Snapple 2008 Annual Report Download - page 98

specific terms and provisions of the senior unsecured credit agreement and the indenture governing the senior
unsecured notes, respectively, copies of which are included as exhibits to this Annual Report on Form 10-K.
Senior Unsecured Credit Facility
The Company’s senior unsecured credit agreement provides senior unsecured financing of up to $2.7 billion,
consisting of:
• a senior unsecured term loan A facility in an aggregate principal amount of $2.2 billion with a term of five
years; and
• a revolving credit facility in an aggregate principal amount of $500 million with a maturity in 2013. The
revolving credit facility was undrawn as of December 31, 2008 except to the extent utilized by letters of
credit. Up to $75 million of the revolving credit facility is available for the issuance of letters of credit, of
which $38 million was utilized as of December 31, 2008.
During 2008, DPS borrowed $2.2 billion under the term loan A facility. The Company made combined
mandatory and optional repayments toward the principal totaling $395 million for the year ended December 31,
2008.
Borrowings under the senior unsecured credit facility bear interest at a floating rate per annum based upon the
London interbank offered rate for dollars (“LIBOR”) or the alternate base rate (“ABR”), in each case plus an
applicable margin which varies based upon the Company’s debt ratings, from 1.00% to 2.50%, in the case of LIBOR
loans and 0.00% to 1.50% in the case of ABR loans. The alternate base rate means the greater of (a) JPMorgan
Chase Bank’s prime rate and (b) the federal funds effective rate plus one half of 1%. Interest is payable on the last
day of the interest period, but not less than quarterly, in the case of any LIBOR loan and on the last day of March,
June, September and December of each year in the case of any ABR loan. The average interest rate for the year
ended December 31, 2008, was 4.9%. Interest expense was $85 million for the year ended December 31, 2008,
including amortization of deferred financing costs of $10 million.
The Company utilizes interest rate swaps, effective September 30, 2008, to convert variable interest rates to
fixed rates. The notional amounts of the swaps are $500 million and $1,200 million with durations of six months and
15 months, respectively. See Note 18 for further information regarding derivatives.
An unused commitment fee is payable quarterly to the lenders on the unused portion of the commitments in
respect of the revolving credit facility equal to 0.15% to 0.50% per annum, depending upon the Company’s debt
ratings. The Company incurred $1 million in unused commitment fees for the year ended December 31, 2008.
Additionally, interest expense included $2 million for amortization of deferred financing costs associated with the
revolving credit facility.
The Company is required to pay annual amortization in equal quarterly installments on the aggregate principal
amount of the term loan A equal to: (i) 10%, or $220 million, per year for installments due in the first and second
years following the initial date of funding, (ii) 15%, or $330 million, per year for installments due in the third and
fourth years following the initial date of funding, and (iii) 50%, or $1.1 billion, for installments due in the fifth year
following the initial date of funding. Principal amounts outstanding under the revolving credit facility are due and
payable in full at maturity.
All obligations under the senior unsecured credit facility are guaranteed by substantially all of the Company’s
existing and future direct and indirect domestic subsidiaries.
The senior unsecured credit facility contains customary negative covenants that, among other things, restrict
the Company’s ability to incur debt at subsidiaries that are not guarantors; incur liens; merge or sell, transfer, lease
or otherwise dispose of all or substantially all assets; make investments, loans, advances, guarantees and
acquisitions; enter into transactions with affiliates; and enter into agreements restricting its ability to incur liens
74
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)