Snapple 2014 Annual Report Download - page 35

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32
SOP. SOP increased $111 million for the year ended December 31, 2014, compared with the year ended December 31, 2013
as a result of the favorable comparison to the $56 million multi-employer pension plan withdrawal recorded in the prior year and
increases in net sales. Increases in SG&A expenses were fully offset by a reduction in cost of sales.
Cost of sales declined as favorable commodity costs, net of the $39 million unfavorable LIFO comparison, and ongoing
productivity improvements were partially offset by increased costs associated with product and package mix, increased costs
associated with higher branded sales volumes and higher other manufacturing costs.
The unfavorable comparison in our LIFO inventory provision was the result of a $2 million increase in the provision for the
year ended December 31, 2014 versus a $37 million decrease in the provision for the year ended December 31, 2013 driven
primarily by apple prices.
The increase in SG&A expenses for the current year were the result of the following significant drivers:
• higher logistics costs from our third party carriers driven by tighter than expected overall transportation system capacity;
• additional operating costs associated with the acquisitions of DP/7UP West and Davis; and
• the $4 million unfavorable comparison of activity related to a case against the American Bottling Company ("ABC litigation")
as we recorded a $2 million decrease in our legal provision in the current year versus a $6 million reduction in our legal
provision in the prior year.
LATIN AMERICA BEVERAGES
The following table details our Latin America Beverages segment's net sales and SOP for the years ended December 31, 2014
and 2013 (in millions):
For the Year Ended
December 31,
2014 2013 Change
Net sales $ 532 $ 462 $ 70
SOP 78 61 17
Volume. Sales volume increased 5% for the year ended December 31, 2014 as compared with the year ended December 31,
2013. The increase in sales volume was primarily driven by a 21% increase in Peñafiel as a result of product innovation. 7UP
grew by 17% in the Caribbean due to increased promotional activity, while Clamato grew 6%. Squirt, Crush and Aguafiel declined
5%, 21% and 7%, respectively, as a result of the Mexican sugar tax. Our other brands in total were flat.
Net Sales. Net sales increased $70 million for the year ended December 31, 2014 compared with the year ended December
31, 2013. Net sales increased as a result of higher pricing driven by the impact of the Mexican sugar tax, favorable mix and
increased sales volume, partially offset by $19 million of unfavorable foreign currency translation.
SOP. SOP increased $17 million for the year ended December 31, 2014 compared with the year ended December 31, 2013,
driven by increases in net sales, partially offset by increases in cost of sales and SG&A expenses. Cost of sales grew in the current
year primarily as a result of the Mexican sugar tax. Other drivers of the change in cost of sales included higher costs associated
with increased sales volumes and product and package mix, partially offset by lower commodity costs, led by packaging and
sweeteners, and ongoing productivity improvements. SG&A expenses increased primarily due to higher logistics costs and
increased people costs as a result of higher commissions, partially offset by favorable foreign currency translation. The benefit of
higher pricing was offset by increased costs due to the Mexican sugar tax.