Dr. Pepper and Snapple Group

Topics: Generally Accepted Accounting Principles, Balance sheet, Depreciation Pages: 7 (1525 words) Published: July 26, 2014
Financial Statement

Analysis

Dr. Pepper Snapple Group, Inc. is a leading intergraded brand owner, manufacturer and distributor for non-alcoholic beverages in the U.S., Canada and Mexico. They have been around since the 1980’s and have expanded throughout the years. They have a range of flavored carbonated drinks. Some significant highlights of the company are their #1 flavored carbonated soft drinks. Dr. Pepper Snapple, Group Inc. are rated #3 in North American for their liquid refreshment beverage business. In 2008 they formed with Cadbury. Dr. Pepper & Snapple Group, Inc. sell brands such as; Dr. Pepper, 7UP, Sunkist, A&W, Canada Dry, Crush, Schweppes, Squirt, RC Cola, Diet Rite, Sundrop, Welch’s, Vernors, Country Time and Hawaiian Punch. Dr. Pepper & Snapple Group, Inc. strength is their diverse port-folio of very popular soft drinks. Their portfolio provides their bottlers, distributors and retailers with a wide range of different products and provides the availability for growth and a larger profit margin. They are the #1 carbonated soft drink company in the U.S. and are the only beverage company with year to year market share growth. They have a stable cash flow with a highly experienced executive management team. Some of the weaknesses Dr. Pepper Snapple, Group, Inc. has are lower exposure to some of the faster growing non-carbonated and bottled water segments. As a result; they have lost shares in the overall United States liquid refreshment beverage market. Severe weather will impact the company negatively due to pricing and/or availability of raw materials, fuel, the demand for the products and possibility of substantial debt. Government laws and regulations change frequently so the company may fall behind on compliance. Dr. Pepper Snapple Group, Inc. recognizes sales revenues when the products get delivered and accepted by the customer at their delivery site, collection is reasonable assured, pricing is fixed or determinable and evidence of agreement exists. Timing of revenue recognition is largely dependant on contract terms. Customers that are committed to a contract have free-on-board destination. PepsiCo has an agreement with Dr. Pepper Snapple Group, Inc. which allows PepsiCo to distribute Dr. Pepper, Crush and Schweppes in the U.S. territories. PepsiCo will pay Dr. Pepper Snapple Group, Inc. $900 million per contract agreement. This agreement is for a period of twenty years, with automatic twenty year renewal periods. The Company leases some of their facilities and equipment which expire at various dates through 2020. The operating lease expense was $79 million, $59 million for the years ended December 31, 2009 and December 31, 2008; respectively. Dr. Pepper Snapple Group, Inc. owns and leases 209 administrative, manufacturing and distribution facilities across the U.S. They also lease buildings in Mexico and Canada. The primary source of income comes from beverage concentrates, packaged beverages and Latin America beverages. The Company has U.S. and foreign pension and postretirement benefit plans which provide benefits to employees who meet certain requirements. As of December 31, 2009 the Company had eleven stand-alone non-contributory defined benefit plans and six stand-alone postretirement health care plans. The expense related to the retirement plans has been determined in accordance with U.S. GAAP and the Company accrues the cost of these benefits during the years that employees render service. Accounts Receivable is recorded at the invoiced amount and do no bear interest. The Company determines the required allowance for doubtful collections. Account balances are charged against the allowance when it is determined that the receivable will not be recovered. The company is exposed to certain risks associated with accounts receivable. The company has not experienced significant credit related losses to date. No single customer accounted for 10% or...
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