Pepsi 2015 Annual Report Download - page 33

Table of Contents
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Unfavorable economic conditions may have an adverse impact on our business, financial condition or
results of operations.
Many of the countries in which we operate have experienced and continue to experience unfavorable economic
conditions. Our business 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,
including speculative influences; highly inflationary currency, devaluation or fluctuation; contraction in the
availability of credit in the marketplace due to legislation or economic conditions; the effects of government
initiatives, including austerity or stimulus measures, to manage economic conditions and any changes to or
cessation of such initiatives; the effects of any default by or deterioration in the credit worthiness of the
countries in which our products are sold or of countries that may then impact countries in which our products
are sold; reduced demand for our products resulting from volatility in general global economic conditions
or a shift in consumer preferences for economic reasons or otherwise to regional, local or private label products
or other lower-cost 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. In addition, we cannot predict how current or future 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, changing regulatory requirements or other factors beyond our control. A ratings
downgrade, bankruptcy, receivership, default or similar event involving a major financial institution, or
changes in the regulatory environment, may limit the ability or willingness of financial institutions to enter
into financial transactions with us, including to provide banking or related cash management services, or to
extend credit on terms commercially acceptable to us or at all; may leave us with reduced borrowing capacity
or exposed to certain currencies or price risk associated with forecasted purchases of raw materials; or may
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.
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 resins 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 our businesses due to their use in our facilities and the vehicles
delivering our products.
Some of these raw materials and supplies are sourced from countries experiencing civil unrest, political
instability or 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 in global