Snapple 2008 Annual Report Download - page 56

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Mexico and the Caribbean
The following table details our Mexico and the Caribbean segment’s net sales and UOP for 2008 and 2007
(dollars in millions):
2008 2007
Amount
Change
Percentage
Change
For the Year
Ended
December 31,
Net sales ........................................ $427 $418 $ 9 2.2%
UOP........................................... 86 100 (14) (14.0)%
Net sales increased $9 million in 2008 compared with 2007 primarily due to price increases and a favorable
channel and product mix, partially offset by a decline in volumes. Sales volumes decreased 4%, principally driven
by the performance of Aguafiel and Peñafiel due to aggressive price competition.
UOP decreased $14 million in 2008 due to an increase in raw material costs combined with higher distribution
and wage costs and volume declines, partially offset by the increase in net sales and lower marketing costs. Raw
material costs were negatively affected both by higher costs of packaging materials and the Mexican Peso
devaluation in the fourth quarter of 2008. An increase in distribution costs and wages resulted from additional
distribution routes added during the year.
In a letter dated December 11, 2008, we received formal notification from Hansen Natural Corporation
terminating our agreements to distribute Monster Energy in Mexico effective January 26, 2009. During 2008, our
Mexico and the Caribbean segment generated approximately $19 million and $6 million in net sales and operating
profits, respectively, from sales of Hansen Natural brands to third parties in Mexico.
Accounting for the Separation from Cadbury
Upon separation, effective May 7, 2008, we became an independent company, which established a new
consolidated reporting structure. For the periods prior to May 7, 2008, our consolidated financial information has
been prepared on a “carve-out” basis from Cadbury’s consolidated financial statements using the historical results
of operations, assets and liabilities, attributable to Cadbury’s Americas Beverages business and including allo-
cations of expenses from Cadbury. The results may not be indicative of our future performance and may not reflect
our financial performance had we been an independent publicly-traded company during those prior periods.
Settlement of Related Party Balances
Upon our separation from Cadbury, we settled debt and other balances with Cadbury, eliminated Cadbury’s net
investment in us and purchased certain assets from Cadbury related to our business. As of December 31, 2008, we
had receivable and payable balances with Cadbury pursuant to the Separation and Distribution Agreement,
Transition Services Agreement, Tax Indemnity Agreement, and Employee Matters Agreement. The following debt
and other balances were settled with Cadbury upon separation (in millions):
Related party receivable .................................................. $ 11
Notes receivable from related parties ......................................... 1,375
Related party payable . ................................................... (70)
Current portion of the long-term debt payable to related parties ..................... (140)
Long-term debt payable to related parties ..................................... (2,909)
Net cash settlement of related party balances ................................... $(1,733)
32