Snapple 2008 Annual Report Download - page 63

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UOP increased $2 million in 2007 compared with 2006. In 2007, UOP included $13 million of the $71 million
gain from the termination of the glaceau distribution agreement. The associated profit from the increased net sales
were more than offset by an increase in post-acquisition employee benefit costs, wage inflation costs, higher
sweetener costs, the elimination of co-packing fees in 2007 which were previously earned on manufacturing for the
Finished Goods segment, and an increase in investments in new markets.
Mexico and the Caribbean
The following table details our Mexico and Caribbean 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 ........................................ $418 $408 $10 2.5%
UOP........................................... 100 102 (2) (2.0)%
Net sales increased $10 million for 2007 compared with 2006 due to volume growth of 2% and increased
pricing despite challenging market conditions and adverse weather. The volume growth was due to double digit
percentage increases in Aguafiel and Clamato. Foreign currency translation negatively impacted net sales by
$6 million.
UOP decreased $2 million in 2007 despite the increase in net sales primarily due to an increase in raw material
costs, particularly sweeteners, and higher distribution costs.
Liquidity and Capital Resources
Trends and Uncertainties Affecting Liquidity
Recent global financial events have resulted in the consolidation, failure or near failure of a number of
institutions in the banking, insurance and investment banking industries and have substantially reduced the ability
of companies to obtain financing. We have assessed the implications of the recent financial events on our current
business and determined that these market disruptions have not had a significant impact on our financial position,
results of operations or liquidity as of December 31, 2008. However, there can be no assurance that these events will
not have an impact on our future financial position, results of operations or liquidity as these events could have a
number of different effects on our business, including:
• a reduction in consumer spending, which could result in a reduction in our sales volume and, consequently,
could reduce our ability to fund our operating requirements with cash provided by operations; or
• a negative impact on the ability of our customers to timely pay their obligations to us, thus reducing our
operating cash flow.
We believe that the following recent transactions and trends and uncertainties may impact liquidity:
• changes in economic factors could impact consumers’ purchasing power;
• we incurred significant third party debt in connection with the separation;
• we will continue to make capital expenditures to build new manufacturing capacity, upgrade our existing
plants and distribution fleet of trucks, replace and expand our cold drink equipment, make investments in IT
systems, and from time-to-time invest in restructuring programs in order to improve operating efficiencies
and lower costs;
• we assumed significant pension obligations in connection with the separation. We have assessed the impact
of recent financial events on our pension asset returns and anticipate there will be no impact on our ability to
meet our 2009 contribution requirements; and
• we may make further acquisitions.
39