Snapple 2012 Annual Report Download - page 34

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We depend on key information systems and third party service providers.
We depend on key information systems to accurately and efficiently transact our business, provide information to management
and prepare financial reports. We rely on third party providers for a number of key information systems and business processing
services, including hosting our primary data center and processing various accounting, order entry and other transactional services.
These systems and services are vulnerable to interruptions or other failures resulting from, among other things, natural disasters,
terrorist attacks, software, equipment or telecommunications failures, processing errors, computer viruses, hackers, other security
issues or supplier defaults. Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid
such disruptions or failures. Any disruption or failure of these systems or services could cause substantial errors, processing
inefficiencies, security breaches, inability to use the systems or process transactions, loss of customers or other business disruptions,
all of which could negatively affect our business and financial performance.
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 contamination could occur in our operations
or those of our bottlers, distributors or suppliers. This could result in expensive production interruptions, recalls, liability claims
and negative publicity. Moreover, negative publicity also 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.
Fluctuations in our effective tax rate may result in volatility in our operating results.
We are subject to income taxes in many U.S. and certain foreign jurisdictions. Income tax expense includes a provision for
uncertain tax positions. At any one time, many tax years are subject to audit by various taxing jurisdictions. As these audits and
negotiations progress, events may occur that change our expectation about how the audit will ultimately be resolved. As a result,
there could be ongoing variability in our quarterly tax rates as events occur that cause a change in our provision for uncertain tax
positions. In addition, our effective tax rate in any given financial statement period may be significantly impacted by changes in
the mix and level of earnings or by changes to existing accounting rules, tax regulations or interpretations of existing law. In
addition, tax legislation may be enacted in the future, domestically or abroad, that impacts our effective tax rate.
We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience strikes.
As of December 31, 2012, 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 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.
In some cases, we license products from third parties that 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.