Snapple 2012 Annual Report Download - page 33

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The impairment tests require us to make an estimate of the fair value of intangible assets. Since a number of factors may
influence determinations of fair value of intangible assets, we are unable to predict whether impairments of goodwill or other
indefinite lived intangibles will occur in the future. Any such impairment would result in us recognizing a non-cash charge in our
Consolidated Statements of Income, which may increase our effective tax rate and adversely affect our results of operations.
Our total indebtedness could affect our operations and profitability.
We maintain levels of debt we consider prudent based on our actual and expected cash flows. As of December 31, 2012, our
total indebtedness was $2,804 million.
This amount of debt could have important consequences to us and our investors, including:
• requiring a portion of our cash flow from operations to make interest payments on this debt; and
• increasing our vulnerability to general adverse economic and industry conditions, which could impact our debt maturity
profile.
While we believe we will have the ability to service our debt and will have access to additional sources of capital in the future
if and when needed, that will depend upon our results of operations and financial position at the time, the then-current state of the
credit and financial markets and other factors that may be beyond our control.
Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
We are party to various litigation claims and legal proceedings which include employment, tort, real estate, commercial and
other litigation. From time to time we are a defendant in class action litigation, including litigation regarding employment practices,
product labeling, and wage and hour laws. Plaintiffs in class action litigation may seek to recover amounts which are large and
may be indeterminable for some period of time. We evaluate litigation claims and legal proceedings to assess the likelihood of
unfavorable outcomes and estimate, if possible, the amount of potential losses. We will establish a reserve as appropriate based
upon assessments and estimates in accordance with our accounting policies. We base our assessments, estimates and disclosures
on the information available to us at the time and rely on legal and management judgment. Actual outcomes or losses may differ
materially from assessments and estimates. Costs to defend litigation claims and legal proceedings and the cost of actual settlements,
judgments or resolutions of these claims and legal proceedings may negatively affect our business and financial performance. Any
adverse publicity resulting from allegations made in litigation claims or legal proceedings may also adversely affect our reputation,
which in turn could adversely affect our results.
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, fruit, juice 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 or supply 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.