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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6. Leases
- Leases
The following table presents the components of lease cost:
| For the Year Ended December 31, | |||
|---|---|---|---|
| (in millions) | 2023 | 2022 | 2021 |
| Operating lease cost | $159 | $137 | $121 |
| Finance lease cost | |||
| Amortization of right-of-use assets | 81 | 76 | 63 |
| Interest on lease liabilities | 25 | 23 | 18 |
| Variable lease cost(1) | 39 | 35 | 31 |
| Short-term lease cost | 1 | 2 | — |
| Sublease income | — | — | (1) |
| Total lease cost | $305 | $273 | $232 |
(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 the Company's leases:
| For the Year Ended December 31, | |||
|---|---|---|---|
| (in millions) | 2023 | 2022 | 2021 |
| Cash paid for amounts included in the measurement of lease liabilities: | |||
| Operating cash flows from operating leases | $149 | $125 | $113 |
| Operating cash flows from finance leases | 25 | 23 | 18 |
| Financing cash flows from finance leases | 95 | 90 | 54 |
| Right-of-use assets obtained in exchange for lease obligations: | |||
| Operating leases | $112 | $320 | $293 |
| Finance leases | 109 | 104 | 408 |
The following table presents information about the Company's weighted average discount rate and remaining lease term:
| December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Weighted average discount rate | ||
| Operating leases | 5.3% | 5.0% |
| Finance leases | 3.9% | 3.7% |
| Weighted average remaining lease term | ||
| Operating leases | 10 years | 11 years |
| Finance leases | 9 years | 9 years |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows:
| (in millions) | Operating Leases | Finance Leases |
|---|---|---|
| 2024 | $143 | $128 |
| 2025 | 149 | 124 |
| 2026 | 137 | 162 |
| 2027 | 114 | 74 |
| 2028 | 90 | 59 |
| Thereafter | 538 | 311 |
| Total future minimum lease payments | 1,171 | 858 |
| Less: imputed interest | (264) | (132) |
| Present value of minimum lease payments | $907 | $726 |
SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED
As of December 31, 2023, the Company has entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $169 million. These leases will commence between 2024 and 2026, with initial lease terms ranging from 4 to 10 years.
ASSET SALE-LEASEBACK TRANSACTIONS
The Company has entered into a number of asset sale-leaseback transactions with a single sponsor, the Veyron SPEs. The following table presents details of the transactions. Gains on the sale-leasebacks are recorded in Other operating income, net, and the leasebacks are accounted for as operating leases.
| (in millions) | Sale Proceeds | Carrying Value | Gain on Sale |
|---|---|---|---|
| March 31, 2023(1) | $7 | $1 | $6 |
| March 31, 2022(2) | 77 | 39 | 38 |
| November 30, 2022(3) | 26 | 12 | 14 |
| December 14, 2022(1) | 65 | 35 | 30 |
| December 29, 2021(4) | 102 | 32 | 70 |
(1)Each sale-leaseback transaction included one distribution property.
(2)The sale-leaseback transaction included one manufacturing property and one distribution property.
(3)The sale-leaseback transaction included one manufacturing property and one multipurpose property.
(4)The sale-leaseback transaction included two manufacturing properties and two distribution properties.
The initial term of each leaseback is 15 years, with two 10-year renewal options. The renewal options are not reasonably assured as (i) the Company's position that the dynamic environment in which it operates precludes the Company's ability to be reasonably certain of exercising the renewal options in the distant future and (ii) the options are contingent on the Company remaining investment grade and no change-in-control as of the end of the lease term. Each leaseback has a RVG. Refer to Note 18 for additional information about RVGs associated with asset sale-leaseback transactions.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.