Snapple 2008 Annual Report Download - page 85

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Other Assets
The Company provides support to certain customers to cover various programs and initiatives to increase net
sales, including contributions to customers or vendors for cold drink equipment used to market and sell the
Company’s products.
These programs and initiatives generally directly benefit the Company over a period of time. Accordingly,
costs of these programs and initiatives are recorded in prepaid expenses and other current assets and other non-
current assets in the Consolidated Balance Sheets. The costs for these programs are amortized over the period to be
directly benefited based upon a methodology consistent with the Company’s contractual rights under these
arrangements.
The long-term portion of these programs and initiatives recorded in the Consolidated Balance Sheets were
$83 million and $86 million, net of accumulated amortization, as of December 31, 2008 and 2007, respectively. The
amortization charge for the cost of contributions to customers or vendors for cold drink equipment was $8 million,
$9 million and $16 million for 2008, 2007 and 2006, respectively, and was recorded in selling, general and
administrative expenses in the Consolidated Statements of Operations. The amortization charge for the cost of other
programs and incentives was $14 million, $10 million and $10 million for 2008, 2007 and 2006, respectively, and
was recorded as a deduction from gross sales.
Fair Value of Financial Instruments
The carrying amounts reflected in the Consolidated Balance Sheets of cash and cash equivalents, accounts
receivable, net, and accounts payable and accrued expenses approximate their fair values due to their short-term
nature. The fair value of long term debt as of December 31, 2008, is based on quoted market prices for publicly
traded securities. The Company’s long-term debt as of December 31, 2007, was subject to variable and fixed interest
rates that approximated market rates and, as a result, the Company believes the carrying value of long-term debt
approximated the fair value.
Effective January 1, 2008, the Company adopted certain provisions of SFAS No. 157, Fair Value
Measurements, (“SFAS 157”), as required, and, accordingly, the estimated fair values of financial instruments
measured at fair value in the financial statements on a recurring basis are calculated based on market rates to settle
the instruments. These values represent the estimated amounts DPS would pay or receive to terminate agreements,
taking into consideration current market rates and creditworthiness. Refer to Note 19 for additional information.
Pension and Postretirement Benefits
The Company has U.S. and foreign pension and postretirement benefit plans which provide benefits to a
defined group of employees who satisfy age and length of service requirements at the discretion of the Company. As
of December 31, 2008, the Company had twelve stand-alone non-contributory defined benefit plans and six stand-
alone postretirement health care plans. Depending on the plan, pension and postretirement benefits are based on a
combination of factors, which may include salary, age and years of service.
Pension expense has been determined in accordance with the principles of SFAS No. 87, Employers’
Accounting for Pensions, as amended by SFAS No. 158, Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans — An amendment of Financial Accounting Standards Board Statements No. 87, 88,
106, and 132(R) (“SFAS 158”). The Company’s policy is to fund pension plans in accordance with the requirements
of the Employee Retirement Income Security Act. Employee benefit plan obligations and expenses included in the
Consolidated Financial Statements are determined from actuarial analyses based on plan assumptions, employee
demographic data, years of service, compensation, benefits and claims paid and employer contributions.
The expense related to the postretirement plans has been determined in accordance with SFAS No. 106,
Employers’ Accounting for Postretirement Benefits Other Than Pensions (“SFAS 106”), as amended by
61
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)