Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 06, 2018 | |
DEI [Abstract] | ||
Entity Registrant Name | Keurig Dr Pepper Inc. | |
Entity Central Index Key | 1,418,135 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 1,389,111,598 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net sales | $ 2,732 | $ 1,140 | $ 4,629 | $ 3,056 |
Cost of sales | 1,371 | 585 | 2,305 | 1,571 |
Gross profit | 1,361 | 555 | 2,324 | 1,485 |
Selling, general and administrative expenses | 1,025 | 318 | 1,636 | 852 |
Other operating (income) expense, net | (8) | (1) | (2) | 0 |
Income from operations | 344 | 238 | 690 | 633 |
Interest expense | 172 | 28 | 221 | 76 |
Interest expense - related party | 0 | 25 | 51 | 75 |
Loss on early extinguishment of debt | 11 | 2 | 13 | 54 |
Other (income) expense, net | (33) | 20 | (28) | 88 |
Income before provision for income taxes | 194 | 163 | 433 | 340 |
Provision for income taxes | 46 | 46 | 110 | 102 |
Net income | 148 | 117 | 323 | 238 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 1 | 3 | 3 |
Net income attributable to KDP | $ 148 | $ 116 | $ 320 | $ 235 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.11 | $ 0.15 | $ 0.33 | $ 0.30 |
Diluted (in dollars per share) | $ 0.11 | $ 0.14 | $ 0.32 | $ 0.29 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 1,361.8 | 790.5 | 983 | 790.5 |
Diluted (in shares) | 1,373.6 | 790.5 | 994.1 | 790.5 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Comprehensive income | $ 226 | $ 208 | $ 361 | $ 334 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 94 | $ 90 |
Restricted cash and restricted cash equivalents | 18 | 5 |
Trade accounts receivable, net | 1,196 | 483 |
Inventories | 720 | 384 |
Prepaid expenses and other current assets | 357 | 94 |
Total current assets | 2,385 | 1,056 |
Property, plant and equipment, net | 2,345 | 790 |
Investments in unconsolidated subsidiaries | 193 | 97 |
Goodwill | 19,291 | 9,819 |
Other intangible assets, net | 24,436 | 3,834 |
Other non-current assets | 315 | 121 |
Deferred tax assets | 93 | 27 |
Total assets | 49,058 | 15,744 |
Current liabilities: | ||
Accounts payable | 2,229 | 1,580 |
Accrued expenses | 1,231 | 201 |
Structured payables | 432 | 0 |
Short-term borrowings and current portion of long-term obligations | 1,765 | 219 |
Current portion of capital lease and financing obligations | 25 | 6 |
Income taxes payable | 11 | 3 |
Other current liabilities | 274 | 9 |
Total current liabilities | 5,967 | 2,018 |
Long-term obligations | 14,275 | 3,064 |
Long-term obligations, related party | 0 | 1,815 |
Capital lease and financing obligations, less current | 305 | 97 |
Deferred tax liabilities | 5,974 | 1,031 |
Other non-current liabilities | 244 | 56 |
Total liabilities | 26,765 | 8,081 |
Commitments and contingencies | ||
Employee redeemable non-controlling interest and mezzanine equity awards | 0 | 265 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | 0 | 0 |
Common stock, $0.01 par value, 2,000,000,000 and 800,000,000 shares authorized, 1,389,090,915 and 790,478,141 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 14 | 8 |
Additional paid-in capital | 21,020 | 6,377 |
Retained earnings | 1,122 | 914 |
Accumulated other comprehensive income | 137 | 99 |
Total stockholders' equity | 22,293 | 7,398 |
Total liabilities and stockholders' equity | $ 49,058 | $ 15,744 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 2,000,000,000 | 800,000,000 |
Common stock issued (in shares) | 1,389,090,915 | 790,478,141 |
Common stock outstanding (in shares) | 1,389,090,915 | 790,478,141 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Net income | $ 323 | $ 238 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 150 | 109 |
Amortization expense | 144 | 85 |
Provision for sales returns | 38 | 38 |
Deferred income taxes | (117) | 16 |
Deferred compensation | 21 | 36 |
Loss on early extinguishment of debt | 13 | 55 |
Gain on step acquisition of unconsolidated subsidiaries | (6) | 0 |
Unrealized gain or loss on foreign currency | 7 | 11 |
Unrealized gain or loss on derivatives | (6) | 35 |
Other, net | 33 | 41 |
Changes in assets and liabilities, net of effects of acquisition: | ||
Trade accounts receivable | 48 | (9) |
Inventories | 91 | (39) |
Income taxes receivable and payables, net | 34 | (84) |
Other current and non current assets | (108) | (13) |
Accounts payable and accrued expenses | 391 | 796 |
Other current and non current liabilities | 7 | 6 |
Net change in operating assets and liabilities | 463 | 657 |
Net cash provided by operating activities | 1,063 | 1,321 |
Investing activities: | ||
Acquisitions of business | (19,124) | 0 |
Cash acquired in acquisitions | 150 | 0 |
Issuance of related party note receivable | (6) | (6) |
Investments in unconsolidated subsidiaries, payments | (23) | |
Investments in unconsolidated subsidiaries, proceeds | 250 | |
Proceeds from capital distributions from investments in unconsolidated subsidiaries | 36 | 0 |
Purchases of property, plant and equipment | (104) | (45) |
Other, net | 1 | 2 |
Net cash (used in) provided by investing activities | (19,070) | 201 |
Financing activities: | ||
Proceeds from issuance of common stock private placement | 9,000 | 0 |
Proceeds from unsecured credit facility | 1,900 | 0 |
Proceeds from senior unsecured notes | 8,000 | 0 |
Proceeds from term loan | 2,700 | 1,200 |
Net issuance of Commercial Paper | 1,386 | 0 |
Proceeds from structured payables | 432 | 0 |
Repayment of unsecured credit facility | (1,900) | 0 |
Net repayment on line of credit | 0 | (200) |
Repayment of term loan | (3,363) | (2,144) |
Payments on capital leases | (20) | (14) |
Deferred financing charges paid | (49) | (5) |
Proceeds from stock options exercised | 3 | 0 |
Cash contributions (distributions) from (to) redeemable NCI shareholders | 19 | (1) |
Cash dividends paid | (23) | (46) |
Cross currency swap | 0 | (78) |
Other, net | (1) | 0 |
Net cash provided by (used in) financing activities | 18,084 | (1,288) |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | 77 | 234 |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | (50) | 18 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 95 | 97 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ 122 | $ 349 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions | Total | Common Stock Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of new accounting standards | $ (4) | $ (4) | |||
Shares issued at beginning of period (in shares) at Dec. 31, 2017 | 790.5 | ||||
Total equity at beginning of period at Dec. 31, 2017 | 7,398 | $ 8 | $ 6,377 | 914 | $ 99 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income attributable to KDP | 320 | 320 | |||
Other comprehensive income | 38 | 38 | |||
Issuance of common stock (in shares) | 407 | ||||
Issuance of common stock | 9,000 | $ 4 | 8,996 | ||
Acquisition of Dr Pepper Snapple Group, Inc. (in shares) | 182.5 | ||||
Acquisition of Dr Pepper Snapple Group, Inc. | 3,642 | $ 2 | 3,640 | ||
Conversion of subsidiary shares (in shares) | 7.9 | ||||
Conversion of subsidiary shares | 172 | 172 | |||
Capitalization of loans with related parties | 1,815 | 1,815 | |||
Reclassification of historical Maple Parent Corporation employee redeemable non-controlling interest and mezzanine equity awards | 132 | 9 | 123 | ||
Dividends declared | (231) | (231) | |||
Shares issued under employee stock-based compensation plans and other (in shares) | 1.2 | ||||
Stock-based compensation | 11 | 11 | |||
Shares issued at end of period (in shares) at Sep. 30, 2018 | 1,389.1 | ||||
Total equity at end of period at Sep. 30, 2018 | 22,293 | $ 14 | 21,020 | 1,122 | 137 |
Total equity at beginning of period at Jun. 30, 2018 | 59 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income attributable to KDP | 148 | ||||
Other comprehensive income | 78 | ||||
Shares issued at end of period (in shares) at Sep. 30, 2018 | 1,389.1 | ||||
Total equity at end of period at Sep. 30, 2018 | $ 22,293 | $ 14 | $ 21,020 | $ 1,122 | $ 137 |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Background and Basis of Presentation | Background and Basis of Presentation ORGANIZATION On January 29, 2018, Dr Pepper Snapple Group, Inc. (" 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. (“ Merger Sub ”), whereby Merger Sub would be merged with and into Maple , with Maple surviving the merger as a wholly-owned subsidiary of DPS (the “ DPS Merger ”). The DPS Merger was consummated on July 9, 2018 (the " Merger Date "), at which time DPS changed its name to " Keurig Dr Pepper Inc. ". Immediately prior to the consummation of the DPS Merger (the “ Effective Time ”), each share of common stock of Maple issued and outstanding was converted into the right to receive a number of fully paid and nonassessable shares of common stock of Merger Sub determined pursuant to an exchange ratio set forth in the Merger Agreement (the “ Acquisition Shares ”). As a result of the DPS Merger , the stockholders of Maple as of immediately prior to the Effective Time owned approximately 87% of KDP common stock on a fully diluted basis following the closing, and the stockholders of DPS as of immediately prior to the Effective Time owned approximately 13% of KDP common stock on a fully diluted basis following the closing of the DPS Merger. Upon consummation of the DPS Merger , KDP declared 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 July 6, 2018. Refer to Note 2 for additional information . Prior to the DPS Merger , Maple was controlled by JAB Holding Company S.a.r.l (" JAB ") following its February 19, 2016 formation of Maple and March 3, 2016 acquisition of Keurig Green Mountain, Inc. (" Keurig "). References in this Quarterly Report on Form 10-Q to " KDP " or "the Company " refer to Keurig Dr Pepper Inc. and all entities included in the unaudited condensed consolidated financial statements. This Quarterly Report on Form 10-Q refers to some of KDP 's owned or licensed trademarks, trade names and service marks, which are referred to as the Company's brands. All of the product names included herein are either KDP registered trademarks or those of the Company 's licensors. BASIS OF PRESENTATION For financial reporting and accounting purposes, Maple was the acquirer of DPS upon completion of the DPS Merger . The unaudited condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the third quarter and first nine months of 2018 and 2017 reflect the results of operations and financial position of Maple for the periods presented and includes 84 days of the results of operations of DPS in 2018 subsequent to the DPS Merger , which was completed on July 9, 2018. 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 Maple 's consolidated financial statements and accompanying notes, included in the Company's Form 8-K/A filed with the U.S. Securities and Exchange Commission (" SEC ") on August 8, 2018. Change in Year End On July 9, 2018, upon the consummation of the DPS Merger, as a result of the DPS Merger being accounted for as a reverse merger with Maple as the accounting acquirer, the board of directors of KDP (the "Board") approved a change in KDP’s fiscal year end from the last Saturday in September to December 31, which was DPS’s fiscal year end prior to the consummation of the DPS Merger, and changed Maple ’s fiscal year end from the last Saturday in September to the last Saturday in December to closely align Maple ’s fiscal year with that of the Company’s. The following presents information about KDP's 2017 fiscal calendar: • Fiscal first quarter 2017 (December 25, 2016 through March 25, 2017) contained 91 days; • Fiscal second quarter 2017 (March 26, 2017 through June 24, 2017) contained 91 days; • Fiscal third quarter 2017 (June 25, 2017 through September 30, 2017) contained 98 days; and • Fiscal fourth quarter 2017 (October 1, 2017 through December 31, 2017) contained 92 days. This change did not materially impact comparability of the Company 's financial results for fiscal 2017. Accordingly, the change to a calendar fiscal year was made on a prospective basis and operating results have not been adjusted. The Company filed a transition report with the SEC for this change in fiscal year for purposes of reporting in accordance with Rule 13a-10 of the Securities Exchange Act of 1934, as amended, on August 7, 2018, on a Form 10-QT. Except as otherwise specified, references to the "third quarter" or "first nine months" indicate the Company 's fiscal periods ended September 30, 2018 and September 30, 2017. PRINCIPLES OF CONSOLIDATION KDP 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 KDP 's proportionate share of the net income or loss of these companies. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors or similar governing body, participation in policy-making decisions and material intercompany transactions. The Company is also required to consolidate entities that are variable interest entities (“ VIE s”) of which KDP is the primary beneficiary. Judgments are made in assessing whether KDP is the primary beneficiary, including determination of the activities that most significantly impact the VIE ’s economic performance. KDP 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. RECLASSIFICATIONS The Company made certain reclassifications in the prior year presentation as management believes this presentation enhances the comparability of the Company 's financial statements with industry peers. Effective in the first quarter of 2018, the Company made the following reclassifications to certain prior year amounts to conform to the current year presentation: • The Company reclassified $58 million and $174 million for the third quarter and first nine months of 2017 , respectively, of transportation and warehouse costs associated with the distribution of finished goods to our customers to selling, general and administrative ("SG&A") expenses, which were previously presented as a separate line within the same section of the unaudited Condensed Consolidated Statements of Income. • The Company reclassified $15 million and $45 million for the third quarter and first nine months of 2017 , respectively, of restructuring costs to SG&A expenses, which were previously presented as separate lines within the same section of the unaudited Condensed Consolidated Statements of Income. • The Company reclassified $10 million and $21 million for the third quarter and first nine months of 2017 , respectively, of gains and losses, net associated with foreign currency to other (income) expense, net, which were previously presented as a separate line within the same section of the unaudited Condensed Consolidated Statements of Income. • The Company reclassified $45 million as of December 31, 2017 of income taxes receivable to prepaids and other current assets, which were previously presented as a separate line within the unaudited Condensed Consolidated Balance Sheets. • The Company reclassified $3 million as of December 31, 2017 of deferred revenue to other current liabilities, which were previously presented as a separate line within the unaudited Condensed Consolidated Balance Sheets. • The Company reclassified unrealized and realized gains and losses associated with derivative instruments within the same financial statement caption that the risk the derivative instrument is meant to mitigate is recorded, as provided in the table below: Third Quarter First Nine Months (in millions) Prior Presentation Revised Presentation 2017 2017 Commodity contracts (Gain) loss on financial instruments, net Cost of sales $ (7 ) $ 3 Interest rate contracts (Gain) loss on financial instruments, net Interest expense (9 ) 16 FX contracts (Gain) loss on financial instruments, net Other (income) expense, net 7 — USE OF ESTIMATES The process of preparing KDP 's unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimate s . SIGNIFICANT ACCOUNTING POLICIES Structured Payables The Company entered into an agreement with a supply chain payment processing intermediary to act as a virtual credit card sponsor, whereby the card sponsor will pay amounts on behalf of the Company and sell the amounts due from the Company to a participating financial institution. The card sponsor will then bill the Company the original payment amount, plus interest for a term not to exceed one year. The agreement permits the Company to utilize the third party and participating financial institutions to make a broad range of payments, including commercial payables to suppliers, business acquisitions, purchases of property, plant and equipment, and employee-related payments. Structured payables have equal priority with accounts payable and are treated as non-recourse obligations. The Company records interest for the period the structured payables obligation is outstanding and reflects the proceeds and payments related to these transactions as a financing activity on the unaudited Condensed Consolidated Statements of Cash Flows. 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 September 30, 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 the Company would pay or receive to terminate agreements, taking into consideration current market rates and creditworthiness. As of September 30, 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 first nine months of 2018 and 2017 . Refer to Notes 6 , 7 , 12 and 13 for additional information. RECENTLY ISSUED ACCOUNTING STANDARDS Effective in 2019 In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The standard 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 is in the midst of the implementation of the software. The Company anticipates the impact of ASU 2016-02 will be significant to its unaudited Condensed 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 unaudited condensed consolidated financial statements. Effective in 2020 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The standard provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2016-13 on the Company's unaudited condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements ("ASU 2018-13"). The objective of the ASU is to improve the disclosures related to fair value measurement by removing, modifying, or adding disclosure requirements related to recurring and non-recurring fair value measurements. ASU 2018-13 is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, and early adoption is permitted. The Company is currently assessing the changes in disclosure requirements and does not believe there will be a material impact to KDP's unaudited condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. ASU 2018-15 is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-15 on its unaudited condensed 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) (" Topic 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 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. As a result of the adoption of Topic 606 , the Company recognizes revenue from contracts with customers when control is transferred, generally upon delivery to the customers facility. 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 $4 million decrease 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. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The amount of revenue recognized by the Company is net of costs associated with customer marketing programs and incentives, as well as sales taxes and other similar taxes. Refer to Note 3 for information regarding the Company 's adoption of Topic 606 . As of January 1, 2018, the Company adopted 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 "), 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. The adoption of ASU 2017-07 had no impact to the Company 's unaudited condensed consolidated financial statements for the third quarter and first nine months of 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 held one investment in equity securities which was accounted for under the cost method of accounting prior to January 1, 2018, which did 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 | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions and Investments in Unconsolidated Subsidiaries | Acquisitions and Investments in Unconsolidated Subsidiaries ACQUISITION OF DR PEPPER SNAPPLE GROUP, INC. Overview and Total Consideration Exchanged As discussed in Note 1 , Background and Basis of Presentation , Maple merged with DPS on July 9, 2018. DPS is a leading integrated brand owner, manufacturer and distributor of non-alcoholic beverages in the United States (" U.S. "), Canada and Mexico with a diverse portfolio of flavored (non-cola) carbonated soft drinks (" CSDs ") and non-carbonated beverages (" NCBs "), including ready-to-drink teas, juices, juice drinks, water and mixers. The DPS Merger was accounted for as a reverse merger under the acquisition method of accounting for business combinations. Maple was considered to be the financial and accounting acquirer, and DPS was considered the legal acquirer. Under the acquisition method of accounting, total consideration exchanged was: (in millions) Aggregate fair value of DPS common stock $ 3,611 $103.75 per share special cash dividend (1) 18,818 Fair value of replacement equity awards (2) 53 Total consideration exchanged $ 22,482 (1) As a result of the DPS Merger , all DPS unvested stock option awards, RSUs and PSUs (the "Legacy Stock Awards") vested immediately as a result of the Change in Control (as defined in the terms of each individual award agreement). All Legacy Stock Awards, except for the stock option awards and certain RSUs not yet released to the employee, received the special cash dividend of $103.75 per share, subject to any withholding of taxes required by law. These amounts were included within the special cash dividend. (2) The fair value of replacement equity awards includes the Company issued replacement stock option awards for DPS stock option awards that were fully vested as of July 9, 2018 but not yet exercised by the employee, the DPS stock option awards that were fully vested as of July 9, 2018 and converted to cash by the employee and certain RSUs not yet released to the employee as a result of certain Internal Revenue Code requirements. The total consideration exchanged in the DPS Merger was funded by the following sources of funds: • A $9,000 million equity investment from JAB. • The issuance by the Company of $8,000 million of senior unsecured notes under a private offering Rule 144A. Refer to Note 6 for additional information . • Proceeds of $2,700 million borrowed under the term loan agreement and proceeds of $1,900 million borrowed under the revolving credit facility. Refer to Note 6 for additional information . • Proceeds of $124 million from the Company's structured payables. • The remainder of the total consideration exchanged in the DPS Merger was funded by cash on hand. Allocation of Consideration The Company 's preliminary allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed in the DPS Merger is based on estimated fair values as of the Merger Date . During the measurement period, the Company will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ materially from these preliminary estimates. Measurement period adjustments, if applicable, will be applied in the reporting period in which the adjustment amounts are determined. The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed in the DPS Merger as of September 30, 2018: (in millions) Fair Value Cash and cash equivalents $ 147 Investments in unconsolidated subsidiaries (1) 90 Property, plant and equipment (2) 1,549 Other intangible assets 20,404 Long-term obligations (3) (4,049 ) Capital lease and financing obligations (214 ) Acquired assets, net of assumed liabilities (4) 107 Deferred tax liabilities, net of deferred tax assets (5) (4,959 ) Goodwill 9,407 Total consideration exchanged 22,482 Fair value of replacement equity awards not converted to cash (6) 3,643 Acquisition of business $ 18,839 (1) The Company preliminarily valued investments in unconsolidated subsidiaries using a market approach, specifically the guideline public company method. (2) The Company preliminarily valued personal property using a combination of the market approach and the cost approach, which is based upon current replacement or reproduction cost of the asset as newly adjusted for any depreciation attributable to physical, functional and economic factors. The Company assigned personal property a useful life ranging from 1 year to 24 years . We preliminarily valued real property using the cost approach and land using the sales comparison approach. The Company assigned real property a useful life between 1 year and 41 years . (3) The fair value amounts of long-term obligations (current and long-term) were based on current market rates available to the Company . (4) The Company used existing carrying values to value trade receivables and payables, as well as certain other current and non-current assets and liabilities, as the Company determined that they represented the fair value of those items as of the Merger Date . The Company preliminarily valued work-in-process ("WIP") and finished goods inventory using a net realizable value approach resulting in a step-up of $131 million which was recognized in the cost of goods sold for the third quarter of 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. (5) Net deferred tax liabilities represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. The Company used a preliminary consolidated tax rate to determine the net deferred tax liabilities. The Company will record measurement period adjustments as the Company applies the appropriate tax rate for each legal entity within DPS. (6) A portion of DPS' vested options were treated as replacement equity awards for purposes of valuation but were converted to cash as of the Merger Date. As a result, in order to determine the cash paid for the DPS Merger , the Company reduced the fair value of the related replacement equity awards originally presented in the total consideration exchanged table above by $21 million . The DPS Merger preliminarily resulted in $9,407 million of goodwill. The preliminary goodwill to be recognized is attributable to operational and general and administrative cost synergies resulting from the warehouse and transportation integration, direct procurement savings on overlapping materials, purchasing scale on indirect spend categories and optimization of duplicate positions and processes. The Company may also recognize revenue synergies, driven by a strong portfolio of brands with exposure to higher growth segments and the ability to leverage our collective distribution strength. The goodwill created in the DPS Merger is not expected to be deductible for tax purposes. The preliminary allocation of consideration exchanged to other intangible assets acquired is as follows: (in millions) Fair Value Estimated Life (in years) Brands (1) $ 19,893 n/a Contractual arrangements (2) 120 n/a Customer relationships (3) 386 10-40 Favorable leases, net (4) 5 5-12 Total other intangible assets $ 20,404 (1) The Company preliminarily valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company preliminarily valued contractual arrangements with bottlers and distributors utilizing the distributor method, a form of the income approach. (3) The Company identified two types of customer relationships, retail and food service. We preliminarily valued retail and food service customer relationships utilizing the distributor method, a form of the income approach. (4) The Company preliminarily valued favorable leases utilizing the income approach. Pro Forma Information Assuming DPS had been acquired as of December 31, 2016, and the results of DPS had been included in operations beginning on January 1, 2017, the following tables provide estimated unaudited pro forma results of operations for the third quarter and first nine months of 2018 and 2017 under U.S. GAAP. The estimated pro forma net income includes the alignment of accounting policies, the effect of fair value adjustments related to the DPS Merger , the associated tax effects and the impact of the additional debt to finance the DPS Merger . Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 Net sales $ 2,856 $ 2,776 $ 8,207 $ 7,975 Net income 287 253 838 364 Estimated unaudited pro forma information is not necessarily indicative of the results that actually would have occurred had the DPS Merger been completed on the date indicated or the future operating results. Actual Results of DPS For the periods subsequent to the Merger Date that are included in the third quarter and first nine months of 2018 , DPS had net sales of $1,679 million and net income of $51 million . ACQUISITION OF BIG RED Overview and Purchase Price On July 9, 2018, KDP entered into an Agreement and Plan of Merger (the "Big Red Merger Agreement") with Big Red Group Holdings, LLC ("Big Red"), pursuant to which we agreed to acquire Big Red for a cash purchase price of $300 million , subject to certain adjustments outlined in the Big Red Merger Agreement (the " Big Red Merger "). Big Red is a brand owner with a portfolio of CSDs and NCBs . On August 31, 2018 (the "Big Red Merger Date"), the Company funded the Big Red Merger with proceeds from structured payables. In order to complete the Big Red Merger , the Company paid $282 million , net of the Company's previous ownership interest, in exchange for the remaining ownership interests and seller transaction costs. Additionally, $15 million was held back and placed in escrow. As a result of the Big Red Merger , our existing 14.36% equity interest in Big Red, which was previously earned based on the Company 's distribution of Big Red's products, was remeasured to fair value of $22 million . Allocation of Consideration Exchanged The Company's preliminary allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed in the Big Red Merger is based on estimated fair values as of the Big Red Merger Date. During the measurement period, the Company will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ materially from these preliminary estimates. Measurement period adjustments, if applicable, will be applied in the reporting period in which the adjustment amounts are determined. The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed in the Big Red Merger as of September 30, 2018: (in millions) Fair Value Cash and cash equivalents $ 3 Other intangible assets 240 Assumed liabilities, net of acquired assets (1) (28 ) Goodwill 89 Total consideration exchanged 304 Company's previous ownership interest 22 Less: Holdback placed in Escrow 15 Acquisition of business $ 267 (1) The Company preliminarily valued WIP and finished goods inventory using a net realizable value approach resulting in a step-up of $2 million which was recognized in the cost of goods sold for the third quarter of 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. The Big Red Merger preliminarily resulted in $89 million of goodwill. The preliminary goodwill to be recognized is attributable to operational and general and administrative cost synergies resulting from the warehouse and transportation integration, purchasing scale on various spend categories and optimization of duplicate positions and processes. The goodwill created in the Big Red Merger is not expected to be deductible for tax purposes. The preliminary allocation of consideration exchanged to other intangible assets acquired is as follows: (in millions) Fair Value Estimated Life (in years) Brands (1) $ 220 n/a Brands (1) 9 5 Customer relationships (2) 4 8-40 Contractual arrangements (3) 7 12 Total other intangible assets $ 240 (1) The Company preliminarily valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company have identified two types of customer relationships, retail and industrial. We preliminarily valued retail and industrial customer relationships utilizing the distributor method, a form of the income approach. (3) The Company preliminarily valued contractual arrangements with bottlers and distributors utilizing the distributor method, a form of the income approach. Pro Forma Information and Actual Results of Big Red The Company has not presented estimated unaudited pro forma results of operations for the Big Red Merger or the actual results of Big Red because it is not material to the Company 's unaudited condensed consolidated financial statements for the third quarter and first nine months of 2018 . PROPOSED ACQUISITION OF CORE NUTRITION, LLC On September 27, 2018, KDP entered into a definitive agreement to purchase Core Nutrition, LLC ("Core") for merger consideration, which represents an enterprise value of $525 million (subject to customary post-closing working capital and other adjustments), comprised substantially of shares of common stock of KDP, subject to certain adjustments paid in cash. The number of shares of KDP common stock to be issued will be based on the final merger consideration and the volume weighted average of the closing prices of KDP common stock for the five consecutive trading days ending on, and including, the second trading day prior to the closing. Prior to the proposed acquisition of Core, the Company owned 5.1% of Core's common units. The proposed acquisition is expected to close by the end of 2018. TRANSACTION EXPENSES The following table provides information about the Company 's transaction expenses incurred during the third quarter and first nine months of 2018 and 2017 : Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 DPS Merger $ 93 $ — $ 167 $ — Big Red Merger 2 — 2 — Core Merger 1 — 1 — Total transaction expenses incurred $ 96 $ — $ 170 $ — Transaction expenses consisted of professional fees for advisory and consulting services and other incremental costs related to the acquisition. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES The following table summarizes the equity method investments held by the Company as of September 30, 2018 and December 31, 2017 : September 30, December 31, (in millions) Ownership Interest 2018 2017 BA Sports Nutrition, LLC ("BODYARMOR") (1)(2) 15.5 % $ 61 $ — Bedford Systems, LLC ("Bedford") (3) 30.0 % 84 95 Core (1) 5.1 % 16 — Force Holdings LLC 33.3 % 6 — Lifefuels, Inc. 26.7 % 20 — Other (various) 6 2 Investments in unconsolidated subsidiaries $ 193 $ 97 (1) The investments in Core and BODYARMOR were acquired as part of the DPS Merger on July 9, 2018. Refer to the purchase price allocation above. (2) On August 14, 2018, it was announced that The Coca-Cola Company ("Coca-Cola") took a minority interest in BODYARMOR and would obtain the Company's current distribution rights. On August 19, 2018, the Company received a distribution from BODYARMOR of approximately $35 million This distribution reduced the Company's investment by approximately $11 million and resulted in a gain of approximately $24 million , which was recorded to Other non-operating (income) expense, net in the unaudited Condensed Consolidated Statements of Income. The Company continues to account for its interest in BODYARMOR as an equity method investment at the ownership level prior to the Coca-Cola announcement as an updated ownership interest percentage has not yet been provided to the Company. (3) The investment in Bedford represents a joint venture formed with Anheuser-Busch InBev ("ABI") on March 3, 2017 to develop and launch an in-home alcoholic beverage system. Under the terms of the transaction agreement, the Company contributed its existing Kold assets and liabilities along with all outstanding shares of MDS Holdings p.l.c. (Bevyz) with a net book value of $357 million to Bedford in exchange for a 30% interest. ABI contributed $250 million to the investment, which was immediately distributed to Maple , in exchange for a 70% interest. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when obligations under the terms of a contract with the customer are satisfied. Branded product sales, which include CSDs , NCBs , pods and appliances, occur once control is transferred upon delivery to 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. Sales 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 adoption of Topic 606 resulted in an immaterial impact to the individual financial statement line items of the Company 's unaudited Condensed Consolidated Statements of Income for the third quarter and first nine months of 2018 . The following table disaggregates the Company 's revenue by portfolio for the third quarter and first nine months of 2018 and 2017 : (in millions) Beverage Concentrates Packaged Beverages Latin America Beverages Coffee Systems Total For the third quarter of 2018: CSD (1) $ 311 $ 505 $ 88 $ — $ 904 NCB (1) 2 649 35 — 686 Pods (2) — — — 831 831 Appliances — — — 171 171 Other 4 84 1 51 140 Net sales $ 317 $ 1,238 $ 124 $ 1,053 $ 2,732 For the first nine months of 2018: CSD (1) $ 311 $ 505 $ 88 $ — $ 904 NCB (1) 2 649 35 — 686 Pods (2) — — — 2,387 2,387 Appliances — — — 403 403 Other 4 84 1 160 249 Net sales $ 317 $ 1,238 $ 124 $ 2,950 $ 4,629 For the third quarter of 2017 (3) : CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) — — — 922 922 Appliances — — — 165 165 Other — — — 53 53 Net sales $ — $ — $ — $ 1,140 $ 1,140 For the first nine months of 2017 (3) : CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) — — — 2,496 2,496 Appliances — — — 407 407 Other — — — 153 153 Net sales $ — $ — $ — $ 3,056 $ 3,056 __________________ (1) Represents net sales of owned and allied brands within our portfolio. (2) Represents net sales from owned brands, partner brands and private label owners. Net sales for partner brands and private label owners are contractual and long term in nature. (3) Prior period amounts were not adjusted for the adoption of revenue recognition under ASC 606. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets GOODWILL Changes in the carrying amount of goodwill by reportable segment are as follows: Beverage Concentrates Packaged Beverages Latin America Beverages Coffee Systems Unallocated (2) Total Balance as of December 31, 2017 $ — $ — $ — $ 9,819 $ — $ 9,819 Foreign currency translation 1 — 7 (32 ) — (24 ) Acquisitions (1) 970 3,452 350 — 4,724 9,496 Balance as of September 30, 2018 $ 971 $ 3,452 $ 357 $ 9,787 $ 4,724 $ 19,291 ___________________________ (1) Acquisition activity during the first nine months of 2018 represents the goodwill recorded as a result of the DPS Merger and the Big Red Merger. Refer to Note 2 for additional information . (2) Amounts recorded primarily for deferred tax liabilities in the preliminary purchase price allocations are recorded using a preliminary consolidated tax rate to determine the deferred tax liabilities. The Company will record measurement period adjustments as the Company applies the appropriate tax rate for each legal entity within DPS, which will enable the Company to allocate this goodwill to the applicable segment within the measurement period. INTANGIBLE ASSETS OTHER THAN GOODWILL The net carrying amounts of intangible assets other than goodwill with indefinite lives are as follows: September 30, 2018 December 31, 2017 Brands (1) $ 20,163 $ — Contractual arrangements (2) 120 — Trade Names 2,479 2,479 Total $ 22,762 $ 2,479 ___________________________ (1) The Company recorded $19,893 million and $220 million of indefinite-lived brand assets as a result of the DPS Merger and the Big Red Merger, respectively. Refer to Note 2 for additional information . The remaining change during the period was due to foreign currency translation. (2) The Company recorded $120 million of indefinite-lived contractual arrangements with certain bottlers and distributors as a result of the DPS Merger . Refer to Note 2 for additional information . The net carrying amounts of intangible assets other than goodwill with definite lives are as follows: September 30, 2018 December 31, 2017 (in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Acquired technology $ 1,146 $ (164 ) $ 982 $ 1,146 $ (109 ) $ 1,037 Customer relationships (1)(2) 632 (59 ) 573 247 (41 ) 206 Trade names 128 (36 ) 92 129 (24 ) 105 Favorable leases, net (1) 13 (2 ) 11 8 (2 ) 6 Brands (2) 9 — 9 — — — Contractual arrangements (2) 7 — 7 — — — Other — — — 1 — 1 Total $ 1,935 $ (261 ) $ 1,674 $ 1,531 $ (176 ) $ 1,355 ___________________________ (1) As a result of the DPS Merger , the Company recorded definite-lived customer relationships of $386 million and definite-lived net favorable leases of $5 million . Refer to Note 2 for additional information . (2) As a result of the Big Red Merger, the Company recorded definite-lived brands of $9 million , definite-lived customer relationships of $4 million and definite-lived contractual arrangements of $7 million . Refer to Note 2 for additional information . Amortization expense for intangible assets with definite lives was as follows: Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 Amortization expense for intangible assets with definite lives $ 31 $ 24 $ 90 $ 72 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 Ending December 31, (in millions) 2019 2020 2021 2022 Expected amortization expense for intangible assets with definite lives $ 32 $ 130 $ 130 $ 130 $ 126 IMPAIRMENT TESTING KDP 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. The Company 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 September 30, 2018 . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 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, but provides a blended tax rate for companies with a non-calendar tax year-end (1) , repealed the domestic manufacturing deduction after their 2017 tax year (3) , and made changes to the international tax rules. The effective tax rates for the third quarter of 2018 and 2017 were 23.7% and 28.2% , respectively. The effective tax rates for the first nine months of 2018 and 2017 were 25.4% and 30.0% , 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: Third Quarter First Nine Months 2018 2017 2018 2017 (in millions) Dollar Percent Dollar Percent Dollar Percent Dollar Percent Statutory federal income tax (1) $ 48 24.5 % $ 57 35.0 % $ 106 24.5 % $ 119 35.0 % State income taxes, net 15 7.7 % 4 2.5 % 26 6.0 % 10 2.9 % Deferred tax revaluation (2) (41 ) (21.1 )% (6 ) (3.7 )% (41 ) (9.5 )% (6 ) (1.8 )% U.S. federal domestic manufacturing benefit (3) (5 ) (2.6 )% (8 ) (4.9 )% (12 ) (2.8 )% (13 ) (3.8 )% Impact of non-U.S. operations 4 2.1 % 11 6.7 % 8 1.8 % 4 1.2 % Tax reform (4) 3 1.5 % — — % (4 ) (0.9 )% — — % U.S. taxation of foreign earnings (5) 5 2.6 % (29 ) (17.8 )% 5 1.2 % (28 ) (8.2 )% Valuation allowance (5) 15 7.7 % 20 12.3 % 15 3.5 % 20 5.9 % Transaction costs 3 1.5 % — — % 13 3.0 % — — % Other (1 ) (0.2 )% (3 ) (1.9 )% (6 ) (1.4 )% (4 ) (1.2 )% Total income tax provision $ 46 23.7 % $ 46 28.2 % $ 110 25.4 % $ 102 30.0 % ____________________________ For the third quarter and first nine months of 2018, unless otherwise noted: (1) The TCJA reduced the U.S. federal statutory tax rate from 35% to 21%. Guidance under the TCJA for non-calendar year tax filers resulted in a 24.5% federal statutory rate for companies with a September tax year-end. (2) As a result of the DPS Merger , Maple 's deferred taxes were revalued to reflect the impact of DPS's state apportionment factors. (3) The TCJA repealed the domestic manufacturing deduction. Guidance under the TCJA for non-calendar year filers resulted in the domestic manufacturing deduction being claimed through September 2018. The period ended September 2018 is the final tax year that the Company can claim the benefit. (4) Net deferred tax assets were revalued from the 24.5% federal tax rate to 21%. Additionally, for the first nine months of 2018, the Company reduced its liability for the one-time transition tax on earnings of certain foreign subsidiaries. (5) In 2017, foreign dividends were paid that generated excess foreign tax credits and a corresponding deferred tax asset, which resulted in an income tax benefit; however, a valuation allowance was applied to approximately 50% of the deferred tax asset related to the excess foreign tax credits. In 2018, the Company recorded a $17 million valuation allowance against the remaining deferred tax asset related to the excess foreign tax credits as a result of the DPS Merger . 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 September 30, 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. |
Long-term Obligations and Borro
Long-term Obligations and Borrowing Arrangements | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Obligations and Borrowing Arrangements | Long-term Obligations and Borrowing Arrangements The following table summarizes the Company 's long-term obligations: (in millions) September 30, 2018 December 31, 2017 Senior unsecured notes $ 12,011 $ — Revolving credit facilities — — Term loans 2,643 3,283 Term loans - related party — 1,815 Subtotal 14,654 5,098 Less - current portion (379 ) (219 ) Long-term obligations $ 14,275 $ 4,879 The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level September 30, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 1 $ 1,386 $ 1,386 $ — $ — Current portion of long-term obligations: Senior unsecured notes 2 250 250 — — Term loans 2 129 129 219 219 Short-term borrowings and current portion of long-term obligations $ 1,765 $ 1,765 $ 219 $ 219 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 unaudited Condensed Consolidated Balance Sheets are as follows: (in millions) Fair Value Hierarchy Level September 30, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value 2019 Notes (1) January 15, 2019 2.600% 2 $ 250 $ 250 $ — $ — 2020 Notes (1) January 15, 2020 2.000% 2 250 245 — — 2021-A Notes (1) November 15, 2021 3.200% 2 250 245 — — 2021-B Notes (1) November 15, 2021 2.530% 2 250 240 — — 2022 Notes (1) November 15, 2022 2.700% 2 250 236 — — 2023 Notes (1) December 15, 2023 3.130% 2 500 477 — — 2025 Notes (1) November 15, 2025 3.400% 2 500 470 — — 2026 Notes (1) September 15, 2026 2.550% 2 400 350 — — 2027 Notes (1) June 15, 2027 3.430% 2 500 462 — — 2038 Notes (1) May 1, 2038 7.450% 2 125 157 — — 2045 Notes (1) November 15, 2045 4.500% 2 550 511 — — 2046 Notes (1) December 15, 2046 4.420% 2 400 366 — — 2021 Merger Notes (2) May 25, 2021 3.551% 2 1,750 1,744 — — 2023 Merger Notes (2) May 25, 2023 4.057% 2 2,000 1,992 — — 2025 Merger Notes (2) May 25, 2025 4.417% 2 1,000 1,003 — — 2028 Merger Notes (2) May 25, 2028 4.597% 2 2,000 2,013 — — 2038 Merger Notes (2) May 25, 2038 4.985% 2 500 506 — — 2048 Merger Notes (2) May 25, 2048 5.085% 2 750 763 — — Principal amount $ 12,225 $ 12,030 $ — $ — Unamortized debt issuance costs and fair value adjustment for the DPS Merger (214 ) — Carrying amount $ 12,011 $ — ____________________________ (1) As a result of the DPS Merger , the Company assumed the liabilities of DPS existing senior unsecured notes. (2) On May 25, 2018, the Company issued $8,000 million of senior unsecured notes, consisting of six different tranches (the " DPS Merger Notes ") in a private offering under Rule 144A under the Securities Act of 1933, as amended. The DPS Merger Notes were issued at par and had debt issuance costs related to the issuance of approximately $46 million . 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, debt issuance costs and the fair value adjustment for the DPS Merger . BORROWING ARRANGEMENTS The Company 's revolving credit facilities and term loans consisted of the following carrying values and estimated fair values that are not required to be measured at fair value in the unaudited Condensed Consolidated Balance Sheets are as follows: (in millions) Fair Value Hierarchy Level September 30, 2018 December 31, 2017 Issuance Maturity Date Carrying Value Fair Value Carrying Value Fair Value KDP Term Loan February 2023 2 $ 2,666 $ 2,666 $ — $ — KDP Revolver February 2023 2 — — — — Term Loan A 2 — — 3,329 3,329 Principal amount $ 2,666 $ 2,666 $ 3,329 $ 3,329 Unamortized discounts and debt issuance costs (23 ) (46 ) Carrying amount $ 2,643 $ 3,283 Commercial Paper Program As a result of the DPS Merger , the Company assumed a commercial paper program which was initially executed by DPS on December 10, 2010. On July 9, 2018, the Company amended its commercial paper program, under which the Company may issue unsecured commercial paper notes (the " Commercial Paper ") on a private placement basis up to a maximum aggregate amount outstanding at any time of $2,400 million . The maturities of the Commercial Paper will vary, but may not exceed 397 days from the date of issuance. The Company 's intent is to classify the Commercial Paper on a short term basis, as maturities are not expected to exceed 90 days. The Company issues Commercial Paper as needed for general corporate purposes. Outstanding Commercial Paper ranks equally with all of the Company 's existing and future unsecured borrowings. Under this program, the Company had weighted average Commercial Paper borrowings of $1,395 million for the third quarter of 2018 since the Company assumed the commercial paper program, with maturities of 90 days or less, and no outstanding Commercial Paper for the third quarter and first nine months of 2017 , respectively. These Commercial Paper borrowings had a weighted average interest rate of 2.37% for the third quarter of 2018. The Company had $1,386 million of outstanding Commercial Paper as of September 30, 2018 , and none outstanding as of December 31, 2017 . KDP Revolving Credit Facilities and Term Loan On February 28, 2018, in connection with the DPS Merger , the Company entered into the following: • A new term loan agreement among the Company , the lenders party thereto (the " Term Lenders "), the other financial institutions party thereto and JP Morgan Chase Bank, N/A. (" JP Morgan "), as administrative agent (the " KDP Term Loan Agreement "), pursuant to which the Term Lenders have committed to provide $2,700 million of a senior unsecured term loan facility (the " KDP Term Loan ") for the purposes of funding the DPS Merger and fees and expenses related to the DPS Merger ; and • A new credit agreement among the Company , the lenders party thereto (the " Revolving Lenders "), the other financial institutions party thereto and JP Morgan , as administrative agent (the " KDP Credit Agreement ” and, together with the KDP Term Loan Agreement , the “ KDP Credit Agreements ”), pursuant to which the Revolving Lenders have committed to provide $2,400 million of a revolving credit facility (the " KDP Revolver "), for the purpose of funding (i) the DPS Merger , (ii) fees and expenses related to the DPS Merger , (iii) repayment of the Company 's previous revolving credit facility (as discussed below) and (iv) general corporate needs. The interest rate applicable to any borrowings under the KDP Credit Agreements ranges from a rate equal to LIBOR plus a margin of 0.875% to 1.500% or a base rate plus a margin of 0.00% to 0.50% , depending on the rating of certain indexed debt of KDP . Under the KDP Credit Agreements , KDP will pay to the Revolving Lenders an unused commitment fee calculated at a rate per annum equal to an amount between 0.07% and 0.20% , depending on the rating of certain index debt of KDP. Under the KDP Term Loan , KDP must repay the unpaid principal amount of the KDP Term Loan quarterly commencing on September 30, 2018 in an amount equal to 1.25% of the aggregate principal amount of the loans made at the Effective Time . The KDP Credit Agreements will both mature on February 28, 2023. The following table provides amounts utilized and available under the revolving credit facilities as of September 30, 2018 : (in millions) Amount Utilized Balances Available KDP Revolver (1) $ — $ 2,395 Letters of credit 5 195 (1) In order to fund the DPS Merger , the Company drew down $1,900 million of the KDP Revolver on July 9, 2018. Subsequent to the DPS Merger , the Company repaid the revolver through issuance of $1,660 million of Commercial Paper through the commercial paper program and with $240 million in cash on hand. The KDP Credit Agreements contain customary representations and warranties for investment grade financings. The KDP Credit Agreements also contain (i) certain customary affirmative covenants, including those that impose certain reporting and/or performance obligations on KDP and its subsidiaries, (ii) certain customary negative covenants that generally limit, subject to various exceptions, KDP and its subsidiaries from taking certain actions, including, without limitation, incurring liens, consummating certain fundamental changes and entering into transactions with affiliates, (iii) a financial covenant in the form of a total net leverage ratio and (iv) customary events of default (including a change of control) for financings of this type. As of September 30, 2018 , the Company was in compliance with all covenants requirements relating to the KDP Credit Agreements . Letters of Credit Facilities In addition to the portion of the KDP Revolver reserved for issuance of letters of credit, the Company has incremental letters of credit facilities. Under these facilities, $220 million is available for the issuance of letters of credit, $60 million of which was utilized as of September 30, 2018 and $160 million of which remains available for use. Previous Revolving Credit Facilities and Term Loan A On March 3, 2016, Keurig entered into a credit agreement with JP Morgan , as administrative agent and as collateral agent, and the lenders party thereto from time to time (the “ Previous Credit Agreement ”). In connection with the DPS Merger , on July 9, 2018, KDP repaid all of the outstanding obligations in respect of principal, interest and fees under the Previous Credit Agreement , and terminated all commitments thereunder. The termination of the Previous Credit Agreement resulted in a loss on extinguishment of debt of $11 million . Prior to the termination of the Previous Credit Agreement , the Company made frequent repayments of the Previous Credit Agreement and recorded a loss on extinguishment of debt of $2 million in the first nine months of 2018 and $2 million and $54 million in the third quarter and first nine months of 2017 . Bridge Financing for DPS Merger On January 29, 2018, the Company entered into a commitment letter for a 364 -day bridge loan facility (the " Bridge Facility ") in an aggregate principal amount of up to $13,100 million , in order to ensure that financing would be available for the DPS Merger . On July 9, 2018, in accordance with its terms, the commitment under the Bridge Facility was automatically terminated upon the Company 's funding of the DPS Merger . LONG-TERM OBLIGATIONS - RELATED PARTIES The Company 's long-term obligations to related parties are as follows: (in millions) Fair Value Hierarchy Level September 30, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value (2) Term Loan Maple B.V. (1) February 27, 2023 5.50% 2 $ — $ — $ 1,375 $ 1,375 Term Loan Mondelez (1) February 27, 2023 5.50% 2 — — 440 440 Principal amount $ — $ — $ 1,815 $ 1,815 ____________________________ (1) As a result of the DPS Merger , the Company converted certain related party term loans into equity, as shown in the unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity. (2) The term loans with related parties occurred as an arms length transaction and were applied a relative interest rate consistent with the current industry and market. As such, the carrying value approximates fair value as of December 31, 2017 . |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives KDP is exposed to market risks arising from adverse changes in interest rates, commodity prices, and foreign exchange (" FX ") rates. KDP 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. KDP does not designate these contracts as hedges for accounting purposes, and KDP does not hold or issue derivative financial instruments for trading or speculative purposes. INTEREST RATES The Company is exposed t o interest rate risk related to its borrowing arrangements and obligations. The Company enters into interest rate swaps to provide predictability in the Company's overall cost structure, including both receive-fixed, pay-variable and receive-variable, pay-fixed swaps. 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 interest expense in the unaudited Condensed Consolidated Statements of Income. The total notional value of receive-fixed, pay-variable interest rate swaps was $1,070 million as of September 30, 2018. There were no receive-fixed, pay-variable interest rate swaps as of December 31, 2017. The total notional value of receive-variable, pay-fixed interest rate swaps was $2,700 million and $2,850 million as of September 30, 2018 and December 31, 2017 , respectively. FOREIGN EXCHANGE The Company 's Canadian and Mexican businesses purchase certain inventory through transactions denominated and settled in U.S. dollars, a currency different from the functional currency of those businesses. The Company additionally has a subsidiary in Canada with intercompany notes denominated and settled in U.S. dollars, a currency different from the functional currency of the Canadian business. These inventory purchases and intercompany notes are subject to exposure from movements in exchange rates. During the third quarter and first nine months of 2018 and 2017 , the Company held FX forward contracts to economically 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. 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 Other (income) expense, net in the unaudited Condensed Consolidated Statements of Income. These FX contracts have maturities between one month and 6 years as of September 30, 2018 . The Company had outstanding FX forward contracts with notional amounts of $378 million and $285 million as of September 30, 2018 and December 31, 2017 , respectively. COMMODITIES KDP centrally manages the exposure to volatility in the prices of certain commodities used in its production process and transportation through various derivative contracts. The intent of these contracts is to provide a certain level of predictability in the Company 's overall cost structure. During the third quarter and first nine months of 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 income from operations. The total notional values of derivatives related to economic hedges of commodities were $368 million and $273 million as of September 30, 2018 and December 31, 2017 , respectively. FAIR VALUE OF DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS 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 September 30, 2018 and December 31, 2017 : (in millions) Fair Value Hierarchy Level Balance Sheet Location September 30, December 31, Assets: Interest rate contracts 2 Prepaid expenses and other current assets $ 2 $ — FX forward contracts 2 Prepaid expenses and other current assets 1 — Commodity contracts 2 Prepaid expenses and other current assets 25 — Interest rate contracts 2 Other non-current assets 123 87 FX forward contracts 2 Other non-current assets 2 — Commodity contracts 2 Other non-current assets 15 — Liabilities: Interest rate contracts 2 Other current liabilities $ 7 $ — FX forward contracts 2 Other current liabilities — 5 Commodity contracts (1) 2 Other current liabilities 20 1 Interest rate contracts 2 Other non-current liabilities 19 — FX forward contracts 2 Other non-current liabilities — — Commodity contracts 2 Other non-current liabilities 10 — ____________________________ (1) A portion of the Company's derivative instruments are subject to a master netting arrangement under which either party may offset amounts if the payment amounts are for the same transaction and in the same currency. By election, parties may agree to net other transactions. In addition, the arrangements provide for the net settlement of all contracts through a single payment in a single currency in the event of default or termination of the contract. The Company's policy is to net all derivative assets and liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets when allowable by U.S. GAAP. The Company has offset gross liabilities of $17 million with gross assets of $2 million and gross liabilities of $5 million offset with gross assets of $4 million related to our commodity contracts at September 30, 2018 and December 31, 2017, respectively. 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 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. Amounts include both realized and unrealized gains and losses. (in millions) Amount of (Gain) Loss Recognized in Income Location of (Gain) Loss Recognized in Income For the third quarter of 2018: Commodity contracts $ 31 Cost of sales Commodity contracts (6 ) SG&A expenses Interest rate contracts 3 Interest expense FX forward contracts 5 Other (income) expense, net Total $ 33 For the first nine months of 2018: Commodity contracts $ 35 Cost of sales Commodity contracts (6 ) SG&A expenses Interest rate contracts (27 ) Interest expense FX forward contracts (9 ) Other (income) expense, net Total $ (7 ) For the third quarter of 2017: Commodity contracts $ (7 ) Cost of sales Interest rate contracts (9 ) Interest expense FX forward contracts 7 Other (income) expense, net Total $ (9 ) For the first nine months of 2017: Commodity contracts $ 3 Cost of sales Interest rate contracts 16 Interest expense FX forward contracts — Other (income) expense, net Total $ 19 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, the Company 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 | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is primarily recorded in SG&A expenses in the unaudited Condensed Consolidated Statements of Income. The components of stock-based compensation expense are presented below: Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 Total stock-based compensation expense $ 8 $ 14 $ 26 $ 36 Income tax benefit recognized in the Statements of Income (2 ) (4 ) (5 ) (12 ) Stock-based compensation expense, net of tax $ 6 $ 10 $ 21 $ 24 RESTRICTED STOCK UNITS Prior to the DPS Merger , Maple had an employee compensation program, comprised of an Executive Ownership Plan ("EOP") which allowed certain designated employees the right to acquire an ownership interest in Maple Parent Corporation, and a Long Term Incentive Plan ("LTIP") under which certain designated employees were granted awards in the form of restricted stock units (" RSU s") in Maple Parent Corporation, which prior to the DPS Merger were settled in shares of Maple Parent Corporation upon vesting. Eligible employees who made a pre-established minimum investment under the EOP were eligible to receive a matching award grant of RSU s. Upon consummation of the DPS Merger , both the EOP and LTIP arrangements continue and RSU s are now settled in shares of the Company 's common stock. Prior to the DPS Merger , RSUs vested at the end of a four year, six-month time period, and compensation expense was recognized ratably over the term of the grant. All RSUs granted after consummation of the DPS Merger vest at the end of a five year period and compensation expense is recognized ratably over the term of the grant. The table below summarizes RSU activity for the first nine months of 2018 . The fair value of RSUs is determined based on the the number of units granted, adjusted for the conversion ratio for RSUs granted prior to July 9, 2018, and the grant date price of common stock. RSUs (1) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 15,462,778 $ 11.51 3.11 $ 342 Granted 6,663,547 23.71 — — Vested and released (965,315 ) 10.38 — 23 Forfeited (1,052,952 ) 15.02 — — Outstanding as of September 30, 2018 20,108,058 15.42 3.27 466 ____________________________ (1) RSUs have been converted from Maple Parent Corporation RSUs to Company RSUs using the conversion ratio established as part of the DPS Merger . As of September 30, 2018 , there was $242 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.27 years . STOCK OPTIONS Upon the consummation of the DPS Merger , the Company issued replacement stock option awards for DPS stock option awards that were fully vested as of July 9, 2018 but not yet exercised by the employee. The fair value of these replacement stock option awards was considered as consideration exchanged in the DPS Merger as a result of the Change in Control (as defined in the terms of each individual award agreement). The table below summarizes stock option activity for the first nine months of 2018 : Stock Options Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 — $ — — $ — Granted 1,319,014 11.92 — Exercised (235,339 ) 11.70 — 3 Outstanding as of September 30, 2018 1,083,675 11.97 6.8 12 Exercisable as of September 30, 2018 1,083,675 11.97 6.8 12 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 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. As a result of the DPS Merger , as discussed in Note 1, Background and Basis of Presentation , all historical per share data and number of shares and numbers of equity awards were retroactively adjusted. The following table presents the Company 's basic and diluted EPS and shares outstanding: Third Quarter First Nine Months (in millions, except per share data) 2018 2017 2018 2017 Basic EPS: Net income attributable to KDP $ 148 $ 116 $ 320 $ 235 Weighted average common shares outstanding 1,361.8 790.5 983.0 790.5 Earnings per common share — basic $ 0.11 $ 0.15 $ 0.33 $ 0.30 Diluted EPS: Net income attributable to KDP $ 148 $ 116 $ 320 $ 235 Impact of dilutive securities in Maple Parent Corporation — 2 — 3 Total $ 148 $ 114 $ 320 $ 232 Weighted average common shares outstanding 1,361.8 790.5 983.0 790.5 Effect of dilutive securities: Stock options 0.9 — 0.6 — RSUs 10.9 — 10.5 — Weighted average common shares outstanding and common stock equivalents 1,373.6 790.5 994.1 790.5 Earnings per common share — diluted $ 0.11 $ 0.14 $ 0.32 $ 0.29 Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation 0.8 — 0.3 — |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The following table provides a summary of changes in Accumulated Other Comprehensive Income, net of taxes, all of which is related to foreign currency translation: (in millions) Accumulated Other Comprehensive Income Balance as of July 1, 2018 $ 59 OCI before reclassifications 78 Amounts reclassified from accumulated other comprehensive income — Net current period other comprehensive income 78 Balance as of September 30, 2018 $ 137 Balance as of January 1, 2018 $ 99 OCI before reclassifications 38 Amounts reclassified from accumulated other comprehensive income — Net current period other comprehensive income 38 Balance as of September 30, 2018 $ 137 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following: September 30, December 31, (in millions) 2018 2017 Raw materials $ 186 $ 121 Work in process 7 1 Finished goods 527 262 Inventories $ 720 $ 384 |
Other Financial Information
Other Financial Information | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Financial Information | Other Financial Information OTHER ASSETS, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The table below details the components of other assets, accrued expenses and other current liabilities: September 30, December 31, (in millions) 2018 2017 Prepaid expenses and other current assets: Other receivables $ 100 $ 7 Customer incentive programs 44 — Derivative instruments 28 — Prepaid marketing 44 9 Spare parts 42 10 Other 99 68 Total prepaid expenses and other current assets $ 357 $ 94 Other non-current assets: Customer incentive programs $ 11 $ — Marketable securities - trading (1) 54 — Derivative instruments 140 87 Equity securities without readily determinable fair values 1 6 Non-current restricted cash and restricted cash equivalents 10 — Related party notes receivable (2) 12 6 Other 87 22 Total other non-current assets $ 315 $ 121 Accrued expenses: Customer rebates & incentives $ 345 $ 8 Accrued compensation 215 46 Insurance reserve 45 8 Interest accrual 173 3 Accrued professional fees 182 19 Other accrued expenses 271 117 Total accrued expenses $ 1,231 $ 201 Other current liabilities: Dividends payable $ 208 $ — Derivative instruments 27 6 Other 39 3 Total other current liabilities $ 274 $ 9 Other non-current liabilities: Long-term pension and postretirement liability $ 27 $ 1 Insurance reserves 56 — Derivative instruments 29 — Deferred compensation liability 54 — Other 78 55 Total other non-current liabilities $ 244 $ 56 ____________________________ (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 $54 million as of September 30, 2018 . There were no marketable securities held as of December 31, 2017 . (2) Refer to Note 17 for additional information . ACCOUNTS PAYABLE KDP entered into an agreement with a third party to allow participating suppliers to track payment obligations from KDP, and if elected, sell payment obligations from KDP to financial institutions. Suppliers can sell one or more of KDP's payment obligations at their sole discretion and the rights and obligations of KDP to its suppliers are not impacted. KDP has no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions. KDP's obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted. As of September 30, 2018 and December 31, 2017, $1,516 million and $1,351 million , respectively, of KDP's outstanding payment obligations is payable to suppliers who utilize these third party services. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 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 September 30, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 94 $ 94 $ 90 $ 90 Restricted cash and restricted cash equivalents 1 18 18 5 5 Non-current restricted cash and restricted cash equivalents included in Other non-current assets 1 10 10 — — Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 122 $ 122 $ 95 $ 95 The following table details supplemental cash flow disclosures of non-cash investing and financing activities: First Nine Months (in millions) 2018 2017 Supplemental cash flow disclosures of non-cash investing and financing activities: Capitalization of related party debt into additional paid-in-capital $ (1,815 ) $ — Fair value of replacement equity awards not converted to cash (3,643 ) — Dividends declared but not yet paid 208 — Capital expenditures included in accounts payable and accrued expenses 80 6 Capital lease additions 24 — |
Restructuring and Integration C
Restructuring and Integration Costs | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Integration Costs | Restructuring and Integration Costs The Company implements restructuring programs from time to time and incurs costs that are designed to improve operating effectiveness and lower costs. When the Company implements these programs, the Company incurs expenses, such as employee separations, lease terminations and other direct exit costs, that qualify as exit and disposal costs under U.S. GAAP. The Company also incurs expenses that are an integral component of, and directly attributable to, the Company's restructuring activities, which do not qualify as exit and disposal costs, such as accelerated depreciation, asset impairments, implementation costs and other incremental costs. The Company has recorded these costs within SG&A expenses on the income statement. Restructuring and integration charges incurred during the the third quarter and first nine months of 2018 and 2017 are as follows: Third Quarter First Nine Months (in millions) Segment 2018 2017 2018 2017 Castroville closure Corporate Unallocated $ — $ 4 $ — $ 22 Business realignment Corporate Unallocated — — 2 12 Keurig 2.0 exit Corporate Unallocated — 10 12 10 Integration program Corporate Unallocated 47 — 71 — Other restructuring programs Corporate Unallocated — 1 1 1 Total restructuring and integration charges $ 47 $ 15 $ 86 $ 45 Restructuring liabilities that qualify as exit and disposal costs under U.S. GAAP are included in accounts payable and accrued expenses on the unaudited condensed consolidated financial statements. Restructuring liabilities as of September 30, 2018 and December 31, 2017 along with charges to expense, cash payments and non-cash charges for the nine-month period were as follows: (in millions) Workforce Reduction Costs Other (1) Total Balance as of December 31, 2017 $ 2 $ 2 $ 4 Charges to expense 27 — 27 Cash payments (13 ) (1 ) (14 ) Non-cash adjustment items — (1 ) (1 ) Balance as of September 30, 2018 $ 16 $ — $ 16 __________________ (1) Primarily reflects activities associated with the closure of certain facilities, excluding contract termination costs, which include any associated asset write-downs and accelerated depreciation. RESTRUCTURING PROGRAMS Integration Program As part of the DPS Merger, the Company established an transformation management office to enable seamless integration and maximize value capture. The Company developed a program to deliver $600 million in synergies on an annualized basis through supply chain optimization, reduction of indirect spend through new economies of scale, elimination of duplicative support functions and advertising and promotion optimization. The Company expects to incur material charges due to exit and disposal activities with a total cost to achieve the synergies of $750 million and expects to complete the program by 2021. The restructuring program resulted in cumulative pre-tax charges of approximately $71 million , primarily related to professional fees related to the integration and transformation and costs associated with severance and employee terminations through September 30, 2018. Castroville Closure In May 2017, the Company looked at its capacity across the manufacturing network and determined that, geographically, it could improve matching capacity to its customer base. As a result, in May 2017, the Company announced it was closing the Castroville, California manufacturing site on May 18, 2017. As a result of the decision, the Company had a reduction in workforce of 183 employees. This restructuring program resulted in cumulative pre-tax restructuring charges of approximately $22 million , primarily related to costs associated with employee terminations and asset related costs through September 30, 2017. The Company does no t expect to incur any additional restructuring charges related to this program as it was completed in 2017. Business Realignment In June 2017, the Company determined that its strategic priorities had shifted and as a result has redesigned its organizational structure. Approximately 500 employees were affected by changing roles, responsibilities or reporting lines, and 140 of those employees were notified that their roles were being eliminated. This restructuring program resulted in cumulative pre-tax restructuring charges of approximately $12 million , primarily related to costs associated with severance and employee terminations through December 31, 2017. The Company does no t expect to incur any additional restructuring charges related to this program as it was completed in 2017. In 2018, the Company approved additional realignment to the organization impacting various employees in the U.S., Canada and UK. The restructuring resulted in cumulative pre-tax restructuring charges of approximately $2 million , primarily related to costs associated with severance and employee terminations through September 30, 2018. The Company does no t expect to incur additional restructuring charges related to this realignment. Keurig 2.0 Exit In August 2017, the Company determined due to shifting demand and strategic priorities that it would stop producing and selling its Keurig K2.0 brewer models. This restructuring program resulted in cumulative pre-tax restructuring charges of approximately $28 million , primarily related to costs associated with accelerated depreciation on all 2.0 molds and tooling equipment as well as costs associated with obsolete inventory on hand through September 30, 2018. |
Non-controlling Interest
Non-controlling Interest | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interest | Non-controlling Interest In August 2016, Keurig introduced the EOP, under which certain employees could invest in shares of Keurig’s immediate parent, Maple Parent Corporation, a wholly owned subsidiary of Maple . The EOP also provided the non-controlling interest shareholders with the right to put their shares back to the Company at fair value during certain periods. These put rights terminate upon an initial public offering or merger into a public company, when employees would then be able to sell shares on the open market. Since redemption of these shares was, subject to certain conditions, at the option of the holder, the fair value of the redeemable non-controlling interest and equity awards were classified within the “mezzanine equity” section of the unaudited Condensed Consolidated Balance Sheets. As a result of the DPS Merger, outstanding shares held at Maple Parent Corporation converted into KDP shares in accordance with the Merger Agreement, and the put rights expired. As such, as of the Merger Date, the redeemable non-controlling interest at Maple Parent Corporation was eliminated and reclassified into Stockholders' Equity in the unaudited Condensed Consolidated Balance Sheets. The employee non-controlling interest represented the redemption value of shares purchased with cash. The mezzanine equity awards (recorded at fair value) included shares purchased with loans and the portion of restricted stock units for which compensation expense had been recognized. Shares financed through loans are treated as options, and accordingly neither the shares nor the notes were recorded on the unaudited Condensed Consolidated Balance Sheets. Prior to the DPS Merger, the fair value of the options were recorded in mezzanine equity awards. The following table is a rollforward of the EOP for the first nine months of 2018 and 2017: (in millions) EOP Balance as of January 1, 2018 $ 265 Net income attributable to non-controlling interests 3 Stock based compensation 24 Proceeds from (cash distributions to) redeemable NCI shareholders 18 Adjustment of non-controlling interests to redemption value 16 Dividends paid to NCI shareholders, currency translation adjustment, and other — Impact of the DPS Merger (326 ) Balance as of September 30, 2018 $ — (in millions) EOP Balance as of January 1, 2017 $ 143 Net income attributable to non-controlling interests 3 Stock based compensation 36 Proceeds from (cash distributions to) redeemable NCI shareholders (1 ) Adjustment of non-controlling interests to redemption value 38 Dividends paid to NCI shareholders, currency translation adjustment, and other — Balance as of September 30, 2017 $ 219 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies LEGAL MATTERS The Company is involved from time to time in various claims, proceedings, and litigation, including those described below. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. Stockholder Litigation A consolidated securities fraud class action against Keurig and two of its former officers and directors captioned Louisiana Municipal Police Employees’ Retirement System (“LAMPERS”) v. Green Mountain Coffee Roasters, Inc., et al., Civ. No. 2:11-cv-00289 was filed in the U.S. District Court for the District of Vermont. Plaintiffs’ amended complaint alleged violations of the federal securities laws in connection with the Company ’s disclosures relating to its revenues and its inventory accounting practices. On March 9, 2018, the parties reached an agreement in principle to settle the case. On October 22, 2018, subsequent to the date of the financial statements, the settlement agreement was approved. The terms of the settlement were covered by the Company's insurance providers. As a result, the Company has recorded the liability to the plaintiffs and a receivable from the insurance providers. Proposition 65 Litigation On May 9, 2011, an organization named Council for Education and Research on Toxics ("CERT") filed a lawsuit in the Superior Court of the State of California, County of Los Angeles, against Keurig. The lawsuit is Council for Education and Research on Toxics v. Brad Barry LLC, et al., Case No. BC461182. CERT alleges that Keurig, in addition to nearly one hundred other defendants who manufacture, package, distribute, or sell coffee, failed to warn persons in California that Keurig's coffee products (the "Products") expose persons to the chemical acrylamide in violation of California's Safe Drinking Water and Toxic Enforcement Act of 1986, Health and Safety Code section 25249.5, et seq. ("Proposition 65"). CERT seeks equitable relief, including providing warnings to consumers, as well as civil penalties in the amount of the statutory maximum of $2,500 per day per violation of Proposition 65. CERT asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Proposition 65. Keurig, as part of a joint defense group organized to defend against the lawsuit, disputes the claims of the Plaintiff. Acrylamide is not added to coffee, but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. Keurig has asserted multiple affirmative defenses. The case was scheduled to proceed to a third phase for trial on damages, remedies and attorneys' fees beginning on October 15, 2018, however on October 12, 2018, the California Court of Appeal issued a temporary stay order upon receiving a writ petition from defendants staying the remedies trial until January 15, 2019, at which time the defendants have been directed to provide a written update to the California Court of Appeal on the status of the OEHHA rulemaking proceedings referenced below. The temporary stay remains in effect. Potentially relevant to the lawsuit, on June 15, 2018, California’s Office of Environmental Health Hazard Assessment (“OEHHA”) published a proposal to amend Proposition 65’s implementing regulations by adding a stand-alone sentence that reads as follows: “Exposures to listed chemicals in coffee created by and inherent in the processes of roasting coffee beans or brewing coffee do not pose a significant risk of cancer.” OEHHA accepted public comments on the proposed regulation until August 30, 2018, and OEHHA expects that the proposed regulation, if finalized, could be effective as early as January 2019. At this stage of the proceedings, prior to a trial on remedies issues, Keurig is unable to reasonably estimate the potential loss or effect on Keurig or its operations that could be associated with the lawsuit. The trial court has discretion to impose zero penalties against Keurig or to impose significant statutory penalties. Significant labeling or warning requirements that could potentially be imposed by the trial court may increase Keurig's costs and adversely affect sales of coffee products. We can provide no assurances as to the outcome of any litigation. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS The Company operates many manufacturing, bottling and distribution facilities. In these and other aspects of the Company 's business, it is subject to a variety of federal, state and local environmental, health and safety laws and regulations. The Company maintains environmental, health and safety policies and a quality, environmental, health and safety program designed to ensure compliance with applicable laws and regulations. However, the nature of the Company 's business exposes it to the risk of claims with respect to environmental, health and safety matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as the Superfund law, as well as similar state laws, generally impose joint and several liability for cleanup and enforcement costs on current and former owners and operators of a site without regard to fault or the legality of the original conduct. The Company was notified by the Environmental Protection Agency that it is a potentially responsible party for study and cleanup costs at a Superfund site in New Jersey. Investigation and remediation costs are yet to be determined, therefore no reasonable estimate exists on which to base a loss accrual. The Company participates in a study for this site with other potentially responsible parties. PRODUCT WARRANTIES KDP offers a one -year warranty on all Keurig brewing systems it sells. KDP provides for the estimated cost of product warranties, primarily using historical information and current repair or replacement costs, at the time product revenue is recognized. Product warranties are included in accrued expenses in the accompanying unaudited Condensed Consolidated Balance Sheets. (in millions) Accrued Product Warranties Balance as of January 1, 2018 $ 13 Accruals for warranties issued 6 Settlements (12 ) Balance as of September 30, 2018 $ 7 |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties IDENTIFICATION OF RELATED PARTIES The Company is controlled by a single stockholder, JAB, a privately held investor group. JAB has ownership control over certain investments that create the following related party transaction types: • Coffee Transactions include transactions with Peet's Coffee ("Peet's"), Caribou Coffee ("Caribou"), Panera Bread ("Panera"), Einstein Bros Bagels ("Einstein Bros") and Krispy Kreme Doughnuts ("Krispy Kreme"). The Company manufactures portion packs containing a selection of coffee and tea varieties under Peet’s brands for sale in the U.S. and Canada. As part of this agreement Peet’s issues purchase orders to the Company for portion packs to be supplied to Peet’s and sold in select channels. In turn the Company places purchase orders for Peet’s raw materials to manufacture portion packs for sale by the Company in select channels. The Company licenses the Caribou and Krispy Kreme trademarks for use in the Keurig system in the Company owned channels. • Restaurant Transactions include transactions with Caribou, Panera, Einstein Bros and Krispy Kreme. The Company sells various beverage concentrates and packaged beverages to these companies. The Company also has rights in certain territories to bottle and/or distribute various brands that the Company does not own. The Company holds investments in these brand ownership companies. Refer to Note 2 for additional information about the Company 's investments in unconsolidated subsidiaries. The Company purchases inventory from these brand ownership companies and sells finished product to third-party customers primarily in the U.S. Additionally, any transactions with significant partners in these investments, such as ABI, are also included in this line. ABI purchases Clamato from the Company and pays the Company a royalty for use of the brand name. PURCHASE AND SALE TRANSACTIONS WITH RELATED PARTIES Net sales generated from these related parties were $123 million and $157 million for the third quarter and first nine months of 2018 and $18 million and $46 million for the third quarter and first nine months of 2017 . Related purchases were $79 million and $90 million for the third quarter and first nine months of 2018 and $6 million and $12 million for the third quarter and first nine months of 2017 . As of September 30, 2018 there were $20 million of trade accounts receivables, net from related parties and none as of December 31, 2017 , respectively, on our unaudited Condensed Consolidated Balance Sheets, primarily related to product sales and royalty revenues. As of September 30, 2018 and December 31, 2017 , there were $23 million and $2 million of accounts payables to related parties, respectively, on our unaudited Condensed Consolidated Balance Sheets, primarily related to purchases of finished goods inventory for distribution. LINE OF CREDIT WITH BEDFORD The Company and ABI executed a line of credit agreement with Bedford on March 3, 2017 in conjunction with the creation of the Joint Venture ("Bedford Credit Agreement"). The Company has committed to provide up to $30 million capacity with a fixed interest rate of 8.1% per annum. The Bedford Credit Agreement matures on March 3, 2024. The Company has outstanding receivable balances on the Bedford Credit Agreement of $12 million and $6 million as of September 30, 2018 and December 31, 2017 . |
Segments
Segments | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segments | Segments Following the DPS Merger as described in Note 2 , the Company revised its segment structure consisting of the following four reportable segments as of September 30, 2018 and for the third quarter and first nine months of 2018 and recasted as of December 31, 2017 and for the third quarter and first nine months of 2017 : • 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 Direct Store Delivery system and the Warehouse Direct 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. • The Coffee Systems segment reflects sales in the U.S. and Canada of the manufacture and distribution of finished goods relating to the Company 's coffee system, pods and brewers. Segment results are based on management reports. Net sales and income from operations 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 unrealized commodity derivative gains and losses, and certain general corporate expenses. Information about the Company 's operations by reportable segment is as follows: Third Quarter For the First Nine Months (in millions) 2018 2017 2018 2017 Segment Results – Net sales Beverage Concentrates $ 317 $ — $ 317 $ — Packaged Beverages 1,238 — 1,238 — Latin America Beverages 124 — 124 — Coffee Systems 1,053 1,140 2,950 3,056 Net sales $ 2,732 $ 1,140 $ 4,629 $ 3,056 Third Quarter For the First Nine Months (in millions) 2018 2017 2018 2017 Segment Results – Income from operations Beverage Concentrates $ 193 $ — $ 193 $ — Packaged Beverages 61 — 61 — Latin America Beverages 15 — 15 — Coffee Systems 334 288 865 779 Total income from operations - segments 603 288 1,134 779 Unallocated corporate costs 259 50 444 146 Income from operations 344 238 690 633 Interest expense 172 28 221 76 Interest expense - related party — 25 51 75 Loss on early extinguishment of debt 11 2 13 54 Other (income) expense, net (33 ) 20 (28 ) 88 Income before provision for income taxes $ 194 $ 163 $ 433 $ 340 (in millions) September 30, 2018 December 31, 2017 Identifiable operating assets Beverage Concentrates $ 17,350 $ — Packaged Beverages 9,205 — Latin America Beverages 1,637 — Coffee Systems 15,240 15,294 Segment total 43,432 15,294 Unallocated corporate assets 5,433 353 Total identifiable operating assets 48,865 15,647 Investments in unconsolidated subsidiaries 193 97 Total assets $ 49,058 $ 15,744 The following table disaggregates the Company 's revenue by geography for the third quarter and first nine months of 2018 and 2017 : Third Quarter For the First Nine Months (in millions) 2018 2017 2018 2017 Net sales U.S. $ 2,432 $ 1,012 $ 4,098 $ 2,717 International 300 128 531 339 Net sales $ 2,732 $ 1,140 $ 4,629 $ 3,056 |
Guarantor and Non-Guarantor Fin
Guarantor and Non-Guarantor Financial Information | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Guarantor and Non-Guarantor Financial Information | Guarantor and Non-Guarantor Financial Information The Notes are fully and unconditionally guaranteed by certain direct and indirect subsidiaries of the Company's (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., immaterial subsidiaries used for charitable purposes, any of the subsidiaries held by Maple prior to the DPS Merger or any of the subsidiaries acquired after the DPS Merger (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 DPS Merger was accounted for under the acquisition method of accounting, using pushdown accounting for the purposes of presenting the following guarantor and non-guarantor financial information. The following schedules present the financial information for Keurig Dr Pepper 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 Third Quarter of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,540 $ 1,225 $ (33 ) $ 2,732 Cost of sales — 774 630 (33 ) 1,371 Gross profit — 766 595 — 1,361 Selling, general and administrative expenses 1 590 434 — 1,025 Other operating (income) expense, net (6 ) — (2 ) — (8 ) Income from operations 5 176 163 — 344 Interest expense 220 31 31 (110 ) 172 Interest expense - related party — — — — — Loss on early extinguishment of debt — — 11 — 11 Other (income) expense, net (46 ) (84 ) (13 ) 110 (33 ) Income before provision for income taxes (169 ) 229 134 — 194 Provision for income taxes (46 ) 68 24 — 46 Income before equity in earnings of consolidated subsidiaries (123 ) 161 110 — 148 Equity in earnings of consolidated subsidiaries 271 16 — (287 ) — Net income 148 177 110 (287 ) 148 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — — — — Net income attributable to KDP $ 148 $ 177 $ 110 $ (287 ) $ 148 Condensed Consolidating Statements of Income Third Quarter of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ — $ 1,140 $ — $ 1,140 Cost of sales — — 585 — 585 Gross profit — — 555 — 555 Selling, general and administrative expenses — — 318 — 318 Other operating (income) expense, net — — (1 ) — (1 ) Income from operations — — 238 — 238 Interest expense — — 28 — 28 Interest expense - related party — — 25 — 25 Loss on early extinguishment of debt — — 2 — 2 Other (income) expense, net — — 20 — 20 Income before provision for income taxes — — 163 — 163 Provision for income taxes — — 46 — 46 Net income — — 117 — 117 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — 1 — 1 Net income attributable to KDP $ — $ — $ 116 $ — $ 116 Condensed Consolidating Statements of Income For the First Nine Months of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,540 $ 3,122 $ (33 ) $ 4,629 Cost of sales — 774 1,564 (33 ) 2,305 Gross profit — 766 1,558 — 2,324 Selling, general and administrative expenses 1 590 1,045 — 1,636 Other operating (income) expense, net (6 ) — 4 — (2 ) Income from operations 5 176 509 — 690 Interest expense 220 31 80 (110 ) 221 Interest expense - related party — — 51 — 51 Loss on early extinguishment of debt — — 13 — 13 Other (income) expense, net (46 ) (84 ) (8 ) 110 (28 ) Income before provision for income taxes (169 ) 229 373 — 433 Provision for income taxes (46 ) 68 88 — 110 Income before equity in earnings of consolidated subsidiaries (123 ) 161 285 — 323 Equity in earnings of consolidated subsidiaries 443 16 — (459 ) — Net income 320 177 285 (459 ) 323 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — 3 — 3 Net income attributable to KDP $ 320 $ 177 $ 282 $ (459 ) $ 320 Condensed Consolidating Statements of Income For the First Nine Months of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ — $ 3,056 $ — $ 3,056 Cost of sales — — 1,571 — 1,571 Gross profit — — 1,485 — 1,485 Selling, general and administrative expenses — — 852 — 852 Other operating (income) expense, net — — — — — Income from operations — — 633 — 633 Interest expense — — 76 — 76 Interest expense - related party — — 75 — 75 Loss on early extinguishment of debt — — 54 — 54 Other (income) expense, net — — 88 — 88 Income before provision for income taxes — — 340 — 340 Provision for income taxes — — 102 — 102 Net income — — 238 — 238 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — 3 — 3 Net income attributable to KDP $ — $ — $ 235 $ — $ 235 Condensed Consolidating Statements of Comprehensive Income Third Quarter of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 226 $ 239 $ 188 $ (427 ) $ 226 Condensed Consolidating Statements of Comprehensive Income Third Quarter of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ — $ — $ 208 $ — $ 208 Condensed Consolidating Statements of Comprehensive Income For the First Nine Months of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 358 $ 239 $ 323 $ (559 ) $ 361 Condensed Consolidating Statements of Comprehensive Income For the First Nine Months of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ — $ — $ 334 $ — $ 334 Condensed Consolidating Balance Sheets As of September 30, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 11 $ 83 $ — $ 94 Restricted cash and restricted cash equivalents 15 — 3 — 18 Trade accounts receivable, net — 641 555 — 1,196 Related party receivable 172 58 146 (376 ) — Inventories — 241 479 — 720 Prepaid expenses and other current assets 576 183 142 (544 ) 357 Total current assets 763 1,134 1,408 (920 ) 2,385 Property, plant and equipment, net — 1,383 962 — 2,345 Investments in consolidated subsidiaries 39,466 4,299 — (43,765 ) — Investments in unconsolidated subsidiaries — 79 114 — 193 Goodwill — 9,042 10,249 — 19,291 Other intangible assets, net — 16,839 7,597 — 24,436 Long-term receivable, related parties 5,820 7,242 — (13,062 ) — Other non-current assets 68 54 193 — 315 Deferred tax assets 7 — 93 (7 ) 93 Total assets $ 46,124 $ 40,072 $ 20,616 $ (57,754 ) $ 49,058 Current liabilities: Accounts payable $ — $ 475 $ 1,754 $ — $ 2,229 Accrued expenses 172 620 439 — 1,231 Structured payables — — 432 — 432 Related party payable 58 174 144 (376 ) — Short-term borrowings and current portion of long-term obligations 1,765 — — — 1,765 Current portion of capital lease and financing obligations — 17 8 — 25 Income taxes payable — 496 59 (544 ) 11 Other current liabilities 246 2 26 — 274 Total current liabilities 2,241 1,784 2,862 (920 ) 5,967 Long-term obligations to third parties 14,275 — — — 14,275 Long-term obligations to related parties 7,242 3,348 2,472 (13,062 ) — Capital lease and financing obligations, less current — 204 101 — 305 Deferred tax liabilities — 5,034 947 (7 ) 5,974 Other non-current liabilities 73 109 62 — 244 Total liabilities 23,831 10,479 6,444 (13,989 ) 26,765 Total stockholders' equity 22,293 29,593 14,172 (43,765 ) 22,293 Total liabilities and stockholders' equity $ 46,124 $ 40,072 $ 20,616 $ (57,754 ) $ 49,058 Condensed Consolidating Balance Sheets As of December 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ — $ 90 $ — $ 90 Restricted cash and restricted cash equivalents — — 5 — 5 Trade accounts receivable, net — — 483 — 483 Related party receivable — — — — — Inventories — — 384 — 384 Prepaid expenses and other current assets — — 94 — 94 Total current assets — — 1,056 — 1,056 Property, plant and equipment, net — — 790 — 790 Investments in consolidated subsidiaries — — — — — Investments in unconsolidated subsidiaries — — 97 — 97 Goodwill — — 9,819 — 9,819 Other intangible assets, net — — 3,834 — 3,834 Long-term receivable, related parties — — — — — Other non-current assets — — 121 — 121 Deferred tax assets — — 27 — 27 Total assets $ — $ — $ 15,744 $ — $ 15,744 Current liabilities: Accounts payable $ — $ — $ 1,580 $ — $ 1,580 Accrued expenses — — 201 — 201 Structured payables — — — — — Related party payable — — — — — Short-term borrowings and current portion of long-term obligations — — 219 — 219 Current portion of capital lease and financing obligations — — 6 — 6 Income taxes payable — — 3 — 3 Other current liabilities — — 9 — 9 Total current liabilities — — 2,018 — 2,018 Long-term obligations to third parties — — 3,064 — 3,064 Long-term obligations to related parties — — 1,815 — 1,815 Capital lease and financing obligations, less current — — 97 — 97 Deferred tax liabilities — — 1,031 — 1,031 Other non-current liabilities — — 56 — 56 Total liabilities — — 8,081 — 8,081 Employee redeemable non-controlling interest and mezzanine equity awards — — 265 — 265 Total stockholders' equity — — 7,398 — 7,398 Total liabilities and stockholders' equity $ — $ — $ 15,744 $ — $ 15,744 Condensed Consolidating Statements of Cash Flows For the First Nine Months of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (29,645 ) $ 25,450 $ 5,160 $ 98 $ 1,063 Investing activities: Acquisitions of business 10,642 (25,208 ) (21,674 ) 17,116 (19,124 ) Cash acquired in acquisitions — 116 34 — 150 Issuance of related party note receivable (2,606 ) (461 ) (6 ) 3,067 (6 ) Investments in unconsolidated subsidiaries — (1 ) (22 ) — (23 ) Proceeds from capital distributions from investments in unconsolidated subsidiaries — 36 — — 36 Purchases of property, plant and equipment — (37 ) (67 ) — (104 ) Proceeds from capital distributions from investments in consolidated subsidiaries — — (35 ) 35 — Other, net 1 — — — 1 Net cash provided by (used in) investing activities $ 8,037 $ (25,555 ) $ (21,770 ) $ 20,218 $ (19,070 ) Financing activities: Proceeds from related party long-term debt 461 — 2,606 (3,067 ) — Proceeds from issuance of common stock private placement — — 9,000 — 9,000 Contribution from subsidiary 9,162 — — (9,162 ) — Proceeds from unsecured credit facility 1,900 — — — 1,900 Proceeds from senior unsecured notes 8,000 — 8,000 (8,000 ) 8,000 Proceeds from term loan 2,700 — — — 2,700 Net Issuance of Commercial Paper 1,386 — — — 1,386 Proceeds from structured payables — 133 432 (133 ) 432 Repayment of unsecured credit facility (1,900 ) — — — (1,900 ) Repayment of term loan (34 ) — (3,329 ) — (3,363 ) Payments on capital leases — (6 ) (14 ) — (20 ) Deferred financing charges paid (55 ) — (40 ) 46 (49 ) Proceeds from stock options exercised 3 — — — 3 Cash contributions from redeemable NCI shareholders — — 19 — 19 Cash dividends paid — — (23 ) — (23 ) Other, net — (1 ) — — (1 ) Net cash provided by (used in) financing activities $ 21,623 $ 126 $ 16,651 $ (20,316 ) $ 18,084 Cash and cash equivalents — net change from: Operating, investing and financing activities 15 21 41 — 77 Effect of exchange rate changes on cash and cash equivalents — — (50 ) — (50 ) Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — — 95 — 95 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 15 $ 21 $ 86 $ — $ 122 Condensed Consolidating Statements of Cash Flows For the First Nine Months of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash provided by operating activities $ — $ — $ 1,321 $ — $ 1,321 Investing activities: Issuance of related party notes receivable — — (6 ) — (6 ) Investments in unconsolidated subsidiaries — — 250 — 250 Purchase of property, plant and equipment — — (45 ) — (45 ) Other, net — — 2 — 2 Net cash provided by investing activities $ — $ — $ 201 $ — $ 201 Financing activities: Proceeds from term loan — — 1,200 — 1,200 Net repayment on line of credit — — (200 ) — (200 ) Repayment of term loan — — (2,144 ) — (2,144 ) Payments on capital leases — — (14 ) — (14 ) Deferred financing fees paid — — (5 ) — (5 ) Cash distributions to redeemable NCI shareholders — — (1 ) — (1 ) Cash dividends paid — — (46 ) — (46 ) Cross currency swap — — (78 ) — (78 ) Net cash used in financing activities $ — $ — $ (1,288 ) $ — $ (1,288 ) Cash and cash equivalents — net change from: Operating, investing and financing activities — — 234 — 234 Effect of exchange rate changes on cash and cash equivalents — — 18 — 18 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — — 97 — 97 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ — $ — $ 349 $ — $ 349 |
Background and Basis of Prese_2
Background and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | For financial reporting and accounting purposes, Maple was the acquirer of DPS upon completion of the DPS Merger . The unaudited condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the third quarter and first nine months of 2018 and 2017 reflect the results of operations and financial position of Maple for the periods presented and includes 84 days of the results of operations of DPS in 2018 subsequent to the DPS Merger , which was completed on July 9, 2018. 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 Maple 's consolidated financial statements and accompanying notes, included in the Company's Form 8-K/A filed with the U.S. Securities and Exchange Commission (" SEC ") on August 8, 2018. |
Principles of Consolidation | KDP 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 KDP 's proportionate share of the net income or loss of these companies. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors or similar governing body, participation in policy-making decisions and material intercompany transactions. The Company is also required to consolidate entities that are variable interest entities (“ VIE s”) of which KDP is the primary beneficiary. Judgments are made in assessing whether KDP is the primary beneficiary, including determination of the activities that most significantly impact the VIE ’s economic performance. KDP 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 |
Reclassifications | The Company made certain reclassifications in the prior year presentation as management believes this presentation enhances the comparability of the Company 's financial statements with industry peers. |
Use of Estimates | The process of preparing KDP 's unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimate s |
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 September 30, 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 the Company would pay or receive to terminate agreements, taking into consideration current market rates and creditworthiness. |
Accounting Standards | RECENTLY ISSUED ACCOUNTING STANDARDS Effective in 2019 In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The standard 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 is in the midst of the implementation of the software. The Company anticipates the impact of ASU 2016-02 will be significant to its unaudited Condensed 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 unaudited condensed consolidated financial statements. Effective in 2020 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The standard provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2016-13 on the Company's unaudited condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements ("ASU 2018-13"). The objective of the ASU is to improve the disclosures related to fair value measurement by removing, modifying, or adding disclosure requirements related to recurring and non-recurring fair value measurements. ASU 2018-13 is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, and early adoption is permitted. The Company is currently assessing the changes in disclosure requirements and does not believe there will be a material impact to KDP's unaudited condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. ASU 2018-15 is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-15 on its unaudited condensed 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) (" Topic 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 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. As a result of the adoption of Topic 606 , the Company recognizes revenue from contracts with customers when control is transferred, generally upon delivery to the customers facility. 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 $4 million decrease 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. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The amount of revenue recognized by the Company is net of costs associated with customer marketing programs and incentives, as well as sales taxes and other similar taxes. Refer to Note 3 for information regarding the Company 's adoption of Topic 606 . As of January 1, 2018, the Company adopted 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 "), 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. The adoption of ASU 2017-07 had no impact to the Company 's unaudited condensed consolidated financial statements for the third quarter and first nine months of 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 held one investment in equity securities which was accounted for under the cost method of accounting prior to January 1, 2018, which did 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. |
Background and Basis of Prese_3
Background and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of reclassifications | The Company reclassified unrealized and realized gains and losses associated with derivative instruments within the same financial statement caption that the risk the derivative instrument is meant to mitigate is recorded, as provided in the table below: Third Quarter First Nine Months (in millions) Prior Presentation Revised Presentation 2017 2017 Commodity contracts (Gain) loss on financial instruments, net Cost of sales $ (7 ) $ 3 Interest rate contracts (Gain) loss on financial instruments, net Interest expense (9 ) 16 FX contracts (Gain) loss on financial instruments, net Other (income) expense, net 7 — |
Acquisitions and Investments _2
Acquisitions and Investments in Unconsolidated Subsidiaries (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of business acquisitions, by acquisition | The following table provides information about the Company 's transaction expenses incurred during the third quarter and first nine months of 2018 and 2017 : Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 DPS Merger $ 93 $ — $ 167 $ — Big Red Merger 2 — 2 — Core Merger 1 — 1 — Total transaction expenses incurred $ 96 $ — $ 170 $ — The DPS Merger was accounted for as a reverse merger under the acquisition method of accounting for business combinations. Maple was considered to be the financial and accounting acquirer, and DPS was considered the legal acquirer. Under the acquisition method of accounting, total consideration exchanged was: (in millions) Aggregate fair value of DPS common stock $ 3,611 $103.75 per share special cash dividend (1) 18,818 Fair value of replacement equity awards (2) 53 Total consideration exchanged $ 22,482 (1) As a result of the DPS Merger , all DPS unvested stock option awards, RSUs and PSUs (the "Legacy Stock Awards") vested immediately as a result of the Change in Control (as defined in the terms of each individual award agreement). All Legacy Stock Awards, except for the stock option awards and certain RSUs not yet released to the employee, received the special cash dividend of $103.75 per share, subject to any withholding of taxes required by law. These amounts were included within the special cash dividend. (2) The fair value of replacement equity awards includes the Company issued replacement stock option awards for DPS stock option awards that were fully vested as of July 9, 2018 but not yet exercised by the employee, the DPS stock option awards that were fully vested as of July 9, 2018 and converted to cash by the employee and certain RSUs not yet released to the employee as a result of certain Internal Revenue Code requirements. |
Schedule of recognized identified assets acquired and liabilities assumed | The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed in the Big Red Merger as of September 30, 2018: (in millions) Fair Value Cash and cash equivalents $ 3 Other intangible assets 240 Assumed liabilities, net of acquired assets (1) (28 ) Goodwill 89 Total consideration exchanged 304 Company's previous ownership interest 22 Less: Holdback placed in Escrow 15 Acquisition of business $ 267 (1) The Company preliminarily valued WIP and finished goods inventory using a net realizable value approach resulting in a step-up of $2 million which was recognized in the cost of goods sold for the third quarter of 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed in the DPS Merger as of September 30, 2018: (in millions) Fair Value Cash and cash equivalents $ 147 Investments in unconsolidated subsidiaries (1) 90 Property, plant and equipment (2) 1,549 Other intangible assets 20,404 Long-term obligations (3) (4,049 ) Capital lease and financing obligations (214 ) Acquired assets, net of assumed liabilities (4) 107 Deferred tax liabilities, net of deferred tax assets (5) (4,959 ) Goodwill 9,407 Total consideration exchanged 22,482 Fair value of replacement equity awards not converted to cash (6) 3,643 Acquisition of business $ 18,839 (1) The Company preliminarily valued investments in unconsolidated subsidiaries using a market approach, specifically the guideline public company method. (2) The Company preliminarily valued personal property using a combination of the market approach and the cost approach, which is based upon current replacement or reproduction cost of the asset as newly adjusted for any depreciation attributable to physical, functional and economic factors. The Company assigned personal property a useful life ranging from 1 year to 24 years . We preliminarily valued real property using the cost approach and land using the sales comparison approach. The Company assigned real property a useful life between 1 year and 41 years . (3) The fair value amounts of long-term obligations (current and long-term) were based on current market rates available to the Company . (4) The Company used existing carrying values to value trade receivables and payables, as well as certain other current and non-current assets and liabilities, as the Company determined that they represented the fair value of those items as of the Merger Date . The Company preliminarily valued work-in-process ("WIP") and finished goods inventory using a net realizable value approach resulting in a step-up of $131 million which was recognized in the cost of goods sold for the third quarter of 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. (5) Net deferred tax liabilities represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. The Company used a preliminary consolidated tax rate to determine the net deferred tax liabilities. The Company will record measurement period adjustments as the Company applies the appropriate tax rate for each legal entity within DPS. (6) A portion of DPS' vested options were treated as replacement equity awards for purposes of valuation but were converted to cash as of the Merger Date. As a result, in order to determine the cash paid for the DPS Merger , the Company reduced the fair value of the related replacement equity awards originally presented in the total consideration exchanged table above by $21 million . |
Finite-lived and indefinite-lived intangible assets acquired as part of business combination | The preliminary allocation of consideration exchanged to other intangible assets acquired is as follows: (in millions) Fair Value Estimated Life (in years) Brands (1) $ 220 n/a Brands (1) 9 5 Customer relationships (2) 4 8-40 Contractual arrangements (3) 7 12 Total other intangible assets $ 240 (1) The Company preliminarily valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company have identified two types of customer relationships, retail and industrial. We preliminarily valued retail and industrial customer relationships utilizing the distributor method, a form of the income approach. (3) The Company preliminarily valued contractual arrangements with bottlers and distributors utilizing the distributor method, a form of the income approach. The preliminary allocation of consideration exchanged to other intangible assets acquired is as follows: (in millions) Fair Value Estimated Life (in years) Brands (1) $ 19,893 n/a Contractual arrangements (2) 120 n/a Customer relationships (3) 386 10-40 Favorable leases, net (4) 5 5-12 Total other intangible assets $ 20,404 (1) The Company preliminarily valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company preliminarily valued contractual arrangements with bottlers and distributors utilizing the distributor method, a form of the income approach. (3) The Company identified two types of customer relationships, retail and food service. We preliminarily valued retail and food service customer relationships utilizing the distributor method, a form of the income approach. (4) The Company preliminarily valued favorable leases utilizing the income approach. |
Pro forma information | Assuming DPS had been acquired as of December 31, 2016, and the results of DPS had been included in operations beginning on January 1, 2017, the following tables provide estimated unaudited pro forma results of operations for the third quarter and first nine months of 2018 and 2017 under U.S. GAAP. The estimated pro forma net income includes the alignment of accounting policies, the effect of fair value adjustments related to the DPS Merger , the associated tax effects and the impact of the additional debt to finance the DPS Merger . Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 Net sales $ 2,856 $ 2,776 $ 8,207 $ 7,975 Net income 287 253 838 364 |
Equity method investments | The following table summarizes the equity method investments held by the Company as of September 30, 2018 and December 31, 2017 : September 30, December 31, (in millions) Ownership Interest 2018 2017 BA Sports Nutrition, LLC ("BODYARMOR") (1)(2) 15.5 % $ 61 $ — Bedford Systems, LLC ("Bedford") (3) 30.0 % 84 95 Core (1) 5.1 % 16 — Force Holdings LLC 33.3 % 6 — Lifefuels, Inc. 26.7 % 20 — Other (various) 6 2 Investments in unconsolidated subsidiaries $ 193 $ 97 (1) The investments in Core and BODYARMOR were acquired as part of the DPS Merger on July 9, 2018. Refer to the purchase price allocation above. (2) On August 14, 2018, it was announced that The Coca-Cola Company ("Coca-Cola") took a minority interest in BODYARMOR and would obtain the Company's current distribution rights. On August 19, 2018, the Company received a distribution from BODYARMOR of approximately $35 million This distribution reduced the Company's investment by approximately $11 million and resulted in a gain of approximately $24 million , which was recorded to Other non-operating (income) expense, net in the unaudited Condensed Consolidated Statements of Income. The Company continues to account for its interest in BODYARMOR as an equity method investment at the ownership level prior to the Coca-Cola announcement as an updated ownership interest percentage has not yet been provided to the Company. (3) The investment in Bedford represents a joint venture formed with Anheuser-Busch InBev ("ABI") on March 3, 2017 to develop and launch an in-home alcoholic beverage system. Under the terms of the transaction agreement, the Company contributed its existing Kold assets and liabilities along with all outstanding shares of MDS Holdings p.l.c. (Bevyz) with a net book value of $357 million to Bedford in exchange for a 30% interest. ABI contributed $250 million to the investment, which was immediately distributed to Maple , in exchange for a 70% interest. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | The following table disaggregates the Company 's revenue by portfolio for the third quarter and first nine months of 2018 and 2017 : (in millions) Beverage Concentrates Packaged Beverages Latin America Beverages Coffee Systems Total For the third quarter of 2018: CSD (1) $ 311 $ 505 $ 88 $ — $ 904 NCB (1) 2 649 35 — 686 Pods (2) — — — 831 831 Appliances — — — 171 171 Other 4 84 1 51 140 Net sales $ 317 $ 1,238 $ 124 $ 1,053 $ 2,732 For the first nine months of 2018: CSD (1) $ 311 $ 505 $ 88 $ — $ 904 NCB (1) 2 649 35 — 686 Pods (2) — — — 2,387 2,387 Appliances — — — 403 403 Other 4 84 1 160 249 Net sales $ 317 $ 1,238 $ 124 $ 2,950 $ 4,629 For the third quarter of 2017 (3) : CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) — — — 922 922 Appliances — — — 165 165 Other — — — 53 53 Net sales $ — $ — $ — $ 1,140 $ 1,140 For the first nine months of 2017 (3) : CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) — — — 2,496 2,496 Appliances — — — 407 407 Other — — — 153 153 Net sales $ — $ — $ — $ 3,056 $ 3,056 __________________ (1) Represents net sales of owned and allied brands within our portfolio. (2) Represents net sales from owned brands, partner brands and private label owners. Net sales for partner brands and private label owners are contractual and long term in nature. (3) Prior period amounts were not adjusted for the adoption of revenue recognition under ASC 606. |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in the carrying amount of goodwill by reportable segment | Changes in the carrying amount of goodwill by reportable segment are as follows: Beverage Concentrates Packaged Beverages Latin America Beverages Coffee Systems Unallocated (2) Total Balance as of December 31, 2017 $ — $ — $ — $ 9,819 $ — $ 9,819 Foreign currency translation 1 — 7 (32 ) — (24 ) Acquisitions (1) 970 3,452 350 — 4,724 9,496 Balance as of September 30, 2018 $ 971 $ 3,452 $ 357 $ 9,787 $ 4,724 $ 19,291 ___________________________ (1) Acquisition activity during the first nine months of 2018 represents the goodwill recorded as a result of the DPS Merger and the Big Red Merger. Refer to Note 2 for additional information . (2) Amounts recorded primarily for deferred tax liabilities in the preliminary purchase price allocations are recorded using a preliminary consolidated tax rate to determine the deferred tax liabilities. The Company will record measurement period adjustments as the Company applies the appropriate tax rate for each legal entity within DPS, which will enable the Company to allocate this goodwill to the applicable segment within the measurement period. |
Schedule of net carrying amounts of intangible assets other than goodwill with indefinite lives | The net carrying amounts of intangible assets other than goodwill with indefinite lives are as follows: September 30, 2018 December 31, 2017 Brands (1) $ 20,163 $ — Contractual arrangements (2) 120 — Trade Names 2,479 2,479 Total $ 22,762 $ 2,479 ___________________________ (1) The Company recorded $19,893 million and $220 million of indefinite-lived brand assets as a result of the DPS Merger and the Big Red Merger, respectively. Refer to Note 2 for additional information . The remaining change during the period was due to foreign currency translation. (2) The Company recorded $120 million of indefinite-lived contractual arrangements with certain bottlers and distributors as a result of the DPS Merger . Refer to Note 2 for additional information . |
Schedule of net carrying amounts of intangible assets other than goodwill with definite lives | The net carrying amounts of intangible assets other than goodwill with definite lives are as follows: September 30, 2018 December 31, 2017 (in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Acquired technology $ 1,146 $ (164 ) $ 982 $ 1,146 $ (109 ) $ 1,037 Customer relationships (1)(2) 632 (59 ) 573 247 (41 ) 206 Trade names 128 (36 ) 92 129 (24 ) 105 Favorable leases, net (1) 13 (2 ) 11 8 (2 ) 6 Brands (2) 9 — 9 — — — Contractual arrangements (2) 7 — 7 — — — Other — — — 1 — 1 Total $ 1,935 $ (261 ) $ 1,674 $ 1,531 $ (176 ) $ 1,355 ___________________________ (1) As a result of the DPS Merger , the Company recorded definite-lived customer relationships of $386 million and definite-lived net favorable leases of $5 million . Refer to Note 2 for additional information . (2) As a result of the Big Red Merger, the Company recorded definite-lived brands of $9 million , definite-lived customer relationships of $4 million and definite-lived contractual arrangements of $7 million . Refer to Note 2 for additional information . |
Schedule of amortization expense for intangible assets with definite lives | Amortization expense for intangible assets with definite lives was as follows: Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 Amortization expense for intangible assets with definite lives $ 31 $ 24 $ 90 $ 72 |
Schedule of future amortization expense | 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 Ending December 31, (in millions) 2019 2020 2021 2022 Expected amortization expense for intangible assets with definite lives $ 32 $ 130 $ 130 $ 130 $ 126 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective income tax rate reconciliation | 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: Third Quarter First Nine Months 2018 2017 2018 2017 (in millions) Dollar Percent Dollar Percent Dollar Percent Dollar Percent Statutory federal income tax (1) $ 48 24.5 % $ 57 35.0 % $ 106 24.5 % $ 119 35.0 % State income taxes, net 15 7.7 % 4 2.5 % 26 6.0 % 10 2.9 % Deferred tax revaluation (2) (41 ) (21.1 )% (6 ) (3.7 )% (41 ) (9.5 )% (6 ) (1.8 )% U.S. federal domestic manufacturing benefit (3) (5 ) (2.6 )% (8 ) (4.9 )% (12 ) (2.8 )% (13 ) (3.8 )% Impact of non-U.S. operations 4 2.1 % 11 6.7 % 8 1.8 % 4 1.2 % Tax reform (4) 3 1.5 % — — % (4 ) (0.9 )% — — % U.S. taxation of foreign earnings (5) 5 2.6 % (29 ) (17.8 )% 5 1.2 % (28 ) (8.2 )% Valuation allowance (5) 15 7.7 % 20 12.3 % 15 3.5 % 20 5.9 % Transaction costs 3 1.5 % — — % 13 3.0 % — — % Other (1 ) (0.2 )% (3 ) (1.9 )% (6 ) (1.4 )% (4 ) (1.2 )% Total income tax provision $ 46 23.7 % $ 46 28.2 % $ 110 25.4 % $ 102 30.0 % ____________________________ For the third quarter and first nine months of 2018, unless otherwise noted: (1) The TCJA reduced the U.S. federal statutory tax rate from 35% to 21%. Guidance under the TCJA for non-calendar year tax filers resulted in a 24.5% federal statutory rate for companies with a September tax year-end. (2) As a result of the DPS Merger , Maple 's deferred taxes were revalued to reflect the impact of DPS's state apportionment factors. (3) The TCJA repealed the domestic manufacturing deduction. Guidance under the TCJA for non-calendar year filers resulted in the domestic manufacturing deduction being claimed through September 2018. The period ended September 2018 is the final tax year that the Company can claim the benefit. (4) Net deferred tax assets were revalued from the 24.5% federal tax rate to 21%. Additionally, for the first nine months of 2018, the Company reduced its liability for the one-time transition tax on earnings of certain foreign subsidiaries. (5) In 2017, foreign dividends were paid that generated excess foreign tax credits and a corresponding deferred tax asset, which resulted in an income tax benefit; however, a valuation allowance was applied to approximately 50% of the deferred tax asset related to the excess foreign tax credits. In 2018, the Company recorded a $17 million valuation allowance against the remaining deferred tax asset related to the excess foreign tax credits as a result of the DPS Merger . |
Long-term Obligations and Bor_2
Long-term Obligations and Borrowing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The following table summarizes the Company 's long-term obligations: (in millions) September 30, 2018 December 31, 2017 Senior unsecured notes $ 12,011 $ — Revolving credit facilities — — Term loans 2,643 3,283 Term loans - related party — 1,815 Subtotal 14,654 5,098 Less - current portion (379 ) (219 ) Long-term obligations $ 14,275 $ 4,879 The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level September 30, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 1 $ 1,386 $ 1,386 $ — $ — Current portion of long-term obligations: Senior unsecured notes 2 250 250 — — Term loans 2 129 129 219 219 Short-term borrowings and current portion of long-term obligations $ 1,765 $ 1,765 $ 219 $ 219 |
Schedule of long-term debt instruments | (in millions) Fair Value Hierarchy Level September 30, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value 2019 Notes (1) January 15, 2019 2.600% 2 $ 250 $ 250 $ — $ — 2020 Notes (1) January 15, 2020 2.000% 2 250 245 — — 2021-A Notes (1) November 15, 2021 3.200% 2 250 245 — — 2021-B Notes (1) November 15, 2021 2.530% 2 250 240 — — 2022 Notes (1) November 15, 2022 2.700% 2 250 236 — — 2023 Notes (1) December 15, 2023 3.130% 2 500 477 — — 2025 Notes (1) November 15, 2025 3.400% 2 500 470 — — 2026 Notes (1) September 15, 2026 2.550% 2 400 350 — — 2027 Notes (1) June 15, 2027 3.430% 2 500 462 — — 2038 Notes (1) May 1, 2038 7.450% 2 125 157 — — 2045 Notes (1) November 15, 2045 4.500% 2 550 511 — — 2046 Notes (1) December 15, 2046 4.420% 2 400 366 — — 2021 Merger Notes (2) May 25, 2021 3.551% 2 1,750 1,744 — — 2023 Merger Notes (2) May 25, 2023 4.057% 2 2,000 1,992 — — 2025 Merger Notes (2) May 25, 2025 4.417% 2 1,000 1,003 — — 2028 Merger Notes (2) May 25, 2028 4.597% 2 2,000 2,013 — — 2038 Merger Notes (2) May 25, 2038 4.985% 2 500 506 — — 2048 Merger Notes (2) May 25, 2048 5.085% 2 750 763 — — Principal amount $ 12,225 $ 12,030 $ — $ — Unamortized debt issuance costs and fair value adjustment for the DPS Merger (214 ) — Carrying amount $ 12,011 $ — ____________________________ (1) As a result of the DPS Merger , the Company assumed the liabilities of DPS existing senior unsecured notes. (2) On May 25, 2018, the Company issued $8,000 million of senior unsecured notes, consisting of six different tranches (the " DPS Merger Notes ") in a private offering under Rule 144A under the Securities Act of 1933, as amended. The DPS Merger Notes were issued at par and had debt issuance costs related to the issuance of approximately $46 million . The Company 's long-term obligations to related parties are as follows: (in millions) Fair Value Hierarchy Level September 30, 2018 December 31, 2017 Issuance Maturity Date Rate Carrying Value Fair Value Carrying Value Fair Value (2) Term Loan Maple B.V. (1) February 27, 2023 5.50% 2 $ — $ — $ 1,375 $ 1,375 Term Loan Mondelez (1) February 27, 2023 5.50% 2 — — 440 440 Principal amount $ — $ — $ 1,815 $ 1,815 ____________________________ (1) As a result of the DPS Merger , the Company converted certain related party term loans into equity, as shown in the unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity. (2) The term loans with related parties occurred as an arms length transaction and were applied a relative interest rate consistent with the current industry and market. As such, the carrying value approximates fair value as of December 31, 2017 . |
Schedule of line of credit facilities | The following table provides amounts utilized and available under the revolving credit facilities as of September 30, 2018 : (in millions) Amount Utilized Balances Available KDP Revolver (1) $ — $ 2,395 Letters of credit 5 195 (1) In order to fund the DPS Merger , the Company drew down $1,900 million of the KDP Revolver on July 9, 2018. Subsequent to the DPS Merger , the Company repaid the revolver through issuance of $1,660 million of Commercial Paper through the commercial paper program and with $240 million in cash on hand. The Company 's revolving credit facilities and term loans consisted of the following carrying values and estimated fair values that are not required to be measured at fair value in the unaudited Condensed Consolidated Balance Sheets are as follows: (in millions) Fair Value Hierarchy Level September 30, 2018 December 31, 2017 Issuance Maturity Date Carrying Value Fair Value Carrying Value Fair Value KDP Term Loan February 2023 2 $ 2,666 $ 2,666 $ — $ — KDP Revolver February 2023 2 — — — — Term Loan A 2 — — 3,329 3,329 Principal amount $ 2,666 $ 2,666 $ 3,329 $ 3,329 Unamortized discounts and debt issuance costs (23 ) (46 ) Carrying amount $ 2,643 $ 3,283 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments in statement of financial position, fair value | 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 September 30, 2018 and December 31, 2017 : (in millions) Fair Value Hierarchy Level Balance Sheet Location September 30, December 31, Assets: Interest rate contracts 2 Prepaid expenses and other current assets $ 2 $ — FX forward contracts 2 Prepaid expenses and other current assets 1 — Commodity contracts 2 Prepaid expenses and other current assets 25 — Interest rate contracts 2 Other non-current assets 123 87 FX forward contracts 2 Other non-current assets 2 — Commodity contracts 2 Other non-current assets 15 — Liabilities: Interest rate contracts 2 Other current liabilities $ 7 $ — FX forward contracts 2 Other current liabilities — 5 Commodity contracts (1) 2 Other current liabilities 20 1 Interest rate contracts 2 Other non-current liabilities 19 — FX forward contracts 2 Other non-current liabilities — — Commodity contracts 2 Other non-current liabilities 10 — ____________________________ (1) A portion of the Company's derivative instruments are subject to a master netting arrangement under which either party may offset amounts if the payment amounts are for the same transaction and in the same currency. By election, parties may agree to net other transactions. In addition, the arrangements provide for the net settlement of all contracts through a single payment in a single currency in the event of default or termination of the contract. The Company's policy is to net all derivative assets and liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets when allowable by U.S. GAAP. The Company has offset gross liabilities of $17 million with gross assets of $2 million and gross liabilities of $5 million offset with gross assets of $4 million related to our commodity contracts at September 30, 2018 and December 31, 2017, respectively. |
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. Amounts include both realized and unrealized gains and losses. (in millions) Amount of (Gain) Loss Recognized in Income Location of (Gain) Loss Recognized in Income For the third quarter of 2018: Commodity contracts $ 31 Cost of sales Commodity contracts (6 ) SG&A expenses Interest rate contracts 3 Interest expense FX forward contracts 5 Other (income) expense, net Total $ 33 For the first nine months of 2018: Commodity contracts $ 35 Cost of sales Commodity contracts (6 ) SG&A expenses Interest rate contracts (27 ) Interest expense FX forward contracts (9 ) Other (income) expense, net Total $ (7 ) For the third quarter of 2017: Commodity contracts $ (7 ) Cost of sales Interest rate contracts (9 ) Interest expense FX forward contracts 7 Other (income) expense, net Total $ (9 ) For the first nine months of 2017: Commodity contracts $ 3 Cost of sales Interest rate contracts 16 Interest expense FX forward contracts — Other (income) expense, net Total $ 19 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock based compensation expense | The components of stock-based compensation expense are presented below: Third Quarter First Nine Months (in millions) 2018 2017 2018 2017 Total stock-based compensation expense $ 8 $ 14 $ 26 $ 36 Income tax benefit recognized in the Statements of Income (2 ) (4 ) (5 ) (12 ) Stock-based compensation expense, net of tax $ 6 $ 10 $ 21 $ 24 |
Schedule of share-based compensation, restricted stock and restricted stock units activity | The table below summarizes RSU activity for the first nine months of 2018 . The fair value of RSUs is determined based on the the number of units granted, adjusted for the conversion ratio for RSUs granted prior to July 9, 2018, and the grant date price of common stock. RSUs (1) Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 15,462,778 $ 11.51 3.11 $ 342 Granted 6,663,547 23.71 — — Vested and released (965,315 ) 10.38 — 23 Forfeited (1,052,952 ) 15.02 — — Outstanding as of September 30, 2018 20,108,058 15.42 3.27 466 |
Schedule of share-based compensation, stock options, activity | The table below summarizes stock option activity for the first nine months of 2018 : Stock Options Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of January 1, 2018 — $ — — $ — Granted 1,319,014 11.92 — Exercised (235,339 ) 11.70 — 3 Outstanding as of September 30, 2018 1,083,675 11.97 6.8 12 Exercisable as of September 30, 2018 1,083,675 11.97 6.8 12 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following table presents the Company 's basic and diluted EPS and shares outstanding: Third Quarter First Nine Months (in millions, except per share data) 2018 2017 2018 2017 Basic EPS: Net income attributable to KDP $ 148 $ 116 $ 320 $ 235 Weighted average common shares outstanding 1,361.8 790.5 983.0 790.5 Earnings per common share — basic $ 0.11 $ 0.15 $ 0.33 $ 0.30 Diluted EPS: Net income attributable to KDP $ 148 $ 116 $ 320 $ 235 Impact of dilutive securities in Maple Parent Corporation — 2 — 3 Total $ 148 $ 114 $ 320 $ 232 Weighted average common shares outstanding 1,361.8 790.5 983.0 790.5 Effect of dilutive securities: Stock options 0.9 — 0.6 — RSUs 10.9 — 10.5 — Weighted average common shares outstanding and common stock equivalents 1,373.6 790.5 994.1 790.5 Earnings per common share — diluted $ 0.11 $ 0.14 $ 0.32 $ 0.29 Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation 0.8 — 0.3 — |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Accumulated other comprehensive income (loss), net of taxes | The following table provides a summary of changes in Accumulated Other Comprehensive Income, net of taxes, all of which is related to foreign currency translation: (in millions) Accumulated Other Comprehensive Income Balance as of July 1, 2018 $ 59 OCI before reclassifications 78 Amounts reclassified from accumulated other comprehensive income — Net current period other comprehensive income 78 Balance as of September 30, 2018 $ 137 Balance as of January 1, 2018 $ 99 OCI before reclassifications 38 Amounts reclassified from accumulated other comprehensive income — Net current period other comprehensive income 38 Balance as of September 30, 2018 $ 137 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories consisted of the following | Inventories consisted of the following: September 30, December 31, (in millions) 2018 2017 Raw materials $ 186 $ 121 Work in process 7 1 Finished goods 527 262 Inventories $ 720 $ 384 |
Other Financial Information (Ta
Other Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of other assets and other liabilities | The table below details the components of other assets, accrued expenses and other current liabilities: September 30, December 31, (in millions) 2018 2017 Prepaid expenses and other current assets: Other receivables $ 100 $ 7 Customer incentive programs 44 — Derivative instruments 28 — Prepaid marketing 44 9 Spare parts 42 10 Other 99 68 Total prepaid expenses and other current assets $ 357 $ 94 Other non-current assets: Customer incentive programs $ 11 $ — Marketable securities - trading (1) 54 — Derivative instruments 140 87 Equity securities without readily determinable fair values 1 6 Non-current restricted cash and restricted cash equivalents 10 — Related party notes receivable (2) 12 6 Other 87 22 Total other non-current assets $ 315 $ 121 Accrued expenses: Customer rebates & incentives $ 345 $ 8 Accrued compensation 215 46 Insurance reserve 45 8 Interest accrual 173 3 Accrued professional fees 182 19 Other accrued expenses 271 117 Total accrued expenses $ 1,231 $ 201 Other current liabilities: Dividends payable $ 208 $ — Derivative instruments 27 6 Other 39 3 Total other current liabilities $ 274 $ 9 Other non-current liabilities: Long-term pension and postretirement liability $ 27 $ 1 Insurance reserves 56 — Derivative instruments 29 — Deferred compensation liability 54 — Other 78 55 Total other non-current liabilities $ 244 $ 56 ____________________________ (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 $54 million as of September 30, 2018 . There were no marketable securities held as of December 31, 2017 . (2) Refer to Note 17 for additional information . |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Cash and Cash Equivalents | 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 September 30, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 94 $ 94 $ 90 $ 90 Restricted cash and restricted cash equivalents 1 18 18 5 5 Non-current restricted cash and restricted cash equivalents included in Other non-current assets 1 10 10 — — Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 122 $ 122 $ 95 $ 95 |
Schedule of Restricted Cash and Cash Equivalents | 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 September 30, 2018 December 31, 2017 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 94 $ 94 $ 90 $ 90 Restricted cash and restricted cash equivalents 1 18 18 5 5 Non-current restricted cash and restricted cash equivalents included in Other non-current assets 1 10 10 — — Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 122 $ 122 $ 95 $ 95 |
Schedule of Cash Flow, Supplemental Disclosures | The following table details supplemental cash flow disclosures of non-cash investing and financing activities: First Nine Months (in millions) 2018 2017 Supplemental cash flow disclosures of non-cash investing and financing activities: Capitalization of related party debt into additional paid-in-capital $ (1,815 ) $ — Fair value of replacement equity awards not converted to cash (3,643 ) — Dividends declared but not yet paid 208 — Capital expenditures included in accounts payable and accrued expenses 80 6 Capital lease additions 24 — |
Restructuring and Integration_2
Restructuring and Integration Costs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and related costs | Restructuring and integration charges incurred during the the third quarter and first nine months of 2018 and 2017 are as follows: Third Quarter First Nine Months (in millions) Segment 2018 2017 2018 2017 Castroville closure Corporate Unallocated $ — $ 4 $ — $ 22 Business realignment Corporate Unallocated — — 2 12 Keurig 2.0 exit Corporate Unallocated — 10 12 10 Integration program Corporate Unallocated 47 — 71 — Other restructuring programs Corporate Unallocated — 1 1 1 Total restructuring and integration charges $ 47 $ 15 $ 86 $ 45 |
Schedule of restructuring reserve by type of cost | Restructuring liabilities as of September 30, 2018 and December 31, 2017 along with charges to expense, cash payments and non-cash charges for the nine-month period were as follows: (in millions) Workforce Reduction Costs Other (1) Total Balance as of December 31, 2017 $ 2 $ 2 $ 4 Charges to expense 27 — 27 Cash payments (13 ) (1 ) (14 ) Non-cash adjustment items — (1 ) (1 ) Balance as of September 30, 2018 $ 16 $ — $ 16 __________________ (1) Primarily reflects activities associated with the closure of certain facilities, excluding contract termination costs, which include any associated asset write-downs and accelerated depreciation. |
Non-controlling Interest (Table
Non-controlling Interest (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Rollforward of the EOP | The following table is a rollforward of the EOP for the first nine months of 2018 and 2017: (in millions) EOP Balance as of January 1, 2018 $ 265 Net income attributable to non-controlling interests 3 Stock based compensation 24 Proceeds from (cash distributions to) redeemable NCI shareholders 18 Adjustment of non-controlling interests to redemption value 16 Dividends paid to NCI shareholders, currency translation adjustment, and other — Impact of the DPS Merger (326 ) Balance as of September 30, 2018 $ — (in millions) EOP Balance as of January 1, 2017 $ 143 Net income attributable to non-controlling interests 3 Stock based compensation 36 Proceeds from (cash distributions to) redeemable NCI shareholders (1 ) Adjustment of non-controlling interests to redemption value 38 Dividends paid to NCI shareholders, currency translation adjustment, and other — Balance as of September 30, 2017 $ 219 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of product warranty liability | Product warranties are included in accrued expenses in the accompanying unaudited Condensed Consolidated Balance Sheets. (in millions) Accrued Product Warranties Balance as of January 1, 2018 $ 13 Accruals for warranties issued 6 Settlements (12 ) Balance as of September 30, 2018 $ 7 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Information about the Company 's operations by reportable segment is as follows: Third Quarter For the First Nine Months (in millions) 2018 2017 2018 2017 Segment Results – Net sales Beverage Concentrates $ 317 $ — $ 317 $ — Packaged Beverages 1,238 — 1,238 — Latin America Beverages 124 — 124 — Coffee Systems 1,053 1,140 2,950 3,056 Net sales $ 2,732 $ 1,140 $ 4,629 $ 3,056 |
Reconciliation of operating profit (loss) from segments to consolidated | Third Quarter For the First Nine Months (in millions) 2018 2017 2018 2017 Segment Results – Income from operations Beverage Concentrates $ 193 $ — $ 193 $ — Packaged Beverages 61 — 61 — Latin America Beverages 15 — 15 — Coffee Systems 334 288 865 779 Total income from operations - segments 603 288 1,134 779 Unallocated corporate costs 259 50 444 146 Income from operations 344 238 690 633 Interest expense 172 28 221 76 Interest expense - related party — 25 51 75 Loss on early extinguishment of debt 11 2 13 54 Other (income) expense, net (33 ) 20 (28 ) 88 Income before provision for income taxes $ 194 $ 163 $ 433 $ 340 |
Reconciliation of assets from segment to consolidated | (in millions) September 30, 2018 December 31, 2017 Identifiable operating assets Beverage Concentrates $ 17,350 $ — Packaged Beverages 9,205 — Latin America Beverages 1,637 — Coffee Systems 15,240 15,294 Segment total 43,432 15,294 Unallocated corporate assets 5,433 353 Total identifiable operating assets 48,865 15,647 Investments in unconsolidated subsidiaries 193 97 Total assets $ 49,058 $ 15,744 |
Revenue from external customers by geographic areas | The following table disaggregates the Company 's revenue by geography for the third quarter and first nine months of 2018 and 2017 : Third Quarter For the First Nine Months (in millions) 2018 2017 2018 2017 Net sales U.S. $ 2,432 $ 1,012 $ 4,098 $ 2,717 International 300 128 531 339 Net sales $ 2,732 $ 1,140 $ 4,629 $ 3,056 |
Guarantor and Non-Guarantor F_2
Guarantor and Non-Guarantor Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed consolidating statements of income | Condensed Consolidating Statements of Income Third Quarter of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,540 $ 1,225 $ (33 ) $ 2,732 Cost of sales — 774 630 (33 ) 1,371 Gross profit — 766 595 — 1,361 Selling, general and administrative expenses 1 590 434 — 1,025 Other operating (income) expense, net (6 ) — (2 ) — (8 ) Income from operations 5 176 163 — 344 Interest expense 220 31 31 (110 ) 172 Interest expense - related party — — — — — Loss on early extinguishment of debt — — 11 — 11 Other (income) expense, net (46 ) (84 ) (13 ) 110 (33 ) Income before provision for income taxes (169 ) 229 134 — 194 Provision for income taxes (46 ) 68 24 — 46 Income before equity in earnings of consolidated subsidiaries (123 ) 161 110 — 148 Equity in earnings of consolidated subsidiaries 271 16 — (287 ) — Net income 148 177 110 (287 ) 148 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — — — — Net income attributable to KDP $ 148 $ 177 $ 110 $ (287 ) $ 148 Condensed Consolidating Statements of Income Third Quarter of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ — $ 1,140 $ — $ 1,140 Cost of sales — — 585 — 585 Gross profit — — 555 — 555 Selling, general and administrative expenses — — 318 — 318 Other operating (income) expense, net — — (1 ) — (1 ) Income from operations — — 238 — 238 Interest expense — — 28 — 28 Interest expense - related party — — 25 — 25 Loss on early extinguishment of debt — — 2 — 2 Other (income) expense, net — — 20 — 20 Income before provision for income taxes — — 163 — 163 Provision for income taxes — — 46 — 46 Net income — — 117 — 117 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — 1 — 1 Net income attributable to KDP $ — $ — $ 116 $ — $ 116 Condensed Consolidating Statements of Income For the First Nine Months of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,540 $ 3,122 $ (33 ) $ 4,629 Cost of sales — 774 1,564 (33 ) 2,305 Gross profit — 766 1,558 — 2,324 Selling, general and administrative expenses 1 590 1,045 — 1,636 Other operating (income) expense, net (6 ) — 4 — (2 ) Income from operations 5 176 509 — 690 Interest expense 220 31 80 (110 ) 221 Interest expense - related party — — 51 — 51 Loss on early extinguishment of debt — — 13 — 13 Other (income) expense, net (46 ) (84 ) (8 ) 110 (28 ) Income before provision for income taxes (169 ) 229 373 — 433 Provision for income taxes (46 ) 68 88 — 110 Income before equity in earnings of consolidated subsidiaries (123 ) 161 285 — 323 Equity in earnings of consolidated subsidiaries 443 16 — (459 ) — Net income 320 177 285 (459 ) 323 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — 3 — 3 Net income attributable to KDP $ 320 $ 177 $ 282 $ (459 ) $ 320 Condensed Consolidating Statements of Income For the First Nine Months of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ — $ 3,056 $ — $ 3,056 Cost of sales — — 1,571 — 1,571 Gross profit — — 1,485 — 1,485 Selling, general and administrative expenses — — 852 — 852 Other operating (income) expense, net — — — — — Income from operations — — 633 — 633 Interest expense — — 76 — 76 Interest expense - related party — — 75 — 75 Loss on early extinguishment of debt — — 54 — 54 Other (income) expense, net — — 88 — 88 Income before provision for income taxes — — 340 — 340 Provision for income taxes — — 102 — 102 Net income — — 238 — 238 Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards — — 3 — 3 Net income attributable to KDP $ — $ — $ 235 $ — $ 235 |
Condensed consolidating statements of comprehensive income | Condensed Consolidating Statements of Comprehensive Income Third Quarter of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 226 $ 239 $ 188 $ (427 ) $ 226 Condensed Consolidating Statements of Comprehensive Income Third Quarter of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ — $ — $ 208 $ — $ 208 Condensed Consolidating Statements of Comprehensive Income For the First Nine Months of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ 358 $ 239 $ 323 $ (559 ) $ 361 Condensed Consolidating Statements of Comprehensive Income For the First Nine Months of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income (loss) $ — $ — $ 334 $ — $ 334 |
Condensed consolidating balance sheets | Condensed Consolidating Balance Sheets As of September 30, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 11 $ 83 $ — $ 94 Restricted cash and restricted cash equivalents 15 — 3 — 18 Trade accounts receivable, net — 641 555 — 1,196 Related party receivable 172 58 146 (376 ) — Inventories — 241 479 — 720 Prepaid expenses and other current assets 576 183 142 (544 ) 357 Total current assets 763 1,134 1,408 (920 ) 2,385 Property, plant and equipment, net — 1,383 962 — 2,345 Investments in consolidated subsidiaries 39,466 4,299 — (43,765 ) — Investments in unconsolidated subsidiaries — 79 114 — 193 Goodwill — 9,042 10,249 — 19,291 Other intangible assets, net — 16,839 7,597 — 24,436 Long-term receivable, related parties 5,820 7,242 — (13,062 ) — Other non-current assets 68 54 193 — 315 Deferred tax assets 7 — 93 (7 ) 93 Total assets $ 46,124 $ 40,072 $ 20,616 $ (57,754 ) $ 49,058 Current liabilities: Accounts payable $ — $ 475 $ 1,754 $ — $ 2,229 Accrued expenses 172 620 439 — 1,231 Structured payables — — 432 — 432 Related party payable 58 174 144 (376 ) — Short-term borrowings and current portion of long-term obligations 1,765 — — — 1,765 Current portion of capital lease and financing obligations — 17 8 — 25 Income taxes payable — 496 59 (544 ) 11 Other current liabilities 246 2 26 — 274 Total current liabilities 2,241 1,784 2,862 (920 ) 5,967 Long-term obligations to third parties 14,275 — — — 14,275 Long-term obligations to related parties 7,242 3,348 2,472 (13,062 ) — Capital lease and financing obligations, less current — 204 101 — 305 Deferred tax liabilities — 5,034 947 (7 ) 5,974 Other non-current liabilities 73 109 62 — 244 Total liabilities 23,831 10,479 6,444 (13,989 ) 26,765 Total stockholders' equity 22,293 29,593 14,172 (43,765 ) 22,293 Total liabilities and stockholders' equity $ 46,124 $ 40,072 $ 20,616 $ (57,754 ) $ 49,058 Condensed Consolidating Balance Sheets As of December 31, 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ — $ 90 $ — $ 90 Restricted cash and restricted cash equivalents — — 5 — 5 Trade accounts receivable, net — — 483 — 483 Related party receivable — — — — — Inventories — — 384 — 384 Prepaid expenses and other current assets — — 94 — 94 Total current assets — — 1,056 — 1,056 Property, plant and equipment, net — — 790 — 790 Investments in consolidated subsidiaries — — — — — Investments in unconsolidated subsidiaries — — 97 — 97 Goodwill — — 9,819 — 9,819 Other intangible assets, net — — 3,834 — 3,834 Long-term receivable, related parties — — — — — Other non-current assets — — 121 — 121 Deferred tax assets — — 27 — 27 Total assets $ — $ — $ 15,744 $ — $ 15,744 Current liabilities: Accounts payable $ — $ — $ 1,580 $ — $ 1,580 Accrued expenses — — 201 — 201 Structured payables — — — — — Related party payable — — — — — Short-term borrowings and current portion of long-term obligations — — 219 — 219 Current portion of capital lease and financing obligations — — 6 — 6 Income taxes payable — — 3 — 3 Other current liabilities — — 9 — 9 Total current liabilities — — 2,018 — 2,018 Long-term obligations to third parties — — 3,064 — 3,064 Long-term obligations to related parties — — 1,815 — 1,815 Capital lease and financing obligations, less current — — 97 — 97 Deferred tax liabilities — — 1,031 — 1,031 Other non-current liabilities — — 56 — 56 Total liabilities — — 8,081 — 8,081 Employee redeemable non-controlling interest and mezzanine equity awards — — 265 — 265 Total stockholders' equity — — 7,398 — 7,398 Total liabilities and stockholders' equity $ — $ — $ 15,744 $ — $ 15,744 |
Condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows For the First Nine Months of 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (29,645 ) $ 25,450 $ 5,160 $ 98 $ 1,063 Investing activities: Acquisitions of business 10,642 (25,208 ) (21,674 ) 17,116 (19,124 ) Cash acquired in acquisitions — 116 34 — 150 Issuance of related party note receivable (2,606 ) (461 ) (6 ) 3,067 (6 ) Investments in unconsolidated subsidiaries — (1 ) (22 ) — (23 ) Proceeds from capital distributions from investments in unconsolidated subsidiaries — 36 — — 36 Purchases of property, plant and equipment — (37 ) (67 ) — (104 ) Proceeds from capital distributions from investments in consolidated subsidiaries — — (35 ) 35 — Other, net 1 — — — 1 Net cash provided by (used in) investing activities $ 8,037 $ (25,555 ) $ (21,770 ) $ 20,218 $ (19,070 ) Financing activities: Proceeds from related party long-term debt 461 — 2,606 (3,067 ) — Proceeds from issuance of common stock private placement — — 9,000 — 9,000 Contribution from subsidiary 9,162 — — (9,162 ) — Proceeds from unsecured credit facility 1,900 — — — 1,900 Proceeds from senior unsecured notes 8,000 — 8,000 (8,000 ) 8,000 Proceeds from term loan 2,700 — — — 2,700 Net Issuance of Commercial Paper 1,386 — — — 1,386 Proceeds from structured payables — 133 432 (133 ) 432 Repayment of unsecured credit facility (1,900 ) — — — (1,900 ) Repayment of term loan (34 ) — (3,329 ) — (3,363 ) Payments on capital leases — (6 ) (14 ) — (20 ) Deferred financing charges paid (55 ) — (40 ) 46 (49 ) Proceeds from stock options exercised 3 — — — 3 Cash contributions from redeemable NCI shareholders — — 19 — 19 Cash dividends paid — — (23 ) — (23 ) Other, net — (1 ) — — (1 ) Net cash provided by (used in) financing activities $ 21,623 $ 126 $ 16,651 $ (20,316 ) $ 18,084 Cash and cash equivalents — net change from: Operating, investing and financing activities 15 21 41 — 77 Effect of exchange rate changes on cash and cash equivalents — — (50 ) — (50 ) Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — — 95 — 95 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 15 $ 21 $ 86 $ — $ 122 Condensed Consolidating Statements of Cash Flows For the First Nine Months of 2017 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash provided by operating activities $ — $ — $ 1,321 $ — $ 1,321 Investing activities: Issuance of related party notes receivable — — (6 ) — (6 ) Investments in unconsolidated subsidiaries — — 250 — 250 Purchase of property, plant and equipment — — (45 ) — (45 ) Other, net — — 2 — 2 Net cash provided by investing activities $ — $ — $ 201 $ — $ 201 Financing activities: Proceeds from term loan — — 1,200 — 1,200 Net repayment on line of credit — — (200 ) — (200 ) Repayment of term loan — — (2,144 ) — (2,144 ) Payments on capital leases — — (14 ) — (14 ) Deferred financing fees paid — — (5 ) — (5 ) Cash distributions to redeemable NCI shareholders — — (1 ) — (1 ) Cash dividends paid — — (46 ) — (46 ) Cross currency swap — — (78 ) — (78 ) Net cash used in financing activities $ — $ — $ (1,288 ) $ — $ (1,288 ) Cash and cash equivalents — net change from: Operating, investing and financing activities — — 234 — 234 Effect of exchange rate changes on cash and cash equivalents — — 18 — 18 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period — — 97 — 97 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ — $ — $ 349 $ — $ 349 |
Background and Basis of Prese_4
Background and Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 29, 2018 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Jan. 28, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Dividend declared (in usd per share) | $ 103.75 | ||||
Adoption of new accounting standards | $ (4) | ||||
Retained Earnings | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Adoption of new accounting standards | (4) | ||||
Restatement adjustment | Other current assets | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | 45 | ||||
Restatement adjustment | Other current liabilities | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | $ 3 | ||||
Restatement adjustment | Transportation and warehouse cost | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | $ 58 | $ 174 | |||
Restatement adjustment | Restructuring cost | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | 15 | 45 | |||
Restatement adjustment | Foreign currency gains and losses | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | 10 | 21 | |||
Restatement adjustment | Cost of sales | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | (7) | 3 | |||
Restatement adjustment | Interest expense | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | (9) | 16 | |||
Restatement adjustment | Other (income) expense, net | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification adjustment | $ 7 | $ 0 | |||
Maple Parent | KDP | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Step acquisition equity interest in acquiree percentage | 87.00% | ||||
DPS | KDP | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Step acquisition equity interest in acquiree percentage | 13.00% |
Acquisitions and Investments _3
Acquisitions and Investments in Unconsolidated Subsidiaries - Dr Pepper Snapple Group, Inc (Details) - USD ($) | Jul. 09, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | May 25, 2018 | Feb. 28, 2018 | Dec. 31, 2017 |
Business Combination, Consideration Transferred [Abstract] | ||||||||
$103.75 per share special cash dividend | $ 19,124,000,000 | $ 0 | ||||||
Proceeds from issuance of common stock private placement | 9,000,000,000 | 0 | ||||||
Proceeds from structured payables | $ 124,000,000 | 432,000,000 | 0 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||||||
Goodwill | $ 19,291,000,000 | 19,291,000,000 | $ 9,819,000,000 | |||||
DPS | ||||||||
Business Combination, Consideration Transferred [Abstract] | ||||||||
Aggregate fair value of DPS common stock | 3,611,000,000 | |||||||
$103.75 per share special cash dividend | 18,818,000,000 | |||||||
Fair value of replacement equity awards | 53,000,000 | |||||||
Total consideration exchanged | $ 22,482,000,000 | |||||||
Cash dividend paid per share (in dollars per share) | $ 103.75 | |||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||||||
Cash and cash equivalents | $ 147,000,000 | |||||||
Investments in unconsolidated subsidiaries | 90,000,000 | |||||||
Property, plant and equipment | 1,549,000,000 | |||||||
Other intangible assets | 20,404,000,000 | |||||||
Long-term obligations | (4,049,000,000) | |||||||
Capital lease and financing obligations | (214,000,000) | |||||||
Assumed liabilities, net of acquired assets | 107,000,000 | |||||||
Deferred tax liabilities | (4,959,000,000) | |||||||
Goodwill | 9,407,000,000 | |||||||
Total consideration exchanged | 22,482,000,000 | |||||||
Fair value of replacement equity awards not converted to cash | 3,643,000,000 | |||||||
Acquisition of business | 18,839,000,000 | |||||||
Inventory step up | 131,000,000 | |||||||
Equity awards adjustment | 21,000,000 | |||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Other intangible assets | $ 20,404,000,000 | |||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||||
Net sales | 2,856,000,000 | $ 2,776,000,000 | 8,207,000,000 | 7,975,000,000 | ||||
Net income | 287,000,000 | $ 253,000,000 | 838,000,000 | $ 364,000,000 | ||||
Pro forma, revenue of acquiree since acquisition date | 1,679,000,000 | 1,679,000,000 | ||||||
Pro forma, earnings of acquiree since acquisition date | $ 51,000,000 | $ 51,000,000 | ||||||
Minimum | Real Property | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||||||
Property plant and equipment useful life | 1 year | |||||||
Minimum | Personal Property | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||||||
Property plant and equipment useful life | 1 year | |||||||
Maximum | Real Property | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||||||
Property plant and equipment useful life | 41 years | |||||||
Maximum | Personal Property | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||||||
Property plant and equipment useful life | 24 years | |||||||
Private Placement | ||||||||
Business Combination, Consideration Transferred [Abstract] | ||||||||
Proceeds from issuance of common stock private placement | $ 9,000,000,000 | |||||||
Brands | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Indefinite-lived Intangible assets acquired | 19,893,000,000 | |||||||
Contractual arrangements | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Indefinite-lived Intangible assets acquired | 120,000,000 | |||||||
Customer relationships | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Finite lived intangible assets acquired | 386,000,000 | |||||||
Customer relationships | Minimum | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 40 years | |||||||
Customer relationships | Maximum | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 10 years | |||||||
Favorable leases, net | DPS | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Finite lived intangible assets acquired | 5,000,000 | |||||||
Favorable leases, net | Minimum | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | |||||||
Favorable leases, net | Maximum | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | ||||||||
Acquired finite-lived intangible assets, weighted average useful life | 5 years | |||||||
DPS Merger Notes | Senior Notes | ||||||||
Business Combination, Consideration Transferred [Abstract] | ||||||||
Face amount | $ 8,000,000,000 | |||||||
Term Loan | KDP Credit Agreement | Line of Credit | ||||||||
Business Combination, Consideration Transferred [Abstract] | ||||||||
Face amount | $ 2,700,000,000 | |||||||
Revolving Credit Facility | KDP Credit Agreement | Line of Credit | ||||||||
Business Combination, Consideration Transferred [Abstract] | ||||||||
Proceeds from lines of credit | $ 1,900,000,000 |
Acquisitions and Investments _4
Acquisitions and Investments in Unconsolidated Subsidiaries - Big Red (Details) - USD ($) $ in Millions | Aug. 31, 2018 | Jul. 09, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Goodwill | $ 19,291 | $ 9,819 | |||
Acquisition of business | 19,124 | $ 0 | |||
Big Red | |||||
Business Acquisition [Line Items] | |||||
Cash purchase price | $ 300 | ||||
Total consideration exchanged | 282 | ||||
Amount held in escrow | $ 15 | ||||
Step acquisition equity interest in acquiree percentage | 14.36% | ||||
Step acquisition equity interest in aquiree | $ 22 | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||||
Cash and cash equivalents | 3 | ||||
Other intangible assets | 240 | ||||
Acquired assets, net of assumed liabilities | (28) | ||||
Goodwill | 89 | ||||
Total consideration exchanged | 304 | ||||
Company's previous ownership interest | 22 | ||||
Amount held in escrow | 15 | ||||
Acquisition of business | $ 267 | ||||
Inventory step up | $ 2 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Other intangible assets | $ 240 | ||||
Brands | Big Red | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Finite lived intangible assets acquired | $ 9 | ||||
Acquired finite-lived intangible assets, weighted average useful life | 5 years | ||||
Contractual arrangements | Big Red | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Finite lived intangible assets acquired | $ 7 | ||||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | ||||
Customer relationships | Big Red | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Finite lived intangible assets acquired | $ 4 | ||||
Brands | Big Red | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Indefinite-lived Intangible assets acquired | $ 220 | ||||
Minimum | Customer relationships | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 40 years | ||||
Minimum | Customer relationships | Big Red | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 8 years | ||||
Maximum | Customer relationships | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 10 years | ||||
Maximum | Customer relationships | Big Red | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||
Acquired finite-lived intangible assets, weighted average useful life | 40 years |
Acquisitions and Investments _5
Acquisitions and Investments in Unconsolidated Subsidiaries - Transaction Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | $ 96 | $ 0 | $ 170 | $ 0 |
DPS | ||||
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | 93 | 0 | 167 | 0 |
Big Red | ||||
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | 2 | 0 | 2 | 0 |
Core Merger | ||||
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | $ 1 | $ 0 | $ 1 | $ 0 |
Acquisitions and Investments _6
Acquisitions and Investments in Unconsolidated Subsidiaries - Core Nutrition, LLC (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 27, 2018 |
Core Merger | ||
Business Acquisition [Line Items] | ||
Enterprise value of acquiree | $ 525 | |
Core | ||
Business Acquisition [Line Items] | ||
Ownership percentage | 5.10% |
Acquisitions and Investments _7
Acquisitions and Investments in Unconsolidated Subsidiaries - Investments In Unconsolidated Subsidiaries (Details) - USD ($) $ in Millions | Aug. 19, 2018 | Mar. 03, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Schedule of Equity Method Investments [Line Items] | |||||
Investments in unconsolidated subsidiaries | $ 193 | $ 97 | |||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | $ 36 | $ 0 | |||
BA Sports Nutrition LLC | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 15.50% | ||||
Investments in unconsolidated subsidiaries | $ 61 | 0 | |||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | $ 35 | ||||
Return of capital reduction in investment | 11 | ||||
Equity method investment gain (loss) | $ 24 | ||||
Bedford | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 30.00% | ||||
Investments in unconsolidated subsidiaries | $ 84 | 95 | |||
Noncash payment to acquire equity method investment | $ 357 | ||||
Partners investment | $ 250 | ||||
Partners ownership percentage | 70.00% | ||||
Core | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 5.10% | ||||
Investments in unconsolidated subsidiaries | $ 16 | 0 | |||
Force Holding LLC | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 33.30% | ||||
Investments in unconsolidated subsidiaries | $ 6 | 0 | |||
Lifefuels Inc. | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 26.70% | ||||
Investments in unconsolidated subsidiaries | $ 20 | 0 | |||
Other Equity Method Investments | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investments in unconsolidated subsidiaries | $ 6 | $ 2 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 2,732 | $ 1,140 | $ 4,629 | $ 3,056 |
CSD | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 904 | 0 | 904 | 0 |
NCB | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 686 | 0 | 686 | 0 |
Pods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 831 | 922 | 2,387 | 2,496 |
Appliances | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 171 | 165 | 403 | 407 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 140 | 53 | 249 | 153 |
Beverage Concentrates | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 317 | 0 | 317 | 0 |
Beverage Concentrates | CSD | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 311 | 0 | 311 | 0 |
Beverage Concentrates | NCB | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2 | 0 | 2 | 0 |
Beverage Concentrates | Pods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Beverage Concentrates | Appliances | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Beverage Concentrates | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 4 | 0 | 4 | 0 |
Packaged Beverages | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,238 | 0 | 1,238 | 0 |
Packaged Beverages | CSD | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 505 | 0 | 505 | 0 |
Packaged Beverages | NCB | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 649 | 0 | 649 | 0 |
Packaged Beverages | Pods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Packaged Beverages | Appliances | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Packaged Beverages | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 84 | 0 | 84 | 0 |
Latin America Beverages | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 124 | 0 | 124 | 0 |
Latin America Beverages | CSD | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 88 | 0 | 88 | 0 |
Latin America Beverages | NCB | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 35 | 0 | 35 | 0 |
Latin America Beverages | Pods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Latin America Beverages | Appliances | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Latin America Beverages | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1 | 0 | 1 | 0 |
Coffee Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,053 | 1,140 | 2,950 | 3,056 |
Coffee Systems | CSD | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Coffee Systems | NCB | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Coffee Systems | Pods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 831 | 922 | 2,387 | 2,496 |
Coffee Systems | Appliances | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 171 | 165 | 403 | 407 |
Coffee Systems | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 51 | $ 53 | $ 160 | $ 153 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Change in goodwill by operating segments [Abstract] | |
Balance as of December 31, 2017 | $ 9,819 |
Foreign currency impact | (24) |
Acquisitions | 9,496 |
Balance as of September 30, 2018 | 19,291 |
Operating Segments | Beverage Concentrates | |
Change in goodwill by operating segments [Abstract] | |
Balance as of December 31, 2017 | 0 |
Foreign currency impact | 1 |
Acquisitions | 970 |
Balance as of September 30, 2018 | 971 |
Operating Segments | Packaged Beverages | |
Change in goodwill by operating segments [Abstract] | |
Balance as of December 31, 2017 | 0 |
Foreign currency impact | 0 |
Acquisitions | 3,452 |
Balance as of September 30, 2018 | 3,452 |
Operating Segments | Latin America Beverages | |
Change in goodwill by operating segments [Abstract] | |
Balance as of December 31, 2017 | 0 |
Foreign currency impact | 7 |
Acquisitions | 350 |
Balance as of September 30, 2018 | 357 |
Operating Segments | Coffee Systems | |
Change in goodwill by operating segments [Abstract] | |
Balance as of December 31, 2017 | 9,819 |
Foreign currency impact | (32) |
Acquisitions | 0 |
Balance as of September 30, 2018 | 9,787 |
Segment Reconciling Items | |
Change in goodwill by operating segments [Abstract] | |
Balance as of December 31, 2017 | 0 |
Foreign currency impact | 0 |
Acquisitions | 4,724 |
Balance as of September 30, 2018 | $ 4,724 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | Jul. 09, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | $ 22,762 | $ 22,762 | $ 2,479 | |||
Finite-lived intangible assets, gross | 1,935 | 1,935 | 1,531 | |||
Accumulated Amortization | (261) | (261) | (176) | |||
Finite-lived intangible assets, net | 1,674 | 1,674 | 1,355 | |||
Amortization expense for intangible assets with definite lives | 31 | $ 24 | 90 | $ 72 | ||
Amortization expense of intangible assets [Abstract] | ||||||
Remainder of 2018 | 32 | 32 | ||||
2,019 | 130 | 130 | ||||
2,020 | 130 | 130 | ||||
2,021 | 130 | 130 | ||||
2,022 | 126 | 126 | ||||
Acquired technology | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 1,146 | 1,146 | 1,146 | |||
Accumulated Amortization | (164) | (164) | (109) | |||
Finite-lived intangible assets, net | 982 | 982 | 1,037 | |||
Customer relationships | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 632 | 632 | 247 | |||
Accumulated Amortization | (59) | (59) | (41) | |||
Finite-lived intangible assets, net | 573 | 573 | 206 | |||
Trade Names | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 128 | 128 | 129 | |||
Accumulated Amortization | (36) | (36) | (24) | |||
Finite-lived intangible assets, net | 92 | 92 | 105 | |||
Favorable leases | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 13 | 13 | 8 | |||
Accumulated Amortization | (2) | (2) | (2) | |||
Finite-lived intangible assets, net | 11 | 11 | 6 | |||
Brands | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 9 | 9 | 0 | |||
Accumulated Amortization | 0 | 0 | 0 | |||
Finite-lived intangible assets, net | 9 | 9 | 0 | |||
Contractual arrangements | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 7 | 7 | 0 | |||
Accumulated Amortization | 0 | 0 | 0 | |||
Finite-lived intangible assets, net | 7 | 7 | 0 | |||
Other | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 0 | 0 | 1 | |||
Accumulated Amortization | 0 | 0 | 0 | |||
Finite-lived intangible assets, net | 0 | 0 | 1 | |||
Brands | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | 20,163 | 20,163 | 0 | |||
Contractual arrangements | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | 120 | 120 | 0 | |||
Trade Names | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | $ 2,479 | $ 2,479 | $ 2,479 | |||
DPS | Customer relationships | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite lived intangible assets acquired | $ 386 | |||||
DPS | Favorable leases | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite lived intangible assets acquired | 5 | |||||
DPS | Brands | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived Intangible assets acquired | 19,893 | |||||
DPS | Contractual arrangements | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived Intangible assets acquired | 120 | |||||
Big Red | Customer relationships | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite lived intangible assets acquired | 4 | |||||
Big Red | Brands | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite lived intangible assets acquired | 9 | |||||
Big Red | Contractual arrangements | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite lived intangible assets acquired | 7 | |||||
Big Red | Brands | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived Intangible assets acquired | $ 220 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 23.70% | 28.20% | 25.40% | 30.00% |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision for Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Dollar | ||||
Statutory federal income tax | $ 48 | $ 57 | $ 106 | $ 119 |
State income taxes, net | 15 | 4 | 26 | 10 |
Deferred tax revaluation | (41) | (6) | (41) | (6) |
U.S. federal domestic manufacturing benefit | (5) | (8) | (12) | (13) |
Impact of non-U.S. operations | 4 | 11 | 8 | 4 |
Tax reform | 3 | 0 | (4) | 0 |
U.S. taxation of foreign earnings | 5 | 5 | ||
U.S. taxation of foreign earnings | (29) | (28) | ||
Valuation allowance | 15 | 20 | 15 | 20 |
Transaction costs | 3 | 0 | 13 | 0 |
Other | (1) | (3) | (6) | (4) |
Total income tax provision | $ 46 | $ 46 | $ 110 | $ 102 |
Percent | ||||
Statutory federal income tax | 24.50% | 35.00% | 24.50% | 35.00% |
State income taxes, net | 7.70% | 2.50% | 6.00% | 2.90% |
Deferred tax revaluation | (21.10%) | (3.70%) | (9.50%) | (1.80%) |
U.S. federal domestic manufacturing benefit | (2.60%) | (4.90%) | (2.80%) | (3.80%) |
Impact of non-U.S. operations | 2.10% | 6.70% | 1.80% | 1.20% |
Tax reform | 1.50% | 0.00% | (0.90%) | 0.00% |
U.S. taxation of foreign earnings | 2.60% | 1.20% | ||
U.S. taxation of foreign earnings | (17.80%) | (8.20%) | ||
Valuation allowance | 7.70% | 12.30% | 3.50% | 5.90% |
Transaction costs | 1.50% | 0.00% | 3.00% | 0.00% |
Other | (0.20%) | (1.90%) | (1.40%) | (1.20%) |
Total income tax provision | 23.70% | 28.20% | 25.40% | 30.00% |
Percent of tax credits valued in prior year | 50.00% | |||
Change in deferred tax assets valuation allowance for prior year excess tax credits | $ 17 |
Long-term Obligations and Bor_3
Long-term Obligations and Borrowing Arrangements - Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 14,654 | $ 5,098 |
Long-term Debt, Current Maturities | (379) | (219) |
Long-term obligations | 14,275 | 4,879 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 12,011 | 0 |
Long-term Debt, Current Maturities | (250) | 0 |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | 2,643 | 3,283 |
Long-term Debt, Current Maturities | (129) | (219) |
Related Party Medium Term Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 1,815 |
Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 0 |
Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 2,643 | $ 3,283 |
Long-term Obligations and Bor_4
Long-term Obligations and Borrowing Arrangements - Current Debt (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||
Current portion of long-term debt | $ 379,000,000 | $ 219,000,000 |
Short-term borrowings and current portion of long-term obligations | 1,765,000,000 | 219,000,000 |
Commercial Paper | ||
Short-term Debt [Line Items] | ||
Short-term debt | 1,386,000,000 | 0 |
Nonrecurring | ||
Short-term Debt [Line Items] | ||
Short-term borrowings and current portion of long-term obligations, fair value | 1,765,000,000 | 219,000,000 |
Level 1 | Nonrecurring | Commercial Paper | ||
Short-term Debt [Line Items] | ||
Short-term debt fair value | 1,386,000,000 | 0 |
Senior Notes | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt | 250,000,000 | 0 |
Senior Notes | Level 2 | Nonrecurring | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt, fair value | 250,000,000 | 0 |
Line of Credit | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt | 129,000,000 | 219,000,000 |
Line of Credit | Level 2 | Nonrecurring | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt, fair value | $ 129,000,000 | $ 219,000,000 |
Long-term Obligations and Bor_5
Long-term Obligations and Borrowing Arrangements - Senior Unsecured Notes (Details) | Sep. 30, 2018USD ($) | May 25, 2018USD ($)instrument | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | |||
Long-term debt | $ 14,654,000,000 | $ 5,098,000,000 | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | 12,225,000,000 | 0 | |
Unamortized discounts and debt issuance costs | (214,000,000) | 0 | |
Long-term debt | $ 12,011,000,000 | 0 | |
Senior Notes | Senior Notes 2019 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.60% | ||
Long term debt, carrying value | $ 250,000,000 | 0 | |
Senior Notes | Senior Notes - 2020 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.00% | ||
Long term debt, carrying value | $ 250,000,000 | 0 | |
Senior Notes | 2021 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.20% | ||
Long term debt, carrying value | $ 250,000,000 | 0 | |
Senior Notes | 2021-B Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.53% | ||
Long term debt, carrying value | $ 250,000,000 | 0 | |
Senior Notes | Senior Notes 2022 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.70% | ||
Long term debt, carrying value | $ 250,000,000 | 0 | |
Senior Notes | 2023 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.13% | ||
Long term debt, carrying value | $ 500,000,000 | 0 | |
Senior Notes | Senior Notes 2025 | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.40% | ||
Long term debt, carrying value | $ 500,000,000 | 0 | |
Senior Notes | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.55% | ||
Long term debt, carrying value | $ 400,000,000 | 0 | |
Senior Notes | 2027 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.43% | ||
Long term debt, carrying value | $ 500,000,000 | 0 | |
Senior Notes | Senior Notes - 2038 | |||
Debt Instrument [Line Items] | |||
Interest rate | 7.45% | ||
Long term debt, carrying value | $ 125,000,000 | 0 | |
Senior Notes | Senior Notes 2045 | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.50% | ||
Long term debt, carrying value | $ 550,000,000 | 0 | |
Senior Notes | 2046 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.42% | ||
Long term debt, carrying value | $ 400,000,000 | 0 | |
Senior Notes | DPS Merger Notes | |||
Debt Instrument [Line Items] | |||
Debt issuance costs | $ 46,000,000 | ||
Face amount | $ 8,000,000,000 | ||
Number of instruments | instrument | 6 | ||
Senior Notes | 2021 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.551% | ||
Long term debt, carrying value | $ 1,750,000,000 | 0 | |
Senior Notes | 2023 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.057% | ||
Long term debt, carrying value | $ 2,000,000,000 | 0 | |
Senior Notes | 2025 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.417% | ||
Long term debt, carrying value | $ 1,000,000,000 | 0 | |
Senior Notes | 2028 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.597% | ||
Long term debt, carrying value | $ 2,000,000,000 | 0 | |
Senior Notes | 2038 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.985% | ||
Long term debt, carrying value | $ 500,000,000 | 0 | |
Senior Notes | 2048 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 5.085% | ||
Long term debt, carrying value | $ 750,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 12,030,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | Senior Notes 2019 | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 250,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | Senior Notes - 2020 | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 245,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2021 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 245,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2021-B Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 240,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | Senior Notes 2022 | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 236,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2023 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 477,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | Senior Notes 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 470,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 350,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2027 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 462,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | Senior Notes - 2038 | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 157,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | Senior Notes 2045 | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 511,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2046 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 366,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2021 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 1,744,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2023 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 1,992,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2025 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 1,003,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2028 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 2,013,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2038 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 506,000,000 | 0 | |
Level 2 | Nonrecurring | Senior Notes | 2048 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | $ 763,000,000 | $ 0 |
Long-term Obligations and Bor_6
Long-term Obligations and Borrowing Arrangements - Borrowing Arrangements (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 14,654 | $ 5,098 |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying value | 2,666 | 3,329 |
Unamortized discounts and debt issuance costs | (23) | (46) |
Long-term debt | 2,643 | 3,283 |
Long-term debt, fair value | 2,666 | 3,329 |
Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | 2,643 | 3,283 |
Term Loan | Line of Credit | KDP Credit Agreement | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying value | 2,666 | 0 |
Long-term debt, fair value | 2,666 | 0 |
Term Loan | Line of Credit | Term Loan A | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying value | 0 | 3,329 |
Long-term debt, fair value | 0 | 3,329 |
Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 0 |
Revolving Credit Facility | Line of Credit | KDP Credit Agreement | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying value | 0 | 0 |
Long-term debt, fair value | $ 0 | $ 0 |
Long-term Obligations and Bor_7
Long-term Obligations and Borrowing Arrangements - Commercial Paper Program (Details) - Commercial Paper - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | |
Short-term Debt [Line Items] | ||||
Maximum borrowing capacity | $ 2,400,000,000 | |||
Average outstanding amount | $ 1,395,000,000 | $ 0 | $ 0 | |
Weighted average interest rate over time | 2.37% | |||
Short-term debt | $ 1,386,000,000 | $ 0 |
Long-term Obligations and Bor_8
Long-term Obligations and Borrowing Arrangements - KDP Revolving Credit Facilities and Term Loan (Details) - Line of Credit - KDP Credit Agreement - USD ($) | Jul. 09, 2018 | Sep. 30, 2018 | Feb. 28, 2018 |
Term Loan | |||
Line of Credit Facility [Line Items] | |||
Face amount | $ 2,700,000,000 | ||
Redemption percentage | 1.25% | ||
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 2,400,000,000 | ||
Line of credit outstanding | $ 0 | ||
Remaining borrowing capacity | 2,395,000,000 | ||
Proceeds from lines of credit | $ 1,900,000,000 | ||
Repayment through additional debt | 1,660,000,000 | ||
Repayment through cash on hand | $ 240,000,000 | ||
Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding | 5,000,000 | ||
Remaining borrowing capacity | $ 195,000,000 | ||
Minimum | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Unused capacity commitment fee percentage | 0.07% | ||
Minimum | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.875% | ||
Minimum | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.00% | ||
Maximum | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Unused capacity commitment fee percentage | 0.20% | ||
Maximum | LIBOR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.50% | ||
Maximum | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.50% |
Long-term Obligations and Bor_9
Long-term Obligations and Borrowing Arrangements - Letter of Credit Facilities (Details) - Letter Of Credit Facilities - Line of Credit - Letter of Credit $ in Millions | Sep. 30, 2018USD ($) |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 220 |
Letters of credit outstanding | 60 |
Remaining borrowing capacity | $ 160 |
Long-term Obligations and Bo_10
Long-term Obligations and Borrowing Arrangements - Previous Revolving Credit Facilities and Term Loan A (Details) - USD ($) $ in Millions | Jul. 09, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Jul. 08, 2018 | Sep. 30, 2018 | Sep. 30, 2017 |
Line of Credit Facility [Line Items] | ||||||
Loss on early extinguishment of debt | $ 11 | $ 2 | $ 13 | $ 54 | ||
Line of Credit | Term Loan A | Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Loss on early extinguishment of debt | $ 11 | $ 2 | $ 2 | $ 54 |
Long-term Obligations and Bo_11
Long-term Obligations and Borrowing Arrangements - Long-Term Debt, Related Party (Details) - Related Party Medium Term Notes - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Carrying Value | $ 0 | $ 1,815 |
Fair Value | $ 0 | 1,815 |
Term Loan Maple B.V. | ||
Debt Instrument [Line Items] | ||
Rate | 5.50% | |
Carrying Value | $ 0 | 1,375 |
Fair Value | $ 0 | 1,375 |
Term Loan Mondelez | ||
Debt Instrument [Line Items] | ||
Rate | 5.50% | |
Carrying Value | $ 0 | 440 |
Fair Value | $ 0 | $ 440 |
Long-term Obligations and Bo_12
Long-term Obligations and Borrowing Arrangements - Bridge Financing for DPS Merger (Details) - Line of Credit - Bridge Loan | Jan. 29, 2018USD ($) |
Line of Credit Facility [Line Items] | |
Debt term | 364 days |
Maximum borrowing capacity | $ 13,100,000,000 |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - Not Designated as Hedging Instrument - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Receive-Fixed, Pay-Variable Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | $ 1,070 | $ 0 |
Receive-Variable Pay-Fixed Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | 2,700 | 2,850 |
Foreign Exchange Forward | ||
Derivative [Line Items] | ||
Notional amount | $ 378 | 285 |
Foreign Exchange Forward | Minimum | ||
Derivative [Line Items] | ||
Derivative maturity range | 1 month | |
Foreign Exchange Forward | Maximum | ||
Derivative [Line Items] | ||
Derivative maturity range | 6 years | |
Commodity Contract | ||
Derivative [Line Items] | ||
Notional amount | $ 368 | $ 273 |
Derivatives - Fair Value (Detai
Derivatives - Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Commodity Contract | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, gross | $ 17 | $ 5 |
Derivative liability, amount offset | 2 | 4 |
Recurring | Level 2 | Interest Rate Contract | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 7 | 0 |
Recurring | Level 2 | Interest Rate Contract | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 2 | 0 |
Recurring | Level 2 | Interest Rate Contract | Not Designated as Hedging Instrument | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 123 | 87 |
Recurring | Level 2 | Interest Rate Contract | Not Designated as Hedging Instrument | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 19 | 0 |
Recurring | Level 2 | Foreign Exchange Forward | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0 | 5 |
Recurring | Level 2 | Foreign Exchange Forward | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 1 | 0 |
Recurring | Level 2 | Foreign Exchange Forward | Not Designated as Hedging Instrument | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 2 | 0 |
Recurring | Level 2 | Foreign Exchange Forward | Not Designated as Hedging Instrument | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0 | 0 |
Recurring | Level 2 | Commodity Contract | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 20 | 1 |
Recurring | Level 2 | Commodity Contract | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 25 | 0 |
Recurring | Level 2 | Commodity Contract | Not Designated as Hedging Instrument | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 15 | 0 |
Recurring | Level 2 | Commodity Contract | Not Designated as Hedging Instrument | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 10 | $ 0 |
Derivatives - Impact on Net Inc
Derivatives - Impact on Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | $ 33 | $ (9) | $ (7) | $ 19 |
Commodity Contract | Cost of sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | 31 | (7) | 35 | 3 |
Commodity Contract | SG&A expenses | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | (6) | (6) | ||
Interest Rate Contract | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | 3 | (9) | (27) | 16 |
Foreign Exchange Forward | Other (income) expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | $ 5 | $ 7 | $ (9) | $ 0 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Jul. 08, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||||||
Total stock-based compensation expense | $ 8 | $ 14 | $ 26 | $ 36 | |||
Income tax benefit recognized in the Statements of Income | (2) | (4) | (5) | (12) | |||
Stock-based compensation expense, net of tax | $ 6 | $ 10 | $ 21 | $ 24 | |||
Stock Options | |||||||
Balance as of beginning of the period (in shares) | 0 | 0 | |||||
Granted (in shares) | 1,319,014 | ||||||
Exercised (in shares) | (235,339) | ||||||
Balance as of end of the period (in shares) | 1,083,675 | 1,083,675 | 1,083,675 | 0 | |||
Exercisable (in shares) | 1,083,675 | 1,083,675 | 1,083,675 | ||||
Weighted Average Grant Date Fair Value | |||||||
Balance as of the beginning of the period (in dollars per share) | $ 0 | $ 0 | |||||
Granted (in dollars per share) | 11.92 | ||||||
Exercised (in dollars per share) | 11.70 | ||||||
Balance as of the end of the period (in dollars per share) | $ 11.97 | $ 11.97 | 11.97 | $ 0 | |||
Exercisable (in dollars per share) | $ 11.97 | $ 11.97 | $ 11.97 | ||||
Weighted Average Remaining Contractual Term (Years) | |||||||
Outstanding as of September 30, 2018 | 6 years 9 months 18 days | ||||||
Exercisable as of September 30, 2018 | 6 years 9 months 18 days | ||||||
Aggregate Intrinsic Value (in millions) | |||||||
Exercised | $ 3 | ||||||
Outstanding as of September 30, 2018 | $ 12 | $ 12 | 12 | ||||
Exercisable as of September 30, 2018 | $ 12 | $ 12 | $ 12 | ||||
RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 5 years | 4 years 6 months | |||||
RSUs | |||||||
Outstanding as of beginning of the period (in shares) | 15,462,778 | 15,462,778 | |||||
Granted (in shares) | 6,663,547 | ||||||
Vested and released (in shares) | (965,315) | ||||||
Forfeited (in shares) | (1,052,952) | ||||||
Outstanding as of end of the period (in shares) | 20,108,058 | 20,108,058 | 20,108,058 | 15,462,778 | |||
Weighted Average Grant Date Fair Value | |||||||
Outstanding as of the beginning of the period (in dollars per share) | $ 11.51 | $ 11.51 | |||||
Granted (in dollars per share) | 23.71 | ||||||
Vested and released (in dollars per share) | 10.38 | ||||||
Forfeited (in dollars per share) | 15.02 | ||||||
Outstanding as of the end of the period (in dollars per share) | $ 15.42 | $ 15.42 | $ 15.42 | $ 11.51 | |||
Weighted Average Remaining Contractual Term (Years) | |||||||
Outstanding | 3 years 3 months 7 days | 3 years 1 month 10 days | |||||
Aggregate Intrinsic Value (in millions) | |||||||
Outstanding as of the beginning of the period | $ 342 | $ 342 | |||||
Vested and released | 23 | ||||||
Outstanding as of the end of the period | $ 466 | $ 466 | 466 | $ 342 | |||
Unrecognized compensation costs related to nonvested awards | $ 242 | $ 242 | $ 242 | ||||
Weighted average recognition period of unrecognized compensation costs | 3 years 3 months 7 days |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Basic EPS: | ||||
Net income attributable to KDP | $ 148 | $ 116 | $ 320 | $ 235 |
Weighted average common shares outstanding (in shares) | 1,361.8 | 790.5 | 983 | 790.5 |
Earnings per common share - basic (in dollars per share) | $ 0.11 | $ 0.15 | $ 0.33 | $ 0.30 |
Diluted EPS: | ||||
Net income attributable to KDP | $ 148 | $ 116 | $ 320 | $ 235 |
Impact of dilutive securities in Maple Parent Corporation | 0 | 2 | 0 | 3 |
Total | $ 148 | $ 114 | $ 320 | $ 232 |
Weighted average common shares outstanding (in shares) | 1,361.8 | 790.5 | 983 | 790.5 |
Effect of dilutive securities: | ||||
Weighted average common shares outstanding and common stock equivalents (in shares) | 1,373.6 | 790.5 | 994.1 | 790.5 |
Earnings per common share - diluted (in dollars per share) | $ 0.11 | $ 0.14 | $ 0.32 | $ 0.29 |
Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation (in shares) | 0.8 | 0 | 0.3 | 0 |
Stock options | ||||
Effect of dilutive securities: | ||||
Effect of dilutive securities (in shares) | 0.9 | 0 | 0.6 | 0 |
RSUs | ||||
Effect of dilutive securities: | ||||
Effect of dilutive securities (in shares) | 10.9 | 0 | 10.5 | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Total equity at beginning of period | $ 7,398 | |
Net current period other comprehensive income | 38 | |
Total equity at end of period | $ 22,293 | 22,293 |
Accumulated Other Comprehensive Income | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Total equity at beginning of period | 59 | 99 |
OCI before reclassifications | 78 | 38 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 |
Net current period other comprehensive income | 78 | 38 |
Total equity at end of period | $ 137 | $ 137 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 186 | $ 121 |
Work in process | 7 | 1 |
Finished goods | 527 | 262 |
Inventories | $ 720 | $ 384 |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Prepaid expenses and other current assets: | ||
Other receivables | $ 100 | $ 7 |
Customer incentive programs | 44 | 0 |
Derivative instruments | 28 | 0 |
Prepaid marketing | 44 | 9 |
Spare parts | 42 | 10 |
Other | 99 | 68 |
Prepaid expenses and other current assets | 357 | 94 |
Other non-current assets: | ||
Customer incentive programs | 11 | 0 |
Marketable securities - trading | 54 | 0 |
Derivative instruments | 140 | 87 |
Equity securities without readily determinable fair values | 1 | 6 |
Non-current restricted cash and restricted cash equivalents | 10 | 0 |
Related party notes receivable | 12 | 6 |
Other | 87 | 22 |
Total other non-current assets | 315 | 121 |
Accrued expenses: | ||
Customer rebates & incentives | 345 | 8 |
Accrued compensation | 215 | 46 |
Insurance reserve | 45 | 8 |
Interest accrual | 173 | 3 |
Accrued professional fees | 182 | 19 |
Other accrued expenses | 271 | 117 |
Total accrued expenses | 1,231 | 201 |
Other current liabilities: | ||
Dividends payable | 208 | 0 |
Derivative instruments | 27 | 6 |
Other | 39 | 3 |
Total other current liabilities | 274 | 9 |
Other non-current liabilities: | ||
Long-term pension and postretirement liability | 27 | 1 |
Insurance reserves | 56 | 0 |
Derivative instruments | 29 | 0 |
Deferred compensation liability | 54 | 0 |
Other | 78 | 55 |
Other non-current liabilities | 244 | 56 |
Suppliers Utilizing Third Party Services | ||
Other Financial Information [Line Items] | ||
Accounts payable | $ 1,516 | $ 1,351 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information - Reconciliation of Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 94 | $ 90 | ||
Restricted cash and restricted cash equivalents | 18 | 5 | ||
Non-current restricted cash and restricted cash equivalents included in Other non-current assets | 10 | 0 | ||
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows | $ 122 | $ 95 | $ 349 | $ 97 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Non-cash Investing and Financing Activities (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Supplemental cash flow disclosures of non-cash investing and financing activities: | |||
Capitalization of related party debt into additional paid-in-capital | $ (1,815) | $ 0 | |
Fair value of replacement equity awards not converted to cash | (3,643) | 0 | |
Dividends declared but not yet paid | 208 | $ 0 | |
Capital expenditures included in accounts payable and accrued expenses | 80 | 6 | |
Capital lease additions | $ 24 | $ 0 |
Restructuring and Integration_3
Restructuring and Integration Costs - Schedule of Charges Incurred (Details) - USD ($) $ in Millions | 3 Months Ended | 7 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | $ 47 | $ 15 | $ 86 | $ 45 | |
Castroville closure | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 22 | ||||
Castroville closure | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 0 | 4 | 0 | 22 | |
Business realignment | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | $ 12 | 2 | |||
Business realignment | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 0 | 0 | 2 | 12 | |
Keurig 2.0 exit | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 28 | ||||
Keurig 2.0 exit | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 0 | 10 | 12 | 10 | |
Integration program | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 71 | ||||
Integration program | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 47 | 0 | 0 | ||
Other restructuring programs | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | $ 0 | $ 1 | $ 1 | $ 1 |
Restructuring and Integration_4
Restructuring and Integration Costs - Restructuring Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance at beginning of period | $ 4 |
Charges to expense | 27 |
Cash payments | (14) |
Non-cash adjustment items | (1) |
Balance at end of period | 16 |
Workforce Reduction Costs | |
Restructuring Reserve [Roll Forward] | |
Balance at beginning of period | 2 |
Charges to expense | 27 |
Cash payments | (13) |
Non-cash adjustment items | 0 |
Balance at end of period | 16 |
Other | |
Restructuring Reserve [Roll Forward] | |
Balance at beginning of period | 2 |
Charges to expense | 0 |
Cash payments | (1) |
Non-cash adjustment items | (1) |
Balance at end of period | $ 0 |
Restructuring and Integration_5
Restructuring and Integration Costs - Restructuring Programs (Details) | May 18, 2017employee | Jun. 30, 2017employee | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and integration charges | $ 47,000,000 | $ 15,000,000 | $ 86,000,000 | $ 45,000,000 | |||
Integration program | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected annual synergies | 600,000,000 | ||||||
Expected cost | 750,000,000 | 750,000,000 | |||||
Restructuring and integration charges | 71,000,000 | ||||||
Castroville closure | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected cost | 0 | 0 | |||||
Number of positions eliminated | employee | 183 | ||||||
Restructuring and integration charges | $ 22,000,000 | ||||||
Business realignment | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected cost | $ 0 | $ 0 | 0 | ||||
Number of positions affected | employee | 500 | ||||||
Number of positions eliminated | employee | 140 | ||||||
Restructuring and integration charges | $ 12,000,000 | 2,000,000 | |||||
Keurig 2.0 exit | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring and integration charges | $ 28,000,000 |
Non-controlling Interest (Detai
Non-controlling Interest (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Balance as of beginning of the period | $ 265 | $ 143 |
Net income attributable to non-controlling interests | 3 | 3 |
Stock based compensation | 24 | 36 |
Proceeds from (cash distributions to) redeemable NCI shareholders | 18 | |
Proceeds from (cash distributions to) redeemable NCI shareholders | (1) | |
Adjustment of non-controlling interests to redemption value | 16 | 38 |
Dividends paid to NCI shareholders, currency translation adjustment, and other | 0 | 0 |
Impact of the DPS Merger | (326) | |
Balance as of the end of the period | $ 0 | $ 219 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - defendant | May 09, 2011 | Sep. 30, 2018 |
Standard Product Warranty Disclosure [Abstract] | ||
Warranty period | 1 year | |
LAMPERS | ||
Loss Contingencies [Line Items] | ||
Number of co-defendants | 2 | |
Proposition 65 Litigation | ||
Loss Contingencies [Line Items] | ||
Number of co-defendants | 100 |
Commitments and Contingencies_2
Commitments and Contingencies - Product Warranties (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |
Balance as of beginning of the period | $ 13 |
Accruals for warranties issued | 6 |
Settlements | (12) |
Balance as of end of the period | $ 7 |
Related Parties (Details)
Related Parties (Details) - USD ($) | Mar. 03, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 |
Related Party Transactions [Abstract] | ||||||
Net sales from related parties | $ 123,000,000 | $ 18,000,000 | $ 157,000,000 | $ 46,000,000 | ||
Related party purchases | 79,000,000 | $ 6,000,000 | 90,000,000 | $ 12,000,000 | ||
Related party trade accounts receivables, net | 20,000,000 | 20,000,000 | $ 0 | |||
Accounts payables, related parties | 23,000,000 | 23,000,000 | 2,000,000 | |||
Bedford | ||||||
Related Party Transaction [Line Items] | ||||||
Outstanding receivables, related party | $ 12,000,000 | $ 12,000,000 | $ 6,000,000 | |||
Bedford | Line of Credit Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Line of credit receivable, maximum borrowing capacity | $ 30,000,000 | |||||
Line of credit receivable, interest rate | 8.10% |
Segments - Schedules of Results
Segments - Schedules of Results (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($)segment | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($)segment | Dec. 31, 2017segment | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 4 | 4,000,000 | 4 | 4,000,000 | 4,000,000 |
Segment Results – Income from operations | |||||
Net sales | $ 2,732 | $ 1,140 | $ 4,629 | $ 3,056 | |
Income from operations | 344 | 238 | 690 | 633 | |
Interest expense | 172 | 28 | 221 | 76 | |
Interest expense - related party | 0 | 25 | 51 | 75 | |
Loss on early extinguishment of debt | 11 | 2 | 13 | 54 | |
Other (income) expense, net | (33) | 20 | (28) | 88 | |
Income before provision for income taxes | 194 | 163 | 433 | 340 | |
Beverage Concentrates | |||||
Segment Results – Income from operations | |||||
Net sales | 317 | 0 | 317 | 0 | |
Packaged Beverages | |||||
Segment Results – Income from operations | |||||
Net sales | 1,238 | 0 | 1,238 | 0 | |
Latin America Beverages | |||||
Segment Results – Income from operations | |||||
Net sales | 124 | 0 | 124 | 0 | |
Coffee Systems | |||||
Segment Results – Income from operations | |||||
Net sales | 1,053 | 1,140 | 2,950 | 3,056 | |
Operating Segments | |||||
Segment Results – Income from operations | |||||
Income from operations | 603 | 288 | 1,134 | 779 | |
Operating Segments | Beverage Concentrates | |||||
Segment Results – Income from operations | |||||
Income from operations | 193 | 0 | 193 | 0 | |
Operating Segments | Packaged Beverages | |||||
Segment Results – Income from operations | |||||
Income from operations | 61 | 0 | 61 | 0 | |
Operating Segments | Latin America Beverages | |||||
Segment Results – Income from operations | |||||
Income from operations | 15 | 0 | 15 | 0 | |
Operating Segments | Coffee Systems | |||||
Segment Results – Income from operations | |||||
Income from operations | 334 | 288 | 865 | 779 | |
Corporate Unallocated | |||||
Segment Results – Income from operations | |||||
Income from operations | $ 259 | $ 50 | $ 444 | $ 146 |
Segments - Assets by Segment (D
Segments - Assets by Segment (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | $ 48,865 | $ 15,647 |
Investments in unconsolidated subsidiaries | 193 | 97 |
Total assets | 49,058 | 15,744 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | 43,432 | 15,294 |
Operating Segments | Beverage Concentrates | ||
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | 17,350 | 0 |
Operating Segments | Packaged Beverages | ||
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | 9,205 | 0 |
Operating Segments | Latin America Beverages | ||
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | 1,637 | 0 |
Operating Segments | Coffee Systems | ||
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | 15,240 | 15,294 |
Corporate Unallocated | ||
Segment Reporting Information [Line Items] | ||
Identifiable operating assets | $ 5,433 | $ 353 |
Segments - Revenue by Geography
Segments - Revenue by Geography (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 2,732 | $ 1,140 | $ 4,629 | $ 3,056 |
U.S. | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 2,432 | 1,012 | 4,098 | 2,717 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 300 | $ 128 | $ 531 | $ 339 |
Guarantor and Non-Guarantor F_3
Guarantor and Non-Guarantor Financial Information Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Income Statements, Captions [Line Items] | ||||
Net sales | $ 2,732 | $ 1,140 | $ 4,629 | $ 3,056 |
Cost of sales | 1,371 | 585 | 2,305 | 1,571 |
Gross profit | 1,361 | 555 | 2,324 | 1,485 |
Selling, general and administrative expenses | 1,025 | 318 | 1,636 | 852 |
Other operating (income) expense, net | (8) | (1) | (2) | 0 |
Income from operations | 344 | 238 | 690 | 633 |
Interest expense | 172 | 28 | 221 | 76 |
Interest expense - related party | 0 | 25 | 51 | 75 |
Loss on early extinguishment of debt | 11 | 2 | 13 | 54 |
Other (income) expense, net | (33) | 20 | (28) | 88 |
Income before provision for income taxes | 194 | 163 | 433 | 340 |
Provision for income taxes | 46 | 46 | 110 | 102 |
Income before equity in earnings of consolidated subsidiaries | 148 | 323 | ||
Equity in earnings of consolidated subsidiaries | 0 | 0 | ||
Net income | 148 | 117 | 323 | 238 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 1 | 3 | 3 |
Net income attributable to KDP | 148 | 116 | 320 | 235 |
Reportable Legal Entities | Parent | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Cost of sales | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | 1 | 0 | 1 | 0 |
Other operating (income) expense, net | (6) | 0 | (6) | 0 |
Income from operations | 5 | 0 | 5 | 0 |
Interest expense | 220 | 0 | 220 | 0 |
Interest expense - related party | 0 | 0 | 0 | 0 |
Loss on early extinguishment of debt | 0 | 0 | 0 | 0 |
Other (income) expense, net | (46) | 0 | (46) | 0 |
Income before provision for income taxes | (169) | 0 | (169) | 0 |
Provision for income taxes | (46) | 0 | (46) | 0 |
Income before equity in earnings of consolidated subsidiaries | (123) | (123) | ||
Equity in earnings of consolidated subsidiaries | 271 | 443 | ||
Net income | 148 | 0 | 320 | 0 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 0 | 0 | 0 |
Net income attributable to KDP | 148 | 0 | 320 | 0 |
Reportable Legal Entities | Guarantors | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Net sales | 1,540 | 0 | 1,540 | 0 |
Cost of sales | 774 | 0 | 774 | 0 |
Gross profit | 766 | 0 | 766 | 0 |
Selling, general and administrative expenses | 590 | 0 | 590 | 0 |
Other operating (income) expense, net | 0 | 0 | 0 | 0 |
Income from operations | 176 | 0 | 176 | 0 |
Interest expense | 31 | 0 | 31 | 0 |
Interest expense - related party | 0 | 0 | 0 | 0 |
Loss on early extinguishment of debt | 0 | 0 | 0 | 0 |
Other (income) expense, net | (84) | 0 | (84) | 0 |
Income before provision for income taxes | 229 | 0 | 229 | 0 |
Provision for income taxes | 68 | 0 | 68 | 0 |
Income before equity in earnings of consolidated subsidiaries | 161 | 161 | ||
Equity in earnings of consolidated subsidiaries | 16 | 16 | ||
Net income | 177 | 0 | 177 | 0 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 0 | 0 | 0 |
Net income attributable to KDP | 177 | 0 | 177 | 0 |
Reportable Legal Entities | Non-Guarantors | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Net sales | 1,225 | 1,140 | 3,122 | 3,056 |
Cost of sales | 630 | 585 | 1,564 | 1,571 |
Gross profit | 595 | 555 | 1,558 | 1,485 |
Selling, general and administrative expenses | 434 | 318 | 1,045 | 852 |
Other operating (income) expense, net | (2) | (1) | 4 | 0 |
Income from operations | 163 | 238 | 509 | 633 |
Interest expense | 31 | 28 | 80 | 76 |
Interest expense - related party | 0 | 25 | 51 | 75 |
Loss on early extinguishment of debt | 11 | 2 | 13 | 54 |
Other (income) expense, net | (13) | 20 | (8) | 88 |
Income before provision for income taxes | 134 | 163 | 373 | 340 |
Provision for income taxes | 24 | 46 | 88 | 102 |
Income before equity in earnings of consolidated subsidiaries | 110 | 285 | ||
Equity in earnings of consolidated subsidiaries | 0 | 0 | ||
Net income | 110 | 117 | 285 | 238 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 1 | 3 | 3 |
Net income attributable to KDP | 110 | 116 | 282 | 235 |
Eliminations | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Net sales | (33) | 0 | (33) | 0 |
Cost of sales | (33) | 0 | (33) | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | 0 | 0 | 0 | 0 |
Other operating (income) expense, net | 0 | 0 | 0 | 0 |
Income from operations | 0 | 0 | 0 | 0 |
Interest expense | (110) | 0 | (110) | 0 |
Interest expense - related party | 0 | 0 | 0 | 0 |
Loss on early extinguishment of debt | 0 | 0 | 0 | 0 |
Other (income) expense, net | 110 | 0 | 110 | 0 |
Income before provision for income taxes | 0 | 0 | 0 | 0 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Income before equity in earnings of consolidated subsidiaries | 0 | 0 | ||
Equity in earnings of consolidated subsidiaries | (287) | (459) | ||
Net income | (287) | 0 | (459) | 0 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 0 | 0 | 0 |
Net income attributable to KDP | $ (287) | $ 0 | $ (459) | $ 0 |
Guarantor and Non-Guarantor F_4
Guarantor and Non-Guarantor Financial Information Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | $ 226 | $ 208 | $ 361 | $ 334 |
Reportable Legal Entities | Parent | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | 226 | 0 | 358 | 0 |
Reportable Legal Entities | Guarantors | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | 239 | 0 | 239 | 0 |
Reportable Legal Entities | Non-Guarantors | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | 188 | 208 | 323 | 334 |
Eliminations | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | $ (427) | $ 0 | $ (559) | $ 0 |
Guarantor and Non-Guarantor F_5
Guarantor and Non-Guarantor Financial Information Balance Sheets (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||||
Cash and cash equivalents | $ 94 | $ 90 | ||
Restricted cash and restricted cash equivalents | 18 | 5 | ||
Trade accounts receivable, net | 1,196 | 483 | ||
Related party receivable | 0 | 0 | ||
Inventories | 720 | 384 | ||
Prepaid expenses and other current assets | 357 | 94 | ||
Total current assets | 2,385 | 1,056 | ||
Property, plant and equipment, net | 2,345 | 790 | ||
Investments in consolidated subsidiaries | 0 | 0 | ||
Investments in unconsolidated subsidiaries | 193 | 97 | ||
Goodwill | 19,291 | 9,819 | ||
Other intangible assets, net | 24,436 | 3,834 | ||
Long-term receivable, related parties | 0 | 0 | ||
Other non-current assets | 315 | 121 | ||
Deferred tax assets | 93 | 27 | ||
Total assets | 49,058 | 15,744 | ||
Current liabilities: | ||||
Accounts payable | 2,229 | 1,580 | ||
Accrued expenses | 1,231 | 201 | ||
Structured payables | 432 | 0 | ||
Related party payable | 0 | 0 | ||
Short-term borrowings and current portion of long-term obligations | 1,765 | 219 | ||
Current portion of capital lease and financing obligations | 25 | 6 | ||
Income taxes payable | 11 | 3 | ||
Other current liabilities | 274 | 9 | ||
Total current liabilities | 5,967 | 2,018 | ||
Long-term obligations | 14,275 | 3,064 | ||
Long-term obligations, related party | 0 | 1,815 | ||
Capital lease and financing obligations, less current | 305 | 97 | ||
Deferred tax liabilities | 5,974 | 1,031 | ||
Other non-current liabilities | 244 | 56 | ||
Total liabilities | 26,765 | 8,081 | ||
Employee redeemable non-controlling interest and mezzanine equity awards | 0 | 265 | $ 219 | $ 143 |
Total stockholders' equity | 22,293 | 7,398 | ||
Total liabilities and stockholders' equity | 49,058 | 15,744 | ||
Reportable Legal Entities | Parent | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash and restricted cash equivalents | 15 | 0 | ||
Trade accounts receivable, net | 0 | 0 | ||
Related party receivable | 172 | 0 | ||
Inventories | 0 | 0 | ||
Prepaid expenses and other current assets | 576 | 0 | ||
Total current assets | 763 | 0 | ||
Property, plant and equipment, net | 0 | 0 | ||
Investments in consolidated subsidiaries | 39,466 | 0 | ||
Investments in unconsolidated subsidiaries | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Long-term receivable, related parties | 5,820 | 0 | ||
Other non-current assets | 68 | 0 | ||
Deferred tax assets | 7 | 0 | ||
Total assets | 46,124 | 0 | ||
Current liabilities: | ||||
Accounts payable | 0 | 0 | ||
Accrued expenses | 172 | 0 | ||
Structured payables | 0 | 0 | ||
Related party payable | 58 | 0 | ||
Short-term borrowings and current portion of long-term obligations | 1,765 | 0 | ||
Current portion of capital lease and financing obligations | 0 | 0 | ||
Income taxes payable | 0 | 0 | ||
Other current liabilities | 246 | 0 | ||
Total current liabilities | 2,241 | 0 | ||
Long-term obligations | 14,275 | 0 | ||
Long-term obligations, related party | 7,242 | 0 | ||
Capital lease and financing obligations, less current | 0 | 0 | ||
Deferred tax liabilities | 0 | 0 | ||
Other non-current liabilities | 73 | 0 | ||
Total liabilities | 23,831 | 0 | ||
Employee redeemable non-controlling interest and mezzanine equity awards | 0 | |||
Total stockholders' equity | 22,293 | 0 | ||
Total liabilities and stockholders' equity | 46,124 | 0 | ||
Reportable Legal Entities | Guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | 11 | 0 | ||
Restricted cash and restricted cash equivalents | 0 | 0 | ||
Trade accounts receivable, net | 641 | 0 | ||
Related party receivable | 58 | 0 | ||
Inventories | 241 | 0 | ||
Prepaid expenses and other current assets | 183 | 0 | ||
Total current assets | 1,134 | 0 | ||
Property, plant and equipment, net | 1,383 | 0 | ||
Investments in consolidated subsidiaries | 4,299 | 0 | ||
Investments in unconsolidated subsidiaries | 79 | 0 | ||
Goodwill | 9,042 | 0 | ||
Other intangible assets, net | 16,839 | 0 | ||
Long-term receivable, related parties | 7,242 | 0 | ||
Other non-current assets | 54 | 0 | ||
Deferred tax assets | 0 | 0 | ||
Total assets | 40,072 | 0 | ||
Current liabilities: | ||||
Accounts payable | 475 | 0 | ||
Accrued expenses | 620 | 0 | ||
Structured payables | 0 | 0 | ||
Related party payable | 174 | 0 | ||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | ||
Current portion of capital lease and financing obligations | 17 | 0 | ||
Income taxes payable | 496 | 0 | ||
Other current liabilities | 2 | 0 | ||
Total current liabilities | 1,784 | 0 | ||
Long-term obligations | 0 | 0 | ||
Long-term obligations, related party | 3,348 | 0 | ||
Capital lease and financing obligations, less current | 204 | 0 | ||
Deferred tax liabilities | 5,034 | 0 | ||
Other non-current liabilities | 109 | 0 | ||
Total liabilities | 10,479 | 0 | ||
Employee redeemable non-controlling interest and mezzanine equity awards | 0 | |||
Total stockholders' equity | 29,593 | 0 | ||
Total liabilities and stockholders' equity | 40,072 | 0 | ||
Reportable Legal Entities | Non-Guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | 83 | 90 | ||
Restricted cash and restricted cash equivalents | 3 | 5 | ||
Trade accounts receivable, net | 555 | 483 | ||
Related party receivable | 146 | 0 | ||
Inventories | 479 | 384 | ||
Prepaid expenses and other current assets | 142 | 94 | ||
Total current assets | 1,408 | 1,056 | ||
Property, plant and equipment, net | 962 | 790 | ||
Investments in consolidated subsidiaries | 0 | 0 | ||
Investments in unconsolidated subsidiaries | 114 | 97 | ||
Goodwill | 10,249 | 9,819 | ||
Other intangible assets, net | 7,597 | 3,834 | ||
Long-term receivable, related parties | 0 | 0 | ||
Other non-current assets | 193 | 121 | ||
Deferred tax assets | 93 | 27 | ||
Total assets | 20,616 | 15,744 | ||
Current liabilities: | ||||
Accounts payable | 1,754 | 1,580 | ||
Accrued expenses | 439 | 201 | ||
Structured payables | 432 | 0 | ||
Related party payable | 144 | 0 | ||
Short-term borrowings and current portion of long-term obligations | 0 | 219 | ||
Current portion of capital lease and financing obligations | 8 | 6 | ||
Income taxes payable | 59 | 3 | ||
Other current liabilities | 26 | 9 | ||
Total current liabilities | 2,862 | 2,018 | ||
Long-term obligations | 0 | 3,064 | ||
Long-term obligations, related party | 2,472 | 1,815 | ||
Capital lease and financing obligations, less current | 101 | 97 | ||
Deferred tax liabilities | 947 | 1,031 | ||
Other non-current liabilities | 62 | 56 | ||
Total liabilities | 6,444 | 8,081 | ||
Employee redeemable non-controlling interest and mezzanine equity awards | 265 | |||
Total stockholders' equity | 14,172 | 7,398 | ||
Total liabilities and stockholders' equity | 20,616 | 15,744 | ||
Eliminations | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash and restricted cash equivalents | 0 | 0 | ||
Trade accounts receivable, net | 0 | 0 | ||
Related party receivable | (376) | 0 | ||
Inventories | 0 | 0 | ||
Prepaid expenses and other current assets | (544) | 0 | ||
Total current assets | (920) | 0 | ||
Property, plant and equipment, net | 0 | 0 | ||
Investments in consolidated subsidiaries | (43,765) | 0 | ||
Investments in unconsolidated subsidiaries | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Long-term receivable, related parties | (13,062) | 0 | ||
Other non-current assets | 0 | 0 | ||
Deferred tax assets | (7) | 0 | ||
Total assets | (57,754) | 0 | ||
Current liabilities: | ||||
Accounts payable | 0 | 0 | ||
Accrued expenses | 0 | 0 | ||
Structured payables | 0 | 0 | ||
Related party payable | (376) | 0 | ||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | ||
Current portion of capital lease and financing obligations | 0 | 0 | ||
Income taxes payable | (544) | 0 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | (920) | 0 | ||
Long-term obligations | 0 | 0 | ||
Long-term obligations, related party | (13,062) | 0 | ||
Capital lease and financing obligations, less current | 0 | 0 | ||
Deferred tax liabilities | (7) | 0 | ||
Other non-current liabilities | 0 | 0 | ||
Total liabilities | (13,989) | 0 | ||
Employee redeemable non-controlling interest and mezzanine equity awards | 0 | |||
Total stockholders' equity | (43,765) | 0 | ||
Total liabilities and stockholders' equity | $ (57,754) | $ 0 |
Guarantor and Non-Guarantor F_6
Guarantor and Non-Guarantor Financial Information Cash Flow Statement (Details) - USD ($) $ in Millions | Jul. 09, 2018 | Sep. 30, 2018 | Sep. 30, 2017 |
Operating activities: | |||
Net cash provided by operating activities | $ 1,063 | $ 1,321 | |
Investing activities: | |||
Acquisitions of business | (19,124) | 0 | |
Cash acquired in acquisitions | 150 | 0 | |
Issuance of related party note receivable | (6) | (6) | |
Investments in unconsolidated subsidiaries, payments | (23) | ||
Investments in unconsolidated subsidiaries, proceeds | 250 | ||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | 36 | 0 | |
Purchases of property, plant and equipment | (104) | (45) | |
Proceeds from capital distributions from investments in consolidated subsidiaries | 0 | ||
Other, net | 1 | 2 | |
Net cash (used in) provided by investing activities | (19,070) | 201 | |
Financing activities: | |||
Proceeds from related party long-term debt | 0 | ||
Proceeds from issuance of common stock private placement | 9,000 | 0 | |
Contribution from subsidiary | 0 | ||
Proceeds from unsecured credit facility | 1,900 | 0 | |
Proceeds from senior unsecured notes | 8,000 | 0 | |
Proceeds from term loan | 2,700 | 1,200 | |
Net issuance of Commercial Paper | 1,386 | 0 | |
Payments on capital leases | (20) | (14) | |
Repayment of term loan | (3,363) | (2,144) | |
Proceeds from stock options exercised | 3 | 0 | |
Cash contributions (distributions) from (to) redeemable NCI shareholders | 19 | (1) | |
Net repayment on line of credit | 0 | (200) | |
Cash dividends paid | (23) | (46) | |
Proceeds from structured payables | $ 124 | 432 | 0 |
Repayment of unsecured credit facility | (1,900) | 0 | |
Deferred financing charges paid | (49) | (5) | |
Other, net | (1) | 0 | |
Cross currency swap | 0 | (78) | |
Net cash provided by (used in) financing activities | 18,084 | (1,288) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | |||
Operating, investing and financing activities | 77 | 234 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | (50) | 18 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 95 | 97 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 122 | 349 | |
Reportable Legal Entities | Parent | |||
Operating activities: | |||
Net cash provided by operating activities | (29,645) | 0 | |
Investing activities: | |||
Acquisitions of business | 10,642 | ||
Cash acquired in acquisitions | 0 | ||
Issuance of related party note receivable | (2,606) | 0 | |
Investments in unconsolidated subsidiaries, payments | 0 | ||
Investments in unconsolidated subsidiaries, proceeds | 0 | ||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | 0 | ||
Purchases of property, plant and equipment | 0 | 0 | |
Proceeds from capital distributions from investments in consolidated subsidiaries | 0 | ||
Other, net | 1 | 0 | |
Net cash (used in) provided by investing activities | 8,037 | 0 | |
Financing activities: | |||
Proceeds from related party long-term debt | 461 | ||
Proceeds from issuance of common stock private placement | 0 | ||
Contribution from subsidiary | 9,162 | ||
Proceeds from unsecured credit facility | 1,900 | ||
Proceeds from senior unsecured notes | 8,000 | ||
Proceeds from term loan | 2,700 | 0 | |
Net issuance of Commercial Paper | 1,386 | ||
Payments on capital leases | 0 | 0 | |
Repayment of term loan | (34) | 0 | |
Proceeds from stock options exercised | 3 | ||
Cash contributions (distributions) from (to) redeemable NCI shareholders | 0 | 0 | |
Net repayment on line of credit | 0 | ||
Cash dividends paid | 0 | 0 | |
Proceeds from structured payables | 0 | ||
Repayment of unsecured credit facility | (1,900) | ||
Deferred financing charges paid | (55) | 0 | |
Other, net | 0 | ||
Cross currency swap | 0 | ||
Net cash provided by (used in) financing activities | 21,623 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | |||
Operating, investing and financing activities | 15 | 0 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 0 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 0 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 15 | 0 | |
Reportable Legal Entities | Guarantors | |||
Operating activities: | |||
Net cash provided by operating activities | 25,450 | 0 | |
Investing activities: | |||
Acquisitions of business | (25,208) | ||
Cash acquired in acquisitions | 116 | ||
Issuance of related party note receivable | (461) | 0 | |
Investments in unconsolidated subsidiaries, payments | (1) | ||
Investments in unconsolidated subsidiaries, proceeds | 0 | ||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | 36 | ||
Purchases of property, plant and equipment | (37) | 0 | |
Proceeds from capital distributions from investments in consolidated subsidiaries | 0 | ||
Other, net | 0 | 0 | |
Net cash (used in) provided by investing activities | (25,555) | 0 | |
Financing activities: | |||
Proceeds from related party long-term debt | 0 | ||
Proceeds from issuance of common stock private placement | 0 | ||
Contribution from subsidiary | 0 | ||
Proceeds from unsecured credit facility | 0 | ||
Proceeds from senior unsecured notes | 0 | ||
Proceeds from term loan | 0 | 0 | |
Net issuance of Commercial Paper | 0 | ||
Payments on capital leases | (6) | 0 | |
Repayment of term loan | 0 | 0 | |
Proceeds from stock options exercised | 0 | ||
Cash contributions (distributions) from (to) redeemable NCI shareholders | 0 | 0 | |
Net repayment on line of credit | 0 | ||
Cash dividends paid | 0 | 0 | |
Proceeds from structured payables | 133 | ||
Repayment of unsecured credit facility | 0 | ||
Deferred financing charges paid | 0 | 0 | |
Other, net | (1) | ||
Cross currency swap | 0 | ||
Net cash provided by (used in) financing activities | 126 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | |||
Operating, investing and financing activities | 21 | 0 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 0 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 0 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 21 | 0 | |
Reportable Legal Entities | Non-Guarantors | |||
Operating activities: | |||
Net cash provided by operating activities | 5,160 | 1,321 | |
Investing activities: | |||
Acquisitions of business | (21,674) | ||
Cash acquired in acquisitions | 34 | ||
Issuance of related party note receivable | (6) | (6) | |
Investments in unconsolidated subsidiaries, payments | (22) | ||
Investments in unconsolidated subsidiaries, proceeds | 250 | ||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | 0 | ||
Purchases of property, plant and equipment | (67) | (45) | |
Proceeds from capital distributions from investments in consolidated subsidiaries | (35) | ||
Other, net | 0 | 2 | |
Net cash (used in) provided by investing activities | (21,770) | 201 | |
Financing activities: | |||
Proceeds from related party long-term debt | 2,606 | ||
Proceeds from issuance of common stock private placement | 9,000 | ||
Contribution from subsidiary | 0 | ||
Proceeds from unsecured credit facility | 0 | ||
Proceeds from senior unsecured notes | 8,000 | ||
Proceeds from term loan | 0 | 1,200 | |
Net issuance of Commercial Paper | 0 | ||
Payments on capital leases | (14) | (14) | |
Repayment of term loan | (3,329) | (2,144) | |
Proceeds from stock options exercised | 0 | ||
Cash contributions (distributions) from (to) redeemable NCI shareholders | 19 | (1) | |
Net repayment on line of credit | (200) | ||
Cash dividends paid | (23) | (46) | |
Proceeds from structured payables | 432 | ||
Repayment of unsecured credit facility | 0 | ||
Deferred financing charges paid | (40) | (5) | |
Other, net | 0 | ||
Cross currency swap | (78) | ||
Net cash provided by (used in) financing activities | 16,651 | (1,288) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | |||
Operating, investing and financing activities | 41 | 234 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | (50) | 18 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 95 | 97 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 86 | 349 | |
Eliminations | |||
Operating activities: | |||
Net cash provided by operating activities | 98 | 0 | |
Investing activities: | |||
Acquisitions of business | 17,116 | ||
Cash acquired in acquisitions | 0 | ||
Issuance of related party note receivable | 3,067 | 0 | |
Investments in unconsolidated subsidiaries, payments | 0 | ||
Investments in unconsolidated subsidiaries, proceeds | 0 | ||
Proceeds from capital distributions from investments in unconsolidated subsidiaries | 0 | ||
Purchases of property, plant and equipment | 0 | 0 | |
Proceeds from capital distributions from investments in consolidated subsidiaries | 35 | ||
Other, net | 0 | 0 | |
Net cash (used in) provided by investing activities | 20,218 | 0 | |
Financing activities: | |||
Proceeds from related party long-term debt | (3,067) | ||
Proceeds from issuance of common stock private placement | 0 | ||
Contribution from subsidiary | (9,162) | ||
Proceeds from unsecured credit facility | 0 | ||
Proceeds from senior unsecured notes | (8,000) | ||
Proceeds from term loan | 0 | 0 | |
Net issuance of Commercial Paper | 0 | ||
Payments on capital leases | 0 | 0 | |
Repayment of term loan | 0 | 0 | |
Proceeds from stock options exercised | 0 | ||
Cash contributions (distributions) from (to) redeemable NCI shareholders | 0 | 0 | |
Net repayment on line of credit | 0 | ||
Cash dividends paid | 0 | 0 | |
Proceeds from structured payables | (133) | ||
Repayment of unsecured credit facility | 0 | ||
Deferred financing charges paid | 46 | 0 | |
Other, net | 0 | ||
Cross currency swap | 0 | ||
Net cash provided by (used in) financing activities | (20,316) | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | |||
Operating, investing and financing activities | 0 | 0 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 0 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 0 | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ 0 | $ 0 |