Snapple 2010 Annual Report Download - page 91

DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The net carrying amounts of intangible assets other than goodwill as of December 31, 2010 and 2009, are as follows (in
millions):
Intangible assets with indefinite lives:
Brands(1)
Distributor rights
Intangible assets with finite lives:
Brands
Customer relationships
Bottler agreements
Distributor rights
Total
December 31, 2010
Gross
Amount
$ 2,656
8
29
76
19
—
$ 2,788
Accumulated
Amortization
$—
—
(23)
(57)
(17)
—
$(97)
Net
Amount
$ 2,656
8
6
19
2
—
$ 2,691
December 31, 2009
Gross
Amount
$ 2,652
8
29
76
21
2
$ 2,788
Accumulated
Amortization
$—
—
(22)
(45)
(17)
(2)
$(86)
Net
Amount
$ 2,652
8
7
31
4
—
$ 2,702
____________________________
(1) In 2010, intangible brands with indefinite lives increased due to a $4 million change in foreign currency translation rates.
As of December 31, 2010, the weighted average useful lives of intangible assets with finite lives were 10 years, 9 years and
11 years for brands, customer relationships and bottler agreements, respectively. Amortization expense for intangible assets was
$16 million, $17 million and $28 million for the years ended December 31, 2010, 2009 and 2008, respectively.
Amortization expense of these intangible assets over the next five years is expected to be the following (in millions):
2011
2012
2013
2014
2015
$8
4
4
4
4
In accordance with U.S. GAAP, the Company conducts impairment tests of goodwill and indefinite lived intangible assets
annually, as of December 31, or more frequently if circumstances indicate that the carrying amount of an asset may not be
recoverable. For purposes of impairment testing, DPS assigns goodwill to the reporting unit that benefits from the synergies arising
from each business combination and also assigns indefinite lived intangible assets to its reporting units. The Company defines
reporting units as Beverage Concentrates, Latin America Beverages and Packaged Beverages’ two reporting units, DSD and WD.
The impairment test for indefinite lived intangible assets encompasses calculating a fair value of an indefinite lived intangible
asset and comparing the fair value to its carrying value. If the carrying value exceeds the estimated fair value, impairment is
recorded. The impairment tests for goodwill include comparing a fair value of the respective reporting unit with its carrying value,
including goodwill and considering any indefinite lived intangible asset impairment charges (“Step 1”). If the carrying value
exceeds the estimated fair value, impairment is indicated and a second step analysis (“Step 2”) must be performed.
Fair value is measured based on what each intangible asset or reporting unit would be worth to a third party market participant.
For our annual impairment analysis performed as of December 31, 2010 and 2009, methodologies used to determine the fair values
of the assets included an income based approach, as well as an overall consideration of market capitalization and our enterprise
value. Management's estimates of fair value, which fall under Level 3, are based on historical and projected operating performance.
Discount rates were based on a weighted average cost of equity and cost of debt and were adjusted with various risk premiums.
As of December 31, 2010 and 2009, the results of the Step 1 analysis indicated that the estimated fair value of our indefinite
lived intangible assets and goodwill substantially exceeded their carrying values and, therefore, are not impaired.
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