Pepsi 2013 Annual Report Download - page 31

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business in emerging and developing markets or as a result of unstable political conditions, civil unrest or
other developments and risks in the markets where our products are sold.”
Imposition of new taxes, disagreements with tax authorities or additional tax liabilities could adversely
affect our financial performance.
Our products are sold in more than 200 countries and territories. As such, we are subject to tax laws and
regulations of various federal, state and local governments in the United States, as well as to tax laws and
regulations outside the United States. The imposition or proposed imposition of new or increased taxes or
other limitations on the sale of our products, ingredients contained in our products or commodities used in
the production of our products, could increase the cost of our products, reduce overall consumption of our
products, lead to negative publicity (whether or not valid) or leave consumers with the perception that our
products do not meet their health and wellness needs, resulting in an adverse impact on our financial
performance. For example, Mexico recently imposed a tax on sugar-sweetened beverages and a tax on certain
foods that exceed specified caloric contents, and other jurisdictions have imposed or are considering the
imposition of taxes and other limitations on the sale of certain of our products. If one jurisdiction imposes
new or increased taxes, or withdraws tax benefits, other jurisdictions may follow.
In addition, we are subject to regular reviews, examinations and audits by the Internal Revenue Service (IRS)
and other taxing authorities with respect to income and non-income based taxes both within and outside the
United States. Economic and political pressures to increase tax revenues in jurisdictions in which we operate
may make resolving tax disputes more difficult and the final resolution of tax audits and any related litigation
could differ from our historical provisions and accruals resulting in an adverse impact on our financial
performance.
Our operations outside the United States generate a significant portion of our net revenue and repatriation
of foreign earnings to the United States, or changes in how United States multinational corporations are taxed
on foreign earnings, could adversely affect our financial performance. See also “Item 1. Business - Regulatory
Environment and Environmental Compliance.” and “Demand for our products may be adversely affected by
changes in consumer preferences or any inability on our part to innovate or market our products effectively.”,
“Changes in the legal and regulatory environment could limit our business activities, increase our operating
costs, reduce demand for our products or result in litigation.”, “Our financial performance could be adversely
affected if we are unable to grow our business in emerging and developing markets or as a result of unstable
political conditions, civil unrest or other developments and risks in the markets where our products are sold.”
and “Any damage to our reputation could have a material adverse effect on our business, financial condition
and results of operations.”
Our financial performance could suffer if we are unable to compete effectively.
The food, snack and beverage industries in which we operate are highly competitive. We compete with major
international food, snack and beverage companies that, like us, operate in multiple geographic areas, as well
as regional, local and private label manufacturers and other value competitors. We compete with other large
companies in each of the food, snack and beverage categories, including The Coca-Cola Company, ConAgra
Foods, Inc., DPSG, Kellogg Company, Kraft Foods Group, Inc., International, Inc., Monster
Beverage Corporation, Nestlé S.A., Red Bull GmbH and Snyder’s-Lance, Inc. In many countries where we
do business, including the United States, our primary beverage competitor is The Coca-Cola Company. We
compete on the basis of brand recognition, taste, price, quality, product variety, distribution, marketing and
promotional activity, packaging, convenience, service and the ability to identify and satisfy consumer
preferences. If we are unable to compete effectively, we may be unable to grow or maintain sales or gross
margins in the global market or in various local markets. This may have a material adverse impact on our