Snapple 2008 Annual Report Download - page 94

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6. Inventories
Inventories as of December 31, 2008 and 2007 consisted of the following (in millions):
December 31,
2008
December 31,
2007
Raw materials ........................................... $ 78 $110
Finished goods ........................................... 235 245
Inventories at FIFO cost .................................. 313 355
Reduction to LIFO cost .................................... (50) (30)
Inventories ............................................ $263 $325
7. Property, Plant and Equipment
Net property, plant and equipment consisted of the following as of December 31, 2008 and 2007 (in
millions):
December 31,
2008
December 31,
2007
Land .................................................. $ 84 $ 90
Buildings and improvements................................. 272 260
Machinery and equipment .................................. 911 775
Cold drink equipment...................................... 157 124
Software ............................................... 111 106
Construction-in-progress .................................... 141 119
Gross property, plant and equipment ......................... 1,676 1,474
Less: accumulated depreciation and amortization.................. (686) (606)
Net property, plant and equipment........................... $ 990 $ 868
Building and improvements included $23 million of assets at cost under capital lease and machinery and
equipment included $1 million of assets at cost under capital lease as of December 31, 2008 and 2007. The net book
value of assets under capital lease was $19 million and $22 million as of December 31, 2008 and 2007, respectively.
Depreciation expense amounted to $141 million, $120 million and $94 million in 2008, 2007 and 2006,
respectively. Depreciation expense was comprised of $53 million, $53 million and $45 million in cost of sales and
$88 million, $67 million and $49 million in depreciation and amortization on the Consolidated Statement of
Operations in 2008, 2007 and 2006, respectively.
Capitalized interest was $8 million, $6 million and $3 million during 2008, 2007 and 2006, respectively.
8. Investments in Unconsolidated Subsidiaries
The Company has an investment in a 50% owned Mexican joint venture which gives it the ability to exercise
significant influence over operating and financial policies of the investee. However, the investment represents a
noncontrolling ownership interest and is accounted for under the equity method of accounting. The carrying value
of the investment was $12 million and $13 million as of December 31, 2008 and 2007, respectively. The Company’s
proportionate share of the net income resulting from its investment in the joint venture is reported under line item
captioned equity in earnings of unconsolidated subsidiaries, net of tax, in the Consolidated Statements of
Operations.
70
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)