Snapple 2009 Annual Report Download - page 35

upon our annual impairment analysis performed as of December 31, 2009. For additional information about these
intangible assets, see “Critical Accounting Estimates — Goodwill and Other Indefinite Lived Intangible Assets” in
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our
Audited Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data,” in
this Annual Report on Form 10-K.
The impairment tests require us to make an estimate of the fair value of intangible assets. Since a number of
factors may influence determinations of fair value of intangible assets, we are unable to predict whether
impairments of goodwill or other indefinite lived intangibles will occur in the future. Any such impairment
would result in us recognizing a non-cash charge in our Statement of Operations, which may adversely affect our
results of operations.
We have a substantial amount of outstanding debt, which could adversely affect our business and our
ability to meet our obligations.
As of December 31, 2009, our total indebtedness was $2,971 million. Total indebtedness is defined as long-
term obligations of $2,960 million, plus the $8 million adjustment related to the change in the fair value of interest
rate swaps designated as fair value hedges and the $3 million of current obligations related to capital leases included
as a component of accounts payable and accrued expenses. Subsequent to December 31, 2009, the Company made
optional repayments of $405 million, which represented the outstanding principal balance on the revolving credit
facility (the “Revolver”) as of December 31, 2009.
This substantial amount of debt could have important consequences to us and our investors, including:
• requiring a portion of our cash flow from operations to make interest payments on this debt; and
• increasing our vulnerability to general adverse economic and industry conditions.
To the extent we experience deteriorating economic conditions, the risks described above would increase.
Additionally, it may become more difficult to satisfy debt service and other obligations, the cash flow available to
fund capital expenditures, other corporate purposes and to grow our business could be reduced. Our actual cash
requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to
repay at maturity all of the outstanding debt as it becomes due.
In addition, the credit agreements governing our debt contain covenants that, among other things, limit our
ability to incur debt at subsidiaries that are not guarantors, incur liens, merge or sell, transfer or otherwise dispose of
all or substantially all of our assets, make investments, loans, advances, guarantees and acquisitions, enter into
transactions with affiliates and enter into agreements restricting our ability to incur liens or the ability of our
subsidiaries to make distributions. The credit agreement also requires us to comply with certain affirmative and
financial covenants.
We may not comply with applicable government laws and regulations and they could change.
We are subject to a variety of federal, state and local laws and regulations in the United States, Canada, Mexico
and other countries in which we do business. These laws and regulations apply to many aspects of our business
including the manufacture, safety, labeling, transportation, advertising and sale of our products. See “Regulatory
Matters” in Item 1, “Business,” of this Annual Report on Form 10-K for more information regarding many of these
laws and regulations. Violations of these laws or regulations could damage our reputation and/or result in regulatory
actions with substantial penalties. In addition, any significant change in such laws or regulations or their
interpretation, or the introduction of higher standards or more stringent laws or regulations could result in
increased compliance costs or capital expenditures. For example, changes in recycling and bottle deposit laws or
special taxes on soft drinks or ingredients could increase our costs. Regulatory focus on the health, safety and
marketing of food products is increasing. Certain state warning and labeling laws, such as California’s “Prop 65,”
which requires warnings on any product with substances that the state lists as potentially causing cancer or birth
defects, could become applicable to our products.
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