Snapple 2011 Annual Report Download - page 63

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Off-Balance Sheet Arrangements
We participate in four multi-employer pension plans. In the event that we or, in the case of one multi-employer pension plan,
another large employer withdraw from participation in any 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 statement of income and
as a liability on our condensed consolidated balance sheets. We presently have no intention of withdrawing from any of these
multi-employer 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 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 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 agreement, 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.