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Keurig Dr Pepper Annual Report, Year Ended Dec 31, 2010

Filing Date
Filed February 22, 2011
Period End
December 31, 2010
Security
KDP
One revenue dollarkept$0.09
In the record · 2016–202610-K1210-Q338-K216

KDP filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 216 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jun ’17Jun ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed February 22, 2011. Cited figures are marked; the original filing is the authoritative source.

Dr Pepper Snapple Group, Inc. reported net sales of $5.64 billiona for 2010, up $105 million, or 2%, from 2009, and net income of $528 million, compared with $555 million in 2009.

Diluted EPS was $2.17b in both years. The company is a non-alcoholic beverage brand owner, manufacturer and distributor in the U.S., Canada and Mexico, with 89% of 2010 net sales from the U.S. Its three segments are Beverage Concentrates ($1.16 billion net sales), Packaged Beverages ($4.10 billion) and Latin America Beverages ($382 million). Beverage Concentrates was the largest contributor to segment operating profit at $745 million.

The year's largest financial developments were two one-time licensing payments that were recorded as deferred revenue: $900 millionc from PepsiCo in February 2010 and $715 million from Coca-Cola in October 2010. Both are being recognized as net sales ratably over an estimated 25-year customer relationship life. Operating cash flow rose to $2.54 billion from $865 million in 2009, primarily because of these receipts.

The company repurchased about 31 million shares for approximately $1.1 billiond and paid $194 million in dividends. Dividends declared totaled $0.90 per share for 2010, versus $0.15 in 2009. Balance sheet activity included a $573 million payment on the 2018 Notes, including a $96 million premium, which produced a $100 million loss on early extinguishment of debt.

Total indebtedness was $2,094 million at year-end, and the company issued $500 million of 2.90% senior notes in January 2011. Interest expense fell to $128 million from $243 million. The filing also flags risks including dependence on large retailers, reliance on third-party bottlers, goodwill and intangible impairment exposure (intangibles were about $5.7 billion of $8.9 billion total assets), and future tax payments of approximately $90 million in 2011 and $500 million in 2012 tied to the PepsiCo and Coca-Cola agreements.

02—Key points

Key Highlights

  1. Net sales of $5.64 billion in 2010, up $105 million, or 2%, from $5.53 billion in 2009.
  2. Net income of $528 million in 2010 versus $555 million in 2009; diluted EPS of $2.17 in both years.
  3. Received one-time nonrefundable payments of $900 million from PepsiCo and $715 million from Coca-Cola, recorded as deferred revenue and recognized over an estimated 25-year period.
  4. Operating cash flow of $2.54 billion in 2010, compared with $865 million in 2009.
  5. Repurchased approximately 31 million shares for about $1.1 billion in 2010 and declared dividends of $0.90 per share.
  6. Early retirement of $476 million of 2018 Notes produced a $100 million loss on extinguishment of debt; interest expense decreased to $128 million from $243 million.
  7. Total indebtedness of $2,094 million at December 31, 2010, with a further $500 million of senior notes issued in January 2011.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2010, Keurig Dr Pepper kept $0.09.

  1. Revenue$5.64B100.0%
  2. Cost of revenue−$2.24B39.8%
  3. Gross profit$3.39B60.2%
  4. Operating costs−$2.37B42.0%
  5. Operating income$1.02B18.2%
  6. Interest, other & tax−$497.0M8.8%
  7. Net income$528.0M9.4%
Computed from 10-KFY2010filed February 22, 2011Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2010 revenue went

$5.64B
  • Cost of revenue: $2.24B, 40% of revenue
  • SG&A: $2.23B, 40% of revenue
  • Net income: $528.0M, 9.4% of revenue
  • R&D: $16.0M, 0.3% of revenue
  • Other operating costs: $119.0M, 2.1% of revenue
  • Interest, other & tax: $497.0M, 8.8% of revenue

Kept 9.4% as net incomeNet income $528.0M · 9.4%R&D $16.0M · 0.3%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2010filed February 22, 2011
Revenue$5.64B60.2% Gross MarginNet Income$528.00M9.4% Net MarginEPS (Diluted)$2.17Total Assets$8.86BCash & Equivalents$315.00MFree Cash Flow$2.29B

Financial Statements

FY2010 against FY2009

Line itemFY2010FY2009Change
Revenue$5.64B$5.53B+1.9%
Cost of Revenue$2.24B$2.23B+0.4%
Gross Profit$3.39B$3.30B+2.9%
R&D Expenses$16.00M$15.00M+6.7%
SG&A Expenses$2.23B$2.13B+4.6%
Operating Income$1.02B$1.08B−5.5%
Interest Expense$128.00M$243.00M−47.3%
Net Income$528.00M$555.00M−4.9%
EPS (Basic)$2.19$2.18+0.5%
EPS (Diluted)$2.17$2.170.0%
Shares Outstanding (Basic)240.40M254.20M−5.4%
Shares Outstanding (Diluted)242.60M255.20M−4.9%

05—Questions

Frequently Asked Questions

  1. What drove the increase in operating cash flow in 2010?

    The filing attributes the $1,670 million increase in net cash provided by operating activities mainly to the receipt of separate one-time nonrefundable cash payments of $900 million from PepsiCo and $715 million from Coca-Cola, both recorded as deferred revenue.

  2. Will the PepsiCo and Coca-Cola payments affect future reported revenue?

    Yes. Both payments are recognized as net sales ratably over an estimated 25-year life of the customer relationship, so they add to reported net sales over time rather than all at once. The filing reports $37 million of revenue recognized under these licenses in 2010.

  3. How much did the company spend returning cash to shareholders in 2010?

    The company repurchased approximately 31 million shares valued at about $1,113 million and paid $194 million in dividends. Dividends declared were $0.90 per share in 2010, compared with $0.15 per share in 2009.

  4. What were the main risks identified in the filing?

    The filing highlights intense industry competition, dependence on a small number of large retailers and on third-party bottlers, changing consumer preferences, raw material cost volatility, and the possibility of future goodwill or intangible asset impairment, given intangibles of about $5.7 billion out of $8.9 billion in total assets. It also cites total indebtedness of $2,094 million and future tax payments of about $90 million in 2011 and $500 million in 2012.

  5. What did the company do with its debt in 2010?

    It repaid the $405 million Revolver balance in the first quarter and completed a December 2010 tender offer that retired about $476 million of its 6.82% 2018 Notes at a premium, for a total payment of $573 million including the premium. Subsequently, in January 2011, it issued $500 million of 2.90% senior notes due 2016.

06—Continue

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