Pepsi 2015 Annual Report Download - page 44

Table of Contents
27
Item 3. Legal Proceedings.
As previously disclosed, in January 2011, Wojewodzka Inspekcja Ochrony Srodowiska, the Polish
environmental control authority, began an audit of a bottling plant of our subsidiary, Pepsi-Cola General
Bottlers Poland SP, z.o.o. (PCGB), in Michrow, Poland. In July 2013, Wojewodzka Inspekcja Ochrony
Srodowiska alleged that the plant was not in compliance in 2009 with applicable regulations governing the
taking of water samples for analysis of the plant’s waste and sought monetary sanctions of $650,000 and, in
August 2013, PCGB appealed this decision. In April 2015, the General Environmental Inspector for
Environmental Protection upheld the sanctions against PCGB and, in May 2015, PCGB further appealed this
decision. In October 2015, Viovodeship Administrative Court in Warsaw rejected our appeal and, in December
2015, PCGB filed an extraordinary appeal in the Supreme Administrative Court.
Also as previously disclosed, in May 2011 and August 2012, Kozep-Duna-Volgyi Kornyezetvedelmi,
Termeszetvedelmi es Vizugyi Felugyeloseg (Budapest), the regional Hungarian governmental authority (the
Hungarian Authority), notified our subsidiary, Fovarosi Asvanyviz-es Uditoipari Zrt. (FAU), that it assessed
monetary sanctions of approximately $220,000 for alleged violation of applicable wastewater discharge
standards in 2010 and of approximately $153,000 for alleged violation of applicable wastewater discharge
standards in 2011, respectively. Following an appeal of this decision by FAU, the Orszagos Kornyezetvedelmi,
Termeszetvedelmi es Vizugyi Felugyeloseg (Budapest) increased the 2011 sanctions to $320,000 and the
2012 sanctions to $196,000, on the grounds that certain pollutant factors had not been taken into account by
the Hungarian Authority. In the third quarter of 2015, these sanctions were annulled by the Fovarosi
Kozigazgatasi es Munkaugyi Birosag (Budapest).
In addition, we and our subsidiaries are party to a variety of legal, administrative, regulatory and government
proceedings, claims and inquiries arising in the normal course of business. While the results of these
proceedings, claims and inquiries cannot be predicted with certainty, management believes that the final
outcome of the foregoing will not have a material adverse effect on our consolidated financial statements,
results of operations or cash flows. See also “Item 1. Business – Regulatory Environment and Environmental
Compliance.” and, under “Item 1A. Risk Factors,” “Changes in, or failure to comply with, laws and regulations
applicable to our products or our business operations could adversely affect our business, financial condition
or results of operations.”, “Imposition of new taxes, disagreements with tax authorities or additional tax
liabilities could adversely affect our business, financial condition or results of operations.”, “Our business,
financial condition or results of operations could be adversely affected if we are unable to grow our business
in developing and emerging markets or as a result of unstable political conditions, civil unrest or other
developments and risks in the markets where our products are made, manufactured, distributed or sold.”,
“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.” and “Potential liabilities
and costs from litigation or legal proceedings could have an adverse impact on our business, financial condition
or results of operations.” Sanctions imposed by foreign authorities are levied in local currency and disclosed
using the U.S. dollar equivalent at the time of imposition and are subject to currency fluctuations.
Item 4. Mine Safety Disclosures.
Not applicable.
__________________________________________________