Pepsi 2013 Annual Report Download - page 38

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result in the loss of customers. In addition, the failure to either deliver the applications on time, or anticipate
the necessary readiness and training needs, could lead to business disruption and loss of customers and
revenue.
We have entered into agreements to share certain information technology support services and administrative
functions, such as payroll processing, benefit plan administration and certain finance and accounting
functions, to third-party service providers and may enter into agreements to share services for other functions
in the future to achieve cost savings and efficiencies. If these service providers do not perform, or do not
perform effectively, we may not be able to achieve the expected cost savings and may have to incur additional
costs to correct errors made by such service providers and our reputation could be harmed. Depending on
the function involved, such errors may also lead to business disruption, processing inefficiencies, the loss of
or damage to intellectual property or sensitive data through security breach or otherwise, litigation or
remediation costs, or damage to our reputation and could have a negative impact on employee morale. See
also “Any damage to our reputation could have a material adverse effect on our business, financial condition
and results of operations.” and “Our business could suffer if we are unable to protect our information systems
against a cybersecurity incident.”
Fluctuations in exchange rates may have an adverse impact on our business results or financial condition.
We hold assets and incur liabilities, earn revenues and pay expenses in a variety of currencies other than the
U.S. dollar. Because our consolidated financial statements are presented in U.S. dollars, the financial
statements of our subsidiaries outside the United States are translated into U.S. dollars. Our operations outside
of the U.S. generate a significant portion of our net revenue. Fluctuations in exchange rates may therefore
adversely impact our business results or financial condition. See also “Market Risks” contained in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1 and
10 to our consolidated financial statements.
Climate change, or legal, regulatory or market measures to address climate change, may negatively affect
our business and operations.
There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse
impact on global temperatures, weather patterns and the frequency and severity of extreme weather and
natural disasters. In the event that such climate change has a negative effect on agricultural productivity, we
may be subject to decreased availability or less favorable pricing for certain commodities that are necessary
for our products, such as sugar cane, corn, wheat, rice, oats, potatoes and various fruits. We may also be
subjected to decreased availability or less favorable pricing for water as a result of such change, which could
impact our manufacturing and distribution operations. In addition, natural disasters and extreme weather
conditions may disrupt the productivity of our facilities or the operation of our supply chain. The increasing
concern over climate change also may result in new or increased regional, federal and/or global legal and
regulatory requirements to reduce or mitigate the effects of greenhouse gases. In the event that such regulation
is more aggressive than the measures that we are currently undertaking to monitor our emissions and improve
our energy efficiency, we may experience significant increases in our costs of operation and delivery. In
particular, increasing regulation of fuel emissions could substantially increase the cost of energy, including
fuel, required to operate our facilities or transport and distribute our products, thereby substantially increasing
the distribution and supply chain costs associated with our products. As a result, climate change could
negatively affect our business and operations. See also “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 operating results may be
adversely affected by increased costs, disruption of supply or shortages of raw materials and other supplies.”