Dr. Pepper Snapple expecting to retire $400 million of debt in 2009

By Jennifer Lanning Drey

Portland, Ore., March 26 - Dr. Pepper Snapple Group, Inc. plans to use free cash flow to retire at least $400 million of debt in 2009, John Stewart, chief financial officer of Dr. Pepper Snapple, said during the company's fourth-quarter earnings call held Thursday.

The company has already met its 2009 principal obligations, so further debt reduction will be focused on prepaying 2010 and 2011 obligations, he said.

Dr. Pepper Snapple generated $709 million of cash in 2008, enabling $395 million of debt repayment during the year.

The company expects to generate strong cash from operations in 2009 and will continue to pursue working capital improvements, Stewart said.

Dr. Pepper Snapple estimates it will need to contribute $43 million toward its pension and post-retirement plan during the year. The company also plans to continue to spend 5% of net sales on capital expenditures to fund growth initiatives.

Dr. Pepper Snapple's net sales declined 1% for the fourth quarter, as compared to the prior-year period. The loss from operations was $836 million, compared to income of $273 million in the fourth quarter of 2007.

"As we look ahead, forecast visibility continues to be a challenge," Stewart said. "Our plans reflect current market conditions, yet they provide us the flexibility to act quickly if things change."

Dr. Pepper Snapple is a beverage company based in Plano, Texas.

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