Pepsi 2014 Annual Report Download - page 37

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or financial results may be adversely impacted by these unfavorable economic conditions, including: adverse
changes in interest rates, tax laws or tax rates; volatile commodity markets; highly inflationary currency,
devaluation or fluctuation; contraction in the availability of credit in the marketplace due to legislation or
other economic conditions; the effects of government initiatives to manage economic conditions, including
changes to or cessation of any such initiatives; reduced demand for our products resulting from a slow-down
in the general global economy or a shift in consumer preferences for economic reasons or otherwise to
regional, local or private label products or other economy products, or to less profitable channels; or a decrease
in the fair value of pension or post-retirement assets that could increase future employee benefit costs and/
or funding requirements of our pension or post-retirement plans. An adverse change in any of the above
factors could have a negative impact on the fair value of our intangible assets, which could require us to
record a non-cash impairment charge. In addition, we cannot predict how current or worsening economic
conditions will affect our customers, consumers, suppliers, bottlers, distributors, joint venture partners or
other third parties and any negative impact on any of the foregoing may also have an adverse impact on our
business, financial condition or results of operations.
In addition, some of the major financial institutions with which we execute transactions, including U.S. and
non-U.S. commercial banks, insurance companies, investment banks and other financial institutions, may
be exposed to a ratings downgrade, bankruptcy, liquidity, default or similar risks as a result of unfavorable
economic conditions or other factors beyond our control. A ratings downgrade, bankruptcy, receivership,
default or similar event involving a major financial institution may limit the availability of credit or willingness
of financial institutions to extend credit on terms commercially acceptable to us or at all or, with respect to
financial institutions that are parties to our financing arrangements, leave us with reduced borrowing capacity
or exposed to certain currencies or price risk associated with forecasted purchases of raw materials, or result
in a decline in the market value of our investments in debt securities, which could have an adverse impact
on our business, financial condition or results of operations.
See also “Our business, financial condition or results of operations may be adversely affected by increased
costs, disruption of supply or shortages of raw materials and other supplies.”, “Imposition of new taxes,
disagreements with tax authorities or additional tax liabilities could adversely affect our business, financial
condition or results of operations.” and “Our borrowing costs and access to capital and credit markets may
be adversely affected by a downgrade or potential downgrade of our credit ratings.”
Our business, financial condition or results of operations may be adversely affected by increased costs,
disruption of supply or shortages of raw materials and other supplies.
We and our business partners use various raw materials and other supplies in our business. The principal
ingredients we use in our beverage, food and snack products are apple, orange and pineapple juice and other
juice concentrates, aspartame, corn, corn sweeteners, flavorings, flour, grapefruit and other fruits, oats,
oranges, potatoes, raw milk, rice, seasonings, sucralose, sugar, vegetable and essential oils, and wheat. We
also use water in the manufacturing of our products. Our key packaging materials include plastic resins,
including PET and polypropylene resin used for plastic beverage bottles and film packaging used for snack
foods, aluminum used for cans, glass bottles, closures, cardboard and paperboard cartons. Fuel and natural
gas are also important commodities for us due to their use in our facilities and in the trucks delivering our
products.
Some of these raw materials and supplies are sourced from countries experiencing civil unrest, political
instability or other unfavorable economic conditions, and some are available from a limited number of
suppliers or are in short supply when seasonal demand is at its peak. The raw materials and energy, including
fuel, that we use for the manufacturing, production and distribution of our products are largely commodities
that are subject to price volatility and fluctuations in availability caused by many factors, including changes
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