Snapple 2008 Annual Report Download - page 39

We base our assessments, estimates and disclosures on the information available to us at the time and rely on legal
and management judgment. Actual outcomes or losses may differ materially from assessments and estimates.
Actual settlements, judgments or resolutions of these claims or proceedings may negatively affect our business and
financial performance. For more information, see Note 22 of the Notes to our Audited Consolidated Financials
Statements.
Benefits cost increases could reduce our profitability.
Our profitability is substantially affected by the costs of pension, postretirement and employee medical costs
and employee other benefits. In recent years, these costs have increased significantly due to factors such as increases
in health care costs, declines in investment returns on pension assets and changes in discount rates used to calculate
pension and related liabilities. Although we actively seek to control increases in costs, there can be no assurance that
we will succeed in limiting future cost increases, and continued upward pressure in costs could have a material
adverse affect on our business and financial performance.
Costs for our raw materials may increase substantially.
The principal raw materials we use in our business are aluminum cans and ends, glass bottles, PET bottles and
caps, paperboard packaging, sweeteners, juice, fruit, water and other ingredients. Additionally, conversion of raw
materials into our products for sale also uses electricity and natural gas. The cost of the raw materials can fluctuate
substantially. We are significantly impacted by increases in fuel costs due to the large truck fleet we operate in our
distribution businesses. Under many of our supply arrangements, the price we pay for raw materials fluctuates along
with certain changes in underlying commodities costs, such as aluminum in the case of cans, natural gas in the case
of glass bottles, resin in the case of PET bottles and caps, corn in the case of sweeteners and pulp in the case of
paperboard packaging. Continued price increases could exert pressure on our costs and we may not be able to pass
along any such increases to our customers or consumers, which could negatively affect our business and financial
performance.
Certain raw materials we use are available from a limited number of suppliers and shortages could
occur.
Some raw materials we use, such as aluminum cans and ends, glass bottles, PET bottles, sweeteners and other
ingredients, are sourced from industries characterized by a limited supply base. If our suppliers are unable or
unwilling to meet our requirements, we could suffer shortages or substantial cost increases. Changing suppliers can
require long lead times. The failure of our suppliers to meet our needs could occur for many reasons, including fires,
natural disasters, weather, manufacturing problems, disease, crop failure, strikes, transportation interruption,
government regulation, political instability and terrorism. A failure of supply could also occur due to suppliers’
financial difficulties, including bankruptcy. Some of these risks may be more acute where the supplier or its plant is
located in riskier or less-developed countries or regions. Any significant interruption to supply or cost increase
could substantially harm our business and financial performance.
Substantial disruption to production at our manufacturing and distribution facilities could occur.
A disruption in production at our beverage concentrates manufacturing facility, which manufactures almost all
of our concentrates, could have a material adverse effect on our business. In addition, a disruption could occur at any
of our other facilities or those of our suppliers, bottlers or distributors. The disruption could occur for many reasons,
including fire, natural disasters, weather, manufacturing problems, disease, strikes, transportation interruption,
government regulation or terrorism. Alternative facilities with sufficient capacity or capabilities may not be
available, may cost substantially more or may take a significant time to start production, each of which could
negatively affect our business and financial performance.
Our facilities and operations may require substantial investment and upgrading.
We have an ongoing program of investment and upgrading in our manufacturing, distribution and other
facilities. We expect to incur substantial costs to upgrade or keep up-to-date various facilities and equipment or
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