Snapple 2011 Annual Report Download - page 34

14
Additionally, the Company currently participates in four multi-employer pension plans in the United States. Our pension
expense for U.S. multi-employer plans totaled $6 million for the year ended December 31, 2011. The plans we participate in have
collective bargaining agreements that extend into 2015. In the event that we or, in the case of one multi-employer pension plan,
another large employer withdraw from participation in any of these plans, then applicable law could require us to record a withdrawal
liability, which may be material and could negatively impact our financial performance in the applicable periods.
Our distribution agreements with our allied brands could be terminated.
Monster Beverage Corporation (formerly Hansen Natural Corporation) and glacéau terminated their distribution agreements
with us in 2008 and 2007, respectively. We are subject to a risk of other allied brands, such as FIJI, AriZona, Neuro and Vita Coco,
terminating their distribution agreements with us, which could negatively affect our business and financial performance.
Determinations in the future that a significant impairment of the value of our goodwill and other indefinite lived intangible
assets has occurred and could have a material adverse effect on our results of operations.
As of December 31, 2011, we had $9.3 billion of total assets, of which approximately $5.7 billion were goodwill and other
intangible assets. Intangible assets include both definite and indefinite 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 upon our annual impairment analysis performed as of
December 31, 2011. For additional information about these intangible assets, see “Critical Accounting Estimates — Goodwill and
Other Indefinite Lived Intangible Assets” in Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Income," and our Audited Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary
Data,” in this Annual Report on Form 10-K.
The impairment tests require us to make an estimate of the fair value of intangible assets. Since a number of factors may
influence determinations of fair value of intangible assets, we are unable to predict whether impairments of goodwill or other
indefinite lived intangibles will occur in the future. Any such impairment would result in us recognizing a non-cash charge in our
Consolidated Statements of Income, which may adversely affect our results of operations.
Our total indebtedness could affect our operations and profitability.
We maintain levels of debt we consider prudent based on our actual and expected cash flows. As of December 31, 2011, our
total indebtedness was $2,712 million.
This amount of debt could have important consequences to us and our investors, including:
• requiring a portion of our cash flow from operations to make interest payments on this debt; and
• increasing our vulnerability to general adverse economic and industry conditions, which could impact our debt maturity
profile.
While we believe we will have the ability to service our debt and will have access to additional sources of capital in the future
if and when needed, that will depend upon our results of operations and financial position at the time, the then-current state of the
credit and financial markets, and other factors that may be beyond our control.
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, juice 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.