Snapple 2008 Annual Report Download - page 99

or the ability of subsidiaries to make distributions. These covenants are subject to certain exceptions described in the
senior credit agreement. In addition, the senior unsecured credit facility requires the Company to comply with a
maximum total leverage ratio covenant and a minimum interest coverage ratio covenant, as defined in the senior
credit agreement. The senior unsecured credit facility also contains certain usual and customary representations and
warranties, affirmative covenants and events of default. As of December 31, 2008, the Company was in compliance
with all covenant requirements.
Senior Unsecured Notes
During 2008, the Company completed the issuance of $1.7 billion aggregate principal amount of senior
unsecured notes consisting of $250 million aggregate principal amount of 6.12% senior notes due 2013, $1.2 billion
aggregate principal amount of 6.82% senior notes due 2018, and $250 million aggregate principal amount of
7.45% senior notes due 2038. The weighted average interest cost of the senior unsecured notes is 6.8%. Interest on
the senior unsecured notes is payable semi-annually on May 1 and November 1 and is subject to adjustment. Interest
expense was $78 million for the year ended December 31, 2008, including amortization of deferred financing costs
of $1 million.
The indenture governing the senior unsecured notes, among other things, limits the Company’s ability to incur
indebtedness secured by principal properties, to enter into certain sale and lease back transactions and to enter into
certain mergers or transfers of substantially all of DPS’ assets. The senior unsecured notes are guaranteed by
substantially all of the Company’s existing and future direct and indirect domestic subsidiaries.
On May 7, 2008, upon the Company’s separation from Cadbury, the borrowings under the term loan A facility
and the net proceeds of the senior unsecured notes were released to DPS from collateral accounts and escrow
accounts. The Company used the funds to settle with Cadbury related party debt and other balances, eliminate
Cadbury’s net investment in the Company, purchase certain assets from Cadbury related to DPS’ business and pay
fees and expenses related to the Company’s credit facilities.
Bridge Loan Facility
The Company’s bridge credit agreement provided a senior unsecured bridge loan facility in an aggregate
principal amount of $1.7 billion with a term of 364 days from the date the bridge loan facility is funded.
On April 11, 2008, DPS borrowed $1.7 billion under the bridge loan facility to reduce financing risks and
facilitate Cadbury’s separation of the Company. All of the proceeds from the borrowings were placed into interest-
bearing collateral accounts. On April 30, 2008, borrowings under the bridge loan facility were released from the
collateral account containing such funds and returned to the lenders and the 364-day bridge loan facility was
terminated. For the year ended December 31, 2008, the Company incurred $24 million of costs associated with the
bridge loan facility. Financing fees of $21 million, which were expensed when the bridge loan facility was
terminated, and $5 million of interest expense were included as a component of interest expense. These costs were
partially offset as the Company earned $2 million in interest income on the bridge loan while in escrow.
Capital Lease Obligations
Long-term capital lease obligations totaled $17 million and $19 million as of December 31, 2008, and
December 31, 2007, respectively. Current obligations related to the Company’s capital leases were $2 million as of
December 31, 2008, and December 31, 2007, and were included as a component of accounts payable and accrued
expenses.
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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)