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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Commodities
DPS centrally manages the exposure to volatility in the prices of certain commodities used in its production process through
futures contracts. The intent of these contracts is to provide a certain level of predictability in the Company's overall cost structure.
During the years ended December 31, 2010 and 2009, the Company entered into futures contracts that economically hedge certain
of its risks. In these cases, a natural hedging relationship exists in which changes in the fair value of the instruments act as an
economic offset to changes in the fair value of the underlying items. Changes in the fair value of these instruments are recorded
in net income throughout the term of the derivative instrument and are reported in the same line item of the Consolidated Statements
of Operations as the hedged transaction. Gains and losses are recognized as a component of unallocated corporate costs until the
Company's operating segments are affected by the completion of the underlying transaction, at which time the gain or loss is
reflected as a component of the respective segment's operating profit (“SOP”).
The following table summarizes the location of the fair value of the Company's derivative instruments within the Consolidated
Balance Sheets as of December 31, 2010 and 2009 (in millions):
Assets:
Derivative instruments designated as
hedging instruments under U.S. GAAP:
Interest rate swap contracts
Derivative instruments not designated as
hedging instruments under U.S. GAAP:
Commodity futures
Commodity futures
Total assets
Liabilities:
Derivative instruments designated as
hedging instruments under U.S. GAAP:
Foreign exchange forward contracts
Interest rate swap contracts
Derivative instruments not designated as
hedging instruments under U.S. GAAP:
Interest rate swap contract
Treasury lock contract
Commodity futures
Foreign exchange forward contracts
Commodity futures
Total liabilities
Balance Sheet Location
Prepaid expenses and other current assets
Prepaid expenses and other current assets
Other non-current assets
Accounts payable and accrued expenses
Other non-current liabilities
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Other non-current liabilities
Other non-current liabilities
December 31,
2010
$8
13
—
$21
$2
6
—
1
2
2
1
$14
December 31,
2009
$6
1
9
$16
$2
14
3
—
—
—
—
$19
78