Pepsi 2011 Annual Report Download - page 44

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Prior to our acquisitions of PBG and PAS on February26, 2010,
we had noncontrolling interests in each of these bottlers and con-
sequently included our share of their net income in bottling equity
income. Upon consummation of the acquisitions in the rst quarter
of 2010, we began to consolidate the results of these bottlers and
recorded a $735million gain in bottling equity income associated
with revaluing our previously held equity interests in PBG and PAS
to fair value.
2011
Bottling equity income decreased $735million, reecting the gain in
the prior year on our previously held equity interests in connection
with our acquisitions of PBG and PAS.
Net interest expense decreased $36million, primarily reecting
interest expense in the prior year in connection with our cash tender
oer to repurchase debt in 2010, partially oset by higher average
debt balances in 2011.
The reported tax rate increased 3.8percentage points compared
to 2010, primarily reecting the prior year non- taxable gain and
reversal of deferred taxes attributable to our previously held equity
interests in connection with our acquisitions of PBG and PAS.
Net income attributable to PepsiCo increased 2% and net income
attributable to PepsiCo per common share increased 3%. Items
aecting comparability (see “Items Aecting Comparability”)
decreased net income attributable to PepsiCo by 3percentage
points and net income attributable to PepsiCo per common share
by 3.5percentage points.
2010
Bottling equity income increased $370million, primarily reecting
the gain on our previously held equity interests in connection with
our acquisitions of PBG and PAS, partially oset by the consolidation
of the related nancial results of the acquired bottlers.
Net interest expense increased $505million, primarily reecting
higher average debt balances, interest expense incurred in connec-
tion with our cash tender oer to repurchase debt, and bridge and
term nancing costs in connection with our acquisitions of PBG
andPAS. These increases were partially oset by lower average
rateson our debt balances.
The reported tax rate decreased 3.0percentage points com-
paredto the prior year, primarily reecting the impact of our
acquisitions of PBG and PAS, which includes the reversal of deferred
taxes attributable to our previously held equity interests in PBG
andPAS, as well as the favorable resolution of certain tax matters
in 2010.
Net income attributable to PepsiCo increased 6% and net income
attributable to PepsiCo per common share increased 4%. Items
aecting comparability (see “Items Aecting Comparability”)
decreased net income attributable to PepsiCo and net income
attributable to PepsiCo per common share by 8percentage points.
Results of Operations— Division Review
The results and discussions below are based on how our Chief Executive Ocer monitors the performance of our divisions. Accordingly,
2011 volume growth measures reect an adjustment to the base year (2010) for divestitures that occurred in 2011. See “Items Aecting
Comparability” for a discussion of items to consider when evaluating our results and related information regarding non- GAAP measures.
FLNA QFNA LAF PAB Europe AMEA Total
Net Revenue, 2011 $ 13,322 $ 2,656 $ 7,156 $ 22,418 $ 13,560 $ 7,392 $ 66,504
Net Revenue, 2010 $ 12,573 $ 2,656 $ 6,315 $ 20,401 $ 9,602 $ 6,291 $ 57,838
% Impact of:
Volume(a) 2% (5)% 3.5% * * 10% *
Eective net pricing(b) 3 4 8** 6*
Foreign exchange – 1 2 1 3 2 1
Acquisitions and divestitures – – – * * – *
% Change(c) 6% –% 13% 10% 41% 17% 15%
FLNA QFNA LAF PAB Europe AMEA Total
Net Revenue, 2010 $ 12,573 $ 2,656 $ 6,315 $ 20,401 $ 9,602 $ 6,291 $ 57,838
Net Revenue, 2009 $ 12,421 $ 2,687 $ 5,703 $ 10,116 $ 7,028 $ 5,277 $ 43,232
% Impact of:
Volume(a) –% –% 3% * * 12% *
Eective net pricing(b) – (2) 6** 3*
Foreign exchange 1 1 1 – (1) 3 1
Acquisitions and divestitures – – – * * 1 *
% Change(c) 1% (1)% 11% 102% 37% 19% 34%
(a) Excludes the impact of acquisitions and divestitures. In certain instances, volume growth varies from the amounts disclosed in the following divisional discussions due to nonconsolidated
joint venture volume, and, for our beverage businesses, temporary timing dierences between BCS and CSE. Our net revenue excludes nonconsolidated joint venture volume, and, for our
beverage businesses, is based on CSE.
(b) Includes the year- over-year impact of discrete pricing actions, sales incentive activities and mix resulting from selling varying products in dierent package sizes and in dierent countries.
(c) Amounts may not sum due to rounding.
* It is impractical to separately determine and quantify the impact of our acquisitions of PBG and PAS from changes in our pre- existing beverage business since we now manage these
businesses as an integrated system.
Management’s Discussion and Analysis
PepsiCo, Inc.  Annual Report
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