4. Acquisitions

In April 2013, the Company announced that it had signed a non-binding letter of intent with The Coca-Cola Company to expand the Company’s franchise territory to include distribution rights in parts of Tennessee and Kentucky served by Coca-Cola Refreshments USA, Inc. (“CCR”), a wholly owned subsidiary of The Coca-Cola Company. On May 7, 2014, the Company and CCR entered into an asset purchase agreement (the “Asset Purchase Agreement”) relating to the territory served by CCR through CCR’s facilities and equipment located in Johnson City and Morristown, Tennessee (the “Territory”). The closing of the transaction contemplated by the Asset Purchase Agreement occurred on May 23, 2014 for a cash purchase price of $12.2 million. The Company will purchase finished goods from CCR for sale and distribution in the Territory at prices consistent with pricing for acquired finished goods in the Company’s currently owned territories. The financial results of the new territories have been included in the Company’s consolidated financial statements from the acquisition date and did not significantly impact the Company’s consolidated financial results for the three and six month periods ended June 29, 2014.

The Company has preliminarily allocated the purchase price for Johnson City and Morristown to the individual acquired assets and assumed liabilities. The valuations are subject to adjustment as additional information is obtained, but any adjustments are not expected to be material.

The fair values of acquired assets and assumed liabilities as of the acquisition date are summarized as follows:


In Thousands	Fair Value
Cash	$	46
Inventories		1,361
Prepaid expense and other current assets		252
Property, plant and equipment		8,495
Other assets		10
Goodwill		1,245
Other identifiable intangible assets		13,800

Total acquired assets	$	25,209


Current liabilities	$	1,005
Other liabilities		11,995

Total assumed liabilities	$	13,000

The preliminary purchase price allocation to the identifiable intangible assets is as follows:


In Thousands			Estimated Useful Life
Distribution agreements	$	13,200		40 years
Customer lists		600		12 years

Total	$	13,800

The goodwill of $1.25 million is primarily attributed to the workforce of the acquired business. None of the goodwill recorded is expected to be deductible for tax purposes.

4. Acquisitions

As part of the Asset Purchase Agreement, the Company signed a Comprehensive Beverage Agreement which has a term of ten years and is renewable by the Company indefinitely for successive additional terms of ten years each unless the Comprehensive Beverage Agreement is earlier terminated as provided therein. Under the Comprehensive Beverage Agreement, the Company will make a quarterly sub-bottling payment to CCR on a continuing basis for the grant of exclusive rights to distribute, promote, market and sell the Covered Beverages and Related Products in the Territory. The quarterly sub-bottling payment will be based on sales of certain beverages and beverage products that are sold under the same trademarks that identify a Covered Beverage, Related Product or certain cross-licensed brands. The range of undiscounted amounts the Company could pay under the contingent consideration arrangement are between $1.0 million and $1.8 million per year. As of June 29, 2014, the Company has recorded a liability of $13.0 million to reflect the estimated fair value of the contingent consideration related to the future sub-bottling payments. Contingent consideration was valued using a probability weighted discounted cash flow model based on internal forecasts and the weighted average cost of capital derived from market data. The contingent consideration will be reassessed and marked to market each quarter through other income or expense. There was no significant change in this liability from the date of acquisition through June 29, 2014.