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BEVERAGES (continued) Soft Drinks 7UP remained the largest-selling soft drink in food stores in the Province of British Columbia and the second largest-selling brand in the Manitoba and Saskatchewan markets. A dramatic share-of-market increase was recorded in the Province of Manitoba. Two important goals for Seven-Up Canada in 1977 were: first, the rebuilding of an effective marketing team within the Franchise Division following the transfer of several key executives to Seven-Up U.S.A.; and, second, the reorganiza- tion of the Company-owned Bottling Division. Under the previous organization, the Bottling Division had served the entire Toronto area and southwest Ontario, utilizing a distribution network of six warehouses. In 1977, five independent distributors were appointed to serve the outlying areas of southwest Ontario, permitting the Bottling Division to concentrate on the underdeveloped but high-potential Toronto market. A 25 percent sales increase in southwest Ontario and a 20 percent sales increase in metropolitan Toronto are indicative of the effectiveness of the new organization. The area served by the Toronto bottling operation showed significant market share increases. _ For the first time, the advertising programs of Seven-Up Canada included separate French language promotions for the Province of Quebec. The Quebecois slogan "Hop la vie!"- "Up with Life"-was used as a pun on 7UP to motivate Quebec consumers to continue purchasing and enjoying 7UP at their histori- cally high levels of consumption. On October 1, the government ban on the use of saccharin in Canada was put into effect, necessitating the withdrawal of Sugar Free 7UP from all Canadian markets. Leading the industry, Seven-Up Canada launched on August 29 a reformulated, calorie-reduced soft drink called Diet 7UP, containing less than half the calories of 7UP. The new brand, which utilizes Isomerose 900"' (a sugar derived from corn), has achieved the number two position in the diet segment of the market. Despite the potential for additional govern- ment legislation, both in terms of packaging and product regulation, management expects to maintain the overall momentum of 7UP sales in Canada and to achieve even higher volume and market share levels. Seven-Up International, Inc. Seven-Up International, Inc. achieved record sales for the year. Increased sales performance was further influenced positively by favorable currency translation rates in several overseas markets. Vigorous volume increases for 7UP were achieved in Latin America, the Middle East and Asia. Europe, while experiencing an unfavorably cool summer, saw 7UP solidify its share position in most markets. The introduction of 7UP in 1976 in London was expanded during 1977 to include all of the United Kingdom-England, Scotland and Wales. 7UP was also introduced in the Isle of Madeira; Grand Cayman Isles; Tunis, Tunisia; Puebla, Toluca and Pachuca, Mexico; Frederikstad, Norway; and, Windhoek in Southwest Africa. In Holland, Sugar Free 7UP became the first international brand to enter the diet soft drink field. It quickly established its acceptance in the Dutch market and added brand share to the already strong position 7UP enjoys in that country. Seven-Up International has sharply increased its sales revenue and profit base in the past five years, and anticipates accelerated growth in overseas markets in 1978 and the years ahead. 10

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BEVERAGES (continued) Lemon Products Ventura Coastal Corporation Ventura Coastal Corporation posted record sales and earnings in 1977, contributing significantly to corporate profitability for the year. The subsidiary, which is a leading U.S. producer of frozen concentrate for lemonade, experienced particularly high sales growth in lemonade concentrate and also in lemon oil, a principal ingredient in the production of 7UP Extract. Three factors were instrumental to Ventura Coastal's exceptionally good performance for 1977: increased lemon production, expanded fruit processing capacity, and a significant increase in business from new customers. Ventura Coastal's second largest lemon harvest in history, up approximately 40 percent over 1976, was helped by normal, good growing weather. Also, trees planted in 1973 and 1974 began to mature, with fruit yields contributing noticeably to the total lemon harvest for the year. Lemon crop predictions for 1978 indicate a similarly successful harvest. Seven new private label brands of frozen concentrate for lemonade were added during the year, and 1977 marked the first full year for supplying the frozen lemonade requirements of two major supermarket chains. Ventura Coastal presently produces 71 brands of frozen concentrate for lemonade. Phase I of the $2 million expansion begun in 1976 has been completed, doubling the Company's fruit processing capacity. The installation of additional juice extractors and expansion of facilities for production of frozen concentrate for lemonade now enables Ventura Coastal to process 600 tons of fresh fruit daily, as compared with 280 tons previously. The new $1 million frozen storage ware- house adjacent to existing production and warehouse facilities will be completed in late spring, 1978. This new 20,000-square-foot warehouse will nearly double present capacity for storage of frozen concentrate for lemonade, and will result in significant savings in outside storage and freight costs later in 1978 and 1979. Golden Crown Citrus Corporation Led by the successful introduction of a full line of flavored soft drink mixes, Golden Crown Citrus Corporation of Evanston, Illinois, reported a significant increase in volume sales for 1977. Golden Crown became an affiliate of Ventura Coastal Corp. in 1974 and is a leading producer of reconstituted lemon and lime juice, operating production facilities in Evanston and Bridgeton, N.J. In 1976, Golden Crown successfully intro- duced a lemonade-flavored powdered soft drink mix on a test market basis in selected cities. Based on the results of that testing, the lemonade-flavored powdered mix and a full line of other flavors - cherry, grape, orange and tropical punch-were marketed nationally in 1977. Concentrating its efforts on producing a superior product at competitive prices, Golden Crown expanded distribution of its soft drink mixes from a single flavor in four markets to five flavors in more than 40 markets nationwide in 1977-covering nearly 65 percent of the potential domestic market in the first full year of distribution. To meet the demand for Golden Crown products on the West Coast, especially reconsti- tuted lemon and lime juice, a bottling facility within the Ventura Coastal production complex was opened in December 1977. The expansion facilitates distribution of Golden Crown products on the West Coast and in adjoining western states. 12

FOOD FLAVORS & COLORS Warner-Jenkinson Company The Warner-Jenkinson Company is a leading producer of food flavors and colors. As a group, Warner-Jenkinson companies in the U.S. experienced moderate sales growth in 1977. Flavor and food color dollar sales showed good gains, exceeding the record performance of 1976. Lemon flavor by-product sales, however, declined substantially. Declining margins in food colors, significant increases in cost of materials and processing operations, and the sharp decline in margins of lemon flavor by-products had a material impact on operations. In addition, costs for retesting the safety of certified food colors, as required by the government, increased operating expenses significantly. The Company's new 125,000-square-foot Hyde Park food color plant in St. Louis completed its first full year of operation in 1977. This new manufacturing facility increases the Company's food dye and lake pigment production capacity by 75 percent. Warner-Jenkinson East, Inc. In May 1977, Warner-Jenkinson East combined the fragrance and flavor production operations of the Manhattan and Brooklyn facilities into a new, single installation in Carlstadt, New Jersey. This new building complex now serves also as a sales and distribution center for flavors and food colors. Consolidating these multiple functions in one location provides more efficient adminis- tration of Warner-Jenkinson's fragrance and flavor units and provides greatly improved service to East Coast customers. Warner-Jenkinson of California Warner-Jenkinson of California set record sales for the Specialty Product Division's lines of Chefmastee- cake decorating colors and Flavor Milil~ brand gourmet flavors in 1977. Operating at consistently high efficiency levels throughout the year, the Santa Ana manufac- turing and distribution center also produces and markets Warner-Jenkinson's Red Sea1'91 lines of food flavors and colors throughout the Western U.S. Warner-Jenkinson S.A. de C.V. Record sales and shipments of food colors were achieved by Warner-.Jenkinson S.A. de C.V. for the third consecutive year. The affiliate, which maintains offices in Mexico City and manufacturing facilities in Lerma, markets and distributes food colors to customers in Mexico and Central and South America. 14

FINANCIAL REVIEW Business Description The Seven-Up Company is basically engaged in two business segments; beverages and food flavors and colors. The beverage segment is engaged in the manufacture and sale of extract to independently- owned franchised 7UP Developers (bottlers) in United States, Canadian and international markets. The beverage segment also supplies finished soft drink products manufactured by independent contract canners to some Developers for resale and provides all Developers with marketing, advertising, management and financial services. In addition, this segment includes two bottling plant operations and the manufacture and sale of frozen concentrate for lemonade, reconstituted lemon and lime juice and powdered soft drink mixes. The food flavor and color segment of The Seven-Up Company includes the manufacture of food flavors and colors for sale to various producers of foods and pharmaceuticals. It also includes the manufacture and sale of cake decorating colors and gourmet flavor specialty products. In each of the two product groups (beverages and food flavors and colors) competition is intense. Major competitors normally have substantially greater sales and financial resources. From time to time, raw materials essential in the manufacture of products in these groups are difficult to acquire. The Company attempts to protect itself against such problems by maintain- ing adequate inventories. Management's Discussion and Analysis of Operations In 1977, consolidated sales of The Seven-Up Company reached record levels of $250,998,056. This is an increase of 7.6 percent over 1976 sales of $233,282,664. Although net dollar sales increased in 1977 at more modest rates than in previous years, sales during the last five years have increased at an annual rate of 13.6 percent. This rate is within the long-range sales growth plan of the Company. For an extended period in 1977, the controversy in the U.S. over the sale of saccharin-based products, as well as the actual ban in Canada, unfavorably influenced total consolidated dollar sales. Also in 1977, average selling prices of Company products were generally below 19761evels, with product unit sales increasing at rates in excess of dollar sales. The distribution of net sales by business segment for the current and previous two years has been: Net Sales Percent Percent 1977 1976 Change 1975 Change s (000) (000) 1977/1976 (000) 1976/1975 B v ra g e e e Soft drinks ................... . ............ Lemon products .... . .... . ............. , _-. Total Beverages ......... . ....... . ... . . > .. Food Flavors and Colors ........ . .......... . .-.- Total ....................-:..:._....:: $193,677 $184,134 + 5.2 $171,290 + 7.5 35,163 28,394 + 23.8 - 26,906 + 5.5 - 228,840 212,528 + 7.7 198,196 + 7.2 22,158 20 755 + 6.8 15 427 + 34 5 , - , . $250,998 $233,283 + 7.6 $213,623 + 9.2 In 1977, total beverage dollar sales increased 7.7 percent over the previous year. In the U.S., consolidated unit sales of both 7UP and Sugar Free 7UP soft drink extracts increased modestly to set new records. In the U.S. unit sales trends for the last six months improved with the resumption of marketing support of Sugar Free 7UP. Soft drink extract unit sales in international and Canadian markets, despite the October 15 Canadian ban of saccharin, grew at rates higher than those in the U.S. In international markets, extract unit sales in the important Argentine market were below 19761evels. However, sales in Mexico were significantly higher than a year ago. Unit sales of finished soft drink products grew at a rate in excess of that experienced by soft drink extracts. For 1977, 7UP Developers in the United States reported to the Company the following distribution of sales by package type based on equivalent 8-ounce cases. Percent of Total Case Sales 1977 Cans ............................:....:.::.. . :..:...:.:. :...:c...r. 30.9 Non-returnable Bottles .. . ..... ..-............... . ........ . . ..<. . . , 24.6 Subtotal ............... ....... -_.................. .:...... ,,.:.::. - 55.5 Returnable Bottles .... . ................. ........... . . . . . . . .. . 32.3 Bulk Sales ................. ............ ....... ....... ..................... . 12.2 100.0 1976 28.3 25.7 54.0 34.5 11.5 100.0 16

Unit sales of lemon products, primarily frozen concentrate for lemonade, reconstituted lemon juice and lemon oil were up sharply. Also, sales of fresh fruit processed for resale reached record levels. The Golden Crown expanded line of flavored powdered soft drink mixes contributed to increased dollar sales. Lower food flavor unit sales were offset by significantly higher food color and specialty product sales. Dollar sales did not reflect the growth of unit sales because of lower selling prices. The distribution of income before taxes by business segment for the last three years has been: Income Before Taxes Percent Percent 1977 1976 Change 1975 Change (000) (000) 1977/1976 (000) 1976/1975 Beverages ......... ....... ..._........ ,,..$48,464 $46,152 + 5,0 $41,579 + 11.0 Food flavors and colors - From operations .................... ........ 1,327 1,717 - 22.7 433 + 296.5 Long-term research project ....... . . . ........ (1,000) 327 1,717 - 81.0 433 + 296.5 Total operating profit. . ........... _ . -48,791 47,869 + 1.9 42,012 + 13.9 Corporate expenses ........ .......... ........ (3,360) (3,109) + 8.1 (2,834) + 9.7 Interest income-net . . . ............... ....... :. . : 2,009 1,908 + 5.3 1,770 + 7.8 Currency-gains (losses) . ............ _ .... - (231) 477 (1,104) Income before income taxes ........ .... . _ . $47,209 $47,145 + 0.1 $39,844 + 18.3 The profit contribution to income before tax of the beverage segment increased 5.0 percent over 1976. Lower selling prices in finished soft drinks and frozen concentrate for lemonade reduced the rate of dollar sales increase for this segment. Also, a shift in the sales mix between finished goods and soft drink extract modestly reduced the profitability ratios for the group to 21.2 percent of sales in 1977, ~compared to 21.7 percent in 1976. The profitability of the food flavors and colors segment was 22.7 percent below 1976. Competitive pricing of food colors and the absorption of increased costs reduced profit margins. The profitability of this segment as a percent of sales was 6.0 percent in 1977 (excluding long- term research project), versus 8.3 percent in 1976. For 1977, this segment included the first year research expenditures of $1,000,000 (five cents per share) related to the development of non-absorbable food colors. In summary, the contribution of the two business segments to consolidated sales and operating income for 1977 and prior years has been: 1977 1976 1975 1974 1973 Net sales (expressed in thousands of dollars) Beverages .............. ................ -. $228,840 $212,528 $198,196 $172,749 $134,471 Food flavors and colors ................... 22,158 20,755 15,427 18,131 12,277 Total Sales .......................... . ... $250,998 $233,283 $213,623 $190,880 $146,748 Operating profit Beverages ................ ........... :.. $ 48,464 $ 46,152 s 41,579 $ 30,017 $ 26,505 Food flavors and colors From operations ................... .., 1,327 1,717 433 2,850 1,695 Long-term research project ......... . . . . (1,000) 327 1.717 433 2,850 1,695 Total Operating Profit ........ . . . . . .... s 48,791 s 47,869 s 42.012 $ 32,867 $ 28.200 TOTAL CORPORATE NET SALES (Millions of Dollars) 1973 1974 1975 1976 1977 146.7 190.9 213.6 233.3 251.0 17

FINANCIAL REVIEW (continued) Quarterly Review Highlights The consolidated sales for The Seven-Up Company and its subsidiaries by fiscal quarters were: Net Sales 1977 Percent Change 1976 Percent Change 1975 Percent Change (000) 1977/1976 (000) 1976/1975 (000) 1975/1974 First Quarter. . . . . . . . . . . . . . . . . . S 50,416 + 2.8 s 49,030 +17.8 $ 41,617 + 25.4 Second Quarter . ............ 74,800 + 10.4 __ 67,783 7,783 + 11.9 60,574 _ + 15.7 Six Months ................... 125,216 + 7.2 116,813 + 14.3 102,191 + 19.5 Third Quarter . . . . ..... . . . . . _ _-, 70,002 ~ 8.7 64,374 + 4.3 61,734 + 7.3 Nine Months.................. 195,218 + 7.7 181,187 + 10.5 163,925 + 14.6 Fourth Quarter . . .... . ...... . . 55,780 + 7.1 52,096 + 4.8 49,698 + 3.9 Year ........................ $250,998 + 7.6 $233,283 + 9.2 $213,623 + 11.9 First Quarter (January-March) Consolidated sales of $50,416,083 increased 2.8 percent over the same quarter of the previous year. The first quarter of 1976 had been favorably influenced by advanced shipments of soft drink extracts made in anticipation of a transportation strike. Net income for the first quarter was $4,864,263, modestly below the comparable 1976 quarter of $4,898,163. Earnings per share for the quarter were 45 cents in both 1977 and 1976. Soft drink U.S. extract unit sales declined comparatively in the first quarter. However, if the prior year's sales are adjusted for the abnormal advanced shipments, the current quarter exceeded both the plan and previous years. Canadian soft drink unit sales were up significantly for the period. In international markets, unit sales were below year-ago levels, influenced unfavorably by the important Argentine and Mexican markets. Unit sales of Sugar Free 7UP Extract were below year-ago levels in both U.S. and Canadian markets, as Developers adjusted inventory levels in anticipation of the proposed saccharin ban. Unit sales of lemon products from Ventura Coastal Corporation, frozen concentrate for lemonade as well as fresh fruit, were sharply higher for the quarter. Average selling prices were below 19761evels. In addition, Golden Crown Citrus Corporation expanded its powdered soft drink product line to include additional flavors and introduced them nationally to the grocery trade. First quarter food flavor dollar and unit sales were below previous year's results. Sales of food colors in 1977 equalled peak 1976 levels, when Red #40 sales accelerated to fill the market void created by the ban of Red #2. Net other income in 1977 reflected a gain on the sale of Canadian real estate which was no longer required after the distribution system of the Toronto bottling division was restructured. Adjustments for translation and foreign exchange transactions were not material in the first quarters of 1977 and 1976. Second Quarter (April-June) For the three-month period ended June 30, 1977, consolidated net sales were $74,799,707, an increase of 10.4 percent over 1976 second quarter sales of $67,783,687. Consolidated dollar sales for the month of June and the second quarter 1977 were the largest in the history of the Company. Net income for the quarter was $7,995,162 in 1977, compared with $7,340,212 in 1976, an increase of 8.9 percent. Earnings per share were 74 cents, compared with 68 cents in 1976. Unit sales of 7UP Extract increased significantly in both the U.S. and Canadian markets over the second quarter of 1976. Extract sales in international markets were up sharply. Unit sales of Sugar Free 7UP Extract increased in U.S. markets during the second quarter but declined significantly in Canadian markets in anticipation of the announced saccharin ban. Unit and dollar sales of frozen concentrate for lemonade were up sharply for the period and made a record contribution to total corporate sales. Unit sales of flavored soft drink powdered mixes, introduced in the first quarter 1977, continued to gain consumer acceptance. Unit sales of food color and specialty products in the second quarter of 1977 were significantly higher than 1976. Average selling prices and sales margins were below year-ago levels as a result of competitive pricing. For the quarter, food flavor sales were below year-ago levels. Net other income for the quarter was below that reported in 1976, primarily as a result of lower interest and royalty payments. 18

Third Quarter (July-September) Dollar sales for the third quarter 1977 were $70,002,583, an increase of 8.7 percent over 1976 sales of $64,374,469. Third quarter 1977 sales were the largest ever reported for that three- month period and were favorably influenced by the warm weather in July and August. Net income of $7,378,468 was also a third quarter record, increasing 7.9 percent over the $6,840,745 earned in 1976. U.S. soft drink extract sales were up significantly. Canadian unit sales increased more modestly, with less favorable weather and the "phasing out" of saccharin-based Sugar Free 7UP. Diet 7UP, a new product with 50% fewer calories than 7UP, was introduced into the Canadian market in August. International extract sales continued to accelerate and reflected a sharp increase over 1976 sales, with improved trends in Mexican and Asian markets. Sales in Argentina continued to be below 1976 results. Case sales of finished soft drinks were at record levels. However, lower average selling prices produced more modest gains in dollar sales compared with 1976. Lemon product unit sales, primarily frozen concentrate for lemonade, made record sales and net income contribution to this quarter. Dollar sales of food flavor and color products were modestly above 1976 results, but lower selling prices in food colors reduced 1977 net income sharply from the comparable 1976 quarter. Lower food flavor and color unit sales for the 1977 quarter were offset by significantly higher specialty product unit sales. Net other income was $587,471, as compared with $903,845 in 1976. For 1977, third quarter earnings were 68 cents, with immaterial currency and translation adjustments. In 1976, earnings were 63 cents for the quarter, including a currency gain of 3 cents resulting from the Mexican peso adjustment. Fourth Quarter (October- December) For the three months ended December 31, 1977, consolidated sales were $55,779,683, increasing 7.1 percent over 1976 sales of $52,094,823. _ Net income for the quarter was $5,551,391, a decline of 2.1 percent from fourth quarter 1976 net income of $5,671,885. Quarterly earnings per share in 1977 were 51 cents versus 52 cents in the previous year. Consolidated soft drink extract unit sales fell modestly below the record 1976 fourth quarter, although unit sales of Sugar Free 7UP were up significantly over the previous year. Unit case and dollar sales of finished soft drink products were sharply higher than in 1976. The resulting change in sales mix reduced consolidated gross profit on sales below normal levels for this quarter. _ Operating expenses increased 6.8 percent to $18,950,391, compared with $17,745,090 in 1976. Marketing support expenditures for the important holiday selling season were increased during the quarter. Net other income for the quarter declined from $735,100 in 1976 to $504,671 in 1977. Net interest income and royalties were higher in 1977 than in the previous year. However, the write- off in Canada of Sugar Free 7UP containers, made obsolete by the saccharin ban, as well as a non-recurring inventory adjustment of a foreign subsidiary, reduced other income below year- ago levels._ The net effect of adjustments for currency translation and foreign exchange transac- tions was not material in the last quarter of 1977. In 1976, currency losses decreased fourth quarter earnings by about 1 cent. Fourth quarter 1977 sales and net income results did not meet management's objectives for the quarter. COMPARISON OF HOW THE DOLLAR WAS SPENT 1976 1977 50.2 51.4 18.6 18.1 5.9 5.6 5.1 6.1 9.6 8.5 5.3 5.4 5.3 4.9 Cost of products sold I Marketing services Payroll All other expense, net Taxes Paid to shareholders Reinvested in the business $1.00 $1.00 19

L LIC .7CVC1i-U~J L.ViatPCU.y cuau vu-.uiu-.,...+ FINANCIAL REVIEW (continued) Operating Results Consolidated gross profit on sales was 48.6 percent, a decline from 49.8 percent in 1976. In 1977, average selling prices were below 1976 levels, although some higher prices were experienced in the latter months of the year. Competitive pricing pressures, reducing normal profit margins on food color unit sales, existed throughout the year. Consolidated gross profit was also affected by the relatively higher contribution to consolidated sales of beverage finished products, which have lower sales margins. Finished beverage sales were 52.7 percent of total sales in 1977 versus 52.1 percent in 1976. Gross profit on sales was $121,958,445 in 1977 and $116,116,432 in 1976, an increase of 5 percent. Selling, general and administrative costs were $76,814,537 in 1977 and $71,482,245 in 1976. Total operating expenses increased 7.5 percent over 1976, comparable with the increase in dollar sales, and were 30.6 percent of sales for both years. Expenditures for marketing services, which include advertising and promotional programs, increased 5 percent to a record level of $45,328,529 or 18.1 percent of sales. This compared with $43,306,814 or 18.6 percent in 1976. Actual expenditures for marketing support funds in 1977 were below management's original plan because of the proposed ban on saccharin in March 1977. Between March and June, advertising programs were curtailed due to the existing uncertainty about saccharin. However, in July 1977, full marketing support efforts were resumed in U.S. markets. In August, Diet 7UP, a Canadian replacement product for Sugar Free 7UP, was introduced with appropriate new marketing support. Consequently, for the last six months, marketing support expenditures were at higher levels than in the first six-month period. For the year, promotional programs accelerated at higher rates of increase than dollars allocated to media advertising. Total selling and administrative payroll, excluding fringe benefits, was equal to 5.6 cents of the sales dollar in 1977, compared with 5.9 cents in 1976. Total employment costs, including salaries, wages and fringe benefits, increased only $571,189 or 1.2 percent. This modest increase in employment costs reflected primarily the change in the distribution system in the Canadian subsidiary which reduced the number of employees in Canada by more than 70 people. Increases in research and development expenses were up sharply, exceeding 1976 expenses by $1,186,866. Also accelerating at abnormally high rates in 1977 were increased charges for outside warehousing, freight, travel and entertainment. These costs exceeded 1976 expenditures by $817,471. Estimated annual sales productivity of personnel employed at year-end was $154,800, compared with $143,800 in 1976. Individual sales productivity of personnel employed in each of the companies increased over year-ago levels. Consolidated operating profit was $45,143,908 or 18.0 percent of sales, compared with $44,634,187 or 19.1 percent of sales in 1976. While operating profit increased only modestly for the year, the 1977 ratio to sales has been exceeded in only two years since the Company became public in 1967. Interest income (net of interest expense) increased to $2,009,198 from the $1,907,738 earned in 1976. Foreign interest expense increased sharply as a result of higher levels of local borrowings for currency hedging purposes. Domestic net interest income increased sharply with a larger amount of funds available for investment. Yields on short-term U.S. investments were modestly below 1976 levels. Miscellaneous other income totaled $1,322,932, compared with $1,611,117 in 1976. These amounts are principally composed of revenues from royalties, rentals, sales of assets and currency gains. Offsetting other income are miscellaneous deductions totaling $1,266,754, compared with $1,008,037 in 1976. Such miscellaneous deductions include certain non- recurring expenses as well as currency losses. Higher miscellaneous charges reflected primarily non-recurring termination charges in Canada relating to changes in the distribution system as well as the write-off of Sugar Free 7UP containers made obsolete by the saccharin ban. In 1977, translation and currency losses, net of tax, decreased net income $224,189 or approximately 2.1 cents per share. This compared with a currency gain in 1976 or $297,607, approximately 2.8 cents per share. Income Taxes Income taxes for 1977 were $21,420,000 or 45.4 percent of pre-tax income, compared to $22,394,000 or 47.5 percent of pre-tax income in 1976. The lower effective income tax rate in 1977 is a result of income earned in foreign countries which have low income tax rates, investmeni tax credit on capital expenditures and tax-free interest on government investments. 20