Keurig Dr Pepper KDP · USD

SegmentsOur three 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, finished beverages, and other consumables, 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 single serve brewers, K-Cup pods, 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 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 expense (income)" includes Other operating (income) expense, 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.

Commitments and Contingencies We are occasionally subject to litigation or other legal proceedings. We accrue 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, and such accruals were $3 million and $2 million as of December 31, 2025 and 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 LITIGATIONIn February 2014, TreeHouse Foods, Inc. and certain affiliated entities filed suit against our 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.

Income TaxesIncome before provision for income taxes was as follows:For the Year Ended December 31,(in millions)202520242023U.S.$1,289 $696 $1,665 Foreign1,398 1,218 1,092 Total$2,687 $1,914 $2,757 The provision for income taxes has the following components:For the Year Ended December 31,(in millions)202520242023Current:Federal$255 $377 $270 State68 108 117 Foreign240 242 193 Total current provision$563 $727 $580 Deferred:Federal$10 $(199)$31 State13 (55)2 Foreign22 — (37)Total deferred provision45 (254)(4)Total provision for income taxes$608 $473 $576 The following tables reconcile the provision for income taxes computed at the U.S. federal statutory tax rate to the provision for income taxes reported in the Consolidated Statements of Income:For the Year Ended December 31, 2025($ in millions)AmountPercentageStatutory federal income tax rate$564 21.0 %State income taxes, net(1)59 2.2 Impact of foreign operationsIrelandStatutory tax rate difference between Ireland and U.S.(71)(2.6)Other20 0.7 Other foreign jurisdictions21 0.8 Effect of cross-border tax laws9 0.3 Tax credits(28)(1.0)Nontaxable or nondeductible items12 0.4 Changes in unrecognized tax benefits22 0.8 Total provision for income taxes$608 22.6 %(1)California, Tennessee, New Jersey, Florida, Illinois, and Texas comprise more than 50% of State income taxes, net.For the Year Ended December 31,20242023Statutory federal income tax rate21.0 %21.0 %State income taxes, net2.1 3.2 Impact of foreign operations(1.4)(1.7)Tax credits(6.2)(3.7)Valuation allowance for deferred tax assets0.6 — U.S. taxation of foreign earnings5.1 3.0 Goodwill impairment2.7 — Deferred rate change(0.4)(0.3)Uncertain tax positions— 0.1 U.S. federal provision to return0.2 — Excess tax deductions on stock-based compensation(0.2)(0.3)Other1.2 (0.4)Effective tax rate24.7 %20.

Leases The following table presents the components of lease cost:For the Year Ended December 31,(in millions)202520242023Operating lease cost$182 $170 $159 Finance lease costAmortization of right-of-use assets113 95 81 Interest on lease liabilities38 33 25 Variable lease cost(1)36 37 39 Short-term lease cost— 2 1 Sublease income— (1)— Total lease cost$369 $336 $305 (1)Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation.The following tables present supplemental information about our leases:December 31,(in millions)Balance Sheet Location20252024Assets:Operating lease right-of-use assetsOther non-current assets$845 $880 Finance lease right-of-use assets(1)Property, plant, and equipment, net919 784 Liabilities:Operating lease liabilityOther current liabilities$127 $128 Finance lease liabilityOther current liabilities179 125 Operating lease liabilityOther non-current liabilities764 790 Finance lease liabilityOther non-current liabilities745 677 (1)Amounts are presented net of accumulated amortization of $426 million and $334 million as of December 31, 2025 and 2024, respectively.For the Year Ended December 31,(in millions)202520242023Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$175 $161 $149 Operating cash flows from finance leases38 32 25 Financing cash flows from finance leases129 115 95 Right-of-use assets obtained in exchange for lease obligations:Operating leases(1)$126 $118 $112 Finance leases(2)278 196 109 (1)Includes impacts from lease modifications of $16 million during the year ended December 31, 2025.(2)Includes impacts from lease modifications of $45 million during the year ended December 31, 2025.The following table presents information about our weighted average discount rate and remaining lease term:December 31,20252024Weighted average discount rateOperating leases5.3 %5.3 %Finance leases4.8 %4.

JDE Peet's Acquisition and Related TransactionsJDE PEET'S ACQUISITIONOn August 24, 2025, we entered into the JDE Peet's Acquisition Agreement, and on January 16, 2026, pursuant to JDE Peet's Acquisition Agreement, KDP commenced 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 pure-play coffee company with a portfolio of leading brands including Jacobs, L'OR, and Peet's. The JDE Peet's Acquisition is expected to occur early in the second quarter of 2026 and is subject to the satisfaction or waiver of closing conditions, including the acceptance of the offer by the shareholders of JDE Peet's.We additionally entered into a series of transactions in order to fund a portion of the consideration of the JDE Peet's Acquisition, as described below. The JV Investment and Preferred Investment are subject to customary closing conditions, including the substantially concurrent closing of the JDE Peet's Acquisition.BORROWING ARRANGEMENTSIn connection with the JDE Peet's Acquisition, we entered into the Bridge Credit Agreement and the Delayed Draw Term Loan Agreement. Refer to Note 5 for additional information on these borrowing arrangements.JV INVESTMENTOn October 26, 2025, we entered into the JV Commitment Letter, under which we will contribute the Coffee Production Assets, as well as certain of our related coffee assets (including sales and distribution) in Canada to the Pod Manufacturing JV, and 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. On February 23, 2026, the JV Transaction Agreement was executed. Refer to Note 22 for additional information on the significant terms of the JV Transaction Agreement.PREFERRED INVESTMENTOn 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.

JDE Peet's Acquisition and Related TransactionsJDE PEET'S ACQUISITIONOn August 24, 2025, we entered into the JDE Peet's Acquisition Agreement, and on January 16, 2026, pursuant to JDE Peet's Acquisition Agreement, KDP commenced 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 pure-play coffee company with a portfolio of leading brands including Jacobs, L'OR, and Peet's. The JDE Peet's Acquisition is expected to occur early in the second quarter of 2026 and is subject to the satisfaction or waiver of closing conditions, including the acceptance of the offer by the shareholders of JDE Peet's.We additionally entered into a series of transactions in order to fund a portion of the consideration of the JDE Peet's Acquisition, as described below. The JV Investment and Preferred Investment are subject to customary closing conditions, including the substantially concurrent closing of the JDE Peet's Acquisition.BORROWING ARRANGEMENTSIn connection with the JDE Peet's Acquisition, we entered into the Bridge Credit Agreement and the Delayed Draw Term Loan Agreement. Refer to Note 5 for additional information on these borrowing arrangements.JV INVESTMENTOn October 26, 2025, we entered into the JV Commitment Letter, under which we will contribute the Coffee Production Assets, as well as certain of our related coffee assets (including sales and distribution) in Canada to the Pod Manufacturing JV, and 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. On February 23, 2026, the JV Transaction Agreement was executed. Refer to Note 22 for additional information on the significant terms of the JV Transaction Agreement.PREFERRED INVESTMENTOn 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.

We, and our third-party service providers, use information technology to support our global business processes and activities, which exposes us to cybersecurity risks. Our overall risk management system includes ongoing cybersecurity risk assessment and reporting, incident management, and a diligence and risk management process for third-party service providers. Employees with network access participate in ongoing phishing, social engineering, and cybersecurity awareness training efforts, and we also conduct periodic tabletop exercises led by external consultants.Our cybersecurity risk assessment and reporting process leverages the National Institute of Standards and Technology's Cybersecurity Framework and is managed by our CISO, whose team comprises both internal personnel and third-party cybersecurity consultants. The CISO provides periodic reports to management, including our CEO, as well as other executive leadership members, and to the Audit and Finance Committee of our Board, which has oversight for cybersecurity risk management. These reports include updates on critical cybersecurity risks and the threat landscape; updates on the status of ongoing cybersecurity improvement initiatives, the internal control environment, and ongoing internal audit activities; and, if relevant, the status of actions taken with respect to certain cybersecurity incidents identified during the period.We have an overall incident management plan, which is intended to provide guidance and protocols to facilitate timely notification and communication to key internal and external stakeholders, as appropriate, during an incident. A subset of this incident management plan is our Security Incident Response Plan, or SIRP, which is based on leading cybersecurity incident response practices. Incidents may be escalated to the CISO, our Chief Information Officer, our Chief Legal Officer, or other members of management or the Board, depending on the severity of the incident, and are handled according to the SIRP protocols, which includes incident detection and analysis; containment, eradication and recovery; and post-incident monitoring. We have developed a framework for assessing the materiality of any such incidents, including a committee responsible for determining whether the incident is material for disclosure.

Net SalesThe following table disaggregates our net sales by portfolio:(in millions)U.S. Refreshment BeveragesU.S. CoffeeInternationalTotalFor the year ended December 31, 2025LRB$10,144 $69 $1,389 $11,602 K-Cup pods— 3,213 564 3,777 Appliances— 582 64 646 Other295 126 157 578 Net sales$10,439 $3,990 $2,174 $16,603 For the year ended December 31, 2024LRB$9,196 $38 $1,332 $10,566 K-Cup pods— 3,112 502 3,614 Appliances— 694 78 772 Other135 123 141 399 Net sales$9,331 $3,967 $2,053 $15,351 For the year ended December 31, 2023LRB$8,675 $— $1,230 $9,905 K-Cup pods— 3,207 477 3,684 Appliances— 725 74 799 Other146 139 141 426 Net sales$8,821 $4,071 $1,922 $14,814 LRB represents net sales of owned and partner brands within our portfolio and includes branded concentrates, syrup, 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.