Snapple 2008 Annual Report Download - page 57

Items Impacting the Statement of Operations
The following transactions related to our separation from Cadbury were included in the statement of operations
for the year ended December 31, 2008 (in millions):
Transaction costs and other one time separation costs(1) ............................. $33
Costs associated with the bridge loan facility(2) ................................... 24
Incremental tax expense related to separation, excluding indemnified taxes................ 11
Impact of Cadbury tax election(3) .............................................. 5
(1) We incurred transaction costs and other one time separation costs of $33 million for the year ended
December 31, 2008. These costs are included in selling, general and administrative expenses in the statement
of operations.
(2) We incurred $24 million of costs for the year ended December 31, 2008, associated with the $1.7 billion bridge
loan facility which was entered into to reduce financing risks and facilitate Cadbury’s separation of us.
Financing fees of $21 million, which were expensed when the bridge loan facility was terminated on April 30,
2008, and $5 million of interest expense were included as a component of interest expense, partially offset by
$2 million in interest income while the bridge loan was in escrow.
(3) We incurred a charge to net income of $5 million ($9 million tax charge offset by $4 million of indemnity
income) caused by a tax election made by Cadbury in December 2008.
Items Impacting Income Taxes
The consolidated financial statements present the taxes of our stand alone business and contain certain taxes
transferred to us at separation in accordance with the Tax Indemnity Agreement agreed between us and Cadbury.
This agreement provides for the transfer to us of taxes related to an entity that was part of Cadbury’s confectionery
business and therefore not part of our historical consolidated financial statements. The consolidated financial
statements also reflect that the Tax Indemnity Agreement requires Cadbury to indemnify us for these taxes. These
taxes and the associated indemnity may change over time as estimates of the amounts change. Changes in estimates
will be reflected when facts change and those changes in estimate will be reflected in our statement of operations at
the time of the estimate change. In addition, pursuant to the terms of the Tax Indemnity Agreement, if we breach
certain covenants or other obligations or we are involved in certain change-in-control transactions, Cadbury may
not be required to indemnify us for any of these unrecognized tax benefits that are subsequently realized.
Refer to Note 13 of the Notes to our Audited Consolidated Financial Statements for further information
regarding the tax impact of the separation.
Items Impacting Equity
In connection with our separation from Cadbury, the following transactions were recorded as a component of
Cadbury’s net investment in us (in millions):
Contributions Distributions
Legal restructuring to purchase Canada operations from Cadbury ...... $ — $ (894)
Legal restructuring relating to Cadbury confectionery operations,
including debt repayment ................................. — (809)
Legal restructuring relating to Mexico operations .................. — (520)
Contributions from parent ................................... 318 —
Tax reserve provided under FIN 48 as part of separation, net of
indemnity ............................................. — (19)
Other .................................................. (59) —
Total ................................................. $259 $(2,242)
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