Pepsi 2007 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2007 Pepsi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

PepsiAmericas
At year-end 2007 and 2006, we owned approximately 44% of PAS, and their
summarized fi nancial information is as follows:
2007 2006 2005
Current assets $ 922 $ 675
Noncurrent assets 4,386 3,532
Total assets $5,308 $ 4,207
Current liabilities $ 903 $ 694
Noncurrent liabilities 2,274 1,909
Minority interest 273 –
Total liabilities $3,450 $ 2,603
Our investment $1,118 $1,028
Net revenue $4,480 $3,972 $3,726
Gross profit $1,823 $1,608 $1,562
Operating profit $436 $356 $393
Net income $212 $158 $195
2007 2006 2005
Net revenue $4,874 $4,837 $4,633
Selling, general and administrative expenses $91 $87 $143
Accounts and notes receivable $163 $175
Accounts payable and other current liabilities $106 $62
Our investment in PAS, which includes
the related goodwill, was $303 million
and $316 million higher than our owner-
ship interest in their net assets at year-end
2007 and 2006, respectively. Based upon
the quoted closing price of PAS shares
at year-end 2007 and 2006, the calcu-
lated market value of our shares in PAS
exceeded our investment by $855 million
and $173 million, respectively.
Additionally, in 2007, we completed the
joint purchase of Sandora, LLC with PAS.
PAS holds a 60% majority interest in the
joint venture and consolidates the entity.
We account for our interest of 40% under
the equity method of accounting.
Related Party Transactions
Our signifi cant related party transactions
include our noncontrolled bottling affi li-
ates. We sell concentrate to these affi li-
ates, which they use in the production of
CSDs and non-carbonated beverages. We
also sell certain fi nished goods to these
affi liates, and we receive royalties for the
use of our trademarks for certain prod-
ucts. Sales of concentrate and fi nished
goods are reported net of bottler funding.
For further unaudited information on
these bottlers, see “Our Customers” in
Management’s Discussion and Analysis.
These transactions with our bottling
affi liates are refl ected in our consolidated
fi nancial statements as follows:
Such amounts are settled on terms
consistent with other trade receivables
and payables. See Note 9 regarding our
guarantee of certain PBG debt.
In addition, we coordinate, on an
aggregate basis, the contract negotiations
of sweeteners and other raw material
requirements for certain of our bottlers.
Once we have negotiated the contracts,
the bottlers order and take delivery
directly from the supplier and pay the
suppliers directly. Consequently, these
transactions are not refl ected in our
consolidated fi nancial statements. As
the contracting party, we could be liable
to these suppliers in the event of any
nonpayment by our bottlers, but we
consider this exposure to be remote.
76