Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Transactions with TCCC

We are a marketer, producer, and distributor principally of products of TCCC with greater than 90 percent of our sales volume consisting of sales of TCCC products. Our license arrangements with TCCC are governed by product licensing agreements. From time to time, the terms and conditions of programs with TCCC are modified.

In connection with the Merger, we (1) signed license agreements with TCCC for each of our territories with terms of 10 years each, with each containing the right for us to request a 10-year renewal, and (2) signed a five-year agreement with TCCC for an incidence-based concentrate pricing model across all of our territories.

The following table summarizes the transactions with TCCC that directly affected our Condensed Consolidated Statements of Operations for the periods presented (in millions):

	Third Quarter						First Nine Months
	2011			2010			2011			2010
Amounts affecting net operating revenues:
Fountain syrup and packaged product sales	$	6		$	5		$	16		$	15
Amounts affecting cost of sales:
Purchases of syrup, concentrate, mineral water, and juice	$	(565	)	$	(481	)	$	(1,832	)	$	(1,505	)
Purchases of finished products	(16		)	(4		)	(49		)	(18		)
Marketing support funding earned	49			46			150			134
Total	$	(532	)	$	(439	)	$	(1,731	)	$	(1,389	)

During the first quarter of 2011, we settled several items between us and TCCC related to the Merger as provided for in the Agreement. The net amount of these items resulted in a payment to us from TCCC of approximately $48 million, which included: (1) a payment to us from TCCC of approximately $41 million representing the settlement of Legacy CCE’s cash balances at the effective date of the Merger; (2) a payment to us from TCCC of approximately $23 million representing the difference between the Gross Indebtedness of Legacy CCE’s North American Business at the effective date of the Merger and the $8.88 billion target Gross Indebtedness in the Agreement; (3) a payment to TCCC of approximately $14 million related to our revised estimate of the tax benefits assumed by TCCC; and (4) a payment to TCCC of approximately $2 million related to the final determination of the working capital of Legacy CCE’s North American Business at the effective date of the Merger. The offset to these adjustments was recorded to additional paid-in capital on our Condensed Consolidated Balance Sheets since the adjustments were directly related to the Merger.

During the third quarter of 2011, we settled items between us and TCCC related to the Norway-Sweden SPA. The net amount of these items resulted in a payment by us to TCCC of $1 million, which included: (1) an amount due from TCCC of approximately $5 million based on the adjusted EBITDA (as defined) of the Norway and Sweden business for the twelve months ended December 31, 2010 and (2) an amount due to TCCC of approximately $6 million related to the final determination of working capital (as defined). The offset to these adjustments was recorded to goodwill as part of the purchase of the bottling operations of Norway and Sweden. For additional information about our acquisition of the Norway and Sweden bottling operations, refer to Note 18 of the Notes to Consolidated Financial Statements in our Form 10-K.

For additional information about certain indemnity obligations to TCCC as part of the Merger, refer to Notes 7 and 9. For additional information about other agreements and transactions with TCCC, refer to Note 3 of the Notes to Consolidated Financial Statements in our Form 10-K.

Transactions with Legacy CCE

Amounts Due To/From Legacy CCE

Prior to the Merger, we had amounts due to/from Legacy CCE that had various maturity dates and were typically issued at fixed interest rates that approximated interest rates in effect at the time of issuance. To facilitate the Merger, all of these loans were settled in the third quarter of 2010. During the third quarter and first nine months of 2010, we had interest expense related to these amounts of $13 million and $40 million, respectively. During the first nine months of 2010, we had interest income related to these amounts of $7 million.

Allocation of Legacy CCE Corporate Expenses

Prior to the Merger, our Condensed Consolidated Financial Statements included an allocation of certain corporate expenses related to services provided to us by Legacy CCE. These expenses included the cost of executive oversight, information technology, legal, treasury, risk management, human resources, accounting and reporting, investor relations, public relations, internal audit, and certain global restructuring projects. The cost of these services was allocated to us based on specific identification when possible or, when the expenses were determined to be global in nature, based on the percentage of our relative sales volume to total Legacy CCE sales volume for the applicable periods. We believe these allocations are a reasonable representation of the cost incurred for the services provided. However, these allocations are not necessarily indicative of the actual expenses that we would have incurred had we been operating as an independent company prior to the Merger. During the third quarter and first nine months of 2010, our allocated expenses from Legacy CCE’s corporate segment totaled $72 million and $160 million, respectively.