or more unobservable significant inputs that reflect the reporting entity's own assumptions. The fair value of senior unsecured notes and marketable securities as of March 31, 2018 and December 31, 2017 are based on quoted market prices for publicly traded securities. The Company estimates fair values of financial instruments measured at fair value in the financial statements on a recurring basis to ensure they are calculated based on market rates to settle the instruments. These values represent the estimated amounts DPS would pay or receive to terminate agreements, taking into consideration current market rates and creditworthiness. As of March 31, 2018 and December 31, 2017 , the Company did not have any assets or liabilities measured on a recurring basis without observable market values that would require a high level of judgment to determine fair value (Level 3). Transfers between levels are recognized at the end of each reporting period. There were no transfers of financial instruments between the three levels of fair value hierarchy during the three months ended March 31, 2018 and 2017 . Refer to Notes 6 , 7 , 12 and 13 for additional information. RECLASSIFICATIONS Pension and other post-retirement benefit plan expenses of $1 million were reclassified from selling, general & administrative ("SG&A") expenses to other income, net, for the three months ended March 31, 2017 , as a result of the retrospective adoption of Accounting Standard Update ("ASU") 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). Refer to Recently Adopted Provisions of U.S. GAAP below. RECENTLY ISSUED ACCOUNTING STANDARDS Effective in 2019 In February 2016, the Financial Accounting Standards Board (" FASB ") issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). The ASU replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) - Land Easement Practical Expedient for Transition to Topic 842 , which provides an optional transition practical expedient that allows companies to not evaluate (under Topic 842) existing or expired land easements that were not previously accounted for as leases (under Topic 840). Topic 842 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. Topic 842 requires a modified retrospective approach, which includes several optional practical expedients. The Company intends to adopt the standard during the quarter ending March 31, 2019. The Company has assembled a cross functional project management team, selected a software provider and has begun the implementation of the software. The Company anticipates the impact of Topic 842 will be significant to its Consolidated Balance Sheet due to the amount of the Company's lease commitments. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). The objective of the ASU is to improve the financial reporting of hedging relationships in order to better portray the economic results of an entity’s risk management activities in its financial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2017-12 on the Company's consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) ("ASU 2018-02"). The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act ("TCJA") and will improve the usefulness of information reported to financial statement users. ASU 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-02 on the Company's consolidated financial statements. RECENTLY ADOPTED PROVISIONS OF U.S. GAAP As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) ("ASC 606") . The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP . The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and recognized the cumulative effect of initially applying the standard, which was primarily driven by the acceleration of certain customer incentives, as a $35 million reduction to the opening balance of retained earnings. The Company expects that the impact to net income of the new standard will be immaterial on an ongoing annual basis; however, the Company does anticipate that the new standard will have an impact on its net sales in interim periods due to timing. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 3 for additional information regarding the Company's adoption of ASC 606. As of January 1, 2018, the Company adopted ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory ("ASU 2016-16"). ASU 2016-16 requires entities to recognize the income tax consequences of intra-entity transfers of assets other than inventories when such transfers occur. The ASU was adopted on a modified retrospective basis through a cumulative-effect adjustment, which resulted in an increase to the opening balance of retained earnings of approximately $4 million as of January 1, 2018. As a result of the adoption of ASC 606 and ASU 2016-16, retained earnings decreased approximately $31 million as of January 1, 2018. As of January 1, 2018, the Company adopted ASU 2017-07, which requires employers who offer defined benefit pension plans or other post-retirement benefit plans to report the service cost component within the same income statement caption as other compensation costs arising from services rendered by employees during the period. The ASU also requires the other components of net periodic benefit cost to be presented separately from the service cost component, in a caption outside of a subtotal of income from operations. Additionally, the ASU provides that only the service cost component is eligible for capitalization. As a result of the adoption, the Company reclassified $1 million from selling, general and administrative expenses to other non-operating expense, net for the three months ended March 31, 2017 . As of January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), which makes several targeted improvements to U.S. GAAP . Among other things, ASU 2016-01 eliminates the cost method of accounting and investments in equity securities which were previously accounted for under the cost method must now be measured at fair value, with changes in fair value recognized in net income, under guidance in the newly added Topic 321, Investments - Equity Securities , to the Accounting Standards Codification. Equity instruments that do not have readily determinable fair values may be measured at cost less impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company also adopted ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which provides clarification on certain guidance issued under ASU 2016-01. The Company holds two investments in equity securities which were accounted for under the cost method of accounting prior to January 1, 2018, which do not have readily determinable fair values. The adoption of these standards did not have a material impact on such investments or the Company's consolidated financial statements. |
Acquisitions and Investments in
Acquisitions and Investments in Unconsolidated Subsidiaries | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Acquisitions and Investments in Unconsolidated Subsidiaries ANNOUNCEMENT OF PROPOSED MERGER WITH MAPLE PARENT HOLDINGS CORP. On January 29, 2018, DPS entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among DPS, Maple Parent Holdings Corp. (“Maple”) and Salt Merger Sub, Inc., a wholly-owned subsidiary of DPS (“Merger Sub”), whereby Merger Sub will be merged with and into Maple, with Maple surviving the merger as a wholly-owned subsidiary of the Company (the “Maple Merger”). For financial reporting and accounting purposes, Maple will be the acquirer of DPS upon completion of the Maple Merger. Maple is the indirect parent of Keurig Green Mountain, Inc. ("Keurig"), through which Maple conducts all of its operations. Keurig is a leading producer of specialty coffee and innovative single serve brewing systems. The combined businesses will create Keurig Dr Pepper Inc., a new beverage company of scale with a portfolio of iconic consumer brands and expanded distribution capability to reach virtually every point-of-sale in North America. In consideration for the Maple Merger, each share of common stock of Maple issued and outstanding immediately prior to the closing of the Maple Merger (the “Effective Time”) shall be converted into the right to receive a number of fully paid and nonassessable shares of common stock of DPS determined pursuant to an exchange ratio set forth in the Merger Agreement (the “Acquisition Shares”). The Merger Agreement provides that DPS will declare a special cash dividend equal to $103.75 per share, subject to any withholding of taxes required by law, payable to holders of its common stock as of the record date for the special dividend, which shall be the business day immediately prior to the completion of the Maple Merger (such special dividend, together with the Maple Merger, the "Maple Transaction"). As a result of the Maple Transaction, the equityholders of Maple as of immediately prior to the Effective Time will own approximately 87% of DPS' common stock following the closing and the stockholders of DPS as of immediately prior to the Effective Time will own approximately 13% on a fully diluted basis. The completion of the Maple Transaction requires the approval of the holders of DPS' common stock of (i) an amendment to DPS’ certificate of incorporation to increase the number of authorized shares of common stock and to change DPS' name to "Keurig Dr Pepper Inc." and (ii) the issuance of the Acquisition Shares pursuant to the Merger Agreement (collectively, the "Stockholder Approvals"). In addition to the Stockholder Approvals, the completion of the Maple Transaction will depend upon a number of conditions being satisfied or waived, including, among others, obtaining all required regulatory approvals, authorization of the listing on the New York Stock Exchange of the Acquisition Shares, the absence of any injunction prohibiting the consummation of the Maple Transaction and absence of any legal requirements enacted by any court or other governmental entity since the date of the Merger Agreement that remain in effect prohibiting consummation of the Maple Transaction. The obligation of each party to consummate the Maple Transaction is also conditioned on the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement. The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Stockholder Approvals or the effectiveness of the Maple stockholder consent or Merger Sub stockholder consent, by the mutual written consent of the parties, by either Maple or DPS if the closing of the Maple Transaction does not occur by October 29, 2018 or the Stockholder Approvals are not obtained or a final and nonappealable government order prohibiting the closing of the Maple Transaction is in place, or by Maple or DPS in connection with certain breaches of the Merger Agreement by DPS or Maple, respectively. If the Merger Agreement is terminated by DPS as a result of DPS accepting a superior proposal and entering into an alternative acquisition agreement, by Maple if our Board changes its recommendation to stockholders to approve the Stockholder Approvals or fails to reaffirm such recommendation following receipt or public announcement of a competing acquisition proposal within five business days after Maple's request to do so, or by either DPS or Maple because the closing does not occur by October 29, 2018 and there is an acquisition proposal outstanding at the time of such termination and within twelve months of termination of the Merger Agreement DPS consummates or enters into an agreement with respect to an acquisition proposal, DPS shall pay to Maple a termination fee in the amount of $700 million . If the Merger Agreement is terminated by DPS because Maple is unable to obtain required financing on the terms required by the Merger Agreement, Maple shall pay to DPS a reverse termination fee in the amount of $700 million . Upon completion of the Maple Transaction: • all unvested stock options, restricted stock units (" RSU s") and performance share units (" PSU s") will vest immediately as a result of the Change in Control (as defined in the terms of each individual award agreement); and • the $500 million revolving line of credit (the " Revolver ") will be terminated as a result of the Change in Control (as defined in the Company's unsecured credit agreement (the " Credit Agreement "). The Company has an agreement with a financial advisor in relation to the pending Maple Transaction. The Company agreed to pay a fee of approximately $50 million , $5 million of which was for the delivery of the fairness opinion during the first quarter of 2018, and the remaining portion of which will be paid upon, and subject to, consummation of the Maple Transaction. BAI BRANDS MERGER UPDATE On January 31, 2018, the purchase price allocation for the merger with Bai Brands LLC ("Bai Brands") ("Bai Brands Merger") was finalized. There were no changes from the preliminary purchase price allocation as of December 31, 2017, as disclosed in our Annual Report. In February 2018, the arbitration between the Company and the former shareholders of Bai Brands was completed and the working capital adjustment, which was agreed upon during the year ended December 31, 2017, was released from restricted cash. The remaining non-current restricted cash and corresponding non-current holdback liability, net of any claims, are anticipated to be released approximately four years after the acquisition date, subject to certain administrative conditions and resolution of certain indemnification obligations. The following table provides a rollforward of the holdback placed in escrow from December 31, 2017 to March 31, 2018 : (in millions) Indemnification Escrow Unrecognized Compensation Costs Total Holdback Liability Balance as of December 31, 2017 $ 79 $ 7 $ 86 Recognized compensation costs — (2 ) (2 ) Balance as of March 31, 2018 $ 79 $ 5 $ 84 TRANSACTION AND INTEGRATION EXPENSES The following table provides information about the Company 's transaction and integration expenses incurred during the three months ended March 31, 2018 and 2017 : For the Three Months Ended March 31, (in millions) 2018 2017 Maple Transaction $ 12 $ — Bai Brands Merger 1 19 Total transaction and integration expenses incurred $ 13 $ 19 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES On January 5, 2018, the Company acquired a 5.1% interest in Core Nutrition, LLC ("Core") for $18 million . The investment is accounted for as an equity method investment as the Company is deemed to have the ability to exercise significant influence through a more than minor interest in the investee in accordance with U.S. GAAP . |
Revenues Revenues
Revenues Revenues | 3 Months Ended |
Mar. 31, 2018 | |
Revenues [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenues The Company recognizes revenue when obligations under the terms of a contract with the customer are satisfied. Branded product sales, which include carbonated soft drinks ("CSDs"), non-carbonated beverages ("NCBs") and allied brand sales, occur once control is transferred upon delivery to the customer's facility. Contract manufacturing sales occur once control is transferred, either upon shipment or at the time the finished goods are ready for shipment and billed to the customer, based upon the terms of the contract with the customer . Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers and their customers. S ales taxes and other similar taxes are excluded from revenue. Costs associated with shipping and handling activities, such as merchandising, are included in SG&A expenses as revenue is recognized. The Company entered into arrangements during 2010 to license the manufacturing and distribution of certain brands to PepsiCo, Inc. (" PepsiCo ") and The Coca-Cola Company (" Coca-Cola ") and to sell and deliver all concentrates used in the manufacture of licensed beverages under these arrangements as PepsiCo and Coca-Cola place orders for these concentrates. In these cases, the Company first determined whether the arrangements represented separate performance obligations. The primary requirements to meet the separate performance obligation criteria is whether the performance obligation is capable of being distinct and distinct in the context of the contract. As the sale of the manufacturing and distribution rights and the ongoing sales of concentrate would not have economic benefit to the customer on its own or together with other resources that are available to the customer and the promises are not capable of being distinct, only one performance obligation was identified for these arrangements. The one-time nonrefundable cash receipts from PepsiCo and Coca-Cola were therefore recorded as deferred revenue and are recognized as net sales ratably over time during the estimated 25 -year life of the customer relationship. The adoption of ASC 606 resulted in an immaterial impact to the individual financial statement line items of the Company's unaudited Condensed Consolidated Statements of Income during the three months ended March 31, 2018 . For the three months ended March 31, 2018 , the Company recognized $16 million of net sales that were included in deferred revenue at the beginning of the respective periods, which relates to the PepsiCo and Coca-Cola arrangements primarily within the Beverage Concentrates operating segment. Information about the Company 's net sales by reporting segment and portfolio for the three months ended March 31, 2018 and 2017 is as follows: (in millions) Beverage Concentrates Packaged Beverages Latin America Beverages Total For the three months ended March 31, 2018: Carbonated soft drinks ("CSDs") (1) $ 280 $ 477 $ 76 $ 833 Non-carbonated beverages ("NCBs") (2) 3 477 36 516 Contract manufacturing (3) — 69 1 70 Allied brand sales (4) — 147 — 147 Other (5) 20 8 — 28 Net sales $ 303 $ 1,178 $ 113 $ 1,594 For the three months ended March 31, 2017: (6) CSDs (1) $ 271 $ 462 $ 66 $ 799 NCBs (2) 3 449 32 484 Contract manufacturing (3) — 60 — 60 Allied brand sales (4) — 139 — 139 Other (5) 20 8 — 28 Net sales $ 294 $ 1,118 $ 98 $ 1,510 __________________ (1) Represents product sales of owned CSD brands within our portfolio and the net sales recognized ratably under the PepsiCo and Coca-Cola arrangements. Product sales include the sale of beverage concentrates, syrup and packaged beverages. (2) Represents product sales of owned NCB brands within our portfolio. Product sales primarily include packaged beverages. (3) Net sales from contract manufacturing, b ottling beverages and other products for private label owners or others. (4) Allied brand sales represent product distribution of third party brands. (5) Other sales include miscellaneous revenues, such as royalties. (6) Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. Information about the Company 's net sales by reporting segment and geography for the three months ended March 31, 2018 and 2017 is as follows: (in millions) Beverage Concentrates Packaged Beverages Latin America Beverages Total For the three months ended March 31, 2018: United States ("U.S.") $ 284 $ 1,146 $ — $ 1,430 Canada 19 32 — 51 Latin America and other (1) — — 113 113 Net sales $ 303 $ 1,178 $ 113 $ 1,594 For the three months ended March 31, 2017: (2) U.S. $ 277 $ 1,089 $ — $ 1,366 Canada 17 29 — 46 Latin America and other (1) — — 98 98 Net sales $ 294 $ 1,118 $ 98 $ 1,510 __________________ (1) Other includes immaterial net sales in geographical locations outside of U.S., Latin America and Canada. (2) Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets CHANGE IN THE COMPANY'S OPERATING SEGMENTS AND REPORTING UNITS As of January 1, 2018, due to changes to the information reviewed by the chief operating decision maker and limited availability of discrete financial information, the Company has determined that Bai no longer meets the criteria to be considered an operating segment. Therefore, as of January 1, 2018, the Company has three operating segments: Beverage Concentrates, Packaged Beverages, and Latin America Beverages. There is no change to the Company's reportable segments, as previously Bai and Packaged Beverages Excluding Bai were aggregated into the Packaged Beverages reportable segment. The Company has additionally concluded that Bai meets the criteria to be considered a component of the Packaged Beverages segment. However, as the economic characteristics of Bai and Warehouse Direct ("WD") are similar, the Company has aggregated Bai and WD into a single reporting unit as of January 1, 2018. GOODWILL Changes in the carrying amount of goodwill by reporting unit are as follows: (in millions) Beverage Concentrates WD Reporting Unit (1) DSD Reporting Unit (1) Bai (1) Latin America Beverages Total Balance as of December 31, 2017 Goodwill $ 1,733 $ 1,222 $ 189 $ 568 $ 29 $ 3,741 Accumulated impairment losses — — (180 ) — — (180 ) 1,733 1,222 9 568 29 3,561 Foreign currency impact — — — — 3 3 Reclassifications (2) — 568 — (568 ) — — Balance as of March 31, 2018 Goodwill 1,733 1,790 189 — 32 3,744 Accumulated impairment losses — — (180 ) — — (180 ) $ 1,733 $ 1,790 $ 9 $ — $ 32 $ 3,564 ____________________________ (1) As of January 1, 2018, the Packaged Beverages operating segment is comprised of three reporting units, the Direct Store Delivery (" DSD ") system, WD and Bai. (2) As of January 1, 2018, due to changes in the Company's operating segments and reporting units, the goodwill associated with the Bai operating segment was reclassified to the WD reporting unit. Refer to Change in the Company's Operating Segments and Reporting Units above. INTANGIBLE ASSETS OTHER THAN GOODWILL The net carrying amounts of intangible assets other than goodwill are as follows: March 31, 2018 December 31, 2017 Gross Accumulated Net Gross Accumulated Net (in millions) Amount Amortization Amount Amount Amortization Amount Intangible assets with indefinite lives: Brands (1) $ 3,697 $ 3,697 $ 3,694 $ 3,694 Distribution rights 32 32 32 32 Intangible assets with definite lives: Customer relationships 106 $ (80 ) 26 106 $ (79 ) 27 Non-compete agreements 22 (3 ) 19 22 (2 ) 20 Distribution rights 21 (11 ) 10 18 (10 ) 8 Brands 29 (29 ) — 29 (29 ) — Bottler agreements 19 (19 ) — 19 (19 ) — Total $ 3,926 $ (142 ) $ 3,784 $ 3,920 $ (139 ) $ 3,781 ____________________________ (1) Indefinite lived brand assets increased $3 million as a result of foreign currency translation. Amortization expense for intangible assets with definite lives for the three months ended March 31, 2018 and 2017 was $3 million and $2 million , respectively. Amortization expense of these intangible assets over the remainder of 2018 and the next four years is expected to be as follows: Remainder of 2018 For the Years Ended December 31, (in millions) 2019 2020 2021 2022 Projected amortization expense for intangible assets with definite lives $ 13 $ 14 $ 9 $ 7 $ 5 IMPAIRMENT TESTING The Company conducts impairment tests on goodwill and all indefinite lived intangible assets annually or more frequently if circumstances indicate that the carrying amount of an asset may not be recoverable. DPS did not identify any circumstances that indicated that the carrying amount of any goodwill or any indefinite lived intangible asset may not be recoverable as of March 31, 2018 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA") was enacted on December 22, 2017. The TCJA reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018, repealed the domestic manufacturing deduction effective January 1, 2018 and made changes to the international tax rules. The effective tax rates for the three months ended March 31, 2018 and 2017 were 24.7% and 28.6% , respectively. The following is a reconciliation of the provision for income taxes computed at the U.S. federal statutory tax rate to the provision for income taxes reported in the unaudited Condensed Consolidated Statements of Income: For the Three Months Ended March 31, 2018 For the Three Months Ended March 31, 2017 (in millions) Amount Percentage Amount Percentage Statutory federal income tax (1) $ 46 21.0 % $ 87 35.0 % State income taxes, net (2) 10 4.6 % 8 3.2 % US federal domestic manufacturing benefit (3) — — % (6 ) (2.4 )% Impact of non-US operations (4) 1 0.5 % (1 ) (0.4 )% Stock-based compensation benefit (5) (5 ) (2.3 )% (18 ) (7.3 )% Other 2 0.9 % 1 0.5 % Total income tax provision $ 54 24.7 % $ 71 28.6 % ____________________________ For the three months ended March 31, 2018 , the TCJA (1) reduced the U.S. federal statutory tax rate from 35% to 21% . (2) decreased the federal income tax benefit from the deduction of state income taxes from 35% to 21% . (3) repealed the U.S. federal domestic manufacturing deduction. (4) caused the impact of non-U.S. operations to switch from an income tax benefit to an income tax detriment due to the lower U.S. federal statutory tax rate. (5) reduced the tax benefit from stock-based compensation due to the lower U.S. federal statutory tax rate; additionally, the pre-tax windfall in the current period was less than the prior period. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provides guidance on accounting for the impact of the TCJA, in effect allowing an entity to use a methodology similar to the measurement period in a business combination for tax impacts effective in the fourth quarter of 2017. Pursuant to the provisions of SAB 118, as of March 31, 2018 , the Company has not completed its accounting for the tax effects of the TCJA. The Company recorded a reasonable estimate of the impact from the TCJA, but is still analyzing the TCJA and refining our calculations. Additionally, future guidance from the Internal Revenue Service, SEC, or the FASB could result in changes to our accounting for the tax effects of the TCJA. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Long-term Obligations and Borrowing Arrangements The following table summarizes the Company 's long-term obligations: March 31, December 31, (in millions) 2018 2017 Senior unsecured notes $ 4,212 $ 4,230 Capital lease obligations 186 183 Subtotal 4,398 4,413 Less - current portion (263 ) (13 ) Long-term obligations $ 4,135 $ 4,400 The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level March 31, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 1 $ 120 $ 120 $ 66 $ 66 Current portion of long-term obligations: Senior unsecured notes 2 249 249 — — Capital lease obligations (1) N/A 14 13 Short-term borrowings and current portion of long-term obligations $ 383 $ 369 $ 79 $ 66 ____________________________ (1) Capital lease obligations are specifically excluded from the calculation of fair value under U.S. GAAP. SENIOR UNSECURED NOTES The Company 's senior unsecured notes (collectively, the "Notes") consisted of the following carrying values and estimated fair values that are not required to be measured at fair value in the Consolidated Balance Sheets are as follows: (in millions) Fair Value Hierarchy Level March 31, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value 2019 Notes January 15, 2019 2.60% 2 $ 250 $ 249 $ 250 $ 251 2020 Notes January 15, 2020 2.00% 2 250 245 250 248 2021-A Notes November 15, 2021 3.20% 2 250 247 250 255 2021-B Notes November 15, 2021 2.53% 2 250 242 250 249 2022 Notes November 15, 2022 2.70% 2 250 239 250 248 2023 Notes December 15, 2023 3.13% 2 500 481 500 504 2025 Notes November 15, 2025 3.40% 2 500 477 500 508 2026 Notes September 15, 2026 2.55% 2 400 354 400 378 2027 Notes June 15, 2027 3.43% 2 500 470 500 501 2038 Notes May 1, 2038 7.45% 2 125 174 125 179 2045 Notes November 15, 2045 4.50% 2 550 528 550 588 2046 Notes December 15, 2046 4.42% 2 400 379 400 424 Principal amount $ 4,225 $ 4,085 $ 4,225 $ 4,333 Unamortized premiums, discounts, and debt issuance costs (12 ) (13 ) Adjustments to carrying value for interest rate swaps (1) (1 ) 18 Carrying amount $ 4,212 $ 4,230 ____________________________ (1) Refer to Note 7 for additional information on the Company 's interest rate swaps. The indentures governing the Notes, among other things, limit the Company's ability to incur indebtedness secured by principal properties, to enter into certain sale and leaseback transactions and to enter into certain mergers or transfers of substantially all of DPS' assets. The Notes are guaranteed by all of the Company's existing and future direct and indirect subsidiaries that guarantee any of the Company's other indebtedness. As of March 31, 2018 , the Company was in compliance with all financial covenant requirements of the Notes. The fair value amounts of long term debt were based on current market rates available to the Company . 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 debt and related unamortized costs to be incurred at such date. The carrying amount includes the unamortized discounts and issuance costs on the issuance of debt and impact of interest rate swaps designated as fair value hedges and other hedge related adjustments. Refer to Note 7 for additional information regarding the notes subject to fair value hedges. BORROWING ARRANGEMENTS Commercial Paper Program The following table provides information about the Company 's weighted average borrowings under its commercial paper program for the three months ended March 31, 2018 and 2017 : For the Three Months Ended March 31, (in millions, except percentages) 2018 2017 Weighted average commercial paper borrowings (1) $ 115 $ 6 Weighted average borrowing rates 1.95 % 1.03 % ____________________________ (1) Borrowings during the period had maturities of 90 days or less. Upon execution of the Merger Agreement on January 29, 2018, the Company became limited to a maximum aggregate amount of commercial paper outstanding of $200 million , unless it obtains Maple's approval. Refer to Note 2 for additional information about the Merger Agreement. Unsecured Credit Agreement The following table provides amounts utilized and available under the " Revolver " as of March 31, 2018 : (in millions) Amount Utilized Balances Available Revolver $ — $ 380 Letters of credit — 75 As of March 31, 2018 , the Company was in compliance with all financial covenant requirements relating to the Credit Agreement . Shelf Registration Statement The Company filed a "well-known seasoned issuer" shelf registration statement with the SEC, effective September 2, 2016, which registered an indeterminate amount of securities for future sales. The Company 's Board of Directors (the "Board") authorizes the amount of securities that the Company may issue. As of March 31, 2018 , $450 million remained authorized to be issued under the Board's authorization. Letters of Credit Facilities In addition to the portion of the Revolver reserved for issuance of letters of credit, the Company has incremental letters of credit facilities. Under these facilities, $120 million is available for the issuance of letters of credit, $60 million of which was utilized as of March 31, 2018 and $60 million of which remains available for use. |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives DPS is exposed to market risks arising from adverse changes in: • interest rates; • foreign exchange ("FX") rates; and • commodity prices affecting the cost of raw materials and fuels. The Company manages these risks through a variety of strategies, including the use of interest rate contracts, FX forward contracts, commodity forward and future contracts and supplier pricing agreements. DPS does not hold or issue derivative financial instruments for trading or speculative purposes. The Company formally designates and accounts for certain interest rate contracts and foreign exchange forward contracts that meet established accounting criteria under U.S. GAAP as either fair value or cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instruments is recorded, net of applicable taxes, in Accumulated Other Comprehensive Loss (" AOCL "), a component of Stockholders' Equity in the unaudited Condensed Consolidated Balance Sheets. When net income is affected by the variability of the underlying transaction, the applicable offsetting amount of the gain or loss from the derivative instrument deferred in AOCL is reclassified to net income and is reported as a component of the unaudited Condensed Consolidated Statements of Income. For derivative instruments that are designated and qualify as fair value hedges, the effective change in the fair value of the instrument, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized immediately in current-period earnings. For derivatives that are not designated or are de-designated as a hedging instrument, the gain or loss on the instrument is recognized in earnings in the period of change. C ash flows from derivative instruments designated in a qualifying hedging relationship are classified in the same category as the cash flows from the hedged items. Certain interest rate contracts qualify for the "shortcut" method of accounting for hedges under U.S. GAAP . Under the shortcut method, the hedges are assumed to be perfectly effective and no ineffectiveness is recorded in earnings. For all other designated hedges, t he Company assesses whether the derivative instrument is effective in offsetting the changes in fair value or variability of cash flows at the inception of the derivative contract. DPS measures hedge ineffectiveness on a quarterly basis throughout the designated period. Changes in the fair value of the derivative instrument that do not effectively offset changes in the fair value of the underlying hedged item throughout the designated hedge period are recorded in earnings each period. If a fair value or cash flow hedge were to cease to qualify for hedge accounting, or were terminated, the derivatives would continue to be carried on the balance sheet at fair value until settled and hedge accounting would be discontinued prospectively. If the underlying hedged transaction ceases to exist, any associated amounts reported in AOCL would be reclassified to earnings at that time. INTEREST RATES Fair Value Hedges The Company is exposed to the risk of changes in the fair value of certain fixed-rate debt attributable to changes in interest rates and manages these risks through the use of receive-fixed, pay-variable interest rate swaps. Any ineffectiveness is recorded as interest during the period incurred. The following table presents information regarding these interest rate swaps and the associated hedging relationships: Impact to the carrying value ($ in millions) Method of of long-term debt Hedging Number of measuring Notional March 31, December 31, Period entered relationship instruments effectiveness value 2018 2017 November 2011 2019 Notes 2 Short cut method $ 100 $ (1 ) $ — November 2011 2021-A Notes 2 Short cut method 150 (3 ) (1 ) November 2012 2020 Notes 5 Short cut method 120 (3 ) (2 ) December 2016 2021-B Notes 2 Short cut method 250 (7 ) (4 ) December 2016 2023 Notes 2 Short cut method 150 (6 ) (3 ) January 2017 2022 Notes 4 Regression 250 8 17 June 2017 2038 Notes 1 Regression 50 11 11 $ 1,070 $ (1 ) $ 18 FOREIGN EXCHANGE Cash Flow Hedges The Company 's Canadian and Mexican businesses purchase certain inventory through transactions denominated and settled in United States (" U.S. ") dollars, a currency different from the functional currency of those businesses. These inventory purchases are subject to exposure from movements in exchange rates. During the three months ended March 31, 2018 and 2017 , the Company utilized FX forward contracts designated as cash flow hedges to manage the exposures resulting from changes in these foreign currency exchange rates. The intent of these FX contracts is to provide predictability in the Company 's overall cost structure. These FX contracts, carried at fair value, have maturities between one and nine months as of March 31, 2018 . The Company had outstanding FX forward contracts with notional amounts of $49 million and $48 million as of March 31, 2018 and December 31, 2017 , respectively. COMMODITIES Economic Hedges DPS centrally manages the exposure to volatility in the prices of certain commodities used in its production process and transportation through forward and future contracts. The intent of these contracts is to provide a certain level of predictability in the Company 's overall cost structure. During the three months ended March 31, 2018 and 2017 , the Company held forward and future contracts that economically hedged certain of its risks. In these cases, a natural hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items. 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 line item of the unaudited Condensed Consolidated Statements of Income as the hedged transaction. Unrealized gains and losses are recognized as a component of unallocated corporate costs until the Company 's operating 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 operating profit (" SOP "). The total notional values of derivatives related to economic hedges of this type were $185 million and $199 million as of March 31, 2018 and December 31, 2017 , respectively. FAIR VALUE OF DERIVATIVE INSTRUMENTS The following table summarizes the fair value hierarchy and the location of the fair value of the Company 's derivative instruments designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 : (in millions) Fair Value Hierarchy Level Balance Sheet Location March 31, December 31, Assets: Interest rate contracts 2 Prepaid expenses and other current assets $ — $ 3 FX forward contracts 2 Prepaid expenses and other current assets — 2 Interest rate contracts 2 Other non-current assets 12 16 Liabilities: Interest rate contracts 2 Other current liabilities 8 3 FX forward contracts 2 Other current liabilities 1 — Interest rate contracts 2 Other non-current liabilities 12 8 The following table summarizes the fair value hierarchy and the location of the fair value of the Company 's derivative instruments not designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 : (in millions) Fair Value Hierarchy Level Balance Sheet Location March 31, December 31, Assets: Commodity contracts 2 Prepaid expenses and other current assets $ 21 $ 27 Commodity contracts 2 Other non-current assets 12 17 Liabilities: Commodity contracts 2 Other non-current liabilities 1 — The fair values of commodity contracts, interest rate contracts and FX forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The fair value of commodity contracts are valued using the market approach based on observable market transactions, primarily underlying commodities futures or physical index prices, at the reporting date. Interest rate contracts are valued using models based primarily on readily observable market parameters, such as LIBOR forward rates, for all substantial terms of the Company 's contracts and credit risk of the counterparties. The fair value of FX forward contracts are valued using quoted forward FX prices at the reporting date. Therefore, the Company has categorized these contracts as Level 2. IMPACT OF CASH FLOW HEDGES The following table presents the impact of derivative instruments designated as cash flow hedging instruments under U.S. GAAP to the unaudited Condensed Consolidated Statements of Income and Comprehensive Income: (in millions) Amount of Loss Recognized in Other Comprehensive Loss ("OCI") Amount of Loss Reclassified from AOCL into Income Location of Loss Reclassified from AOCL into Income For the three months ended March 31, 2018: Interest rate contracts $ — $ (2 ) Interest expense FX forward contracts (1 ) — Cost of sales Total $ (1 ) $ (2 ) For the three months ended March 31, 2017: Interest rate contracts $ — $ (2 ) Interest expense FX forward contracts (5 ) — Cost of sales Total $ (5 ) $ (2 ) For the three months ended March 31, 2018 and 2017 , no hedge ineffectiveness was recognized in earnings with respect to derivative instruments designated as cash flow hedges. During the next 12 months, the Company expects to reclassify pre-tax net losses of $11 million from AOCL into net income. IMPACT OF FAIR VALUE HEDGES The following table presents the impact of derivative instruments designated as fair value hedging instruments under U.S. GAAP to the unaudited Condensed Consolidated Statements of Income: (in millions) Amount of Gain Recognized in Income Location of Gain Recognized in Income For the three months ended March 31, 2018: Interest rate contracts $ 1 Interest expense For the three months ended March 31, 2017: Interest rate contracts $ 4 Interest expense For the three months ended March 31, 2018 and 2017 , no hedge ineffectiveness was recognized in earnings with respect to derivative instruments designated as fair value hedges for each period. IMPACT OF ECONOMIC HEDGES The following table presents the impact of derivative instruments not designated as hedging instruments under U.S. GAAP to the unaudited Condensed Consolidated Statements of Income: (in millions) Amount of Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income For the three months ended March 31, 2018: Commodity contracts (1) $ (8 ) Cost of sales Commodity contracts (1) 3 SG&A expenses Total $ (5 ) For the three months ended March 31, 2017: Commodity contracts (1) $ 21 Cost of sales Commodity contracts (1) (13 ) SG&A expenses Interest rate contracts (2) 1 Interest expense Total $ 9 ____________________________ (1) Commodity contracts include both realized and unrealized gains and losses. (2) Represents gains on the interest rate contracts related to the 2022 Notes prior to re-designation of hedging relationship in January 2017. The Company has exposure to credit losses from derivative instruments in an asset position in the event of nonperformance by the counterparties to the agreements. Historically, DPS has not experienced credit losses as a result of counterparty nonperformance. The Company selects and periodically reviews counterparties based on credit ratings, limits its exposure to a single counterparty under defined guidelines and monitors the market position of the programs upon execution of a hedging transaction and at least on a quarterly basis. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company 's Omnibus Stock Incentive Plan of 2009 ( " DPS Stock Plan ") provides for various long-term incentive awards, including stock options, RSU s and PSU s. Stock-based compensation expense is recorded in SG&A expenses in the unaudited Condensed Consolidated Statements of Income. The components of stock-based compensation expense are presented below: For the Three Months Ended March 31, (in millions) 2018 2017 Total stock-based compensation expense $ 10 $ 6 Income tax benefit recognized in the Statements of Income (2 ) (2 ) Stock-based compensation expense, net of tax $ 8 $ 4 STOCK OPTIONS The table below summarizes stock option activity for the three months ended March 31, 2018 : Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 1,372,606 $ 82.83 7.86 $ 20 Exercised (23,510 ) 77.15 1 Forfeited or expired (3,519 ) 93.52 Outstanding as of March 31, 2018 1,345,577 82.90 7.62 48 Exercisable as of March 31, 2018 938,886 78.19 7.19 38 As of March 31, 2018 , there was $4 million of unrecognized compensation cost related to unvested stock options granted under the DPS Stock Plan that is expected to be recognized over a weighted average period of 1.26 years . RESTRICTED STOCK UNITS The table below summarizes RSU activity for the three months ended March 31, 2018 . The fair value of RSU s is determined based on the number of units granted and the grant date price of the Company's common stock. RSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 942,124 $ 88.44 0.82 $ 91 Granted 432,538 116.13 Vested and released (501,852 ) 84.24 58 Forfeited (6,745 ) 92.86 Outstanding as of March 31, 2018 866,065 104.67 1.79 103 As of March 31, 2018 , there was $80 million of unrecognized compensation cost related to unvested RSU s granted under the DPS Stock Plan that is expected to be recognized over a weighted average period of 1.78 years . During the three months ended March 31, 2018 , 501,852 shares subject to previously granted RSU s vested. A majority of these vested RSU s were net share settled. The Company withheld 144,882 shares based upon the Company's closing stock price on the vesting date to settle the employees' minimum statutory obligation for applicable income and other employment taxes. Subsequently, the Company remitted the required funds to the appropriate taxing authorities. PERFORMANCE SHARE UNITS The table below summarizes PSU activity for the three months ended March 31, 2018 . The fair value of PSU s is determined based on the number of units granted and the grant date price of the Company's common stock. PSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 329,490 $ 51.69 0.98 $ 32 Vested and released (92,589 ) 67.35 11 Forfeited (21,972 ) 67.11 Outstanding as of March 31, 2018 214,929 45.66 1.25 25 As of March 31, 2018 , there was $6 million of unrecognized compensation cost related to unvested PSU s granted under the DPS Stock Plan that is expected to be recognized over a weighted average period of 1.25 years . During the three months ended March 31, 2018 , 92,589 units subject to previously granted PSU s vested. A majority of these vested PSU s were net share settled. The Company withheld 27,373 shares based upon the Company's closing stock price on the vesting date to settle the employees' minimum statutory obligation for the applicable income and other employment taxes. Subsequently, the Company remitted the required funds to the appropriate taxing authorities. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the assumed conversion of all dilutive securities. The following table presents the basic and diluted EPS and the Company's basic and diluted shares outstanding: For the Three Months Ended March 31, (in millions, except per share data) 2018 2017 Basic EPS: Net income $ 159 $ 177 Weighted average common shares outstanding 179.9 183.4 Earnings per common share — basic $ 0.88 $ 0.97 Diluted EPS: Net income $ 159 $ 177 Weighted average common shares outstanding 179.9 183.4 Effect of dilutive securities: Stock options 0.3 0.3 RSUs 0.5 0.7 PSUs 0.1 0.2 Weighted average common shares outstanding and common stock equivalents 180.8 184.6 Earnings per common share — diluted $ 0.88 $ 0.96 Stock options, RSU s, PSU s and dividend equivalent units (" DEUs ") totaling 0.1 million and 0.5 million shares were excluded from the diluted weighted average shares outstanding for the three months ended March 31, 2018 and 2017 , respectively, as they were not dilutive. Under the terms of our RSU and PSU agreements, unvested RSU and PSU awards contain forfeitable rights to dividends and DEUs . Because the DEUs are forfeitable, they are defined as non-participating securities. As of March 31, 2018 , there were 22,526 DEUs , which will vest at the time that the underlying RSU or PSU vests. As of March 31, 2018 , the Company 's Board has authorized a total aggregate share repurchase plan of $5 billion . The Company's share repurchase program was suspended during negotiation of the Maple Transaction, and it remains suspended as of March 31, 2018 under the terms of the Merger Agreement. The Company therefore did not repurchase any shares during the three months ended March 31, 2018 . The Company repurchased and retired 0.3 million shares of common stock valued at approximately $28 million for the three months ended March 31, 2017 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2018 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following tables provide a summary of changes in the balances of each component of AOCL , net of taxes: (in millions) Foreign Currency Translation Change in Pension Liability Cash Flow Hedges Accumulated Other Comprehensive Loss Balance as of January 1, 2017 $ (164 ) $ (37 ) $ (28 ) $ (229 ) OCI before reclassifications 16 1 (7 ) 10 Amounts reclassified from AOCL — 4 13 17 Net current year OCI 16 5 6 27 Balance as of December 31, 2017 (148 ) (32 ) (22 ) (202 ) OCI before reclassifications 18 — (2 ) 16 Amounts reclassified from AOCL — 1 2 3 Net current period OCI 18 1 — 19 Balance as of March 31, 2018 $ (130 ) $ (31 ) $ (22 ) $ (183 ) The following table presents the amount of loss reclassified from AOCL into the unaudited Condensed Consolidated Statements of Income: For the Three Months Ended March 31, (in millions) Location of Loss Reclassified from AOCL into Income 2018 2017 Loss on cash flow hedges: Interest rate contracts Interest expense $ (2 ) $ (2 ) Foreign exchange forward contracts Cost of sales — — Total (2 ) (2 ) Income tax benefit — (1 ) Total $ (2 ) $ (1 ) Defined benefit pension and post-retirement plan items: Amortization of actuarial losses, net Other income, net $ (1 ) $ (1 ) Total (1 ) (1 ) Income tax benefit — — Total $ (1 ) $ (1 ) Total reclassifications $ (3 ) $ (2 ) |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following: March 31, December 31, (in millions) 2018 2017 Raw materials $ 79 $ 81 Spare parts 25 24 Work in process 7 7 Finished goods 166 149 Inventories at first in first out cost 277 261 Reduction to LIFO cost (34 ) (32 ) Inventories $ 243 $ 229 Approximately $189 million and $177 million of the Company 's inventory was accounted for under the LIFO method of accounting as of March 31, 2018 and December 31, 2017 , respectively. The reduction to LIFO cost reflects the excess of the current cost of LIFO inventories as of March 31, 2018 and December 31, 2017 , over the amount at which these inventories were valued on the unaudited Condensed Consolidated Balance Sheets. For the three months ended March 31, 2018 and 2017 , there was no LIFO inventory liquidation. |
Other Assets and Liabilities Ot
Other Assets and Liabilities Other Assets and Liabilities (Notes) | 3 Months Ended |
Mar. 31, 2018 | |
Other Assets and Liabilities [Abstract] | |
Other assets and liabilities disclosure [Text Block] | Other Assets and Liabilities The table below details the components of other assets and other liabilities: March 31, December 31, (in millions) 2018 2017 Prepaid expenses and other current assets: Customer incentive programs $ 118 $ 16 Derivative instruments 21 32 Prepaid income taxes 9 7 Other 77 44 Total prepaid expenses and other current assets $ 225 $ 99 Other non-current assets: Customer incentive programs $ 77 $ 76 Marketable securities - trading (1) 52 48 Derivative instruments 24 33 Equity securities without readily determinable fair values 1 1 Non-current restricted cash and restricted cash equivalents 92 79 Other 40 42 Total other non-current assets $ 286 $ 279 Other current liabilities: Customer rebates and incentives $ 345 $ 299 Accrued compensation 81 130 Insurance liability 36 34 Interest accrual 46 20 Dividends payable 105 103 Derivative instruments 9 3 Holdback liability to former Bai Brands shareholders 5 7 Acquired contingent liabilities 11 14 Other 123 109 Total other current liabilities $ 761 $ 719 Other non-current liabilities: Long-term payables due to Mondelēz International, Inc. $ 16 $ 16 Long-term pension and post-retirement liability 20 19 Insurance liability 60 60 Derivative instruments 13 8 Deferred compensation liability 52 48 Holdback liability to former Bai Brands shareholders 79 79 Acquired contingent liabilities 5 5 Other 28 29 Total other non-current liabilities $ 273 $ 264 ____________________________ (1) 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 $52 million and $48 million as of March 31, 2018 and December 31, 2017 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies LEGAL MATTERS In connection with the Maple Transaction, purported DPS stockholders have filed five lawsuits (excluding a lawsuit that has subsequently been withdrawn) against the Company and each member of the board of directors in federal court and a sixth lawsuit, against the Company, each member of the board, Maple and Merger Sub in the Delaware Court of Chancery. The complaints in each lawsuit allege certain material misrepresentations and omissions in the preliminary proxy statement filed by the Company on March 8, 2018. The complaint in the action filed in the Delaware Court of Chancery also asserts that stockholders are entitled to appraisal rights in connection with the Maple Transaction. The Company intends to vigorously contest these allegations. In addition, the Company is occasionally subject to certain other litigation or other legal proceedings. The Company does not believe that the outcome of these, or any other, pending legal matters, individually or collectively, will have a material adverse effect on the results of operations, financial condition or liquidity of the Company . |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported with the unaudited Condensed Consolidated Balance Sheets to the total of the same amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows: Fair Value Hierarchy Level March 31, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 13 $ 13 $ 61 $ 61 Restricted cash and restricted cash equivalents (1) 1 16 16 18 18 Non-current restricted cash and restricted cash equivalents included in Other non-current assets (1) 1 92 92 79 79 Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 121 $ 121 $ 158 $ 158 ____________________________ (1) Current and non-current restricted cash and restricted cash equivalents primarily includes the holdback held in escrow in connection with the Bai Brands Merger. Refer to Note 2 for additional information on the Bai Brands Merger. The following table details supplemental cash flow disclosures of non-cash investing and financing activities: For the Three Months Ended March 31, (in millions) 2018 2017 Supplemental cash flow disclosures of non-cash investing and financing activities: Dividends declared but not yet paid $ 105 $ 107 Capital expenditures included in accounts payable and other current liabilities 12 9 Holdback liability for acquisition of business 84 103 Capital lease additions 6 7 Supplemental cash flow disclosures: Interest paid $ 15 $ 13 Income taxes paid 3 7 |
Segments
Segments | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segments | Segments As of March 31, 2018 and for the three months ended March 31, 2018 , the Company 's operating structure consisted of the following three operating segments: • 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 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 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. As of December 31, 2017 and for the three months ended March 31, 2017 , the Company 's operating structure consisted of the four operating segments identified as a result of the Bai Brands Merger. Refer to Note 4 for additional information about the change in the Company 's operating structure as of January 1, 2018. Segment results are based on management reports. Net sales and SOP are the significant financial measures used to assess the operating performance of the Company 's operating segments. Intersegment sales are recorded at cost and are eliminated in the unaudited Condensed Consolidated Statements of Income. “Unallocated corporate costs” are excluded from the Company's measurement of segment performance and include stock-based compensation expense, unrealized commodity derivative gains and losses, and certain general corporate expenses. Information about the Company 's operations by reporting segment is as follows: For the Three Months Ended March 31, (in millions) 2018 2017 Segment Results – Net sales Beverage Concentrates $ 303 $ 294 Packaged Beverages 1,178 1,118 Latin America Beverages 113 98 Net sales $ 1,594 $ 1,510 For the Three Months Ended March 31, (in millions) 2018 2017 Segment Results – SOP Beverage Concentrates $ 194 $ 186 Packaged Beverages 150 141 Latin America Beverages 12 11 Total SOP 356 338 Unallocated corporate costs 96 80 Other operating expense (income), net 1 (28 ) Income from operations 259 286 Interest expense, net 40 39 Other income, net — (1 ) Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries $ 219 $ 248 |
Guarantor and Non-Guarantor Fin
Guarantor and Non-Guarantor Financial Information | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Guarantor and Non-Guarantor Financial Information | Guarantor and Non-Guarantor Financial Information The Company's outstanding senior unsecured notes (the " Notes ") are fully and unconditionally guaranteed by substantially all of the Company 's existing and future direct and indirect domestic subsidiaries (except one immaterial subsidiary associated with charitable purposes) (the " Guarantors "), as defined in the indentures governing the Notes . The Guarantors are 100% owned either directly or indirectly by the Company and jointly and severally guarantee, subject to the release provisions described below, the Company 's obligations under the Notes . None of the Company 's subsidiaries organized outside of the U.S. or immaterial subsidiaries used for charitable purposes (collectively, the " Non-Guarantors ") guarantee the Notes. The subsidiary guarantees with respect to the Notes are subject to release upon the occurrence of certain events, including the sale of all or substantially all of a subsidiary's assets, the release of the subsidiary's guarantee of other indebtedness of the Company, the Company 's exercise of its legal defeasance option with respect to the Notes and the discharge of the Company 's obligations under the applicable indenture. The following schedules present the financial information for Dr Pepper Snapple Group, Inc. (the " Parent "), Guarantors and Non-Guarantors . The consolidating schedules are provided in accordance with the reporting requirements of Rule 3-10 under SEC Regulation S-X for guarantor subsidiaries. Condensed Consolidating Statements of Income For the Three Months Ended March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,473 $ 153 $ (32 ) $ 1,594 Cost of sales — 629 84 (32 ) 681 Gross profit — 844 69 — 913 Selling, general and administrative expenses — 576 50 — 626 Depreciation and amortization — 25 2 — 27 Other operating expense (income), net — 1 — — 1 Income from operations — 242 17 — 259 Interest expense 82 25 — (66 ) 41 Interest income (23 ) (43 ) (1 ) 66 (1 ) Other (income) expense, net (2 ) (1 ) 3 — — Income (loss) before provision (benefit) for income taxes and equity in loss of subsidiaries (57 ) 261 15 — 219 Provision (benefit) for income taxes (13 ) 63 4 — 54 Income (loss) before equity in earnings (loss) of subsidiaries (44 ) 198 11 — 165 Equity in earnings of consolidated subsidiaries 203 11 — (214 ) — Equity in loss of unconsolidated subsidiaries, net of tax — (6 ) — — (6 ) Net income $ 159 $ 203 $ 11 $ (214 ) $ 159 Condensed Consolidating Statements of Income For the Three Months Ended March 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,407 $ 136 $ (33 ) $ 1,510 Cost of sales — 564 76 (33 ) 607 Gross profit — 843 60 — 903 Selling, general and administrative expenses 2 576 42 — 620 Depreciation and amortization — 23 2 — 25 Other operating expense (income), net — (28 ) — — (28 ) Income from operations (2 ) 272 16 — 286 Interest expense 63 19 — (42 ) 40 Interest income (16 ) (27 ) — 42 (1 ) Other (income) expense, net (4 ) — 3 — (1 ) Income (loss) before provision (benefit) for income taxes and equity in loss of subsidiaries (45 ) 280 13 — 248 Provision (benefit) for income taxes (16 ) 83 4 — 71 Income (loss) before equity in earnings (loss) of subsidiaries (29 ) 197 9 — 177 Equity in earnings of consolidated subsidiaries 206 9 — (215 ) — Equity in loss of unconsolidated subsidiaries, net of tax — — — — — Net income $ 177 $ 206 $ 9 $ (215 ) $ 177 Condensed Consolidating Statements of Comprehensive Income For the Three Months Ended March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 178 $ 220 $ 27 $ (247 ) $ 178 Condensed Consolidating Statements of Comprehensive Income For the Three Months Ended March 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 200 $ 227 $ 30 $ (257 ) $ 200 Condensed Consolidating Balance Sheets As of March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ — $ 13 $ — $ 13 Restricted cash and cash equivalents — 15 1 — 16 Accounts receivable: Trade, net — 620 80 — 700 Other 6 33 10 — 49 Related party receivable 25 48 — (73 ) — Inventories — 211 32 — 243 Prepaid expenses and other current assets 482 211 19 (487 ) 225 Total current assets 513 1,138 155 (560 ) 1,246 Property, plant and equipment, net — 1,051 147 — 1,198 Investments in consolidated subsidiaries 9,555 324 — (9,879 ) — Investments in unconsolidated subsidiaries — 36 — — 36 Goodwill — 3,540 24 — 3,564 Other intangible assets, net — 3,733 51 — 3,784 Long-term receivable, related parties 3,298 6,335 — (9,633 ) — Other non-current assets 64 195 29 (2 ) 286 Deferred tax assets 10 — 65 (10 ) 65 Total assets $ 13,440 $ 16,352 $ 471 $ (20,084 ) $ 10,179 Current liabilities: Accounts payable $ — $ 344 $ 33 $ — $ 377 Related party payable 43 23 7 (73 ) — Deferred revenue — 67 2 (5 ) 64 Short-term borrowings and current portion of long-term obligations 369 14 — — 383 Income taxes payable — 521 — (482 ) 39 Other current liabilities 164 528 69 — 761 Total current liabilities 576 1,497 111 (560 ) 1,624 Long-term obligations to third parties 3,963 172 — — 4,135 Long-term obligations to related parties 6,335 3,298 — (9,633 ) — Deferred tax liabilities — 633 — (10 ) 623 Non-current deferred revenue — 1,015 25 (2 ) 1,038 Other non-current liabilities 80 182 11 — 273 Total liabilities 10,954 6,797 147 (10,205 ) 7,693 Total stockholders' equity 2,486 9,555 324 (9,879 ) 2,486 Total liabilities and stockholders' equity $ 13,440 $ 16,352 $ 471 $ (20,084 ) $ 10,179 Condensed Consolidating Balance Sheets As of December 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 15 $ 46 $ — $ 61 Restricted cash and cash equivalents — 18 — — 18 Accounts receivable: Trade, net — 595 73 — 668 Other 1 35 6 — 42 Related party receivable 20 42 — (62 ) — Inventories — 199 30 — 229 Prepaid and other current assets 473 83 18 (475 ) 99 Total current assets 494 987 173 (537 ) 1,117 Property, plant and equipment, net — 1,062 136 — 1,198 Investments in consolidated subsidiaries 9,373 332 — (9,705 ) — Investments in unconsolidated subsidiaries — 24 — — 24 Goodwill — 3,539 22 — 3,561 Other intangible assets, net — 3,733 48 — 3,781 Long-term receivable, related parties 3,278 6,233 — (9,511 ) — Other non-current assets 65 195 22 (3 ) 279 Deferred tax assets 11 — 62 (11 ) 62 Total assets $ 13,221 $ 16,105 $ 463 $ (19,767 ) $ 10,022 Current liabilities: Accounts payable $ — $ 333 $ 32 $ — $ 365 Related party payable 37 20 5 (62 ) — Deferred revenue — 68 2 (6 ) 64 Short-term borrowings and current portion of long-term obligations 66 13 — — 79 Income taxes payable — 479 1 (469 ) 11 Other current liabilities 133 532 54 — 719 Total current liabilities 236 1,445 94 (537 ) 1,238 Long-term obligations to third parties 4,230 170 — — 4,400 Long-term obligations to related parties 6,233 3,278 — (9,511 ) — Deferred tax liabilities — 625 — (11 ) 614 Non-current deferred revenue — 1,032 26 (3 ) 1,055 Other non-current liabilities 71 182 11 — 264 Total liabilities 10,770 6,732 131 (10,062 ) 7,571 Total stockholders' equity 2,451 9,373 332 (9,705 ) 2,451 Total liabilities and stockholders' equity $ 13,221 $ 16,105 $ 463 $ (19,767 ) $ 10,022 Condensed Consolidating Statements of Cash Flows For the Three Months Ended March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (29 ) $ 150 $ 19 $ (37 ) $ 103 Investing activities: Acquisition of business — (2 ) — — (2 ) Purchase of property, plant and equipment — (35 ) (6 ) — (41 ) Purchase of intangible assets — (3 ) — — (3 ) Investment in unconsolidated subsidiaries — (19 ) — — (19 ) Proceeds from disposals of property, plant and equipment — 1 — — 1 Issuance of related party notes receivable — (102 ) — 102 — Other, net (4 ) — — — (4 ) Net cash (used in) provided by investing activities (4 ) (160 ) (6 ) 102 (68 ) Financing activities: Proceeds from issuance of related party debt 102 — — (102 ) — Net issuance of commercial paper 54 — — — 54 Dividends paid (104 ) — (37 ) 37 (104 ) Tax withholdings related to net share settlements of certain stock awards (21 ) — — — (21 ) Proceeds from stock options exercised 2 — — — 2 Capital lease payments — (4 ) — — (4 ) Net cash (used in) provided by financing activities 33 (4 ) (37 ) (65 ) (73 ) Cash and cash equivalents — net change from: Operating, investing and financing activities — (14 ) (24 ) — (38 ) Effect of exchange rate changes on cash and cash equivalents — — 1 — 1 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — 111 47 — 158 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ — $ 97 $ 24 $ — $ 121 Condensed Consolidating Statements of Cash Flows For the Three Months Ended March 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (23 ) $ 122 $ 8 $ (10 ) $ 97 Investing activities: Acquisition of business — (1,548 ) — — (1,548 ) Cash acquired in step acquisition of unconsolidated subsidiaries — 3 — — 3 Purchase of property, plant and equipment — (15 ) (1 ) — (16 ) Purchase of intangible assets — (1 ) — — (1 ) Investments in unconsolidated subsidiaries — (1 ) — — (1 ) Proceeds from disposals of property, plant and equipment — 1 — — 1 Issuance of related party notes receivable — (169 ) — 169 — Other, net (7 ) — — — (7 ) Net cash (used in) provided by investing activities (7 ) (1,730 ) (1 ) 169 (1,569 ) Financing activities: Proceeds from issuance of related party debt 169 — — (169 ) — Repurchase of shares of common stock (28 ) — — — (28 ) Dividends paid (97 ) — (10 ) 10 (97 ) Tax withholdings related to net share settlements of certain stock awards (30 ) — — — (30 ) Proceeds from stock options exercised 17 — — — 17 Deferred financing charges paid (1 ) — — — (1 ) Capital lease payments — (3 ) — — (3 ) Net cash (used in) provided by financing activities 30 (3 ) (10 ) (159 ) (142 ) Cash and cash equivalents — net change from: Operating, investing and financing activities — (1,611 ) (3 ) — (1,614 ) Effect of exchange rate changes on cash and cash equivalents — 1 2 — 3 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — 1,736 51 — 1,787 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ — $ 126 $ 50 $ — $ 176 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value [Abstract] | |
Fair Value of Financial Instruments | FAIR VALUE Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Based upon the transparency of inputs to the valuation of an asset or liability, a three-level hierarchy has been established for fair value measurements. The three-level hierarchy for disclosure of fair value measurements is as follows: Level 1 - Quoted market prices in active markets for identical assets or liabilities. Level 2 - Observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 - Valuations with one or more unobservable significant inputs that reflect the reporting entity's own assumptions. The fair value of senior unsecured notes and marketable securities as of March 31, 2018 and December 31, 2017 are based on quoted market prices for publicly traded securities. The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level March 31, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 1 $ 120 $ 120 $ 66 $ 66 Current portion of long-term obligations: Senior unsecured notes 2 249 249 — — Capital lease obligations (1) N/A 14 13 Short-term borrowings and current portion of long-term obligations $ 383 $ 369 $ 79 $ 66 ____________________________ (1) Capital lease obligations are specifically excluded from the calculation of fair value under U.S. GAAP. SENIOR UNSECURED NOTES The Company 's senior unsecured notes (collectively, the "Notes") consisted of the following carrying values and estimated fair values that are not required to be measured at fair value in the Consolidated Balance Sheets are as follows: (in millions) Fair Value Hierarchy Level March 31, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value 2019 Notes January 15, 2019 2.60% 2 $ 250 $ 249 $ 250 $ 251 2020 Notes January 15, 2020 2.00% 2 250 245 250 248 2021-A Notes November 15, 2021 3.20% 2 250 247 250 255 2021-B Notes November 15, 2021 2.53% 2 250 242 250 249 2022 Notes November 15, 2022 2.70% 2 250 239 250 248 2023 Notes December 15, 2023 3.13% 2 500 481 500 504 2025 Notes November 15, 2025 3.40% 2 500 477 500 508 2026 Notes September 15, 2026 2.55% 2 400 354 400 378 2027 Notes June 15, 2027 3.43% 2 500 470 500 501 2038 Notes May 1, 2038 7.45% 2 125 174 125 179 2045 Notes November 15, 2045 4.50% 2 550 528 550 588 2046 Notes December 15, 2046 4.42% 2 400 379 400 424 Principal amount $ 4,225 $ 4,085 $ 4,225 $ 4,333 Unamortized premiums, discounts, and debt issuance costs (12 ) (13 ) Adjustments to carrying value for interest rate swaps (1) (1 ) 18 Carrying amount $ 4,212 $ 4,230 ____________________________ (1) Refer to Note 7 for additional information on the Company 's interest rate swaps. The indentures governing the Notes, among other things, limit the Company's ability to incur indebtedness secured by principal properties, to enter into certain sale and leaseback transactions and to enter into certain mergers or transfers of substantially all of DPS' assets. The Notes are guaranteed by all of the Company's existing and future direct and indirect subsidiaries that guarantee any of the Company's other indebtedness. As of March 31, 2018 , the Company was in compliance with all financial covenant requirements of the Notes. The fair value amounts of long term debt were based on current market rates available to the Company . 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 debt and related unamortized costs to be incurred at such date. The carrying amount includes the unamortized discounts and issuance costs on the issuance of debt and impact of interest rate swaps designated as fair value hedges and other hedge related adjustments. Refer to Note 7 for additional information regarding the notes subject to fair value hedges. FAIR VALUE OF DERIVATIVE INSTRUMENTS The following table summarizes the fair value hierarchy and the location of the fair value of the Company 's derivative instruments designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 : (in millions) Fair Value Hierarchy Level Balance Sheet Location March 31, December 31, Assets: Interest rate contracts 2 Prepaid expenses and other current assets $ — $ 3 FX forward contracts 2 Prepaid expenses and other current assets — 2 Interest rate contracts 2 Other non-current assets 12 16 Liabilities: Interest rate contracts 2 Other current liabilities 8 3 FX forward contracts 2 Other current liabilities 1 — Interest rate contracts 2 Other non-current liabilities 12 8 The following table summarizes the fair value hierarchy and the location of the fair value of the Company 's derivative instruments not designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 : (in millions) Fair Value Hierarchy Level Balance Sheet Location March 31, December 31, Assets: Commodity contracts 2 Prepaid expenses and other current assets $ 21 $ 27 Commodity contracts 2 Other non-current assets 12 17 Liabilities: Commodity contracts 2 Other non-current liabilities 1 — The fair values of commodity contracts, interest rate contracts and FX forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The fair value of commodity contracts are valued using the market approach based on observable market transactions, primarily underlying commodities futures or physical index prices, at the reporting date. Interest rate contracts are valued using models based primarily on readily observable market parameters, such as LIBOR forward rates, for all substantial terms of the Company 's contracts and credit risk of the counterparties. The fair value of FX forward contracts are valued using quoted forward FX prices at the reporting date. Therefore, the Company has categorized these contracts as Level 2. (1) 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 $52 million and $48 million as of March 31, 2018 and December 31, 2017 , respectively. The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported with the unaudited Condensed Consolidated Balance Sheets to the total of the same amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows: Fair Value Hierarchy Level March 31, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 13 $ 13 $ 61 $ 61 Restricted cash and restricted cash equivalents (1) 1 16 16 18 18 Non-current restricted cash and restricted cash equivalents included in Other non-current assets (1) 1 92 92 79 79 Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 121 $ 121 $ 158 $ 158 ____________________________ (1) Current and non-current restricted cash and restricted cash equivalents primarily includes the holdback held in escrow in connection with the Bai Brands Merger. Refer to Note 2 for additional information on the Bai Brands Merger. |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (" 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 the Company 's audited consolidated financial statements and the notes thereto in the Company 's Annual Report on Form 10-K for the year ended December 31, 2017 ("Annual Report"). |
Principles of Consolidation | PRINCIPLES OF CONSOLIDATION DPS consolidates all wholly owned subsidiaries. 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 DPS' 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. The Company is also required to consolidate entities that are variable interest entities (“ VIE s”) of which DPS is the primary beneficiary. Judgments are made in assessing whether the Company is the primary beneficiary, including determination of the activities that most significantly impact the VIE ’s economic performance. The Company eliminates from its financial results all intercompany transactions between entities included in the unaudited condensed consolidated financial statements and the intercompany transactions with its equity method investees. |
Use of Estimates | USE OF ESTIMATES The process of preparing DPS ' 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 . |
Fair Value Measurement, Policy [Policy Text Block] | FAIR VALUE Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Based upon the transparency of inputs to the valuation of an asset or liability, a three-level hierarchy has been established for fair value measurements. The three-level hierarchy for disclosure of fair value measurements is as follows: Level 1 - Quoted market prices in active markets for identical assets or liabilities. Level 2 - Observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 - Valuations with one or more unobservable significant inputs that reflect the reporting entity's own assumptions. The fair value of senior unsecured notes and marketable securities as of March 31, 2018 and December 31, 2017 are based on quoted market prices for publicly traded securities. |
Reclassification | RECLASSIFICATIONS Pension and other post-retirement benefit plan expenses of $1 million were reclassified from selling, general & administrative ("SG&A") expenses to other income, net, for the three months ended March 31, 2017 , as a result of the retrospective adoption of Accounting Standard Update ("ASU") 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). Refer to Recently Adopted Provisions of U.S. GAAP below. |
Recently Issued Accounting Standards | RECENTLY ISSUED ACCOUNTING STANDARDS Effective in 2019 In February 2016, the Financial Accounting Standards Board (" FASB ") issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). The ASU replaces the prior lease accounting guidance in its entirety. The underlying principle of the new standard is the recognition of lease assets and lease liabilities by lessees for substantially all leases, with an exception for leases with terms of less than twelve months. The standard also requires additional quantitative and qualitative disclosures. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) - Land Easement Practical Expedient for Transition to Topic 842 , which provides an optional transition practical expedient that allows companies to not evaluate (under Topic 842) existing or expired land easements that were not previously accounted for as leases (under Topic 840). Topic 842 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. Topic 842 requires a modified retrospective approach, which includes several optional practical expedients. The Company intends to adopt the standard during the quarter ending March 31, 2019. The Company has assembled a cross functional project management team, selected a software provider and has begun the implementation of the software. The Company anticipates the impact of Topic 842 will be significant to its Consolidated Balance Sheet due to the amount of the Company's lease commitments. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). The objective of the ASU is to improve the financial reporting of hedging relationships in order to better portray the economic results of an entity’s risk management activities in its financial statements and to make certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2017-12 on the Company's consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) ("ASU 2018-02"). The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act ("TCJA") and will improve the usefulness of information reported to financial statement users. ASU 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-02 on the Company's consolidated financial statements. |
Recently Adopted Provisions of U.S. GAAP | RECENTLY ADOPTED PROVISIONS OF U.S. GAAP As of January 1, 2018, the Company adopted Revenue from Contracts with Customers (Topic 606) ("ASC 606") . The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP . The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and recognized the cumulative effect of initially applying the standard, which was primarily driven by the acceleration of certain customer incentives, as a $35 million reduction to the opening balance of retained earnings. The Company expects that the impact to net income of the new standard will be immaterial on an ongoing annual basis; however, the Company does anticipate that the new standard will have an impact on its net sales in interim periods due to timing. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 3 for additional information regarding the Company's adoption of ASC 606. As of January 1, 2018, the Company adopted ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory ("ASU 2016-16"). ASU 2016-16 requires entities to recognize the income tax consequences of intra-entity transfers of assets other than inventories when such transfers occur. The ASU was adopted on a modified retrospective basis through a cumulative-effect adjustment, which resulted in an increase to the opening balance of retained earnings of approximately $4 million as of January 1, 2018. As a result of the adoption of ASC 606 and ASU 2016-16, retained earnings decreased approximately $31 million as of January 1, 2018. As of January 1, 2018, the Company adopted ASU 2017-07, which requires employers who offer defined benefit pension plans or other post-retirement benefit plans to report the service cost component within the same income statement caption as other compensation costs arising from services rendered by employees during the period. The ASU also requires the other components of net periodic benefit cost to be presented separately from the service cost component, in a caption outside of a subtotal of income from operations. Additionally, the ASU provides that only the service cost component is eligible for capitalization. As a result of the adoption, the Company reclassified $1 million from selling, general and administrative expenses to other non-operating expense, net for the three months ended March 31, 2017 . As of January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"), which makes several targeted improvements to U.S. GAAP . Among other things, ASU 2016-01 eliminates the cost method of accounting and investments in equity securities which were previously accounted for under the cost method must now be measured at fair value, with changes in fair value recognized in net income, under guidance in the newly added Topic 321, Investments - Equity Securities , to the Accounting Standards Codification. Equity instruments that do not have readily determinable fair values may be measured at cost less impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company also adopted ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which provides clarification on certain guidance issued under ASU 2016-01. The Company holds two investments in equity securities which were accounted for under the cost method of accounting prior to January 1, 2018, which do not have readily determinable fair values. The adoption of these standards did not have a material impact on such investments or the Company's consolidated financial statements. |
Acquisitions and Investments 27
Acquisitions and Investments in Unconsolidated Subsidiaries (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Changes in Holdback Liability [Table Text Block] | The following table provides a rollforward of the holdback placed in escrow from December 31, 2017 to March 31, 2018 : (in millions) Indemnification Escrow Unrecognized Compensation Costs Total Holdback Liability Balance as of December 31, 2017 $ 79 $ 7 $ 86 Recognized compensation costs — (2 ) (2 ) Balance as of March 31, 2018 $ 79 $ 5 $ 84 |
Interim Period, Costs Not Allocable [Table Text Block] | The following table provides information about the Company 's transaction and integration expenses incurred during the three months ended March 31, 2018 and 2017 : For the Three Months Ended March 31, (in millions) 2018 2017 Maple Transaction $ 12 $ — Bai Brands Merger 1 19 Total transaction and integration expenses incurred $ 13 $ 19 |
Revenues Revenues (Tables)
Revenues Revenues (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenues [Abstract] | |
Disaggregation of Revenue [Table Text Block] | Information about the Company 's net sales by reporting segment and portfolio for the three months ended March 31, 2018 and 2017 is as follows: (in millions) Beverage Concentrates Packaged Beverages Latin America Beverages Total For the three months ended March 31, 2018: Carbonated soft drinks ("CSDs") (1) $ 280 $ 477 $ 76 $ 833 Non-carbonated beverages ("NCBs") (2) 3 477 36 516 Contract manufacturing (3) — 69 1 70 Allied brand sales (4) — 147 — 147 Other (5) 20 8 — 28 Net sales $ 303 $ 1,178 $ 113 $ 1,594 For the three months ended March 31, 2017: (6) CSDs (1) $ 271 $ 462 $ 66 $ 799 NCBs (2) 3 449 32 484 Contract manufacturing (3) — 60 — 60 Allied brand sales (4) — 139 — 139 Other (5) 20 8 — 28 Net sales $ 294 $ 1,118 $ 98 $ 1,510 __________________ (1) Represents product sales of owned CSD brands within our portfolio and the net sales recognized ratably under the PepsiCo and Coca-Cola arrangements. Product sales include the sale of beverage concentrates, syrup and packaged beverages. (2) Represents product sales of owned NCB brands within our portfolio. Product sales primarily include packaged beverages. (3) Net sales from contract manufacturing, b ottling beverages and other products for private label owners or others. (4) Allied brand sales represent product distribution of third party brands. (5) Other sales include miscellaneous revenues, such as royalties. (6) Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. Information about the Company 's net sales by reporting segment and geography for the three months ended March 31, 2018 and 2017 is as follows: (in millions) Beverage Concentrates Packaged Beverages Latin America Beverages Total For the three months ended March 31, 2018: United States ("U.S.") $ 284 $ 1,146 $ — $ 1,430 Canada 19 32 — 51 Latin America and other (1) — — 113 113 Net sales $ 303 $ 1,178 $ 113 $ 1,594 For the three months ended March 31, 2017: (2) U.S. $ 277 $ 1,089 $ — $ 1,366 Canada 17 29 — 46 Latin America and other (1) — — 98 98 Net sales $ 294 $ 1,118 $ 98 $ 1,510 __________________ (1) Other includes immaterial net sales in geographical locations outside of U.S., Latin America and Canada. (2) Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. |
Goodwill and Other Intangible29
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in goodwill by operating segments | Changes in the carrying amount of goodwill by reporting unit are as follows: (in millions) Beverage Concentrates WD Reporting Unit (1) DSD Reporting Unit (1) Bai (1) Latin America Beverages Total Balance as of December 31, 2017 Goodwill $ 1,733 $ 1,222 $ 189 $ 568 $ 29 $ 3,741 Accumulated impairment losses — — (180 ) — — (180 ) 1,733 1,222 9 568 29 3,561 Foreign currency impact — — — — 3 3 Reclassifications (2) — 568 — (568 ) — — Balance as of March 31, 2018 Goodwill 1,733 1,790 189 — 32 3,744 Accumulated impairment losses — — (180 ) — — (180 ) $ 1,733 $ 1,790 $ 9 $ — $ 32 $ 3,564 ____________________________ (1) As of January 1, 2018, the Packaged Beverages operating segment is comprised of three reporting units, the Direct Store Delivery (" DSD ") system, WD and Bai. (2) As of January 1, 2018, due to changes in the Company's operating segments and reporting units, the goodwill associated with the Bai operating segment was reclassified to the WD reporting unit. Refer to Change in the Company's Operating Segments and Reporting Units above. |
Change in intangible assets other than goodwill - indefinite lives | The net carrying amounts of intangible assets other than goodwill are as follows: March 31, 2018 December 31, 2017 Gross Accumulated Net Gross Accumulated Net (in millions) Amount Amortization Amount Amount Amortization Amount Intangible assets with indefinite lives: Brands (1) $ 3,697 $ 3,697 $ 3,694 $ 3,694 Distribution rights 32 32 32 32 Intangible assets with definite lives: Customer relationships 106 $ (80 ) 26 106 $ (79 ) 27 Non-compete agreements 22 (3 ) 19 22 (2 ) 20 Distribution rights 21 (11 ) 10 18 (10 ) 8 Brands 29 (29 ) — 29 (29 ) — Bottler agreements 19 (19 ) — 19 (19 ) — Total $ 3,926 $ (142 ) $ 3,784 $ 3,920 $ (139 ) $ 3,781 ____________________________ (1) Indefinite lived brand assets increased $3 million as a result of foreign currency translation. |
Change in intangible assets other than goodwill - finite lives | The net carrying amounts of intangible assets other than goodwill are as follows: March 31, 2018 December 31, 2017 Gross Accumulated Net Gross Accumulated Net (in millions) Amount Amortization Amount Amount Amortization Amount Intangible assets with indefinite lives: Brands (1) $ 3,697 $ 3,697 $ 3,694 $ 3,694 Distribution rights 32 32 32 32 Intangible assets with definite lives: Customer relationships 106 $ (80 ) 26 106 $ (79 ) 27 Non-compete agreements 22 (3 ) 19 22 (2 ) 20 Distribution rights 21 (11 ) 10 18 (10 ) 8 Brands 29 (29 ) — 29 (29 ) — Bottler agreements 19 (19 ) — 19 (19 ) — Total $ 3,926 $ (142 ) $ 3,784 $ 3,920 $ (139 ) $ 3,781 |
Future amortization expense of intangible assets | Amortization expense of these intangible assets over the remainder of 2018 and the next four years is expected to be as follows: Remainder of 2018 For the Years Ended December 31, (in millions) 2019 2020 2021 2022 Projected amortization expense for intangible assets with definite lives $ 13 $ 14 $ 9 $ 7 $ 5 |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | The following is a reconciliation of the provision for income taxes computed at the U.S. federal statutory tax rate to the provision for income taxes reported in the unaudited Condensed Consolidated Statements of Income: For the Three Months Ended March 31, 2018 For the Three Months Ended March 31, 2017 (in millions) Amount Percentage Amount Percentage Statutory federal income tax (1) $ 46 21.0 % $ 87 35.0 % State income taxes, net (2) 10 4.6 % 8 3.2 % US federal domestic manufacturing benefit (3) — — % (6 ) (2.4 )% Impact of non-US operations (4) 1 0.5 % (1 ) (0.4 )% Stock-based compensation benefit (5) (5 ) (2.3 )% (18 ) (7.3 )% Other 2 0.9 % 1 0.5 % Total income tax provision $ 54 24.7 % $ 71 28.6 % ____________________________ For the three months ended March 31, 2018 , the TCJA (1) reduced the U.S. federal statutory tax rate from 35% to 21% . (2) decreased the federal income tax benefit from the deduction of state income taxes from 35% to 21% . (3) repealed the U.S. federal domestic manufacturing deduction. (4) caused the impact of non-U.S. operations to switch from an income tax benefit to an income tax detriment due to the lower U.S. federal statutory tax rate. (5) reduced the tax benefit from stock-based compensation due to the lower U.S. federal statutory tax rate; additionally, the pre-tax windfall in the current period was less than the prior period. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Short-term Debt [Line Items] | |
Long Term Debt Obligations | The following table summarizes the Company 's long-term obligations: March 31, December 31, (in millions) 2018 2017 Senior unsecured notes $ 4,212 $ 4,230 Capital lease obligations 186 183 Subtotal 4,398 4,413 Less - current portion (263 ) (13 ) Long-term obligations $ 4,135 $ 4,400 |
Schedule of Short-term Debt | The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level March 31, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 1 $ 120 $ 120 $ 66 $ 66 Current portion of long-term obligations: Senior unsecured notes 2 249 249 — — Capital lease obligations (1) N/A 14 13 Short-term borrowings and current portion of long-term obligations $ 383 $ 369 $ 79 $ 66 ____________________________ (1) Capital lease obligations are specifically excluded from the calculation of fair value under U.S. GAAP. |
Schedule of Long-term Debt Instruments | The Company 's senior unsecured notes (collectively, the "Notes") consisted of the following carrying values and estimated fair values that are not required to be measured at fair value in the Consolidated Balance Sheets are as follows: (in millions) Fair Value Hierarchy Level March 31, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value 2019 Notes January 15, 2019 2.60% 2 $ 250 $ 249 $ 250 $ 251 2020 Notes January 15, 2020 2.00% 2 250 245 250 248 2021-A Notes November 15, 2021 3.20% 2 250 247 250 255 2021-B Notes November 15, 2021 2.53% 2 250 242 250 249 2022 Notes November 15, 2022 2.70% 2 250 239 250 248 2023 Notes December 15, 2023 3.13% 2 500 481 500 504 2025 Notes November 15, 2025 3.40% 2 500 477 500 508 2026 Notes September 15, 2026 2.55% 2 400 354 400 378 2027 Notes June 15, 2027 3.43% 2 500 470 500 501 2038 Notes May 1, 2038 7.45% 2 125 174 125 179 2045 Notes November 15, 2045 4.50% 2 550 528 550 588 2046 Notes December 15, 2046 4.42% 2 400 379 400 424 Principal amount $ 4,225 $ 4,085 $ 4,225 $ 4,333 Unamortized premiums, discounts, and debt issuance costs (12 ) (13 ) Adjustments to carrying value for interest rate swaps (1) (1 ) 18 Carrying amount $ 4,212 $ 4,230 ____________________________ (1) Refer to Note 7 for additional information on the Company 's interest rate swaps. |
Commercial Paper Borrowings [Table Text Block] | The following table provides information about the Company 's weighted average borrowings under its commercial paper program for the three months ended March 31, 2018 and 2017 : For the Three Months Ended March 31, (in millions, except percentages) 2018 2017 Weighted average commercial paper borrowings (1) $ 115 $ 6 Weighted average borrowing rates 1.95 % 1.03 % ____________________________ (1) Borrowings during the period had maturities of 90 days or less. |
Amount Utilized and Available for Revolver | The following table provides amounts utilized and available under the " Revolver " as of March 31, 2018 : (in millions) Amount Utilized Balances Available Revolver $ — $ 380 Letters of credit — 75 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments, Fair Value Hedges [Table Text Block] | The following table presents information regarding these interest rate swaps and the associated hedging relationships: Impact to the carrying value ($ in millions) Method of of long-term debt Hedging Number of measuring Notional March 31, December 31, Period entered relationship instruments effectiveness value 2018 2017 November 2011 2019 Notes 2 Short cut method $ 100 $ (1 ) $ — November 2011 2021-A Notes 2 Short cut method 150 (3 ) (1 ) November 2012 2020 Notes 5 Short cut method 120 (3 ) (2 ) December 2016 2021-B Notes 2 Short cut method 250 (7 ) (4 ) December 2016 2023 Notes 2 Short cut method 150 (6 ) (3 ) January 2017 2022 Notes 4 Regression 250 8 17 June 2017 2038 Notes 1 Regression 50 11 11 $ 1,070 $ (1 ) $ 18 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | |
Derivative Instruments Designated As Cash Flow Hedging Instruments | The following table presents the impact of derivative instruments designated as cash flow hedging instruments under U.S. GAAP to the unaudited Condensed Consolidated Statements of Income and Comprehensive Income: (in millions) Amount of Loss Recognized in Other Comprehensive Loss ("OCI") Amount of Loss Reclassified from AOCL into Income Location of Loss Reclassified from AOCL into Income For the three months ended March 31, 2018: Interest rate contracts $ — $ (2 ) Interest expense FX forward contracts (1 ) — Cost of sales Total $ (1 ) $ (2 ) For the three months ended March 31, 2017: Interest rate contracts $ — $ (2 ) Interest expense FX forward contracts (5 ) — Cost of sales Total $ (5 ) $ (2 ) |
Derivative instruments designated as fair value hedging instruments | The following table presents the impact of derivative instruments designated as fair value hedging instruments under U.S. GAAP to the unaudited Condensed Consolidated Statements of Income: (in millions) Amount of Gain Recognized in Income Location of Gain Recognized in Income For the three months ended March 31, 2018: Interest rate contracts $ 1 Interest expense For the three months ended March 31, 2017: Interest rate contracts $ 4 Interest expense |
Schedule Of Derivative Instruments Not Designated As Hedging Instruments | The following table presents the impact of derivative instruments not designated as hedging instruments under U.S. GAAP to the unaudited Condensed Consolidated Statements of Income: (in millions) Amount of Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income For the three months ended March 31, 2018: Commodity contracts (1) $ (8 ) Cost of sales Commodity contracts (1) 3 SG&A expenses Total $ (5 ) For the three months ended March 31, 2017: Commodity contracts (1) $ 21 Cost of sales Commodity contracts (1) (13 ) SG&A expenses Interest rate contracts (2) 1 Interest expense Total $ 9 ____________________________ (1) Commodity contracts include both realized and unrealized gains and losses. (2) Represents gains on the interest rate contracts related to the 2022 Notes prior to re-designation of hedging relationship in January 2017. |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation Expense | The components of stock-based compensation expense are presented below: For the Three Months Ended March 31, (in millions) 2018 2017 Total stock-based compensation expense $ 10 $ 6 Income tax benefit recognized in the Statements of Income (2 ) (2 ) Stock-based compensation expense, net of tax $ 8 $ 4 |
Schedule of Share-based Compensation, Stock Options, Activity | The table below summarizes stock option activity for the three months ended March 31, 2018 : Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 1,372,606 $ 82.83 7.86 $ 20 Exercised (23,510 ) 77.15 1 Forfeited or expired (3,519 ) 93.52 Outstanding as of March 31, 2018 1,345,577 82.90 7.62 48 Exercisable as of March 31, 2018 938,886 78.19 7.19 38 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The table below summarizes RSU activity for the three months ended March 31, 2018 . The fair value of RSU s is determined based on the number of units granted and the grant date price of the Company's common stock. RSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 942,124 $ 88.44 0.82 $ 91 Granted 432,538 116.13 Vested and released (501,852 ) 84.24 58 Forfeited (6,745 ) 92.86 Outstanding as of March 31, 2018 866,065 104.67 1.79 103 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted, by Common Class | The following table presents the basic and diluted EPS and the Company's basic and diluted shares outstanding: For the Three Months Ended March 31, (in millions, except per share data) 2018 2017 Basic EPS: Net income $ 159 $ 177 Weighted average common shares outstanding 179.9 183.4 Earnings per common share — basic $ 0.88 $ 0.97 Diluted EPS: Net income $ 159 $ 177 Weighted average common shares outstanding 179.9 183.4 Effect of dilutive securities: Stock options 0.3 0.3 RSUs 0.5 0.7 PSUs 0.1 0.2 Weighted average common shares outstanding and common stock equivalents 180.8 184.6 Earnings per common share — diluted $ 0.88 $ 0.96 |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated other comprehensive income (loss), net of taxes | The following tables provide a summary of changes in the balances of each component of AOCL , net of taxes: (in millions) Foreign Currency Translation Change in Pension Liability Cash Flow Hedges Accumulated Other Comprehensive Loss Balance as of January 1, 2017 $ (164 ) $ (37 ) $ (28 ) $ (229 ) OCI before reclassifications 16 1 (7 ) 10 Amounts reclassified from AOCL — 4 13 17 Net current year OCI 16 5 6 27 Balance as of December 31, 2017 (148 ) (32 ) (22 ) (202 ) OCI before reclassifications 18 — (2 ) 16 Amounts reclassified from AOCL — 1 2 3 Net current period OCI 18 1 — 19 Balance as of March 31, 2018 $ (130 ) $ (31 ) $ (22 ) $ (183 ) |
Schedule of Reclassifications out of AOCL and into Net Income | The following table presents the amount of loss reclassified from AOCL into the unaudited Condensed Consolidated Statements of Income: For the Three Months Ended March 31, (in millions) Location of Loss Reclassified from AOCL into Income 2018 2017 Loss on cash flow hedges: Interest rate contracts Interest expense $ (2 ) $ (2 ) Foreign exchange forward contracts Cost of sales — — Total (2 ) (2 ) Income tax benefit — (1 ) Total $ (2 ) $ (1 ) Defined benefit pension and post-retirement plan items: Amortization of actuarial losses, net Other income, net $ (1 ) $ (1 ) Total (1 ) (1 ) Income tax benefit — — Total $ (1 ) $ (1 ) Total reclassifications $ (3 ) $ (2 ) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories consisted of the following | Inventories consisted of the following: March 31, December 31, (in millions) 2018 2017 Raw materials $ 79 $ 81 Spare parts 25 24 Work in process 7 7 Finished goods 166 149 Inventories at first in first out cost 277 261 Reduction to LIFO cost (34 ) (32 ) Inventories $ 243 $ 229 |
Other Assets and Liabilities 37
Other Assets and Liabilities Other Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Other Assets and Liabilities [Abstract] | |
Schedule of Other Assets and Other Liabilities [Table Text Block] | The table below details the components of other assets and other liabilities: March 31, December 31, (in millions) 2018 2017 Prepaid expenses and other current assets: Customer incentive programs $ 118 $ 16 Derivative instruments 21 32 Prepaid income taxes 9 7 Other 77 44 Total prepaid expenses and other current assets $ 225 $ 99 Other non-current assets: Customer incentive programs $ 77 $ 76 Marketable securities - trading (1) 52 48 Derivative instruments 24 33 Equity securities without readily determinable fair values 1 1 Non-current restricted cash and restricted cash equivalents 92 79 Other 40 42 Total other non-current assets $ 286 $ 279 Other current liabilities: Customer rebates and incentives $ 345 $ 299 Accrued compensation 81 130 Insurance liability 36 34 Interest accrual 46 20 Dividends payable 105 103 Derivative instruments 9 3 Holdback liability to former Bai Brands shareholders 5 7 Acquired contingent liabilities 11 14 Other 123 109 Total other current liabilities $ 761 $ 719 Other non-current liabilities: Long-term payables due to Mondelēz International, Inc. $ 16 $ 16 Long-term pension and post-retirement liability 20 19 Insurance liability 60 60 Derivative instruments 13 8 Deferred compensation liability 52 48 Holdback liability to former Bai Brands shareholders 79 79 Acquired contingent liabilities 5 5 Other 28 29 Total other non-current liabilities $ 273 $ 264 ____________________________ (1) 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 $52 million and $48 million as of March 31, 2018 and December 31, 2017 , respectively. |
Supplemental Cash Flow Inform38
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | The following table details supplemental cash flow disclosures of non-cash investing and financing activities: For the Three Months Ended March 31, (in millions) 2018 2017 Supplemental cash flow disclosures of non-cash investing and financing activities: Dividends declared but not yet paid $ 105 $ 107 Capital expenditures included in accounts payable and other current liabilities 12 9 Holdback liability for acquisition of business 84 103 Capital lease additions 6 7 Supplemental cash flow disclosures: Interest paid $ 15 $ 13 Income taxes paid 3 7 |
Restrictions on Cash and Cash Equivalents [Table Text Block] | The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported with the unaudited Condensed Consolidated Balance Sheets to the total of the same amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows: Fair Value Hierarchy Level March 31, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 13 $ 13 $ 61 $ 61 Restricted cash and restricted cash equivalents (1) 1 16 16 18 18 Non-current restricted cash and restricted cash equivalents included in Other non-current assets (1) 1 92 92 79 79 Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 121 $ 121 $ 158 $ 158 ____________________________ (1) Current and non-current restricted cash and restricted cash equivalents primarily includes the holdback held in escrow in connection with the Bai Brands Merger. Refer to Note 2 for additional information on the Bai Brands Merger. |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Information about the Company 's operations by reporting segment is as follows: For the Three Months Ended March 31, (in millions) 2018 2017 Segment Results – Net sales Beverage Concentrates $ 303 $ 294 Packaged Beverages 1,178 1,118 Latin America Beverages 113 98 Net sales $ 1,594 $ 1,510 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | For the Three Months Ended March 31, (in millions) 2018 2017 Segment Results – SOP Beverage Concentrates $ 194 $ 186 Packaged Beverages 150 141 Latin America Beverages 12 11 Total SOP 356 338 Unallocated corporate costs 96 80 Other operating expense (income), net 1 (28 ) Income from operations 259 286 Interest expense, net 40 39 Other income, net — (1 ) Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries $ 219 $ 248 |
Guarantor and Non-Guarantor F40
Guarantor and Non-Guarantor Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Consolidating Statements of Income | Condensed Consolidating Statements of Income For the Three Months Ended March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,473 $ 153 $ (32 ) $ 1,594 Cost of sales — 629 84 (32 ) 681 Gross profit — 844 69 — 913 Selling, general and administrative expenses — 576 50 — 626 Depreciation and amortization — 25 2 — 27 Other operating expense (income), net — 1 — — 1 Income from operations — 242 17 — 259 Interest expense 82 25 — (66 ) 41 Interest income (23 ) (43 ) (1 ) 66 (1 ) Other (income) expense, net (2 ) (1 ) 3 — — Income (loss) before provision (benefit) for income taxes and equity in loss of subsidiaries (57 ) 261 15 — 219 Provision (benefit) for income taxes (13 ) 63 4 — 54 Income (loss) before equity in earnings (loss) of subsidiaries (44 ) 198 11 — 165 Equity in earnings of consolidated subsidiaries 203 11 — (214 ) — Equity in loss of unconsolidated subsidiaries, net of tax — (6 ) — — (6 ) Net income $ 159 $ 203 $ 11 $ (214 ) $ 159 Condensed Consolidating Statements of Income For the Three Months Ended March 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,407 $ 136 $ (33 ) $ 1,510 Cost of sales — 564 76 (33 ) 607 Gross profit — 843 60 — 903 Selling, general and administrative expenses 2 576 42 — 620 Depreciation and amortization — 23 2 — 25 Other operating expense (income), net — (28 ) — — (28 ) Income from operations (2 ) 272 16 — 286 Interest expense 63 19 — (42 ) 40 Interest income (16 ) (27 ) — 42 (1 ) Other (income) expense, net (4 ) — 3 — (1 ) Income (loss) before provision (benefit) for income taxes and equity in loss of subsidiaries (45 ) 280 13 — 248 Provision (benefit) for income taxes (16 ) 83 4 — 71 Income (loss) before equity in earnings (loss) of subsidiaries (29 ) 197 9 — 177 Equity in earnings of consolidated subsidiaries 206 9 — (215 ) — Equity in loss of unconsolidated subsidiaries, net of tax — — — — — Net income $ 177 $ 206 $ 9 $ (215 ) $ 177 |
Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statements of Comprehensive Income For the Three Months Ended March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 178 $ 220 $ 27 $ (247 ) $ 178 Condensed Consolidating Statements of Comprehensive Income For the Three Months Ended March 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 200 $ 227 $ 30 $ (257 ) $ 200 |
Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets As of March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ — $ 13 $ — $ 13 Restricted cash and cash equivalents — 15 1 — 16 Accounts receivable: Trade, net — 620 80 — 700 Other 6 33 10 — 49 Related party receivable 25 48 — (73 ) — Inventories — 211 32 — 243 Prepaid expenses and other current assets 482 211 19 (487 ) 225 Total current assets 513 1,138 155 (560 ) 1,246 Property, plant and equipment, net — 1,051 147 — 1,198 Investments in consolidated subsidiaries 9,555 324 — (9,879 ) — Investments in unconsolidated subsidiaries — 36 — — 36 Goodwill — 3,540 24 — 3,564 Other intangible assets, net — 3,733 51 — 3,784 Long-term receivable, related parties 3,298 6,335 — (9,633 ) — Other non-current assets 64 195 29 (2 ) 286 Deferred tax assets 10 — 65 (10 ) 65 Total assets $ 13,440 $ 16,352 $ 471 $ (20,084 ) $ 10,179 Current liabilities: Accounts payable $ — $ 344 $ 33 $ — $ 377 Related party payable 43 23 7 (73 ) — Deferred revenue — 67 2 (5 ) 64 Short-term borrowings and current portion of long-term obligations 369 14 — — 383 Income taxes payable — 521 — (482 ) 39 Other current liabilities 164 528 69 — 761 Total current liabilities 576 1,497 111 (560 ) 1,624 Long-term obligations to third parties 3,963 172 — — 4,135 Long-term obligations to related parties 6,335 3,298 — (9,633 ) — Deferred tax liabilities — 633 — (10 ) 623 Non-current deferred revenue — 1,015 25 (2 ) 1,038 Other non-current liabilities 80 182 11 — 273 Total liabilities 10,954 6,797 147 (10,205 ) 7,693 Total stockholders' equity 2,486 9,555 324 (9,879 ) 2,486 Total liabilities and stockholders' equity $ 13,440 $ 16,352 $ 471 $ (20,084 ) $ 10,179 Condensed Consolidating Balance Sheets As of December 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 15 $ 46 $ — $ 61 Restricted cash and cash equivalents — 18 — — 18 Accounts receivable: Trade, net — 595 73 — 668 Other 1 35 6 — 42 Related party receivable 20 42 — (62 ) — Inventories — 199 30 — 229 Prepaid and other current assets 473 83 18 (475 ) 99 Total current assets 494 987 173 (537 ) 1,117 Property, plant and equipment, net — 1,062 136 — 1,198 Investments in consolidated subsidiaries 9,373 332 — (9,705 ) — Investments in unconsolidated subsidiaries — 24 — — 24 Goodwill — 3,539 22 — 3,561 Other intangible assets, net — 3,733 48 — 3,781 Long-term receivable, related parties 3,278 6,233 — (9,511 ) — Other non-current assets 65 195 22 (3 ) 279 Deferred tax assets 11 — 62 (11 ) 62 Total assets $ 13,221 $ 16,105 $ 463 $ (19,767 ) $ 10,022 Current liabilities: Accounts payable $ — $ 333 $ 32 $ — $ 365 Related party payable 37 20 5 (62 ) — Deferred revenue — 68 2 (6 ) 64 Short-term borrowings and current portion of long-term obligations 66 13 — — 79 Income taxes payable — 479 1 (469 ) 11 Other current liabilities 133 532 54 — 719 Total current liabilities 236 1,445 94 (537 ) 1,238 Long-term obligations to third parties 4,230 170 — — 4,400 Long-term obligations to related parties 6,233 3,278 — (9,511 ) — Deferred tax liabilities — 625 — (11 ) 614 Non-current deferred revenue — 1,032 26 (3 ) 1,055 Other non-current liabilities 71 182 11 — 264 Total liabilities 10,770 6,732 131 (10,062 ) 7,571 Total stockholders' equity 2,451 9,373 332 (9,705 ) 2,451 Total liabilities and stockholders' equity $ 13,221 $ 16,105 $ 463 $ (19,767 ) $ 10,022 |
Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows For the Three Months Ended March 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (29 ) $ 150 $ 19 $ (37 ) $ 103 Investing activities: Acquisition of business — (2 ) — — (2 ) Purchase of property, plant and equipment — (35 ) (6 ) — (41 ) Purchase of intangible assets — (3 ) — — (3 ) Investment in unconsolidated subsidiaries — (19 ) — — (19 ) Proceeds from disposals of property, plant and equipment — 1 — — 1 Issuance of related party notes receivable — (102 ) — 102 — Other, net (4 ) — — — (4 ) Net cash (used in) provided by investing activities (4 ) (160 ) (6 ) 102 (68 ) Financing activities: Proceeds from issuance of related party debt 102 — — (102 ) — Net issuance of commercial paper 54 — — — 54 Dividends paid (104 ) — (37 ) 37 (104 ) Tax withholdings related to net share settlements of certain stock awards (21 ) — — — (21 ) Proceeds from stock options exercised 2 — — — 2 Capital lease payments — (4 ) — — (4 ) Net cash (used in) provided by financing activities 33 (4 ) (37 ) (65 ) (73 ) Cash and cash equivalents — net change from: Operating, investing and financing activities — (14 ) (24 ) — (38 ) Effect of exchange rate changes on cash and cash equivalents — — 1 — 1 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — 111 47 — 158 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ — $ 97 $ 24 $ — $ 121 Condensed Consolidating Statements of Cash Flows For the Three Months Ended March 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (23 ) $ 122 $ 8 $ (10 ) $ 97 Investing activities: Acquisition of business — (1,548 ) — — (1,548 ) Cash acquired in step acquisition of unconsolidated subsidiaries — 3 — — 3 Purchase of property, plant and equipment — (15 ) (1 ) — (16 ) Purchase of intangible assets — (1 ) — — (1 ) Investments in unconsolidated subsidiaries — (1 ) — — (1 ) Proceeds from disposals of property, plant and equipment — 1 — — 1 Issuance of related party notes receivable — (169 ) — 169 — Other, net (7 ) — — — (7 ) Net cash (used in) provided by investing activities (7 ) (1,730 ) (1 ) 169 (1,569 ) Financing activities: Proceeds from issuance of related party debt 169 — — (169 ) — Repurchase of shares of common stock (28 ) — — — (28 ) Dividends paid (97 ) — (10 ) 10 (97 ) Tax withholdings related to net share settlements of certain stock awards (30 ) — — — (30 ) Proceeds from stock options exercised 17 — — — 17 Deferred financing charges paid (1 ) — — — (1 ) Capital lease payments — (3 ) — — (3 ) Net cash (used in) provided by financing activities 30 (3 ) (10 ) (159 ) (142 ) Cash and cash equivalents — net change from: Operating, investing and financing activities — (1,611 ) (3 ) — (1,614 ) Effect of exchange rate changes on cash and cash equivalents — 1 2 — 3 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — 1,736 51 — 1,787 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ — $ 126 $ 50 $ — $ 176 |
General (Details)
General (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Jan. 01, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (31) | |
Accounting Standards Update 2014-09 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | 35 | |
Accounting Standards Update 2016-16 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | (4) | |
Accounting Standards Update 2017-07 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prior Period Reclassification Adjustment | $ 1 | |
Retained Earnings [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (31) |
Acquisitions and Investments 42
Acquisitions and Investments in Unconsolidated Subsidiaries (Details) $ / shares in Units, $ in Millions | 3 Months Ended | ||||
Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Jan. 29, 2018USD ($)$ / shares | Jan. 05, 2018 | Dec. 31, 2017USD ($) | |
Business Acquisition [Line Items] | |||||
Contingent Liability, Fee | $ 50 | ||||
Holdback Liability, Noncurrent | $ 79 | $ 79 | |||
Holdback Liability, Current | 5 | 7 | |||
Business Combination, Total Holdback | 84 | $ 86 | |||
Business Combination Acquisition and Integration Expenses | 13 | $ 19 | |||
Payments to Acquire Equity Method Investments | 19 | 1 | |||
Bai Brands LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Deferred Compensation Arrangement with Individual, Compensation Expense | (2) | ||||
Maple Parent [Member] | |||||
Business Acquisition [Line Items] | |||||
Special cash dividend per share | $ / shares | $ 103.75 | ||||
Ownership in Combined Company Post Merger | 0.87 | ||||
Business Acquisition, Termination Fee | $ 700 | ||||
DPS [Member] | |||||
Business Acquisition [Line Items] | |||||
Ownership in Combined Company Post Merger | 0.13 | ||||
Business Acquisition, Termination Fee | $ 700 | ||||
Line of Credit [Member] | |||||
Business Acquisition [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | 500 | ||||
Fairness Opinion [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent Liability, Fee | $ 5 | ||||
Selling, General and Administrative Expenses [Member] | Bai Brands LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Business Combination Acquisition and Integration Expenses | 1 | 19 | |||
Selling, General and Administrative Expenses [Member] | Keurig Transaction [Member] | |||||
Business Acquisition [Line Items] | |||||
Business Combination Acquisition and Integration Expenses | 12 | $ 0 | |||
Core Nutrition LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Equity Method Investment, Ownership Percentage | 5.10% | ||||
Payments to Acquire Equity Method Investments | $ 18 |
Revenues Revenues (Details)
Revenues Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | |||
Disaggregation of Revenue [Line Items] | ||||
Deferred Revenue Recognition Period | 25 years | |||
Recognition of Deferred Revenue | $ 16 | $ 16 | ||
Revenue, Net | 1,594 | 1,510 | [1],[2] | |
UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 1,430 | 1,366 | [2] | |
CANADA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 51 | 46 | [2] | |
Latin America [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [3] | 113 | 98 | [2] |
Carbonated Soft Drinks (CSDs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [4] | 833 | 799 | [1] |
Non-carbonated Beverages (NCBs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [5] | 516 | 484 | [1] |
Contract Manufacturing [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [6] | 70 | 60 | [1] |
Allied Brand Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [7] | 147 | 139 | [1] |
Other Net Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [8] | 28 | 28 | [1] |
Beverage Concentrates [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 303 | 294 | [1],[2] | |
Beverage Concentrates [Member] | UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 284 | 277 | [2] | |
Beverage Concentrates [Member] | CANADA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 19 | 17 | [2] | |
Beverage Concentrates [Member] | Latin America [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [3] | 0 | 0 | [2] |
Beverage Concentrates [Member] | Carbonated Soft Drinks (CSDs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [4] | 280 | 271 | [1] |
Beverage Concentrates [Member] | Non-carbonated Beverages (NCBs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [5] | 3 | 3 | [1] |
Beverage Concentrates [Member] | Contract Manufacturing [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [6] | 0 | 0 | [1] |
Beverage Concentrates [Member] | Allied Brand Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [7] | 0 | 0 | [1] |
Beverage Concentrates [Member] | Other Net Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [8] | 20 | 20 | [1] |
Packaged Beverages [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 1,178 | 1,118 | [1],[2] | |
Packaged Beverages [Member] | UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 1,146 | 1,089 | [2] | |
Packaged Beverages [Member] | CANADA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 32 | 29 | [2] | |
Packaged Beverages [Member] | Latin America [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [3] | 0 | 0 | [2] |
Packaged Beverages [Member] | Carbonated Soft Drinks (CSDs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [4] | 477 | 462 | [1] |
Packaged Beverages [Member] | Non-carbonated Beverages (NCBs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [5] | 477 | 449 | [1] |
Packaged Beverages [Member] | Contract Manufacturing [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [6] | 69 | 60 | [1] |
Packaged Beverages [Member] | Allied Brand Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [7] | 147 | 139 | [1] |
Packaged Beverages [Member] | Other Net Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [8] | 8 | 8 | [1] |
Latin America Beverages [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 113 | 98 | [1],[2] | |
Latin America Beverages [Member] | UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 0 | 0 | [2] | |
Latin America Beverages [Member] | CANADA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | 0 | 0 | [2] | |
Latin America Beverages [Member] | Latin America [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [3] | 113 | 98 | [2] |
Latin America Beverages [Member] | Carbonated Soft Drinks (CSDs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [4] | 76 | 66 | [1] |
Latin America Beverages [Member] | Non-carbonated Beverages (NCBs) [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [5] | 36 | 32 | [1] |
Latin America Beverages [Member] | Contract Manufacturing [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [6] | 1 | 0 | [1] |
Latin America Beverages [Member] | Allied Brand Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [7] | 0 | 0 | [1] |
Latin America Beverages [Member] | Other Net Sales [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, Net | [8] | $ 0 | $ 0 | [1] |
[1] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. | |||
[2] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. | |||
[3] | Other includes immaterial net sales in geographical locations outside of U.S., Latin America and Canada. | |||
[4] | Represents product sales of owned CSD brands within our portfolio and the net sales recognized ratably under the PepsiCo and Coca-Cola arrangements. Product sales include the sale of beverage concentrates, syrup and packaged beverages. | |||
[5] | Represents product sales of owned NCB brands within our portfolio. Product sales primarily include packaged beverages. | |||
[6] | Net sales from contract manufacturing, bottling beverages and other products for private label owners or others. | |||
[7] | Allied brand sales represent product distribution of third party brands. | |||
[8] | Other sales include miscellaneous revenues, such as royalties. |
Goodwill and Other Intangible44
Goodwill and Other Intangible Assets, Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | ||
Change in goodwill by operating segments [Abstract] | |||
Goodwill | $ 3,744 | $ 3,741 | |
Accumulated impairment losses | (180) | (180) | |
Goodwill, net | 3,564 | 3,561 | |
Foreign currency impact | 3 | ||
Reclassifications | 0 | ||
Beverage Concentrates [Member] | |||
Change in goodwill by operating segments [Abstract] | |||
Goodwill | 1,733 | 1,733 | |
Accumulated impairment losses | 0 | 0 | |
Goodwill, net | 1,733 | 1,733 | |
Foreign currency impact | 0 | ||
Reclassifications | 0 | ||
WD Reporting Unit [Member] | |||
Change in goodwill by operating segments [Abstract] | |||
Goodwill | [1] | 1,790 | 1,222 |
Accumulated impairment losses | [1] | 0 | 0 |
Goodwill, net | [1] | 1,790 | 1,222 |
Foreign currency impact | [1] | 0 | |
Reclassifications | [1],[2] | 568 | |
DSD Reporting Unit [Member] | |||
Change in goodwill by operating segments [Abstract] | |||
Goodwill | [1] | 189 | 189 |
Accumulated impairment losses | [1] | (180) | (180) |
Goodwill, net | [1] | 9 | 9 |
Foreign currency impact | [1] | 0 | |
Reclassifications | [1] | 0 | |
Bai [Member] | |||
Change in goodwill by operating segments [Abstract] | |||
Goodwill | 0 | 568 | |
Accumulated impairment losses | 0 | 0 | |
Goodwill, net | 0 | 568 | |
Foreign currency impact | 0 | ||
Reclassifications | [2] | (568) | |
Latin America Beverages [Member] | |||
Change in goodwill by operating segments [Abstract] | |||
Goodwill | 32 | 29 | |
Accumulated impairment losses | 0 | 0 | |
Goodwill, net | 32 | $ 29 | |
Foreign currency impact | 3 | ||
Reclassifications | $ 0 | ||
[1] | As of January 1, 2018, the Packaged Beverages operating segment is comprised of three reporting units, the Direct Store Delivery ("DSD") system, WD and Bai. | ||
[2] | As of January 1, 2018, due to changes in the Company's operating segments and reporting units, the goodwill associated with the Bai operating segment was reclassified to the WD reporting unit. Refer to Change in the Company's Operating Segments and Reporting Units above. |
Goodwill and Other Intangible45
Goodwill and Other Intangible Assets, Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | ||
Change in intangible assets other than goodwill [Abstract] | ||||
Intangible Assets Gross Excluding Goodwill | $ 3,926 | $ 3,920 | ||
Accumulated amortization | (142) | (139) | ||
Intangible Assets, Net (Excluding Goodwill) | 3,784 | 3,781 | ||
Indefinite-lived Intangible Assets, Foreign Currency Translation Gain (Loss) | 3 | |||
Amortization of intangible assets with definite lives | 3 | $ 2 | ||
Amortization expense of intangible assets [Abstract] | ||||
October 1, 2017 through December 31, 2017 | 13 | |||
2,018 | 14 | |||
2,019 | 9 | |||
2,020 | 7 | |||
2,021 | 5 | |||
Brands [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Finite-Lived Intangible Assets, Gross | 29 | 29 | ||
Accumulated amortization | (29) | (29) | ||
Finite-Lived Intangible Assets, Net | 0 | 0 | ||
Distribution rights [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Finite-Lived Intangible Assets, Gross | 21 | 18 | ||
Accumulated amortization | (11) | (10) | ||
Finite-Lived Intangible Assets, Net | 10 | 8 | ||
Customer relationships [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Finite-Lived Intangible Assets, Gross | 106 | 106 | ||
Accumulated amortization | (80) | (79) | ||
Finite-Lived Intangible Assets, Net | 26 | 27 | ||
Non-compete agreements [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Finite-Lived Intangible Assets, Gross | 22 | 22 | ||
Accumulated amortization | (3) | (2) | ||
Finite-Lived Intangible Assets, Net | 19 | 20 | ||
Bottler agreements [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Finite-Lived Intangible Assets, Gross | 19 | 19 | ||
Accumulated amortization | (19) | (19) | ||
Finite-Lived Intangible Assets, Net | 0 | 0 | ||
Brands [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | [1] | 3,697 | 3,694 | |
Distribution rights [Member] | ||||
Change in intangible assets other than goodwill [Abstract] | ||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 32 | $ 32 | ||
[1] | Indefinite lived brand assets increased $3 million as a result of foreign currency translation. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Income Tax Disclosure [Abstract] | |||
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount | [1] | $ 46 | $ 87 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | [1] | 21.00% | 35.00% |
Income Tax Expense (Benefit) | $ (54) | $ (71) | |
Document Period End Date | Mar. 31, 2018 | ||
Effective income tax rate | 24.70% | 28.60% | |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount | [2] | $ 10 | $ 8 |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | [2] | 4.60% | 3.20% |
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount | [3] | $ 0 | $ (6) |
Effective Income Tax Rate Reconciliation,Other Reconciling Items, Percent | [3] | 0.00% | (2.40%) |
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Amount | [4] | $ 1 | $ (1) |
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent | [4] | 0.50% | (0.40%) |
Effective Income Tax Rate Reconciliation, Deduction, Employee Stock Ownership Plan Dividend, Amount | [5] | $ (5) | $ (18) |
Effective Income Tax Rate Reconciliation, Deduction, Employee Stock Ownership Plan Dividend, Percent | [5] | (2.30%) | (7.30%) |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | $ 2 | $ 1 | |
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | 0.90% | 0.50% | |
[1] | (1)reduced the U.S. federal statutory tax rate from 35% to 21%. | ||
[2] | (2)decreased the federal income tax benefit from the deduction of state income taxes from 35% to 21%. | ||
[3] | (3)repealed the U.S. federal domestic manufacturing deduction. | ||
[4] | (4)caused the impact of non-U.S. operations to switch from an income tax benefit to an income tax detriment due to the lower U.S. federal statutory tax rate. | ||
[5] | (5)reduced the tax benefit from stock-based compensation due to the lower U.S. federal statutory tax rate; additionally, the pre-tax windfall in the current period was less than the prior period. |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | |||||||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 14, 2016 | Sep. 16, 2016 | Nov. 09, 2015 | Nov. 20, 2012 | Nov. 15, 2011 | Apr. 30, 2008 | ||
Debt Instrument [Line Items] | ||||||||||
Commercial Paper Maximum Borrowing Capacity | $ 200,000,000 | |||||||||
Weighted Average Commercial Paper Borrowings | [1] | 115,000,000 | $ 6,000,000 | |||||||
Short-term Debt, Fair Value | 369,000,000 | $ 66,000,000 | ||||||||
Commercial Paper, at Carrying Value | 120,000,000 | 66,000,000 | ||||||||
March 31, 2018 | 4,212,000,000 | 4,230,000,000 | ||||||||
Capital lease obligations | 186,000,000 | 183,000,000 | ||||||||
Long-term Debt and Capital Lease Obligations, Including Current Maturities | 4,398,000,000 | 4,413,000,000 | ||||||||
Long-term Debt and Capital Lease Obligations, Current | (263,000,000) | (13,000,000) | ||||||||
Long-term obligations | 4,135,000,000 | 4,400,000,000 | ||||||||
Current portion of senior unsecured notes | 249,000,000 | 0 | ||||||||
Current portion of capital lease obligations | [2] | 14,000,000 | 13,000,000 | |||||||
Short-term borrowings and current portion of long-term obligations | 383,000,000 | 79,000,000 | ||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, principal amount | 4,225,000,000 | 4,225,000,000 | ||||||||
Shelf Registration Statement [Abstract] | ||||||||||
Debt Securities Authorized Unutilized Amount | 450,000,000 | |||||||||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | (12,000,000) | (13,000,000) | ||||||||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | [3] | $ (1,000,000) | $ 18,000,000 | |||||||
Short-term Debt, Weighted Average Interest Rate, over Time | 1.95% | 1.03% | ||||||||
Standby Letters of Credit [Member] | ||||||||||
Credit Facilities [Abstract] | ||||||||||
Maximum borrowing capacity of facility | $ 120,000,000 | |||||||||
Amounts utilized under the facility | 60,000,000 | |||||||||
Remaining borrowing capacity under the facility | 60,000,000 | |||||||||
Line of Credit [Member] | ||||||||||
Credit Facilities [Abstract] | ||||||||||
Maximum borrowing capacity of facility | 500,000,000 | |||||||||
Amounts utilized under the facility | 0 | |||||||||
Remaining borrowing capacity under the facility | 380,000,000 | |||||||||
2019 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 2.60% | |||||||||
Senior unsecured notes, principal amount | 250,000,000 | 250,000,000 | ||||||||
2020 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 2.00% | |||||||||
Senior unsecured notes, principal amount | 250,000,000 | 250,000,000 | ||||||||
2021 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 3.20% | |||||||||
Senior unsecured notes, principal amount | 250,000,000 | 250,000,000 | ||||||||
2021-B Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 2.53% | |||||||||
Senior unsecured notes, principal amount | 250,000,000 | 250,000,000 | ||||||||
2022 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 2.70% | |||||||||
Senior unsecured notes, principal amount | 250,000,000 | 250,000,000 | ||||||||
2023 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 3.13% | |||||||||
Senior unsecured notes, principal amount | 500,000,000 | 500,000,000 | ||||||||
2025 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 3.40% | |||||||||
Senior unsecured notes, principal amount | 500,000,000 | 500,000,000 | ||||||||
2026 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 2.55% | |||||||||
Senior unsecured notes, principal amount | 400,000,000 | 400,000,000 | ||||||||
2027 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 3.43% | |||||||||
Senior unsecured notes, principal amount | 500,000,000 | 500,000,000 | ||||||||
2038 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 7.45% | |||||||||
Senior unsecured notes, principal amount | 125,000,000 | 125,000,000 | ||||||||
2045 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 4.50% | |||||||||
Senior unsecured notes, principal amount | 550,000,000 | 550,000,000 | ||||||||
Revolving Letters of Credit [Member] | Line of Credit [Member] | ||||||||||
Credit Facilities [Abstract] | ||||||||||
Amounts utilized under the facility | 0 | |||||||||
Remaining borrowing capacity under the facility | 75,000,000 | |||||||||
2046 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Senior unsecured notes, stated interest rate | 4.42% | |||||||||
Senior unsecured notes, principal amount | 400,000,000 | 400,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 4,085,000,000 | 4,333,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2019 Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Current portion of senior unsecured notes | 249,000,000 | 0 | ||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 249,000,000 | 251,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2020 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 245,000,000 | 248,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2021 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 247,000,000 | 255,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2021-B Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 242,000,000 | 249,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2022 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 239,000,000 | 248,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2023 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 481,000,000 | 504,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2025 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 477,000,000 | 508,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2026 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 354,000,000 | 378,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2027 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 470,000,000 | 501,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2038 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 174,000,000 | 179,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2045 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 528,000,000 | 588,000,000 | ||||||||
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member] | 2046 Notes [Member] | ||||||||||
Senior Unsecured Notes [Abstract] | ||||||||||
Long-term Debt, Fair Value | 379,000,000 | 424,000,000 | ||||||||
Fair Value, Inputs, Level 1 [Member] | Commercial Paper [Member] | Fair Value, Measurements, Nonrecurring [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Short-term Debt, Fair Value | $ 120,000,000 | $ 66,000,000 | ||||||||
[1] | (1)Borrowings during the period had maturities of 90 days or less. | |||||||||
[2] | (1)Capital lease obligations are specifically excluded from the calculation of fair value under U.S. GAAP. | |||||||||
[3] | (1)Refer to Note 7 for additional information on the Company's interest rate swaps. |
Derivatives Derivatives - Fair
Derivatives Derivatives - Fair Value Hedges (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018USD ($)integer | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | ||
Derivative [Line Items] | ||||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | [1] | $ (1) | $ 18 | |
Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Notional Amount | 1,070 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | (1) | 18 | ||
Foreign Exchange Forward [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Notional Amount | 49 | $ 48 | ||
Commodity Contract [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Notional Amount | $ 185 | $ 199 | ||
2019 Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 2 | |||
Derivative, Notional Amount | $ 100 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ (1) | 0 | ||
2021 Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 2 | |||
Derivative, Notional Amount | $ 150 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ (3) | (1) | ||
2020 Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 5 | |||
Derivative, Notional Amount | $ 120 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ (3) | (2) | ||
2022 Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 4 | |||
Derivative, Notional Amount | $ 250 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ 8 | 17 | ||
2038 Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 1 | |||
Derivative, Notional Amount | $ 50 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ 11 | 11 | ||
2021-B Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 2 | |||
Derivative, Notional Amount | $ 250 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ (7) | (4) | ||
2023 Notes [Member] | Interest Rate Contract [Member] | Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, Number of Instruments Held | integer | 2 | |||
Derivative, Notional Amount | $ 150 | |||
Increase (Decrease) in Fair Value of Hedged Item in Interest Rate Fair Value Hedge | $ (6) | $ (3) | ||
[1] | (1)Refer to Note 7 for additional information on the Company's interest rate swaps. |
Derivatives Derivatives - Balan
Derivatives Derivatives - Balance Sheet Location (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | $ 1 | $ 0 |
Commodity Contract [Member] | Not Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | 1 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 0 | 3 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 12 | 16 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | 8 | 3 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Other Noncurrent Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | 12 | 8 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 0 | 2 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Commodity Contract [Member] | Not Designated as Hedging Instrument [Member] | Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 21 | 27 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Commodity Contract [Member] | Not Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | $ 12 | $ 17 |
Derivatives Derivatives - Impac
Derivatives Derivatives - Impact on Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Fair Value Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (Loss) on Fair Value Hedge Ineffectiveness, Net | $ 0 | ||
Cash Flow Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain (Loss) on Cash Flow Hedge Ineffectiveness, Net | $ 0 | ||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | (1) | (5) | |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (2) | (2) | |
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | (11) | ||
Not Designated as Hedging Instrument [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | (5) | 9 | |
Commodity Contract [Member] | Interest Expense [Member] | Not Designated as Hedging Instrument [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | [1] | 1 | |
Commodity Contract [Member] | Cost of Sales [Member] | Not Designated as Hedging Instrument [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | [2] | (8) | 21 |
Commodity Contract [Member] | Selling, General and Administrative Expenses [Member] | Not Designated as Hedging Instrument [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | [2] | 3 | (13) |
Interest Rate Contract [Member] | Interest Expense [Member] | Fair Value Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, Gain (Loss) on Derivative, Net | 1 | 4 | |
Interest Rate Contract [Member] | Interest Expense [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | 0 | 0 | |
Foreign Exchange Forward [Member] | Cost of Sales [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ (1) | $ (5) | |
Minimum [Member] | Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, Remaining Maturity | 1 month | ||
Maximum [Member] | Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Derivative, Remaining Maturity | 9 months | ||
[1] | Represents gains on the interest rate contracts related to the 2022 Notes prior to re-designation of hedging relationship in January 2017. | ||
[2] | Commodity contracts include both realized and unrealized gains and losses. |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | ||
Total stock-based compensation expense | $ 10 | $ 6 |
Income tax benefit recognized in the Statements of Income | (2) | (2) |
Stock-based compensation expense, net of tax | 8 | 4 |
Restricted Stock Units and Performance Stock Units Activity | ||
Tax withholdings related to net share settlements of certain stock awards | $ 21 | $ 30 |
Employee Stock Option [Member] | ||
Stock Option Activity | ||
Stock options - beginning balance outstanding | 1,372,606 | |
Stock options - beginning balance outstanding, weighted average exercise price | $ 82.83 | |
Stock options - outstanding - weighted average remaining contractual term | 7 years 7 months 13 days | 7 years 10 months 10 days |
Stock options - beginning balance outstanding, aggregate intrinsic value | $ 20 | |
Stock options - exercised | (23,510) | |
Stock options - exercised, weighted average exercise price | $ 77.15 | |
Stock options - exercised, total intrinsic value | $ 1 | |
Stock options - forfeited or expired | (3,519) | |
Stock options, forfeited or expired, weighted average exercise price | $ 93.52 | |
Stock options - ending balance outstanding | 1,345,577 | |
Stock options - ending balance outstanding, weighted average exercise price | $ 82.90 | |
Stock options - ending balance outstanding, aggregate intrinsic value | $ 48 | |
Stock options - exercisable | 938,886 | |
Stock options - exercisable, weighted average exercise price | $ 78.19 | |
Stock options- exercisable, weighted average remaining contractual term | 7 years 2 months 8 days | |
Stock options - exercisable, intrinsic value | $ 38 | |
Restricted Stock Units and Performance Stock Units Activity | ||
Unrecognized compensation costs related to nonvested awards | $ 4 | |
Weighted average recognition period of unrecognized compensation costs | 1 year 3 months 4 days | |
Restricted Stock [Member] | ||
Restricted Stock Units and Performance Stock Units Activity | ||
RSUs and PSUs - beginning balance outstanding | 942,124 | |
RSUs and PSUs - beginning balance outstanding, weighted average grant date total fair value | $ 88.44 | |
RSUs and PSUs - outstanding - weighted average remaining contractual term | 1 year 9 months 14 days | 9 months 25 days |
RSUs and PSUs - beginning balance outstanding, aggregate intrinsic value | $ 91 | |
RSUs and PSUs - granted | 432,538 | |
RSUs and PSUs - granted, weighted average grant date fair value | $ 116.13 | |
RSUs and PSUs - vested and released | (501,852) | |
RSUs and PSUs - vested and released, weighted average grant date fair value | $ 84.24 | |
RSUs and PSUs - vested and released, aggregate intrinsic value | $ 58 | |
RSUs and PSUs - forfeited | (6,745) | |
RSUs and PSUs - forfeited, weighted average grant date fair value | $ 92.86 | |
RSUs and PSUs - ending balance outstanding | 866,065 | |
RSUs and PSUs - ending balance outstanding, weighted average grant date total fair value | $ 104.67 | |
RSUs and PSUs - ending balance outstanding, aggregate intrinsic value | $ 103 | |
Unrecognized compensation costs related to nonvested awards | $ 80 | |
Weighted average recognition period of unrecognized compensation costs | 1 year 9 months 11 days | |
Tax withholdings related to net share settlements of certain stock awards, shares | 144,882 | |
Performance Shares [Member] | ||
Restricted Stock Units and Performance Stock Units Activity | ||
RSUs and PSUs - beginning balance outstanding | 329,490 | |
RSUs and PSUs - beginning balance outstanding, weighted average grant date total fair value | $ 51.69 | |
RSUs and PSUs - outstanding - weighted average remaining contractual term | 1 year 3 months | 11 months 23 days |
RSUs and PSUs - beginning balance outstanding, aggregate intrinsic value | $ 32 | |
RSUs and PSUs - vested and released | (92,589) | |
RSUs and PSUs - vested and released, weighted average grant date fair value | $ 67.35 | |
RSUs and PSUs - vested and released, aggregate intrinsic value | $ 11 | |
RSUs and PSUs - forfeited | (21,972) | |
RSUs and PSUs - forfeited, weighted average grant date fair value | $ 67.11 | |
RSUs and PSUs - ending balance outstanding | 214,929 | |
RSUs and PSUs - ending balance outstanding, weighted average grant date total fair value | $ 45.66 | |
RSUs and PSUs - ending balance outstanding, aggregate intrinsic value | $ 25 | |
Unrecognized compensation costs related to nonvested awards | $ 6 | |
Weighted average recognition period of unrecognized compensation costs | 1 year 3 months | |
Tax withholdings related to net share settlements of certain stock awards, shares | 27,373 |
Earnings Per Share (Details)
Earnings Per Share (Details) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2018USD ($)shares$ / shares | Mar. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | |
Basic EPS: | |||
Net income | $ | $ 159 | $ 177 | |
Weighted average common shares outstanding | 179,900,000 | 183,400,000 | |
Earnings per common share - basic | $ / shares | $ 0.88 | $ 0.97 | |
Diluted EPS: | |||
Net income | $ | $ 159 | $ 177 | |
Weighted average common shares outstanding | 179,900,000 | 183,400,000 | |
Earnings Per Share, Diluted [Line Items] | |||
Weighted average common shares outstanding and common stock equivalents | 180,800,000 | 184,600,000 | |
Earnings per common share - diluted | $ / shares | $ 0.88 | $ 0.96 | |
Earnings Per Share (Textuals) [Abstract] | |||
Exclusion from the diluted weighted average shares outstanding | 100,000 | 500,000 | |
Dividend equivalent units outstanding | 22,526 | ||
Aggregate shares authorized under repurchase program, initial amount | $ | $ 5,000 | ||
Number of shares repurchased and retired | 0 | 300,000 | |
Value of shares repurchased and retired | $ | $ 28 | ||
Employee Stock Option [Member] | |||
Earnings Per Share, Diluted [Line Items] | |||
Effect of dilutive securities | 300,000 | 300,000 | |
Restricted Stock [Member] | |||
Earnings Per Share, Diluted [Line Items] | |||
Effect of dilutive securities | 500,000 | 700,000 | |
Performance Shares [Member] | |||
Earnings Per Share, Diluted [Line Items] | |||
Effect of dilutive securities | 100,000 | 200,000 |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Accumulated other comprehensive income (loss), net of taxes | |||
Accumulated other comprehensive income (loss), net of tax, beginning balance | $ (202) | $ (229) | $ (229) |
Net change in pension liability | 1 | 1 | |
Current year OCI | 19 | 27 | |
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, before Reclassification Adjustments, Net of Tax | 0 | 1 | |
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI after Tax | 1 | 4 | |
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Derivatives Arising During Period, Net of Tax | 2 | 7 | |
Other Comprehensive Income (Loss), Reclassification Adjustment on Derivatives Included in Net Income, Net of Tax | 2 | 1 | 13 |
Other Comprehensive Income (Loss) Prior to Reclassifications | (16) | (10) | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | (3) | (2) | (17) |
Accumulated other comprehensive income (loss), net of tax, ending balance | (183) | (202) | |
Other Comprehensive Income (Loss), Reclassification Adjustments [Abstract] | |||
Amortization of actuarial losses | 1 | 1 | |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax | (1) | (1) | |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax | 0 | 0 | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 3 | 2 | 17 |
Foreign Currency Translation [Member] | |||
Accumulated other comprehensive income (loss), net of taxes | |||
Accumulated other comprehensive income (loss), net of tax, beginning balance | (148) | (164) | (164) |
Foreign currency translation adjustments | 18 | 16 | |
Accumulated other comprehensive income (loss), net of tax, ending balance | (130) | (148) | |
Change in Pension Liability [Member] | |||
Accumulated other comprehensive income (loss), net of taxes | |||
Accumulated other comprehensive income (loss), net of tax, beginning balance | (32) | (37) | (37) |
Net change in pension liability | 1 | 5 | |
Accumulated other comprehensive income (loss), net of tax, ending balance | (31) | (32) | |
Cash Flow Hedges [Member] | |||
Accumulated other comprehensive income (loss), net of taxes | |||
Accumulated other comprehensive income (loss), net of tax, beginning balance | (22) | (28) | (28) |
Cash flow hedges, net of tax | 0 | 6 | |
Accumulated other comprehensive income (loss), net of tax, ending balance | (22) | $ (22) | |
Cash Flow Hedging [Member] | |||
Other Comprehensive Income (Loss), Reclassification Adjustments [Abstract] | |||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax | 0 | (1) | |
Cash Flow Hedging [Member] | Interest Expense [Member] | Interest Rate Contract [Member] | |||
Other Comprehensive Income (Loss), Reclassification Adjustments [Abstract] | |||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | 2 | 2 | |
Cash Flow Hedging [Member] | Cost of Sales [Member] | Foreign Exchange Forward [Member] | |||
Other Comprehensive Income (Loss), Reclassification Adjustments [Abstract] | |||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, before Tax | $ 0 | $ 0 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 79 | $ 81 | |
Spare parts | 25 | 24 | |
Work in process | 7 | 7 | |
Finished goods | 166 | 149 | |
Inventories at first in first out cost | 277 | 261 | |
Reduction to LIFO cost | (34) | (32) | |
Inventories | 243 | 229 | |
Inventory accounted for under the LIFO method | 189 | $ 177 | |
Effect of LIFO Inventory Liquidation on Income | $ 0 | $ 0 |
Other Assets and Liabilities 55
Other Assets and Liabilities Other Assets and Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 | |
Prepaid Expense and Other Assets, Current [Abstract] | |||
Customer incentive programs | $ 118 | $ 16 | |
Derivative instruments | 21 | 32 | |
Prepaid income taxes | 9 | 7 | |
Other | 77 | 44 | |
Total prepaid expenses and other current assets | 225 | 99 | |
Other Assets, Noncurrent [Abstract] | |||
Customer incentive programs | 77 | 76 | |
Marketable securities - trading | [1] | 52 | 48 |
Derivative instruments | 24 | 33 | |
Equity securities without readily determinable fair values | 1 | 1 | |
Non-current restricted cash and restricted cash equivalents | 92 | 79 | |
Other | 40 | 42 | |
Total other non-current assets | 286 | 279 | |
Other Liabilities, Current [Abstract] | |||
Customer rebates and incentives | 345 | 299 | |
Accrued compensation | 81 | 130 | |
Insurance liability | 36 | 34 | |
Interest accrual | 46 | 20 | |
Dividends payable | 105 | 103 | |
Derivative instruments | 9 | 3 | |
Holdback liability to former Bai Brands shareholders | 5 | 7 | |
Acquired contingent liabilities | 11 | 14 | |
Other | 123 | 109 | |
Total other current liabilities | 761 | 719 | |
Other Liabilities, Noncurrent [Abstract] | |||
Long-term payables due to Mondelez International, Inc | 16 | 16 | |
Long-term pension and post-retirement liability | 20 | 19 | |
Insurance liability | 60 | 60 | |
Derivative instruments | 13 | 8 | |
Deferred compensation liability | 52 | 48 | |
Holdback liability to former Bai Brands shareholders | 79 | 79 | |
Acquired contingent liabilities | 5 | 5 | |
Other | 28 | 29 | |
Total other non-current liabilities | 273 | 264 | |
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | |||
Other Assets and Liabilities [Line Items] | |||
Marketable Securities | $ 52 | $ 48 | |
[1] | 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 $52 million and $48 million as of March 31, 2018 and December 31, 2017, respectively. |
Supplemental Cash Flow Inform56
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Cash and Cash Equivalents, at Carrying Value | $ 13 | $ 176 | $ 61 | $ 1,787 | |
Restricted Cash and Cash Equivalents, Current | [1] | 16 | 18 | ||
Restricted Cash and Investments, Noncurrent | 92 | 79 | |||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 121 | 176 | 158 | $ 1,787 | |
Dividends declared but not yet paid | 105 | 107 | |||
Capital expenditures included in accounts payable and other current liabilities | 12 | 9 | |||
Capital lease additions | 6 | 7 | |||
Business Combination, Indemnification Holdback | 84 | 103 | |||
Interest paid | 15 | 13 | |||
Income taxes paid | 3 | $ 7 | |||
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Restricted Cash, Fair Value Disclosure | [1] | 16 | 18 | ||
Restricted Investments, at Fair Value | [1] | 92 | 79 | ||
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, fair value | 121 | 158 | |||
Cash and Cash Equivalents, Fair Value Disclosure | $ 13 | $ 61 | |||
[1] | (1)Current and non-current restricted cash and restricted cash equivalents primarily includes the holdback held in escrow in connection with the Bai Brands Merger. Refer to Note 2 for additional information on the Bai Brands Merger. |
Segments (Details)
Segments (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018USD ($)integer | Mar. 31, 2017USD ($)integer | Dec. 31, 2017USD ($) | ||
Segment Reporting Information [Line Items] | ||||
Number of Operating Segments | integer | 3 | 4 | ||
Net sales | $ 1,594 | $ 1,510 | [1],[2] | |
Segment Results - SOP | ||||
Total segment operating profit | 356 | 338 | ||
Unallocated corporate costs | 96 | 80 | ||
Other operating expense (income), net | 1 | (28) | ||
Income from operations | 259 | 286 | ||
Interest expense, net | 40 | 39 | ||
Other income, net | 0 | (1) | ||
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | 219 | 248 | ||
Segment Results - Assets [Abstract] | ||||
Equity Method Investments | 36 | $ 24 | ||
Total assets | 10,179 | $ 10,022 | ||
Beverage Concentrates [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 303 | 294 | [1],[2] | |
Segment Results - SOP | ||||
Total segment operating profit | 194 | 186 | ||
Packaged Beverages [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,178 | 1,118 | [1],[2] | |
Segment Results - SOP | ||||
Total segment operating profit | 150 | 141 | ||
Latin America Beverages [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 113 | 98 | [1],[2] | |
Segment Results - SOP | ||||
Total segment operating profit | $ 12 | $ 11 | ||
[1] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. | |||
[2] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. |
Guarantor and Non-Guarantor F58
Guarantor and Non-Guarantor Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | |||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Condensed Financial Statements, Captions [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 121 | $ 176 | $ 158 | $ 1,787 | ||
Restricted Cash and Cash Equivalents, Current | [1] | 16 | 18 | |||
Condensed Consolidating Statements of Income | ||||||
Net sales | 1,594 | 1,510 | [2],[3] | |||
Cost of sales | 681 | 607 | ||||
Gross profit | 913 | 903 | ||||
Selling, general and administrative expenses | 626 | 620 | ||||
Depreciation and amortization | 27 | 25 | ||||
Other operating expense (income), net | 1 | (28) | ||||
Income from operations | 259 | 286 | ||||
Interest expense | 41 | 40 | ||||
Interest income | (1) | (1) | ||||
Other expense (income), net | 0 | (1) | ||||
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | 219 | 248 | ||||
Provision for income taxes | 54 | 71 | ||||
Income before equity in loss of unconsolidated subsidiaries | 165 | 177 | ||||
Equity in earnings of consolidated subsidiaries | 0 | 0 | ||||
Equity in loss of unconsolidated subsidiaries, net of tax | (6) | 0 | ||||
Net income | 159 | 177 | ||||
Condensed Consolidating Statements of Comprehensive Income | ||||||
Comprehensive income (loss) | 178 | 200 | ||||
Accounts receivable: | ||||||
Trade, net | 700 | 668 | ||||
Other | 49 | 42 | ||||
Related party receivable | 0 | 0 | ||||
Inventories | 243 | 229 | ||||
Prepaid expenses and other current assets | 225 | 99 | ||||
Total current assets | 1,246 | 1,117 | ||||
Property, plant and equipment, net | 1,198 | 1,198 | ||||
Investments in consolidated subsidiaries | 0 | 0 | ||||
Investments in unconsolidated subsidiaries | 36 | 24 | ||||
Goodwill | 3,564 | 3,561 | ||||
Other intangible assets, net | 3,784 | 3,781 | ||||
Long-term receivable, related parties | 0 | 0 | ||||
Other non-current assets | 286 | 279 | ||||
Deferred tax assets | 65 | 62 | ||||
Total assets | 10,179 | 10,022 | ||||
Current liabilities: | ||||||
Accounts payable | 377 | 365 | ||||
Related party payable | 0 | 0 | ||||
Deferred revenue | 64 | 64 | ||||
Short-term borrowings and current portion of long-term obligations | 383 | 79 | ||||
Income taxes payable | 39 | 11 | ||||
Other current liabilities | 761 | 719 | ||||
Total current liabilities | 1,624 | 1,238 | ||||
Long-term obligations to third parties | 4,135 | 4,400 | ||||
Long-term obligations to related parties | 0 | 0 | ||||
Deferred tax liabilities | 623 | 614 | ||||
Non-current deferred revenue | 1,038 | 1,055 | ||||
Other non-current liabilities | 273 | 264 | ||||
Total liabilities | 7,693 | 7,571 | ||||
Total stockholders' equity | 2,486 | 2,451 | ||||
Total liabilities and stockholders' equity | 10,179 | 10,022 | ||||
Operating activities: | ||||||
Net cash (used in) provided by operating activities | 103 | 97 | ||||
Payments to Acquire Businesses, Net of Cash Acquired | 1,548 | |||||
Investing activities: | ||||||
Payments to Acquire Businesses, Gross | (2) | (1,548) | ||||
Cash acquired in step acquisition of unconsolidated subsidiary | 0 | 3 | ||||
Purchase of property, plant and equipment | (41) | (16) | ||||
Investment in unconsolidated subsidiaries | (19) | (1) | ||||
Purchase of intangible assets | (3) | (1) | ||||
Proceeds from disposals of property, plant and equipment | 1 | 1 | ||||
Issuance of related party notes receivable | 0 | 0 | ||||
Other, net | (4) | (7) | ||||
Net cash used in investing activities | (68) | (1,569) | ||||
Financing activities: | ||||||
Proceeds from issuance of related party debt | 0 | 0 | ||||
Repurchase of shares of common stock | 0 | (28) | ||||
Dividends paid | (104) | (97) | ||||
Tax withholdings related to net share settlements of certain stock awards | (21) | (30) | ||||
Proceeds from stock options exercised | 2 | 17 | ||||
Proceeds from Short-term Debt | 54 | |||||
Deferred financing charges paid | 0 | (1) | ||||
Capital lease payments | (4) | (3) | ||||
Net cash used in financing activities | (73) | (142) | ||||
Cash and cash equivalents - net change from: | ||||||
Operating, investing and financing activities | (38) | (1,614) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1 | 3 | ||||
Cash and cash equivalents at beginning of year | 61 | 1,787 | ||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 13 | 176 | ||||
Parent [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 0 | 0 | 0 | 0 | ||
Restricted Cash and Cash Equivalents, Current | 0 | 0 | ||||
Condensed Consolidating Statements of Income | ||||||
Net sales | 0 | 0 | ||||
Cost of sales | 0 | 0 | ||||
Gross profit | 0 | 0 | ||||
Selling, general and administrative expenses | 0 | 2 | ||||
Depreciation and amortization | 0 | 0 | ||||
Other operating expense (income), net | 0 | 0 | ||||
Income from operations | 0 | (2) | ||||
Interest expense | 82 | 63 | ||||
Interest income | (23) | (16) | ||||
Other expense (income), net | (2) | (4) | ||||
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | (57) | (45) | ||||
Provision for income taxes | (13) | (16) | ||||
Income before equity in loss of unconsolidated subsidiaries | (44) | (29) | ||||
Equity in earnings of consolidated subsidiaries | 203 | 206 | ||||
Equity in loss of unconsolidated subsidiaries, net of tax | 0 | 0 | ||||
Net income | 159 | 177 | ||||
Condensed Consolidating Statements of Comprehensive Income | ||||||
Comprehensive income (loss) | 178 | 200 | ||||
Accounts receivable: | ||||||
Trade, net | 0 | 0 | ||||
Other | 6 | 1 | ||||
Related party receivable | 25 | 20 | ||||
Inventories | 0 | 0 | ||||
Prepaid expenses and other current assets | 482 | 473 | ||||
Total current assets | 513 | 494 | ||||
Property, plant and equipment, net | 0 | 0 | ||||
Investments in consolidated subsidiaries | 9,555 | 9,373 | ||||
Investments in unconsolidated subsidiaries | 0 | 0 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | 0 | 0 | ||||
Long-term receivable, related parties | 3,298 | 3,278 | ||||
Other non-current assets | 64 | 65 | ||||
Deferred tax assets | 10 | 11 | ||||
Total assets | 13,440 | 13,221 | ||||
Current liabilities: | ||||||
Accounts payable | 0 | 0 | ||||
Related party payable | 43 | 37 | ||||
Deferred revenue | 0 | 0 | ||||
Short-term borrowings and current portion of long-term obligations | 369 | 66 | ||||
Income taxes payable | 0 | 0 | ||||
Other current liabilities | 164 | 133 | ||||
Total current liabilities | 576 | 236 | ||||
Long-term obligations to third parties | 3,963 | 4,230 | ||||
Long-term obligations to related parties | 6,335 | 6,233 | ||||
Deferred tax liabilities | 0 | 0 | ||||
Non-current deferred revenue | 0 | 0 | ||||
Other non-current liabilities | 80 | 71 | ||||
Total liabilities | 10,954 | 10,770 | ||||
Total stockholders' equity | 2,486 | 2,451 | ||||
Total liabilities and stockholders' equity | 13,440 | 13,221 | ||||
Operating activities: | ||||||
Net cash (used in) provided by operating activities | (29) | (23) | ||||
Payments to Acquire Businesses, Net of Cash Acquired | 0 | |||||
Investing activities: | ||||||
Payments to Acquire Businesses, Gross | 0 | |||||
Cash acquired in step acquisition of unconsolidated subsidiary | 0 | |||||
Purchase of property, plant and equipment | 0 | 0 | ||||
Investment in unconsolidated subsidiaries | 0 | 0 | ||||
Purchase of intangible assets | 0 | 0 | ||||
Proceeds from disposals of property, plant and equipment | 0 | 0 | ||||
Issuance of related party notes receivable | 0 | 0 | ||||
Other, net | (4) | (7) | ||||
Net cash used in investing activities | (4) | (7) | ||||
Financing activities: | ||||||
Proceeds from issuance of related party debt | 102 | 169 | ||||
Repurchase of shares of common stock | (28) | |||||
Dividends paid | (104) | (97) | ||||
Tax withholdings related to net share settlements of certain stock awards | (21) | (30) | ||||
Proceeds from stock options exercised | 2 | 17 | ||||
Proceeds from Short-term Debt | 54 | |||||
Deferred financing charges paid | (1) | |||||
Capital lease payments | 0 | 0 | ||||
Net cash used in financing activities | 33 | 30 | ||||
Cash and cash equivalents - net change from: | ||||||
Operating, investing and financing activities | 0 | 0 | ||||
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 | ||||
Cash and cash equivalents at beginning of year | 0 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 0 | |||||
Guarantors [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 97 | 126 | 111 | 1,736 | ||
Restricted Cash and Cash Equivalents, Current | 15 | 18 | ||||
Condensed Consolidating Statements of Income | ||||||
Net sales | 1,473 | 1,407 | ||||
Cost of sales | 629 | 564 | ||||
Gross profit | 844 | 843 | ||||
Selling, general and administrative expenses | 576 | 576 | ||||
Depreciation and amortization | 25 | 23 | ||||
Other operating expense (income), net | 1 | (28) | ||||
Income from operations | 242 | 272 | ||||
Interest expense | 25 | 19 | ||||
Interest income | (43) | (27) | ||||
Other expense (income), net | (1) | 0 | ||||
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | 261 | 280 | ||||
Provision for income taxes | 63 | 83 | ||||
Income before equity in loss of unconsolidated subsidiaries | 198 | 197 | ||||
Equity in earnings of consolidated subsidiaries | 11 | 9 | ||||
Equity in loss of unconsolidated subsidiaries, net of tax | (6) | 0 | ||||
Net income | 203 | 206 | ||||
Condensed Consolidating Statements of Comprehensive Income | ||||||
Comprehensive income (loss) | 220 | 227 | ||||
Accounts receivable: | ||||||
Trade, net | 620 | 595 | ||||
Other | 33 | 35 | ||||
Related party receivable | 48 | 42 | ||||
Inventories | 211 | 199 | ||||
Prepaid expenses and other current assets | 211 | 83 | ||||
Total current assets | 1,138 | 987 | ||||
Property, plant and equipment, net | 1,051 | 1,062 | ||||
Investments in consolidated subsidiaries | 324 | 332 | ||||
Investments in unconsolidated subsidiaries | 36 | 24 | ||||
Goodwill | 3,540 | 3,539 | ||||
Other intangible assets, net | 3,733 | 3,733 | ||||
Long-term receivable, related parties | 6,335 | 6,233 | ||||
Other non-current assets | 195 | 195 | ||||
Deferred tax assets | 0 | 0 | ||||
Total assets | 16,352 | 16,105 | ||||
Current liabilities: | ||||||
Accounts payable | 344 | 333 | ||||
Related party payable | 23 | 20 | ||||
Deferred revenue | 67 | 68 | ||||
Short-term borrowings and current portion of long-term obligations | 14 | 13 | ||||
Income taxes payable | 521 | 479 | ||||
Other current liabilities | 528 | 532 | ||||
Total current liabilities | 1,497 | 1,445 | ||||
Long-term obligations to third parties | 172 | 170 | ||||
Long-term obligations to related parties | 3,298 | 3,278 | ||||
Deferred tax liabilities | 633 | 625 | ||||
Non-current deferred revenue | 1,015 | 1,032 | ||||
Other non-current liabilities | 182 | 182 | ||||
Total liabilities | 6,797 | 6,732 | ||||
Total stockholders' equity | 9,555 | 9,373 | ||||
Total liabilities and stockholders' equity | 16,352 | 16,105 | ||||
Operating activities: | ||||||
Net cash (used in) provided by operating activities | 150 | 122 | ||||
Payments to Acquire Businesses, Net of Cash Acquired | 1,548 | |||||
Investing activities: | ||||||
Payments to Acquire Businesses, Gross | (2) | |||||
Cash acquired in step acquisition of unconsolidated subsidiary | 3 | |||||
Purchase of property, plant and equipment | (35) | (15) | ||||
Investment in unconsolidated subsidiaries | (19) | (1) | ||||
Purchase of intangible assets | (3) | (1) | ||||
Proceeds from disposals of property, plant and equipment | 1 | 1 | ||||
Issuance of related party notes receivable | (102) | (169) | ||||
Other, net | 0 | 0 | ||||
Net cash used in investing activities | (160) | (1,730) | ||||
Financing activities: | ||||||
Proceeds from issuance of related party debt | 0 | 0 | ||||
Repurchase of shares of common stock | 0 | |||||
Dividends paid | 0 | 0 | ||||
Tax withholdings related to net share settlements of certain stock awards | 0 | 0 | ||||
Proceeds from stock options exercised | 0 | 0 | ||||
Proceeds from Short-term Debt | 0 | |||||
Deferred financing charges paid | 0 | |||||
Capital lease payments | (4) | (3) | ||||
Net cash used in financing activities | (4) | (3) | ||||
Cash and cash equivalents - net change from: | ||||||
Operating, investing and financing activities | (14) | (1,611) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0 | 1 | ||||
Cash and cash equivalents at beginning of year | 15 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 0 | |||||
Non-Guarantors [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 24 | 50 | 47 | 51 | ||
Restricted Cash and Cash Equivalents, Current | 1 | 0 | ||||
Condensed Consolidating Statements of Income | ||||||
Net sales | 153 | 136 | ||||
Cost of sales | 84 | 76 | ||||
Gross profit | 69 | 60 | ||||
Selling, general and administrative expenses | 50 | 42 | ||||
Depreciation and amortization | 2 | 2 | ||||
Other operating expense (income), net | 0 | 0 | ||||
Income from operations | 17 | 16 | ||||
Interest expense | 0 | 0 | ||||
Interest income | (1) | 0 | ||||
Other expense (income), net | 3 | 3 | ||||
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | 15 | 13 | ||||
Provision for income taxes | 4 | 4 | ||||
Income before equity in loss of unconsolidated subsidiaries | 11 | 9 | ||||
Equity in earnings of consolidated subsidiaries | 0 | 0 | ||||
Equity in loss of unconsolidated subsidiaries, net of tax | 0 | 0 | ||||
Net income | 11 | 9 | ||||
Condensed Consolidating Statements of Comprehensive Income | ||||||
Comprehensive income (loss) | 27 | 30 | ||||
Accounts receivable: | ||||||
Trade, net | 80 | 73 | ||||
Other | 10 | 6 | ||||
Related party receivable | 0 | 0 | ||||
Inventories | 32 | 30 | ||||
Prepaid expenses and other current assets | 19 | 18 | ||||
Total current assets | 155 | 173 | ||||
Property, plant and equipment, net | 147 | 136 | ||||
Investments in consolidated subsidiaries | 0 | 0 | ||||
Investments in unconsolidated subsidiaries | 0 | 0 | ||||
Goodwill | 24 | 22 | ||||
Other intangible assets, net | 51 | 48 | ||||
Long-term receivable, related parties | 0 | 0 | ||||
Other non-current assets | 29 | 22 | ||||
Deferred tax assets | 65 | 62 | ||||
Total assets | 471 | 463 | ||||
Current liabilities: | ||||||
Accounts payable | 33 | 32 | ||||
Related party payable | 7 | 5 | ||||
Deferred revenue | 2 | 2 | ||||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | ||||
Income taxes payable | 0 | 1 | ||||
Other current liabilities | 69 | 54 | ||||
Total current liabilities | 111 | 94 | ||||
Long-term obligations to third parties | 0 | 0 | ||||
Long-term obligations to related parties | 0 | 0 | ||||
Deferred tax liabilities | 0 | 0 | ||||
Non-current deferred revenue | 25 | 26 | ||||
Other non-current liabilities | 11 | 11 | ||||
Total liabilities | 147 | 131 | ||||
Total stockholders' equity | 324 | 332 | ||||
Total liabilities and stockholders' equity | 471 | 463 | ||||
Operating activities: | ||||||
Net cash (used in) provided by operating activities | 19 | 8 | ||||
Payments to Acquire Businesses, Net of Cash Acquired | 0 | |||||
Investing activities: | ||||||
Payments to Acquire Businesses, Gross | 0 | |||||
Cash acquired in step acquisition of unconsolidated subsidiary | 0 | |||||
Purchase of property, plant and equipment | (6) | (1) | ||||
Investment in unconsolidated subsidiaries | 0 | 0 | ||||
Purchase of intangible assets | 0 | 0 | ||||
Proceeds from disposals of property, plant and equipment | 0 | 0 | ||||
Issuance of related party notes receivable | 0 | 0 | ||||
Other, net | 0 | 0 | ||||
Net cash used in investing activities | (6) | (1) | ||||
Financing activities: | ||||||
Proceeds from issuance of related party debt | 0 | 0 | ||||
Repurchase of shares of common stock | 0 | |||||
Dividends paid | (37) | (10) | ||||
Tax withholdings related to net share settlements of certain stock awards | 0 | 0 | ||||
Proceeds from stock options exercised | 0 | 0 | ||||
Proceeds from Short-term Debt | 0 | |||||
Deferred financing charges paid | 0 | |||||
Capital lease payments | 0 | 0 | ||||
Net cash used in financing activities | (37) | (10) | ||||
Cash and cash equivalents - net change from: | ||||||
Operating, investing and financing activities | (24) | (3) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1 | 2 | ||||
Cash and cash equivalents at beginning of year | 46 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 13 | |||||
Consolidation, Eliminations [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 0 | 0 | 0 | $ 0 | ||
Restricted Cash and Cash Equivalents, Current | 0 | 0 | ||||
Condensed Consolidating Statements of Income | ||||||
Net sales | (32) | (33) | ||||
Cost of sales | (32) | (33) | ||||
Gross profit | 0 | 0 | ||||
Selling, general and administrative expenses | 0 | 0 | ||||
Depreciation and amortization | 0 | 0 | ||||
Other operating expense (income), net | 0 | 0 | ||||
Income from operations | 0 | 0 | ||||
Interest expense | (66) | (42) | ||||
Interest income | 66 | 42 | ||||
Other expense (income), net | 0 | 0 | ||||
Income before provision for income taxes and equity in loss of unconsolidated subsidiaries | 0 | 0 | ||||
Provision for income taxes | 0 | 0 | ||||
Income before equity in loss of unconsolidated subsidiaries | 0 | 0 | ||||
Equity in earnings of consolidated subsidiaries | (214) | (215) | ||||
Equity in loss of unconsolidated subsidiaries, net of tax | 0 | 0 | ||||
Net income | (214) | (215) | ||||
Condensed Consolidating Statements of Comprehensive Income | ||||||
Comprehensive income (loss) | (247) | (257) | ||||
Accounts receivable: | ||||||
Trade, net | 0 | 0 | ||||
Other | 0 | 0 | ||||
Related party receivable | (73) | (62) | ||||
Inventories | 0 | 0 | ||||
Prepaid expenses and other current assets | (487) | (475) | ||||
Total current assets | (560) | (537) | ||||
Property, plant and equipment, net | 0 | 0 | ||||
Investments in consolidated subsidiaries | (9,879) | (9,705) | ||||
Investments in unconsolidated subsidiaries | 0 | 0 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | 0 | 0 | ||||
Long-term receivable, related parties | (9,633) | (9,511) | ||||
Other non-current assets | (2) | (3) | ||||
Deferred tax assets | (10) | (11) | ||||
Total assets | (20,084) | (19,767) | ||||
Current liabilities: | ||||||
Accounts payable | 0 | 0 | ||||
Related party payable | (73) | (62) | ||||
Deferred revenue | (5) | (6) | ||||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | ||||
Income taxes payable | (482) | (469) | ||||
Other current liabilities | 0 | 0 | ||||
Total current liabilities | (560) | (537) | ||||
Long-term obligations to third parties | 0 | 0 | ||||
Long-term obligations to related parties | (9,633) | (9,511) | ||||
Deferred tax liabilities | (10) | (11) | ||||
Non-current deferred revenue | (2) | (3) | ||||
Other non-current liabilities | 0 | 0 | ||||
Total liabilities | (10,205) | (10,062) | ||||
Total stockholders' equity | (9,879) | (9,705) | ||||
Total liabilities and stockholders' equity | (20,084) | $ (19,767) | ||||
Operating activities: | ||||||
Net cash (used in) provided by operating activities | (37) | (10) | ||||
Payments to Acquire Businesses, Net of Cash Acquired | 0 | |||||
Investing activities: | ||||||
Payments to Acquire Businesses, Gross | 0 | |||||
Cash acquired in step acquisition of unconsolidated subsidiary | 0 | |||||
Purchase of property, plant and equipment | 0 | 0 | ||||
Investment in unconsolidated subsidiaries | 0 | 0 | ||||
Purchase of intangible assets | 0 | 0 | ||||
Proceeds from disposals of property, plant and equipment | 0 | 0 | ||||
Issuance of related party notes receivable | 102 | 169 | ||||
Other, net | 0 | 0 | ||||
Net cash used in investing activities | 102 | 169 | ||||
Financing activities: | ||||||
Proceeds from issuance of related party debt | (102) | (169) | ||||
Repurchase of shares of common stock | 0 | |||||
Dividends paid | 37 | 10 | ||||
Tax withholdings related to net share settlements of certain stock awards | 0 | 0 | ||||
Proceeds from stock options exercised | 0 | 0 | ||||
Proceeds from Short-term Debt | 0 | |||||
Deferred financing charges paid | 0 | |||||
Capital lease payments | 0 | 0 | ||||
Net cash used in financing activities | (65) | (159) | ||||
Cash and cash equivalents - net change from: | ||||||
Operating, investing and financing activities | 0 | 0 | ||||
Effect of exchange rate changes on cash and cash equivalents | 0 | $ 0 | ||||
Cash and cash equivalents at beginning of year | 0 | |||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ 0 | |||||
[1] | (1)Current and non-current restricted cash and restricted cash equivalents primarily includes the holdback held in escrow in connection with the Bai Brands Merger. Refer to Note 2 for additional information on the Bai Brands Merger. | |||||
[2] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. | |||||
[3] | Prior period amounts were not adjusted for the adoption of the new revenue recognition guidance under ASC 606. |