Pepsi 2015 Annual Report Download - page 40

Table of Contents
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If we are not able to successfully implement shared services or utilize information technology systems and
networks effectively, our ability to conduct our business might be negatively impacted.
We have entered into agreements with third-party service providers to share certain information technology
support services and administrative functions, including payroll processing, health and benefit plan
administration and certain finance and accounting functions, and may enter into agreements for shared services
in other functions in the future to achieve cost savings and efficiencies. In addition, we utilize cloud-based
services and systems and networks managed by third-party vendors to process, transmit and store information
and to conduct certain of our business activities and transactions with employees, customers, consumers and
other third parties. If any of these third-party service providers or vendors do not perform effectively, or if
we fail to adequately monitor their performance, we may not be able to achieve the expected cost savings or
we may have to incur additional costs to correct errors made by such service providers and our reputation
could be harmed. Depending on the function involved, such errors may also lead to business disruption,
processing inefficiencies, the loss of or damage to intellectual property or sensitive data through security
breaches or otherwise, effects on financial reporting, litigation or remediation costs, or damage to our
reputation, which could have a negative impact on employee morale.
We continue on our multi-year business transformation initiative to migrate certain of our systems, including
our financial processing systems, to enterprise-wide systems solutions. If we do not allocate and effectively
manage the resources necessary to build and sustain the proper information technology infrastructure, or if
we fail to achieve the expected benefits from this initiative, it may impact our ability to process transactions
accurately and efficiently, and remain in step with the changing needs of the trade, which could result in the
loss of customers or consumers. In addition, the failure to either deliver the applications on time, or anticipate
the necessary readiness and training needs, could lead to business disruption and loss of customers or
consumers and revenue.
Fluctuations in exchange rates impact our business, financial condition and results of operations.
We hold assets, incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S.
dollar. Because our consolidated financial statements are presented in U.S. dollars, the financial statements
of our subsidiaries outside the United States, where the functional currency is other than the U.S. dollar, are
translated into U.S. dollars. Our operations outside of the United States, particularly in Mexico, Russia,
Canada, the United Kingdom and Brazil, generate a significant portion of our net revenue. In addition, we
purchase many of the ingredients, raw materials and commodities used in our business in numerous markets
and in numerous currencies. Fluctuations in exchange rates, including as a result of currency controls or other
currency exchange restrictions, have had, and may continue to have, an adverse impact on our business,
financial condition and results of operations.
Climate change or water scarcity, or legal, regulatory or market measures to address climate change or
water scarcity, may negatively affect our business and operations or damage our reputation.
There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse
impact on global temperatures, weather patterns and the frequency and severity of extreme weather and
natural disasters. In the event that such climate change has a negative effect on agricultural productivity, we
may be subject to decreased availability or less favorable pricing for certain commodities that are necessary
for our products, such as sugar cane, corn, wheat, rice, oats, potatoes and various fruits. As demand for water
access continues to increase around the world, we may be subject to decreased availability of water,
deteriorated quality of water or less favorable pricing for water, which could adversely impact our
manufacturing and distribution operations. The effects of climate change may also exacerbate challenges
regarding the availability and quality of water. In addition, natural disasters and extreme weather conditions
may disrupt the productivity of our facilities or the operation of our supply chain.