Item 1. Financial Statements (Unaudited)

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Item 1. Financial Statements (Unaudited)

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Third Quarter				First Nine Months
(in millions, except per share data)	2025		2024		2025		2024
Net sales	$	4,306	$	3,891	$	12,104	$	11,281
Cost of sales	1,966		1,751		5,524		5,029
Gross profit	2,340		2,140		6,580		6,252
Selling, general, and administrative expenses	1,344		1,245		3,892		3,716



Other operating expense (income), net	1		(7)		(6)		8
Income from operations	995		902		2,694		2,528
Interest expense, net	188		106		516		488



Other income, net	(45)		(6)		(52)		(28)
Income before provision for income taxes	852		802		2,230		2,068
Provision for income taxes	190		186		504		483
Net income	$	662	$	616	$	1,726	$	1,585

Earnings per common share:
Basic	$	0.49	$	0.45	$	1.27	$	1.16
Diluted	0.49		0.45		1.27		1.16
Weighted average common shares outstanding:
Basic	1,358.5		1,356.2		1,358.0		1,364.2
Diluted	1,362.9		1,361.9		1,362.7		1,370.4

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

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Third Quarter				First Nine Months
(in millions)	2025		2024		2025		2024
Net income	$	662	$	616	$	1,726	$	1,585
Other comprehensive (loss) income:
Foreign currency translation adjustments	(30)		(69)		302		(326)
Net change in pension and post-retirement liability, net of tax of $0, $0, $0, and $0, respectively	1		—		1		—
Net change in cash flow hedges, net of tax of $(1), $2, $5, and $3, respectively	(5)		6		(51)		25
Total other comprehensive (loss) income	(34)		(63)		252		(301)
Comprehensive income	$	628	$	553	$	1,978	$	1,284

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

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions, except share and per share data)	September 30, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	516	$	510
Restricted cash and restricted cash equivalents	53		80
Trade accounts receivable, net	1,497		1,502
Inventories	1,840		1,299
Prepaid expenses and other current assets	795		606
Total current assets	4,701		3,997
Property, plant, and equipment, net	3,039		2,964
Investments in unconsolidated affiliates	1,617		1,543
Goodwill	20,198		20,053
Intangible assets, net	23,786		23,634
Other non-current assets	1,228		1,200
Deferred tax assets	36		39
Total assets	$	54,605	$	53,430
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	2,993	$	2,985
Accrued expenses	1,396		1,584
Structured payables	30		41
Short-term borrowings and current portion of long-term obligations	2,285		2,642
Other current liabilities	823		835
Total current liabilities	7,527		8,087
Long-term obligations	13,531		12,912
Deferred tax liabilities	5,433		5,435
Other non-current liabilities	2,790		2,753
Total liabilities	29,281		29,187
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued as of September 30, 2025 and December 31, 2024	—		—
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,358,556,914 and 1,356,664,609 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively	14		14
Additional paid-in capital	19,753		19,712
Retained earnings	5,581		4,793
Accumulated other comprehensive loss	(24)		(276)
Total stockholders' equity	25,324		24,243


Total liabilities and stockholders' equity	$	54,605	$	53,430

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

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	First Nine Months
(in millions)	2025		2024
Operating activities:
Net income	$	1,726	$	1,585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	336		310
Amortization of intangibles	101		100
Other amortization expense	117		140
Provision for sales returns	42		50
Deferred income taxes	(39)		21
Employee stock-based compensation expense	70		76


(Gain) loss on disposal of property, plant, and equipment	(3)		19
Unrealized loss on foreign currency	7		14
Unrealized (gain) loss on derivatives	(127)		23

Equity in earnings of unconsolidated affiliates	(62)		(22)
Earned equity from distribution arrangements	(21)		(64)



Other, net	3		9
Changes in assets and liabilities, excluding the effects of business acquisitions:
Trade accounts receivable	(16)		(148)
Inventories	(518)		(220)
Income taxes receivable and payable, net	(27)		(7)
Other current and non-current assets	(183)		(204)
Accounts payable and accrued expenses	(140)		(275)
Other current and non-current liabilities	13		(37)
Net change in operating assets and liabilities	(871)		(891)
Net cash provided by operating activities	1,279		1,370
Investing activities:
Acquisitions of businesses, net of cash acquired	(114)		(85)

Purchases of property, plant, and equipment	(338)		(398)
Proceeds from sales of property, plant, and equipment	14		1
Purchases of intangibles	(16)		(49)
Investments in unconsolidated affiliates	(1)		(7)

Other, net	65		—
Net cash used in investing activities	$	(390)	$	(538)

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

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, CONTINUED)


	First Nine Months
(in millions)	2025		2024
Financing activities:
Proceeds from issuance of Notes	$	2,000	$	3,000
Repayments of Notes	(529)		(1,150)
Net repayment of commercial paper	(225)		(153)

Repayment of term loan	(990)		—
Proceeds from structured payables	23		39
Repayments of structured payables	(34)		(89)
Cash dividends paid	(937)		(883)
Repurchases of common stock, inclusive of excise tax obligation	(9)		(1,105)

Tax withholdings related to net share settlements	(29)		(58)
Payments on finance leases	(96)		(83)
Deferred financing charges paid	(103)		(16)
Other, net	(5)		(6)
Net cash used in financing activities	(934)		(504)
Cash, cash equivalents, restricted cash, and restricted cash equivalents:
Net change from operating, investing, and financing activities	(45)		328
Effect of exchange rate changes	6		(35)
Beginning balance	608		267
Ending balance	$	569	$	560

Supplemental cash flow disclosures of non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued expenses	$	151	$	164
Earned equity from distribution arrangements	21		64
Equity received in exchange for modification of related party contract	—		19
Acquisitions of businesses	—		18
Dividends declared but not yet paid	313		311

Accrued excise tax on net share repurchases	—		14
Supplemental cash flow disclosures:
Cash paid for interest	377		308
Cash paid for income taxes	322		246

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

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)


	Common Stock Issued			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
(in millions, except per share data)	Shares	Amount
Balance as of December 31, 2024	1,356.7	$	14	$	19,712	$	4,793	$	(276)	$	24,243
Net income	—	—		—		517		—		517
Other comprehensive income	—	—		—		—		1		1
Dividends declared, $0.23 per share	—	—		—		(313)		—		(313)


Shares issued under employee stock-based compensation plans and other	1.5	—		—		—		—		—
Tax withholdings related to net share settlements	—	—		(23)		—		—		(23)
Stock-based compensation and stock options exercised	—	—		22		—		—		22
Balance as of March 31, 2025	1,358.2	$	14	$	19,711	$	4,997	$	(275)	$	24,447
Net income	—	—		—		547		—		547
Other comprehensive income	—	—		—		—		285		285
Dividends declared, $0.23 per share	—	—		—		(312)		—		(312)


Shares issued under employee stock-based compensation plans and other	0.2	—		—		—		—		—
Tax withholdings related to net share settlements	—	—		(5)		—		—		(5)
Stock-based compensation and stock options exercised	—	—		23		—		—		23
Balance as of June 30, 2025	1,358.4	$	14	$	19,729	$	5,232	$	10	$	24,985
Net income	—	—		—		662		—		662
Other comprehensive loss	—	—		—		—		(34)		(34)
Dividends declared, $0.23 per share	—	—		—		(313)		—		(313)

Shares issued under employee stock-based compensation plans and other	0.2	—		—		—		—		—
Tax withholdings related to net share settlements	—	—		(1)		—		—		(1)
Stock-based compensation and stock options exercised	—	—		25		—		—		25

Balance as of September 30, 2025	1,358.6	$	14	$	19,753	$	5,581	$	(24)	$	25,324

KEURIG DR PEPPER INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED, CONTINUED)


	Common Stock Issued			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders' Equity
(in millions, except per share data)	Shares	Amount
Balance as of December 31, 2023	1,390.4	$	14	$	20,788	$	4,559	$	315	$	25,676

Net income	—	—		—		454		—		454
Other comprehensive loss	—	—		—		—		(58)		(58)
Dividends declared, $0.215 per share	—	—		—		(292)		—		(292)

Repurchases of common stock, inclusive of excise tax obligation	(38.0)	—		(1,114)		—		—		(1,114)
Shares issued under employee stock-based compensation plans and other	3.2	—		—		—		—		—
Tax withholdings related to net share settlements	—	—		(41)		—		—		(41)
Stock-based compensation and stock options exercised	—	—		28		—		—		28
Balance as of March 31, 2024	1,355.6	$	14	$	19,661	$	4,721	$	257	$	24,653
Net income	—	—		—		515		—		515
Other comprehensive loss	—	—		—		—		(180)		(180)
Dividends declared, $0.215 per share	—	—		—		(292)		—		(292)


Shares issued under employee stock-based compensation plans and other	0.2	—		—		—		—		—
Tax withholdings related to net share settlements	—	—		(2)		—		—		(2)
Stock-based compensation and stock options exercised	—	—		24		—		—		24
Balance as of June 30, 2024	1,355.8	$	14	$	19,683	$	4,944	$	77	$	24,718
Net income	—	—		—		616		—		616
Other comprehensive loss	—	—		—		—		(63)		(63)
Dividends declared, $0.23 per share	—	—		—		(311)		—		(311)



Shares issued under employee stock-based compensation plans and other	0.6	—		—		—		—		—
Tax withholdings related to net share settlements	—	—		(15)		—		—		(15)
Stock-based compensation and stock options exercised	—	—		24		—		—		24

Balance as of September 30, 2024	1,356.4	$	14	$	19,692	$	5,249	$	14	$	24,969

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

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. General

ORGANIZATION

References in this Quarterly Report on Form 10-Q to "KDP", "we", "us", and "our", refer to Keurig Dr Pepper Inc. and all wholly-owned subsidiaries included in the unaudited condensed consolidated financial statements. Definitions of terms used in this Quarterly Report on Form 10-Q are included within the Master Glossary.

This Quarterly Report on Form 10-Q refers to some of our owned or licensed trademarks, trade names, and service marks, which are referred to as our brands. All of the product names included herein are either KDP registered trademarks or those of our licensors.

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting principally of normal recurring adjustments, considered necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and accompanying notes included in our Annual Report.

References to the "third quarter" indicate the quarterly periods ended September 30, 2025 and 2024.

USE OF ESTIMATES

The process of preparing our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect reported amounts. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions we believe to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.

RECLASSIFICATIONS

We have reclassified certain current and prior period amounts within the unaudited Condensed Consolidated Statements of Cash Flows to conform to the current period presentation. These reclassifications had no impact on total cash, cash equivalents, restricted cash, and restricted cash equivalents.

RECENTLY ISSUED ACCOUNTING STANDARDS

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The objective of ASU 2025-06 is to modernize the guidance to reflect changes in the software development environment over time. ASU 2025-06 is effective for public companies starting in annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are currently evaluating ASU 2025-06 and the impact to our consolidated financial statements.

2. Acquisitions

JDE PEET'S ACQUISITION

On August 24, 2025, we entered into the JDE Peet's Acquisition Agreement, pursuant to which KDP will commence a tender offer to acquire all of the issued ordinary shares, excluding ordinary shares in treasury, of JDE Peet's for a cash offer price of €31.85 per share, without interest. JDE Peet's is a global coffee and tea company, serving more than 100 markets, with a portfolio of leading brands including Jacobs, L'OR, and Peet's. The JDE Peet's Acquisition is expected to occur in the first six months of 2026 and is subject to certain regulatory approvals, as well as the acceptance of the offer by the shareholders of JDE Peet's.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

In connection with the JDE Peet's Acquisition, we entered into the Bridge Credit Agreement, which provides for a 364-day senior unsecured bridge loan facility in an aggregate amount not to exceed €16.2 billion. Refer to Note 3 for additional information.

DYLA ACQUISITION

On June 2, 2025, we completed the acquisition of Dyla for aggregate consideration of $98 million. Dyla is a leading player in powdered drink mixes and liquid water enhancers. Prior to the acquisition, we held direct and indirect ownership interests in Dyla and accounted for the investment as an equity method investment. In order to complete the acquisition of Dyla, net of our previous ownership interest, we paid $69 million in cash, and approximately $3 million of cash was held back and placed in escrow, which was released in the third quarter of 2025.

Our allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed was based on estimated fair values as of June 2, 2025, and the consideration was primarily allocated to intangible assets and goodwill. In the third quarter of 2025, we finalized our allocation of consideration exchanged in the Dyla acquisition, with no significant measurement period adjustments recorded.

GHOST TRANSACTIONS

In the first quarter of 2025, we finalized our allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in the GHOST Transactions based on estimated fair values as of December 31, 2024, with no significant measurement period adjustments recorded.

KALIL ACQUISITION

In the third quarter of 2025, we finalized our allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in the Kalil Acquisition based on estimated fair values as of August 9, 2024, with no significant measurement period adjustments recorded.

3. Long-term Obligations and Borrowing Arrangements

The following table summarizes our long-term obligations:


(in millions)	September 30, 2025		December 31, 2024
Notes	$	14,425	$	12,948
Term loan	—		990
Less: current portion of long-term obligations	(894)		(1,026)
Long-term obligations	$	13,531	$	12,912

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


(in millions)	September 30, 2025		December 31, 2024
Commercial paper notes	$	1,391	$	1,616
Current portion of long-term obligations:
Notes	894		1,026
Short-term borrowings and current portion of long-term obligations	$	2,285	$	2,642

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

SENIOR UNSECURED NOTES


(in millions, except %)	Maturity Date	Rate	September 30, 2025		December 31, 2024
2025 Merger Notes	May 25, 2025	4.417%	$	—	$	529
2025 Notes	November 15, 2025	3.400%	500		500
2026 Notes	September 15, 2026	2.550%	400		400
2026-B Notes	November 15, 2026	Floating(2)	500		—
2027-B Notes	March 15, 2027	Floating(2)	350		350
2027-C Notes	March 15, 2027	5.100%	750		750
2027 Notes	June 15, 2027	3.430%	500		500
2028 Notes	May 15, 2028	4.350%	500		—
2028 Merger Notes	May 25, 2028	4.597%	1,112		1,112
2029-B Notes	March 15, 2029	5.050%	750		750
2029 Notes	April 15, 2029	3.950%	1,000		1,000
2030 Notes	May 1, 2030	3.200%	750		750
2030-B Notes	May 15, 2030	4.600%	500		—
2031 Notes	March 15, 2031	2.250%	500		500
2031-B Notes	March 15, 2031	5.200%	500		500
2032 Notes	April 15, 2032	4.050%	850		850
2034 Notes	March 15, 2034	5.300%	650		650
2035 Notes	May 15, 2035	5.150%	500		—
2038 Merger Notes	May 25, 2038	4.985%	211		211
2045 Notes	November 15, 2045	4.500%	550		550
2046 Notes	December 15, 2046	4.420%	400		400
2048 Merger Notes	May 25, 2048	5.085%	391		391
2050 Notes	May 1, 2050	3.800%	750		750
2051 Notes	March 15, 2051	3.350%	500		500
2052 Notes	April 15, 2052	4.500%	1,150		1,150
Principal amount			14,564		13,093
Adjustment from principal amount to carrying amount(1)			(139)		(145)
Carrying amount			$	14,425	$	12,948

(1)The carrying amount includes unamortized discounts, debt issuance costs, and fair value adjustments related to the DPS Merger.

(2)Our floating rate notes bear interest at a rate equal to Compounded SOFR (as defined in the respective supplemental indenture) plus a spread of 0.580% and 0.880% for the 2026-B Notes and the 2027-B Notes, respectively.

On May 5, 2025, we completed the issuance of the 2026-B Notes, 2028 Notes, 2030-B Notes, and 2035 Notes, with an aggregate principal amount of $2 billion. The discount associated with these notes was approximately $4 million, and we incurred $10 million in debt issuance costs. The proceeds from the issuance were used for the repayment of outstanding commercial paper borrowings.

The 2025 Merger Notes were repaid at maturity using proceeds from commercial paper.

VARIABLE-RATE BORROWING ARRANGEMENTS

Bridge Credit Agreement

In connection and concurrently with the entry into the JDE Peet's Acquisition Agreement, we entered into the Bridge Credit Agreement on August 24, 2025, among KDP, as borrower, with the lenders party thereto, and Morgan Stanley Senior Funding, Inc., as administrative agent. We incurred approximately $93 million in deferred financing fees related to the issuance, which were capitalized and are being amortized to Interest expense, net over the term of the Bridge Credit Agreement. We will owe additional fees of approximately €36 million on December 22, 2025, to the extent that the Bridge Credit Agreement has not been terminated or the amounts available under the facility remain undrawn.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The Bridge Credit Agreement provides for a 364-day senior unsecured bridge loan facility in an aggregate amount not to exceed €16.2 billion. The proceeds of the Bridge Credit Agreement may be used to fund the JDE Peet's Acquisition. Obligations under the Bridge Credit Agreement are guaranteed by our subsidiaries that guarantee our revolving credit facility and outstanding senior notes.

Borrowings under the Bridge Credit Agreement will bear interest at a rate per annum equal to EURIBOR plus a margin of 0.750% to 2.500% depending on the rating of certain of our index debt and the period for which the bridge loans remain outstanding after the initial funding date. The undrawn commitments under the bridge loan facility will be subject to a commitment fee commencing on the 121st day after the date the Bridge Credit Agreement became effective at a per annum rate of 0.060% to 0.200% depending on the rating of certain of our index debt. The Bridge Credit Agreement contains customary representations and warranties for investment grade financings. The Bridge Credit Agreement also contains (i) certain affirmative covenants, including those that impose reporting and/or operating obligations on us and our subsidiaries, (ii) certain negative covenants that generally limit, subject to exceptions, us and our subsidiaries from taking certain actions, including incurring liens and consummating certain fundamental changes, (iii) financial covenants in the form of a minimum interest coverage ratio of 3.25 to 1.00 that will apply after the initial funding date and a maximum total net leverage ratio of 6.25 to 1.00 that will apply after the initial funding date only upon a downgrade in the ratings of certain of our index debt, and (iv) events of default customary for financings of this type.

As of September 30, 2025, the full amount of this facility remains available and undrawn.

Term Loan Agreement

On January 31, 2025, we repaid the amount outstanding under the Term Loan Agreement using proceeds from commercial paper. On May 7, 2025, we terminated our Term Loan Agreement. We had no outstanding loan balances as of the termination date.

Revolving Credit Agreement

On March 31, 2025, we entered into the 2025 Revolving Credit Agreement among KDP, as borrower, the lenders and issuing banks party thereto, and JPMorgan Chase, Bank, N.A., as administrative agent. We incurred approximately $4 million in deferred financing fees related to the issuance. On September 30, 2025, the 2025 Revolving Credit Agreement was amended to increase the capacity to $4.3 billion.

The following table summarizes information about the 2025 Revolving Credit Agreement:


				Amounts Outstanding
(in millions)	Maturity Date	Capacity		September 30, 2025		December 31, 2024
2025 Revolving Credit Agreement(1)	March 31, 2030	$	4,300	$	—	$	—

(1)The 2025 Revolving Credit Agreement has a $200 million letter of credit limit, with none utilized as of September 30, 2025.

The 2025 Revolving Credit Agreement replaced our previous revolving credit agreement.

Borrowings under the 2025 Revolving Credit Agreement will bear interest at a rate per annum equal to, at our option, the term SOFR rate plus a margin of 0.750% to 1.250% or the alternative base rate plus a margin of zero to 0.250%, in each case, depending on the rating of certain of our index debt. The 2025 Revolving Credit Agreement contains customary representations and warranties for investment grade financings. The 2025 Revolving Credit Agreement also contains (i) certain customary affirmative covenants, including those that impose certain reporting and/or performance obligations on us and our subsidiaries, (ii) certain customary negative covenants that generally limit, subject to various exceptions, us and our subsidiaries from taking certain actions, including, without limitation, incurring liens and consummating certain fundamental changes, (iii) a financial covenant in the form of a minimum interest coverage ratio of 3.25 to 1.00, and (iv) customary events of default (including a change of control) for financings of this type.

As of September 30, 2025, we were in compliance with our minimum interest coverage ratio with respect to the 2025 Revolving Credit Agreement.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Commercial Paper Program


	Third Quarter						First Nine Months
(in millions, except %)	2025			2024			2025			2024
Weighted average commercial paper borrowings	$	1,898		$	2,163		$	2,296		$	2,299
Weighted average borrowing rates	4.57		%	5.50		%	4.63		%	5.57		%

Letter of Credit Facility

In addition to the portion of the 2025 Revolving Credit Agreement reserved for issuance of letters of credit, we have an incremental letter of credit facility. Under this facility, $150 million is available for the issuance of letters of credit, $72 million of which was utilized as of September 30, 2025 and $78 million of which remains available for use.

FAIR VALUE DISCLOSURES

The fair value of our commercial paper approximates the carrying value and is considered Level 2 within the fair value hierarchy.

The fair values of our Notes are based on current market rates available to us and are considered Level 2 within the fair value hierarchy. The difference between the fair value and the carrying value represents the theoretical net premium or discount that would be paid or received to retire all the Notes and related unamortized costs to be incurred at such date. The fair value of our Notes was $13,597 million and $12,036 million as of September 30, 2025 and December 31, 2024, respectively.

4. Goodwill and Intangible Assets

GOODWILL

Changes in the carrying amount of goodwill by reportable segment are as follows:


(in millions)	U.S. Refreshment Beverages		U.S. Coffee		International		Total
Balance as of December 31, 2024	$	8,855	$	8,622	$	2,576	$	20,053
Acquisitions(1)	15		—		—		15
Foreign currency translation	—		—		130		130
Balance as of September 30, 2025	$	8,870	$	8,622	$	2,706	$	20,198

(1)Acquisition activity during the first nine months of 2025 represents the goodwill recorded as a result of the Dyla Acquisition. Refer to Note 2 for additional information.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

INTANGIBLE ASSETS OTHER THAN GOODWILL

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


	September 30, 2025						December 31, 2024
(in millions)	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Intangible assets with definite lives:
Acquired technology	$	1,146	$	(676)	$	470	$	1,146	$	(621)	$	525
Customer relationships	683		(293)		390		666		(270)		396
Contractual arrangements	145		(28)		117		144		(21)		123
Trade names	126		(126)		—		126		(124)		2
Brands	77		(38)		39		51		(32)		19
Distribution rights	68		(31)		37		66		(23)		43
Other	25		(1)		24		—		—		—
Total intangible assets with definite lives	$	2,270	$	(1,193)	$	1,077	$	2,199	$	(1,091)	$	1,108
Intangible assets with indefinite lives:
Brands					$	20,019					$	19,848
Trade names					2,478						2,478
Distribution rights					212						200
Total intangible assets with indefinite lives					22,709						22,526
Total intangible assets, net					$	23,786					$	23,634

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


	Third Quarter				First Nine Months
(in millions)	2025		2024		2025		2024
Amortization expense	$	33	$	33	$	101	$	100

5. Derivatives

We are exposed to market risks arising from adverse changes in interest rates, FX rates, and commodity prices. We manage these risks through a variety of strategies, including the use of interest rate contracts, FX forward contracts, commodity forward, future, swap, and option contracts, and supplier pricing agreements. We do not hold or issue derivative financial instruments for trading or speculative purposes.

All derivative instruments are recorded on a gross basis, including those subject to master netting arrangements.

We formally designate and account for certain interest rate contracts and FX forward contracts that meet established accounting criteria under U.S. GAAP as cash flow hedges. For such contracts, the effective portion of the gain or loss on the derivative instruments is recorded, net of applicable taxes, in AOCI. When net income is affected by the variability of the underlying transaction, the applicable offsetting amount of the gain or loss from the derivative instrument deferred in AOCI is reclassified to net income. Cash flows from derivative instruments designated in a qualifying hedging relationship are classified in the same category as the cash flows from the hedged items. If a cash flow hedge were to cease to qualify for hedge accounting, or were terminated, the derivatives would continue to be carried on the balance sheet at fair value until settled, and hedge accounting would be discontinued prospectively. If the underlying hedged transaction ceases to exist, any associated amounts reported in AOCI would be reclassified to earnings at that time.

For derivatives that are not designated or for which the designated hedging relationship is discontinued, the gain or loss on the instrument is recognized in earnings in the period of change.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

We have exposure to credit losses from derivative instruments in an asset position in the event of nonperformance by the counterparties to the agreements. Historically, we have not experienced material credit losses as a result of counterparty nonperformance. We select and periodically review counterparties based on credit ratings, limit our exposure to a single counterparty under defined guidelines, and monitor the market position of the programs upon execution of a hedging transaction and at least on a quarterly basis.

INTEREST RATES

Economic Hedges

We are exposed to interest rate risk related to our borrowing arrangements and obligations. We enter into interest rate contracts to provide predictability in our overall cost structure and to manage the balance of fixed-rate and variable-rate debt. We primarily enter into receive-fixed, pay-variable and receive-variable, pay-fixed swaps, and swaption contracts. A natural hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are generally reported in Interest expense, net in the unaudited Condensed Consolidated Statements of Income. As of September 30, 2025, economic interest rate derivative instruments have maturities ranging from March 2027 to November 2046.

Cash Flow Hedges

From time to time, we designate certain interest rate contracts as cash flow hedges in order to manage the exposures resulting from changes in interest rates as described above. We had no such contracts outstanding as of September 30, 2025.

FOREIGN EXCHANGE

We are exposed to FX risk in our foreign subsidiaries and with certain counterparties in foreign jurisdictions, which may transact in currencies that are different from the functional currencies of our legal entities. Additionally, the balance sheets of these subsidiaries are subject to exposure from movements in exchange rates.

Economic Hedges

We hold FX forward contracts to economically manage the balance sheet exposures resulting from changes in the FX rates described above. The intent of these FX contracts is to minimize the impact of FX risk associated with balance sheet positions not in local currency. In these cases, a hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items.

Additionally, we have significant anticipated Euro-denominated cash outflows resulting from the intended JDE Peet's Acquisition, as described in Note 2. To reduce our exposure to exchange rate fluctuations associated with the planned acquisition consideration and related financing, we entered into FX forward contracts during the third quarter of 2025.

Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same caption of the unaudited Condensed Consolidated Statements of Income as the associated risk. As of September 30, 2025, these FX contracts have maturities ranging from October 2025 to September 2026.

Cash Flow Hedges

We designate certain FX forward contracts as cash flow hedges in order to manage the exposures resulting from changes in the FX rates described above. These designated FX forward contracts relate to forecasted inventory purchases of our foreign subsidiaries in U.S. dollars. The intent of these FX contracts is to provide predictability in our overall cost structure. As of September 30, 2025, these FX contracts have maturities ranging from October 2025 to June 2027.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

COMMODITIES

Economic Hedges

We centrally manage the exposure to volatility in the prices of certain commodities used in our production process and transportation through various derivative contracts. We generally hold some combination of future, swap, and option contracts that economically hedge certain of our risks. In these cases, a hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items or as an offset to certain costs of production. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same line item of the unaudited Condensed Consolidated Statements of Income as the hedged transaction. Unrealized gains and losses are recognized as a component of unallocated corporate costs until our reportable segments are affected by the completion of the underlying transaction, at which time the gain or loss is reflected as a component of the respective segment's income from operations. As of September 30, 2025, these commodity contracts have maturities ranging from October 2025 to July 2027.

NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS

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


(in millions)	September 30, 2025		December 31, 2024
Interest rate contracts
Forward starting swaps, not designated as hedging instruments	$	2,300	$	1,700




FX contracts
Forward contracts, not designated as hedging instruments(1)	12,418		490
Forward contracts, designated as cash flow hedges	677		486
Commodity contracts, not designated as hedging instruments(2)	607		515

(1)Includes €10 billion of FX forward contracts entered into during the third quarter of 2025 in connection with the planned JDE Peet's Acquisition.

(2)Notional value for commodity contracts is calculated as the expected volume times strike price per unit on a gross basis.

FAIR VALUE OF DERIVATIVE INSTRUMENTS

The fair values of commodity contracts, interest rate contracts, and FX forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The fair value of commodity contracts are valued using the market approach based on observable market transactions, primarily underlying commodities futures or physical index prices, at the reporting date. Interest rate contracts are valued using models based primarily on readily observable market parameters, such as SOFR forward rates, for all substantial terms of our contracts and credit risk of the counterparties. FX forward contracts are valued using quoted forward FX prices at the reporting date. Therefore, we have categorized these contracts as Level 2.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Not Designated as Hedging Instruments

The following table summarizes the location of the fair value of our derivative instruments which are not designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets. All such instruments are considered Level 2 within the fair value hierarchy.


(in millions)	Balance Sheet Location	September 30, 2025		December 31, 2024
Assets:

FX contracts	Prepaid expenses and other current assets	$	38	$	7
Commodity contracts	Prepaid expenses and other current assets	55		32

FX contracts	Other non-current assets	—		4
Commodity contracts	Other non-current assets	10		2

Liabilities:
Interest rate contracts	Other current liabilities	20		22
FX contracts	Other current liabilities	8		4
Commodity contracts	Other current liabilities	27		82
Interest rate contracts	Other non-current liabilities	332		345

Commodity contracts	Other non-current liabilities	1		3

Designated as Hedging Instruments

The following table summarizes the location of the fair value of our derivative instruments which are designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets. All such instruments are considered Level 2 within the fair value hierarchy.


(in millions)	Balance Sheet Location	September 30, 2025		December 31, 2024
Assets:
FX contracts	Prepaid expenses and other current assets	$	7	$	41
FX contracts	Other non-current assets	3		—



Liabilities:
FX contracts	Other current liabilities	10		—

FX contracts	Other non-current liabilities	1		—

IMPACT OF DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS

The following table presents the amount of (gains) losses, net, recognized in the unaudited Condensed Consolidated Statements of Income related to derivative instruments not designated as hedging instruments under U.S. GAAP during the periods presented. Amounts include both realized and unrealized gains and losses.


	Income Statement Location		Third Quarter						First Nine Months
(in millions)		2025			2024			2025			2024
Interest rate contracts	Interest expense, net		$	(1)		$	(66)		$	(35)		$	(14)

FX contracts	Cost of sales		(3)			(2)			(6)			(4)
FX contracts	Other income, net		(35)			6			(21)			(2)
Commodity contracts	Cost of sales		(50)			7			(77)			29
Commodity contracts	SG&A expenses		(11)			20			(11)			11

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

IMPACT OF CASH FLOW HEDGES

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


	Income Statement Location		Third Quarter						First Nine Months
(in millions)		2025			2024			2025			2024
Interest rate contracts	Interest expense, net		$	(3)		$	(3)		$	(10)		$	(9)
FX contracts	Cost of sales		(4)			(1)			(17)			1

We expect to reclassify approximately $13 million of pre-tax net gains and $3 million of pre-tax net losses from AOCI into net income during the next twelve months related to interest rate contracts and FX contracts, respectively.

6. Leases

The following table presents the components of lease cost:


	Third Quarter				First Nine Months
(in millions)	2025		2024		2025		2024
Operating lease cost	$	46	$	42	$	136	$	127
Finance lease cost
Amortization of right-of-use assets	28		33		84		93
Interest on lease liabilities	10		8		28		22
Variable lease cost(1)	9		9		27		29
Short-term lease cost	—		1		—		2
Sublease income	—		(1)		—		(1)
Total lease cost	$	93	$	92	$	275	$	272

(1)Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation.

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


	First Nine Months
(in millions)	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	130	$	121
Operating cash flows from finance leases	27		22
Financing cash flows from finance leases	96		83
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	52		60
Finance leases	157		128

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

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


	September 30, 2025		December 31, 2024
Weighted average discount rate
Operating leases	5.3	%	5.3	%
Finance leases	4.7	%	4.5	%
Weighted average remaining lease term
Operating leases	8 years		9 years
Finance leases	9 years		9 years

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Future minimum lease payments for non-cancellable leases that have commenced and are reflected on the unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 were as follows:


(in millions)	Operating Leases		Finance Leases
Remainder of 2025	$	31	$	43
2026	172		213
2027	150		123
2028	119		112
2029	111		106
2030	90		95
Thereafter	418		345
Total future minimum lease payments	1,091		1,037
Less: imputed interest	(211)		(183)
Present value of minimum lease payments	$	880	$	854

SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED

As of September 30, 2025, we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $205 million. These leases are expected to commence between the fourth quarter of 2025 through 2027, with initial lease terms ranging from 5 years to 10 years.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

7. Segments

Our operating and reportable segments consist of the following:

The U.S. Refreshment Beverages segment reflects sales in the U.S. from the manufacture and distribution of branded concentrates, syrups, and finished beverages, including the sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
The U.S. Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single-serve brewers, and accessories, and other coffee products to partners, retailers, and directly to consumers through the Keurig.com website.
The International segment reflects sales in international markets, including the following:

◦Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrups, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.

◦Sales in Canada from the manufacture and distribution of finished goods relating to our K-Cup pods, single-serve brewers, and other coffee products.

Segment results are based on management reports provided to the CODM, which is Tim Cofer, our CEO. Net sales and income from operations are the significant financial measures used to assess the operating performance of our operating segments. The CODM periodically monitors our actual results and remaining forecast versus our annual budget for these financial measures, and this information is used to assess performance of the reportable segments, determine the payout of short-term incentive plan compensation, and to establish management's base salaries.

Intersegment sales are recorded at cost and are eliminated in the unaudited Condensed Consolidated Statements of Income. We have not provided disclosures of intersegment sales or total assets for each reportable segment, as our CODM does not review and is not provided with this information. "Other segment (income) expense" includes Other operating expense (income), net, as well as other financial statement captions for infrequent charges, such as impairment of goodwill or intangible assets, used to arrive at "Income from operations - reportable segments". "Unallocated corporate costs" are excluded from our measurement of segment performance and include unrealized commodity derivative gains and losses and certain general corporate expenses.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Information about our operations and significant expenses by reportable segment is as follows:


(in millions)	U.S. Refreshment Beverages		U.S. Coffee		International		Total
Third Quarter of 2025
Net sales	$	2,735	$	991	$	580	$	4,306
Cost of sales	1,120		586		287
SG&A expenses	813		166		140
Other segment (income) expense	—		2		—
Income from operations - reportable segments	$	802	$	237	$	153	$	1,192
Unallocated corporate costs							(197)
Income from operations							995
Interest expense, net							188



Other income, net							(45)
Income before provision for income taxes							$	852

Third Quarter of 2024
Net sales	$	2,390	$	976	$	525	$	3,891
Cost of sales	946		554		248
SG&A expenses	722		167		128
Other segment (income) expense	—		1		(8)
Income from operations - reportable segments	$	722	$	254	$	157	$	1,133
Unallocated corporate costs							(231)
Income from operations							902
Interest expense, net							106



Other income, net							(6)
Income before provision for income taxes							$	802

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)


(in millions)	U.S. Refreshment Beverages		U.S. Coffee		International		Total
First Nine Months of 2025
Net sales	$	7,718	$	2,816	$	1,570	$	12,104
Cost of sales	3,156		1,660		775
SG&A expenses	2,361		480		411
Other segment (income) expense	(1)		4		(2)
Income from operations - reportable segments	$	2,202	$	672	$	386	$	3,260
Unallocated corporate costs							(566)
Income from operations							2,694
Interest expense, net							516



Other income, net							(52)
Income before provision for income taxes							$	2,230

First Nine Months of 2024
Net sales	$	6,890	$	2,837	$	1,554	$	11,281
Cost of sales	2,696		1,577		743
SG&A expenses	2,141		512		400
Other segment (income) expense	(1)		18		(8)
Income from operations - reportable segments	$	2,054	$	730	$	419	$	3,203
Unallocated corporate costs							(675)
Income from operations							2,528
Interest expense, net							488



Other income, net							(28)
Income before provision for income taxes							$	2,068

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

8. Revenue

The following table disaggregates our revenue by product portfolio and by reportable segment:


(in millions)	U.S. Refreshment Beverages		U.S. Coffee		International		Total
Third Quarter of 2025
LRB	$	2,652	$	21	$	371	$	3,044
K-Cup pods	—		782		153		935
Appliances	—		167		16		183
Other	83		21		40		144
Net sales	$	2,735	$	991	$	580	$	4,306

Third Quarter of 2024
LRB	$	2,351	$	12	$	348	$	2,711
K-Cup pods	—		733		126		859
Appliances	—		203		19		222
Other	39		28		32		99
Net sales	$	2,390	$	976	$	525	$	3,891

First Nine Months of 2025
LRB	$	7,504	$	49	$	1,022	$	8,575
K-Cup pods	—		2,272		401		2,673
Appliances	—		405		36		441
Other	214		90		111		415
Net sales	$	7,718	$	2,816	$	1,570	$	12,104

First Nine Months of 2024
LRB	$	6,785	$	26	$	1,041	$	7,852
K-Cup pods	—		2,225		359		2,584
Appliances	—		496		49		545
Other	105		90		105		300
Net sales	$	6,890	$	2,837	$	1,554	$	11,281

LRB represents net sales of owned and partner brands within our portfolio and includes branded concentrates, syrups, and finished beverages, including contract manufacturing of KDP branded products for our bottlers and distributors. K-Cup pods represents net sales from owned brands, partner brands, and private label owners. Net sales for partner brands and private label owners are contractual and long-term in nature.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

9. Earnings Per Share


	Third Quarter				First Nine Months
(in millions, except per share data)	2025		2024		2025		2024
Net income	$	662	$	616	$	1,726	$	1,585

Weighted average common shares outstanding	1,358.5		1,356.2		1,358.0		1,364.2
Dilutive effect of stock-based awards	4.4		5.7		4.7		6.2
Weighted average common shares outstanding and common stock equivalents	1,362.9		1,361.9		1,362.7		1,370.4

Basic EPS	$	0.49	$	0.45	$	1.27	$	1.16
Diluted EPS	0.49		0.45		1.27		1.16

Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation	1.3		0.8		0.4		0.8

10. Stock-Based Compensation

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


	Third Quarter				First Nine Months
(in millions)	2025		2024		2025		2024
Total stock-based compensation expense	$	25	$	24	$	70	$	76
Income tax benefit	(5)		(4)		(13)		(12)
Stock-based compensation expense, net of tax	$	20	$	20	$	57	$	64

RESTRICTED SHARE UNITS

The table below summarizes RSU activity:


	RSUs	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2024	12,488,799	$	29.70	2.0	$	401
Granted(1)	3,569,889	30.65
Vested and released	(2,762,065)	30.53			92
Forfeited	(1,176,777)	29.89
Outstanding as of September 30, 2025	12,119,846	$	29.77	1.9	$	309

(1)Beginning in 2025, new RSUs granted vest ratably over 4 years.

As of September 30, 2025, there was $178 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.0 years.

PERFORMANCE SHARE UNITS

In March 2025, the Remuneration & Nomination Committee of the Board approved PSU grants. Each PSU represents the right to receive one share of our common stock. The PSUs vest 3 years from the grant date, to the extent that the performance metrics are achieved during a predetermined performance period. The performance metrics include net sales growth and adjusted diluted EPS growth, as defined in the respective grant agreement, and are measured on a constant currency basis. The payout percentage for all PSUs granted ranges from 0% to 200%. Beginning in 2025, the fair value of PSUs is determined based on the number of units granted and the grant date price of common stock.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The table below summarizes PSU activity:


	PSUs	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in millions)
Balance as of December 31, 2024	—	$	—	0.0	$	—
Granted	464,354	30.61

Forfeited or expired	(2,628)	30.71
Balance as of September 30, 2025	461,726	$	30.61	2.4	$	12

As of September 30, 2025, there was $9 million of unrecognized compensation cost related to unvested PSUs that is expected to be recognized over a weighted average period of 2.4 years.

11. Investments

The following table summarizes our investments in unconsolidated affiliates:


(in millions)	September 30, 2025		December 31, 2024
Nutrabolt(1)	$	1,155	$	1,097
Chobani	329		313
Tractor	53		56
Athletic Brewing(2)	53		47


Other	27		30
Investments in unconsolidated affiliates	$	1,617	$	1,543

(1)We hold a 35.8% interest on an as-converted basis in Nutrabolt, consisting of 30.4% in Class A preferred shares acquired through our December 2022 investment, which are treated as in-substance common stock, and 5.4% in Class B common shares earned through the achievement of certain milestones included in our distribution agreement with Nutrabolt.

(2)During the first quarter of 2025, we received additional equity interests in Athletic Brewing in accordance with our investment agreement, raising our total interest to 12.2%. This earned equity is recorded in Other income, net in the unaudited Condensed Consolidated Statements of Income.

12. Income Taxes

Our effective tax rates were as follows:


	Third Quarter				First Nine Months
	2025		2024		2025		2024
Effective tax rate	22.3	%	23.2	%	22.6	%	23.4	%

For the third quarter of 2025, the change in our effective tax rate was driven by a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions and a favorable comparison to a true-up of prior year tax provisions in the third quarter of 2024, partially offset by an increase in uncertain tax positions.

For the first nine months of 2025, the change in our effective tax rate was driven by a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions, which was partially offset by an increase in uncertain tax positions.

On July 4, 2025, the OBBB was signed into law in the U.S., which includes a broad range of tax reform provisions. We currently expect the impact of the OBBB to be immaterial to our consolidated financial statements, including our estimated annual effective tax rate.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

13. Accumulated Other Comprehensive (Loss) Income

The following table provides a summary of changes in AOCI, net of taxes:


(in millions)	Foreign Currency Translation Adjustments		Pension and Post-Retirement Benefit Liabilities		Cash Flow Hedges		Accumulated Other Comprehensive (Loss) Income
Third Quarter of 2025
Beginning balance	$	(78)	$	(14)	$	102	$	10
Other comprehensive loss	(30)		—		1		(29)
Amounts reclassified from AOCI	—		1		(6)		(5)
Total other comprehensive (loss) income	(30)		1		(5)		(34)
Balance as of September 30, 2025	$	(108)	$	(13)	$	97	$	(24)

Third Quarter of 2024
Beginning balance	$	(55)	$	(14)	$	146	$	77
Other comprehensive (loss) income	(69)		(1)		10		(60)
Amounts reclassified from AOCI	—		1		(4)		(3)
Total other comprehensive (loss) income	(69)		—		6		(63)
Balance as of September 30, 2024	$	(124)	$	(14)	$	152	$	14

First Nine Months of 2025
Beginning balance	$	(410)	$	(14)	$	148	$	(276)
Other comprehensive income (loss)	302		—		(31)		271
Amounts reclassified from AOCI	—		1		(20)		(19)
Total other comprehensive income (loss)	302		1		(51)		252
Balance as of September 30, 2025	$	(108)	$	(13)	$	97	$	(24)

First Nine Months of 2024
Beginning balance	$	202	$	(14)	$	127	$	315
Other comprehensive (loss) income	(326)		(1)		32		(295)
Amounts reclassified from AOCI	—		1		(7)		(6)
Total other comprehensive (loss) income	(326)		—		25		(301)
Balance as of September 30, 2024	$	(124)	$	(14)	$	152	$	14

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

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


	Income Statement Caption		Third Quarter						First Nine Months
(in millions)		2025			2024			2025			2024
Pension and PRMB liabilities	SG&A expenses		$	1		$	1		$	1		$	1
Income tax benefit			—			—			—			—
Total, net of tax			$	1		$	1		$	1		$	1

Cash Flow Hedges
Interest rate contracts	Interest expense, net		$	(3)		$	(3)		$	(10)		$	(9)
FX contracts	Cost of sales		(4)			(1)			(17)			1
Total			(7)			(4)			(27)			(8)
Income tax expense			1			—			7			1
Total, net of tax			$	(6)		$	(4)		$	(20)		$	(7)

14. Other Financial Information

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS

The carrying value of cash, cash equivalents, restricted cash, and restricted cash equivalents is valued as of the balance sheet date equating fair value and is classified as Level 1. The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the unaudited Condensed Consolidated Balance Sheets to the total of the same amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows:


(in millions)	September 30, 2025		December 31, 2024
Cash and cash equivalents	$	516	$	510
Restricted cash and restricted cash equivalents	53		80
Non-current restricted cash and restricted cash equivalents	—		18
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	569	$	608

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

SELECTED BALANCE SHEET INFORMATION


(in millions)	September 30, 2025		December 31, 2024
Inventories:
Raw materials	$	700	$	524
Work-in-progress	11		9
Finished goods	1,155		798
Total	1,866		1,331
Allowance for excess and obsolete inventories	(26)		(32)
Total inventories	$	1,840	$	1,299
Prepaid expenses and other current assets:
Other receivables	$	158	$	146
Prepaid income taxes	112		33
Customer incentive programs	50		18
Derivative instruments	100		80
Prepaid marketing	27		29
Spare parts	132		126
Income tax receivable	69		75
Other	147		99
Total prepaid expenses and other current assets	$	795	$	606
Other non-current assets:
Operating lease right-of-use assets	$	835	$	880
Customer incentive programs	55		45
Derivative instruments	13		6

Equity securities(1)	32		89

Non-current restricted cash and restricted cash equivalents	—		18

Other	293		162
Total other non-current assets	$	1,228	$	1,200

(1)We sold our investment in Vita Coco and recorded a realized gain of $34 million in the first quarter of 2025.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)


(in millions)	September 30, 2025		December 31, 2024
Accrued expenses:
Accrued customer trade	$	427	$	439
Accrued compensation	202		235
Insurance reserve	75		57
Accrued interest	177		107
Accrued termination fees(1)	—		225
Accrued transferable tax credits	78		130
Other accrued expenses	437		391
Total accrued expenses	$	1,396	$	1,584
Other current liabilities:
Dividends payable	$	313	$	312
Income taxes payable	90		67
Operating lease liability	133		128
Finance lease liability	150		125
Derivative instruments	65		108
Holdback liability	53		80
Other	19		15
Total other current liabilities	$	823	$	835
Other non-current liabilities:
Operating lease liability	$	747	$	790
Finance lease liability	704		677
Mandatory redemption liability	728		689
Pension and post-retirement liability	31		31
Insurance reserves	106		95
Derivative instruments	334		348
Deferred compensation liability	33		33
Holdback liability	—		18
Other	107		72
Total other non-current liabilities	$	2,790	$	2,753

(1)We paid the termination fee related to the GHOST Transactions in full in the first quarter of 2025.

Supplier Financing Arrangements

Outstanding obligations under supplier financing arrangements, which are confirmed as valid and included in accounts payable as of September 30, 2025 and December 31, 2024, were $1,502 million and $1,740 million, respectively.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

15. Commitments and Contingencies

We are occasionally subject to litigation or other legal proceedings. Reserves are recorded for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. We had litigation reserves of $3 million and $2 million as of September 30, 2025 and December 31, 2024, respectively. We have also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. We do not believe that the outcome of these, or any other, pending legal matters, individually or collectively, will have a material adverse effect on our results of operations, financial condition, or liquidity.

ANTITRUST LITIGATION

In February 2014, TreeHouse Foods, Inc. and certain affiliated entities filed suit against KDP's wholly-owned subsidiary, Keurig (formerly known as Green Mountain Coffee Roasters, Inc.), in the U.S. District Court for the Southern District of New York ("SDNY") (TreeHouse Foods, Inc. et al. v. Green Mountain Coffee Roasters, Inc. et al.). The TreeHouse complaint asserted claims under the federal antitrust laws and various state laws, contending that Keurig had monopolized alleged markets for single serve coffee brewers and single serve coffee pods. The TreeHouse complaint sought treble monetary damages, declaratory relief, injunctive relief and attorneys' fees. In the months that followed, a number of additional actions, including claims from another coffee manufacturer (JBR, Inc.), as well as putative class actions on behalf of direct and indirect purchasers of Keurig's products, were filed in various federal district courts, asserting claims and seeking relief substantially similar to the claims asserted and relief sought in the TreeHouse complaint. Additional similar actions were filed by individual direct purchasers (including McLane Company, Inc., BJ's Wholesale Club, Inc., Winn-Dixie Stores Inc., and Bi-Lo Holding LLC) in 2019 and in 2021. All of these actions were transferred to the SDNY for coordinated pre-trial proceedings (In re: Keurig Green Mountain Single-Serve Coffee Antitrust Litigation) (the "Multidistrict Antitrust Litigation").

In July 2020, Keurig reached an agreement with one of the plaintiff groups in the Multidistrict Antitrust Litigation, the putative indirect purchaser class, to settle the claims asserted for $31 million. The settlement class consisted of individuals and entities in the United States that purchased, from persons other than Keurig and not for purposes of resale, Keurig manufactured or licensed single serve beverage portion packs during the applicable class period (beginning in September 2010 for most states). The settlement was approved and paid, and the indirect purchasers' claims have been dismissed.

Discovery in all remaining matters pending in the Multidistrict Antitrust Litigation is concluded, with the plaintiffs collectively claiming more than $5 billion of monetary damages. Keurig strongly disputes the merits of the claims and the calculation of damages. Keurig has fully briefed summary judgment motions that, if successful, would end the cases entirely. Keurig is also pursuing its opposition to direct purchaser plaintiffs' motion for class certification.

Keurig intends to continue vigorously defending the remaining lawsuits. At this time, we are unable to predict the outcome of these lawsuits, the potential loss or range of loss, if any, associated with the resolution of these lawsuits or any potential effect they may have on us or our results of operations. Accordingly, we have not accrued for a loss contingency. Additionally, as the timelines in these cases may be beyond our control, we can provide no assurance as to whether or when there will be material developments in these matters.

16. Restructuring

RESTRUCTURING PROGRAMS

Network Optimization

In March 2024, we announced a restructuring program designed to more effectively and efficiently meet the needs of consumers and customers. Our restructuring program includes the closure of certain facilities and other costs intended to optimize our manufacturing and distribution footprint throughout our operations.

The restructuring program is expected to incur pre-tax restructuring charges in an estimated range of $160 million to $180 million through 2026, primarily comprised of asset related costs.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

2023 CEO Succession and Associated Realignment

In 2023, we began to implement succession planning for our CEO, including a realignment of our executive and operating leadership team, in order to reinforce enterprise capabilities to support growth and to control costs. The program is expected to incur charges of approximately $85 million, primarily driven by severance costs, which were substantially completed as of December 31, 2024, and the sign-on bonus for our CEO.

RESTRUCTURING EXPENSES

Restructuring expenses for the defined programs were as follows:


	Third Quarter				First Nine Months
(in millions)	2025		2024		2025		2024
Network Optimization	$	26	$	24	$	38	$	45
2023 CEO Succession and Associated Realignment	—		3		—		16

RESTRUCTURING LIABILITIES

Restructuring liabilities that qualify as exit and disposal costs under U.S. GAAP are included in accounts payable and accrued expenses on the unaudited condensed consolidated financial statements. Restructuring liabilities, primarily consisting of workforce reduction costs, were as follows:


(in millions)	Restructuring Liabilities
Balance as of December 31, 2024	$	44
Charges to expense and other adjustments	(6)
Cash payments	(24)
Balance as of September 30, 2025	$	14

17. Related Parties

In February 2025, JAB BevCo B.V., a subsidiary of JAB, sold approximately 87 million shares of our common stock through an underwritten secondary offering. Upon completion of the offering on February 28, 2025, JAB beneficially owned less than 10% of our outstanding common stock, and the three members of our Board affiliated with JAB resigned. Prior to these transactions, JAB and its affiliates were included in our disclosures of related party transactions. Effective February 28, 2025, these disclosures are no longer applicable to JAB and its affiliates.

18. Subsequent Events

JV INVESTMENT

On October 26, 2025, we entered into the JV Commitment Letter, under which the JV Investors have committed to making a strategic minority investment into the Pod Manufacturing JV.

Pursuant to the JV Commitment Letter, (i) at or prior to the closing of the JV Investment, we will contribute to the Pod Manufacturing JV, either by contribution or merger of one or more of our subsidiaries, the Coffee Production Assets as well as all of our related coffee assets (including sales and distribution) in Canada and (ii) at the closing of the JV Investment, the JV Investors will contribute, through the JV Investor Partner, $4 billion in cash in exchange for a 49% interest in the Pod Manufacturing JV. The remaining 51% ownership interest will remain under our ownership. Further, the JV Commitment Letter names each of Apollo Global Securities, LLC and KKR Capital Markets, LLC as a joint lead arranger with respect to certain of the transactions.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The JV Commitment Letter sets forth each partner's rights and responsibilities with respect to the Pod Manufacturing JV, including with respect to the board of managers (a majority of which will be appointed by us), certain unanimous approval rights in favor of the JV Investor Partner, mechanisms for capital contributions to be made to the Pod Manufacturing JV, limitations on transfers by the partners, a call right exercisable by us beginning approximately 8 years following the closing, a conversion right exercisable by the JV Investor Partner approximately 15 years following the closing whereby the JV Investor Partner may elect to convert its interest in the Pod Manufacturing JV into shares of KDP, or following the Separation, the separated coffee business, and certain redemption obligations of Pod Manufacturing JV in the event of change of control transaction. It also sets forth distribution mechanics pursuant to which the Pod Manufacturing JV will make quarterly distributions of available cash (subject to certain limitations, including for operating costs and reserves) to its partners generally in proportion to their ownership interests.

The funding of the JV Investors' commitment is subject to customary conditions, including: (i) no material adverse effect having occurred on our business or the business comprising the Coffee Production Assets and all of our related coffee assets (including sales and distribution) in Canada; (ii) our payment of the applicable commitment fees and expenses; (iii) entry into definitive agreements with respect to the JV Investment and the Pod Manufacturing JV; (iv) our long-term debt maintaining a credit rating that is not lower than investment grade by at least two of S&P, Moody's, and Fitch; (v) the receipt of required regulatory approvals; (vi) the contribution of all or substantially all of the Coffee Production Assets and all of our related coffee assets (including sales and distribution) in Canada to the Pod Manufacturing JV; (vii) the closing of the JDE Peet's Acquisition; (viii) the continued operation of the Coffee Production Assets and all of our related coffee assets (including sales and distribution) in Canada in all material respects; and (ix) the continued accuracy of certain representations and warranties made by us with respect to the Coffee Production Assets and related sales and distribution assets in Canada and the Pod Manufacturing JV and our compliance of certain covenants to be set forth in the definitive agreements with respect to the JV Investment.

We intend to use the net proceeds from the JV Investment to fund a portion of the JDE Peet's Acquisition consideration and the related fees and expenses. The JV Investors will receive a 1% transaction fee upon closing (30% of which was earned at signing and payable if the JV Commitment Letter is terminated, subject to certain limited exceptions) and a 0.10% "ticking fee" for the period beginning 120 days after signing until the closing of the JV Investment. The definitive documentation for the JV Investment has not yet been finalized and may differ from the foregoing description once finalized.

PREFERRED INVESTMENT

On October 27, 2025, we entered into the Preferred Investment Agreement with the KKR Investor and the Apollo Investor. Under the Preferred Investment Agreement, we agreed to issue and sell to the Preferred Investors, and the Preferred Investors agreed to purchase from us, 3 million shares of our Convertible Preferred Stock, with a par value of $0.01 per share, for a purchase price of $1,000 per share, for an aggregate purchase price of $3 billion. The transaction is exempt from the registration requirements of the Securities Act of 1933, as amended.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The Convertible Preferred Stock will rank senior to our common stock with respect to dividend and distribution on liquidation rights. The Convertible Preferred Stock will have a liquidation preference of $1,000 per share. The holders of the Convertible Preferred Stock will be entitled to dividends at a rate of 4.75% per annum, subject to increase in certain cases, and to participate in dividends paid to holders of our common stock on an as-converted basis, provided that any such dividends received on an as-converted basis will reduce, on a dollar-for-dollar basis, the dividends holders are entitled to receive on the Convertible Preferred Stock. Dividends on the Convertible Preferred Stock will be paid in cash. We may choose to defer payment of all or part of any dividends due on the Convertible Preferred Stock; however, we will accrue additional dividends until paid in cash and we will not be able to declare or pay any dividends on or make repurchases of our common stock, subject to certain conditions. The Convertible Preferred Stock will be convertible into shares of our common stock, at our election or the holders thereof, in certain specified circumstances, at an initial conversion price of $37.25 (which price will be subject to anti-dilution adjustments, as well as an adjustment in the event that we complete the Separation). Holders may convert up to, in the aggregate, 50% of the Convertible Preferred Stock allocated among such holders and their permitted transferees pro rata at any time, and may convert the remainder following the earliest of the closing of the Separation, the 18-month anniversary of the issuance of the Convertible Preferred Stock, upon foreclosure by a lender under a bona fide loan or other financing arrangement or the 12-month anniversary of any initial public offering of the remaining beverage business if the Separation has not yet occurred. We may require, at any time after the 3-year anniversary of the issuance of the Convertible Preferred Stock to be converted if the closing price per share of our common stock exceeds 150% of the conversion price then in effect for at least twenty trading days in any period of thirty consecutive trading days. After the seventh anniversary of the issue date, we will have the option to redeem the Convertible Preferred Stock at the then-applicable redemption price. In the case of a fundamental change, we will be required to offer to repurchase the Convertible Preferred Stock at a specified price. Preferred Investors will vote with holders of our common stock on an as-converted basis, following the satisfaction of certain conditions.

The Preferred Investment is subject to customary closing conditions, including, among others: (i) the continued accuracy of the representations and warranties contained in the Preferred Investment Agreement; (ii) the performance in all material respects by each party of its respective covenants and agreements under the Preferred Investment Agreement; (iii) the expiration of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; and (iv) the substantially concurrent closing of the JDE Peet's Acquisition. We intend to use the net proceeds from the Preferred Investment to fund a portion of the consideration for the JDE Peet's Acquisition and related fees and expenses.

BRIDGE CREDIT AGREEMENT

Upon the closing of the JV Investment and the Preferred Investment, the Bridge Credit Agreement will be reduced by an amount equal to the net proceeds from the JV Investment and the Preferred Investment, subject to applicable de minimis exceptions.

INTEREST RATE CONTRACTS DESIGNATED AS CASH FLOW HEDGES

In October 2025, in order to hedge the variability in cash flows from interest rate changes associated with our planned future issuances of long-term debt, we entered into forward starting swaps with an aggregate notional amount of $1.5 billion and designated them as cash flow hedges.

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