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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The consolidated financial statements may not be indicative of the Company’s future performance and may not reflect
what its consolidated results of operations, financial position and cash flows would have been had the 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 communications, regulatory, human
resources and benefit management, treasury, investor relations, corporate controller, internal audit, Sarbanes Oxley compliance,
information technology, corporate and legal compliance and community 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.
The Company has evaluated subsequent events through the date of issuance of our Audited Consolidated Financial
Statements.
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.
Cash and Cash Equivalents
Cash and cash equivalents include cash and investments in short-term, highly liquid securities, with original maturities of
three months or less.
The Company is exposed to potential risks associated with its cash and cash equivalents. DPS places its cash and cash
equivalents with high credit quality financial institutions. Deposits with these financial institutions may exceed the amount of
insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the
financial risks associated with these financial instruments are minimal.
Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the required
allowance for doubtful collections using information such as its customer credit history and financial condition, industry and
market segment information, economic trends and conditions and credit reports. Allowances can be affected by changes in the
industry,customer credit issues or customer bankruptcies. Accountbalances are charged against the allowance when it is determined
that the receivable will not be recovered.
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