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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
56
1. Business and Basis of Presentation
References in the Notes to Audited Consolidated Financial Statements to "DPS" or "the Company" refer to Dr Pepper Snapple
Group, Inc. and all entities included in the Audited Consolidated Financial Statements. Cadbury plc and Cadbury Schweppes plc
are hereafter collectively referred to as "Cadbury" unless otherwise indicated. Kraft Foods Inc. acquired Cadbury on February 2,
2010 and on October 1, 2012, Kraft Foods Inc. spun-off its North American grocery business to its shareholders and changed its
name to International, Inc.
The Notes to Audited Consolidated Financial Statements refer to some of DPS' owned or licensed trademarks, trade names
and service marks, which are referred to as the Company's brands. All of the product names included herein are either DPS'
registered trademarks or those of the Company's licensors.
Nature of Operations
DPS is a leading integrated brand owner, manufacturer and distributor of non-alcoholic beverages in the United States ("U.S."),
Canada, and Mexico with a diverse portfolio of flavored (non-cola) carbonated soft drinks ("CSDs") and non-carbonated beverages
("NCBs"), including ready-to-drink teas, juices, juice drinks, mixers and water. The Company's brand portfolio includes popular
CSD brands such as Dr Pepper, Canada Dry, 7UP, Squirt, Peñafiel, Crush, A&W, Sunkist soda and Schweppes, and NCB brands
such as Snapple, Hawaiian Punch, Mott's, Clamato, Mr & Mrs T mixers and Rose's.
We were incorporated in Delaware on October 24, 2007. In 2008, Cadbury separated its beverage business in the U.S., Canada,
Mexico and the Caribbean (the "Americas Beverages business") from its global confectionery business by contributing the
subsidiaries that operated its Americas Beverages business to us.
Principles of Consolidation
DPS consolidates all wholly-owned subsidiaries. The Company uses the equity method to account for investments in companies
if the investment provides the Company with the ability to exercise significant influence over operating and financial policies of
the investee. Consolidated net income includes DPS' proportionate share of the net income or loss of these companies. Judgment
regarding the level of influence over each equity method investment includes considering key factors such as ownership interest,
representation on the board of directors, participation in policy-making decisions and material intercompany transactions.
The Company is also required to consolidate entities that are variable interest entities (“VIEs”) of which DPS is the primary
beneficiary. Judgments are made in assessing whether the Company is the primary beneficiary, including determination of the
activities that most significantly impact the VIE’s economic performance. During the year ended December 31, 2014, the Company
provided 100% financing to a VIE as part of a short term leasing structure for which DPS is the primary beneficiary. As a result,
DPS has consolidated that entity. The Company’s financing of the VIE, which totaled $21 million as of December 31, 2014,
included a transfer of cash and assignment of the rights to deposits previously made with a manufacturer in the prior year. The
Company's financing of the VIE, which eliminates in consolidation, was used by the VIE to purchase certain property, plant and
equipment. The assets and liabilities of the VIE were not significant to the Company’s consolidated financial statements.
The Company eliminates from its financial results all intercompany transactions between entities included in the consolidated
financial statements and the intercompany transactions with its equity method investees.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP"). In the opinion of management, all adjustments, consisting principally
of normal recurring adjustments, considered necessary for a fair presentation have been included. The preparation of financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported
in the financial statements and the accompanying notes. Actual results could differ from these estimates.
The Company has evaluated subsequent events through the date of issuance of the Company's Audited Consolidated Financial
Statements.