Snapple 2008 Annual Report Download - page 82

Company operated as an independent company during all of the periods presented. To the extent that an asset,
liability, revenue or expense is directly associated with the Company, it is reflected in the accompanying
consolidated financial statements.
Prior to the May 7, 2008, separation, Cadbury provided certain corporate functions to the Company and costs
associated with these functions were allocated to the Company. These functions included corporate communi-
cations, regulatory, human resources and benefit management, treasury, investor relations, corporate controller,
internal audit, Sarbanes Oxley compliance, information technology, corporate and legal compliance and commu-
nity affairs. The costs of such services were allocated to the Company based on the most relevant allocation method
to the service provided, primarily based on relative percentage of revenue or headcount. Management believes such
allocations were reasonable; however, they may not be indicative of the actual expense that would have been
incurred had the Company been operating as an independent company for all of the periods presented. The charges
for these functions are included primarily in selling, general, and administrative expenses in the Consolidated
Statements of Operations.
Prior to the May 7, 2008, separation, the Company’s total invested equity represented Cadbury’s interest in the
recorded net assets of the Company. The net investment balance represented the cumulative net investment by
Cadbury in the Company through May 6, 2008, including any prior net income or loss attributed to the Company.
Certain transactions between the Company and other related parties within the Cadbury group, including allocated
expenses, were also included in Cadbury’s net investment.
Restatement of Net Sales and Cost of Sales related to Intercompany Eliminations
Subsequent to the issuance of the Company’s 2007 Combined Annual Financial Statements included on
Form 10, which was effective on April 22, 2008, the Company identified an error in the presentation of the
previously reported net sales and cost of sales captions on the Statement of Operations. For the years ended
December 31, 2007 and 2006, the Company’s Combined Statement of Operations included $53 million and
$35 million, respectively, of intercompany transactions that should have been eliminated upon consolidation.
In order to correct the error, the net sales and cost of sales captions have been restated in the Consolidated
Statement of Operations from the amounts previously reported as follows (in millions):
As Previously
Reported As Corrected
As Previously
Reported As Corrected
For the Year Ended
December 31, 2007
For the Year Ended
December 31, 2006
Net sales ......................... $5,748 $5,695 $4,735 $4,700
Cost of sales ...................... 2,617 2,564 1,994 1,959
These adjustments to the Consolidated Statement of Operations do not affect the Company’s Consolidated
Balance Sheets, Consolidated Statements of Changes in Stockholders’ Equity, Consolidated Statements of Cash
Flows, gross profit, income from operations or net income.
2. Significant Accounting Policies
Use of Estimates
The process of preparing financial statements in conformity with U.S. GAAP requires the use of estimates and
judgments that affect the reported amount of assets, liabilities, revenue and expenses. These estimates and
judgments are based on historical experience, future expectations and other factors and assumptions the Company
believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis
and are revised when necessary. Actual amounts may differ from these estimates. Changes in estimates are recorded
in the period of change.
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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)