Snapple 2010 Annual Report Download - page 136

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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
24. Agreement with PepsiCo
On February 26, 2010, the Company completed the licensing of certain brands to PepsiCo following PepsiCo’s acquisition
of The Pepsi Bottling Group, Inc. ("PBG") and PepsiAmericas, Inc. ("PAS").
Under the new 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.
Under the agreements, DPS received a one-time nonrefundable cash payment of $900 million. The new agreements have an
initial period of 20 years with automatic 20-year renewal periods, and will require PepsiCo to meet certain performance conditions.
The payment was recorded as deferred revenue and will be recognized as net sales ratably over the estimated 25-year life of the
customer relationship.
Additionally, in U.S. territories where it has a distribution footprint, DPS distributes certain owned and licensed brands,
including Sunkist soda, Squirt, Vernors, Canada Dry and Hawaiian Punch, that were previously distributed by PBG and PAS.
25. Agreement with Coca-Cola
On October 4, 2010, the Company received a one-time nonrefundable cash payment of $715 million, 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 will offer Dr Pepper and Diet Dr Pepper in local fountain
accounts and the Freestyle fountain program.
Under the new licensing agreements, Coca-Cola began distributing 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 agreement, Coca-Cola has agreed to offer Dr Pepper and Diet Dr Pepper in its local fountain accounts.
The new agreements have an initial period of 20 years with automatic 20-year renewal periods, and will 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 will begin selling in early 2011 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 will be recognized as net sales ratably over the estimated 25-year life of
the customer relationship.
116