Coca Cola 2011 Annual Report Download - page 97

include Dr Pepper and Diet Dr Pepper in our Coca-Cola Freestyle fountain dispensers in certain outlets throughout the United
States. The Coca-Cola Freestyle agreement has a term of 20 years.
Although these transactions were negotiated concurrently, they are legally separable and have distinct termination provisions and
penalties, if applicable. As a result, the Company recorded an asset of $865 million related to the DPS license agreements and
recorded deferred revenue of $150 million related to the Freestyle agreement. The DPS license agreements were determined to be
indefinite-lived intangible assets and classified in the line item bottlers’ franchise rights with indefinite lives in our consolidated
balance sheet. The Company reached the conclusion that these distribution rights had an indefinite life based on several key
factors, including, but not limited to, (1) our license agreements with DPS shall remain in effect for 20 years and shall
automatically renew for additional 20-year successive periods thereafter unless terminated pursuant to the provisions of the
agreements; (2) no additional payments shall be due for the renewal periods; (3) we anticipate using the assets indefinitely;
(4) there are no known legal, regulatory or contractual provisions that are likely to limit the useful life of these assets; and (5) the
classification of these assets as indefinite-lived assets is consistent with similar market transactions. The Company will amortize the
deferred revenue related to the Freestyle agreement on a straight-line basis over 20 years, which is the length of the agreement.
The amortization will be included as a component of the Company’s net operating revenues.
Definitive Agreement to Acquire an Investment in Aujan Industries
On December 14, 2011, the Company entered into a definitive agreement with Aujan Industries (‘‘Aujan’’), one of the largest
independent beverage companies in the Middle East, to acquire approximately half of the equity in Aujan’s existing beverage
business, excluding Aujan’s Iranian manufacturing and distribution business. Under the terms of the agreement, we will acquire
50 percent of the Aujan entity that holds the rights to Aujan-owned brands, and 49 percent of Aujan’s bottling and distribution
company, which will continue to hold the licensed brand Vimto. Total consideration for this investment, which will be accounted
for under the equity method, is approximately $980 million, which we expect to fund from our existing cash reserves. Closing of
the transaction is subject to certain conditions and is expected to occur in the first half of 2012.
Divestitures
During 2011, proceeds from the disposal of bottling companies and other investments totaled $562 million, primarily related to the
sale of our investment in Coca-Cola Embonor, S.A. (‘‘Embonor’’), a bottling partner with operations primarily in Chile, for
$394 million. Prior to this transaction, the Company accounted for our investment in Embonor under the equity method of
accounting. Refer to Note 17. None of the Company’s other divestitures was individually significant.
In 2010, proceeds from the disposal of bottling companies and other investments totaled $972 million, primarily related to the sale
of all our ownership interests in our Norwegian and Swedish bottling operations to New CCE for $0.9 billion in cash on
October 2, 2010. In addition to the proceeds related to the disposal of our Norwegian and Swedish bottling operations, our
Company sold 50 percent of our investment in Le˜ ao Junior, S.A. (‘‘Le˜ ao Junior’’), a Brazilian tea company, for $83 million. Refer
to Note 17 for information related to the gain on these divestitures.
Our Norwegian and Swedish bottling operations (the disposal group) met the criteria to be classified as held for sale prior to their
disposal. The following table presents information related to the major classes of assets and liabilities of the disposal group as of
October 1, 2010 (in millions):
Trade receivables, less allowances for doubtful accounts $ 67
Inventories 42
Prepaid expenses and other current assets 17
Property, plant and equipment — net 315
Intangible assets 172
Total assets1$ 613
Accounts payable and accrued expenses $ 159
Accrued income taxes 10
Deferred income taxes 45
Total liabilities1$ 214
1Prior to the divestiture of our Norwegian and Swedish bottling operations, the assets and liabilities of these entities were included in our Bottling
Investments operating segment. Refer to Note 19.
We determined that our Norwegian and Swedish bottling operations did not meet the criteria to be classified as discontinued
operations, primarily due to our continuing significant involvement with these entities. Although we do not have an ownership
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