Keurig Dr Pepper (KDP) 10-K risk factor changes: FY2021 vs FY2020

Widespread health developments and economic uncertainty resulting from the ongoing COVID-19 [removed: pandemic,] [added: pandemic] could materially and adversely affect our business, financial condition and results of operations.

Our business has been, and may continue to be, adversely impacted by the response to the ongoing COVID-19 pandemic in countries where we operate or our customers and suppliers are located, due to recommendations or mandates from governmental [added: and local] authorities to [added: require vaccinations,] close businesses, limit travel, avoid large gatherings or self-quarantine, as well as temporary closures or decreased operations of the facilities of our customers, distributors or suppliers.

- Significant reductions in demand or significant volatility in demand for one or more of our products, as a result of, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine or other restrictions, store closures, or financial hardship, shifts in demand away from one or more of our higher priced products to lower priced products, or stockpiling or similar activity, reduced options for marketing and promotion of products or other restrictions in connection with the COVID-19 pandemic; [removed: if prolonged,] such impacts could further increase the difficulty of operating our business during the pandemic, including accurately planning and forecasting customer demand;

- Inability to meet our consumers' and customers’ needs and achieve cost targets due to disruptions in our manufacturing and supply arrangements [removed: caused by] [added: such as] the loss or disruption of essential [removed: manufacturing and supply elements, such as] raw materials or purchased finished goods, [added: disruption of] logistics, reduction or loss of workforce due to the insufficiency or failure of our safety protocols, or [added: disruption of] other manufacturing and distribution capability;

The impact of COVID-19 may also exacerbate other risks discussed [removed: in Item 1A of our Annual Report,] [added: herein,] any of which could have a material effect on us.

[removed: This] [added: As this] situation [removed: is changing rapidly and additional impacts] [added: continues to evolve, new risks or uncertainties] may arise that we are not aware of currently.

Our sales may be negatively affected by numerous factors including our inability to maintain or increase prices, our inability to effectively promote our products, ineffective advertising and marketing campaigns, new entrants into the market, the decision of wholesalers, retailers or consumers to purchase competitors' products instead of ours, [removed: and] increased marketing costs and [added: higher] in-store placement and slotting fees [removed: due to] [added: driven by] our competitors' willingness to spend aggressively.

Costs and supply for [removed: commodities, such as] [added: inputs to our products, including] raw materials and [removed: energy,] [added: transportation,] may change substantially and shortages [added: have occurred and] may [added: continue to] occur.

Price increases for our raw materials [removed: could exert] [added: have placed] pressure on our costs and [added: could continue to do so, and] we may not be able to effectively hedge or pass along any such increases to our customers or consumers.

Furthermore, any price increases passed along to our customers or consumers could [added: significantly] reduce demand for our [removed: products.][added: products and could negatively affect our business and financial performance.]

[removed: Furthermore,] [added: In addition,] price decreases in commodities that we have effectively hedged could also increase our cost of goods sold for mark-to-market changes in the derivative instruments.

Our principal raw materials in our [removed: hot] [added: coffee] business include coffee beans and K-Cup pod raw materials (including cups, filter paper and other ingredients) used in the manufacturing of our K-Cup pods.

The supply and price of [removed: crop commodities] [added: crops] we purchase, such as coffee, apples, and corn, can also be affected by multiple factors in the producing countries, including weather, natural disasters, crop disease (such as coffee rust), general cost increases in farm inputs and costs of production, inventory levels and political and economic conditions, as well as the actions of certain organizations and associations that have historically attempted to influence prices of various commodities through agreements establishing export quotas or by restricting supplies.

We may have limited [removed: negotiation] leverage [removed: with regards] to [added: negotiate with] these suppliers, which could negatively affect our operations and the financial performance of our business.

The failure of our suppliers to meet our needs could occur for many reasons, including fires, natural disasters, weather, manufacturing problems, disease, crop failure, strikes, transportation [removed: interruption,] [added: disruption,] government regulation, political instability, cybersecurity attacks and terrorism.

Moreover, negative publicity [removed: also could be generated] [added: may result] from false, unfounded or nominal liability claims or limited recalls.

If we do not effectively anticipate and respond to these [added: changing] trends and [removed: changing] consumer beverage preferences, our sales and growth could suffer.

If we do not meet consumer demands by [removed: providing] [added: continuing to provide] recyclable packaging options and focusing on sustainability throughout our manufacturing operations, our sales could suffer.

[removed: Additionally, new] [added: New] ventures and investments are inherently risky and may not be successful, and we may face challenges in achieving strategic objectives and other benefits expected from such investments or ventures.

The disruption could occur for many reasons, including fire, natural disasters, weather, water scarcity, manufacturing problems, disease, epidemics, strikes, [added: labor shortages,] transportation or supply interruption, contractual dispute, government regulation, cybersecurity attacks or terrorism.

Moreover, if demand increases [removed: more than we forecast,] [added: beyond our production capabilities,] we [removed: will] [added: would] need to either expand our capabilities internally or acquire additional capacity.

We have programs to invest and upgrade our manufacturing, distribution and other facilities, including expansive investments in [removed: new] manufacturing facilities in Spartanburg, South Carolina; Newbridge, Ireland; and Allentown, Pennsylvania.

If our investment and restructuring costs are higher than anticipated, [added: the investments and upgrades are not sufficient to meet] our [added: near-term future] business [added: needs, our business] does not develop as anticipated to appropriately utilize new or upgraded facilities, or third parties fail to complete the construction or renovation of facilities or production equipment in a timely manner or in accordance with our specifications, our costs and financial performance could be negatively affected.

As of December 31, [removed: 2020,] [added: 2021,] we had [removed: $49,779] [added: $50,598] million of total assets, of which [removed: $20,184] [added: $20,182] million were goodwill and [removed: $23,968] [added: $23,856] million were other intangible assets.

Factors which could result in an impairment include, but are not limited to: (i) reduced demand for our products and/or the product category resulting in diminished long-term revenue growth; (ii) higher commodity or transportation prices; (iii) lower prices for our products or increased marketing as a result of increased competition; (iv) not achieving forecasted [removed: synergies from the DPS Merger;] [added: productivities;] (v) significant disruptions to our operations as a result of both internal and external events, such as the ongoing COVID-19 pandemic; and (vi) changes in our discount rates, which could change due to factors such as movement in risk free interest rates, changes in general market interest [removed: rate] [added: rates] and market beta volatility and changes to management's view of [removed: forecast] [added: forecasted] risk, among others.

[removed: We have incurred significant indebtedness, which] [added: Our level of indebtedness] could adversely affect us, including decreasing our business flexibility and increasing our interest expense.

If our credit ratings were to be downgraded as a result of changes in our capital structure, changes in the credit rating agencies’ [removed: methodology] [added: methodologies] in assessing our credit strength, the credit agencies’ perception of the impact of credit market conditions on our current or future results of operations and financial position or for any other reason, our cost of borrowing could increase.

[removed: Moreover, in] [added: In] the [removed: future] [added: future,] we may be required to raise substantial additional financing to fund working capital, capital expenditures, the repayment or refinancing of [removed: its] [added: our] indebtedness, acquisitions or other general corporate requirements.

Retailers also have leverage to require us to provide increased marketing and promotional expenditures, including larger, more tailored promotional and product delivery [removed: programs.][added: programs, as well as to demand fines for late or incomplete product shipments.]

Unseasonable or unusual weather, natural disasters or long-term climate changes [removed: may negatively impact] [added: are expected to add volatility to commodity prices and have] the [removed: price or] [added: potential to disrupt the] availability of raw materials, energy and fuel, our ability to produce and demand for our products.

These impacts may limit availability or increase the [removed: cost] [added: price volatility] of key agricultural commodities, such as coffee, corn and tea, which are important sources of ingredients for our products.

Laws enacted that directly or indirectly affect our production, distribution, [removed: packaging (including K-Cup pods and the disposal of K-Cup pods),] [added: packaging,] cost of raw materials, fuel, ingredients and water could all negatively impact our business and financial results.

For example, changes in [removed: recycling and bottle deposit] [added: packaging] laws or special taxes on soft drinks or ingredients could increase our costs.

In addition, changes in legislation imposing tariffs on or restricting the importation of our products or raw materials required to make our products, restricting the sale of K-Cup pods, requiring compostability of K-Cup pods, limiting the ability of consumers to put K-Cup pods into municipal waste or recycling streams [removed: or requiring manufacturers of K-Cup pods to pay responsible producer or other fees to local or other governmental entities in connection with the collection, recycling or disposition of K-Cup pods could increase costs for us or,] [added: could,] at least for some period of time, cut off a significant source of our sales and profits.

We are in [removed: the process to be in] compliance with the PCI Standard.

Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and [removed: technology such as those necessary to achieve compliance with the PCI Standard] [added: technology,] or [removed: with] [added: the] maintenance [removed: or adequate] [added: and] support of existing systems [added: and technology, to maintain compliance with the PCI Standard] could also disrupt or reduce the efficiency of our operations.

[removed: Even if] [added: Further, even though] we are compliant with [added: the] PCI Standard, we still may not be able to prevent security breaches.

As cybersecurity attacks continue to evolve and increase, our information systems [removed: could also] [added: and those of our third party service providers have been and may in the future] be penetrated or compromised by internal and external parties intent on extracting confidential information, disrupting business processes or corrupting information.

Additionally, in the event of a cybersecurity [removed: breach of] [added: breach,] confidential information that we process and maintain about our employees or consumers through our e-commerce platform could [removed: be] potentially [added: be] exposed.

We continue to devote [removed: focused] resources to network security, backup and disaster recovery, upgrading systems and networks, enhanced training and other security measures to protect our systems and data; we are also in the process of enhancing the monitoring and detection of threats in our environment.

The ongoing COVID-19 pandemic and its resulting impacts on the global economy, particularly supply chain constraints and labor shortages, have led to inflation in input costs, logistics, manufacturing and labor costs.

We have experienced supply chain disruptions and significant inflation, which have impacted our results of operations in the current year and may continue to do so in the future.

Speculative trading in commodities, such as coffee, has and may continue to influence prices.

Some of our raw materials and finished products are sourced or manufactured overseas and shipped to the U.S. and Canada.

Changes in the global ocean transport market, including shortages of shipping containers and availability of U.S. and Canadian ports, have resulted in and may continue to result in increased costs of transportation for our raw materials and finished products, which may impact our results of operations.

We also regularly pursue productivity initiatives, which are focused on strategic opportunities in procurement, manufacturing, and logistics, as well as cost savings and tax initiatives.

These strategic initiatives may include investments in new technologies and optimization and relocation of our manufacturing and distribution footprint.

In 2020 and 2021, as a result of the COVID-19 pandemic, we have experienced delays in the construction of our new facilities and the production equipment contained within, and we may continue to experience such delays.

We cannot guarantee that our share repurchase program will be fully consummated or that our share repurchase program will enhance long-term stockholder value, and share repurchases could increase the volatility of the price of our stock and reduce our free cash flow.

In October 2021, our Board of Directors authorized the Company to repurchase up to $4 billion of our outstanding common stock, beginning on January 1, 2022, potentially enabling us to return value to shareholders.

Our repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.

Our share repurchase program could affect the price of our stock and increase volatility and may be suspended or terminated at any time.

We cannot guarantee that we will repurchase shares or conduct future share repurchase programs, and we cannot guarantee that any such programs will result in long-term increases to shareholder value.

RISKS RELATING TO LABOR AND EMPLOYMENT

Labor shortages, employee turnover, and increases in wages could significantly impact our operations.

The ongoing COVID-19 pandemic and its resulting impacts on the global economy have exacerbated employee turnover and led to labor shortages, particularly in the market for frontline employees in the production and distribution environments.

The labor force has been and may continue to be impacted by a number of factors related to the ongoing COVID-19 pandemic, including government actions, such as vaccination mandates, unemployment benefits and subsidies, and laws and regulations related to employee health and safety.

Additionally, competition in the labor marketplace for qualified employees has led to increased costs, such as higher wages in order to recruit and retain employees.

A prolonged labor shortage or inflation in labor costs could have a significant impact on our results of operations.

Changes in bottle deposit and recycling laws, including requiring manufacturers of K-Cup pods to pay responsible producer or other fees to either governmental or non-governmental entities in connection with the collection, recycling, or disposition of K-Cup pods, which may support our corporate responsibility objectives and goals, but could increase our costs.

[Table of Content](#i4e002ac394c34074b07ec2df1e1fbbfe_7)[s](#i4e002ac394c34074b07ec2df1e1fbbfe_7)

Such increases could negatively affect our business and financial performance.

Speculative trading in commodities can also influence prices.

Additionally, conversion of raw materials into our products for sale uses electricity and natural gas.

We have significant indebtedness, which could adversely affect us, including decreasing our business flexibility and increasing our interest expense.

The increased levels of indebtedness could also reduce funds available for working capital, capital expenditures, acquisitions, the repayment or refinancing of our indebtedness as it becomes due and other general corporate purposes and may create competitive disadvantages for us relative to other companies with lower debt levels.

Optimizing our operations following the DPS Merger may be more difficult, costly or time-consuming than expected, and the anticipated benefits and cost savings of the DPS Merger may not be realized.

We continue to optimize our operations as One KDP, which is a complex, costly and time-consuming process.

The anticipated benefits of the DPS Merger may not be realized fully or at all, or may take longer to realize than expected.

There can be no assurances that we will be successful or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the DPS Merger.

We are also incurring costs related to the optimization of our operations, including facilities and systems consolidation costs and employment-related costs.

We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the optimization of our operations.

Our reliance on third-party manufacturers also exposes us to increased risk that certain minerals and metals, known as "conflict minerals", that are contained in our brewers have originated from "covered countries" (as defined in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) but cannot be determined to be "conflict free".

As a result of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted disclosure requirements for public companies whose products contain conflict minerals that are necessary to the functionality or production of such products.

Under these rules, we are required to obtain sourcing data from suppliers, perform supply chain due diligence, and file annually with the SEC a specialized disclosure report on Form SD covering the prior calendar year.

We have incurred and expect to incur additional costs to comply with the rules, including costs related to the determination of the origin, source and chain of custody of the conflict minerals used in our products and the adoption of conflict minerals-related governance policies, processes and controls.

Moreover, the implementation of these compliance measures could adversely affect the sourcing, availability and pricing of materials used in the manufacture of our products to the extent that there may be only a limited number of suppliers that are able to meet our sourcing requirements.

There can be no assurance that we will be able to obtain such materials in sufficient quantities or at competitive prices.

We may also encounter customers who require that all of the components of our products be certified as conflict-free.

If we are not able to meet customer requirements, such customers may choose to not purchase our products, which could impact our sales and the value of portions of our inventory.

RISK RELATING TO OUR CAPITAL STRUCTURE

We no longer meet the requirements to be a “controlled company” within the meaning of the rules of Nasdaq and the rules of the SEC.

However, even though we are no longer a "controlled company," we will continue to qualify for, and may rely upon, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies during a one-year transition period.

On August 19, 2020, Maple Holdings B.V., an affiliate of JAB, completed the sale of 45 million shares of KDP stock in a public secondary offering.

On September 8, 2020, JAB distributed an additional 76 million shares of KDP stock to its minority partners.

On November 19, 2020, Maple Holdings B.V. completed the sale of an additional 20 million shares of KDP stock in a public secondary offering.

As a result of these transactions, JAB and its affiliates now own approximately 34% of KDP's common stock, and we are no longer a “controlled company” as defined in the Nasdaq rules.

However, even though we are not a "controlled company," we will continue to qualify for, and may rely on, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies during a one-year transition period.

The Nasdaq rules require that our Board be composed of a majority of "independent directors," as defined under the rules of such exchange, by August 19, 2021 and that our Remuneration and Nomination Committee consist entirely of independent directors by August 19, 2021.

During these transition periods, we may continue to utilize the available exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies, as permitted by the Nasdaq rules.

If we fail to meet the above deadlines for these requirements, our common stock could be delisted from Nasdaq, which would negatively impact the trading of our common shares and our business and financial condition.

Regulatory focus on the health, safety and marketing of food products is increasing.

Certain federal or state regulations or laws affecting the labeling of our products, such as California’s “Proposition 65,” which requires warnings on any product with substances that the state lists as potentially causing cancer or birth defects, are or could become applicable to our products.

We are not fully compliant with the PCI Standard and there can be no assurance that in the future we will be able to operate our facilities and our customer service and sales operations in accordance with the PCI Standard or other industry recommended or contractually required practices.

Among other things, a number of countries are considering changes to their tax laws applicable to multinational corporate groups, such as the TCJA.

Some foreign governments may enact tax laws in response to the TCJA that could result in further changes to global taxation and materially affect our financial position and operating results.

Moreover, many of the new provisions of the TCJA will need to be implemented through U.S. Department of Treasury regulations and other guidance that could impact the interpretation and effect of these provisions.

The recent presidential election may additionally impact our effective tax rate, as the new administration may seek to change the statutory rate and associated tax laws.

*This section of this Annual Report on Form 10-K generally discusses the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and year-over-year comparisons between the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019.][added: 2020.]

Discussions of the periods prior to the year ended December 31, [removed: 2019] [added: 2020] that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, [removed: 2019] [added: 2020] and the discussion therein for the year ended December 31, [removed: 2019] [added: 2020] compared to the year ended December 31, [removed: 2018] [added: 2019] is incorporated by reference into this Annual Report.*

We believe our integrated business model strengthens our route-to-market and provides opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our manufacturing and distribution businesses through both our DSD system and our WD [removed: delivery] system.

Refer to Item 1A, [removed: "Risk Factors", combined with] [added: *Risk Factors*, as well as] the *Uncertainties and Trends Affecting Liquidity* section below, for more information about [removed: the] risks and uncertainties [removed: we face.][added: facing us.]

[removed: Refer to *Uncertainties and Trends Affecting Liquidity* within the *Liquidity and Capital Resources* section below for more information.][added: UNCERTAINTIES AND TRENDS AFFECTING LIQUIDITY AND CAPITAL RESOURCES]

Employee compensation expense and employee protection costs, which impact our SG&A expenses and cost of sales, are included as the COVID-19 item affecting comparability and [removed: is] [added: are] excluded in our [removed: non-GAAP] [added: Adjusted] financial measures.

In addition, reported amounts under U.S. GAAP also include additional costs, not included [removed: in] [added: as] the COVID-19 item affecting comparability, as presented in tables below.

| Coffee Systems | | | $ | [removed: 15] [added: 4] | | | | | $ | [removed: 10] [added: 16] | | | | | $ | [removed: 2] [added: (2)] | | | | | $ | [removed: 8] [added: —] | | | | | $ | [removed: 35] [added: 18] | |

| Packaged Beverages | | | [removed: 76] [added: 76] | | | | | | [removed: 25] [added: 25] | | | | | | [removed: 8] [added: 8] | | | | | | [removed: —] [added: —] | | | | | | [removed: 109] [added: 109] | | |

| Beverage Concentrates | | | — | | | | | | — | | | | | | [removed: 4] [added: (3)] | | | | | | — | | | | | | [removed: 4] [added: (3)] | | |

| Total | | | [removed: $] [added: $] | [removed: 91] [added: 91] | | | | | [removed: $] [added: $] | [removed: 37] [added: 37] | | | | | [removed: $] [added: $] | [removed: 14] [added: 14] | | | | | [removed: $] [added: $] | [removed: 8] [added: 8] | | | | | [removed: $] [added: $] | [removed: 150] [added: 150] | |

(1)Employee compensation expense and employee protection costs are both included as the COVID-19 [removed: item] [added: items] affecting comparability in the reconciliation of our Adjusted Non-GAAP financial measures.

[removed: (4)Allowances reflect] [added: (4)In 2020, allowances reflected] the expected impact of the economic uncertainty caused by COVID-19, leveraging estimates of credit worthiness, default and recovery rates for certain of our customers.

The following [removed: table details] [added: summarizes] our [removed: net income and diluted EPS] [added: cash activity] for the years ended December 31, [added: 2021,] 2020 and 2019:

| [removed: | | |] For the [removed: Year Ended] [added: year ended] December [removed: 31,] [added: 31, 2021] | | | | | | | | | | | | [removed: Dollar] | | | | | | [removed: Percent] | | | [added: | | | | | | | | |]

| (in millions, except per share [removed: data)] [added: amounts)] | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | Change | | | | | | Change | | |

| [removed: Net] [added: Net] income attributable to [removed: KDP] [added: KDP] | | | $ | [removed: 1,325] [added: 2,146] | | | | | $ | [removed: 1,254] [added: 1,325] | | | | | $ | [removed: 71] [added: 821] | | | | | [removed: 5.7] [added: 62.0] | | % |

| Adjusted net income attributable to KDP | | | [removed: 1,988] [added: 2,280] | | | | | | [removed: 1,727] [added: 1,988] | | | | | | [removed: 261] [added: 292] | | | | | | [removed: 15.1] [added: 14.7] | | [removed: %] |

| Adjusted diluted EPS | | | [removed: 1.40] [added: 1.60] | | | | | | [removed: 1.22] [added: 1.40] | | | | | | [removed: 0.18] [added: 0.20] | | | | | | [removed: 14.8] [added: 14.3] | | [removed: %] |

[removed: Net income attributable to KDP] [added: Income from Operations. Income from operations] increased [removed: $71] [added: $188] million, or [removed: 5.7%,] [added: 22.9%,] to [removed: $1,325] [added: $1,010] million for the year ended December 31, [removed: 2020,] [added: 2021] compared to [removed: $1,254] [added: $822] million [removed: in] [added: for] the prior year, [removed: reflecting strong growth in income from operations,] driven primarily by [added: strong net sales growth,] the [removed: continued] benefit of productivity and merger synergies, [removed: volume/mix growth and] lower [removed: discretionary] [added: COVID-19-related] expenses, [removed: primarily marketing, partially offset by $150 million of additional pre-tax expenses associated with COVID-19 and] [added: the favorable comparison to both] a non-cash impairment [removed: on our] [added: charge of $67 million related to the] Bai brand [removed: intangible asset.][added: and year-over-year favorable asset sale-leaseback activity of $44 million from our strategic asset investment program.]

During the [removed: year] [added: years] ended December 31, [added: 2021 and] 2020, we made net repayments of [removed: $951 million related to] our Notes, our [removed: 2019 KDP Term Loan, and our] commercial paper [removed: notes.][added: and our other credit agreements of $1,721 million and $951 million, respectively.]

The following table sets forth our consolidated results of operations for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019:][added: 2020:]

| (in millions, except per share amounts) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | Change | | | | | | Change | | |

| Net sales | | | $ | [removed: 11,618 | | | | | $ | 11,120] [added: 12,683] | | | | | $ | [removed: 498 | | | | | 4.5 |] [added: 11,618] | [removed: %] |

| Selling, general and administrative expenses | | | [removed: 3,978] [added: 4,153] | | | | | | [removed: 3,962] [added: 3,978] | | | | | | [removed: 16] [added: 175] | | | | | | [removed: 0.4] [added: 4.4] | | |

| Impairment of intangible assets | | | [removed: 67] [added: —] | | | | | | [removed: —] [added: 67] | | | | | | [removed: 67] [added: (67)] | | | | | | NM | | |

| Other operating (income) expense, net | | | [removed: (39)] [added: (70)] | | | | | | [removed: 2] [added: (39)] | | | | | | [removed: (41)] [added: (31)] | | | | | | NM | | |

| Income from operations | | | [removed: 2,480 | | | | | | 2,378 | | | | | | 102] [added: $] | [added: 2,894] | | | | | [removed: 4.3] [added: $] | [added: 2,480] | |

| Loss on early extinguishment of debt | | | [removed: 4] [added: —] | | | | | | [removed: 11] [added: (4)] | | | | | | [removed: (7)] | | | | | | [removed: (63.6)] [added: —] | | | [added: | | | 4 | | | | | | 1 | | | | | | | | | | | | 3 | | | | | | | | | | | | — | | |]

| Impairment of investments and note receivable | | | [removed: 102] [added: 17] | | | | | | [removed: —] [added: 102] | | | | | | [removed: 102] [added: (85)] | | | | | | NM | | |

| Other [removed: expense (income),] [added: (income) expense,] net | | | [removed: 17] [added: (2)] | | | | | | [removed: 19] [added: 17] | | | | | | [removed: (2)] [added: (19)] | | | | | | [removed: (10.5)] [added: NM] | | |

| Income before provision for income taxes | | | [removed: 1,753] [added: 2,798] | | | | | | [removed: 1,694] [added: 1,753] | | | | | | [removed: 59] [added: 1,045] | | | | | | [removed: 3.5] [added: 59.6] | | |

| Provision for income taxes | | | [removed: 428] [added: 653] | | | | | | [removed: 440] [added: 428] | | | | | | [removed: (12)] [added: 225] | | | | | | [removed: (2.7)] [added: 52.6] | | |

| Less: Net [removed: income] [added: loss] attributable to non-controlling interest | | | [removed: —] [added: (1)] | | | | | | — | | | | | | [removed: —] [added: (1)] | | | | | | NM | | |

| [removed: Net] [added: Net] income attributable to [removed: KDP | | | $ | 1,325 | | | | | $ | 1,254 | | | | | $ | 71 | |] [added: KDP] | | | [removed: 5.7] [added: 2,146] | | [removed: %] |

| Gross margin | | | [removed: 55.8] [added: 55.0] | | % | | | | [removed: 57.0] [added: 55.8] | | % | | | | | | | | | | [removed: (120 bps)] [added: (80) bps] | | |

| Operating margin | | | [removed: 21.3] [added: 22.8] | | % | | | | [removed: 21.4] [added: 21.3] | | % | | | | | | | | | | [removed: (10 bps)] [added: 150 bps] | | |

| Effective tax rate | | | [removed: 24.4] [added: 23.3] | | % | | | | [removed: 26.0] [added: 24.4] | | % | | | | | | | | | | [removed: (160 bps)] [added: (110) bps] | | |

[removed: *Sales Volume.*] [added: Sales Volume.] The following table sets forth changes in sales volume for the year ended December 31, [removed: 2020] [added: 2021] compared to the prior year:

| K-Cup pod volume | | | | | | [removed: 6.3] [added: 5.6] | | % |

Effective January 1, 2021, we modified our internal reporting and operating segments to reflect changes in the executive leadership team to further enhance speed-to-market and decision effectiveness.

These modifications did not change our reportable segments.

As of December 31, 2021, our reportable segments were as follows:

DSD and WD have both been identified as operating segments that the Company aggregated into Packaged Beverages due to similar economic characteristics and similarities in the nature of finished goods sales and route-to-markets.

Our FFS operating segment is aggregated with our Branded Concentrates operating segment into our Beverage Concentrates reportable segment due to similar economic characteristics and similarities in the nature of the product sold.

As Reported, in millions (except Diluted EPS)


As Adjusted, in millions (except Diluted EPS)

 

On November 1, 2021, Coca-Cola announced that it had acquired full ownership of BodyArmor.

On December 15, 2021, we received $576 million of cash proceeds, net of holdback liabilities, from the sale of our equity interests in BodyArmor to Coca-Cola.

As a result, we recorded an estimated gain on the sale of approximately $524 million during the fourth quarter of 2021.

In the fourth quarter of 2021, we announced that our Board of Directors authorized a share repurchase program of up to $4 billion of our outstanding common stock, beginning on January 1, 2022, potentially enabling us to return value to shareholders.

Some of these items, such as the ongoing COVID-19 pandemic and its resulting impacts on the global economy, including supply chain challenges and labor shortages, have led to broad-based inflation in input costs, logistics, manufacturing and labor costs.

During the year ended December 31, 2021, we have experienced supply chain disruptions and a significant inflationary impact compared to the prior year.

These challenges intensified during the later part of the year due to the surge in cases resulting from the Omicron variant.

These impacts have created headwinds for our products that we expect to continue into 2022.

These inflationary pressures could impact our margins and operating results.

We, along with our competitors, have increased the pricing on a number of products in response to widespread inflation.

These pricing increases may result in future reductions in volume.

Refer to Note 6 of the Notes to our Consolidated Financial Statements and Item 7A, *Quantitative and Qualitative Disclosures About Market Risk* for management's discussion of how we manage our exposure to commodity risk.

| Total | | | $ | 12 | | | | | $ | 25 | | | | | $ | (13) | | | | | $ | — | | | | | $ | 24 | |

(2)In 2021, amounts primarily included incremental benefits provided to frontline workers such as extended sick leave, in order to maintain essential operations during the COVID-19 pandemic.

In 2020, amounts primarily reflected temporary incremental frontline incentive pay and benefits, as well as pay for temporary employees, including the associated taxes.

In 2021, reversals of those previously recorded allowances reflect improving economic conditions.

(5)Impacts cost of sales.

Non-GAAP financial measures are provided in addition to U.S. GAAP measures.

Such non-GAAP financial measures are excluded from the *Results of Operations by Segment* when there is no difference between the non-GAAP and the corresponding U.S. GAAP measure.

See *Non-GAAP Financial Measures* for more information, including reconciliations to the corresponding U.S. GAAP measures.

| Cost of sales | | | 5,706 | | | | | | 5,132 | | | | | | 574 | | | | | | 11.2 | | |

| Gross profit | | | 6,977 | | | | | | 6,486 | | | | | | 491 | | | | | | 7.6 | | |

| Interest expense | | | 500 | | | | | | 604 | | | | | | (104) | | | | | | (17.2) | | |

| Gain on sale of equity method investment | | | (524) | | | | | | — | | | | | | (524) | | | | | | NM | | |

| Net income including non-controlling interest | | | 2,145 | | | | | | 1,325 | | | | | | 820 | | | | | | 61.9 | | |

| Basic | | | $ | 1.52 | | | | | $ | 0.94 | | | | | $ | 0.58 | | | | | 61.7 | | % |

| Diluted | | | 1.50 | | | | | | 0.93 | | | | | | 0.57 | | | | | | 61.3 | | % |

This performance reflected volume/mix of 5.7%, net price realization of 2.7% and favorable FX translation of 0.8%.

These benefits were partially offset by higher input and manufacturing costs, driven by both volume/mix growth and inflation, and unfavorable FX effects on our cost of sales.

The increase was driven by increases in logistics, driven by both inflation and higher volumes, higher marketing expense, and unfavorable FX effects.

Other Operating Income, Net. Other operating income, net had a favorable change of $31 million for the year ended December 31, 2021 compared to the prior year, largely driven by the increased gain of $28 million year-over-year on asset sale-leaseback transactions related to our strategic asset investment program.

As of December 31, 2020, we report our business in four operating segments:

Some of these items, such as the ongoing outbreak of COVID-19, changes in consumer preferences and macroeconomic changes, have previously created and may continue to create category headwinds for a number of our products.

COVID-19 Pandemic Disclosures

Our first priority, always, is to keep our employees safe and healthy.

We have taken extraordinary precautions to do this and to provide the support our employees and their families may need during this unprecedented time.

We continue to deliver for our customers and consumers, working hard to fulfill strong demand.

We are finding innovative ways to quickly adapt to changes in shopping behaviors, with the vast majority of North America impacted by a mix of occupancy limitations, stay-at-home or shelter-in-place orders, and closures of non-essential businesses.

We are also focused on providing for our communities by supporting frontline healthcare workers who are fighting this crisis day in and day out.

We don’t make masks or medical equipment at our Company, but we do make beverages and, through our *Fueling The Frontline* program, we donated Keurig brewers, coffee and other beverages to hospitals in need, as our way to say thank you for the unwavering commitment and courage of the entire medical community.

The COVID-19 pandemic has had divergent impacts within our business.

For example, we experienced a significant increase in demand and consumption of our products in our at-home business caused in part by changing consumer habits in response to COVID-19, contributing to increases in net sales.

At the same time, we experienced significant declines in net sales in our away-from-home business due to office closures and the slowdown of hospitality and fountain foodservice as a result of shelter-in-place guidelines and restaurant capacity limits.

In the future, the economic effects of the COVID-19 pandemic, including higher levels of unemployment, lower wages or a recessionary environment, may result in reduced demand for our products.

It could also lead to volatility in demand due to government actions, such as shelter-in-place notices, in response to increases in reported cases and hospitalizations in certain regions.

These government actions could impact consumers' movements and access to our products.

While we believe that there will continue to be strong long-term demand for our products, the timing and extent of economic recovery, and the uncertainties in short-term demand trends, make it difficult to predict the overall effects of the COVID-19 pandemic on our business.

We expect that there will be heightened volatility in net sales during and subsequent to the duration of the pandemic that may impact interim periods.

Our ability to continue to operate without any significant negative impacts will in part depend on our ability to protect our critical frontline employees and our supply chain.

As food and agriculture is deemed part of the critical infrastructure by the Department of Homeland Security, our frontline employees have been identified as critical workers in maintaining the U.S. food and beverage supply.

As a result, we have strived to follow recommended actions of government and health authorities to protect our employees, with particular measures in place for those working in our manufacturing and distribution facilities, which also included temporary incentive pay programs and benefits.

We intend to continue to work with government authorities and implement our employee safety measures; however, disruptions to our supply chain, measures taken to protect employees, increased absenteeism or other local effects of the COVID-19 pandemic have impacted and could continue to impact our operations.

For our corporate employees, we do not believe that the remote work environment has had any significant impact on our internal controls over financial reporting.

With the health and safety of our employees remaining our top priority, we are diligently working on plans to safely bring our employees back to office locations with enhanced safety and health protocols.

We do not believe these plans will impact our near-term liquidity needs.

The COVID-19 pandemic has not materially impacted our liquidity position.

We continue to generate operating cash flows to meet our short-term liquidity needs, and we expect to maintain access to the capital markets enabled by our debt ratings.

The impact of COVID-19 on our net sales performance presented both headwinds and tailwinds across the business and within the segments, requiring strong portfolio, package and channel mix management to optimize overall performance.

The diversity of the Company’s broad portfolio and extensive route to market network enabled us to successfully navigate these mix impacts posed by the COVID-19 pandemic to drive overall performance.

- Coffee Systems experienced growth in K-Cup coffee pods for at-home consumption and strong double-digit growth in brewers, which more than offset the significant decline in away-from-home consumption due to weaknesses in the office coffee channel, as many companies shifted to a work-from-home model during 2020.

Sales in the e-commerce channel were very strong, as consumers shifted purchases to the online channel, including at the Keurig.com retail site.

- Packaged Beverages experienced a net benefit from strong in-market execution, driven by net sales and market share growth in the majority of the segment's beverage portfolio.

Performance in large-format channels continued to be strong across multi-pack and take-home packages, which was partially offset by softness in the convenience and gas channels due to decreased consumer mobility.

- Beverage Concentrates experienced a significant decline in net sales due to the fountain foodservice component of the business, which services restaurants and hospitality, as a result of the impact of shutdowns and reductions in occupant capacity, which improved throughout the year, reflecting a modest reopening of quick-serve and other fast-casual restaurants.

- Latin America Beverages experienced limited growth in sales volumes, driven by reduced consumer mobility and tourism in Mexico.

The current environment has increased operating costs, requiring us to take deliberate action.

In addition to strong portfolio, package and channel mix management to optimize overall net sales performance, we maintained our strong cost discipline, which included the following:

- Reduced marketing expense, given the current COVID-19 landscape which has impacted the effectiveness and return on marketing investments; and

- Reduced other discretionary costs, such as travel and entertainment expenses, within our business.

As a result of these items, COVID-19 impacted our results, both positively and negatively, and should be taken into account when reviewing this *Management's Discussion and Analysis.* Refer to the section *Uncertainties and Trends Affecting our Business - COVID-19 Pandemic Disclosures* above for further information.

(2)Primarily reflects temporary incremental frontline incentive pay and the associated taxes in order to maintain essential operations during the COVID-19 pandemic.

Refer to Note [removed: 8] [added: 6] of the Notes to our Consolidated Financial Statements for further information about our derivative instruments.

As of December 31, [removed: 2020,] [added: 2021,] the impact to our income from operations of a 10% [removed: change] [added: swing] (up or down) in exchange rates is estimated to be an increase or decrease of approximately [removed: $38] [added: $48] million on an annual basis.

As of December 31, [removed: 2020,] [added: 2021,] we had derivative contracts outstanding with [removed: a] notional [removed: value] [added: values] of [removed: $809] [added: $848] million maturing at various dates through September 25, 2024.

We centrally manage our debt portfolio through the use of interest rate [removed: swaps] [added: contracts] and monitor our mix of fixed-rate and variable-rate debt.

As of December 31, [removed: 2020,] [added: 2021,] the carrying value of our fixed-rate debt, excluding lease obligations, was [removed: $13,065] [added: $11,733] million and our variable-rate debt was [removed: $423] [added: $149] million, [removed: inclusive] [added: comprised entirely] of commercial paper.

[removed: As] [added: Additionally, as] of December 31, [removed: 2020,] [added: 2021,] the total notional value of [removed: our receive-variable, pay-fixed] [added: receive-fixed, pay-variable] interest rate swaps was [removed: $450] [added: $400] million.

Our principal commodities risks relate to our purchases of coffee beans, PET, aluminum, diesel fuel, corn (for high fructose corn syrup), apple juice concentrate, [removed: apples,] sucrose and natural gas (for use in processing and packaging).

As of December 31, [removed: 2020,] [added: 2021,] we had derivative contracts outstanding with a notional value of [removed: $450] [added: $529] million maturing at various dates through [removed: January 1, 2024.][added: November 28, 2023.]

The fair market value of these contracts as of December 31, [removed: 2020] [added: 2021] was a net asset of [removed: $50] [added: $106] million.

As of December 31, [removed: 2020,] [added: 2021,] the impact of a 10% change (up or down) in market prices for these commodities where the risk of movements has not been hedged is estimated to have a [removed: $15] [added: $40] million impact to our income from operations for the year ended December 31, [removed: 2021.][added: 2022.]

Our variable-rate instruments are generally based on LIBOR and a credit spread.

We estimate that the potential impact to our interest rate expense associated with variable rate debt and derivative instruments resulting from a hypothetical interest rate change of 1%, based on variable-rate debt and derivative instrument levels as of December 31, 2021, would be an increase of approximately $5 million or decrease of approximately $1 million.

Our estimate of the annual impact to interest expense reflects our assumption that LIBOR will not fall below 0%.

Based upon our variable rate debt and the fair value of the interest rate swaps that could result from hypothetical interest rate changes during the term of the financial instruments, there was no interest rate risk associated with our debt balances based on debt levels as of December 31, 2020.

[removed: *Strong] [added: *Strong, balanced] portfolio of leading, consumer-preferred [removed: brands.*] [added: brands with proven ability to expand via innovation, renovation and partnerships.*] We own a diverse portfolio of well-known CSD, coffee and NCB brands.

[removed: *Scale distribution] [added: *Flexible] and [removed: selling system.*] [added: scalable route-to-market network, with unique e-commerce expertise.*] We have strategically-located distribution capabilities, which enables us to better align our operations with our customers and our channels, [removed: to] ensure our products are available to meet consumer demand, [removed: to] reduce transportation costs and [removed: to] have greater control over the timing and coordination of new product launches.

We actively manage transportation of our products using our fleet (owned and leased) of approximately [removed: 6,100] [added: 6,300] vehicles in the U.S. and 1,700 in Mexico, as well as third party logistics providers.

[removed: *Innovation, renovation, acquisition and partnering capabilities.*] We drive growth in our business by a combination of innovating and renovating our portfolio of owned brands and partnerships with other leading beverage brands.

*Highly efficient business [removed: model.*] [added: model, driving significant cash flow and investments.*] Our highly efficient business model, both from a cost and a cash perspective, gives us optionality to invest internally and look outside for acquisitions or other options to continue to drive growth and create value.

The following presents highlights of our major owned and licensed brands as of December 31, [removed: 2020:][added: 2021:]

| Single Serve Coffee | | | Green Mountain | | | #2 K-cup pod [added: brand] in the U.S. | | |

| | | | The Original Donut Shop | | | #5 K-cup pod [added: brand] in the U.S. | | |

| | | | Van Houtte | | | #2 K-cup pod [added: brand] in Canada | | |

All information regarding our brand market positions in the U.S. is based on retail market dollars in [removed: 2020.][added: 2021.]

According to IRi, we had a [removed: 23.8%] [added: 24.2%] share of the U.S. CSD market in [removed: 2020] [added: 2021] (measured by retail sales), an increase of [removed: 110] [added: 40] bps versus [removed: 2019.][added: 2020.]

We create value by developing and selling our Keurig single serve brewers and by expanding Keurig brewer household adoption, which increased [removed: nearly 10%] [added: approximately 9%] for the year ended December 31, [removed: 2020] [added: 2021] to [removed: approximately 33] [added: nearly 36] million U.S. households, based on third party survey data and our own estimates.

PRODUCT [added: AND PACKAGE] INNOVATION

We regularly launch new brewers with new features and benefits, technological advances, [added: sustainable attributes,] and changes in aesthetics [removed: and sustainability] to provide a variety of options to suit individual consumer preferences.

As of December 31, [removed: 2020,] [added: 2021,] our operating structure consists of four [removed: operating] [added: reportable] segments: Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages.

Segment financial data, including financial information about foreign and domestic operations, is included in Note [removed: 18] [added: 9] of the Notes to our Consolidated Financial Statements.

[removed: Our Coffee Systems segment manufactures over 75% of the pods in the single-serve K-Cup pod format in the U.S.] We manufacture and sell 100% of the K-Cup pods of the following brands to retailers, away from home channel participants and end-use consumers: Green Mountain Coffee Roasters, The Original Donut Shop, McCafé, Laughing Man, REVV, and Van Houtte.

We manufacture and sell K-Cup pods for the following brands to our partners, who in turn sell them to retailers: Starbucks, [removed: Smuckers, Peet's, Dunkin' Donuts,] [added: Dunkin',] Folgers, [added: Peet's,] Newman’s Own Organics, Caribou Coffee, Eight O’Clock, Maxwell House, and Tim Hortons, as well as private label arrangements.

We offer [removed: high-quality] [added: high-quality, responsibly sourced] coffee including certified single-origin, organic, flavored, limited edition and proprietary blends.

In [removed: 2020,] [added: 2021,] Walmart and Costco were the Coffee Systems segment's largest customers.

Our Packaged Beverages segment is [removed: principally] a [removed: brand ownership,] manufacturing and distribution [removed: business.][added: business of both NCBs and CSDs, as well as a brand ownership business, focused primarily on NCB brands.]

In this segment, we primarily manufacture and distribute packaged beverages of our [removed: brands.][added: brands to retailers and, ultimately, the end consumer.]

The larger NCB brands in this segment include Snapple, Mott's, Bai, [removed: Clamato,] Hawaiian Punch, [removed: Core,] [added: Clamato,] Yoo-Hoo, [added: Core,] ReaLemon, evian, Vita Coco and Mr and Mrs T mixers.

We also recognize net sales in this segment from the distribution of our partner brands such as evian, Vita Coco, [removed: Peet's RTD coffee,] [added: Polar Beverages seltzer water,] A Shoc energy [removed: drinks] [added: drinks, Peet's RTD coffee] and Runa energy drinks.

We provide a route-to-market for [removed: third party brand owners] [added: our partner brands] seeking effective distribution for their new and emerging brands.

In [removed: 2020,] [added: 2021,] Walmart was the Packaged Beverages segment's largest customer.

Our Beverage Concentrates segment is principally a brand ownership business where we manufacture and sell beverage concentrates [added: and syrups] in the U.S. and Canada.

Key brands include Dr Pepper, Canada Dry, Schweppes, Crush, Sunkist, A&W, [added: SunDrop,] 7UP, [removed: Sun Drop,] Squirt, Big Red, Hawaiian Punch and RC Cola.

Beverage concentrates are shipped to third party bottlers, as well as to our own manufacturing systems, who combine them with carbonation, water, sweeteners and other ingredients, package the combined product in aluminum cans, PET [removed: containers] [added: bottles,] and glass bottles, and sell them as a [removed: finished] [added: packaged] beverage to [removed: retailers.][added: retailers and, ultimately, the end consumer.]

The largest brands include Peñafiel, Clamato, Squirt, Mott's, Dr Pepper, [removed: Aguafiel] [added: Crush] and [removed: Crush.][added: Aguafiel.]

In [removed: 2020,] [added: 2021,] Walmart was the Latin America Beverages segment's largest customer.

In [removed: 2020,] [added: 2021,] our largest retailer was Walmart, representing approximately [removed: 15%] [added: 16%] of our consolidated net sales.

As of December 31, [removed: 2020,] [added: 2021,] our partner brands included, but were not limited to, Starbucks, Kirkland Signature, [removed: Dunkin' Donuts,] [added: Dunkin',] Great Value, Peet's, Caribou Coffee, Eight O’Clock, Folgers, Newman’s Own Organics, McCafé, Maxwell House, Kroger, Krispy Kreme, Celestial Seasonings, Lipton, Tazo, Panera, and Tim Hortons.

| Nestlé S.A. | | | [removed: NCBs (Water),] [added: NCBs,] Packaged Coffee, Single-serve brewers | | |

The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, approximate [removed: 58%] [added: 59%] of our cost of sales and include green coffee, PET bottles and caps, including both virgin and [removed: recycled PET,] [added: rPET,] aluminum cans and ends, sweeteners, paper products, K-Cup pod packaging materials, fruit, glass bottles and enclosures, juices, teas, water, and other ingredients.

During [removed: 2020, 82%] [added: 2021, nearly 100%] of our [added: delivered] purchases of green coffee were responsibly sourced through third party sourcing programs, [removed: and by] [added: with] the [removed: end of 2020, all] [added: remaining purchased as conventional] coffee [removed: contracted] [added: due] to [removed: be received going forward is 100% responsibly sourced.][added: increased demand and COVID-19-related impacts.]

As of December 31, [removed: 2020,] [added: 2021,] our portfolio of partner brands included, but was not limited to, Vita Coco coconut water, evian water, [added: Polar Beverages seltzer water,] A Shoc energy drinks, Peet's RTD Coffee, Runa energy drinks, [removed: Polar Beverages seltzer water,] and Don't Quit nutrition shakes.

We have nearly [removed: 27,000] [added: 27,500] employees, primarily located in North America.

In Mexico, we have approximately [removed: 4,000] [added: 4,500] employees, of which approximately 3,000 are covered by union collective bargaining agreements.

[removed: These] [added: Our] collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.

Our scalable business model provides a platform for future growth, focused on:

With our Keurig.com website, we have a leading e-commerce platform which provides us insights and expertise in the e-commerce channel.

We have been able to translate those insights and experience into our cold business as the number of fulfillment options that are better suited economically for beverages has evolved, leading to growth in the e-commerce channel.

*High-performing team driving better, faster decisions, enabled by technology.* We believe that our team and the culture we have created, through the integration of two companies into one, are truly our competitive advantage.

When we approach our customers, we do so as one fully combined modern beverage company.

This go-to market system is strengthened through sophisticated data and technology.

This includes the only point-of-sale consumption data available in the consumer packaged goods industry through our panel of connected brewers, predictive ordering powered by artificial intelligence for our frontline sales team within our DSD system, and best in class revenue growth management tools.

*Bold ESG commitments and collaborations making positive impacts.* ESG is embedded in the way that we do business at KDP, ensuring that we make a positive impact in our environment and communities.

| | | | McCafé | | | #6 K-cup pod brand in the U.S. | | |

During 2021, we launched our Keurig Supreme Plus Smart brewer, which incorporates our new BrewID technology platform.

BrewID creates value through consumer connectivity in our brewers by recognizing the specific K-cup pod brand and roast to automatically customize brew settings, tracking K-cup pod usage to enable automatic reordering, and recommending future purchases and trials based on consumer preferences.

Additionally, the Keurig mobile app provides enhanced control over temperature, strength, and beverage size.

We also designed and launched easy-peel K-Cup pod lids with a tab to make it simpler to recycle.

Within our NCB portfolio, in 2021, we completed the transition of our Core brand and select packaging sizes of our Snapple and Aguafiel brands to bottles made with 100% rPET.

We expanded our Bai portfolio to include Bai Boost, a line of beverages with plant-based energy providing 110 mg of caffeine, in three flavors: Buka Black Raspberry, Togo Tangerine Citrus, and Watamu Strawberry Watermelon.

We also launched the Mott’s Mighty collection in both the juice and applesauce categories.

Mott’s Mighty juices are made with vitamins A, C and E to help support a healthy immune system and 50% less sugar, and Mott’s Mighty applesauces are made with no added sugars and added fiber to help support healthy digestive systems.

In our CSD portfolio, we expanded our Zero Sugar collection to include 7UP, Sunkist and A&W.

Our Coffee Systems segment manufactures over 80% of the pods in the single-serve K-Cup pod format in the U.S., on a dollar share basis.

Responsibly sourced means the coffee we purchase is grown and sold in adherence to a credible sourcing program that aligns with our Supplier Code of Conduct.

We also have a small number of employees in Europe and Asia.

We continually monitor key talent metrics including employee engagement and employee turnover.

Due to the ongoing impacts of COVID-19 on the global economy and workforce, we have been experiencing higher employee turnover than in the past, particularly in our frontline workforce.

Based on our work thus far, in 2021 we set two new goals for KDP in the area of diversity and inclusion.

Our first goal is to increase female representation in positions at and above the “director” management level, also known as “Director +”, by 25% by 2025; in 2020, our baseline year, women represented 26% of our Director + workforce.

Our second goal is to increase people of color representation in our Director + workforce by 25% by 2025; in 2020, people of color represented 17% of our Director + workforce.

During 2021, we rolled out an extensive diversity and inclusion training program across all employees except for frontline hourly employees, which provides weekly engagement in an online content platform and regular opportunities to apply, practice and reinforce the learnings from the program over the course of several months.

In 2022, the concepts from the program will be shared through trainings and meetings designed to embed these concepts in the culture of our hourly frontline employees.

Global Employee Snapshot as of December 31, 2021


U.S. Employee Snapshot as of December 31, 2021


In 2021, Newsweek named us to their 2022 America’s Most Responsible Companies list, and we were the top beverage company in their rankings.

Additionally, in 2021, we were awarded the 2021 Reuters Responsible Business award in the Social and Human Capital category.

Environment

Product Design and Circular Economy

In 2021, we completed the transition of our Core brand and select packaging sizes of our Snapple and Aguafiel brands to bottles made with 100% rPET, and we are in the process of transitioning additional products to rPET.

We also designed and launched easy-peel K-Cup pod lids with a tab to make it simpler to recycle.

The K-Cup pods are made of polypropylene #5 plastic, and we continue to engage with municipalities and recycling facilities to advance the quantity and quality of recycled polypropylene.

To that end, KDP is a cofounder and the largest funder of the Polypropylene Recycling Coalition, an effort led by The Recycling Partnership to advance polypropylene recycling in the U.S. KDP invested $10 million in the coalition and is joined by leading brands, recyclers, retailers, converters and producers of polypropylene, all of whom have also provided funding to the coalition.

Refer to Note 5 of the Notes to our Consolidated Financial Statements for further information related to the DPS Merger.

The key strengths of our business are:

[Table of Content](#i4e002ac394c34074b07ec2df1e1fbbfe_7)[s](#i4e002ac394c34074b07ec2df1e1fbbfe_7)

During 2020, we introduced the K-Supreme and the K-Supreme Plus brewers, which include multi-stream technology to provide the consumer better extraction compared to previous models, while adding new controls for temperature and strength.

We also launched a limited-edition brewer designed by Jonathan Adler.

We achieved our longstanding commitment to make all of the K-Cup pods that we produce recyclable, as the pods are now made from polypropylene #5 plastic.

We launched a line of K-Cup pods to provide one-step lattes with our Original Donut Shop Vanilla and Mocha lattes.

Within our CSD portfolio, we launched Dr Pepper & Cream Soda, which was the best-selling CSD innovation in 2020 according to IRi, and Canada Dry Bold.

Within our NCB portfolio, we launched Zambia Bing Cherry and Blackberry Lemonade, two new flavors for Bai, and Snapple’s Mystery Flavor as a limited time offer.

We have also begun the rollout of new PET bottles made from 100% recycled PET for Snapple and Core.

Almost all of our beverage concentrates are currently manufactured at our plant in St. Louis, Missouri.

We are expanding our manufacturing capabilities to include a concentrate manufacturing facility in Ireland in 2021.

These purchases include a corresponding premium to recognize the effort required to achieve the sustainability standard and are traceable back to the exporter mill, farm or group of farms.

We believe that traceability helps us manage social and environmental risk, secure long-term supplies of high-quality coffee and identify opportunities for supply chain investments.

To date, we have:

- Defined our aspiration and strategy for diversity and inclusion;

- Launched eight Employee Resource Groups, which are each sponsored by a member of the executive leadership team and are open to all employees;

- Expanded our participation in the Organisation for Economic Co-operation and Development's Business for Inclusive Growth global coalition, joining the Inclusive Workplaces project team in addition to the Human Rights and Inclusive Value Chain teams; and

- Partnered with professional external resources to provide guidance on best practices to ensure that we are capturing a broad range of employee perspectives.

We will report our progress with expanded disclosures in our Corporate Responsibility Report, which is expected to be published in June 2021.

As a result of our sustainability efforts, in 2020, Newsweek named us one of America's most responsible companies.

Newsweek ranked us as the top beverage company, as well as giving us the top environmental score for all consumer goods companies.

Sustainable Packaging

In the fourth quarter of 2020, we began transitioning our Snapple and Core brands to bottles made with 100% post-consumer recycled PET.

The new pods are made of polypropylene #5 plastic, a material that is accepted curbside for recycling by many communities, and we have conducted extensive testing with municipal recycling facilities to validate that they can be effectively recycled.

We continue to engage with municipalities and recycling facilities to advance the quantity and quality of recycled polypropylene and have committed $10 million toward the advancement of polypropylene recycling in the U.S. through the Polypropylene Recycling Coalition, an effort led by The Recycling Partnership and funded by leading brands, recyclers, converters and producers of polypropylene.

In 2020, KDP joined a water stewardship effort to increase water supply reliability for Arizona, Nevada, and California through a system conservation project with the Colorado River Indian Tribes.

Additionally, we were a founding company member in the first-of-its kind beverage industry collaboration project to improve water quantity and quality in Jalisco, Mexico through activities such as planting native vegetation and restoring water infrastructure in the area.

In 2014, we joined industry peers to form the Balance Calories Initiative, managed by the American Beverage Association and in partnership with the Alliance for a Healthier Generation.

We also know that health equality is about ensuring opportunities for physical activity.

Since 2011, we’ve provided more than 14 million kids and their families in underserved areas with play opportunities through our Let’s Play initiative, building or improving play spaces and supplying sports equipment to schools and youth groups across the country.

Refer to Note [removed: 16] [added: 18] of the Notes to our Consolidated Financial Statements related to commitments and contingencies, which is incorporated herein by reference.

The complaint [removed: seeks] [added: sought] monetary damages relating to lost distribution revenues, disgorgement of profits, liquidated and punitive damages, attorneys' fees and costs.

In December 2020, the court dismissed the individual claim against Mr. Repole, but ABC's claims against BodyArmor and Coca-Cola [removed: continue.][added: continued.]

In December 2021, the Court granted summary judgment to ABC on its breach of contract claim against BodyArmor, finding, as a matter of law, that BodyArmor’s termination constituted a breach of the distribution agreement.

In January 2022, KDP agreed to a $350 million payment from BodyArmor for a full settlement of all of the claims under the existing litigation against BodyArmor and in complete satisfaction of the holdback amount owed to ABC in association with the sale of ABC’s equity interest in BodyArmor in 2021.

ABC received the settlement payment in January 2022 and the lawsuit has been dismissed.

Refer to Note 21 of the Notes to our Consolidated Financial Statements for further information.

Fact and expert discovery in the case is ongoing and a trial date has been set for November 2021.

ABC intends to continue to vigorously prosecute the action.

We are unable to predict the outcome of the lawsuit, the potential recovery, if any, associated with the resolution of the lawsuit or any potential effect it may have on us or our operations.

FOR THE FISCAL YEAR ENDED December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

[removed: | | | |] 53 South Avenue [removed: | | | | | | | | |]

[removed: | | | | Burlington, | | | Massachusetts | | | | | |][added: Burlington, Massachusetts 01803]

[removed: |] *(Address of principal executive offices)* [removed: | | | | | | | | | | | |]

[removed: | | | | (781) | | | 418-7000 | | | | | |][added: (781) 418-7000]

[removed: |] *(Registrant's telephone number, including area code)* [removed: | | | | | | | | | | | |]

As of June 30, [removed: 2020,] [added: 2021,] the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's common equity held by non-affiliates of the registrant (treating directors, executive officers and beneficial owners of 10% or more of the registrant’s common stock outstanding as of that date, for this purpose, as affiliates) was approximately [removed: $13.7] [added: $29.5] billion (based on the closing sales price of the registrant's common stock on that date).

As of February [removed: 23, 2021,] [added: 22, 2022,] there were [removed: 1,407,267,272] [added: 1,418,158,363] shares of the registrant's common stock, par value $0.01 per share, outstanding.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2020][added: 2021]

| [Item [removed: 1](#i4e002ac394c34074b07ec2df1e1fbbfe_16)] [added: 1](#i4234b33cecc54255affb64b031a587a2_16)] | | | [removed: [Business](#i4e002ac394c34074b07ec2df1e1fbbfe_16)] [added: [Business](#i4234b33cecc54255affb64b031a587a2_16)] | | | [removed: [1](#i4e002ac394c34074b07ec2df1e1fbbfe_16)] [added: [1](#i4234b33cecc54255affb64b031a587a2_16)] | | |

| [Item [removed: 1A](#i4e002ac394c34074b07ec2df1e1fbbfe_19)] [added: 1A](#i4234b33cecc54255affb64b031a587a2_19)] | | | [Risk [removed: Factors](#i4e002ac394c34074b07ec2df1e1fbbfe_19)] [added: Factors](#i4234b33cecc54255affb64b031a587a2_19)] | | | [removed: [10](#i4e002ac394c34074b07ec2df1e1fbbfe_19)] [added: [12](#i4234b33cecc54255affb64b031a587a2_19)] | | |

| [Item [removed: 1B](#i4e002ac394c34074b07ec2df1e1fbbfe_22)] [added: 1B](#i4234b33cecc54255affb64b031a587a2_25)] | | | [Unresolved Staff [removed: Comments](#i4e002ac394c34074b07ec2df1e1fbbfe_22)] [added: Comments](#i4234b33cecc54255affb64b031a587a2_25)] | | | [removed: [20](#i4e002ac394c34074b07ec2df1e1fbbfe_22)] [added: [22](#i4234b33cecc54255affb64b031a587a2_25)] | | |

| [Item [removed: 2](#i4e002ac394c34074b07ec2df1e1fbbfe_25)] [added: 2](#i4234b33cecc54255affb64b031a587a2_28)] | | | [removed: [Properties](#i4e002ac394c34074b07ec2df1e1fbbfe_25)] [added: [Properties](#i4234b33cecc54255affb64b031a587a2_28)] | | | [removed: [21](#i4e002ac394c34074b07ec2df1e1fbbfe_25)] [added: [23](#i4234b33cecc54255affb64b031a587a2_28)] | | |

| [Item [removed: 3](#i4e002ac394c34074b07ec2df1e1fbbfe_28)] [added: 3](#i4234b33cecc54255affb64b031a587a2_31)] | | | [Legal [removed: Proceedings](#i4e002ac394c34074b07ec2df1e1fbbfe_28)] [added: Proceedings](#i4234b33cecc54255affb64b031a587a2_31)] | | | [removed: [21](#i4e002ac394c34074b07ec2df1e1fbbfe_28)] [added: [23](#i4234b33cecc54255affb64b031a587a2_31)] | | |

| [Item [removed: 4](#i4e002ac394c34074b07ec2df1e1fbbfe_31)] [added: 4](#i4234b33cecc54255affb64b031a587a2_34)] | | | [Mine Safety [removed: Disclosures](#i4e002ac394c34074b07ec2df1e1fbbfe_31)] [added: Disclosures](#i4234b33cecc54255affb64b031a587a2_34)] | | | [removed: [21](#i4e002ac394c34074b07ec2df1e1fbbfe_31)] [added: [23](#i4234b33cecc54255affb64b031a587a2_34)] | | |

| [Item [removed: 5](#i4e002ac394c34074b07ec2df1e1fbbfe_37)] [added: 5](#i4234b33cecc54255affb64b031a587a2_40)] | | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i4e002ac394c34074b07ec2df1e1fbbfe_37)] [added: Securities](#i4234b33cecc54255affb64b031a587a2_40)] | | | [removed: [22](#i4e002ac394c34074b07ec2df1e1fbbfe_37)] [added: [24](#i4234b33cecc54255affb64b031a587a2_40)] | | |

| [removed: Item 6] [added: [Item 6](#i4234b33cecc54255affb64b031a587a2_43)] | | | [removed: \[Removed and Reserved\]] [added: [\[Reserved\]](#i4234b33cecc54255affb64b031a587a2_43)] | | | [added: [24](#i4234b33cecc54255affb64b031a587a2_43)] | | |

| [Item [removed: 7](#i4e002ac394c34074b07ec2df1e1fbbfe_43)] [added: 7](#i4234b33cecc54255affb64b031a587a2_46)] | | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i4e002ac394c34074b07ec2df1e1fbbfe_43)] [added: Operations](#i4234b33cecc54255affb64b031a587a2_46)] | | | [removed: [23](#i4e002ac394c34074b07ec2df1e1fbbfe_43)] [added: [25](#i4234b33cecc54255affb64b031a587a2_46)] | | |

| [Item [removed: 7A](#i4e002ac394c34074b07ec2df1e1fbbfe_139)] [added: 7A](#i4234b33cecc54255affb64b031a587a2_133)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i4e002ac394c34074b07ec2df1e1fbbfe_139)] [added: Risk](#i4234b33cecc54255affb64b031a587a2_133)] | | | [removed: [46](#i4e002ac394c34074b07ec2df1e1fbbfe_139)] [added: [48](#i4234b33cecc54255affb64b031a587a2_133)] | | |

| [Item [removed: 8](#i4e002ac394c34074b07ec2df1e1fbbfe_142)] [added: 8](#i4234b33cecc54255affb64b031a587a2_136)] | | | [Financial Statements and Supplementary [removed: Data](#i4e002ac394c34074b07ec2df1e1fbbfe_142)] [added: Data](#i4234b33cecc54255affb64b031a587a2_136)] | | | [removed: [47](#i4e002ac394c34074b07ec2df1e1fbbfe_142)] [added: [49](#i4234b33cecc54255affb64b031a587a2_136)] | | |

| [Item [removed: 9](#i4e002ac394c34074b07ec2df1e1fbbfe_280)] [added: 9](#i4234b33cecc54255affb64b031a587a2_232)] | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosures](#i4e002ac394c34074b07ec2df1e1fbbfe_280)] [added: Disclosures](#i4234b33cecc54255affb64b031a587a2_232)] | | | [removed: [103](#i4e002ac394c34074b07ec2df1e1fbbfe_280)] [added: [104](#i4234b33cecc54255affb64b031a587a2_232)] | | |

| [Item [removed: 9A](#i4e002ac394c34074b07ec2df1e1fbbfe_283)] [added: 9A](#i4234b33cecc54255affb64b031a587a2_235)] | | | [Controls and [removed: Procedures](#i4e002ac394c34074b07ec2df1e1fbbfe_283)] [added: Procedures](#i4234b33cecc54255affb64b031a587a2_235)] | | | [removed: [103](#i4e002ac394c34074b07ec2df1e1fbbfe_283)] [added: [104](#i4234b33cecc54255affb64b031a587a2_235)] | | |

| [Item [removed: 10](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: 10](#i4234b33cecc54255affb64b031a587a2_241)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: Governance](#i4234b33cecc54255affb64b031a587a2_241)] | | | [removed: [103](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: [105](#i4234b33cecc54255affb64b031a587a2_241)] | | |

| [Item [removed: 12](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: 12](#i4234b33cecc54255affb64b031a587a2_241)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: Matters](#i4234b33cecc54255affb64b031a587a2_241)] | | | [removed: [103](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: [105](#i4234b33cecc54255affb64b031a587a2_241)] | | |

| [Item [removed: 13](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: 13](#i4234b33cecc54255affb64b031a587a2_241)] | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: Independence](#i4234b33cecc54255affb64b031a587a2_241)] | | | [removed: [103](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: [105](#i4234b33cecc54255affb64b031a587a2_241)] | | |

| [Item [removed: 14](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: 14](#i4234b33cecc54255affb64b031a587a2_241)] | | | [Principal Accountant Fees and [removed: Services](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: Services](#i4234b33cecc54255affb64b031a587a2_241)] | | | [removed: [103](#i4e002ac394c34074b07ec2df1e1fbbfe_289)] [added: [105](#i4234b33cecc54255affb64b031a587a2_241)] | | |

| [Item [removed: 15](#i4e002ac394c34074b07ec2df1e1fbbfe_295)] [added: 15](#i4234b33cecc54255affb64b031a587a2_247)] | | | [Exhibits and Financial Statement [removed: Schedules](#i4e002ac394c34074b07ec2df1e1fbbfe_295)] [added: Schedules](#i4234b33cecc54255affb64b031a587a2_247)] | | | [removed: [105](#i4e002ac394c34074b07ec2df1e1fbbfe_295)] [added: [106](#i4234b33cecc54255affb64b031a587a2_247)] | | |

| [removed: 2018] [added: 2019] KDP Term Loan | | | | | | [removed: The $2.4] [added: KDP’s $2] billion term [removed: loan] [added: loan,] executed in [removed: conjunction with the DPS Merger on] February [removed: 23, 2018 and refinanced with the] 2019 [removed: KDP Term Loan on February 8, 2019] [added: and terminated in March 2021] | | |

| [removed: 2019] [added: 2021] 364-Day Credit Agreement | | | | | | The Company's [removed: $750] [added: $1,500] million credit agreement, which was entered into on [removed: May 29, 2019] [added: March 26, 2021] and [removed: terminated on April 14, 2020] [added: contains a term-out option] | | |

| KDP Credit Agreements | | | | | | Collectively, the KDP Revolver, the 364-day credit agreements, and [removed: term loans] [added: the 2019 KDP Term Loan] | | |

| Keurig | | | | | | Keurig Green Mountain, Inc., [added: a wholly-owned subsidiary of KDP,] and the brand of our brewers | | |

| Proxy Statement | | | | | | The definitive proxy statement for the Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, [removed: 2020,] [added: 2021,] pursuant to Regulation 14A under the Exchange Act | | |

| | | | [PART I](#i4234b33cecc54255affb64b031a587a2_13) | | | | | |

| | | | [PART II](#i4234b33cecc54255affb64b031a587a2_37) | | | | | |

| [Item 9B](#i4234b33cecc54255affb64b031a587a2_238) | | | [Other Information](#i4234b33cecc54255affb64b031a587a2_238) | | | [104](#i4234b33cecc54255affb64b031a587a2_238) | | |

| [Item 9C](#i4234b33cecc54255affb64b031a587a2_2341) | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i4234b33cecc54255affb64b031a587a2_2341) | | | [104](#i4234b33cecc54255affb64b031a587a2_2341) | | |

| | | | [PART III](#i4234b33cecc54255affb64b031a587a2_241) | | | | | |

| [Item 11](#i4234b33cecc54255affb64b031a587a2_241) | | | [Executive Compensation](#i4234b33cecc54255affb64b031a587a2_241) | | | [105](#i4234b33cecc54255affb64b031a587a2_241) | | |

| | | | [PART IV](#i4234b33cecc54255affb64b031a587a2_244) | | | | | |

| [Item 16](#i4234b33cecc54255affb64b031a587a2_2385) | | | [Form 10-K Summary](#i4234b33cecc54255affb64b031a587a2_2385) | | | [108](#i4234b33cecc54255affb64b031a587a2_2385) | | |

| | | | [Signatures](#i4234b33cecc54255affb64b031a587a2_2357) | | | [109](#i4234b33cecc54255affb64b031a587a2_2357) | | |

FOR THE YEAR ENDED DECEMBER 31, 2021

| 2022 Revolving Credit Agreement | | | | | | KDP’s $4 billion revolving credit agreement, which was executed in February 2022 and replaced the 2021 364-Day Credit Agreement and the KDP Revolver | | |

| CERT | | | | | | Council for Education and Research on Toxins | | |

| ESG | | | | | | Environmental, social and governance | | |

| FFS | | | | | | Fountain Foodservice, an operating segment of KDP which serves the fountain channel, such as restaurants | | |

FOR THE YEAR ENDED DECEMBER 31, 2021

| rPET | | | | | | Post-consumer recycled PET | | |

| RVG | | | | | | Residual value guarantee | | |

| S&P | | | | | | Standard & Poor’s | | |

| Veyron SPEs | | | | | | Special purpose entities with the same sponsor, Veyron Global | | |

| | | | | | | | | | | | |

| | | | 01803 | | | | | | | | |

| | | | [PART I](#i4e002ac394c34074b07ec2df1e1fbbfe_13) | | | | | |

| | | | [PART II](#i4e002ac394c34074b07ec2df1e1fbbfe_34) | | | | | |

| [Item 9B](#i4e002ac394c34074b07ec2df1e1fbbfe_286) | | | [Other Information](#i4e002ac394c34074b07ec2df1e1fbbfe_286) | | | [103](#i4e002ac394c34074b07ec2df1e1fbbfe_286) | | |

| | | | [PART III](#i4e002ac394c34074b07ec2df1e1fbbfe_289) | | | | | |

| [Item 11](#i4e002ac394c34074b07ec2df1e1fbbfe_289) | | | [Executive Compensation](#i4e002ac394c34074b07ec2df1e1fbbfe_289) | | | [103](#i4e002ac394c34074b07ec2df1e1fbbfe_289) | | |

| | | | [PART IV](#i4e002ac394c34074b07ec2df1e1fbbfe_292) | | | | | |

| 2019 KDP Term Loan | | | | | | The $2 billion term loan executed on February 8, 2019 in order to refinance the 2018 KDP Term Loan | | |

| Big Red | | | | | | Big Red Group Holdings, LLC | | |

| Big Red Acquisition | | | | | | The acquisition of Big Red by KDP | | |

| Core | | | | | | Core Nutrition LLC | | |

| Core Acquisition | | | | | | The acquisition of Core by KDP in 2018 | | |

| DPS Merger Date | | | | | | July 9, 2018 | | |

| S&P | | | | | | Standard & Poors | | |

| TCJA | | | | | | Legislation commonly known as the Tax Cuts and Jobs Act of 2017 | | |

| Veyron SPE | | | | | | Veyron NE Beverage Licensing LLC | | |

[Table of Content](#i4e002ac394c34074b07ec2df1e1fbbfe_7)[s](#i4e002ac394c34074b07ec2df1e1fbbfe_7)

We have two corporate headquarters, located in Burlington, Massachusetts and [removed: Plano,] [added: Frisco,] Texas, both of which are leased.

The following table summarizes our principal manufacturing plants and principal warehouse and distribution facilities by geography and reportable segment as of December 31, [removed: 2020:][added: 2021:]

| Production [removed: facilities(1)] [added: facilities] | | | 1 | | | | | | — | | | | | | [removed: 8] [added: 6] | | | | | | [removed: 10] [added: 11] | | | | | | — | | | | | | — | | | | | | 2 | | | | | | 4 | | | | | | [removed: 11] [added: 9] | | | | | | [removed: 14] [added: 15] | | |

| Warehouse and distribution facilities | | | — | | | | | | — | | | | | | [removed: 29] [added: 27] | | | | | | [removed: 62] [added: 56] | | | | | | — | | | | | | — | | | | | | — | | | | | | [removed: 4] [added: 5] | | | | | | [removed: 29] [added: 27] | | | | | | [removed: 66] [added: 61] | | |

| Production [removed: facilities(2)] [added: facilities] | | | [removed: —] [added: 1] | | | | | | — | | | | | | — | | | | | | — | | | | | | 3 | | | | | | — | | | | | | [removed: 3] [added: 1] | | | | | | [removed: —] [added: 1] | | | | | | [removed: 6] [added: 5] | | | | | | [removed: —] [added: 1] | | |

| Warehouse and distribution facilities | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | | | | | [removed: 27] [added: 30] | | | | | | [removed: 2] [added: —] | | | | | | [removed: 33] [added: 34] | | | | | | [removed: 7] [added: 5] | | | | | | [removed: 60] [added: 64] | | |

| Total | | | 2 | | | | | | — | | | | | | 33 | | | | | | 67 | | | | | | 8 | | | | | | 30 | | | | | | 3 | | | | | | 44 | | | | | | 46 | | | | | | 141 | | |

Our Plano headquarters will move to Frisco, Texas in 2021.

| Total | | | 1 | | | | | | — | | | | | | 37 | | | | | | 72 | | | | | | 8 | | | | | | 27 | | | | | | 7 | | | | | | 41 | | | | | | 53 | | | | | | 140 | | |

(1)Our manufacturing facility in Spartanburg, South Carolina, is excluded from the above table as it is currently under construction and not operational.

We expect this facility to be operational during 2021.

(2)Our manufacturing facility in Newbridge, Ireland, is excluded from the above table as it is currently under construction and not operational.

As of December 31, [removed: 2020,] [added: 2021,] there were [removed: 10,375] [added: 9,769] stockholders of record of our common stock.

The following performance graph compares the cumulative total returns of DPS through July 9, 2018 and KDP from July 10, 2018 through December 31, [removed: 2020] [added: 2021] with the cumulative total returns of the S&P 500 Index and the S&P Food and Beverage Select Industry Index.

The graph assumes that $100 was invested on December 31, [removed: 2015,] [added: 2016,] with dividends reinvested quarterly.

[removed: ][added: ]

On October 1, 2021, our Board of Directors authorized a share repurchase program of up to $4 billion of our outstanding common stock, potentially enabling us to return value to shareholders.

The $4 billion authorization is effective for four years, beginning on January 1, 2022 and expiring on December 31, 2025, and does not require the purchase of any minimum number of shares.

There were no share repurchase programs in effect during the years ended December 31, 2021, 2020 and 2019.

None.

| [Reports of Independent Registered Accounting [removed: Firm](#i4e002ac394c34074b07ec2df1e1fbbfe_145)] [added: Firm](#i4234b33cecc54255affb64b031a587a2_139) (PCAOB ID No. 34)] | | | | | | [removed: [48](#i4e002ac394c34074b07ec2df1e1fbbfe_145)] [added: [50](#i4234b33cecc54255affb64b031a587a2_139)] | | |

| [Consolidated Statements of [removed: Income](#i4e002ac394c34074b07ec2df1e1fbbfe_148)] [added: Income](#i4234b33cecc54255affb64b031a587a2_142)] | | | | | | [removed: [51](#i4e002ac394c34074b07ec2df1e1fbbfe_148)] [added: [53](#i4234b33cecc54255affb64b031a587a2_142)] | | |

| [Consolidated Statements of Comprehensive [removed: Income](#i4e002ac394c34074b07ec2df1e1fbbfe_151)] [added: Income](#i4234b33cecc54255affb64b031a587a2_145)] | | | | | | [removed: [52](#i4e002ac394c34074b07ec2df1e1fbbfe_151)] [added: [54](#i4234b33cecc54255affb64b031a587a2_145)] | | |

| [Consolidated Balance [removed: Sheets](#i4e002ac394c34074b07ec2df1e1fbbfe_157)] [added: Sheets](#i4234b33cecc54255affb64b031a587a2_148)] | | | | | | [removed: [53](#i4e002ac394c34074b07ec2df1e1fbbfe_157)] [added: [55](#i4234b33cecc54255affb64b031a587a2_148)] | | |

| [Consolidated Statements of Cash [removed: Flows](#i4e002ac394c34074b07ec2df1e1fbbfe_163)] [added: Flows](#i4234b33cecc54255affb64b031a587a2_151)] | | | | | | [removed: [54](#i4e002ac394c34074b07ec2df1e1fbbfe_163)] [added: [56](#i4234b33cecc54255affb64b031a587a2_151)] | | |

| [Consolidated Statements of Changes in Stockholders' [removed: Equity](#i4e002ac394c34074b07ec2df1e1fbbfe_166)] [added: Equity](#i4234b33cecc54255affb64b031a587a2_154)] | | | | | | [removed: [56](#i4e002ac394c34074b07ec2df1e1fbbfe_166)] [added: [58](#i4234b33cecc54255affb64b031a587a2_154)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i4e002ac394c34074b07ec2df1e1fbbfe_169)] [added: Statements](#i4234b33cecc54255affb64b031a587a2_157)] | | | | | | [removed: [57](#i4e002ac394c34074b07ec2df1e1fbbfe_169)] [added: [59](#i4234b33cecc54255affb64b031a587a2_157)] | | |

| [1. Business and Basis of [removed: Presentation](#i4e002ac394c34074b07ec2df1e1fbbfe_172)] [added: Presentation](#i4234b33cecc54255affb64b031a587a2_160)] | | | | | | [removed: [57](#i4e002ac394c34074b07ec2df1e1fbbfe_172)] [added: [59](#i4234b33cecc54255affb64b031a587a2_160)] | | |

| [2. Significant Accounting [removed: Policies](#i4e002ac394c34074b07ec2df1e1fbbfe_178)] [added: Policies](#i4234b33cecc54255affb64b031a587a2_163)] | | | | | | [removed: [58](#i4e002ac394c34074b07ec2df1e1fbbfe_178)] [added: [60](#i4234b33cecc54255affb64b031a587a2_163)] | | |

| [3. Long-Term Obligations and Borrowing [removed: Arrangements](#i4e002ac394c34074b07ec2df1e1fbbfe_208)] [added: Arrangements](#i4234b33cecc54255affb64b031a587a2_166)] | | | | | | [removed: [67](#i4e002ac394c34074b07ec2df1e1fbbfe_208)] [added: [68](#i4234b33cecc54255affb64b031a587a2_166)] | | |

| [4. Goodwill and Other Intangible [removed: Assets](#i4e002ac394c34074b07ec2df1e1fbbfe_193)] [added: Assets](#i4234b33cecc54255affb64b031a587a2_172)] | | | | | | [removed: [71](#i4e002ac394c34074b07ec2df1e1fbbfe_193)] [added: [72](#i4234b33cecc54255affb64b031a587a2_172)] | | |

| [removed: [5.] [added: [14.] Acquisitions and Investments in Unconsolidated [removed: Subsidiaries](#i4e002ac394c34074b07ec2df1e1fbbfe_181)] [added: Subsidiaries](#i4234b33cecc54255affb64b031a587a2_175)] | | | | | | [removed: [73](#i4e002ac394c34074b07ec2df1e1fbbfe_181)] [added: [93](#i4234b33cecc54255affb64b031a587a2_175)] | | |

| [removed: [6.] [added: [5.] Restructuring and Integration [removed: Costs](#i4e002ac394c34074b07ec2df1e1fbbfe_196)] [added: Costs](#i4234b33cecc54255affb64b031a587a2_178)] | | | | | | [removed: [77](#i4e002ac394c34074b07ec2df1e1fbbfe_196)] [added: [74](#i4234b33cecc54255affb64b031a587a2_178)] | | |

| [removed: [7. Income Taxes](#i4e002ac394c34074b07ec2df1e1fbbfe_199)] [added: Deferred income taxes] | | | [added: 31] | | | [removed: [79](#i4e002ac394c34074b07ec2df1e1fbbfe_199)] | | | [added: (51) | | | | | | (23) | | |]

| [removed: [9. Leases](#i4e002ac394c34074b07ec2df1e1fbbfe_187)] [added: [7. Leases](#i4234b33cecc54255affb64b031a587a2_187)] | | | | | | [removed: [84](#i4e002ac394c34074b07ec2df1e1fbbfe_187)] [added: [78](#i4234b33cecc54255affb64b031a587a2_187)] | | |

| [removed: [12. Stock-Based Compensation](#i4e002ac394c34074b07ec2df1e1fbbfe_223)] [added: Stock-based compensation] | | | [added: —] | | | [removed: [90](#i4e002ac394c34074b07ec2df1e1fbbfe_223)] | | | [added: — | | | | | | 88 | | | | | | — | | | | | | — | | | | | | 88 | | | | | | — | | | | | | 88 | | |]

| [removed: [13.] Accumulated [removed: Other Comprehensive (Loss) Income](#i4e002ac394c34074b07ec2df1e1fbbfe_229)] [added: other comprehensive (loss) income] | | | [added: (26)] | | | [removed: [93](#i4e002ac394c34074b07ec2df1e1fbbfe_229)] | | | [added: 77 | | |]

| [removed: [14.] Property, [removed: Plant] [added: plant] and [removed: Equipment](#i4e002ac394c34074b07ec2df1e1fbbfe_232)] [added: equipment, gross] | | | [added: 3,843] | | | [removed: [93](#i4e002ac394c34074b07ec2df1e1fbbfe_232)] | | | [added: 3,232 | | |]

We have audited the accompanying consolidated balance sheets of Keurig Dr Pepper Inc. and subsidiaries (the "Company") as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 25, 2021,] [added: 24, 2022,] expressed an unqualified opinion on the Company's internal control over financial reporting.

The Company’s evaluation of the brand [removed: asset’s] [added: assets] for impairment [added: is performed annually as of October 1, and] involves the comparison of the fair value of each brand asset to [removed: its’] [added: its] carrying value.

[removed: Management estimates the fair value of the brand assets annually as of October 1, 2020, using a multi-period excess earnings method, which is a specific discounted cash flow method.The] [added: The] fair value determination of these assets requires management to make significant estimates and assumptions related to revenue growth projections, discount rates, and operating margins.

[removed: During the year ended December 31, 2020, the Company recognized] [added: KDP recorded] impairment of $67 million for the [removed: Bai brand, as the fair value of the] [added: year ended December 31, 2020 for Bai, an indefinite lived] brand [removed: was lower than its carrying value.][added: asset.]

- We considered the impact of changes in management's forecast from the October 1, [removed: 2020] [added: 2021] annual assessment date to December 31, [removed: 2020.][added: 2021.]

We have audited the internal control over financial reporting of Keurig Dr Pepper Inc. and subsidiaries (the "Company") as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, [removed: 2020] [added: 2021] of the Company and our report dated February [removed: 25, 2021] [added: 24, 2022] expressed an unqualified opinion on those financial statements.

| (in millions, except per share data) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Net sales | | | $ | [removed: 11,618] [added: 12,683] | | | | | $ | [removed: 11,120] [added: 11,618] | | | | | $ | [removed: 7,442] [added: 11,120] | |

| Cost of sales | | | [removed: 5,132] [added: 5,706] | | | | | | [removed: 4,778] [added: 5,132] | | | | | | [removed: 3,560] [added: 4,778] | | |

| Gross profit | | | [removed: 6,486] [added: 6,977] | | | | | | [removed: 6,342] [added: 6,486] | | | | | | [removed: 3,882] [added: 6,342] | | |

| Selling, general and administrative expenses | | | [removed: 3,978] [added: 4,153] | | | | | | [removed: 3,962] [added: 3,978] | | | | | | [removed: 2,635] [added: 3,962] | | |

| Impairment of intangible assets | | | [removed: 67] [added: —] | | | | | | [removed: —] [added: 67] | | | | | | — | | |

| Other operating (income) expense, net | | | [removed: (39)] [added: (70)] | | | | | | [removed: 2] [added: (39)] | | | | | | [removed: 10] [added: 2] | | |

| Income from operations | | | [removed: 2,480] [added: 2,894] | | | | | | [removed: 2,378] [added: 2,480] | | | | | | [removed: 1,237] [added: 2,378] | | |

| Interest expense | | | [removed: 604] [added: 500] | | | | | | [removed: 654] [added: 604] | | | | | | [removed: 401] [added: 654] | | |

| Loss on early extinguishment of debt | | | [removed: 4] [added: 105] | | | | | | [removed: 11] [added: 4] | | | | | | [removed: 13] [added: 11] | | |

| Impairment of investments and note receivable | | | [removed: 102] [added: 17] | | | | | | [removed: —] [added: 102] | | | | | | — | | |

| Other [removed: expense (income),] [added: (income) expense,] net | | | [removed: 17] [added: (2)] | | | | | | [removed: 19] [added: 17] | | | | | | [removed: (19)] [added: 19] | | |

| [6. Derivatives](#i4234b33cecc54255affb64b031a587a2_184) | | | | | | [75](#i4234b33cecc54255affb64b031a587a2_184) | | |

| [8. Employee Benefit Plans](#i4234b33cecc54255affb64b031a587a2_190) | | | | | | [81](#i4234b33cecc54255affb64b031a587a2_190) | | |

| [9. Segments](#i4234b33cecc54255affb64b031a587a2_220) | | | | | | [85](#i4234b33cecc54255affb64b031a587a2_220) | | |

| [11. Stock-Based Compensation](#i4234b33cecc54255affb64b031a587a2_196) | | | | | | [87](#i4234b33cecc54255affb64b031a587a2_196) | | |

| [12. Revenue Recognition](#i4234b33cecc54255affb64b031a587a2_223) | | | | | | [90](#i4234b33cecc54255affb64b031a587a2_223) | | |

| [13. Income Taxes](#i4234b33cecc54255affb64b031a587a2_181) | | | | | | [91](#i4234b33cecc54255affb64b031a587a2_181) | | |

| [17. Other Financial Information](#i4234b33cecc54255affb64b031a587a2_205) | | | | | | [96](#i4234b33cecc54255affb64b031a587a2_205) | | |

| [18. Commitments and Contingencies](#i4234b33cecc54255affb64b031a587a2_208) | | | | | | [99](#i4234b33cecc54255affb64b031a587a2_208) | | |

| [19. Transactions with Variable Interest Entities](#i4234b33cecc54255affb64b031a587a2_2285) | | | | | | [101](#i4234b33cecc54255affb64b031a587a2_2285) | | |

| [20. Related Parties](#i4234b33cecc54255affb64b031a587a2_217) | | | | | | [102](#i4234b33cecc54255affb64b031a587a2_217) | | |

| [21. Subsequent Events](#i4234b33cecc54255affb64b031a587a2_229) | | | | | | [102](#i4234b33cecc54255affb64b031a587a2_229) | | |

Management estimates the fair value of the brand assets using a multi-period excess earnings method, which is a specific discounted cash flow method.

February 24, 2022

| Gain on sale of equity method investment | | | (524) | | | | | | — | | | | | | — | | |

| Net income including non-controlling interest | | | $ | 2,145 | | | | | $ | 1,325 | | | | | $ | 1,254 | |

| Gain on sale of equity method investment | | | (524) | | | | | | — | | | | | | — | | |

| Proceeds from sale of investment in unconsolidated affiliates | | | 578 | | | | | | — | | | | | | — | | |

| Proceeds from issuance of commercial paper | | | 5,406 | | | | | | 7,288 | | | | | | 16,197 | | |

| Repayments of commercial paper | | | (5,257) | | | | | | (8,534) | | | | | | (16,030) | | |

| Proceeds from KDP Revolver | | | — | | | | | | 1,850 | | | | | | — | | |

| Repayment of KDP Revolver | | | — | | | | | | (1,850) | | | | | | — | | |

| Tax withholdings related to net share settlements | | | (125) | | | | | | — | | | | | | — | | |

| Conversion of note receivable to equity method investment | | | 15 | | | | | | — | | | | | | — | | |

| Proceeds from sale of stock by JAB | | | — | | | | | | — | | | | | | 29 | | | | | | — | | | | | | — | | | | | | 29 | | | | | | — | | | | | | 29 | | |

| Net income (loss) | | | — | | | | | | — | | | | | | — | | | | | | 2,146 | | | | | | — | | | | | | 2,146 | | | | | | (1) | | | | | | 2,145 | | |

| Issuance of common stock | | | 4.3 | | | | | | — | | | | | | 140 | | | | | | — | | | | | | — | | | | | | 140 | | | | | | — | | | | | | 140 | | |

| Dividends declared, $0.7125 per share | | | — | | | | | | — | | | | | | — | | | | | | (1,008) | | | | | | — | | | | | | (1,008) | | | | | | — | | | | | | (1,008) | | |

| Tax withholdings related to net share settlements | | | — | | | | | | — | | | | | | (125) | | | | | | — | | | | | | — | | | | | | (125) | | | | | | — | | | | | | (125) | | |

| Balance as of December 31, 2021 | | | 1,418.1 | | | | | | $ | 14 | | | | | $ | 21,785 | | | | | $ | 3,199 | | | | | $ | (26) | | | | | $ | 24,972 | | | | | $ | — | | | | | $ | 24,972 | |

The Company would be required to consolidate VIEs for which KDP has been determined to be the primary beneficiary.

To determine if KDP is the primary beneficiary, the Company assesses whether it has the power to direct the significant activities of the VIE and the obligation to absorb losses or receive benefits from the VIE that may be significant to the VIE.

The Company has determined that it is not the primary beneficiary of any VIEs.

However, future events may require the Company to consolidate VIEs if the Company becomes the primary beneficiary.

| Proceeds from commercial paper | | | | | | Net (repayment) issuance of commercial paper | | | | | | $ | 7,288 | | | | | $ | 16,197 | |

The Company's lease agreements do not contain any material restrictive covenants.

KDP has certain leases of manufacturing and distribution properties and the Frisco headquarters that contain a residual value guarantee at the end of the term.

Investments with readily determinable fair values for which we do not have the ability to exercise significant influence are measured at fair value and reported in Other non-current assets in the Company's Consolidated Balance Sheets.

Unrealized gains and losses on these investments are recorded in Other (income) expense, net in the Consolidated Statements of Income.

| | | | | | | Fountain Foodservice | | |

In November 2021, the FASB issued ASU 2021-10, *Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance*.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| [8. Derivatives](#i4e002ac394c34074b07ec2df1e1fbbfe_214) | | | | | | [81](#i4e002ac394c34074b07ec2df1e1fbbfe_214) | | |

| [10. Employee Benefit Plans](#i4e002ac394c34074b07ec2df1e1fbbfe_205) | | | | | | [85](#i4e002ac394c34074b07ec2df1e1fbbfe_205) | | |

| [11. Earnings per Share](#i4e002ac394c34074b07ec2df1e1fbbfe_217) | | | | | | [90](#i4e002ac394c34074b07ec2df1e1fbbfe_217) | | |

| [15. Other Financial Information](#i4e002ac394c34074b07ec2df1e1fbbfe_235) | | | | | | [94](#i4e002ac394c34074b07ec2df1e1fbbfe_235) | | |

| [16. Commitments and Contingencies](#i4e002ac394c34074b07ec2df1e1fbbfe_241) | | | | | | [96](#i4e002ac394c34074b07ec2df1e1fbbfe_241) | | |

| [17. Related Parties](#i4e002ac394c34074b07ec2df1e1fbbfe_247) | | | | | | [98](#i4e002ac394c34074b07ec2df1e1fbbfe_247) | | |

| [18. Segments](#i4e002ac394c34074b07ec2df1e1fbbfe_250) | | | | | | [99](#i4e002ac394c34074b07ec2df1e1fbbfe_250) | | |

| [19. Revenue Recognition](#i4e002ac394c34074b07ec2df1e1fbbfe_256) | | | | | | [101](#i4e002ac394c34074b07ec2df1e1fbbfe_256) | | |

| [20. Unaudited Quarterly Financial Information](#i4e002ac394c34074b07ec2df1e1fbbfe_274) | | | | | | [102](#i4e002ac394c34074b07ec2df1e1fbbfe_274) | | |

February 25, 2021

KEURIG DR PEPPER INC.

| Interest expense - related party | | | — | | | | | | — | | | | | | 51 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Gain on step acquisition of unconsolidated subsidiaries | | | — | | | | | | — | | | | | | (18) | | |

| Cash acquired in acquisitions | | | — | | | | | | — | | | | | | 169 | | |

(continued)

| Proceeds from unsecured credit facility | | | 1,850 | | | | | | — | | | | | | 1,900 | | |

| Repayment of unsecured credit facility | | | (1,850) | | | | | | — | | | | | | (1,900) | | |

| Issuance of common stock for acquisition of business | | | — | | | | | | — | | | | | | (441) | | |

| Fair value of stock and replacement equity awards not converted to cash | | | — | | | | | | — | | | | | | (3,643) | | |

| Capitalization of related party debt into additional paid-in-capital | | | — | | | | | | — | | | | | | (1,815) | | |

| Cash paid for related party interest | | | — | | | | | | — | | | | | | 51 | | |

| Balance as of December 31, 2017 | | | 790.5 | | | | | | $ | 8 | | | | | $ | 6,377 | | | | | $ | 914 | | | | | $ | 99 | | | | | $ | 7,398 | | | | | $ | — | | | | | $ | 7,398 | |

| Adoption of new accounting standards | | | — | | | | | | — | | | | | | — | | | | | | (4) | | | | | | — | | | | | | (4) | | | | | | — | | | | | | (4) | | |

| Issuance of common stock | | | 407.0 | | | | | | 4 | | | | | | 8,996 | | | | | | — | | | | | | — | | | | | | 9,000 | | | | | | — | | | | | | 9,000 | | |

| Acquisition of DPS | | | 182.5 | | | | | | 2 | | | | | | 3,641 | | | | | | — | | | | | | — | | | | | | 3,643 | | | | | | — | | | | | | 3,643 | | |

| Conversion of subsidiary shares | | | 7.9 | | | | | | — | | | | | | 172 | | | | | | — | | | | | | — | | | | | | 172 | | | | | | — | | | | | | 172 | | |

| Capitalization of loans with related parties | | | — | | | | | | — | | | | | | 1,815 | | | | | | — | | | | | | — | | | | | | 1,815 | | | | | | — | | | | | | 1,815 | | |

| Adjustment of non-controlling interests to fair value | | | — | | | | | | — | | | | | | — | | | | | | (16) | | | | | | — | | | | | | (16) | | | | | | — | | | | | | (16) | | |

| Reclassification of historical Maple Parent Corporation employee redeemable non-controlling interest and mezzanine equity awards | | | — | | | | | | — | | | | | | 9 | | | | | | 139 | | | | | | — | | | | | | 148 | | | | | | — | | | | | | 148 | | |

| Acquisition of Core | | | 16.7 | | | | | | — | | | | | | 441 | | | | | | — | | | | | | — | | | | | | 441 | | | | | | — | | | | | | 441 | | |

| Dividends declared | | | — | | | | | | — | | | | | | — | | | | | | (441) | | | | | | — | | | | | | (441) | | | | | | — | | | | | | (441) | | |

| Net income attributable to KDP | | | — | | | | | | — | | | | | | — | | | | | | 1,254 | | | | | | — | | | | | | 1,254 | | | | | | — | | | | | | 1,254 | | |

| Net income attributable to KDP | | | — | | | | | | — | | | | | | — | | | | | | 1,325 | | | | | | — | | | | | | 1,325 | | | | | | — | | | | | | 1,325 | | |

| Proceeds from controlling shareholder stock transactions | | | — | | | | | | — | | | | | | 29 | | | | | | — | | | | | | — | | | | | | 29 | | | | | | — | | | | | | 29 | | |

| Non-cash acquisition of controlling interest | | | — | | | | | | — | | | | | | 3 | | | | | | — | | | | | | — | | | | | | 3 | | | | | | 1 | | | | | | 4 | | |

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective September 18, 2020, at market close, the Company's common stock ceased to be listed on the New York Stock Exchange and on September 21, 2020, the following business day, KDP's common stock began trading on Nasdaq's Global Select Market at market open.

As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, [removed: 2020,] [added: 2021,] and has concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Based on the criteria for effective internal control over financial reporting established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, management concluded that the internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their attestation report, which is included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

As of December 31, [removed: 2020,] [added: 2021,] management has concluded that there have been no changes in our internal control over financial reporting that occurred during our fourth quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART III

Not applicable.

PART III

- Consolidated Statements of Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018.][added: 2019.]

- Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018.][added: 2019.]

- Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019.][added: 2020.]

- Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018.][added: 2019.]

- Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018.][added: 2019.]

- Notes to Consolidated Financial Statements for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] and as of December 31, [removed: 2020] [added: 2021] and [removed: 2019.][added: 2020.]

| [removed: [2.1](http://www.sec.gov/Archives/edgar/data/1418135/000110465916158940/a16-22114_1ex2d1.htm)] [added: [4.10](http://www.sec.gov/Archives/edgar/data/1418135/000141813515000043/ex41fifthindenture.htm)] | | | [removed: Agreement and Plan of Merger,] [added: Fifth Supplemental Indenture,] dated as of November [removed: 21, 2016, by and] [added: 9, 2015,] among [removed: Bai Brands LLC,] Dr Pepper Snapple Group, Inc., [removed: Superfruit Merger Sub, LLC] [added: the guarantors party thereto] and [removed: Fortis Advisors LLC,] [added: Wells Fargo Bank, N.A., as trustee] (filed as Exhibit [removed: 2.1] [added: 4.1] to the [removed: Company’s] [added: Company's] Current Report on Form 8-K (filed on November [removed: 23, 2016)] [added: 10, 2015)] and incorporated herein by reference). | | |

| [removed: [2.2](http://www.sec.gov/Archives/edgar/data/1418135/000110465917005365/a17-3493_1ex2d2.htm)] [added: [4.13](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000079/ex41sixthindenture.htm)] | | | [removed: Amendment No. 1, dated as of January 31, 2017, to the Agreement and Plan of Merger,] [added: Sixth Supplemental Indenture,] dated as of [removed: November 21,] [added: September 16,] 2016, [removed: by and] among [removed: Bai Brands LLC,] Dr Pepper Snapple Group, Inc., [removed: Superfruit Merger Sub, LLC] [added: the guarantors party thereto] and [removed: Fortis Advisors LLC,] [added: Wells Fargo Bank, N.A., as trustee] (filed as Exhibit [removed: 2.2] [added: 4.1] to the [removed: Company’s] [added: Company's] Current Report on Form 8-K (filed on [removed: January 31, 2017)] [added: September 16, 2016)] and incorporated herein by reference). | | |

| [removed: [2.3](http://www.sec.gov/Archives/edgar/data/1418135/000110465918005202/a18-3957_1ex2d1.htm)] [added: [4.21](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044357/a18-16509_3ex4d1.htm)] | | | [added: Investor Rights] Agreement [removed: and Plan of Merger, dated as of January 29, 2018,] by and among [added: Keurig] Dr Pepper [removed: Snapple Group, Inc., Maple Parent Holdings Corp. and Salt Merger Sub,] Inc. [added: and The Holders Listed on Schedule A thereto, dated as of July 9, 2018] (filed as Exhibit [removed: 2.1] [added: 4.1] to the Company's Current Report on Form 8-K (filed on [removed: January 31,] [added: July 9,] 2018) and incorporated herein by reference). | | |

| [3.5](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044357/a18-16509_3ex3d2.htm) | | | Amended and Restated By-Laws of Keurig Dr Pepper Inc. effective as of July 9, 2018 (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K (filed July 9, 2018) and incorporated herein by [removed: reference.] [added: reference).] | | |

| [4.8](http://www.sec.gov/Archives/edgar/data/1418135/000110465917006174/a17-3651_1ex4d1.htm) | | | Fourth Supplemental Indenture, dated as of January 31, 2017, among Bai Brands LLC, a New Jersey limited liability company, 184 Innovations Inc., a Delaware corporation (each as a new subsidiary [removed: guarantors] [added: guarantor] under the Indenture dated April 30, 2008 (as referenced in Item 4.1 in this Exhibit [removed: Index),] [added: Index)),] Dr Pepper Snapple Group, Inc., each other then-existing Guarantor under the Indenture and Wells Fargo, National Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed February 2, 2017) and incorporated herein by reference). | | |

| [removed: [4.10](http://www.sec.gov/Archives/edgar/data/1418135/000110465911064294/a11-29914_1ex4d1.htm)] [added: [4.15](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000103/ex41seventhindenture.htm)] | | | [removed: Third] [added: Seventh] Supplemental Indenture, dated as of [removed: November 15, 2011,] [added: December 14, 2016,] among Dr Pepper Snapple Group, Inc., the guarantors party thereto and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on [removed: November 15, 2011)] [added: December 14, 2016)] and incorporated herein by reference). | | |

| [removed: [4.11](http://www.sec.gov/Archives/edgar/data/1418135/000110465911064294/a11-29914_1ex4d3.htm)] [added: [4.12](http://www.sec.gov/Archives/edgar/data/1418135/000141813515000043/ex43formof2045notes.htm)] | | | [removed: 3.20%] [added: 4.50%] Senior Note due [removed: 2021] [added: 2045] (in global form), dated November [removed: 15, 2011,] [added: 9, 2015,] in the principal amount of [removed: $250 million] [added: $250,000,000] (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on November [removed: 15, 2011)] [added: 10, 2015)] and incorporated herein by reference). | | |

| [removed: [4.12](http://www.sec.gov/Archives/edgar/data/1418135/000141813520000023/kdp-ex4132020630.htm)] [added: [4.19](http://www.sec.gov/Archives/edgar/data/1418135/000141813517000031/a41ninthsupplementalindent.htm)] | | | [removed: Fourth] [added: Ninth] Supplemental Indenture, dated as of [removed: November 20, 2012,] [added: June 15, 2017,] among Dr Pepper Snapple Group, Inc., the guarantors party [removed: thereto] [added: thereto,] and Wells Fargo Bank, N.A., as trustee (filed as Exhibit [removed: 4.13] [added: 4.1] to the Company's [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q] [added: 8-K] (filed on [removed: July 30, 2020)] [added: June 15, 2017)] and incorporated herein by reference). | | |

| [removed: [4.13](http://www.sec.gov/Archives/edgar/data/1418135/000141813512000051/ex-43xdpsx2022globalnote.htm)] [added: [4.11](http://www.sec.gov/Archives/edgar/data/1418135/000141813515000043/ex42formof2025notes.htm)] | | | [removed: 2.70%] [added: 3.40%] Senior Note due [removed: 2022] [added: 2025] (in global form), dated November [removed: 20, 2012,] [added: 9, 2015,] in the principal amount of [removed: $250 million] [added: $500,000,000] (filed as Exhibit [removed: 4.3] [added: 4.2] to the Company's Current Report on Form 8-K (filed on November [removed: 20, 2012)] [added: 10, 2015)] and incorporated herein by reference). | | |

| [removed: [4.14](http://www.sec.gov/Archives/edgar/data/1418135/000141813515000043/ex41fifthindenture.htm)] [added: [4.29](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044358/a18-16509_2ex4d8.htm)] | | | [removed: Fifth] [added: Seventh] Supplemental Indenture, dated as of [removed: November] [added: July] 9, [removed: 2015,] [added: 2018,] among [added: Keurig] Dr Pepper [removed: Snapple Group,] Inc., the [added: subsidiary] guarantors [removed: party thereto] [added: thereto,] and Wells Fargo Bank, N.A., as trustee (filed as Exhibit [removed: 4.1] [added: 4.8] to the Company's Current Report on Form 8-K (filed on [removed: November 10, 2015)] [added: July 9, 2018)] and incorporated herein by reference). | | |

| [removed: [4.15](http://www.sec.gov/Archives/edgar/data/1418135/000141813515000043/ex42formof2025notes.htm)] [added: [4.14](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000079/ex42formof2026notes.htm)] | | | [removed: 3.40%] [added: 2.55%] Senior Note due [removed: 2025] [added: 2026] (in global form), dated [removed: November 9, 2015,] [added: September 16, 2016,] in the principal amount of [removed: $500,000,000] [added: $400,000,000] (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on [removed: November 10, 2015)] [added: September 16, 2016)] and incorporated herein by reference). | | |

| [removed: [4.16](http://www.sec.gov/Archives/edgar/data/1418135/000141813515000043/ex43formof2045notes.htm)] [added: [4.16](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000103/ex43formof2023notes.htm)] | | | [removed: 4.50%] [added: 3.13%] Senior Note due [removed: 2045] [added: 2023] (in global form), dated [removed: November 9, 2015,] [added: December 14, 2016,] in the principal amount of [removed: $250,000,000] [added: $500,000,000] (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K (filed on [removed: November 10, 2015)] [added: December 14, 2016)] and incorporated herein by reference). | | |

| [removed: [4.17](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000079/ex41sixthindenture.htm)] [added: [4.33](http://www.sec.gov/Archives/edgar/data/1418135/000110465920045968/tm2015044d3_ex4-1.htm)] | | | [removed: Sixth] [added: Tenth] Supplemental [removed: Indenture,] [added: Indenture (including 3.20% Senior Notes Due 2030 and 3.80% Senior Notes Due 2050 (in global form)),] dated as of [removed: September 16, 2016,] [added: April 13, 2020,] among [added: Keurig] Dr Pepper [removed: Snapple Group,] Inc., the [added: subsidiary] guarantors [removed: party thereto] [added: thereto,] and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on [removed: September 16, 2016)] [added: April 13, 2020)] and incorporated herein by reference). | | |

| [removed: [4.18](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000079/ex42formof2026notes.htm)] [added: [4.18](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000103/ex45formof2046notes.htm)] | | | [removed: 2.55%] [added: 4.42%] Senior Note due [removed: 2026] [added: 2046] (in global form), dated [removed: September 16,] [added: December 14,] 2016, in the principal amount of $400,000,000 (filed as Exhibit [removed: 4.2] [added: 4.5] to the Company's Current Report on Form 8-K (filed on [removed: September 16,] [added: December 14,] 2016) and incorporated herein by reference). | | |

| [removed: [4.19](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000103/ex41seventhindenture.htm)] [added: [4.34](http://www.sec.gov/Archives/edgar/data/0001418135/000119312521081448/d153075dex41.htm)] | | | [removed: Seventh] [added: Eleventh] Supplemental [removed: Indenture,] [added: Indenture (including 0.750% Senior Notes Due 2024, 2.250% Senior Notes Due 2031, and 3.350% Senior Notes Due 2051 (in global form)),] dated as of [removed: December 14, 2016,] [added: March 15, 2021,] among [added: Keurig] Dr Pepper [removed: Snapple Group,] Inc., the [added: subsidiary] guarantors [removed: party thereto] [added: thereto,] and Wells Fargo Bank, [removed: N.A.,] [added: N.A.] as trustee (filed as Exhibit 4.1 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K (filed on [removed: December 14, 2016)] [added: March 15, 2021)] and incorporated herein by reference). | | |

| [removed: [4.20](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000103/ex42formof2021notes.htm)] [added: [4.17](http://www.sec.gov/Archives/edgar/data/1418135/000141813516000103/ex44formof2027notes.htm)] | | | [removed: 2.53%] [added: 3.43%] Senior Note due [removed: 2021] [added: 2027] (in global form), dated December 14, 2016, in the principal amount of [removed: $250,000,000] [added: $400,000,000] (filed as Exhibit [removed: 4.2] [added: 4.4] to the Company's Current Report on Form 8-K (filed on December 14, 2016) and incorporated herein by reference). | | |

| [removed: [4.24](http://www.sec.gov/Archives/edgar/data/1418135/000110465917006174/a17-3651_1ex4d2.htm)] [added: [4.19](http://www.sec.gov/Archives/edgar/data/1418135/000110465917006174/a17-3651_1ex4d2.htm)] | | | Eighth Supplemental Indenture, dated as of January 31, 2017, among Bai Brands LLC, a New Jersey limited liability company, 184 Innovations Inc., a Delaware corporation (each as a new subsidiary guarantor under the Indenture dated April 30, 2008 (as referenced in Item 4.1 in this Exhibit Index), Dr Pepper Snapple Group, Inc., each other then-existing Guarantor under the Indenture) and Wells Fargo, National Bank, N.A., as trustee (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K (filed on February 2, 2017) and incorporated herein by reference). | | |

| [removed: [4.25](http://www.sec.gov/Archives/edgar/data/1418135/000141813517000031/a41ninthsupplementalindent.htm)] [added: [4.22](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044358/a18-16509_2ex4d1.htm)] | | | [removed: Ninth Supplemental] [added: Base] Indenture, dated as of [removed: June 15, 2017, among Dr Pepper Snapple Group, Inc., the guarantors party thereto,] [added: May 25, 2018 between Maple Escrow Subsidiary] and Wells Fargo Bank, [removed: N.A.,] [added: N.A.] as trustee (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K (filed on [removed: June 15, 2017)] [added: July 9, 2018)] and incorporated herein by reference). | | |

| [removed: [4.26](http://www.sec.gov/Archives/edgar/data/1418135/000110465920045968/tm2015044d3_ex4-1.htm)] [added: [10.12](http://www.sec.gov/Archives/edgar/data/1418135/000141813521000008/ex101kdp-364xdaycreditagre.htm)] | | | [removed: Tenth Supplemental Indenture,] [added: Credit Agreement,] dated as of [removed: April 13, 2020,] [added: March 24, 2021,] among Keurig Dr Pepper Inc., the [removed: guarantors] [added: lenders] party [removed: thereto] [added: thereto,] and [removed: Wells Fargo Bank,] [added: Bank of America,] N.A., as [removed: trustee] [added: administrative agent] (filed as Exhibit [removed: 4.1] [added: 10.1] to the Company’s Current Report on Form 8-K (filed on [removed: April 13, 2020)] [added: March 26, 2021)] and incorporated herein by reference). | | |

| [removed: [4.29](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044357/a18-16509_3ex4d1.htm)] [added: [10.6](http://www.sec.gov/Archives/edgar/data/1418135/000141813519000044/exhibit101keurigdrpepperin.htm)] | | | [removed: Investor Rights Agreement by and among] Keurig Dr Pepper Inc. [removed: and The Holders Listed on Schedule A thereto, dated as] [added: Omnibus Stock Incentive Plan] of [removed: July 9, 2018] [added: 2019] (filed as Exhibit [removed: 4.1] [added: 10.1] to the Company's Current Report on Form 8-K (filed on [removed: July 9, 2018)] [added: June 11, 2019)] and incorporated herein by [removed: reference).] [added: reference).++] | | |

| [removed: [4.30](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044358/a18-16509_2ex4d1.htm)] [added: [4.24](http://www.sec.gov/Archives/edgar/data/1418135/000110465918044358/a18-16509_2ex4d3.htm)] | | | [removed: Base Indenture,] [added: Second Supplemental Indenture (including the form of note),] dated as of May 25, [removed: 2018 between] [added: 2018, among] Maple Escrow [removed: Subsidiary] [added: Subsidiary, Inc.] and [added: Maple Parent Holdings Corp. as parent guarantor, and] Wells Fargo Bank, [removed: N.A.] [added: N.A.,] as trustee [added: relating to the 2023 Notes] (filed as Exhibit [removed: 4.1] [added: 4.3] to the Company's Current Report on Form 8-K (filed on July 9, 2018) and incorporated herein by reference). | | |