Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 06, 2019 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity File Number | 001-33829 | |
Entity Registrant Name | Keurig Dr Pepper Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 98-0517725 | |
Entity Address, Address Line One | 53 South Avenue | |
Entity Address, City or Town | Burlington, | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01803 | |
City Area Code | (802) | |
Local Phone Number | 244-5621 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common stock | |
Security Exchange Name | NYSE | |
Trading Symbol | KDP | |
Entity Common Stock, Shares Outstanding | 1,406,735,468 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001418135 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 2,812 | $ 949 | $ 5,316 | $ 1,897 |
Cost of sales | 1,186 | 458 | 2,292 | 925 |
Gross profit | 1,626 | 491 | 3,024 | 972 |
Selling, general and administrative expenses | 1,028 | 321 | 1,939 | 621 |
Other operating expense, net | 11 | 3 | 0 | 6 |
Income from operations | 587 | 167 | 1,085 | 345 |
Interest expense | 170 | 51 | 339 | 49 |
Interest expense - related party | 0 | 26 | 0 | 51 |
Loss on early extinguishment of debt | 0 | 0 | 9 | 2 |
Other expense (income), net | 1 | (8) | 6 | 5 |
Income before provision for income taxes | 416 | 98 | 731 | 238 |
Provision for income taxes | 102 | 13 | 187 | 64 |
Net income | 314 | 85 | 544 | 174 |
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 2 | 0 | 3 |
Net income attributable to KDP | $ 314 | $ 83 | $ 544 | $ 171 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.22 | $ 0.10 | $ 0.39 | $ 0.21 |
Diluted (in dollars per share) | $ 0.22 | $ 0.10 | $ 0.38 | $ 0.21 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 1,406.7 | 790.5 | 1,406.5 | 790.5 |
Diluted (in shares) | 1,419.2 | 790.5 | 1,418.5 | 790.5 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Comprehensive income | $ 402 | $ 66 | $ 725 | $ 130 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | |
Current assets: | |||
Cash and cash equivalents | $ 106 | $ 83 | |
Restricted cash and restricted cash equivalents | [1] | 44 | 46 |
Trade accounts receivable, net | 1,068 | 1,150 | |
Inventories | 686 | 626 | |
Prepaid expenses and other current assets | 317 | 254 | |
Total current assets | 2,221 | 2,159 | |
Property, plant and equipment, net | 2,290 | 2,310 | |
Investments in unconsolidated affiliates | 170 | 186 | |
Goodwill | 20,039 | 20,011 | |
Other intangible assets, net | 24,228 | 23,967 | |
Other non-current assets | 572 | 259 | |
Deferred tax assets | 27 | 26 | |
Total assets | 49,547 | 48,918 | |
Current liabilities: | |||
Accounts payable | 2,909 | 2,300 | |
Accrued expenses | 869 | 1,012 | |
Structured payables | 595 | 526 | |
Short-term borrowings and current portion of long-term obligations | 1,806 | 1,458 | |
Other current liabilities | 516 | 406 | |
Total current liabilities | 6,695 | 5,702 | |
Long-term obligations | 13,164 | 14,201 | |
Deferred tax liabilities | 6,034 | 5,923 | |
Other non-current liabilities | 771 | 559 | |
Total liabilities | 26,664 | 26,385 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | 0 | 0 | |
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,406,706,062 and 1,405,944,922 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 14 | 14 | |
Additional paid-in capital | 21,524 | 21,471 | |
Retained earnings | 1,294 | 1,178 | |
Accumulated other comprehensive income (loss) | 51 | (130) | |
Total stockholders' equity | 22,883 | 22,533 | |
Total liabilities and stockholders' equity | $ 49,547 | $ 48,918 | |
[1] | Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Big Red Acquisition and the Core Acquisition. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
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 | 2,000,000,000 |
Common stock issued (in shares) | 1,406,706,062 | 1,405,944,922 |
Common stock outstanding (in shares) | 1,406,706,062 | 1,405,944,922 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net income | $ 544 | $ 174 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 172 | 66 |
Amortization expense | 172 | 65 |
Provision for sales returns | 16 | 22 |
Deferred income taxes | (5) | (38) |
Employee stock-based compensation expense | 34 | 20 |
Loss on early extinguishment of debt | 9 | 2 |
Unrealized (gain) loss on foreign currency | (25) | 13 |
Unrealized (gain) loss on derivatives | 43 | (39) |
Gain (Loss) on Sale of Investments | 27 | 7 |
Other, net | (19) | 20 |
Changes in assets and liabilities: | ||
Trade accounts receivable | 68 | 119 |
Inventories | (56) | (30) |
Income taxes receivable and payables, net | 64 | 21 |
Other current and non-current assets | (149) | (59) |
Accounts payable and accrued expenses | 339 | 215 |
Other current and non-current liabilities | (31) | 0 |
Net change in operating assets and liabilities | 235 | 266 |
Net cash provided by operating activities | 1,203 | 578 |
Investing activities: | ||
Acquisitions of businesses | (8) | 0 |
Issuance of related party note receivable | (14) | (2) |
Investments in unconsolidated subsidiaries, payments | (11) | (22) |
Purchases of property, plant and equipment | (118) | (44) |
Proceeds from Sale of Property, Plant, and Equipment | 19 | 0 |
Payments to Acquire Intangible Assets | (4) | (12) |
Other, net | 22 | 0 |
Net cash used in investing activities | (114) | (80) |
Financing activities: | ||
Proceeds from senior unsecured notes | 0 | 8,000 |
Proceeds from term loan | 2,000 | 0 |
Net issuance of commercial paper | 381 | 0 |
Proceeds from structured payables | 78 | 0 |
Payments on Structured Payables | (9) | 0 |
Repayments of Senior Debt | (250) | 0 |
Repayment of term loan | (2,848) | (254) |
Finance Lease, Principal Payments | (19) | (9) |
Payments on finance leases | (19) | |
Deferred financing charges paid | 0 | (35) |
Cash contributions from redeemable non-controlling interest shareholders | 0 | 12 |
Cash dividends paid | (423) | (23) |
Other, net | 10 | (1) |
Net cash (used in) provided by financing activities | (1,080) | 7,690 |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | 9 | 8,188 |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 12 | 1 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 139 | 95 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ 160 | $ 8,284 |
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 (Loss) | Core MergerCommon Stock Issued | Core MergerAdditional Paid-In Capital |
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 | 88 | 88 | |||||
Other comprehensive income | (24) | (24) | |||||
Dividends declared, $0.15 per share | (11) | (11) | |||||
Adjustment of non-controlling interests to fair value | (13) | (13) | |||||
Shares issued at end of period (in shares) at Mar. 31, 2018 | 790.5 | ||||||
Total equity at end of period at Mar. 31, 2018 | 7,434 | $ 8 | 6,377 | 974 | 75 | ||
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 | 171 | ||||||
Shares issued at end of period (in shares) at Jun. 30, 2018 | 790.5 | ||||||
Total equity at end of period at Jun. 30, 2018 | 7,484 | $ 8 | 6,377 | 1,040 | 59 | ||
Shares issued at beginning of period (in shares) at Mar. 31, 2018 | 790.5 | ||||||
Total equity at beginning of period at Mar. 31, 2018 | 7,434 | $ 8 | 6,377 | 974 | 75 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income attributable to KDP | 83 | 83 | |||||
Other comprehensive income | (16) | (16) | |||||
Dividends declared, $0.15 per share | (12) | (12) | |||||
Adjustment of non-controlling interests to fair value | (5) | (5) | |||||
Shares issued at end of period (in shares) at Jun. 30, 2018 | 790.5 | ||||||
Total equity at end of period at Jun. 30, 2018 | 7,484 | $ 8 | 6,377 | 1,040 | 59 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Adoption of new accounting standards | (5) | (5) | |||||
Shares issued at beginning of period (in shares) at Dec. 31, 2018 | 1,405.9 | ||||||
Total equity at beginning of period at Dec. 31, 2018 | 22,533 | $ 14 | 21,471 | 1,178 | (130) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income attributable to KDP | 230 | 230 | |||||
Other comprehensive income | 93 | 93 | |||||
Measurement period adjustment | 11 | $ 11 | |||||
Shares issued under employee stock-based compensation plans and other | 0.8 | ||||||
Dividends declared, $0.15 per share | (211) | (211) | |||||
Stock Issued During Period, Shares, Acquisitions | 0 | ||||||
Stock-based compensation and stock options exercised | 23 | 23 | |||||
Shares issued at end of period (in shares) at Mar. 31, 2019 | 1,406.7 | ||||||
Total equity at end of period at Mar. 31, 2019 | 22,674 | $ 14 | 21,505 | 1,192 | (37) | ||
Shares issued at beginning of period (in shares) at Dec. 31, 2018 | 1,405.9 | ||||||
Total equity at beginning of period at Dec. 31, 2018 | 22,533 | $ 14 | 21,471 | 1,178 | (130) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income attributable to KDP | 544 | ||||||
Shares issued at end of period (in shares) at Jun. 30, 2019 | 1,406.7 | ||||||
Total equity at end of period at Jun. 30, 2019 | 22,883 | $ 14 | 21,524 | 1,294 | 51 | ||
Shares issued at beginning of period (in shares) at Mar. 31, 2019 | 1,406.7 | ||||||
Total equity at beginning of period at Mar. 31, 2019 | 22,674 | $ 14 | 21,505 | 1,192 | (37) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income attributable to KDP | 314 | 314 | |||||
Other comprehensive income | 88 | 88 | |||||
Dividends declared, $0.15 per share | (212) | (212) | |||||
Stock-based compensation and stock options exercised | 19 | 19 | |||||
Shares issued at end of period (in shares) at Jun. 30, 2019 | 1,406.7 | ||||||
Total equity at end of period at Jun. 30, 2019 | $ 22,883 | $ 14 | $ 21,524 | $ 1,294 | $ 51 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Stockholders' Equity Condensed Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) - $ / shares | 3 Months Ended | |
Jun. 30, 2019 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Common Stock, Dividends, Per Share, Declared | $ 0.15 | $ 0.15 |
Background and Basis of Present
Background and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Background and Basis of Presentation | General 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. ". 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 June 30, 2019 and December 31, 2018 and for the second quarter and first six months of 2019 and 2018 reflect the results of operations and financial position of Maple for the periods presented. Amounts reported as of June 30, 2019 and December 31, 2018 , and for the second quarter and first six months of 2019, include the results of operations and financial position of DPS , as the DPS Merger 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 KDP 's consolidated financial statements and accompanying notes, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 . Except as otherwise specified, references to the " second quarter " indicate the Company 's quarterly periods ended June 30, 2019 and 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. 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 . RECLASSIFICATIONS The Company reclassified the following amounts from the unaudited condensed consolidated balance sheets as of December 31, 2018 in connection with the adoption of Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842"): (in millions) Prior Presentation Revised Presentation December 31, 2018 Capital lease and financing obligations Current portion of capital lease and financing obligations Other current liabilities $ 26 Capital lease and financing obligations Capital lease and financing obligations, less current Other non-current liabilities 305 Refer to Recently Adopted Provisions of U.S. GAAP below for further information about the adoption of ASC 842. Refer to Note 3 for information about the Company's leases and Note 12 for disclosure of the components of other current liabilities and other non-current liabilities. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. RECENTLY ADOPTED PROVISIONS OF U.S. GAAP Leases As of January 1, 2019, the Company adopted ASC 842. ASC 842 replaced 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. The Company elected to apply the optional transition method provided by ASU 2018-11, Leases (Topic 842) - Targeted Improvements, which allows companies to adopt the standard on a modified retrospective basis and to apply the new leases standard as of the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings. Accordingly, amounts reported in the unaudited condensed consolidated financial statements for all periods prior to January 1, 2019 have not been recast under ASC 842 and continue to be reported in accordance with ASC 840. The Company elected the package of practical expedients which allows the Company to carry forward its historical assessments of whether contracts contain leases, lease classification, and initial direct costs, for leases in existence prior to January 1, 2019. The adoption of ASC 842 resulted in an increase to KDP's total assets of approximately $314 million , an increase to KDP's total liabilities of approximately $319 million , and an impact to KDP's retained earnings of approximately $5 million , as of January 1, 2019. Refer to Note 3 for additional information . Other Accounting Standards As of January 1, 2019, the Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12") on a prospective basis. 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. The adoption of ASU 2017-12 did not have a material impact on the Company's unaudited condensed consolidated financial statements. As of January 1, 2019, the Company early adopted 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. The ASU was adopted on a prospective basis and did not have a material impact on the Company's unaudited condensed consolidated financial statements. |
Acquisitions and Investments in
Acquisitions and Investments in Unconsolidated Affiliates | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions and Investments in Unconsolidated Subsidiaries | Acquisitions and Investments in Unconsolidated Affiliates ACQUISITION OF DR PEPPER SNAPPLE GROUP, INC. Overview and Total Consideration Exchanged As discussed in Note 1 , General , Maple merged with DPS on July 9, 2018. 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 $22,482 million . 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 July 9, 2018. 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 June 30, 2019 : (in millions) Initial Allocation of Consideration Measurement Period Adjustments Allocation of Consideration as of June 30, 2019 Cash and cash equivalents $ 147 $ — $ 147 Investments in unconsolidated affiliates 90 — 90 Property, plant and equipment (1) 1,549 (74 ) 1,475 Other intangible assets 20,404 (326 ) 20,078 Long-term obligations (4,049 ) — (4,049 ) Finance leases (214 ) 9 (205 ) Acquired assets, net of assumed liabilities (2) 107 (26 ) 81 Deferred tax liabilities, net of deferred tax assets (3) (4,959 ) (82 ) (5,041 ) Goodwill 9,407 499 9,906 Total consideration exchanged $ 22,482 $ — $ 22,482 Fair value of stock and replacement equity awards not converted to cash 3,643 — 3,643 Acquisition of business $ 18,839 $ — $ 18,839 (1) The Company 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 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 . (2) 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 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. (3) 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 DPS Merger resulted in $9,906 million of goodwill as of June 30, 2019 . The goodwill 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 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) $ 19,556 n/a Contractual arrangements (2) 127 n/a Customer relationships (3) 390 10-40 Favorable leases (4) 5 5-12 Total other intangible assets $ 20,078 (1) The Company valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company 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 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 second quarter and first six months of 2018 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. Second Quarter First Six Months (Unaudited, in millions) 2018 2018 Net sales $ 2,822 $ 5,351 Net income 323 534 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. 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 an enterprise value of $300 million , subject to certain adjustments outlined in the Big Red Merger Agreement (the " Big Red Acquisition "). On August 31, 2018 (the "Big Red Merger Date"), the Company completed the Big Red Acquisition . Allocation of Purchase Price The Company's preliminary allocation of purchase price to the net tangible and intangible assets acquired and liabilities assumed in the Big Red Acquisition is based on estimated fair values as of the Big Red Acquisition Date. 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 Acquisition as of June 30, 2019 : (in millions) Initial Allocation of Consideration Measurement Period Adjustments Allocation of Consideration as of June 30, 2019 Cash and cash equivalents $ 3 — $ 3 Other intangible assets 240 (2 ) 238 Assumed liabilities, net of acquired assets (1) (28 ) (20 ) (48 ) Goodwill 89 24 113 Total consideration exchanged (2) $ 304 $ 2 $ 306 Less: Company's previous ownership interest 22 — 22 Less: Holdback placed in escrow 15 — 15 Acquisition of business $ 267 $ 2 $ 269 (1) The Company valued WIP and finished goods inventory using a net realizable value approach, which resulted in a step-up of $2 million which was recognized in the cost of goods sold for the year ended December 31, 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. (2) The Company paid $2 million in additional consideration during the fourth quarter of 2018 as a result of working capital adjustments determined pursuant to the terms of the Big Red Acquisition Agreement. The Big Red Acquisition resulted in $113 million of goodwill. The goodwill 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 Acquisition is not 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) 11 5 Contractual arrangements (2) 6 12 Customer relationships (3) 1 8-40 Total other intangible assets $ 238 (1) The Company valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company 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 industrial. We valued retail and industrial customer relationships utilizing the distributor method, a form of the income approach. ACQUISITION OF CORE NUTRITION, LLC Overview and Purchase Price On September 27, 2018, KDP entered into a definitive agreement with Core Nutrition, LLC (" Core "), pursuant to which we agreed to acquire Core for merger consideration, which represented 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 " Core Acquisition "). On November 30, 2018 (the " Core Acquisition Date "), the Company completed the Core Acquisition . Allocation of Purchase Price The Company 's preliminary allocation of purchase price to the net tangible and intangible assets acquired and liabilities assumed in the Core Acquisition is based on estimated fair values as of the Core Acquisition Date . The following is a summary of the preliminary allocation of purchase price to the estimated fair values of assets acquired and liabilities assumed in the Core Acquisition as of June 30, 2019 : (in millions) Initial Allocation of Consideration Measurement Period Adjustments Allocation of Consideration as of June 30, 2019 Cash and cash equivalents $ 10 $ — $ 10 Other intangible assets 273 — 273 Assumed liabilities, net of acquired assets (1) (12 ) (3 ) (15 ) Goodwill 236 12 248 Total purchase price $ 507 $ 9 $ 516 Company's previous ownership interest 31 — 31 Less: Holdback placed in Escrow 27 (2 ) 25 Acquisition of business $ 449 $ 11 $ 460 (1) The Company preliminarily valued WIP and finished goods inventory using a net realizable value approach resulting in a step-up of $4 million , of which $1 million and $3 million was recognized in cost of goods sold in 2018 and 2019, respectively, due to the timing of the sale of the related inventory. Raw materials were carried at net book value. The Core Acquisition preliminarily resulted in $248 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 Core Acquisition is expected to be deductible for tax purposes. The preliminary allocation of purchase price to other intangible assets acquired is as follows: (in millions) Fair Value Estimated Life (in years) Brands (1) $ 254 n/a Contractual arrangements (2) 19 10 Total other intangible assets $ 273 (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 utilizing the distributor method, a form of the income approach. OTHER ACQUISITIONS The Company also spent an aggregate of $8 million in connection with other immaterial acquisitions during the first six months of 2019 , which resulted in the recognition of fixed assets, intangible assets and goodwill. Pro forma financial information has not been presented for these acquisitions as the impact to our unaudited condensed consolidated financial statements was not material. TRANSACTION EXPENSES The following table provides information about the Company's transaction expenses incurred during the second quarter and first six months of 2019 and 2018 : Second Quarter First Six Months (in millions) 2019 2018 2019 2018 DPS Merger $ 4 $ 39 $ 6 $ 75 Other transaction expenses 4 — 7 — Total transaction expenses incurred $ 8 $ 39 $ 13 $ 75 Transaction expenses primarily consisted of professional fees for advisory and consulting services and other incremental costs related to the acquisitions. INVESTMENTS IN UNCONSOLIDATED AFFILIATES The following table summarizes investments in unconsolidated affiliates as of June 30, 2019 and December 31, 2018 : June 30, December 31, (in millions) Ownership Interest 2019 2018 BA Sports Nutrition, LLC ("BA") 12.5 % $ 52 $ 62 Bedford Systems, LLC 30.0 % 65 79 Dyla LLC 12.6 % 14 15 Force Holdings LLC 33.3 % 5 6 Beverage startup companies (various) 28 19 Other (various) 6 5 Investments in unconsolidated affiliates $ 170 $ 186 |
Leases (Notes)
Leases (Notes) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases of Lessee Disclosure [Text Block] | Leases The Company leases certain facilities and machinery and equipment, including fleet. These leases expire at various dates through 2044. Some lease agreements contain standard renewal provisions that allow us to renew the lease at rates equivalent to fair market value at the end of the lease term. Our lease agreements do not contain any material residual value guarantees or restrictive covenants. Operating leases are included within other non-current assets, other current liabilities, and other non-current liabilities within our unaudited Condensed Consolidated Balance Sheets. Refer to Note 12 for further information. Finance leases are included within property, plant and equipment, net, other current liabilities, and other non-current liabilities. Leases with an initial term of 12 months or less are not recognized on the balance sheet. Right of use assets and lease liabilities are recognized in the unaudited Condensed Consolidated Balance Sheets at the present value of future minimum lease payments over the lease term on the commencement date. As the rate implicit in the lease is generally not provided to the Company, KDP uses its incremental borrowing rate based on information available at the commencement date to determine the present value of future minimum lease payments. KDP's incremental borrowing rate is determined using a portfolio of secured borrowing rates commensurate with the term of the lease and is reassessed on a quarterly basis. KDP has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. The following table presents the components of lease cost: Second Quarter First Six Months (in millions) 2019 2019 Operating lease cost $ 20 $ 40 Finance lease cost Amortization of right-of-use assets 10 20 Interest on lease liabilities 3 7 Variable lease cost (1) 8 14 Short-term lease cost 2 3 Sublease income (1 ) (1 ) Total lease cost $ 42 $ 83 (1) Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation. The following table presents supplemental cash flow information about the Company's leases: First Six Months (in millions) 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 38 Operating cash flows from finance leases 7 Financing cash flows from finance leases 19 The following table presents information about the Company's weighted average discount rate and remaining lease term as of June 30, 2019 : Weighted average discount rate Operating leases 4.6 % Finance leases 5.3 % Weighted average remaining lease term Operating leases 8 years Finance leases 12 years Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows: (in millions) Operating Leases Finance Leases Remainder of 2019 $ 39 $ 26 2020 70 49 2021 56 42 2022 47 36 2023 39 33 2024 37 30 Thereafter 133 171 Total future minimum lease payments 421 387 Less: imputed interest (70 ) (97 ) Present value of minimum lease payments $ 351 $ 290 Future minimum lease payments under non-cancellable leases as of December 31, 2018 under ASC 840 were as follows: (in millions) Operating Leases Capital Leases Financing Obligations 2019 $ 58 $ 35 $ 10 2020 53 34 10 2021 44 33 10 2022 34 33 10 2023 25 30 10 Thereafter 98 189 62 Total future minimum lease payments $ 312 354 112 Less: imputed interest (98 ) (37 ) Present value of minimum lease payments $ 256 $ 75 SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED As of June 30, 2019 , the Company has entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $470 million . These leases will commence between 2020 and 2021 , with initial lease terms ranging from 7 years to 16 years |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
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: Coffee Systems Packaged Beverages Beverage Concentrates Latin America Beverages Unallocated Total Balance as of January 1, 2019 $ 9,725 $ 4,878 $ 4,265 $ 618 $ 525 $ 20,011 Foreign currency translation 46 27 16 14 — 103 Acquisitions (1) 3 254 242 (73 ) (501 ) (75 ) Balance as of June 30, 2019 $ 9,774 $ 5,159 $ 4,523 $ 559 $ 24 $ 20,039 (1) Amounts primarily represent measurement period adjustments for the DPS Merger, the Big Red Acquisition, and the Core Acquisition. Refer to Note 2 for further information. INTANGIBLE ASSETS OTHER THAN GOODWILL The net carrying amounts of intangible assets other than goodwill with indefinite lives are as follows: June 30, 2019 December 31, 2018 Brands (1) $ 20,025 $ 19,712 Trade names 2,479 2,479 Contractual arrangements 122 119 Distribution rights 2 — Total $ 22,628 $ 22,310 (1) Approximately $113 million of the increase in brands with indefinite lives was due to foreign currency translation during the period. The remaining change represents measurement period adjustments for the DPS Merger. Refer to Note 2 for further information. The net carrying amounts of intangible assets other than goodwill with definite lives are as follows: June 30, 2019 December 31, 2018 (in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Acquired technology $ 1,146 $ (218 ) $ 928 $ 1,146 $ (182 ) $ 964 Customer relationships 638 (85 ) 553 629 (67 ) 562 Trade names 127 (47 ) 80 127 (40 ) 87 Contractual arrangements 25 (2 ) 23 26 (1 ) 25 Brands 11 (1 ) 10 9 — 9 Distribution rights 6 — 6 — — — Favorable leases (1) — — — 13 (3 ) 10 Total $ 1,953 $ (353 ) $ 1,600 $ 1,950 $ (293 ) $ 1,657 (1) Amounts recorded as favorable lease intangible assets were reclassified to operating lease right-of-use assets in connection with the adoption of ASC 842 as of January 1, 2019. Refer to Note 3 for further information regarding the adoption of ASC 842. Amortization expense for intangible assets with definite lives was as follows: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Amortization expense for intangible assets with definite lives $ 32 $ 29 $ 63 $ 59 Amortization expense of these intangible assets over the remainder of 2019 and the next five years is expected to be as follows: Remainder of 2019 For the Years Ending December 31, (in millions) 2020 2021 2022 2023 2024 Expected amortization expense for intangible assets with definite lives $ 63 $ 126 $ 126 $ 126 $ 126 $ 121 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 June 30, 2019 . |
Restructuring and Integration C
Restructuring and Integration Costs | 6 Months Ended |
Jun. 30, 2019 | |
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, its restructuring activities, which do not qualify as exit and disposal costs, such as accelerated depreciation, asset impairments, implementation costs and other incremental costs. These costs are recorded within SG&A expenses on the income statement and are held primarily within unallocated corporate costs. Restructuring and integration charges incurred were as follows: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Keurig 2.0 exit $ — $ 7 $ 1 $ 12 Integration program 32 26 92 26 Other restructuring programs — 1 — 2 Total restructuring and integration charges $ 32 $ 34 $ 93 $ 40 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 June 30, 2019 and December 31, 2018 along with charges to expense, cash payments and non-cash charges for the period were as follows: (in millions) Workforce Reduction Costs Other (1) Total Balance as of December 31, 2018 $ 28 $ 1 $ 29 Charges to expense 10 — 10 Cash payments (34 ) — (34 ) Non-cash adjustment items 1 (1 ) — Balance as of June 30, 2019 $ 5 $ — $ 5 (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 a transformation management office to enable integration and maximize value capture. The Company developed a program to deliver $600 million in synergies over a three-year period 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 total cash expenditures of $750 million , comprised of both capital expenditures and expense, and expects to complete the program by 2021. The restructuring and integration program resulted in cumulative pre-tax charges of approximately $247 million , primarily consisting of professional fees related to the integration and transformation and costs associated with severance and employee terminations, through June 30, 2019 . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rates were as follows: Second Quarter First Six Months 2019 2018 2019 2018 Effective tax rate 24.5 % 13.3 % 25.6 % 26.9 % The increase in our effective tax rate from the second quarter of 2018 to the second quarter of 2019 was primarily due to the benefit received in the second quarter of 2018 from refining the estimated impact related to the legislation commonly known as the Tax Cuts and Jobs Act, which was enacted on December 22, 2017 (“TCJA”). The decrease in our effective tax rate from the first six months of 2018 to the first six months of 2019 was primarily due to reduction in the U.S. federal tax rate from 24.5% to 21% and exclusion of DPS Merger-related non-deductible transaction costs, partially offset by the loss of tax benefits associated with the U.S. domestic manufacturing deduction in 2019. The TCJA reduced the U.S. federal statutory tax rate from 35% to 21% and eliminated the domestic manufacturing deduction. Guidance under the TCJA for non-calendar year filers resulted in a 24.5% |
Long-term Obligations and Borro
Long-term Obligations and Borrowing Arrangements | 6 Months Ended |
Jun. 30, 2019 | |
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) June 30, 2019 December 31, 2018 Senior unsecured notes $ 11,785 $ 12,019 Term loans 1,724 2,561 Subtotal 13,509 14,580 Less - current portion (345 ) (379 ) Long-term obligations $ 13,164 $ 14,201 The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level June 30, 2019 December 31, 2018 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 2 $ 1,461 $ 1,461 $ 1,079 $ 1,079 Current portion of long-term obligations: Senior unsecured notes 2 248 249 250 250 Term loans 2 97 97 129 129 Short-term borrowings and current portion of long-term obligations $ 1,806 $ 1,807 $ 1,458 $ 1,458 SENIOR UNSECURED NOTES The Company 's senior unsecured notes (collectively, the " Notes ") consisted of the following: (in millions) Fair Value Hierarchy Level June 30, 2019 December 31, 2018 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 January 15, 2020 2.000% 2 250 249 250 245 2021 Merger Notes May 25, 2021 3.551% 2 1,750 1,823 1,750 1,742 2021-A Notes November 15, 2021 3.200% 2 250 253 250 244 2021-B Notes November 15, 2021 2.530% 2 250 250 250 240 2022 Notes November 15, 2022 2.700% 2 250 249 250 237 2023 Merger Notes May 25, 2023 4.057% 2 2,000 2,152 2,000 1,988 2023 Notes December 15, 2023 3.130% 2 500 506 500 474 2025 Merger Notes May 25, 2025 4.417% 2 1,000 1,072 1,000 999 2025 Notes November 15, 2025 3.400% 2 500 509 500 467 2026 Notes September 15, 2026 2.550% 2 400 383 400 346 2027 Notes June 15, 2027 3.430% 2 500 505 500 458 2028 Merger Notes May 25, 2028 4.597% 2 2,000 2,180 2,000 1,981 2038 Notes May 1, 2038 7.450% 2 125 163 125 151 2038 Merger Notes May 25, 2038 4.985% 2 500 548 500 483 2045 Notes November 15, 2045 4.500% 2 550 554 550 478 2046 Notes December 15, 2046 4.420% 2 400 398 400 342 2048 Merger Notes May 25, 2048 5.085% 2 750 839 750 716 Principal amount $ 11,975 $ 12,633 $ 12,225 $ 11,841 Unamortized debt issuance costs and fair value adjustment for Notes assumed in the DPS Merger (190 ) (206 ) Carrying amount $ 11,785 $ 12,019 (1) On January 15, 2019, the Company repaid the 2019 Notes at maturity, using Commercial Paper. The fair value amounts of the Notes 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 the Notes 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 Term Loan Agreements On February 8, 2019 , the Company terminated its term loan executed in conjunction with the DPS Merger ("KDP Term Loan") and entered into a new term loan agreement among the Company ("New KDP Term Loan"), the lenders party thereto (the "New Term Lenders"), and JP Morgan , as administrative agent (the "2019 New Term Loan Agreement"), pursuant to which the New Term Lenders provided $2 billion of the New KDP Term Loan to refinance the KDP Term Loan in order to achieve a more favorable interest rate. As a result of the extinguishment of the KDP Term Loan, the Company recorded approximately $3 million of loss on early extinguishment during the first six months of 2019 . The interest rate applicable to the 2019 Term Loan Agreement ranges from a rate equal to LIBOR plus a margin of 0.75% to 1.25% or a base rate plus a margin of 0.00% to 0.25% , depending on the rating of certain indexed debt of KDP. Under the 2019 New Term Loan Agreement, KDP must repay the unpaid principal amount quarterly commencing on March 29, 2019 in an amount equal to 1.25% of the aggregate principal amount made on the effective date of the New KDP Term Loan, resulting in annual mandatory repayments of $100 million . The 2019 Term Loan Agreement matures on February 8, 2023 . 364-Day Credit Agreement The Company entered into a new credit agreement on May 29, 2019 (the "364-Day Credit Agreement") among the Company, the banks party thereto and JP Morgan , as administrative agent, pursuant to which the Company obtained a $750 million commitment. The 364-Day Credit Agreement is unsecured, and its proceeds may be used for general corporate purposes. Under this credit agreement, $750 million is available for issuance, none of which was utilized as of June 30, 2019 . The interest rate applicable to borrowings under the 364-Day Credit Agreement ranges from a rate equal to LIBOR plus a margin of 1.000% to 1.625% or a base rate plus a margin of 0.000% to 0.625% , depending on the rating of certain index debt of the Company. The 364-Day Credit Agreement will mature on May 27, 2020 , subject to the Company’s option to extend the maturity date by one year so long as certain customary conditions are satisfied. KDP Revolving Credit Facility The following table provides amounts utilized and available under the Company 's revolving credit facilities ("KDP Revolver") as of June 30, 2019 : (in millions) Amount Utilized Balances Available KDP Revolver $ — $ 2,400 Letters of credit — 200 The Company 's KDP Revolver, 364-Day Credit Agreement and term loans, collectively the ("KDP Credit Agreements"), 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: (in millions) Fair Value Hierarchy Level June 30, 2019 December 31, 2018 Issuance Maturity Date Carrying Value Fair Value Carrying Value Fair Value KDP Term Loan (1) February 2023 2 $ — $ — $ 2,583 $ 2,583 New KDP Term Loan (2) February 2023 2 1,735 1,735 — — KDP Revolver February 2023 2 — — — — 364-Day Credit Agreement May 2020 2 — — — — Principal amount $ 1,735 $ 1,735 $ 2,583 $ 2,583 Unamortized discounts and debt issuance costs (11 ) (22 ) Carrying amount $ 1,724 $ 2,561 (1) In January 2019, the Company borrowed $583 million of Commercial Paper to prepay a portion of its outstanding obligations under the KDP Term Loan, all of which was a voluntary prepayment. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $5 million of loss on early extinguishment during the first six months of 2019 . This KDP Term Loan was refinanced with the New KDP Term Loan in February 2019. (2) The Company borrowed $65 million and $215 million of Commercial Paper during the second quarter and first six months of 2019 , respectively, to prepay a portion of its outstanding obligations under the 2019 New Term Loan Agreement, all of which were voluntary prepayments. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $1 million of loss on early extinguishment during the first six months of 2019 . As of June 30, 2019 , the Company was in compliance with all financial covenant requirements relating to the KDP Credit Agreements . Commercial Paper Program The following table provides information about the Company 's weighted average borrowings under its commercial paper program: Second Quarter First Six Months 2019 2018 2019 2018 Weighted average commercial paper borrowings $ 2,074 $ — $ 1,911 $ — Weighted average borrowing rates 2.76 % — % 2.83 % — % Letter of Credit Facility In addition to the portion of the KDP Revolver reserved for issuance of letters of credit, the Company has an incremental letter of credit facility. Under this facility, $100 million is available for the issuance of letters of credit, $48 million of which was utilized as of June 30, 2019 and $52 million of which remains available for use. |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2019 | |
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, future, swap and option 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. These interest rate swap contracts have maturities between approximately 2 years and 19 years as of June 30, 2019 . 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 second quarter and first six months of 2019 and 2018 , 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 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 caption of the unaudited Condensed Consolidated Statements of Income as the associated risk. These FX contracts have maturities ranging from less than 1 month to approximately 5 years as of June 30, 2019 . 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 second quarter and first six months of 2019 and 2018 , the Company held forward, future, swap and option contracts that economically hedged certain of its risks. In these cases, a 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. These commodity contracts have maturities ranging from less than 1 month to approximately 6 years as of June 30, 2019 . NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS The following table presents the notional amounts of the Company's outstanding derivative instruments by type: June 30, December 31, (in millions) 2019 2018 Interest rate contracts Receive-fixed, pay-variable interest rate swaps (1) $ 50 $ 1,070 Receive-variable, pay-fixed interest rate swaps (2) 575 2,125 FX contracts 475 348 Commodity contracts 271 296 (1) During the first six months of 2019 , the Company elected to terminate $920 million notional amount of receive-fixed, pay-variable interest rate swaps and received cash of $2 million . (2) During the first six months of 2019 , the Company elected to terminate $1,400 million notional amount of receive-variable, pay-fixed interest rate swaps and received cash of $38 million . 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 June 30, 2019 and December 31, 2018 : (in millions) Fair Value Hierarchy Level Balance Sheet Location June 30, December 31, Assets: Interest rate contracts 2 Prepaid expenses and other current assets $ 1 $ 2 FX contracts 2 Prepaid expenses and other current assets 1 4 Commodity contracts 2 Prepaid expenses and other current assets 8 3 Interest rate contracts 2 Other non-current assets 20 77 FX contracts 2 Other non-current assets 9 15 Commodity contracts 2 Other non-current assets 6 3 Liabilities: Interest rate contracts 2 Other current liabilities $ — $ 7 FX contracts 2 Other current liabilities 2 — Commodity contracts 2 Other current liabilities 27 27 Interest rate contracts 2 Other non-current liabilities — 6 Commodity contracts 2 Other non-current liabilities 5 10 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 amount of (gains) losses recognized in the unaudited Condensed Consolidated Statements of Income related to derivative instruments not designated as hedging instruments under U.S. GAAP during the periods presented. Amounts include both realized and unrealized gains and losses. Second Quarter First Six Months (in millions) Income Statement Location 2019 2018 2019 2018 Interest rate contracts Interest expense $ 2 $ (6 ) $ 4 $ (30 ) FX contracts Cost of sales 1 — 3 — FX contracts Other expense (income), net — (7 ) 6 (13 ) Commodity contracts Cost of sales (3 ) 3 12 5 Commodity contracts SG&A expenses 2 — (12 ) — Total $ 2 $ (10 ) $ 13 $ (38 ) 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. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
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 , 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: Second Quarter First Six Months (in millions, except per share data) 2019 2018 2019 2018 Basic EPS: Net income attributable to KDP $ 314 $ 83 $ 544 $ 171 Weighted average common shares outstanding 1,406.7 790.5 1,406.5 790.5 Earnings per common share — basic $ 0.22 $ 0.10 $ 0.39 $ 0.21 Diluted EPS: Net income attributable to KDP $ 314 $ 83 $ 544 $ 171 Impact of dilutive securities in Maple Parent Corporation — 2 — 3 Total $ 314 $ 81 $ 544 $ 168 Weighted average common shares outstanding 1,406.7 790.5 1,406.5 790.5 Effect of dilutive securities: Stock options 0.5 — 0.7 — RSUs 12.0 — 11.3 — Weighted average common shares outstanding and common stock equivalents 1,419.2 790.5 1,418.5 790.5 Earnings per common share — diluted $ 0.22 $ 0.10 $ 0.38 $ 0.21 Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation 0.1 — 0.1 — |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
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: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Total stock-based compensation expense $ 20 $ 9 $ 34 $ 20 Income tax benefit recognized in the Statements of Income (4 ) (2 ) (7 ) (5 ) Stock-based compensation expense, net of tax $ 16 $ 7 $ 27 $ 15 RESTRICTED STOCK UNITS The table below summarizes RSU activity : RSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2018 18,625,898 $ 15.68 3.5 $ 478 Granted 5,200,620 26.25 Vested and released (4,368 ) 24.20 — Forfeited (1,136,796 ) 19.07 Outstanding as of June 30, 2019 22,685,354 $ 17.93 3.0 $ 656 As of June 30, 2019 , there was $297 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.9 years . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income (Loss) The following table provides a summary of changes in Accumulated Other Comprehensive Income (Loss) , net of taxes: (in millions) Foreign Currency Translation Adjustments Pension and PRMB Liabilities Accumulated Other Comprehensive Income (Loss) Balance as of April 1, 2019 $ (33 ) $ (4 ) $ (37 ) Other comprehensive income 88 — 88 Balance as of June 30, 2019 $ 55 $ (4 ) $ 51 Balance as of January 1, 2019 $ (126 ) $ (4 ) $ (130 ) Other comprehensive income 181 — 181 Balance as of June 30, 2019 $ 55 $ (4 ) $ 51 Balance as of April 1, 2018 $ 75 $ — $ 75 Other comprehensive loss (16 ) — (16 ) Balance as of June 30, 2018 $ 59 $ — $ 59 Balance as of January 1, 2018 $ 99 $ — $ 99 Other comprehensive loss (40 ) — (40 ) Balance as of June 30, 2018 $ 59 $ — $ 59 |
Other Financial Information
Other Financial Information | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Financial Information | Other Financial Information The tables below provide selected financial information from the unaudited Condensed Consolidated Balance Sheets: June 30, December 31, (in millions) 2019 2018 Inventories: Raw materials $ 207 $ 204 Work in process 8 7 Finished goods 471 415 Total inventories $ 686 $ 626 Prepaid expenses and other current assets: Other receivables $ 49 $ 51 Customer incentive programs 80 12 Derivative instruments 10 9 Prepaid marketing 43 29 Spare parts 45 43 Assets held for sale 7 8 Income tax receivable 13 22 Other 70 80 Total prepaid expenses and other current assets $ 317 $ 254 Other non-current assets: Customer incentive programs $ 29 $ 34 Marketable securities - trading (1) 40 44 Operating lease right-of-use assets (2) 355 — Derivative instruments 35 95 Equity securities without readily determinable fair values 1 1 Non-current restricted cash and restricted cash equivalents 10 10 Related party notes receivable (3) 32 17 Other 70 58 Total other non-current assets $ 572 $ 259 (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 $40 million and $44 million as of June 30, 2019 and December 31, 2018 , respectively. (2) Refer to Note 3 for additional information . (3) Refer to Note 15 for additional information . June 30, December 31, (in millions) 2019 2018 Accrued expenses: Customer rebates & incentives $ 374 $ 342 Accrued compensation 148 214 Insurance reserve 39 37 Accrued interest 53 77 Accrued professional fees 29 113 Other accrued expenses 226 229 Total accrued expenses $ 869 $ 1,012 Other current liabilities: Dividends payable $ 212 $ 209 Income taxes payable 110 60 Operating lease liability (1) 61 — Finance lease liability (2) 37 26 Derivative instruments 29 34 Holdback liabilities 42 44 Other 25 33 Total other current liabilities $ 516 $ 406 Other non-current liabilities: Pension and post-retirement liability $ 29 $ 30 Insurance reserves 61 57 Operating lease liability (1) 290 — Finance lease liability (2) 253 305 Derivative instruments 5 16 Deferred compensation liability 40 44 Other 93 107 Total other non-current liabilities $ 771 $ 559 (1) Refer to Note 3 for additional information . (2) Amounts as of December 31, 2018 include capital leases and financing obligations reported under ASC 840. Refer to Notes 1 and 3 for additional information. ACCOUNTS PAYABLE KDP entered into an agreement with a third party administrator 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 June 30, 2019 and December 31, 2018 , $2,096 million and $1,676 million , respectively, of KDP's outstanding payment obligations are payable to suppliers who utilize this third party service administrator. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 December 31, 2018 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 106 $ 106 $ 83 $ 83 Restricted cash and restricted cash equivalents (1) 1 44 44 46 46 Non-current restricted cash and restricted cash equivalents included in Other non-current assets 1 10 10 10 10 Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 160 $ 160 $ 139 $ 139 (1) Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Big Red Acquisition and the Core Acquisition. The following table provides supplemental cash flow disclosures: First Six Months (in millions) 2019 2018 Supplemental cash flow disclosures of non-cash investing activities: Measurement period adjustment of Core purchase price $ (11 ) $ — Capital expenditures included in accounts payable and accrued expenses 205 39 Purchases of intangibles 2 — Supplemental cash flow disclosures of non-cash financing activities: Dividends declared but not yet paid 212 — Finance lease additions 30 — Supplemental cash flow disclosures: Cash paid for interest 272 47 Cash paid for related party interest — 51 Cash paid for income taxes 142 71 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
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. 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 granted the defendants' request for a stay of the third phase trial. The Court of Appeal’s stay order was prompted by a notice published on June 15, 2018 by California’s Office of Environmental Health Hazard Assessment (“OEHHA”) proposing a new Proposition 65 regulation clarifying that cancer warnings are not required for Proposition 65 chemicals, such as acrylamide, that are present in coffee as a result of roasting coffee beans. After two rounds of public comments, the regulation was finalized, adopted and approved by the Office of Administrative Law on June 3, 2019. It will take effect on October 1, 2019. The Court of Appeal has lifted its 2018 stay order. Further litigation is anticipated based on CERT’s contentions that the regulation is legally invalid and, alternatively, cannot be applied to its pending claims. 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. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties IDENTIFICATION OF RELATED PARTIES The Company is indirectly controlled by a single stockholder, JAB Holding Company S.a.r.l ("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 Panera, Peet's, Caribou, 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 certain brand ownership companies. Refer to Note 2 for additional information about the Company 's investments in unconsolidated affiliates. 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 Anheuser-Busch InBev ("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. 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"), which was amended on December 7, 2018 to increase the line of credit (the credit agreement, as amended, the "Bedford Credit Agreement"). Under the Bedford Credit Agreement, the Company has committed to provide up to $51 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 $32 million and $17 million as of June 30, 2019 and December 31, 2018 , respectively. |
Segments
Segments | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segments | Segments Following the DPS Merger as described in Note 2 , the Company revised its segment structure to consist of the following four reportable segments as of June 30, 2019 and December 31, 2018 , and for the second quarter and first six months of 2019 , and recasted for the second quarter and the first six months of 2018 : • 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. • 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 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 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. 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: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Segment Results – Net sales Coffee Systems $ 990 $ 949 $ 1,958 $ 1,897 Packaged Beverages 1,311 — 2,427 — Beverage Concentrates 370 — 674 — Latin America Beverages 141 — 257 — Net sales $ 2,812 $ 949 $ 5,316 $ 1,897 Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Segment Results – Income from operations Coffee Systems $ 287 $ 274 $ 580 $ 531 Packaged Beverages 186 — 335 — Beverage Concentrates 244 — 445 — Latin America Beverages 26 — 37 — Total income from operations - segments 743 274 1,397 531 Unallocated corporate costs 156 107 312 186 Income from operations $ 587 $ 167 $ 1,085 $ 345 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2019 | |
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 following table disaggregates the Company 's revenue by portfolio for the second quarter and first six months of 2019 and 2018 : (in millions) Coffee Systems Packaged Beverages Beverage Concentrates Latin America Beverages Total For the second quarter of 2019: CSD (1) $ — $ 541 $ 362 $ 102 $ 1,005 NCB (1) — 662 3 38 703 Pods (2) 783 — — — 783 Appliances 154 — — — 154 Other 53 108 5 1 167 Net sales $ 990 $ 1,311 $ 370 $ 141 $ 2,812 For the first six months of 2019: CSD (1) $ — $ 1,063 $ 660 $ 182 $ 1,905 NCB (1) — 1,163 5 74 1,242 Pods (2) 1,576 — — — 1,576 Appliances 277 — — — 277 Other 105 201 9 1 316 Net sales $ 1,958 $ 2,427 $ 674 $ 257 $ 5,316 For the second quarter of 2018: CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) 763 — — — 763 Appliances 131 — — — 131 Other 55 — — — 55 Net sales $ 949 $ — $ — $ — $ 949 For the first six months of 2018: CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) 1,557 — — — 1,557 Appliances 232 — — — 232 Other 108 — — — 108 Net sales $ 1,897 $ — $ — $ — $ 1,897 (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. |
Guarantor and Non-Guarantor Fin
Guarantor and Non-Guarantor Financial Information | 6 Months Ended |
Jun. 30, 2019 | |
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 (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 second quarter and first six months of 2018 are not presented herein, as amounts reported prior to the DPS Merger are that of Maple, and would therefore be entirely reported within the Non-Guarantors column. Refer to the Condensed Consolidated Statements of Income, Statements of Comprehensive Income, and Statements of Cash Flows for the amounts which would be presented as Non-Guarantors for these historical periods. Condensed Consolidating Statements of Income For the Second Quarter of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,660 $ 1,207 $ (55 ) $ 2,812 Cost of sales — 661 580 (55 ) 1,186 Gross profit — 999 627 — 1,626 Selling, general and administrative expenses 1 668 359 — 1,028 Other operating expense, net — — 11 — 11 Income from operations (1 ) 331 257 — 587 Interest expense 198 3 28 (59 ) 170 Interest expense - related party — — — — — Loss on early extinguishment of debt — — — — — Other expense (income), net (239 ) 192 (11 ) 59 1 Income before provision for income taxes 40 136 240 — 416 Provision for income taxes (5 ) 42 65 — 102 Income before equity in earnings of consolidated subsidiaries 45 94 175 — 314 Equity in earnings of consolidated subsidiaries 269 14 — (283 ) — Net income $ 314 $ 108 $ 175 $ (283 ) $ 314 Condensed Consolidating Statements of Income For the First Six Months of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 3,070 $ 2,345 $ (99 ) $ 5,316 Cost of sales — 1,232 1,159 (99 ) 2,292 Gross profit — 1,838 1,186 — 3,024 Selling, general and administrative expenses 5 1,230 704 — 1,939 Other operating expense, net — (10 ) 10 — — Income from operations (5 ) 618 472 — 1,085 Interest expense 398 7 57 (123 ) 339 Interest expense - related party — — — — — Loss on early extinguishment of debt 9 — — — 9 Other (income) expense, net (251 ) 147 (13 ) 123 6 Income before provision for income taxes (161 ) 464 428 — 731 Provision for income taxes (54 ) 126 115 — 187 Income before equity in earnings of consolidated subsidiaries (107 ) 338 313 — 544 Equity in earnings of consolidated subsidiaries 651 14 — (665 ) — Net income $ 544 $ 352 $ 313 $ (665 ) $ 544 Condensed Consolidating Statements of Comprehensive Income For the Second Quarter of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income $ 402 $ 178 $ 264 $ (442 ) $ 402 Condensed Consolidating Statements of Comprehensive Income For the First Six Months of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income $ 725 $ 497 $ 495 $ (992 ) $ 725 Condensed Consolidating Balance Sheets As of June 30, 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 11 $ 95 $ — $ 106 Restricted cash and restricted cash equivalents 40 2 2 — 44 Trade accounts receivable, net — 642 426 — 1,068 Related party receivable 135 74 64 (273 ) — Inventories — 250 436 — 686 Prepaid expenses and other current assets 613 199 115 (610 ) 317 Total current assets 788 1,178 1,138 (883 ) 2,221 Property, plant and equipment, net — 1,297 993 — 2,290 Investments in consolidated subsidiaries 41,003 4,971 — (45,974 ) — Investments in unconsolidated affiliates — 63 107 — 170 Goodwill — 8,239 11,800 — 20,039 Other intangible assets, net — 16,857 7,371 — 24,228 Long-term receivable, related parties 5,066 8,623 — (13,689 ) — Other non-current assets 61 248 263 — 572 Deferred tax assets — — 27 — 27 Total assets $ 46,918 $ 41,476 $ 21,699 $ (60,546 ) $ 49,547 Current liabilities: Accounts payable $ — $ 990 $ 1,919 $ — $ 2,909 Accrued expenses 53 596 220 — 869 Structured payables — 47 548 — 595 Related party payable 74 95 104 (273 ) — Short-term borrowings and current portion of long-term obligations 1,806 — — — 1,806 Other current liabilities 269 679 178 (610 ) 516 Total current liabilities 2,202 2,407 2,969 (883 ) 6,695 Long-term obligations to third parties 13,164 — — — 13,164 Long-term obligations to related parties 8,589 3,440 1,660 (13,689 ) — Deferred tax liabilities 40 4,107 1,887 — 6,034 Other non-current liabilities 40 495 236 — 771 Total liabilities 24,035 10,449 6,752 (14,572 ) 26,664 Total stockholders' equity 22,883 31,027 14,947 (45,974 ) 22,883 Total liabilities and stockholders' equity $ 46,918 $ 41,476 $ 21,699 $ (60,546 ) $ 49,547 Condensed Consolidating Balance Sheets As of December 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 18 $ 65 $ — $ 83 Restricted cash and restricted cash equivalents 42 3 1 — 46 Trade accounts receivable, net — 596 554 — 1,150 Related party receivable 189 71 76 (336 ) — Inventories — 226 400 — 626 Prepaid expenses and other current assets 569 110 132 (557 ) 254 Total current assets 800 1,024 1,228 (893 ) 2,159 Property, plant and equipment, net — 1,351 959 — 2,310 Investments in consolidated subsidiaries 40,119 4,882 — (45,001 ) — Investments in unconsolidated affiliates — 63 123 — 186 Goodwill 50 8,371 11,590 — 20,011 Other intangible assets, net — 16,583 7,384 — 23,967 Long-term receivable, related parties 5,503 7,827 — (13,330 ) — Other non-current assets 64 41 154 — 259 Deferred tax assets — — 26 — 26 Total assets $ 46,536 $ 40,142 $ 21,464 $ (59,224 ) $ 48,918 Current liabilities: Accounts payable $ — $ 497 $ 1,803 $ — $ 2,300 Accrued expenses 78 610 324 — 1,012 Structured payables — 47 479 — 526 Related party payable 65 106 165 (336 ) — Short-term borrowings and current portion of long-term obligations 1,458 — — — 1,458 Other current liabilities 278 626 59 (557 ) 406 Total current liabilities 1,879 1,886 2,830 (893 ) 5,702 Long-term obligations to third parties 14,201 — — — 14,201 Long-term obligations to related parties 7,827 3,369 2,134 (13,330 ) — Deferred tax liabilities 46 4,075 1,802 — 5,923 Other non-current liabilities 50 337 172 — 559 Total liabilities 24,003 9,667 6,938 (14,223 ) 26,385 Total stockholders' equity 22,533 30,475 14,526 (45,001 ) 22,533 Total liabilities and stockholders' equity $ 46,536 $ 40,142 $ 21,464 $ (59,224 ) $ 48,918 Condensed Consolidating Statements of Cash Flows For the First Six Months of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (178 ) $ 812 $ 581 $ (12 ) $ 1,203 Investing activities: Acquisitions of businesses — (3 ) (5 ) — (8 ) Collections on (issuances of) related party notes receivable 535 (789 ) (14 ) 254 (14 ) Investments in unconsolidated affiliates — (11 ) — — (11 ) Purchases of property, plant and equipment — (44 ) (74 ) — (118 ) Proceeds from sales of property, plant and equipment — 10 9 — 19 Purchases of intangibles — (4 ) — — (4 ) Return of capital from investments in consolidated subsidiaries — 32 — (32 ) — Other, net 10 — 12 — 22 Net cash provided by (used in) investing activities 545 (809 ) (72 ) 222 (114 ) Financing activities: Proceeds from (payments of) related party notes 763 — (509 ) (254 ) — Proceeds from term loan 2,000 — — — 2,000 Net issuance of commercial paper 381 — — — 381 Proceeds from structured payables — — 78 — 78 Payments on structured payables — — (9 ) — (9 ) Payments on senior unsecured notes (250 ) — — — (250 ) Repayment of term loan (2,848 ) — — — (2,848 ) Payments on finance leases — (11 ) (8 ) — (19 ) Cash dividends paid (423 ) — (44 ) 44 (423 ) Other, net 8 — 2 — 10 Net cash used in financing activities (369 ) (11 ) (490 ) (210 ) (1,080 ) Cash and cash equivalents — net change from: Operating, investing and financing activities (2 ) (8 ) 19 — 9 Effect of exchange rate changes on cash and cash equivalents — — 12 — 12 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 42 31 66 — 139 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 40 $ 23 $ 97 $ — $ 160 |
Background and Basis of Prese_2
Background and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 and December 31, 2018 and for the second quarter and first six months of 2019 and 2018 reflect the results of operations and financial position of Maple for the periods presented. Amounts reported as of June 30, 2019 and December 31, 2018 , and for the second quarter and first six months of 2019, include the results of operations and financial position of DPS , as the DPS Merger 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 KDP 's consolidated financial statements and accompanying notes, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 . Except as otherwise specified, references to the " second quarter " indicate the Company 's quarterly periods ended June 30, 2019 and 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. |
Reclassifications | RECLASSIFICATIONS The Company reclassified the following amounts from the unaudited condensed consolidated balance sheets as of December 31, 2018 in connection with the adoption of Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842"): (in millions) Prior Presentation Revised Presentation December 31, 2018 Capital lease and financing obligations Current portion of capital lease and financing obligations Other current liabilities $ 26 Capital lease and financing obligations Capital lease and financing obligations, less current Other non-current liabilities 305 Refer to Recently Adopted Provisions of U.S. GAAP below for further information about the adoption of ASC 842. Refer to Note 3 for information about the Company's leases and Note 12 for disclosure of the components of other current liabilities and other non-current liabilities. |
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 |
Accounting Standards | RECENTLY ISSUED ACCOUNTING STANDARDS In June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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. RECENTLY ADOPTED PROVISIONS OF U.S. GAAP Leases As of January 1, 2019, the Company adopted ASC 842. ASC 842 replaced 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. The Company elected to apply the optional transition method provided by ASU 2018-11, Leases (Topic 842) - Targeted Improvements, which allows companies to adopt the standard on a modified retrospective basis and to apply the new leases standard as of the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings. Accordingly, amounts reported in the unaudited condensed consolidated financial statements for all periods prior to January 1, 2019 have not been recast under ASC 842 and continue to be reported in accordance with ASC 840. The Company elected the package of practical expedients which allows the Company to carry forward its historical assessments of whether contracts contain leases, lease classification, and initial direct costs, for leases in existence prior to January 1, 2019. The adoption of ASC 842 resulted in an increase to KDP's total assets of approximately $314 million , an increase to KDP's total liabilities of approximately $319 million , and an impact to KDP's retained earnings of approximately $5 million , as of January 1, 2019. Refer to Note 3 for additional information . Other Accounting Standards As of January 1, 2019, the Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12") on a prospective basis. 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. The adoption of ASU 2017-12 did not have a material impact on the Company's unaudited condensed consolidated financial statements. As of January 1, 2019, the Company early adopted 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. The ASU was adopted on a prospective basis and did not have a material impact on the Company's unaudited condensed consolidated financial statements. |
Background and Basis of Prese_3
Background and Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of reclassifications | The Company reclassified the following amounts from the unaudited condensed consolidated balance sheets as of December 31, 2018 in connection with the adoption of Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842"): (in millions) Prior Presentation Revised Presentation December 31, 2018 Capital lease and financing obligations Current portion of capital lease and financing obligations Other current liabilities $ 26 Capital lease and financing obligations Capital lease and financing obligations, less current Other non-current liabilities 305 |
Acquisitions and Investments _2
Acquisitions and Investments in Unconsolidated Affiliates (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
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 Acquisition as of June 30, 2019 : (in millions) Initial Allocation of Consideration Measurement Period Adjustments Allocation of Consideration as of June 30, 2019 Cash and cash equivalents $ 3 — $ 3 Other intangible assets 240 (2 ) 238 Assumed liabilities, net of acquired assets (1) (28 ) (20 ) (48 ) Goodwill 89 24 113 Total consideration exchanged (2) $ 304 $ 2 $ 306 Less: Company's previous ownership interest 22 — 22 Less: Holdback placed in escrow 15 — 15 Acquisition of business $ 267 $ 2 $ 269 (1) The Company valued WIP and finished goods inventory using a net realizable value approach, which resulted in a step-up of $2 million which was recognized in the cost of goods sold for the year ended December 31, 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. (2) The Company paid $2 million in additional consideration during the fourth quarter of 2018 as a result of working capital adjustments determined pursuant to the terms of the Big Red Acquisition Agreement. DPS Merger as of June 30, 2019 : (in millions) Initial Allocation of Consideration Measurement Period Adjustments Allocation of Consideration as of June 30, 2019 Cash and cash equivalents $ 147 $ — $ 147 Investments in unconsolidated affiliates 90 — 90 Property, plant and equipment (1) 1,549 (74 ) 1,475 Other intangible assets 20,404 (326 ) 20,078 Long-term obligations (4,049 ) — (4,049 ) Finance leases (214 ) 9 (205 ) Acquired assets, net of assumed liabilities (2) 107 (26 ) 81 Deferred tax liabilities, net of deferred tax assets (3) (4,959 ) (82 ) (5,041 ) Goodwill 9,407 499 9,906 Total consideration exchanged $ 22,482 $ — $ 22,482 Fair value of stock and replacement equity awards not converted to cash 3,643 — 3,643 Acquisition of business $ 18,839 $ — $ 18,839 (1) The Company 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 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 . (2) 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 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. (3) 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 following is a summary of the preliminary allocation of purchase price to the estimated fair values of assets acquired and liabilities assumed in the Core Acquisition as of June 30, 2019 : (in millions) Initial Allocation of Consideration Measurement Period Adjustments Allocation of Consideration as of June 30, 2019 Cash and cash equivalents $ 10 $ — $ 10 Other intangible assets 273 — 273 Assumed liabilities, net of acquired assets (1) (12 ) (3 ) (15 ) Goodwill 236 12 248 Total purchase price $ 507 $ 9 $ 516 Company's previous ownership interest 31 — 31 Less: Holdback placed in Escrow 27 (2 ) 25 Acquisition of business $ 449 $ 11 $ 460 (1) The Company preliminarily valued WIP and finished goods inventory using a net realizable value approach resulting in a step-up of $4 million , of which $1 million and $3 million was recognized in cost of goods sold in 2018 and 2019, respectively, due to the timing of the sale of the related inventory. Raw materials were carried at net book value. |
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) 11 5 Contractual arrangements (2) 6 12 Customer relationships (3) 1 8-40 Total other intangible assets $ 238 (1) The Company valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company 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 industrial. We valued retail and industrial customer relationships utilizing the distributor method, a form of the income approach. The preliminary allocation of purchase price to other intangible assets acquired is as follows: (in millions) Fair Value Estimated Life (in years) Brands (1) $ 254 n/a Contractual arrangements (2) 19 10 Total other intangible assets $ 273 (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 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) $ 19,556 n/a Contractual arrangements (2) 127 n/a Customer relationships (3) 390 10-40 Favorable leases (4) 5 5-12 Total other intangible assets $ 20,078 (1) The Company valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. (2) The Company 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 |
Pro forma information | e DPS Merger, the associated tax effects and the impact of the additional debt to finance the DPS Merger. Second Quarter First Six Months (Unaudited, in millions) 2018 2018 Net sales $ 2,822 $ 5,351 Net income 323 534 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. |
Schedule of Transaction Costs [Table Text Block] | The following table provides information about the Company's transaction expenses incurred during the second quarter and first six months of 2019 and 2018 : Second Quarter First Six Months (in millions) 2019 2018 2019 2018 DPS Merger $ 4 $ 39 $ 6 $ 75 Other transaction expenses 4 — 7 — Total transaction expenses incurred $ 8 $ 39 $ 13 $ 75 |
Equity method investments | The following table summarizes investments in unconsolidated affiliates as of June 30, 2019 and December 31, 2018 : June 30, December 31, (in millions) Ownership Interest 2019 2018 BA Sports Nutrition, LLC ("BA") 12.5 % $ 52 $ 62 Bedford Systems, LLC 30.0 % 65 79 Dyla LLC 12.6 % 14 15 Force Holdings LLC 33.3 % 5 6 Beverage startup companies (various) 28 19 Other (various) 6 5 Investments in unconsolidated affiliates $ 170 $ 186 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease, Cost [Table Text Block] | The following table presents the components of lease cost: Second Quarter First Six Months (in millions) 2019 2019 Operating lease cost $ 20 $ 40 Finance lease cost Amortization of right-of-use assets 10 20 Interest on lease liabilities 3 7 Variable lease cost (1) 8 14 Short-term lease cost 2 3 Sublease income (1 ) (1 ) Total lease cost $ 42 $ 83 (1) Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation. |
Supplemental Cash Flow Information for Leases [Table Text Block] | The following table presents supplemental cash flow information about the Company's leases: First Six Months (in millions) 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 38 Operating cash flows from finance leases 7 Financing cash flows from finance leases 19 |
Schedule of Weighted Average Lease Disclosures [Table Text Block] | The following table presents information about the Company's weighted average discount rate and remaining lease term as of June 30, 2019 : Weighted average discount rate Operating leases 4.6 % Finance leases 5.3 % Weighted average remaining lease term Operating leases 8 years Finance leases 12 years |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows: (in millions) Operating Leases Finance Leases Remainder of 2019 $ 39 $ 26 2020 70 49 2021 56 42 2022 47 36 2023 39 33 2024 37 30 Thereafter 133 171 Total future minimum lease payments 421 387 Less: imputed interest (70 ) (97 ) Present value of minimum lease payments $ 351 $ 290 Future minimum lease payments under non-cancellable leases as of December 31, 2018 under ASC 840 were as follows: (in millions) Operating Leases Capital Leases Financing Obligations 2019 $ 58 $ 35 $ 10 2020 53 34 10 2021 44 33 10 2022 34 33 10 2023 25 30 10 Thereafter 98 189 62 Total future minimum lease payments $ 312 354 112 Less: imputed interest (98 ) (37 ) Present value of minimum lease payments $ 256 $ 75 |
Finance Lease, Liability, Maturity [Table Text Block] | Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows: (in millions) Operating Leases Finance Leases Remainder of 2019 $ 39 $ 26 2020 70 49 2021 56 42 2022 47 36 2023 39 33 2024 37 30 Thereafter 133 171 Total future minimum lease payments 421 387 Less: imputed interest (70 ) (97 ) Present value of minimum lease payments $ 351 $ 290 |
Schedule of Capital Leases and Financing Obligations, Maturity [Table Text Block] | Future minimum lease payments under non-cancellable leases as of December 31, 2018 under ASC 840 were as follows: (in millions) Operating Leases Capital Leases Financing Obligations 2019 $ 58 $ 35 $ 10 2020 53 34 10 2021 44 33 10 2022 34 33 10 2023 25 30 10 Thereafter 98 189 62 Total future minimum lease payments $ 312 354 112 Less: imputed interest (98 ) (37 ) Present value of minimum lease payments $ 256 $ 75 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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: Coffee Systems Packaged Beverages Beverage Concentrates Latin America Beverages Unallocated Total Balance as of January 1, 2019 $ 9,725 $ 4,878 $ 4,265 $ 618 $ 525 $ 20,011 Foreign currency translation 46 27 16 14 — 103 Acquisitions (1) 3 254 242 (73 ) (501 ) (75 ) Balance as of June 30, 2019 $ 9,774 $ 5,159 $ 4,523 $ 559 $ 24 $ 20,039 (1) Amounts primarily represent measurement period adjustments for the DPS Merger, the Big Red Acquisition, and the Core Acquisition. Refer to Note 2 for further information. |
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: June 30, 2019 December 31, 2018 Brands (1) $ 20,025 $ 19,712 Trade names 2,479 2,479 Contractual arrangements 122 119 Distribution rights 2 — Total $ 22,628 $ 22,310 (1) Approximately $113 million of the increase in brands with indefinite lives was due to foreign currency translation during the period. The remaining change represents measurement period adjustments for the DPS Merger. Refer to Note 2 for further 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: June 30, 2019 December 31, 2018 (in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Acquired technology $ 1,146 $ (218 ) $ 928 $ 1,146 $ (182 ) $ 964 Customer relationships 638 (85 ) 553 629 (67 ) 562 Trade names 127 (47 ) 80 127 (40 ) 87 Contractual arrangements 25 (2 ) 23 26 (1 ) 25 Brands 11 (1 ) 10 9 — 9 Distribution rights 6 — 6 — — — Favorable leases (1) — — — 13 (3 ) 10 Total $ 1,953 $ (353 ) $ 1,600 $ 1,950 $ (293 ) $ 1,657 (1) Amounts recorded as favorable lease intangible assets were reclassified to operating lease right-of-use assets in connection with the adoption of ASC 842 as of January 1, 2019. Refer to Note 3 for further information regarding the adoption of ASC 842. |
Schedule of amortization expense for intangible assets with definite lives | Amortization expense for intangible assets with definite lives was as follows: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Amortization expense for intangible assets with definite lives $ 32 $ 29 $ 63 $ 59 |
Schedule of future amortization expense | Amortization expense of these intangible assets over the remainder of 2019 and the next five years is expected to be as follows: Remainder of 2019 For the Years Ending December 31, (in millions) 2020 2021 2022 2023 2024 Expected amortization expense for intangible assets with definite lives $ 63 $ 126 $ 126 $ 126 $ 126 $ 121 |
Restructuring and Integration_2
Restructuring and Integration Costs (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and related costs | Restructuring and integration charges incurred were as follows: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Keurig 2.0 exit $ — $ 7 $ 1 $ 12 Integration program 32 26 92 26 Other restructuring programs — 1 — 2 Total restructuring and integration charges $ 32 $ 34 $ 93 $ 40 |
Schedule of restructuring reserve by type of cost | Restructuring liabilities as of June 30, 2019 and December 31, 2018 along with charges to expense, cash payments and non-cash charges for the period were as follows: (in millions) Workforce Reduction Costs Other (1) Total Balance as of December 31, 2018 $ 28 $ 1 $ 29 Charges to expense 10 — 10 Cash payments (34 ) — (34 ) Non-cash adjustment items 1 (1 ) — Balance as of June 30, 2019 $ 5 $ — $ 5 (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. |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | Our effective tax rates were as follows: Second Quarter First Six Months 2019 2018 2019 2018 Effective tax rate 24.5 % 13.3 % 25.6 % 26.9 % |
Long-term Obligations and Bor_2
Long-term Obligations and Borrowing Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt [Table Text Block] | The following table provides information about the Company 's weighted average borrowings under its commercial paper program: Second Quarter First Six Months 2019 2018 2019 2018 Weighted average commercial paper borrowings $ 2,074 $ — $ 1,911 $ — Weighted average borrowing rates 2.76 % — % 2.83 % — % |
Schedule of debt | The following table summarizes the Company 's long-term obligations: (in millions) June 30, 2019 December 31, 2018 Senior unsecured notes $ 11,785 $ 12,019 Term loans 1,724 2,561 Subtotal 13,509 14,580 Less - current portion (345 ) (379 ) Long-term obligations $ 13,164 $ 14,201 The following table summarizes the Company 's short-term borrowings and current portion of long-term obligations: Fair Value Hierarchy Level June 30, 2019 December 31, 2018 (in millions) Carrying Value Fair Value Carrying Value Fair Value Commercial paper 2 $ 1,461 $ 1,461 $ 1,079 $ 1,079 Current portion of long-term obligations: Senior unsecured notes 2 248 249 250 250 Term loans 2 97 97 129 129 Short-term borrowings and current portion of long-term obligations $ 1,806 $ 1,807 $ 1,458 $ 1,458 |
Schedule of long-term debt instruments | The Company 's senior unsecured notes (collectively, the " Notes ") consisted of the following: (in millions) Fair Value Hierarchy Level June 30, 2019 December 31, 2018 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 January 15, 2020 2.000% 2 250 249 250 245 2021 Merger Notes May 25, 2021 3.551% 2 1,750 1,823 1,750 1,742 2021-A Notes November 15, 2021 3.200% 2 250 253 250 244 2021-B Notes November 15, 2021 2.530% 2 250 250 250 240 2022 Notes November 15, 2022 2.700% 2 250 249 250 237 2023 Merger Notes May 25, 2023 4.057% 2 2,000 2,152 2,000 1,988 2023 Notes December 15, 2023 3.130% 2 500 506 500 474 2025 Merger Notes May 25, 2025 4.417% 2 1,000 1,072 1,000 999 2025 Notes November 15, 2025 3.400% 2 500 509 500 467 2026 Notes September 15, 2026 2.550% 2 400 383 400 346 2027 Notes June 15, 2027 3.430% 2 500 505 500 458 2028 Merger Notes May 25, 2028 4.597% 2 2,000 2,180 2,000 1,981 2038 Notes May 1, 2038 7.450% 2 125 163 125 151 2038 Merger Notes May 25, 2038 4.985% 2 500 548 500 483 2045 Notes November 15, 2045 4.500% 2 550 554 550 478 2046 Notes December 15, 2046 4.420% 2 400 398 400 342 2048 Merger Notes May 25, 2048 5.085% 2 750 839 750 716 Principal amount $ 11,975 $ 12,633 $ 12,225 $ 11,841 Unamortized debt issuance costs and fair value adjustment for Notes assumed in the DPS Merger (190 ) (206 ) Carrying amount $ 11,785 $ 12,019 (1) On January 15, 2019, the Company repaid the 2019 Notes at maturity, using Commercial Paper. |
Schedule of line of credit facilities | The following table provides amounts utilized and available under the Company 's revolving credit facilities ("KDP Revolver") as of June 30, 2019 : (in millions) Amount Utilized Balances Available KDP Revolver $ — $ 2,400 Letters of credit — 200 The Company 's KDP Revolver, 364-Day Credit Agreement and term loans, collectively the ("KDP Credit Agreements"), 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: (in millions) Fair Value Hierarchy Level June 30, 2019 December 31, 2018 Issuance Maturity Date Carrying Value Fair Value Carrying Value Fair Value KDP Term Loan (1) February 2023 2 $ — $ — $ 2,583 $ 2,583 New KDP Term Loan (2) February 2023 2 1,735 1,735 — — KDP Revolver February 2023 2 — — — — 364-Day Credit Agreement May 2020 2 — — — — Principal amount $ 1,735 $ 1,735 $ 2,583 $ 2,583 Unamortized discounts and debt issuance costs (11 ) (22 ) Carrying amount $ 1,724 $ 2,561 (1) In January 2019, the Company borrowed $583 million of Commercial Paper to prepay a portion of its outstanding obligations under the KDP Term Loan, all of which was a voluntary prepayment. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $5 million of loss on early extinguishment during the first six months of 2019 . This KDP Term Loan was refinanced with the New KDP Term Loan in February 2019. (2) The Company borrowed $65 million and $215 million of Commercial Paper during the second quarter and first six months of 2019 , respectively, to prepay a portion of its outstanding obligations under the 2019 New Term Loan Agreement, all of which were voluntary prepayments. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $1 million of loss on early extinguishment during the first six months of 2019 . |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Notional Amounts of Derivative Instruments | NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS The following table presents the notional amounts of the Company's outstanding derivative instruments by type: June 30, December 31, (in millions) 2019 2018 Interest rate contracts Receive-fixed, pay-variable interest rate swaps (1) $ 50 $ 1,070 Receive-variable, pay-fixed interest rate swaps (2) 575 2,125 FX contracts 475 348 Commodity contracts 271 296 (1) During the first six months of 2019 , the Company elected to terminate $920 million notional amount of receive-fixed, pay-variable interest rate swaps and received cash of $2 million . (2) During the first six months of 2019 , the Company elected to terminate $1,400 million notional amount of receive-variable, pay-fixed interest rate swaps and received cash of $38 million . |
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 June 30, 2019 and December 31, 2018 : (in millions) Fair Value Hierarchy Level Balance Sheet Location June 30, December 31, Assets: Interest rate contracts 2 Prepaid expenses and other current assets $ 1 $ 2 FX contracts 2 Prepaid expenses and other current assets 1 4 Commodity contracts 2 Prepaid expenses and other current assets 8 3 Interest rate contracts 2 Other non-current assets 20 77 FX contracts 2 Other non-current assets 9 15 Commodity contracts 2 Other non-current assets 6 3 Liabilities: Interest rate contracts 2 Other current liabilities $ — $ 7 FX contracts 2 Other current liabilities 2 — Commodity contracts 2 Other current liabilities 27 27 Interest rate contracts 2 Other non-current liabilities — 6 Commodity contracts 2 Other non-current liabilities 5 10 |
Schedule of derivative instruments not designated as hedging instruments | The following table presents the amount of (gains) losses recognized in the unaudited Condensed Consolidated Statements of Income related to derivative instruments not designated as hedging instruments under U.S. GAAP during the periods presented. Amounts include both realized and unrealized gains and losses. Second Quarter First Six Months (in millions) Income Statement Location 2019 2018 2019 2018 Interest rate contracts Interest expense $ 2 $ (6 ) $ 4 $ (30 ) FX contracts Cost of sales 1 — 3 — FX contracts Other expense (income), net — (7 ) 6 (13 ) Commodity contracts Cost of sales (3 ) 3 12 5 Commodity contracts SG&A expenses 2 — (12 ) — Total $ 2 $ (10 ) $ 13 $ (38 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following table presents the Company 's basic and diluted EPS and shares outstanding: Second Quarter First Six Months (in millions, except per share data) 2019 2018 2019 2018 Basic EPS: Net income attributable to KDP $ 314 $ 83 $ 544 $ 171 Weighted average common shares outstanding 1,406.7 790.5 1,406.5 790.5 Earnings per common share — basic $ 0.22 $ 0.10 $ 0.39 $ 0.21 Diluted EPS: Net income attributable to KDP $ 314 $ 83 $ 544 $ 171 Impact of dilutive securities in Maple Parent Corporation — 2 — 3 Total $ 314 $ 81 $ 544 $ 168 Weighted average common shares outstanding 1,406.7 790.5 1,406.5 790.5 Effect of dilutive securities: Stock options 0.5 — 0.7 — RSUs 12.0 — 11.3 — Weighted average common shares outstanding and common stock equivalents 1,419.2 790.5 1,418.5 790.5 Earnings per common share — diluted $ 0.22 $ 0.10 $ 0.38 $ 0.21 Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation 0.1 — 0.1 — |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock based compensation expense | The components of stock-based compensation expense are presented below: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Total stock-based compensation expense $ 20 $ 9 $ 34 $ 20 Income tax benefit recognized in the Statements of Income (4 ) (2 ) (7 ) (5 ) Stock-based compensation expense, net of tax $ 16 $ 7 $ 27 $ 15 |
Schedule of share-based compensation, restricted stock and restricted stock units activity | The table below summarizes RSU activity : RSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2018 18,625,898 $ 15.68 3.5 $ 478 Granted 5,200,620 26.25 Vested and released (4,368 ) 24.20 — Forfeited (1,136,796 ) 19.07 Outstanding as of June 30, 2019 22,685,354 $ 17.93 3.0 $ 656 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Accumulated other comprehensive income (loss), net of taxes | The following table provides a summary of changes in Accumulated Other Comprehensive Income (Loss) , net of taxes: (in millions) Foreign Currency Translation Adjustments Pension and PRMB Liabilities Accumulated Other Comprehensive Income (Loss) Balance as of April 1, 2019 $ (33 ) $ (4 ) $ (37 ) Other comprehensive income 88 — 88 Balance as of June 30, 2019 $ 55 $ (4 ) $ 51 Balance as of January 1, 2019 $ (126 ) $ (4 ) $ (130 ) Other comprehensive income 181 — 181 Balance as of June 30, 2019 $ 55 $ (4 ) $ 51 Balance as of April 1, 2018 $ 75 $ — $ 75 Other comprehensive loss (16 ) — (16 ) Balance as of June 30, 2018 $ 59 $ — $ 59 Balance as of January 1, 2018 $ 99 $ — $ 99 Other comprehensive loss (40 ) — (40 ) Balance as of June 30, 2018 $ 59 $ — $ 59 |
Other Financial Information (Ta
Other Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of other assets and other liabilities | The tables below provide selected financial information from the unaudited Condensed Consolidated Balance Sheets: June 30, December 31, (in millions) 2019 2018 Inventories: Raw materials $ 207 $ 204 Work in process 8 7 Finished goods 471 415 Total inventories $ 686 $ 626 Prepaid expenses and other current assets: Other receivables $ 49 $ 51 Customer incentive programs 80 12 Derivative instruments 10 9 Prepaid marketing 43 29 Spare parts 45 43 Assets held for sale 7 8 Income tax receivable 13 22 Other 70 80 Total prepaid expenses and other current assets $ 317 $ 254 Other non-current assets: Customer incentive programs $ 29 $ 34 Marketable securities - trading (1) 40 44 Operating lease right-of-use assets (2) 355 — Derivative instruments 35 95 Equity securities without readily determinable fair values 1 1 Non-current restricted cash and restricted cash equivalents 10 10 Related party notes receivable (3) 32 17 Other 70 58 Total other non-current assets $ 572 $ 259 (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 $40 million and $44 million as of June 30, 2019 and December 31, 2018 , respectively. (2) Refer to Note 3 for additional information . (3) Refer to Note 15 for additional information . June 30, December 31, (in millions) 2019 2018 Accrued expenses: Customer rebates & incentives $ 374 $ 342 Accrued compensation 148 214 Insurance reserve 39 37 Accrued interest 53 77 Accrued professional fees 29 113 Other accrued expenses 226 229 Total accrued expenses $ 869 $ 1,012 Other current liabilities: Dividends payable $ 212 $ 209 Income taxes payable 110 60 Operating lease liability (1) 61 — Finance lease liability (2) 37 26 Derivative instruments 29 34 Holdback liabilities 42 44 Other 25 33 Total other current liabilities $ 516 $ 406 Other non-current liabilities: Pension and post-retirement liability $ 29 $ 30 Insurance reserves 61 57 Operating lease liability (1) 290 — Finance lease liability (2) 253 305 Derivative instruments 5 16 Deferred compensation liability 40 44 Other 93 107 Total other non-current liabilities $ 771 $ 559 (1) Refer to Note 3 for additional information . (2) Amounts as of December 31, 2018 include capital leases and financing obligations reported under ASC 840. Refer to Notes 1 and 3 for additional information. |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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 June 30, 2019 December 31, 2018 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 106 $ 106 $ 83 $ 83 Restricted cash and restricted cash equivalents (1) 1 44 44 46 46 Non-current restricted cash and restricted cash equivalents included in Other non-current assets 1 10 10 10 10 Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 160 $ 160 $ 139 $ 139 (1) Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Big Red Acquisition and the Core Acquisition. |
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 June 30, 2019 December 31, 2018 (in millions) Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents 1 $ 106 $ 106 $ 83 $ 83 Restricted cash and restricted cash equivalents (1) 1 44 44 46 46 Non-current restricted cash and restricted cash equivalents included in Other non-current assets 1 10 10 10 10 Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows $ 160 $ 160 $ 139 $ 139 (1) Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Big Red Acquisition and the Core Acquisition. |
Schedule of Cash Flow, Supplemental Disclosures | The following table provides supplemental cash flow disclosures: First Six Months (in millions) 2019 2018 Supplemental cash flow disclosures of non-cash investing activities: Measurement period adjustment of Core purchase price $ (11 ) $ — Capital expenditures included in accounts payable and accrued expenses 205 39 Purchases of intangibles 2 — Supplemental cash flow disclosures of non-cash financing activities: Dividends declared but not yet paid 212 — Finance lease additions 30 — Supplemental cash flow disclosures: Cash paid for interest 272 47 Cash paid for related party interest — 51 Cash paid for income taxes 142 71 |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Information about the Company 's operations by reportable segment is as follows: Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Segment Results – Net sales Coffee Systems $ 990 $ 949 $ 1,958 $ 1,897 Packaged Beverages 1,311 — 2,427 — Beverage Concentrates 370 — 674 — Latin America Beverages 141 — 257 — Net sales $ 2,812 $ 949 $ 5,316 $ 1,897 |
Reconciliation of operating profit (loss) from segments to consolidated | Second Quarter First Six Months (in millions) 2019 2018 2019 2018 Segment Results – Income from operations Coffee Systems $ 287 $ 274 $ 580 $ 531 Packaged Beverages 186 — 335 — Beverage Concentrates 244 — 445 — Latin America Beverages 26 — 37 — Total income from operations - segments 743 274 1,397 531 Unallocated corporate costs 156 107 312 186 Income from operations $ 587 $ 167 $ 1,085 $ 345 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | The following table disaggregates the Company 's revenue by portfolio for the second quarter and first six months of 2019 and 2018 : (in millions) Coffee Systems Packaged Beverages Beverage Concentrates Latin America Beverages Total For the second quarter of 2019: CSD (1) $ — $ 541 $ 362 $ 102 $ 1,005 NCB (1) — 662 3 38 703 Pods (2) 783 — — — 783 Appliances 154 — — — 154 Other 53 108 5 1 167 Net sales $ 990 $ 1,311 $ 370 $ 141 $ 2,812 For the first six months of 2019: CSD (1) $ — $ 1,063 $ 660 $ 182 $ 1,905 NCB (1) — 1,163 5 74 1,242 Pods (2) 1,576 — — — 1,576 Appliances 277 — — — 277 Other 105 201 9 1 316 Net sales $ 1,958 $ 2,427 $ 674 $ 257 $ 5,316 For the second quarter of 2018: CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) 763 — — — 763 Appliances 131 — — — 131 Other 55 — — — 55 Net sales $ 949 $ — $ — $ — $ 949 For the first six months of 2018: CSD (1) $ — $ — $ — $ — $ — NCB (1) — — — — — Pods (2) 1,557 — — — 1,557 Appliances 232 — — — 232 Other 108 — — — 108 Net sales $ 1,897 $ — $ — $ — $ 1,897 (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. |
Guarantor and Non-Guarantor F_2
Guarantor and Non-Guarantor Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed consolidating statements of income | Condensed Consolidating Statements of Income For the Second Quarter of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 1,660 $ 1,207 $ (55 ) $ 2,812 Cost of sales — 661 580 (55 ) 1,186 Gross profit — 999 627 — 1,626 Selling, general and administrative expenses 1 668 359 — 1,028 Other operating expense, net — — 11 — 11 Income from operations (1 ) 331 257 — 587 Interest expense 198 3 28 (59 ) 170 Interest expense - related party — — — — — Loss on early extinguishment of debt — — — — — Other expense (income), net (239 ) 192 (11 ) 59 1 Income before provision for income taxes 40 136 240 — 416 Provision for income taxes (5 ) 42 65 — 102 Income before equity in earnings of consolidated subsidiaries 45 94 175 — 314 Equity in earnings of consolidated subsidiaries 269 14 — (283 ) — Net income $ 314 $ 108 $ 175 $ (283 ) $ 314 Condensed Consolidating Statements of Income For the First Six Months of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Net sales $ — $ 3,070 $ 2,345 $ (99 ) $ 5,316 Cost of sales — 1,232 1,159 (99 ) 2,292 Gross profit — 1,838 1,186 — 3,024 Selling, general and administrative expenses 5 1,230 704 — 1,939 Other operating expense, net — (10 ) 10 — — Income from operations (5 ) 618 472 — 1,085 Interest expense 398 7 57 (123 ) 339 Interest expense - related party — — — — — Loss on early extinguishment of debt 9 — — — 9 Other (income) expense, net (251 ) 147 (13 ) 123 6 Income before provision for income taxes (161 ) 464 428 — 731 Provision for income taxes (54 ) 126 115 — 187 Income before equity in earnings of consolidated subsidiaries (107 ) 338 313 — 544 Equity in earnings of consolidated subsidiaries 651 14 — (665 ) — Net income $ 544 $ 352 $ 313 $ (665 ) $ 544 |
Condensed consolidating statements of comprehensive income | Condensed Consolidating Statements of Comprehensive Income For the Second Quarter of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income $ 402 $ 178 $ 264 $ (442 ) $ 402 Condensed Consolidating Statements of Comprehensive Income For the First Six Months of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Comprehensive income $ 725 $ 497 $ 495 $ (992 ) $ 725 |
Condensed consolidating balance sheets | Condensed Consolidating Balance Sheets As of June 30, 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 11 $ 95 $ — $ 106 Restricted cash and restricted cash equivalents 40 2 2 — 44 Trade accounts receivable, net — 642 426 — 1,068 Related party receivable 135 74 64 (273 ) — Inventories — 250 436 — 686 Prepaid expenses and other current assets 613 199 115 (610 ) 317 Total current assets 788 1,178 1,138 (883 ) 2,221 Property, plant and equipment, net — 1,297 993 — 2,290 Investments in consolidated subsidiaries 41,003 4,971 — (45,974 ) — Investments in unconsolidated affiliates — 63 107 — 170 Goodwill — 8,239 11,800 — 20,039 Other intangible assets, net — 16,857 7,371 — 24,228 Long-term receivable, related parties 5,066 8,623 — (13,689 ) — Other non-current assets 61 248 263 — 572 Deferred tax assets — — 27 — 27 Total assets $ 46,918 $ 41,476 $ 21,699 $ (60,546 ) $ 49,547 Current liabilities: Accounts payable $ — $ 990 $ 1,919 $ — $ 2,909 Accrued expenses 53 596 220 — 869 Structured payables — 47 548 — 595 Related party payable 74 95 104 (273 ) — Short-term borrowings and current portion of long-term obligations 1,806 — — — 1,806 Other current liabilities 269 679 178 (610 ) 516 Total current liabilities 2,202 2,407 2,969 (883 ) 6,695 Long-term obligations to third parties 13,164 — — — 13,164 Long-term obligations to related parties 8,589 3,440 1,660 (13,689 ) — Deferred tax liabilities 40 4,107 1,887 — 6,034 Other non-current liabilities 40 495 236 — 771 Total liabilities 24,035 10,449 6,752 (14,572 ) 26,664 Total stockholders' equity 22,883 31,027 14,947 (45,974 ) 22,883 Total liabilities and stockholders' equity $ 46,918 $ 41,476 $ 21,699 $ (60,546 ) $ 49,547 Condensed Consolidating Balance Sheets As of December 31, 2018 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Current assets: Cash and cash equivalents $ — $ 18 $ 65 $ — $ 83 Restricted cash and restricted cash equivalents 42 3 1 — 46 Trade accounts receivable, net — 596 554 — 1,150 Related party receivable 189 71 76 (336 ) — Inventories — 226 400 — 626 Prepaid expenses and other current assets 569 110 132 (557 ) 254 Total current assets 800 1,024 1,228 (893 ) 2,159 Property, plant and equipment, net — 1,351 959 — 2,310 Investments in consolidated subsidiaries 40,119 4,882 — (45,001 ) — Investments in unconsolidated affiliates — 63 123 — 186 Goodwill 50 8,371 11,590 — 20,011 Other intangible assets, net — 16,583 7,384 — 23,967 Long-term receivable, related parties 5,503 7,827 — (13,330 ) — Other non-current assets 64 41 154 — 259 Deferred tax assets — — 26 — 26 Total assets $ 46,536 $ 40,142 $ 21,464 $ (59,224 ) $ 48,918 Current liabilities: Accounts payable $ — $ 497 $ 1,803 $ — $ 2,300 Accrued expenses 78 610 324 — 1,012 Structured payables — 47 479 — 526 Related party payable 65 106 165 (336 ) — Short-term borrowings and current portion of long-term obligations 1,458 — — — 1,458 Other current liabilities 278 626 59 (557 ) 406 Total current liabilities 1,879 1,886 2,830 (893 ) 5,702 Long-term obligations to third parties 14,201 — — — 14,201 Long-term obligations to related parties 7,827 3,369 2,134 (13,330 ) — Deferred tax liabilities 46 4,075 1,802 — 5,923 Other non-current liabilities 50 337 172 — 559 Total liabilities 24,003 9,667 6,938 (14,223 ) 26,385 Total stockholders' equity 22,533 30,475 14,526 (45,001 ) 22,533 Total liabilities and stockholders' equity $ 46,536 $ 40,142 $ 21,464 $ (59,224 ) $ 48,918 |
Condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows For the First Six Months of 2019 (in millions) Parent Guarantors Non-Guarantors Eliminations Total Operating activities: Net cash (used in) provided by operating activities $ (178 ) $ 812 $ 581 $ (12 ) $ 1,203 Investing activities: Acquisitions of businesses — (3 ) (5 ) — (8 ) Collections on (issuances of) related party notes receivable 535 (789 ) (14 ) 254 (14 ) Investments in unconsolidated affiliates — (11 ) — — (11 ) Purchases of property, plant and equipment — (44 ) (74 ) — (118 ) Proceeds from sales of property, plant and equipment — 10 9 — 19 Purchases of intangibles — (4 ) — — (4 ) Return of capital from investments in consolidated subsidiaries — 32 — (32 ) — Other, net 10 — 12 — 22 Net cash provided by (used in) investing activities 545 (809 ) (72 ) 222 (114 ) Financing activities: Proceeds from (payments of) related party notes 763 — (509 ) (254 ) — Proceeds from term loan 2,000 — — — 2,000 Net issuance of commercial paper 381 — — — 381 Proceeds from structured payables — — 78 — 78 Payments on structured payables — — (9 ) — (9 ) Payments on senior unsecured notes (250 ) — — — (250 ) Repayment of term loan (2,848 ) — — — (2,848 ) Payments on finance leases — (11 ) (8 ) — (19 ) Cash dividends paid (423 ) — (44 ) 44 (423 ) Other, net 8 — 2 — 10 Net cash used in financing activities (369 ) (11 ) (490 ) (210 ) (1,080 ) Cash and cash equivalents — net change from: Operating, investing and financing activities (2 ) (8 ) 19 — 9 Effect of exchange rate changes on cash and cash equivalents — — 12 — 12 Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 42 31 66 — 139 Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 40 $ 23 $ 97 $ — $ 160 |
Background and Basis of Prese_4
Background and Basis of Presentation (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Finance lease liability | [1] | $ 37 | $ 26 | ||
Finance lease liability | [1] | $ 253 | 305 | ||
Adoption of new accounting standards | $ 5 | $ (5) | $ (4) | ||
Total assets | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Effect of adoption of new accounting standards | 314 | ||||
Total liabilities | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Effect of adoption of new accounting standards | $ 319 | ||||
[1] | Amounts as of December 31, 2018 include capital leases and financing obligations reported under ASC 840. Refer to Notes 1 and 3 for additional information. |
Acquisitions and Investments _3
Acquisitions and Investments in Unconsolidated Affiliates - Dr Pepper Snapple Group, Inc (Details) - USD ($) $ in Millions | Jul. 09, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | |||||||||
Goodwill | $ 20,039 | $ 20,039 | $ 20,011 | ||||||
Measurement period adjustment, goodwill | (75) | ||||||||
DPS | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | |||||||||
Cash and cash equivalents | $ 147 | 147 | 147 | ||||||
Investments in unconsolidated subsidiaries | 90 | 90 | 90 | ||||||
Property, plant and equipment | 1,549 | 1,475 | [1] | 1,475 | [1] | ||||
Measurement period adjustments, PP&E | [1] | (74) | |||||||
Other intangible assets | 20,404 | 20,078 | 20,078 | ||||||
Measurement period adjustments, intangible assets | (326) | ||||||||
Long-term obligations | (4,049) | (4,049) | (4,049) | ||||||
Finance leases | (214) | (205) | (205) | ||||||
Measurement period adjustments, finance leases | 9 | ||||||||
Assumed liabilities, net of acquired assets | 107 | 81 | [2] | 81 | [2] | ||||
Measurement period adjustments, acquired assets net of assumed liabilities | [2] | (26) | |||||||
Deferred tax liabilities | (4,959) | (5,041) | [3] | (5,041) | [3] | ||||
Measurement period adjustment, deferred tax liabilities | [3] | (82) | |||||||
Goodwill | 9,407 | 9,906 | 9,906 | ||||||
Measurement period adjustment, goodwill | 499 | ||||||||
Total consideration exchanged | 22,482 | 22,482 | 22,482 | ||||||
Fair value of replacement equity awards not converted to cash | 3,643 | 3,643 | 3,643 | ||||||
Acquisition of business | 18,839 | 18,839 | 18,839 | ||||||
Inventory step up | 131 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||||||
Other intangible assets | $ 20,404 | 20,078 | $ 20,078 | ||||||
Business Acquisition, Pro Forma Information [Abstract] | |||||||||
Net sales | $ 2,822 | $ 5,351 | |||||||
Net income | $ 323 | $ 534 | |||||||
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 | ||||||||
Brands | DPS | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||||||
Indefinite-lived Intangible assets acquired | [4] | 19,556 | |||||||
Contractual arrangements | DPS | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||||||
Indefinite-lived Intangible assets acquired | [5] | 127 | |||||||
Customer relationships | DPS | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||||||
Finite lived intangible assets acquired | [6] | 390 | |||||||
Customer relationships | Minimum | DPS | |||||||||
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 | ||||||||
Customer relationships | Maximum | DPS | |||||||||
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 | ||||||||
Favorable leases, net | DPS | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill [Abstract] | |||||||||
Finite lived intangible assets acquired | [7] | $ 5 | |||||||
Favorable leases, net | Minimum | DPS | |||||||||
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 | ||||||||
Favorable leases, net | Maximum | DPS | |||||||||
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 | ||||||||
[1] | The Company 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 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 . | ||||||||
[2] | 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 valued work-in-process ("WIP") and finished goods inventory using a net realizable value approach resulting in a step-up of $131 million which was recognized in the cost of goods sold for the third quarter of 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. | ||||||||
[3] | Net deferred tax liabilities represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. | ||||||||
[4] | The Company valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach. | ||||||||
[5] | The Company valued contractual arrangements with bottlers and distributors utilizing the distributor method, a form of the income approach. | ||||||||
[6] | The Company identified two types of customer relationships, retail and food service. We preliminarily valued retail and food service customer relationships utilizing the distributor method, a form of the income approach. | ||||||||
[7] | The Company |
Acquisitions and Investments _4
Acquisitions and Investments in Unconsolidated Affiliates - Big Red (Details) - USD ($) $ in Millions | Aug. 31, 2018 | Jul. 09, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 20,039 | $ 20,039 | $ 20,011 | |||
Measurement period adjustment, goodwill | (75) | |||||
Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Cash and cash equivalents | $ 3 | 3 | 3 | |||
Cash purchase price | 300 | |||||
Inventory step up | 2 | |||||
Other intangible assets | 240 | 238 | 238 | |||
Measurement period adjustments, intangible assets | (2) | |||||
Assumed liabilities, net of acquired assets | [1] | (28) | (48) | (48) | ||
Measurement period adjustments, acquired assets net of assumed liabilities | [1] | (20) | ||||
Goodwill | 89 | 113 | 113 | |||
Measurement period adjustment, goodwill | 24 | |||||
Total consideration exchanged | [2] | 304 | 306 | 306 | ||
Measurement period adjustments, net | [2] | 2 | ||||
Company's previous ownership interest | 22 | 22 | ||||
Amount held in escrow | 15 | 15 | ||||
Acquisition of business | $ 267 | 269 | ||||
Measurement period adjustment, acquisition of business | 2 | |||||
Brands | Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Other intangible assets | [3] | 11 | $ 11 | |||
Acquired finite-lived intangible assets, weighted average useful life | 5 years | |||||
Contractual arrangements | Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Other intangible assets | [4] | 6 | $ 6 | |||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | |||||
Customer relationships | Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Other intangible assets | [5] | 1 | $ 1 | |||
Brands | Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Other intangible assets | [3] | $ 220 | $ 220 | |||
Minimum | Customer relationships | Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Acquired finite-lived intangible assets, weighted average useful life | 8 years | |||||
Maximum | Customer relationships | Big Red | ||||||
Business Acquisition [Line Items] | ||||||
Acquired finite-lived intangible assets, weighted average useful life | 40 years | |||||
[1] | The Company valued WIP and finished goods inventory using a net realizable value approach, which resulted in a step-up of $2 million which was recognized in the cost of goods sold for the year ended December 31, 2018 as the related inventory was sold during that period. Raw materials were carried at net book value. | |||||
[2] | The Company paid $2 million in additional consideration during the fourth quarter of 2018 as a result of working capital adjustments determined pursuant to the terms of the Big Red Acquisition Agreement. | |||||
[3] | The Company valued the brand portfolio utilizing the multi-period excess earnings method, a form of the income approach | |||||
[4] | The Company valued contractual arrangements with bottlers and distributors utilizing the distributor method, a form of the income approach. | |||||
[5] | The Company identified two types of customer relationships, retail and industrial. We valued retail and industrial customer relationships utilizing the distributor method, a form of the income approach. |
Acquisitions and Investments _5
Acquisitions and Investments in Unconsolidated Affiliates - Transaction Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | $ 8 | $ 39 | $ 13 | $ 75 |
DPS | ||||
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | 4 | 39 | 6 | 75 |
Other Transactions [Member] | ||||
Business Acquisition [Line Items] | ||||
Total transaction expenses incurred | $ 4 | $ 0 | $ 7 | $ 0 |
Acquisitions and Investments _6
Acquisitions and Investments in Unconsolidated Affiliates - Core Nutrition, LLC (Details) - USD ($) $ in Millions | Nov. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2019 | Sep. 27, 2018 | |
Business Combination, Consideration Transferred [Abstract] | |||||||
Goodwill | $ 20,011 | $ 20,039 | $ 20,039 | ||||
Measurement period adjustment, goodwill | (75) | ||||||
Core Merger | |||||||
Business Acquisition [Line Items] | |||||||
Enterprise value of acquiree | $ 525 | ||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Cash and cash equivalents | $ 10 | 10 | 10 | ||||
Other intangible assets | 273 | 273 | 273 | ||||
Assumed liabilities, net of acquired assets | [1] | (12) | (15) | (15) | |||
Measurement period adjustments, acquired assets net of assumed liabilities | [1] | (3) | |||||
Goodwill | 236 | 248 | 248 | ||||
Measurement period adjustment, goodwill | 12 | ||||||
Total purchase price | 507 | 516 | 516 | ||||
Measurement period adjustments, net | 9 | ||||||
Company's previous ownership interest | 31 | $ 31 | |||||
Amount held in escrow | 27 | 25 | |||||
Measurement period adjustment, amounts held in escrow | (2) | ||||||
Acquisition of business | 449 | $ 460 | |||||
Measurement period adjustment, acquisition of business | $ 11 | ||||||
Inventory step up | 4 | ||||||
Brands | Core Merger | |||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Indefinite-lived Intangible assets acquired | [2] | 254 | |||||
Contractual arrangements | Core Merger | |||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Finite lived intangible assets acquired | [3] | $ 19 | |||||
Acquired finite-lived intangible assets, weighted average useful life | [3] | 10 years | |||||
Cost of sales | Core Merger | |||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Inventory step up | $ 1 | $ 3 | |||||
[1] | The Company preliminarily valued WIP and finished goods inventory using a net realizable value approach resulting in a step-up of $4 million , of which $1 million and $3 million was recognized in cost of goods sold in 2018 and 2019, respectively, due to the timing of the sale of the related inventory. Raw materials were carried at net book value. | ||||||
[2] | The Company | ||||||
[3] | The Company preliminarily valued contractual arrangements utilizing the distributor method, a form of the income approach. |
Acquisitions and Investments _7
Acquisitions and Investments in Unconsolidated Affiliates - Investments In Unconsolidated Affiliates (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated affiliates | $ 170 | $ 186 |
BA Sports Nutrition LLC | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 12.50% | |
Investments in unconsolidated affiliates | $ 52 | 62 |
Bedford | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 30.00% | |
Investments in unconsolidated affiliates | $ 65 | 79 |
Dyla LLC [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 12.60% | |
Investments in unconsolidated affiliates | $ 14 | 15 |
Force Holding LLC | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 33.30% | |
Investments in unconsolidated affiliates | $ 5 | 6 |
Beverage startup companies [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated affiliates | 28 | 19 |
Other | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments in unconsolidated affiliates | $ 6 | $ 5 |
Acquisitions and Investments _8
Acquisitions and Investments in Unconsolidated Affiliates - Other Acquisitions (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Business Acquisition [Line Items] | ||
Payments to Acquire Businesses, Gross | $ 8 | $ 0 |
Series of Individually Immaterial Business Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Payments to Acquire Businesses, Gross | $ 8 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | ||
Lease, Cost [Abstract] | |||||
Operating lease cost | $ 20,000,000 | $ 40,000,000 | |||
Amortization of right-of-use assets | 10,000,000 | 20,000,000 | |||
Interest on lease liabilities | 3,000,000 | 7,000,000 | |||
Variable lease cost(1) | 8,000,000 | 14,000,000 | [1] | ||
Short-term lease cost | 2,000,000 | 3,000,000 | |||
Sublease Income | (1,000,000) | (1,000,000) | |||
Total lease cost | $ 42,000,000 | 83,000,000 | |||
Cash Flow, Operating Activities, Lessee [Abstract] | |||||
Operating cash flows from operating leases | 38,000,000 | ||||
Operating cash flows from finance leases | 7,000,000 | ||||
Cash Flow, Financing Activities, Lessee [Abstract] | |||||
Financing cash flows from finance leases | $ 19,000,000 | $ 9,000,000 | |||
Lessee, Operating Lease, Description [Abstract] | |||||
Operating Lease, Weighted Average Discount Rate, Percent | 4.60% | 4.60% | |||
Operating Lease, Weighted Average Remaining Lease Term | 8 years | 8 years | |||
Lessee, Finance Lease, Description [Abstract] | |||||
Finance Lease, Weighted Average Discount Rate, Percent | 5.30% | 5.30% | |||
Finance Lease, Weighted Average Remaining Lease Term | 12 years | 12 years | |||
Operating Lease Liabilities, Payments Due [Abstract] | |||||
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year | $ 39,000,000 | $ 39,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due Next Twelve Months | 70,000,000 | 70,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Two | 56,000,000 | 56,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 47,000,000 | 47,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Four | 39,000,000 | 39,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due Year Five | 37,000,000 | 37,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due after Year Five | 133,000,000 | 133,000,000 | |||
Lessee, Operating Lease, Liability, Payments, Due | 421,000,000 | 421,000,000 | |||
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (70,000,000) | (70,000,000) | |||
Operating Lease, Liability | 351,000,000 | 351,000,000 | |||
Finance Lease Liabilities, Payments, Due [Abstract] | |||||
Finance Lease, Liability, Payments, Remainder of Fiscal Year | 26,000,000 | 26,000,000 | |||
Finance Lease, Liability, Payments, Due Next Twelve Months | 49,000,000 | 49,000,000 | |||
Finance Lease, Liability, Payments, Due Year Two | 42,000,000 | 42,000,000 | |||
Finance Lease, Liability, Payments, Due Year Three | 36,000,000 | 36,000,000 | |||
Finance Lease, Liability, Payments, Due Year Four | 33,000,000 | 33,000,000 | |||
Finance Lease, Liability, Payments, Due Year Five | 30,000,000 | 30,000,000 | |||
Finance Lease, Liability, Payments, Due after Year Five | 171,000,000 | 171,000,000 | |||
Finance Lease, Liability, Payments, Due | 387,000,000 | 387,000,000 | |||
Finance Lease, Liability, Undiscounted Excess Amount | (97,000,000) | (97,000,000) | |||
Finance Lease, Liability | 290,000,000 | 290,000,000 | |||
Lessee, Lease, Description [Line Items] | |||||
Leases not yet commenced, estimated obligation | $ 470,000,000 | $ 470,000,000 | |||
Operating Leases under ASC 840 [Abstract] | |||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 58,000,000 | ||||
Operating Leases, Future Minimum Payments, Due in Two Years | 53,000,000 | ||||
Operating Leases, Future Minimum Payments, Due in Three Years | 44,000,000 | ||||
Operating Leases, Future Minimum Payments, Due in Four Years | 34,000,000 | ||||
Operating Leases, Future Minimum Payments, Due in Five Years | 25,000,000 | ||||
Operating Leases, Future Minimum Payments, Due Thereafter | 98,000,000 | ||||
Operating Leases, Future Minimum Payments Due | 312,000,000 | ||||
Capital Leases under ASC 840 [Abstract] | |||||
Capital Leases, Future Minimum Payments Due, Next Twelve Months | 35,000,000 | ||||
Capital Leases, Future Minimum Payments Due in Two Years | 34,000,000 | ||||
Capital Leases, Future Minimum Payments Due in Three Years | 33,000,000 | ||||
Capital Leases, Future Minimum Payments Due in Four Years | 33,000,000 | ||||
Capital Leases, Future Minimum Payments Due in Five Years | 30,000,000 | ||||
Capital Leases, Future Minimum Payments Due Thereafter | 189,000,000 | ||||
Capital Leases, Future Minimum Payments Due | 354,000,000 | ||||
Capital Leases, Future Minimum Payments, Interest Included in Payments | (98,000,000) | ||||
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments | 256,000,000 | ||||
Financing Obligations under ASC 840 [Abstract] | |||||
Financing Obligations, Future Minimum Payments, Current | 10,000,000 | ||||
Financing Obligations, Future Minimum Payments, Due in Two Years | 10,000,000 | ||||
Financing Obligations, Future Minimum Payments, Due in Three Years | 10,000,000 | ||||
Financing Obligations, Future Minimum Payments, Due in Four Years | 10,000,000 | ||||
Financing Obligations, Future Minimum Payments, Due in Five Years | 10,000,000 | ||||
Financing Obligations, Future Minimum Payments, Due Thereafter | 62,000,000 | ||||
Financing Obligations, Future Minimum Payments | 112,000,000 | ||||
Financing Obligations, Future Minimum Payments, Imputed Interest | (37,000,000) | ||||
Financing Obligations | $ 75,000,000 | ||||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease not yet commenced, term | 7 years | 7 years | |||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease not yet commenced, term | 16 years | 16 years | |||
[1] | Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation. |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2019USD ($) | ||
Change in goodwill by operating segments [Abstract] | ||
Balance as of January 1, 2019 | $ 20,011 | |
Foreign currency impact | 103 | |
Acquisitions | (75) | |
Balance as of June 30, 2019 | 20,039 | |
Beverage Concentrates | ||
Change in goodwill by operating segments [Abstract] | ||
Balance as of January 1, 2019 | 4,265 | |
Foreign currency impact | 16 | |
Acquisitions | 242 | |
Balance as of June 30, 2019 | 4,523 | |
Packaged Beverages | ||
Change in goodwill by operating segments [Abstract] | ||
Balance as of January 1, 2019 | 4,878 | |
Foreign currency impact | 27 | |
Acquisitions | 254 | |
Balance as of June 30, 2019 | 5,159 | |
Latin America Beverages | ||
Change in goodwill by operating segments [Abstract] | ||
Balance as of January 1, 2019 | 618 | |
Foreign currency impact | 14 | |
Acquisitions | (73) | |
Balance as of June 30, 2019 | 559 | |
Coffee Systems | ||
Change in goodwill by operating segments [Abstract] | ||
Balance as of January 1, 2019 | 9,725 | |
Foreign currency impact | 46 | |
Acquisitions | 3 | |
Balance as of June 30, 2019 | 9,774 | |
Corporate and Other [Member] | ||
Change in goodwill by operating segments [Abstract] | ||
Balance as of January 1, 2019 | 525 | [1] |
Foreign currency impact | 0 | [1] |
Acquisitions | (501) | [1] |
Balance as of June 30, 2019 | $ 24 | [1] |
[1] | Amounts primarily represent measurement period adjustments for the DPS Merger, the Big Red Acquisition, and the Core Acquisition. Refer to Note 2 for further information. |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | ||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | $ 22,628 | $ 22,628 | $ 22,310 | |||
Finite-lived intangible assets, gross | 1,953 | 1,953 | 1,950 | |||
Accumulated Amortization | (353) | (353) | (293) | |||
Finite-lived intangible assets, net | 1,600 | 1,600 | 1,657 | |||
Amortization expense for intangible assets with definite lives | 32 | $ 29 | 63 | $ 59 | ||
Amortization expense of intangible assets [Abstract] | ||||||
Remainder of year | 63 | 63 | ||||
Year one | 126 | 126 | ||||
Year two | 126 | 126 | ||||
Year three | 126 | 126 | ||||
Year four | 126 | 126 | ||||
Year five | 121 | 121 | ||||
Acquired technology | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 1,146 | 1,146 | 1,146 | |||
Accumulated Amortization | (218) | (218) | (182) | |||
Finite-lived intangible assets, net | 928 | 928 | 964 | |||
Customer relationships | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 638 | 638 | 629 | |||
Accumulated Amortization | (85) | (85) | (67) | |||
Finite-lived intangible assets, net | 553 | 553 | 562 | |||
Trade Names | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 127 | 127 | 127 | |||
Accumulated Amortization | (47) | (47) | (40) | |||
Finite-lived intangible assets, net | 80 | 80 | 87 | |||
Favorable leases | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | [1] | 0 | 0 | 13 | ||
Accumulated Amortization | [1] | 0 | 0 | (3) | ||
Finite-lived intangible assets, net | [1] | 0 | 0 | 10 | ||
Brands | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 11 | 11 | 9 | |||
Accumulated Amortization | (1) | (1) | 0 | |||
Finite-lived intangible assets, net | 10 | 10 | 9 | |||
Distribution rights | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 6 | 6 | 0 | |||
Accumulated Amortization | 0 | 0 | 0 | |||
Finite-lived intangible assets, net | 6 | 6 | 0 | |||
Contractual arrangements | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Finite-lived intangible assets, gross | 25 | 25 | 26 | |||
Accumulated Amortization | (2) | (2) | (1) | |||
Finite-lived intangible assets, net | 23 | 23 | 25 | |||
Brands | ||||||
Indefinite and Finite-Lived Intangible Assets by Major Class [Line Items] | ||||||
Indefinite-lived Intangible Assets, Foreign Currency Translation Gain (Loss) | 113 | |||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | [2] | 20,025 | 20,025 | 19,712 | ||
Trade Names | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | 2,479 | 2,479 | 2,479 | |||
Contractual arrangements | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | 122 | 122 | 119 | |||
Distribution rights | ||||||
Change in intangible assets other than goodwill [Abstract] | ||||||
Indefinite-lived intangible assets (excluding goodwill) | $ 2 | $ 2 | $ 0 | |||
[1] | Amounts recorded as favorable lease intangible assets were reclassified to operating lease right-of-use assets in connection with the adoption of ASC 842 as of January 1, 2019. Refer to Note 3 for further information regarding the adoption of ASC 842. | |||||
[2] | Approximately $113 million of the increase in brands with indefinite lives was due to foreign currency translation during the period. The remaining change represents measurement period adjustments for the DPS Merger. Refer to Note 2 for further information. |
Restructuring and Integration_3
Restructuring and Integration Costs - Schedule of Charges Incurred (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | $ 32 | $ 34 | $ 93 | $ 40 | |
Keurig 2.0 exit | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 0 | 7 | 1 | 12 | |
Integration program | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | $ 247 | ||||
Integration program | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | 32 | 26 | 92 | 26 | |
Other restructuring programs | Corporate Unallocated | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring and integration charges | $ 0 | $ 1 | $ 0 | $ 2 |
Restructuring and Integration_4
Restructuring and Integration Costs - Restructuring Liabilities (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2019USD ($) | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | $ 29 | |
Charges to expense | 10 | |
Cash payments | (34) | |
Non-cash adjustment items | 0 | |
Balance at end of period | 5 | |
Workforce Reduction Costs | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 28 | |
Charges to expense | 10 | |
Cash payments | (34) | |
Non-cash adjustment items | 1 | |
Balance at end of period | 5 | |
Other | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 1 | |
Charges to expense | 0 | [1] |
Cash payments | 0 | [1] |
Non-cash adjustment items | (1) | |
Balance at end of period | $ 0 | [1] |
[1] | (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 and Integration_5
Restructuring and Integration Costs - Restructuring Programs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | |||||
Expected annual synergies | $ 600 | ||||
Expected cost | $ 750 | 750 | $ 750 | ||
Restructuring and integration charges | $ 32 | $ 34 | $ 93 | $ 40 | |
Integration program | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and integration charges | $ 247 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 24.50% | 13.30% | 25.60% | 26.90% |
U.S. federal statutory income tax rate | 21.00% | 24.50% | ||
Change in enacted tax rate | 21.00% | 35.00% |
Long-term Obligations and Bor_3
Long-term Obligations and Borrowing Arrangements - Long-Term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 13,509 | $ 14,580 |
Long-term Debt, Current Maturities | (345) | (379) |
Long-term obligations | 13,164 | 14,201 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 11,785 | 12,019 |
Long-term Debt, Current Maturities | (248) | (250) |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,724 | 2,561 |
Long-term Debt, Current Maturities | (97) | (129) |
KDP Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,724 | $ 2,561 |
Long-term Obligations and Bor_4
Long-term Obligations and Borrowing Arrangements - Current Debt (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Short-term Debt [Line Items] | ||
Current portion of long-term debt | $ 345 | $ 379 |
Short-term borrowings and current portion of long-term obligations | 1,806 | 1,458 |
Commercial Paper | ||
Short-term Debt [Line Items] | ||
Short-term debt | 1,461 | 1,079 |
Nonrecurring | ||
Short-term Debt [Line Items] | ||
Short-term borrowings and current portion of long-term obligations, fair value | 1,807 | 1,458 |
Level 2 | Nonrecurring | Commercial Paper | ||
Short-term Debt [Line Items] | ||
Short-term debt fair value | 1,461 | 1,079 |
Senior Notes | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt | 248 | 250 |
Senior Notes | Level 2 | Nonrecurring | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt, fair value | 249 | 250 |
Line of Credit | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt | 97 | 129 |
Line of Credit | Level 2 | Nonrecurring | ||
Short-term Debt [Line Items] | ||
Current portion of long-term debt, fair value | $ 97 | $ 129 |
Long-term Obligations and Bor_5
Long-term Obligations and Borrowing Arrangements - Senior Unsecured Notes (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 13,509 | $ 14,580 | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | 11,975 | 12,225 | |
Unamortized discounts and debt issuance costs | (190) | (206) | |
Long-term debt | $ 11,785 | 12,019 | |
Senior Notes | 2019 Notes(1) | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.60% | ||
Long term debt, carrying value | [1] | $ 0 | 250 |
Senior Notes | 2020 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.00% | ||
Long term debt, carrying value | $ 250 | 250 | |
Senior Notes | 2021 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.551% | ||
Long term debt, carrying value | $ 1,750 | 1,750 | |
Senior Notes | 2021-A Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.20% | ||
Long term debt, carrying value | $ 250 | 250 | |
Senior Notes | 2021-B Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.53% | ||
Long term debt, carrying value | $ 250 | 250 | |
Senior Notes | 2022 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.70% | ||
Long term debt, carrying value | $ 250 | 250 | |
Senior Notes | 2023 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.057% | ||
Long term debt, carrying value | $ 2,000 | 2,000 | |
Senior Notes | 2023 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.13% | ||
Long term debt, carrying value | $ 500 | 500 | |
Senior Notes | 2025 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.417% | ||
Long term debt, carrying value | $ 1,000 | 1,000 | |
Senior Notes | 2025 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.40% | ||
Long term debt, carrying value | $ 500 | 500 | |
Senior Notes | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.55% | ||
Long term debt, carrying value | $ 400 | 400 | |
Senior Notes | 2027 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 3.43% | ||
Long term debt, carrying value | $ 500 | 500 | |
Senior Notes | 2028 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.597% | ||
Long term debt, carrying value | $ 2,000 | 2,000 | |
Senior Notes | 2038 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.985% | ||
Long term debt, carrying value | $ 500 | 500 | |
Senior Notes | 2038 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 7.45% | ||
Long term debt, carrying value | $ 125 | 125 | |
Senior Notes | 2045 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.50% | ||
Long term debt, carrying value | $ 550 | 550 | |
Senior Notes | 2046 Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 4.42% | ||
Long term debt, carrying value | $ 400 | 400 | |
Senior Notes | 2048 Merger Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 5.085% | ||
Long term debt, carrying value | $ 750 | 750 | |
Level 2 | Nonrecurring | Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 12,633 | 11,841 | |
Level 2 | Nonrecurring | Senior Notes | 2019 Notes(1) | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | [1] | 0 | 250 |
Level 2 | Nonrecurring | Senior Notes | 2020 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 249 | 245 | |
Level 2 | Nonrecurring | Senior Notes | 2021 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 1,823 | 1,742 | |
Level 2 | Nonrecurring | Senior Notes | 2021-A Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 253 | 244 | |
Level 2 | Nonrecurring | Senior Notes | 2021-B Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 250 | 240 | |
Level 2 | Nonrecurring | Senior Notes | 2022 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 249 | 237 | |
Level 2 | Nonrecurring | Senior Notes | 2023 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 2,152 | 1,988 | |
Level 2 | Nonrecurring | Senior Notes | 2023 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 506 | 474 | |
Level 2 | Nonrecurring | Senior Notes | 2025 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 1,072 | 999 | |
Level 2 | Nonrecurring | Senior Notes | 2025 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 509 | 467 | |
Level 2 | Nonrecurring | Senior Notes | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 383 | 346 | |
Level 2 | Nonrecurring | Senior Notes | 2027 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 505 | 458 | |
Level 2 | Nonrecurring | Senior Notes | 2028 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 2,180 | 1,981 | |
Level 2 | Nonrecurring | Senior Notes | 2038 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 548 | 483 | |
Level 2 | Nonrecurring | Senior Notes | 2038 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 163 | 151 | |
Level 2 | Nonrecurring | Senior Notes | 2045 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 554 | 478 | |
Level 2 | Nonrecurring | Senior Notes | 2046 Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 398 | 342 | |
Level 2 | Nonrecurring | Senior Notes | 2048 Merger Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | $ 839 | $ 716 | |
[1] | On January 15, 2019, the Company repaid the 2019 Notes at maturity, using Commercial Paper. |
Long-term Obligations and Bor_6
Long-term Obligations and Borrowing Arrangements - Borrowing Arrangements (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 13,509 | $ 14,580 | |
Line of Credit | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | 1,735 | 2,583 | |
Unamortized discounts and debt issuance costs | (11) | (22) | |
Long-term debt | 1,724 | 2,561 | |
Old Term Loan [Member] | Line of Credit | KDP Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | [1] | 0 | 2,583 |
KDP Term Loan | Line of Credit | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,724 | 2,561 | |
KDP Term Loan | Line of Credit | KDP Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | [2] | 1,735 | 0 |
Revolving Credit Facility | Line of Credit | KDP Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | 0 | 0 | |
364 Day Credit Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Long term debt, carrying value | 0 | 0 | |
Long-term debt, fair value | 0 | 0 | |
Level 2 | Line of Credit | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | 1,735 | 2,583 | |
Level 2 | Old Term Loan [Member] | Line of Credit | KDP Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | [1] | 0 | 2,583 |
Level 2 | KDP Term Loan | Line of Credit | KDP Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | [2] | 1,735 | 0 |
Level 2 | Revolving Credit Facility | Line of Credit | KDP Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt, fair value | $ 0 | $ 0 | |
[1] | In January 2019, the Company borrowed $583 million of Commercial Paper to prepay a portion of its outstanding obligations under the KDP Term Loan, all of which was a voluntary prepayment. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $5 million of loss on early extinguishment during the first six months of 2019 . This KDP Term Loan was refinanced with the New KDP Term Loan in February 2019. | ||
[2] | The Company borrowed $65 million and $215 million of Commercial Paper during the second quarter and first six months of 2019 , respectively, to prepay a portion of its outstanding obligations under the 2019 New Term Loan Agreement, all of which were voluntary prepayments. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $1 million of loss on early extinguishment during the first six months of 2019 . |
Long-term Obligations and Bor_7
Long-term Obligations and Borrowing Arrangements - Commercial Paper Program (Details) - Commercial Paper - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Short-term Debt [Line Items] | |||||
Average outstanding amount | $ 2,074 | $ 0 | $ 1,911 | $ 0 | |
Weighted average interest rate over time | 2.76% | 0.00% | 2.83% | 0.00% | |
Short-term debt | $ 1,461 | $ 1,461 | $ 1,079 |
Long-term Obligations and Bor_8
Long-term Obligations and Borrowing Arrangements - KDP Revolving Credit Facilities and Term Loan (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Feb. 08, 2019 | Dec. 31, 2018 | ||
Line of Credit Facility [Line Items] | |||||||
Gain (Loss) on Extinguishment of Debt | $ 0 | $ 0 | $ (9) | $ (2) | |||
KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Voluntary Prepayment of KDP Term Loan | 65 | 215 | |||||
Old Term Loan [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Voluntary Prepayment of KDP Term Loan | 583 | ||||||
364 Day Credit Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Long term debt, carrying value | 0 | 0 | $ 0 | ||||
Long-term debt, fair value | 0 | 0 | 0 | ||||
Maximum borrowing capacity | 750 | 750 | |||||
Line of credit outstanding | 0 | $ 0 | |||||
Minimum | LIBOR | 364 Day Credit Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.00% | ||||||
Minimum | Base Rate | 364 Day Credit Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 0.00% | ||||||
Maximum | LIBOR | 364 Day Credit Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.625% | ||||||
Maximum | Base Rate | 364 Day Credit Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 0.625% | ||||||
KDP Credit Agreement | Revolving Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | 2,400 | $ 2,400 | |||||
Line of credit outstanding | 0 | 0 | |||||
KDP Credit Agreement | Letter of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | 200 | 200 | |||||
Letters of credit outstanding | 0 | $ 0 | |||||
KDP Credit Agreement | Minimum | LIBOR | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 0.75% | ||||||
KDP Credit Agreement | Minimum | Base Rate | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 0.00% | ||||||
KDP Credit Agreement | Maximum | LIBOR | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.25% | ||||||
KDP Credit Agreement | Maximum | Base Rate | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 0.25% | ||||||
Line of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Long term debt, carrying value | 1,735 | $ 1,735 | 2,583 | ||||
Line of Credit | Letter of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | 100 | 100 | |||||
Letters of credit outstanding | 48 | 48 | |||||
Remaining borrowing capacity | 52 | 52 | |||||
Line of Credit | KDP Credit Agreement | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Long term debt, carrying value | [1] | 1,735 | $ 1,735 | 0 | |||
Face amount | $ 2,000 | ||||||
Redemption percentage | 1.25% | ||||||
Debt Instrument, Annual Principal Payment | 100 | $ 100 | |||||
Line of Credit | KDP Credit Agreement | Revolving Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Long term debt, carrying value | 0 | 0 | 0 | ||||
Line of Credit | KDP Credit Agreement | Old Term Loan [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Long term debt, carrying value | [2] | 0 | 0 | $ 2,583 | |||
Term Loan Refinance [Member] | Line of Credit | KDP Credit Agreement | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Gain (Loss) on Extinguishment of Debt | 3 | ||||||
Voluntary Prepayments [Member] | Line of Credit | KDP Credit Agreement | KDP Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Gain (Loss) on Extinguishment of Debt | 0 | 1 | |||||
Voluntary Prepayments [Member] | Line of Credit | KDP Credit Agreement | Old Term Loan [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Gain (Loss) on Extinguishment of Debt | $ 0 | $ 5 | |||||
[1] | The Company borrowed $65 million and $215 million of Commercial Paper during the second quarter and first six months of 2019 , respectively, to prepay a portion of its outstanding obligations under the 2019 New Term Loan Agreement, all of which were voluntary prepayments. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $1 million of loss on early extinguishment during the first six months of 2019 . | ||||||
[2] | In January 2019, the Company borrowed $583 million of Commercial Paper to prepay a portion of its outstanding obligations under the KDP Term Loan, all of which was a voluntary prepayment. As a result of these voluntary prepayments, the Company recorded no loss on extinguishment of debt during the second quarter of 2019 and $5 million of loss on early extinguishment during the first six months of 2019 . This KDP Term Loan was refinanced with the New KDP Term Loan in February 2019. |
Long-term Obligations and Bor_9
Long-term Obligations and Borrowing Arrangements - Letter of Credit Facilities (Details) - Line of Credit - Letter of Credit $ in Millions | Jun. 30, 2019USD ($) |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 100 |
Letters of credit outstanding | 48 |
Remaining borrowing capacity | $ 52 |
Derivatives - Notional and Matu
Derivatives - Notional and Maturity Information (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | ||
Receive-Fixed, Pay-Variable Interest Rate Swaps | |||
Derivative [Line Items] | |||
Notional amount terminated early during the period | $ 920 | ||
Cash received from early termination of derivatives | 2 | ||
Receive-Fixed, Pay-Variable Interest Rate Swaps | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Notional amount | [1] | 50 | $ 1,070 |
Receive-Variable Pay-Fixed Interest Rate Swaps | |||
Derivative [Line Items] | |||
Notional amount terminated early during the period | 1,400 | ||
Cash received from early termination of derivatives | 38 | ||
Receive-Variable Pay-Fixed Interest Rate Swaps | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Notional amount | [2] | $ 575 | 2,125 |
Interest Rate Contract | Minimum | |||
Derivative [Line Items] | |||
Derivative maturity range | 2 years | ||
Interest Rate Contract | Maximum | |||
Derivative [Line Items] | |||
Derivative maturity range | 19 years | ||
Foreign Exchange Forward | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Notional amount | $ 475 | 348 | |
Foreign Exchange Forward | Minimum | |||
Derivative [Line Items] | |||
Derivative maturity range | 1 month | ||
Foreign Exchange Forward | Maximum | |||
Derivative [Line Items] | |||
Derivative maturity range | 5 years | ||
Commodity Contract | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Notional amount | $ 271 | $ 296 | |
Commodity Contract | Minimum | |||
Derivative [Line Items] | |||
Derivative maturity range | 1 month | ||
Commodity Contract | Maximum | |||
Derivative [Line Items] | |||
Derivative maturity range | 6 years | ||
[1] | During the first six months of 2019 , the Company elected to terminate $920 million notional amount of receive-fixed, pay-variable interest rate swaps and received cash of $2 million . | ||
[2] | During the first six months of 2019 , the Company elected to terminate $1,400 million notional amount of receive-variable, pay-fixed interest rate swaps and received cash of $38 million . |
Derivatives - Fair Value (Detai
Derivatives - Fair Value (Details) - Recurring - Level 2 - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Interest Rate Contract | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 0 | $ 7 |
Interest Rate Contract | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 1 | 2 |
Interest Rate Contract | Not Designated as Hedging Instrument | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 20 | 77 |
Interest Rate Contract | Not Designated as Hedging Instrument | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0 | 6 |
Foreign Exchange Forward | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 2 | 0 |
Foreign Exchange Forward | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 1 | 4 |
Foreign Exchange Forward | Not Designated as Hedging Instrument | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 9 | 15 |
Commodity Contract | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 27 | 27 |
Commodity Contract | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 8 | 3 |
Commodity Contract | Not Designated as Hedging Instrument | Other non-current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 6 | 3 |
Commodity Contract | Not Designated as Hedging Instrument | Other non-current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 5 | $ 10 |
Derivatives - Impact on Net Inc
Derivatives - Impact on Net Income (Details) - Not Designated as Hedging Instrument - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | $ 2 | $ (10) | $ 13 | $ (38) |
Commodity Contract | Cost of sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | (3) | 3 | 12 | 5 |
Commodity Contract | SG&A expenses | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | 2 | 0 | (12) | 0 |
Interest Rate Contract | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | 2 | (6) | 4 | (30) |
Foreign Exchange Forward | Cost of sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | 1 | 0 | 3 | 0 |
Foreign Exchange Forward | Other expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Gain) Loss Recognized in Income | $ 0 | $ (7) | $ 6 | $ (13) |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Basic EPS: | ||||||
Net income attributable to KDP | $ 314 | $ 230 | $ 83 | $ 88 | $ 544 | $ 171 |
Weighted average common shares outstanding (in shares) | 1,406.7 | 790.5 | 1,406.5 | 790.5 | ||
Earnings per common share - basic (in dollars per share) | $ 0.22 | $ 0.10 | $ 0.39 | $ 0.21 | ||
Diluted EPS: | ||||||
Net income attributable to KDP | $ 314 | $ 230 | $ 83 | $ 88 | $ 544 | $ 171 |
Impact of dilutive securities in Maple Parent Corporation | 0 | 2 | 0 | 3 | ||
Total | $ 314 | $ 81 | $ 544 | $ 168 | ||
Weighted average common shares outstanding (in shares) | 1,406.7 | 790.5 | 1,406.5 | 790.5 | ||
Effect of dilutive securities: | ||||||
Weighted average common shares outstanding and common stock equivalents (in shares) | 1,419.2 | 790.5 | 1,418.5 | 790.5 | ||
Earnings per common share - diluted (in dollars per share) | $ 0.22 | $ 0.10 | $ 0.38 | $ 0.21 | ||
Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation (in shares) | 0.1 | 0 | 0.1 | 0 | ||
Stock options | ||||||
Effect of dilutive securities: | ||||||
Effect of dilutive securities (in shares) | 0.5 | 0 | 0.7 | 0 | ||
RSUs | ||||||
Effect of dilutive securities: | ||||||
Effect of dilutive securities (in shares) | 12 | 0 | 11.3 | 0 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2017 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||||
Total stock-based compensation expense | $ 20 | $ 9 | $ 34 | $ 20 | |
Income tax benefit recognized in the Statements of Income | (4) | (2) | (7) | (5) | |
Stock-based compensation expense, net of tax | $ 16 | $ 7 | $ 27 | $ 15 | |
RSUs | |||||
RSUs | |||||
Outstanding as of beginning of the period (in shares) | 18,625,898 | ||||
Granted (in shares) | 5,200,620 | ||||
Vested and released (in shares) | (4,368) | ||||
Forfeited (in shares) | (1,136,796) | ||||
Outstanding as of end of the period (in shares) | 22,685,354 | 22,685,354 | |||
Unrecognized compensation costs related to nonvested awards | $ 297 | $ 297 | |||
Weighted average recognition period of unrecognized compensation costs | 3 years 10 months 24 days | ||||
Weighted Average Grant Date Fair Value | |||||
Outstanding as of the beginning of the period (in dollars per share) | $ 15.68 | ||||
Granted (in dollars per share) | 26.25 | ||||
Vested and released (in dollars per share) | 24.20 | ||||
Forfeited (in dollars per share) | 19.07 | ||||
Outstanding as of the end of the period (in dollars per share) | $ 17.93 | $ 17.93 | |||
Weighted Average Remaining Contractual Term (Years) | |||||
Outstanding | 3 years | 3 years 6 months | |||
Aggregate Intrinsic Value (in millions) | |||||
Outstanding as of the beginning of the period | $ 478 | ||||
Vested and released | 0 | ||||
Outstanding as of the end of the period | $ 656 | $ 656 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Total equity at beginning of period | $ 22,674 | $ 22,533 | $ 7,434 | $ 7,398 | $ 22,533 | $ 7,398 |
Net current period other comprehensive income | 88 | 93 | (16) | (24) | ||
Total equity at end of period | 22,883 | 22,674 | 7,484 | 7,434 | 22,883 | 7,484 |
Accumulated Other Comprehensive Income (Loss) | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Total equity at beginning of period | (37) | (130) | 75 | 99 | (130) | 99 |
Other comprehensive income | 88 | (16) | 181 | (40) | ||
Net current period other comprehensive income | 88 | 93 | (16) | (24) | ||
Total equity at end of period | 51 | (37) | 59 | 75 | 51 | 59 |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Total equity at beginning of period | (33) | (126) | 75 | 99 | (126) | 99 |
Other comprehensive income | 88 | (16) | 181 | (40) | ||
Total equity at end of period | 55 | (33) | 59 | 75 | 55 | 59 |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Total equity at beginning of period | (4) | (4) | 0 | 0 | (4) | 0 |
Other comprehensive income | 0 | 0 | 0 | 0 | ||
Total equity at end of period | $ (4) | $ (4) | $ 0 | $ 0 | $ (4) | $ 0 |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 207 | $ 204 | |
Work in process | 8 | 7 | |
Finished goods | 471 | 415 | |
Total inventories | 686 | 626 | |
Prepaid expenses and other current assets: | |||
Other receivables | 49 | 51 | |
Customer incentive programs | 80 | 12 | |
Derivative instruments | 10 | 9 | |
Prepaid marketing | 43 | 29 | |
Spare parts | 45 | 43 | |
Assets held for sale | 7 | 8 | |
Income tax receivable | 13 | 22 | |
Other | 70 | 80 | |
Prepaid expenses and other current assets | 317 | 254 | |
Other non-current assets: | |||
Customer incentive programs | 29 | 34 | |
Marketable securities - trading | [1] | 40 | 44 |
Operating lease right-of-use assets | [2] | 355 | 0 |
Derivative instruments | 35 | 95 | |
Equity securities without readily determinable fair values | 1 | 1 | |
Non-current restricted cash and restricted cash equivalents | 10 | 10 | |
Related party notes receivable | [3] | 32 | 17 |
Other | 70 | 58 | |
Total other non-current assets | 572 | 259 | |
Accrued expenses: | |||
Customer rebates & incentives | 374 | 342 | |
Accrued compensation | 148 | 214 | |
Insurance reserve | 39 | 37 | |
Interest accrual | 53 | 77 | |
Accrued professional fees | 29 | 113 | |
Other accrued expenses | 226 | 229 | |
Total accrued expenses | 869 | 1,012 | |
Other current liabilities: | |||
Dividends payable | 212 | 209 | |
Income taxes payable | 110 | 60 | |
Operating lease liability | [4] | 61 | 0 |
Finance lease liability | [5] | 37 | 26 |
Derivative instruments | 29 | 34 | |
Holdback liabilities | 42 | 44 | |
Other | 25 | 33 | |
Total other current liabilities | 516 | 406 | |
Other non-current liabilities: | |||
Long-term pension and postretirement liability | 29 | 30 | |
Insurance reserves | 61 | 57 | |
Operating lease liability | [4] | 290 | 0 |
Finance lease liability | [5] | 253 | 305 |
Derivative instruments | 5 | 16 | |
Deferred compensation liability | 40 | 44 | |
Other | 93 | 107 | |
Other non-current liabilities | 771 | 559 | |
Suppliers Utilizing Third Party Services | |||
Other Financial Information [Line Items] | |||
Accounts payable | $ 2,096 | $ 1,676 | |
[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 $40 million and $44 million as of June 30, 2019 and December 31, 2018 , respectively. | ||
[2] | Refer to Note 3 for additional information . | ||
[3] | Refer to Note 15 for additional information . | ||
[4] | Refer to Note 3 for additional information . | ||
[5] | Amounts as of December 31, 2018 include capital leases and financing obligations reported under ASC 840. Refer to Notes 1 and 3 for additional information. |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information - Reconciliation of Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Cash and cash equivalents | $ 106 | $ 83 | |||
Restricted cash and restricted cash equivalents | [1] | 44 | 46 | ||
Non-current restricted cash and restricted cash equivalents included in Other non-current assets | 10 | 10 | |||
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows | 160 | 139 | $ 8,284 | $ 95 | |
Recurring | Level 1 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Cash and cash equivalents | 106 | 83 | |||
Restricted cash and restricted cash equivalents | [1] | 44 | 46 | ||
Non-current restricted cash and restricted cash equivalents included in Other non-current assets | 10 | 10 | |||
Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the unaudited Condensed Consolidated Statement of Cash Flows | $ 160 | $ 139 | |||
[1] | Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Big Red Acquisition and the Core Acquisition. |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Non-cash Investing and Financing Activities (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Supplemental cash flow disclosures: | |||
Measurement period adjustment of Core purchase price | $ (11) | $ 0 | |
Capital expenditures included in accounts payable and accrued expenses | 205 | 39 | |
Non Cash purchase of intangibles | 2 | 0 | |
Dividends declared but not yet paid | 212 | $ 0 | |
Capital Lease Obligations Incurred | 30 | 0 | |
Cash paid for interest | 272 | 47 | |
Cash paid for related party interest | 0 | 51 | |
Cash paid for income taxes | $ 142 | $ 71 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | May 09, 2011defendant |
Proposition 65 Litigation | |
Loss Contingencies [Line Items] | |
Number of co-defendants | 100 |
Related Parties (Details)
Related Parties (Details) - Bedford - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | ||
Outstanding receivables, related party | $ 32 | $ 17 |
Line of Credit Agreement | ||
Related Party Transaction [Line Items] | ||
Line of credit receivable, maximum borrowing capacity | $ 51 | |
Line of credit receivable, interest rate | 8.10% |
Segments - Schedules of Results
Segments - Schedules of Results (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | |
Segment Reporting [Abstract] | ||||
Number of operating segments | segment | 4 | |||
Segment Results – Income from operations | ||||
Net sales | $ 2,812 | $ 949 | $ 5,316 | $ 1,897 |
Income from operations | 587 | 167 | 1,085 | 345 |
Beverage Concentrates | ||||
Segment Results – Income from operations | ||||
Net sales | 370 | 0 | 674 | 0 |
Packaged Beverages | ||||
Segment Results – Income from operations | ||||
Net sales | 1,311 | 0 | 2,427 | 0 |
Latin America Beverages | ||||
Segment Results – Income from operations | ||||
Net sales | 141 | 0 | 257 | 0 |
Coffee Systems | ||||
Segment Results – Income from operations | ||||
Net sales | 990 | 949 | 1,958 | 1,897 |
Operating Segments | ||||
Segment Results – Income from operations | ||||
Income from operations | 743 | 274 | 1,397 | 531 |
Operating Segments | Beverage Concentrates | ||||
Segment Results – Income from operations | ||||
Income from operations | 244 | 0 | 445 | 0 |
Operating Segments | Packaged Beverages | ||||
Segment Results – Income from operations | ||||
Income from operations | 186 | 0 | 335 | 0 |
Operating Segments | Latin America Beverages | ||||
Segment Results – Income from operations | ||||
Income from operations | 26 | 0 | 37 | 0 |
Operating Segments | Coffee Systems | ||||
Segment Results – Income from operations | ||||
Income from operations | 287 | 274 | 580 | 531 |
Corporate Unallocated | ||||
Segment Results – Income from operations | ||||
Income from operations | $ 156 | $ 107 | $ 312 | $ 186 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | $ 2,812 | $ 949 | $ 5,316 | $ 1,897 | |||
CSD | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 1,005 | 0 | 1,905 | [1] | 0 | [1] | |
NCB | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 703 | 0 | 1,242 | [1] | 0 | [1] | |
Pods | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 783 | 763 | 1,576 | [2] | 1,557 | [2] | |
Appliances | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 154 | 131 | 277 | 232 | |||
Other | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 167 | 55 | 316 | 108 | |||
Beverage Concentrates | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 370 | 0 | 674 | 0 | |||
Beverage Concentrates | CSD | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | [1] | 362 | 0 | 660 | 0 | ||
Beverage Concentrates | NCB | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | [1] | 3 | 0 | 5 | 0 | ||
Beverage Concentrates | Pods | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | [2] | 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 | 5 | 0 | 9 | 0 | |||
Packaged Beverages | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 1,311 | 0 | 2,427 | 0 | |||
Packaged Beverages | CSD | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 541 | 0 | 1,063 | [1] | 0 | [1] | |
Packaged Beverages | NCB | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 662 | 0 | 1,163 | [1] | 0 | [1] | |
Packaged Beverages | Pods | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 0 | 0 | 0 | [2] | 0 | [2] | |
Packaged Beverages | Appliances | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 0 | 0 | 0 | 0 | |||
Packaged Beverages | Other | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 108 | 0 | 201 | 0 | |||
Latin America Beverages | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 141 | 0 | 257 | 0 | |||
Latin America Beverages | CSD | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 102 | 0 | 182 | [1] | 0 | [1] | |
Latin America Beverages | NCB | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 38 | 0 | 74 | [1] | 0 | [1] | |
Latin America Beverages | Pods | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 0 | 0 | 0 | [2] | 0 | [2] | |
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 | 990 | 949 | 1,958 | 1,897 | |||
Coffee Systems | CSD | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | [1] | 0 | 0 | 0 | 0 | ||
Coffee Systems | NCB | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | [1] | 0 | 0 | 0 | 0 | ||
Coffee Systems | Pods | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | [2] | 783 | 763 | 1,576 | 1,557 | ||
Coffee Systems | Appliances | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | 154 | 131 | 277 | 232 | |||
Coffee Systems | Other | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Net sales | $ 53 | $ 55 | $ 105 | $ 108 | |||
[1] | (1) Represents net sales of owned and Allied Brands within our portfolio. | ||||||
[2] | (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. |
Guarantor and Non-Guarantor F_3
Guarantor and Non-Guarantor Financial Information Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Condensed Income Statements, Captions [Line Items] | ||||||
Net sales | $ 2,812 | $ 949 | $ 5,316 | $ 1,897 | ||
Cost of sales | 1,186 | 458 | 2,292 | 925 | ||
Gross profit | 1,626 | 491 | 3,024 | 972 | ||
Selling, general and administrative expenses | 1,028 | 321 | 1,939 | 621 | ||
Other operating expense, net | 11 | 3 | 0 | 6 | ||
Income from operations | 587 | 167 | 1,085 | 345 | ||
Interest expense | 170 | 339 | ||||
Interest expense - related party | 0 | 26 | 0 | 51 | ||
Loss on early extinguishment of debt | 0 | 0 | 9 | 2 | ||
Other expense (income), net | 1 | (8) | 6 | 5 | ||
Income before provision for income taxes | 416 | 98 | 731 | 238 | ||
Provision for income taxes | 102 | 13 | 187 | 64 | ||
Income before equity in earnings of consolidated subsidiaries | 314 | 544 | ||||
Equity in earnings of consolidated subsidiaries | 0 | 0 | ||||
Net income | 314 | 85 | 544 | 174 | ||
Less: Net income attributable to employee redeemable non-controlling interest and mezzanine equity awards | 0 | 2 | 0 | 3 | ||
Net income attributable to KDP | 314 | $ 230 | $ 83 | $ 88 | 544 | $ 171 |
Reportable Legal Entities | Parent | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Net sales | 0 | 0 | ||||
Cost of sales | 0 | 0 | ||||
Gross profit | 0 | 0 | ||||
Selling, general and administrative expenses | 1 | 5 | ||||
Other operating expense, net | 0 | 0 | ||||
Income from operations | (1) | (5) | ||||
Interest expense | 198 | 398 | ||||
Interest expense - related party | 0 | 0 | ||||
Loss on early extinguishment of debt | 0 | 9 | ||||
Other expense (income), net | (239) | (251) | ||||
Income before provision for income taxes | 40 | (161) | ||||
Provision for income taxes | (5) | (54) | ||||
Income before equity in earnings of consolidated subsidiaries | 45 | (107) | ||||
Equity in earnings of consolidated subsidiaries | 269 | 651 | ||||
Net income | 314 | 544 | ||||
Reportable Legal Entities | Guarantors | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Net sales | 1,660 | 3,070 | ||||
Cost of sales | 661 | 1,232 | ||||
Gross profit | 999 | 1,838 | ||||
Selling, general and administrative expenses | 668 | 1,230 | ||||
Other operating expense, net | 0 | (10) | ||||
Income from operations | 331 | 618 | ||||
Interest expense | 3 | 7 | ||||
Interest expense - related party | 0 | 0 | ||||
Loss on early extinguishment of debt | 0 | 0 | ||||
Other expense (income), net | 192 | 147 | ||||
Income before provision for income taxes | 136 | 464 | ||||
Provision for income taxes | 42 | 126 | ||||
Income before equity in earnings of consolidated subsidiaries | 94 | 338 | ||||
Equity in earnings of consolidated subsidiaries | 14 | 14 | ||||
Net income | 108 | 352 | ||||
Reportable Legal Entities | Non-Guarantors | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Net sales | 1,207 | 2,345 | ||||
Cost of sales | 580 | 1,159 | ||||
Gross profit | 627 | 1,186 | ||||
Selling, general and administrative expenses | 359 | 704 | ||||
Other operating expense, net | 11 | 10 | ||||
Income from operations | 257 | 472 | ||||
Interest expense | 28 | 57 | ||||
Interest expense - related party | 0 | 0 | ||||
Loss on early extinguishment of debt | 0 | 0 | ||||
Other expense (income), net | (11) | (13) | ||||
Income before provision for income taxes | 240 | 428 | ||||
Provision for income taxes | 65 | 115 | ||||
Income before equity in earnings of consolidated subsidiaries | 175 | 313 | ||||
Equity in earnings of consolidated subsidiaries | 0 | 0 | ||||
Net income | 175 | 313 | ||||
Eliminations | ||||||
Condensed Income Statements, Captions [Line Items] | ||||||
Net sales | (55) | (99) | ||||
Cost of sales | (55) | (99) | ||||
Gross profit | 0 | 0 | ||||
Selling, general and administrative expenses | 0 | 0 | ||||
Other operating expense, net | 0 | 0 | ||||
Income from operations | 0 | 0 | ||||
Interest expense | (59) | (123) | ||||
Interest expense - related party | 0 | 0 | ||||
Loss on early extinguishment of debt | 0 | 0 | ||||
Other expense (income), net | 59 | 123 | ||||
Income before provision for income taxes | 0 | 0 | ||||
Provision for income taxes | 0 | 0 | ||||
Income before equity in earnings of consolidated subsidiaries | 0 | 0 | ||||
Equity in earnings of consolidated subsidiaries | (283) | (665) | ||||
Net income | $ (283) | $ (665) |
Guarantor and Non-Guarantor F_4
Guarantor and Non-Guarantor Financial Information Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | $ 402 | $ 66 | $ 725 | $ 130 |
Reportable Legal Entities | Parent | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | 402 | 725 | ||
Reportable Legal Entities | Guarantors | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | 178 | 497 | ||
Reportable Legal Entities | Non-Guarantors | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | 264 | 495 | ||
Eliminations | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Comprehensive income | $ (442) | $ (992) |
Guarantor and Non-Guarantor F_5
Guarantor and Non-Guarantor Financial Information Balance Sheets (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Current assets: | |||||||
Cash and cash equivalents | $ 106 | $ 83 | |||||
Restricted cash and restricted cash equivalents | [1] | 44 | 46 | ||||
Trade accounts receivable, net | 1,068 | 1,150 | |||||
Related party receivable | 0 | 0 | |||||
Inventories | 686 | 626 | |||||
Prepaid expenses and other current assets | 317 | 254 | |||||
Total current assets | 2,221 | 2,159 | |||||
Property, plant and equipment, net | 2,290 | 2,310 | |||||
Investments in consolidated subsidiaries | 0 | 0 | |||||
Investments in unconsolidated affiliates | 170 | 186 | |||||
Goodwill | 20,039 | 20,011 | |||||
Other intangible assets, net | 24,228 | 23,967 | |||||
Long-term receivable, related parties | 0 | 0 | |||||
Other non-current assets | 572 | 259 | |||||
Deferred tax assets | 27 | 26 | |||||
Total assets | 49,547 | 48,918 | |||||
Current liabilities: | |||||||
Accounts payable | 2,909 | 2,300 | |||||
Accrued expenses | 869 | 1,012 | |||||
Structured payables | 595 | 526 | |||||
Related party payable | 0 | 0 | |||||
Short-term borrowings and current portion of long-term obligations | 1,806 | 1,458 | |||||
Other current liabilities | 516 | 406 | |||||
Total current liabilities | 6,695 | 5,702 | |||||
Long-term obligations | 13,164 | 14,201 | |||||
Long-term obligations, related party | 0 | 0 | |||||
Deferred tax liabilities | 6,034 | 5,923 | |||||
Other non-current liabilities | 771 | 559 | |||||
Total liabilities | 26,664 | 26,385 | |||||
Total stockholders' equity | 22,883 | $ 22,674 | 22,533 | $ 7,484 | $ 7,434 | $ 7,398 | |
Total liabilities and stockholders' equity | 49,547 | 48,918 | |||||
Reportable Legal Entities | Parent | |||||||
Current assets: | |||||||
Cash and cash equivalents | 0 | 0 | |||||
Restricted cash and restricted cash equivalents | 40 | 42 | |||||
Trade accounts receivable, net | 0 | 0 | |||||
Related party receivable | 135 | 189 | |||||
Inventories | 0 | 0 | |||||
Prepaid expenses and other current assets | 613 | 569 | |||||
Total current assets | 788 | 800 | |||||
Property, plant and equipment, net | 0 | 0 | |||||
Investments in consolidated subsidiaries | 41,003 | 40,119 | |||||
Investments in unconsolidated affiliates | 0 | 0 | |||||
Goodwill | 0 | 50 | |||||
Other intangible assets, net | 0 | 0 | |||||
Long-term receivable, related parties | 5,066 | 5,503 | |||||
Other non-current assets | 61 | 64 | |||||
Deferred tax assets | 0 | 0 | |||||
Total assets | 46,918 | 46,536 | |||||
Current liabilities: | |||||||
Accounts payable | 0 | 0 | |||||
Accrued expenses | 53 | 78 | |||||
Structured payables | 0 | 0 | |||||
Related party payable | 74 | 65 | |||||
Short-term borrowings and current portion of long-term obligations | 1,806 | 1,458 | |||||
Other current liabilities | 269 | 278 | |||||
Total current liabilities | 2,202 | 1,879 | |||||
Long-term obligations | 13,164 | 14,201 | |||||
Long-term obligations, related party | 8,589 | 7,827 | |||||
Deferred tax liabilities | 40 | 46 | |||||
Other non-current liabilities | 40 | 50 | |||||
Total liabilities | 24,035 | 24,003 | |||||
Total stockholders' equity | 22,883 | 22,533 | |||||
Total liabilities and stockholders' equity | 46,918 | 46,536 | |||||
Reportable Legal Entities | Guarantors | |||||||
Current assets: | |||||||
Cash and cash equivalents | 11 | 18 | |||||
Restricted cash and restricted cash equivalents | 2 | 3 | |||||
Trade accounts receivable, net | 642 | 596 | |||||
Related party receivable | 74 | 71 | |||||
Inventories | 250 | 226 | |||||
Prepaid expenses and other current assets | 199 | 110 | |||||
Total current assets | 1,178 | 1,024 | |||||
Property, plant and equipment, net | 1,297 | 1,351 | |||||
Investments in consolidated subsidiaries | 4,971 | 4,882 | |||||
Investments in unconsolidated affiliates | 63 | 63 | |||||
Goodwill | 8,239 | 8,371 | |||||
Other intangible assets, net | 16,857 | 16,583 | |||||
Long-term receivable, related parties | 8,623 | 7,827 | |||||
Other non-current assets | 248 | 41 | |||||
Deferred tax assets | 0 | 0 | |||||
Total assets | 41,476 | 40,142 | |||||
Current liabilities: | |||||||
Accounts payable | 990 | 497 | |||||
Accrued expenses | 596 | 610 | |||||
Structured payables | 47 | 47 | |||||
Related party payable | 95 | 106 | |||||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | |||||
Other current liabilities | 679 | 626 | |||||
Total current liabilities | 2,407 | 1,886 | |||||
Long-term obligations | 0 | 0 | |||||
Long-term obligations, related party | 3,440 | 3,369 | |||||
Deferred tax liabilities | 4,107 | 4,075 | |||||
Other non-current liabilities | 495 | 337 | |||||
Total liabilities | 10,449 | 9,667 | |||||
Total stockholders' equity | 31,027 | 30,475 | |||||
Total liabilities and stockholders' equity | 41,476 | 40,142 | |||||
Reportable Legal Entities | Non-Guarantors | |||||||
Current assets: | |||||||
Cash and cash equivalents | 95 | 65 | |||||
Restricted cash and restricted cash equivalents | 2 | 1 | |||||
Trade accounts receivable, net | 426 | 554 | |||||
Related party receivable | 64 | 76 | |||||
Inventories | 436 | 400 | |||||
Prepaid expenses and other current assets | 115 | 132 | |||||
Total current assets | 1,138 | 1,228 | |||||
Property, plant and equipment, net | 993 | 959 | |||||
Investments in consolidated subsidiaries | 0 | 0 | |||||
Investments in unconsolidated affiliates | 107 | 123 | |||||
Goodwill | 11,800 | 11,590 | |||||
Other intangible assets, net | 7,371 | 7,384 | |||||
Long-term receivable, related parties | 0 | 0 | |||||
Other non-current assets | 263 | 154 | |||||
Deferred tax assets | 27 | 26 | |||||
Total assets | 21,699 | 21,464 | |||||
Current liabilities: | |||||||
Accounts payable | 1,919 | 1,803 | |||||
Accrued expenses | 220 | 324 | |||||
Structured payables | 548 | 479 | |||||
Related party payable | 104 | 165 | |||||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | |||||
Other current liabilities | 178 | 59 | |||||
Total current liabilities | 2,969 | 2,830 | |||||
Long-term obligations | 0 | 0 | |||||
Long-term obligations, related party | 1,660 | 2,134 | |||||
Deferred tax liabilities | 1,887 | 1,802 | |||||
Other non-current liabilities | 236 | 172 | |||||
Total liabilities | 6,752 | 6,938 | |||||
Total stockholders' equity | 14,947 | 14,526 | |||||
Total liabilities and stockholders' equity | 21,699 | 21,464 | |||||
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 | (273) | (336) | |||||
Inventories | 0 | 0 | |||||
Prepaid expenses and other current assets | (610) | (557) | |||||
Total current assets | (883) | (893) | |||||
Property, plant and equipment, net | 0 | 0 | |||||
Investments in consolidated subsidiaries | (45,974) | (45,001) | |||||
Investments in unconsolidated affiliates | 0 | 0 | |||||
Goodwill | 0 | 0 | |||||
Other intangible assets, net | 0 | 0 | |||||
Long-term receivable, related parties | (13,689) | (13,330) | |||||
Other non-current assets | 0 | 0 | |||||
Deferred tax assets | 0 | 0 | |||||
Total assets | (60,546) | (59,224) | |||||
Current liabilities: | |||||||
Accounts payable | 0 | 0 | |||||
Accrued expenses | 0 | 0 | |||||
Structured payables | 0 | 0 | |||||
Related party payable | (273) | (336) | |||||
Short-term borrowings and current portion of long-term obligations | 0 | 0 | |||||
Other current liabilities | (610) | (557) | |||||
Total current liabilities | (883) | (893) | |||||
Long-term obligations | 0 | 0 | |||||
Long-term obligations, related party | (13,689) | (13,330) | |||||
Deferred tax liabilities | 0 | 0 | |||||
Other non-current liabilities | 0 | 0 | |||||
Total liabilities | (14,572) | (14,223) | |||||
Total stockholders' equity | (45,974) | (45,001) | |||||
Total liabilities and stockholders' equity | $ (60,546) | $ (59,224) | |||||
[1] | Restricted cash and cash equivalents primarily represent amounts held in escrow in connection with the Big Red Acquisition and the Core Acquisition. |
Guarantor and Non-Guarantor F_6
Guarantor and Non-Guarantor Financial Information Cash Flow Statement (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating activities: | ||
Net cash provided by operating activities | $ 1,203 | $ 578 |
Investing activities: | ||
Acquisitions of businesses | (8) | 0 |
Issuance of related party note receivable | (14) | (2) |
Investments in unconsolidated subsidiaries, payments | (11) | (22) |
Purchases of property, plant and equipment | (118) | (44) |
Proceeds from Sale of Property, Plant, and Equipment | 19 | 0 |
Payments to Acquire Intangible Assets | (4) | (12) |
Return of capital from investments in consolidated subsidiaries | 0 | |
Other, net | 22 | 0 |
Net cash used in investing activities | (114) | (80) |
Financing activities: | ||
Proceeds from (payments of) related party notes | 0 | |
Proceeds from senior unsecured notes | 0 | 8,000 |
Proceeds from term loan | 2,000 | 0 |
Net issuance of commercial paper | 381 | 0 |
Payments on finance leases | (19) | |
Repayment of term loan | (2,848) | (254) |
Cash contributions from redeemable non-controlling interest shareholders | 0 | 12 |
Cash dividends paid | (423) | (23) |
Proceeds from structured payables | 78 | 0 |
Payments on Structured Payables | (9) | 0 |
Repayments of Senior Debt | (250) | 0 |
Deferred financing charges paid | 0 | (35) |
Other, net | 10 | (1) |
Net cash (used in) provided by financing activities | (1,080) | 7,690 |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | 9 | 8,188 |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 12 | 1 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 139 | 95 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 160 | $ 8,284 |
Reportable Legal Entities | Parent | ||
Operating activities: | ||
Net cash provided by operating activities | (178) | |
Investing activities: | ||
Acquisitions of businesses | 0 | |
Issuance of related party note receivable | 535 | |
Investments in unconsolidated subsidiaries, payments | 0 | |
Purchases of property, plant and equipment | 0 | |
Proceeds from Sale of Property, Plant, and Equipment | 0 | |
Payments to Acquire Intangible Assets | 0 | |
Return of capital from investments in consolidated subsidiaries | 0 | |
Other, net | 10 | |
Net cash used in investing activities | 545 | |
Financing activities: | ||
Proceeds from (payments of) related party notes | 763 | |
Proceeds from term loan | 2,000 | |
Net issuance of commercial paper | 381 | |
Payments on finance leases | 0 | |
Repayment of term loan | (2,848) | |
Cash dividends paid | (423) | |
Proceeds from structured payables | 0 | |
Payments on Structured Payables | 0 | |
Repayments of Senior Debt | (250) | |
Other, net | 8 | |
Net cash (used in) provided by financing activities | (369) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | (2) | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 42 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 40 | |
Reportable Legal Entities | Guarantors | ||
Operating activities: | ||
Net cash provided by operating activities | 812 | |
Investing activities: | ||
Acquisitions of businesses | (3) | |
Issuance of related party note receivable | (789) | |
Investments in unconsolidated subsidiaries, payments | (11) | |
Purchases of property, plant and equipment | (44) | |
Proceeds from Sale of Property, Plant, and Equipment | 10 | |
Payments to Acquire Intangible Assets | (4) | |
Return of capital from investments in consolidated subsidiaries | 32 | |
Other, net | 0 | |
Net cash used in investing activities | (809) | |
Financing activities: | ||
Proceeds from (payments of) related party notes | 0 | |
Proceeds from term loan | 0 | |
Net issuance of commercial paper | 0 | |
Payments on finance leases | (11) | |
Repayment of term loan | 0 | |
Cash dividends paid | 0 | |
Proceeds from structured payables | 0 | |
Payments on Structured Payables | 0 | |
Repayments of Senior Debt | 0 | |
Other, net | 0 | |
Net cash (used in) provided by financing activities | (11) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | (8) | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 31 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 23 | |
Reportable Legal Entities | Non-Guarantors | ||
Operating activities: | ||
Net cash provided by operating activities | 581 | |
Investing activities: | ||
Acquisitions of businesses | (5) | |
Issuance of related party note receivable | (14) | |
Investments in unconsolidated subsidiaries, payments | 0 | |
Purchases of property, plant and equipment | (74) | |
Proceeds from Sale of Property, Plant, and Equipment | 9 | |
Payments to Acquire Intangible Assets | 0 | |
Return of capital from investments in consolidated subsidiaries | 0 | |
Other, net | 12 | |
Net cash used in investing activities | (72) | |
Financing activities: | ||
Proceeds from (payments of) related party notes | (509) | |
Proceeds from term loan | 0 | |
Net issuance of commercial paper | 0 | |
Payments on finance leases | (8) | |
Repayment of term loan | 0 | |
Cash dividends paid | (44) | |
Proceeds from structured payables | 78 | |
Payments on Structured Payables | (9) | |
Repayments of Senior Debt | 0 | |
Other, net | 2 | |
Net cash (used in) provided by financing activities | (490) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | 19 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 12 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 66 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | 97 | |
Eliminations | ||
Operating activities: | ||
Net cash provided by operating activities | (12) | |
Investing activities: | ||
Acquisitions of businesses | 0 | |
Issuance of related party note receivable | 254 | |
Investments in unconsolidated subsidiaries, payments | 0 | |
Purchases of property, plant and equipment | 0 | |
Proceeds from Sale of Property, Plant, and Equipment | 0 | |
Payments to Acquire Intangible Assets | 0 | |
Return of capital from investments in consolidated subsidiaries | (32) | |
Other, net | 0 | |
Net cash used in investing activities | 222 | |
Financing activities: | ||
Proceeds from (payments of) related party notes | (254) | |
Proceeds from term loan | 0 | |
Net issuance of commercial paper | 0 | |
Payments on finance leases | 0 | |
Repayment of term loan | 0 | |
Cash dividends paid | 44 | |
Proceeds from structured payables | 0 | |
Payments on Structured Payables | 0 | |
Repayments of Senior Debt | 0 | |
Other, net | 0 | |
Net cash (used in) provided by financing activities | (210) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents — net change from: | ||
Operating, investing and financing activities | 0 | |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 0 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ 0 |