Snapple 2010 Annual Report Download - page 89

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Land, buildings and improvements included $21 million and $22 million of assets at cost under capital lease as of December 31,
2010 and 2009, respectively. Machinery and equipment included $1 million of assets at cost under capital lease as of December 31,
2010 and 2009. The net book value of assets under capital lease was $14 million and $16 million as of December 31, 2010 and
2009, respectively.
Depreciation expense amounted to $185 million, $167 million and $141 million in 2010, 2009 and 2008, respectively.
Depreciation expense was comprised of $74 million, $67 million and $53 million in cost of sales and $111 million, $100 million
and $88 million in depreciation and amortization on the Consolidated Statements of Operations in 2010, 2009 and 2008, respectively.
The depreciation expense above also includes the charge to income resulting from amortization of assets recorded under capital
leases.
Capitalized interest was $3 million during 2010, and $8 million during both 2009 and 2008.
6. Investments in Unconsolidated Subsidiaries
The Company has an investment in a 50% owned Mexican joint venture with Acqua Minerale San Benedetto which gives it
the ability to exercise significant influence over operating and financial policies of the investee. The joint venture is not a variable
interest entity and the investment represents a noncontrolling ownership interest and is accounted for under the equity method of
accounting. The carrying value of the investment was $11 million and $9 million as of December 31, 2010 and 2009, respectively.
The Company's equity investment does not have a readily determinable fair value as the joint venture is not publicly traded. The
Company's proportionate share of the net income resulting from its investment in the joint venture is reported under the line item
captioned equity in earnings of unconsolidated subsidiaries, net of tax, in the Consolidated Statements of Operations. During the
fourth quarter of 2009, the Company received $5 million from the joint venture as its share of dividends declared by the Board of
Directors of the Mexican joint venture. The dividends received were recorded as a reduction of the Company's investment in the
joint venture, consistent with the equity method of accounting.
Additionally, the Company maintains certain investments accounted for under the cost method of accounting that have a zero
cost basis in companies that it does not control and for which it does not have the ability to exercise significant influence over
operating and financial policies. During the third quarter of 2010, the Company contributed approximately $1 million to one of
those investments, Hydrive Energy, LLC ("Hydrive"), a beverage manufacturer, whose co-founder and significant equity holder
is a member of the Company's Board of Directors (the "Board"). As a result of this contribution, the Company increased its interest
from 13.4% as of December 31, 2009 to 20.4%, thereby causing the investment to be accounted for under the equity method of
accounting. There was no retroactive impact to retained earnings as a result of the change in the method of accounting. The carrying
value of the investment was zero as of December 31, 2010 and 2009. The Company's equity investment does not have a readily
determinable fair value as Hydrive is not publicly traded. The Company's proportionate share of the net loss resulting from its
investment is reported under the line item captioned equity in earnings of unconsolidated subsidiaries, net of tax, in the Consolidated
Statements of Operations.
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