Snapple 2009 Annual Report Download - page 54

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Items Impacting the Consolidated Statements of Operations
The following transactions related to our separation from Cadbury were included in the Consolidated
Statements of Operations for the year ended December 31, 2009 and 2008 (in millions):
2009 2008
Transaction costs and other one time separation costs(1) ...................... $ — $ 33
Costs associated with the bridge loan facility(2) ............................ — 24
Incremental tax (benefit) expense related to separation, excluding indemnified
taxes .......................................................... (5) 11
Impact of Cadbury tax election(3) . . . ................................... — 5
(1) DPS incurred transaction costs and other one time separation costs of $33 million for the year ended
December 31, 2008. These costs are included in SG&A expenses in the statement of operations.
(2) The Company incurred $24 million of costs for the year ended December 31, 2008, associated with the
$1.7 billion bridge loan facility which was entered into to reduce financing risks and facilitate Cadbury’s
separation of the Company. Financing fees of $21 million, which were expensed when the bridge loan facility
was terminated on April 30, 2008, and $5 million of interest expense were included as a component of interest
expense, partially offset by $2 million in interest income while in escrow.
(3) The Company incurred a charge to net income of $5 million ($9 million tax charge offset by $4 million of
indemnity income) caused by a tax election made by Cadbury in December 2008.
Items Impacting Income Taxes
The consolidated financial statements present the taxes of our stand alone business and contain certain taxes
transferred to us at separation in accordance with the Tax Indemnity Agreement between us and Cadbury. This
agreement provides for the transfer to us of taxes related to an entity that was part of Cadbury’s confectionery
business and therefore not part of our historical consolidated financial statements. The consolidated financial
statements also reflect that the Tax Indemnity Agreement requires Cadbury to indemnify us for these taxes. These
taxes and the associated indemnity may change over time as estimates of the amounts change. Changes in estimates
will be reflected when facts change and those changes in estimate will be reflected in our statement of operations at
the time of the estimate change. In addition, pursuant to the terms of the Tax Indemnity Agreement, if we breach
certain covenants or other obligations or we are involved in certain change-in-control transactions, Cadbury may
not be required to indemnify us for any of these unrecognized tax benefits that are subsequently realized.
Kraft acquired Cadbury on February 2, 2010 and, therefore, assumes responsibility for Cadbury’s indemnity
obligations under the terms of the Tax Indemnity Agreement.
Refer to Note 12 of the Notes to our Audited Consolidated Financial Statements for further information
regarding the tax impact of the separation.
34