Snapple 2009 Annual Report Download - page 98

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The following table summarizes the critical assumptions that were used in estimating fair value for DPS’
annual impairment tests of goodwill and intangible assets performed as of December 31, 2008:
Estimated average operating income growth (2009 to 2018) ........................... 3.2%
Projected long-term operating income growth(1).................................... 2.5%
Weighted average discount rate(2) .............................................. 8.9%
Capital charge for distribution rights(3) .......................................... 2.1%
(1) Represents the operating income growth rate used to determine terminal value.
(2) Represents the Company’s targeted weighted average discount rate of 7.0% plus the impact of specific
reporting unit risk premiums to account for the estimated additional uncertainty associated with DPS’ future
cash flows. The risk premium primarily reflects the uncertainty related to: (1) the continued impact of the
challenging marketplace and difficult macroeconomic conditions; (2) the volatility related to key input costs;
and (3) the consumer, customer, competitor, and supplier reaction to the Company’s marketplace pricing
actions. Factors inherent in determining DPS’ weighted average discount rate are: (1) the volatility of DPS’
common stock; (2) expected interest costs on debt and debt market conditions; and (3) the amounts and
relationships of targeted debt and equity capital.
(3) Represents a charge as a percent of revenues to the estimated future cash flows attributable to the Company’s
distribution rights for the estimated required economic returns on investments in property, plant, and equip-
ment, net working capital, customer relationships, and assembled workforce.
8. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following as of December 31, 2009 and 2008 (in
millions):
December 31,
2009
December 31,
2008
Trade accounts payable .................................... $ 252 $ 234
Customer rebates ......................................... 209 177
Accrued compensation ..................................... 126 86
Insurance reserves ........................................ 68 59
Third party interest accrual and interest rate swap liability........... 24 58
Other current liabilities..................................... 171 182
Accounts payable and accrued expenses ...................... $ 850 $ 796
78
DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)