Snapple 2010 Annual Report Download - page 35

Certain raw materials we use are available from a limited number of suppliers and shortages could occur.
Some raw materials we use, such as aluminum cans and ends, glass bottles, PET bottles, sweeteners and other ingredients,
are sourced from industries characterized by a limited supply base. If our suppliers are unable or unwilling to meet our requirements,
we could suffer shortages or substantial cost increases. Changing suppliers can require long lead times. The failure of our suppliers
to meet our needs could occur for many reasons, including fires, natural disasters, weather, manufacturing problems, disease, crop
failure, strikes, transportation interruption, government regulation, political instability and terrorism. A failure of supply could
also occur due to suppliers’ financial difficulties, including bankruptcy. Some of these risks may be more acute where the supplier
or its plant is located in riskier or less-developed countries or regions. Any significant interruption to supply or cost increase could
substantially harm our business and financial performance.
Substantial disruption to production at our manufacturing and distribution facilities could occur.
A disruption in production at our beverage concentrates manufacturing facility, which manufactures almost all of our
concentrates, could have a material adverse effect on our business. In addition, a disruption could occur at any of our other facilities
or those of our suppliers, bottlers or distributors. The disruption could occur for many reasons, including fire, natural disasters,
weather, water scarcity, manufacturing problems, disease, strikes, transportation interruption, government regulation or terrorism.
Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a
significant time to start production, each of which could negatively affect our business and financial performance.
Our facilities and operations may require substantial investment and upgrading.
We have an ongoing program of investment and upgrading in our manufacturing, distribution and other facilities. We expect
to incur substantial costs to upgrade or keep up-to-date various facilities and equipment or 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, 2010, approximately 4,000 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. Afailure to meet these standards or contamination 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,
“Business,” 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 U.S., 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.
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