Snapple 2008 Annual Report Download - page 50

Recent Developments
Formation of the Company and Separation from Cadbury
On May 7, 2008, Cadbury separated its Americas Beverages business from its global confectionery business by
contributing the subsidiaries that operated its Americas Beverages business to us. In return for the transfer of the
Americas Beverages business, we distributed our common stock to Cadbury plc shareholders. As of the date of
distribution, a total of 800 million shares of our common stock, par value $0.01 per share, and 15 million shares of
our undesignated preferred stock were authorized. On the date of distribution, 253.7 million shares of our common
stock were issued and outstanding and no shares of preferred stock were issued. On May 7, 2008, we became an
independent publicly-traded company listed on the New York Stock Exchange under the symbol “DPS”. We entered
into a Separation and Distribution Agreement, Transition Services Agreement, Tax Sharing and Indemnification
Agreement (“Tax Indemnity Agreement”) and Employee Matters Agreement with Cadbury, each dated as of May 1,
2008.
New Financing Arrangements
During 2008, we entered into financing arrangements, including a $2.7 billion senior unsecured credit
agreement that provides a $2.2 billion term loan A facility and a $500 million revolving credit facility. We
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.
2008 Impairment
Our annual impairment analysis, performed as of December 31, 2008, resulted in net non-cash impairment
charges of $696 million for 2008 ($1,039 million net of tax benefit of $343 million). The pre-tax charges consisted
of $278 million related to the Snapple brand, $581 million related to the Bottling Group’s distribution rights and
$180 million related to the Bottling Group’s goodwill. Deteriorating economic and market conditions in the fourth
quarter triggered higher discount rates as well as lower volume and growth projections which drove these
impairments. Indicative of the economic and market conditions, our average stock price declined 19% in the
fourth quarter as compared to the average stock price from May 7, 2008, the date of our separation from Cadbury,
through September 30, 2008.
Hansen Natural Distribution Agreement Termination
In letters dated October 10, 2008, and December 11, 2008, we received formal notification from Hansen
Natural Corporation (“Hansen”), terminating our agreements to distribute Monster Energy as well as other
Hansen’s beverage brands in certain markets in the United States and Mexico effective November 10, 2008,
and January 26, 2009, respectively. The termination of the Hansen distribution agreement in the United States
reduced 2008 net sales by $23 million. During 2008, our Bottling Group generated approximately $197 million and
$38 million in net sales and operating profits, respectively, from sales of Hansen brands to third parties in the United
States and our Mexico and the Caribbean segment generated approximately $19 million and $6 million in net sales
and operating profits, respectively, from sales of Hansen Natural brands to third parties in Mexico.
Results of Operations
For the periods prior to May 7, 2008, our consolidated financial statements have been prepared on a “carve-
out” basis from Cadbury’s consolidated financial statements using historical results of operations, assets and
liabilities attributable to Cadbury’s Americas Beverages business and including allocations of expenses from
Cadbury. The historical Cadbury’s Americas Beverages information is our predecessor financial information. We
eliminate from our financial results all intercompany transactions between entities included in the combination and
the intercompany transactions with our equity method investees. On May 7, 2008, we became an independent
company.
References in the financial tables to percentage changes that are not meaningful are denoted by “NM.”
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