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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 communi-
cations, regulatory, human resources and benefit management, treasury, investor relations, corporate controller,
internal audit, Sarbanes Oxley compliance, information technology, corporate and legal compliance and commu-
nity 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.
64
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)