Snapple 2008 Annual Report Download - page 65

substantially all of our assets. The notes are guaranteed by substantially all of our existing and future direct and
indirect domestic subsidiaries.
Use of Proceeds
We used the funds from the term loan A facility and the net proceeds of the senior unsecured notes to settle with
Cadbury related party debt and other balances, eliminate Cadbury’s net investment in us, purchase certain assets
from Cadbury related to our business and pay fees and expenses related to our credit facilities.
Debt Ratings
As of December 31, 2008, our debt ratings were Baa3 with a stable outlook from Moody’s Investor Service and
BBB- with a negative outlook from Standard & Poor’s. These debt ratings impact the interest we pay on our
financing arrangement. A downgrade of one or both of our debt ratings could increase our interest expense and
decrease the cash available to fund anticipated obligations.
Cash Management
Prior to separation, our cash was available for use and was regularly swept by Cadbury operations in the United
States at its discretion. Cadbury also funded our operating and investing activities as needed. We earned interest
income on certain related party balances. Our interest income has been reduced due to the settlement of the related
party balances upon separation and, accordingly, we expect interest income for 2009 to be minimal.
Post separation, we fund our liquidity needs from cash flow from operations and amounts available under
financing arrangements.
Capital Expenditures
Capital expenditures were $304 million, $230 million and $158 million for 2008, 2007 and 2006, respectively.
Capital expenditures for all periods primarily consisted of expansion of our capabilities in existing facilities, cold
drink equipment and IT investments for new systems. The increase in expenditures for 2008 compared with 2007
was primarily related to early stage costs of a new manufacturing and distribution center in Victorville, California.
The increase in 2007 compared with 2006 was primarily due to investments and improvements in newly acquired
bottling operations. We continue to expect to incur discretionary annual capital expenditures in an amount equal to
approximately 5% of our net sales which we expect to fund through cash provided by operating activities.
Restructuring
We have implemented restructuring programs from time to time and have incurred costs that are designed to
improve operating effectiveness and lower costs. These programs have included closure of manufacturing plants,
reductions in force, integration of back office operations and outsourcing of certain transactional activities. We
recorded $57 million, $76 million and $27 of restructuring costs for 2008, 2007 and 2006, respectively, and we do
not expect to incur significant restructuring charges over the next 12 months. Refer to Note 14 of the Notes to our
Audited Consolidated Financial Statements for further information.
Acquisitions
We may make further acquisitions. For example, we may make further acquisitions of regional bottling
companies, distributors and distribution rights to further extend our geographic coverage. Any acquisitions may
require future capital expenditures and restructuring expenses.
Liquidity
Based on our current and anticipated level of operations, we believe that our proceeds from operating cash
flows will be sufficient to meet our anticipated obligations. To the extent that our operating cash flows are not
sufficient to meet our liquidity needs, we may utilize amounts available under our revolving credit facility.
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