Snapple 2008 Annual Report Download - page 58

Prior to May 7, 2008, our total invested equity represented Cadbury’s interest in our recorded assets. In
connection with the distribution of our stock to Cadbury plc shareholders on May 7, 2008, Cadbury’s total invested
equity was reclassified to reflect the post-separation capital structure of $3 million par value of outstanding
common stock and contributed capital of $3,133 million.
Results of Operations for 2007 Compared to 2006
Combined Operations
The following table sets forth our combined results of operation for 2007 and 2006 (in millions):
Dollars Percent Dollars Percent
Percentage
Change
2007 2006
For the Year Ended December 31,
Net sales ..................................... $5,695 100.0% $4,700 100.0% 21.2%
Cost of sales .................................. 2,564 45.0 1,959 41.7 30.9
Gross profit ................................. 3,131 55.0 2,741 58.3 14.2
Selling, general and administrative expenses ........... 2,018 35.5 1,659 35.3 21.6
Depreciation and amortization ..................... 98 1.7 69 1.5 42.0
Restructuring costs.............................. 76 1.3 27 0.6 NM
Impairment of intangible assets .................... 6 0.1 — — NM
Other operating income .......................... (71) (1.2) (32) (0.7) NM
Income from operations ........................ 1,004 17.6 1,018 21.6 (1.4)
Interest expense ................................ 253 4.4 257 5.5 (1.6)
Interest income ................................ (64) (1.1) (46) (1.0) 39.1
Other expense/(income) .......................... (2) — 2 — NM
Income before provision for income taxes and equity in
earnings of unconsolidated subsidiaries ........... 817 14.3 805 17.1 1.5
Provision for income taxes ........................ 322 5.6 298 6.3 8.1
Income before equity in earnings of unconsolidated
subsidiaries ................................. 495 8.7 507 10.8 (2.4)
Equity in earnings of unconsolidated subsidiaries, net of
tax........................................ 2 — 3 0.1 (33.3)
Net income ................................... $ 497 8.7% $ 510 10.9% (2.5)%
Volume
Volume (BCS) increased 1%. An 8% increase in NCBs was partially offset by a 1% decline in CSDs. In CSDs,
Dr Pepper declined 2%, driven by declines in the “Soda Fountain Classics” line extensions which were introduced
nationally in 2005. Our “Core 4” brands, which include 7UP, Sunkist, A&W and Canada Dry, increased 1%,
consistent with the consumer shift from colas to flavored CSDs. Sales of glaceau products had a 5% favorable
impact on NCB growth. Additionally, in NCBs growth of 4%, 10%, 32% and 3% in Snapple, Mott’s, Aguafiel and
Clamato, respectively, was partially offset by a 13% decrease in Hawaiian Punch. Our Snapple volumes increase
was driven by aggressive promotional activity and pricing activity in 2007. Volumes increased 1% in both North
America and in Mexico and the Caribbean.
Net Sales
Net sales increased $995 million for 2007 compared with 2006 driven by increases in our Bottling Group
segment, which contributed an additional $931 million mainly due to the inclusion of our bottling acquisitions.
Higher pricing and improved sales mix in all remaining segments increased net sales by 3% despite lower volumes.
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