Pepsi 2014 Annual Report Download - page 30

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Program, to purchase certain beverages and foods. In addition, legislation has been enacted in certain U.S.
states and in certain other countries in which our products are sold that requires collection and recycling of
containers or that prohibits the sale of our beverages in certain non-refillable containers, unless a deposit or
other fee is charged. It is possible that similar or more restrictive legal requirements may be proposed or
enacted in the future. In addition, we are subject to taxes in the United States and numerous foreign
jurisdictions. Economic and political conditions may result in changes in tax rates which could affect our
financial performance. See also “Item 1A. Risk Factors – 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.” and “Item 1A. Risk Factors – Imposition of new taxes, disagreements with tax authorities or
additional tax liabilities could adversely affect our business, financial condition or results of operations.”
The cost of compliance with U.S. and foreign laws does not have a material financial impact on our
consolidated results of operations.
We are also subject to national and local environmental laws in the United States and in foreign countries in
which we do business, including laws related to water consumption and treatment, wastewater discharge and
air emissions. In the United States, our facilities must comply with the Clean Air Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act
and other federal and state laws regarding handling, storage, release and disposal of wastes generated on-
site and sent to third-party owned and operated off-site licensed facilities and our facilities outside the United
States must comply with similar laws and regulations. Our policy is to meet all applicable environmental
compliance requirements, and we have internal programs in place to enhance our global environmental
compliance. We have made, and plan to continue making, necessary expenditures for compliance with
applicable laws. While these expenditures have not had a material impact on our business, financial condition
or results of operations, changes in environmental compliance requirements, and any expenditures necessary
to comply with such requirements, could affect our financial performance. In addition, we and our subsidiaries
are subject to environmental remediation obligations in the normal course of business, as well as remediation
and related indemnification obligations in connection with certain historical activities and contractual
obligations, including those of businesses acquired by our subsidiaries. While these environmental and
indemnification obligations cannot be predicted with certainty, environmental compliance costs have not
had, and are not expected to have, a material impact on our capital expenditures, earnings or competitive
position. See also “Item 1A. Risk Factors – 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.”
The Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRA) requires disclosure of certain
activities relating to Iran by PepsiCo or its affiliates that occurred during our 2014 fiscal year. As previously
disclosed, one of our foreign subsidiaries historically maintained a small office in Iran, which provided sales
support to independent bottlers in Iran in connection with in-country sales of foreign-owned beverage brands,
and which was not in contravention of any applicable U.S. sanctions laws. The office ceased all commercial
activity since the enactment of ITRA. In addition, the office of the foreign subsidiary had one local bank
account, containing aggregate deposits of approximately $180, with a bank identified on the list of “Specially
Designated Nationals” maintained by the U.S. Treasury Department’s Office of Foreign Assets Control
(OFAC). During our 2014 fiscal year, our foreign subsidiary received a license from OFAC authorizing it to
engage in activities related to the winding down of the office in Iran and to close the bank account. Following
receipt of this license, our foreign subsidiary restarted the process of winding down its office and closed the
bank account. Subsequent to the end of 2014, this license expired and the foreign subsidiary ceased the
process of winding down its office upon expiration of the license. The foreign subsidiary has applied for a
license from OFAC to authorize continuation and completion of wind-down activities and intends to continue
such activities upon receipt thereof. The foreign subsidiary did not engage in any activities in Iran other than
wind-down activities in 2014, or have any revenues or profits attributable to activities in Iran during 2014.
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