Snapple 2009 Annual Report Download - page 34

response, our sales could suffer. Developing and launching new products can be risky and expensive. We may not be
successful in responding to changing markets and consumer preferences, and some of our competitors may be better
able to respond to these changes, either of which could negatively affect our business and financial performance.
We depend on a small number of large retailers for a significant portion of our sales.
Food and beverage retailers in the United States have been consolidating, resulting in large, sophisticated
retailers with increased buying power. They are in a better position to resist our price increases and demand lower
prices. They also have leverage to require us to provide larger, more tailored promotional and product delivery
programs. If we and our bottlers and distributors do not successfully provide appropriate marketing, product,
packaging, pricing and service to these retailers, our product availability, sales and margins could suffer. Certain
retailers make up a significant percentage of our products’ retail volume, including volume sold by our bottlers and
distributors. Some retailers also offer their own private label products that compete with some of our brands. The
loss of sales of any of our products in a major retailer could have a material adverse effect on our business and
financial performance.
We depend on third party bottling and distribution companies for a portion of our business.
Net sales from our Beverage Concentrates segment represent sales of beverage concentrates to third party
bottling companies that we do not own. The Beverage Concentrates segment’s net sales generate a portion of our
overall net sales. Some of these bottlers are partly owned by a competitor. In the case of PBG and PAS, PepsiCo has
acquired majority ownership. Additionally, Coca-Cola is now in the process of acquiring ownership of CCE’s North
American bottling business. The majority of these bottlers’ business comes from selling our competitors’ products.
In addition, some of the products we manufacture are distributed by third parties. As independent companies, these
bottlers and distributors make their own business decisions. They may have the right to determine whether, and to
what extent, they produce and distribute our products, our competitors’ products and their own products. They may
devote more resources to other products or take other actions detrimental to our brands. In most cases, they are able
to terminate their bottling and distribution arrangements with us without cause. We may need to increase support for
our brands in their territories and may not be able to pass on price increases to them. Their financial condition could
also be adversely affected by conditions beyond our control and our business could suffer. Deteriorating economic
conditions could negatively impact the financial viability of third party bottlers. Any of these factors could
negatively affect our business and financial performance.
Our financial results may be negatively impacted by recession, financial and credit market disruptions
and other economic conditions.
Customer and consumer demand for our products may be impacted by recession or other economic downturn
in the United States, Canada, Mexico or the Caribbean, which could result in a reduction in our sales volume and/or
switching to lower price offerings. Similarly, disruptions in financial and credit markets may impact our ability to
manage normal commercial relationships with our customers, suppliers and creditors. These disruptions could have
a negative impact on the ability of our customers to timely pay their obligations to us, thus reducing our cash flow, or
our vendors to timely supply materials.
We could also face increased counterparty risk for our cash investments and our hedge arrangements. Declines
in the securities and credit markets could also affect our pension fund, which in turn could increase funding
requirements.
Determinations in the future that a significant impairment of the value of our goodwill and other indefi-
nite lived intangible assets has occurred could have a material adverse effect on our results of operations.
As of December 31, 2009, we had $8.8 billion of total assets, of which approximately $5.7 billion were
intangible assets. Intangible assets include goodwill, and other intangible assets in connection with brands, bottler
agreements, distribution rights and customer relationships. We conduct impairment tests on goodwill and all
indefinite lived intangible assets annually, as of December 31, or more frequently if circumstances indicate that the
carrying amount of an asset may not be recoverable. If the carrying amount of an intangible asset exceeds its fair
value, an impairment loss is recognized in an amount equal to that excess. There was no impairment required based
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