Pepsi 2011 Annual Report Download - page 61

Net Revenue Long- Lived Assets(a)
2011 2010 2009 2011 2010 2009
U.S. $ 33,053 $ 30,618 $ 22,446 $ 28,999 $ 28,631 $ 12,496
Russia(b) 4,954 1,890 1,006 8,236 2,744 2,094
Mexico 4,782 4,531 3,210 1,027 1,671 1,044
Canada 3,364 3,081 1,996 3,097 3,133 688
United Kingdom 2,075 1,888 1,826 1,011 1,019 1,358
All other countries 18,276 15,830 12,748 12,050 11,697 8,632
$ 66,504 $ 57,838 $ 43,232 $ 54,420 $ 48,895 $ 26,312
(a) Long- lived assets represent property, plant and equipment, nonamortizable intangible assets, amortizable intangible assets and investments in noncontrolled aliates. These assets are
reported in the country where they are primarily used.
(b) Changes in 2011 relate primarily to our acquisition of WBD.
Net Revenue
United States
Mexico
Canada 5%
Russia
United Kingdom 3%
Other
7%
28%
50%
7%
Long-Lived Assets
United States
Mexico 2%
Canada
Russia
United Kingdom 2%
Other
15%
22%
53%
6%
Note 2
Our Significant Accounting Policies
Revenue Recognition
We recognize revenue upon shipment or delivery to our customers
based on written sales terms that do not allow for a right of return.
However, our policy for DSD and certain chilled products is to
remove and replace damaged and out- of-date products from store
shelves to ensure that our consumers receive the product qual-
ity and freshness that they expect. Similarly, our policy for certain
warehouse- distributed products is to replace damaged and out- of-
date products. Based on our experience with this practice, we have
reserved for anticipated damaged and out- of-date products. For
additional unaudited information on our revenue recognition and
related policies, including our policy on bad debts, see “Our Critical
Accounting Policies” in Management’s Discussion and Analysis.
We are exposed to concentration of credit risk by our customers,
including Wal- Mart. In 2011, Wal- Mart (including Sam’s) represented
approximately 11% of our total net revenue, including concentrate
sales to our independent bottlers which are used in nished goods
sold by them to Wal- Mart. We have not experienced credit issues
with these customers.
Sales Incentives and Other Marketplace Spending
We oer sales incentives and discounts through various programs
to our customers and consumers. Sales incentives and discounts are
accounted for as a reduction of revenue and totaled $34.6billion
in 2011, $29.1billion in 2010 and $12.9billion in 2009. While most of
these incentive arrangements have terms of no more than one year,
certain arrangements, such as fountain pouring rights, may extend
beyond one year. Costs incurred to obtain these arrangements are
recognized over the shorter of the economic or contractual life, as
a reduction of revenue, and the remaining balances of $288mil-
lion as of December31, 2011 and $296million as of December25,
2010, are included in current assets and other assets on our balance
sheet. For additional unaudited information on our sales incentives,
see “Our Critical Accounting Policies” in Management’s Discussion
and Analysis.
Other marketplace spending, which includes the costs of adver-
tising and other marketing activities, totaled $3.5billion in 2011,
$3.4billion in 2010 and $2.8billion in 2009 and is reported as selling,
general and administrative expenses. Included in these amounts
were advertising expenses of $1.9billion in 2011 and 2010 and
$1.7billion in 2009. Deferred advertising costs are not expensed
until the year rst used and consist of:
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Deferred advertising costs of $163million and $158million at
year- end 2011 and 2010, respectively, are classied as prepaid
expenses on our balance sheet.
Distribution Costs
Distribution costs, including the costs of shipping and handling
activities, are reported as selling, general and administrative
expenses. Shipping and handling expenses were $9.2billion in 2011,
$7.7billion in 2010 and $5.6billion in 2009.
Cash Equivalents
Cash equivalents are investments with original maturities of three
months or less.
PepsiCo, Inc.  Annual Report
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Notes to Consolidated Financial Statements