Snapple 2012 Annual Report Download - page 58

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In general, we are covered under conventional insurance programs with high deductibles or are self-insured for large portions
of many different types of claims. Our insurance liability for our losses related to these programs are estimated through actuarial
procedures of the insurance industry and by using industry assumptions, adjusted for our specific expectations based on our claim
history. As of December 31, 2012, our insurance liability totaled approximately $120 million. Refer to Notes 7 and 10 of the Notes
to our Audited Consolidated Financial Statements. We did not include estimated payments related to our insurance liability in the
table above.
OFF-BALANCE SHEET ARRANGEMENTS
We currently participate in four multiemployer pension plans. We recognized an expense of $5 million, $6 million and $4
million, respectively, related to contributions to our multiemployer pension plans for the years ended December 31, 2012, 2011
and 2010. In the event that we or, in the case of one multiemployer pension plan, another large employer withdraws from participation
in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, and we would
have to reflect that as an expense in our consolidated statements of income and as a liability on our condensed consolidated balance
sheets. We presently have no intention of withdrawing from any of these multiemployer pension plans.
There are no other off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect
on our results of operations, financial condition, liquidity, capital expenditures or capital resources other than letters of credit
outstanding. Refer to Note 8 of the Notes to our Audited Consolidated Financial Statements for additional information regarding
outstanding letters of credit.
OTHER MATTERS
Agreement with PepsiCo
On February 26, 2010, the Company completed the licensing of certain brands to PepsiCo following PepsiCo's acquisitions
of PBG and 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.
Agreement with The Coca-Cola Company
On October 4, 2010, the Company completed the licensing of certain brands to Coca-Cola following Coca-Cola's acquisition
of CCE's 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 offers 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 these arrangements, 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.