Keurig Dr Pepper Inc
For the period ended Dec 31, 2023. Filed Feb 22, 2024.
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FY2023 · Filed Feb 22, 2024
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19. Restructuring and Integration Costs
- Restructuring and Integration Costs
RESTRUCTURING PROGRAMS
2023 CEO Succession and Associated Realignment
In 2023, the Company began to enact several organization movements to ensure succession plans, to reinforce enterprise capabilities to support growth, and to control costs. A key component of the program was the appointment of a Chief Operating Officer, effective November 6, 2023, with the expectation that the new Chief Operating Officer will succeed Robert Gamgort as CEO of the Company during the second quarter of 2024. The Company is also realigning its executive and operating leadership structure to enable faster decision making and to better support various strategic initiatives of the Company. The program is expected to incur charges of approximately $52 million, primarily driven by severance costs, which are expected to be incurred through 2024, and the sign-on bonus for the Company’s new Chief Operating Officer.
DPS Integration Program
As part of the DPS Merger, the Company developed a program to deliver $600 million in synergies over a three-year period through supply chain optimization, reduction of indirect spend through new economies of scale, elimination of duplicative support functions, and advertising and promotion optimization. Although the program was initially expected to be completed in 2021, as a result of delays due to COVID-19, KDP continued to recognize expenditures for certain initiatives which began during the integration period through December 31, 2022. The restructuring and integration program resulted in cumulative pre-tax charges of approximately $962 million, primarily consisting of professional fees related to the integration and transformation and costs associated with severance and employee terminations.
Restructuring and integration charges for the defined programs during the years ended December 31, 2023, 2022, and 2021 were as follows:
| Year Ended December 31, | |||
|---|---|---|---|
| (in millions) | 2023 | 2022 | 2021 |
| 2023 CEO Succession and Associated Realignment | $35 | $— | $— |
| DPS Integration | — | 172 | 202 |
| Total restructuring and integration charges | $35 | $172 | $202 |
Restructuring liabilities, primarily consisting of workforce reduction costs, as of December 31, 2023 and 2022 were as follows:
| (in millions) | Restructuring Liabilities |
|---|---|
| Balance as of December 31, 2021 | $19 |
| Charges to expense | 66 |
| Cash payments | (30) |
| Balance as of December 31, 2022 | 55 |
| Charges to expense | 18 |
| Cash payments | (46) |
| Balance as of December 31, 2023 | $27 |
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