Snapple 2008 Annual Report Download - page 40

restructure our operations, including closing existing facilities or opening new ones. If our investment and
restructuring costs are higher than anticipated or our business does not develop as anticipated to appropriately
utilize new or upgraded facilities, our costs and financial performance could be negatively affected.
We may not be able to renew collective bargaining agreements on satisfactory terms, or we could
experience strikes.
As of December 31, 2008, approximately 5,000 of our employees, many of whom are at our key manufacturing
locations, were covered by collective bargaining agreements. These agreements typically expire every three to four
years at various dates. We may not be able to renew our collective bargaining agreements on satisfactory terms or at
all. This could result in strikes or work stoppages, which could impair our ability to manufacture and distribute our
products and result in a substantial loss of sales. The terms of existing or renewed agreements could also
significantly increase our costs or negatively affect our ability to increase operational efficiency.
Our products may not meet health and safety standards or could become contaminated.
We have adopted various quality, environmental, health and safety standards. However, our products may still
not meet these standards or could otherwise become contaminated. A failure to meet these standards or contam-
ination could occur in our operations or those of our bottlers, distributors or suppliers. This could result in expensive
production interruptions, recalls and liability claims. Moreover, negative publicity could be generated from false,
unfounded or nominal liability claims or limited recalls. Any of these failures or occurrences could negatively affect
our business and financial performance.
Our intellectual property rights could be infringed or we could infringe the intellectual property rights of
others and adverse events regarding licensed intellectual property, including termination of distribution
rights, could harm our business.
We possess intellectual property that is important to our business. This intellectual property includes
ingredient formulas, trademarks, copyrights, patents, business processes and other trade secrets. See “Intellectual
Property and Trademarks” in Item 1 of this Annual Report on Form 10-K for more information. We and third
parties, including competitors, could come into conflict over intellectual property rights. Litigation could disrupt
our business, divert management attention and cost a substantial amount to protect our rights or defend ourselves
against claims. We cannot be certain that the steps we take to protect our rights will be sufficient or that others will
not infringe or misappropriate our rights. If we are unable to protect our intellectual property rights, our brands,
products and business could be harmed.
We also license various trademarks from third parties and license our trademarks to third parties. In some
countries, other companies own a particular trademark which we own in the United States, Canada or Mexico. For
example, the Dr Pepper trademark and formula is owned by Coca-Cola in certain other countries. Adverse events
affecting those third parties or their products could affect our use of the trademark and negatively impact our brands.
In some cases, we license products from third parties which we distribute. The licensor may be able to
terminate the license arrangement upon an agreed period of notice, in some cases without payment to us of any
termination fee. The termination of any material license arrangement could adversely affect our business and
financial performance. For example, in letters dated October 10, 2008, and December 11, 2008, we received formal
notification from Hansen Natural Corporation, terminating our agreements to distribute Monster Energy as well as
other Hansen’s beverage brands in certain markets in the United States and Mexico effective November 10, 2008,
and January 26, 2009, respectively.
We may not comply with applicable government laws and regulations and they could change.
We are subject to a variety of federal, state and local laws and regulations in the United States, Canada, Mexico
and other countries in which we do business. These laws and regulations apply to many aspects of our business
including the manufacture, safety, labeling, transportation, advertising and sale of our products. See “Regulatory
Matters” in Item 1 of this Annual Report on Form 10-K for more information regarding many of these laws and
regulations. Violations of these laws or regulations could damage our reputation and/or result in regulatory actions
16