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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
62
During the third quarter of 2010, the Company contributed approximately $1 million to Hydrive Energy, LLC ("Hydrive"),
a beverage manufacturer, whose co-founder and significant equity holder was previously a member of the Company's Board of
Directors (the "Board"). Prior to this contribution, Hydrive was accounted for under the cost method of accounting. 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. During the fourth quarter of 2011, the Company contributed an additional $2 million, which
increased its interest in Hydrive to 40.4% as of December 31, 2011. On November 16, 2012, Hydrive sold its intellectual property
rights to Big Red Holdings, Inc. in exchange for earn-out payments to Hydrive based on the earnings associated with Hydrive
functional beverages over the next fifteen years. The carrying value of the investment was $1 million and $2 million as of
December 31, 2012 and 2011, respectively.
The Company's equity investments do not have a readily determinable fair value as the entities are not publicly traded. The
Company's proportionate share of the net income (loss) resulting from these investments are reported under the line item captioned
equity in earnings of unconsolidated subsidiaries, net of tax, in the Consolidated Statements of Income.
Additionally, the Company maintains certain investments accounted for under the cost method of accounting. These
investments have a zero cost basis and are not within the Company's control nor does it have the ability to exercise significant
influence over operating and financial policies.
6. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the years ended December 31, 2012, and 2011, by reporting unit, are as follows
(in millions):
Beverage
Concentrates WD Reporting
Unit(1)
DSD
Reporting
Unit(1) Latin America
Beverages Total
Balance as of January 1, 2011
Goodwill $ 1,732 $ 1,220 $ 180 $ 32 $ 3,164
Accumulated impairment losses — — (180) — (180)
1,732 1,220 — 32 2,984
Foreign currency impact — — — (4)(4)
Balance as of December 31, 2011
Goodwill 1,732 1,220 180 28 3,160
Accumulated impairment losses — — (180) — (180)
1,732 1,220 — 28 2,980
Foreign currency impact — — — 3 3
Balance as of December 31, 2012
Goodwill 1,732 1,220 180 31 3,163
Accumulated impairment losses — — (180) — (180)
$ 1,732 $ 1,220 $ — $ 31 $ 2,983
____________________________
(1) The Packaged Beverages segment is comprised of two reporting units, the Direct Store Delivery ("DSD") system and the
Warehouse Direct ("WD") system.