Snapple 2008 Annual Report Download - page 61

(1) UOP for the Bottling Group and Finished Goods segments have been recast to reallocate intersegment profit
allocations to conform to the change in 2008 management reporting of segment UOP. The allocations totaled
$54 million and $56 million for 2007 and 2006, respectively.
(2) Adjustments consist of the following:
2007 2006
For the Year
Ended
December 31,
Restructuring costs ................................................. (76) (27)
Unallocated general and administrative expenses(1) ......................... (36) (10)
Stock-based compensation expense ..................................... (21) (17)
Amortization expense related to intangible assets ........................... (30) (19)
Incremental pension costs ............................................ (11) (15)
Impairment of intangible assets ........................................ (6) —
Other operating income (expense)(2) .................................... 58 32
Other ........................................................... 2 (25)
Total ............................................................ $(120) $(81)
(1) Consists of equity in earnings of unconsolidated subsidiaries and unallocated general and administrative
expenses. The increase in 2007 compared with 2006 was primarily due to a decrease in our equity in earnings of
unconsolidated subsidiaries as a result of our purchase of the remaining 55% of DPSUBG in May 2006 and an
increase in general and administrative expenses related to our IT operations.
(2) In 2007, $58 million of the $71 million gain on termination of the glaceau distribution agreement is included as
an adjustment. The balance of the gain ($13 million) is reflected in the Bottling Group UOP.
Beverage Concentrates
The following table details our Beverage Concentrates segment’s net sales and UOP for 2007 and 2006 (dollars
in millions):
2007 2006
Amount
Change
Percentage
Change
For the Year Ended
December 31,
Net sales ..................................... $1,342 $1,330 $12 0.9%
UOP........................................ 731 710 21 3.0%
Net sales increased $12 million primarily due to price increases which more than offset the impact of a 1%
volume decline. The volume decline was due primarily to a 3% decline in Dr Pepper partially offset by single digit
percentage increases in Sunkist, Schweppes and A&W. The Dr Pepper decline was primarily a result of the launch
of “Soda Fountain Classics” line. Line extensions are usually offered for a limited time period and their volumes
typically decline in the years subsequent to the year of launch, as was the case with the “Soda Fountain Classics”
line in 2007. For 2006, net sales included $8 million for the Slush Puppie business which was disposed of in May
2006.
UOP increased $21 million primarily due to higher net sales and lower marketing expenses, particularly
advertising costs, partially offset by increased sweetener and flavor costs and increased selling, general and
administrative expenses. The lower marketing expenses were primarily a result of a reduction in costs to support
new product initiatives, including $25 million for the launch of Accelerade. Selling, general and administrative
expenses were higher due primarily to increased corporate costs following our bottler acquisitions, a sales
reorganization, and general inflationary increases, which were partially offset by lower management annual
incentive plan accruals.
37