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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
107
21. Agreement with PepsiCo
On February 26, 2010, the Company completed the licensing of certain brands to PepsiCo following PepsiCo's acquisitions
of The Pepsi Bottling Group, Inc. ("PBG") and PepsiAmericas, Inc. ("PAS").
Under the licensing agreements, PepsiCo began distributing Dr Pepper, Crush and Schweppes in the U.S. territories where
these brands were previously being distributed by PBG and PAS. The same applies to Dr Pepper, Crush, Schweppes, Vernors and
Sussex in Canada; and Squirt and Canada Dry in Mexico.
Additionally, in U.S. territories where it has a distribution footprint, DPS is selling certain owned and licensed brands, including
Sunkist soda, Squirt, Vernors and Hawaiian Punch, that were previously distributed by PBG and PAS.
Under the agreements, DPS received a one-time nonrefundable cash payment of $900 million. The agreements have an initial
period of 20 years with automatic 20-year renewal periods, and require PepsiCo to meet certain performance conditions. The
payment was recorded as deferred revenue and recognized as net sales ratably over the estimated 25-year life of the customer
relationship.
22. Agreement with Coca-Cola
On October 4, 2010, the Company completed the licensing of certain brands to Coca-Cola following Coca-Cola's acquisition
of Coca-Cola Enterprises' ("CCE") North American Bottling Business and executed separate agreements pursuant to which Coca-
Cola began offering Dr Pepper and Diet Dr Pepper in local fountain accounts and the Freestyle fountain program.
Under the licensing agreements, Coca-Cola distributes Dr Pepper in the U.S. and Canada Dry in the Northeast U.S. where
these brands were previously being distributed by CCE. The same applies to Canada Dry and C Plus in Canada. As part of the
U.S. licensing agreements, Coca-Cola has agreed to offer Dr Pepper and Diet Dr Pepper in its local fountain accounts. The
agreements have an initial period of 20 years with automatic 20-year renewal periods, and require Coca-Cola to meet certain
performance conditions.
Under a separate agreement, Coca-Cola has agreed to include Dr Pepper and Diet Dr Pepper brands in its Freestyle fountain
program. The Freestyle fountain program agreement has a period of 20 years. Additionally, in certain U.S. territories where it has
a distribution footprint, DPS is selling certain owned and licensed brands, including Canada Dry, Schweppes, Squirt and Cactus
Cooler, that were previously distributed by CCE.
Under this arrangement, DPS received a one-time nonrefundable cash payment of $715 million, which was recorded net, as
no competent or verifiable evidence of fair value could be determined for the significant elements in this arrangement. The total
cash consideration was recorded as deferred revenue and recognized as net sales ratably over the estimated 25-year life of the
customer relationship.