Pepsi 2011 Annual Report Download - page 86

Net revenue excluding the impact of acquisitions and divestitures,
division operating prot, core results and core constant currency
results are non- GAAP nancial measures as they exclude certain
items noted below. However, we believe investors should consider
these measures as they are more indicative of our ongoing perfor-
mance and with how management evaluates our operational results
and trends.
53rd Week Impact
In 2011, we had an additional week of results (53rd week). Our scal
year ends on the last Saturday of each December, resulting in an
additional week of results every ve or six years. The 53rd week
increased net revenue by $623million and operating prot by
$109million in the year ended December31, 2011.
Commodity Mark- to-Market Net Impact
In the year ended December31, 2011, we recognized $102million
of mark- to-market net losses on commodity hedges in corporate
unallocated expenses. In the year ended December25, 2010, we
recognized $91million of mark- to-market net gains on commod-
ity hedges in corporate unallocated expenses. In the year ended
December30, 2006, we recognized $18million of mark- to-market net
losses on commodity hedges in corporate unallocated expenses. We
centrally manage commodity derivatives on behalf of our divisions.
Certain of these commodity derivatives do not qualify for hedge
accounting treatment and are marked to market with the resulting
gains and losses recognized in corporate unallocated expenses.
These gains and losses are subsequently reected in division results
when the divisions take delivery of the underlying commodity.
Merger and Integration Charges
In the year ended December31, 2011, we incurred merger and inte-
gration charges of $329million related to our acquisitions of PBG,
PAS and WBD, including $112million recorded in the PAB segment,
$123million recorded in the Europe segment, $78million recorded
in corporate unallocated expenses and $16million recorded in
interest expense. These charges also include closing costs and
advisory fees related to our acquisition of WBD. In the year ended
December25, 2010, we incurred merger and integration charges of
$799million related to our acquisitions of PBG and PAS, as well as
advisory fees in connection with our acquisition of WBD, including
$467million recorded in the PAB segment, $111million recorded
in the Europe segment, $191million recorded in corporate unallo-
cated expenses and $30million recorded in interest expense. These
charges also include closing costs, one- time nancing costs and
advisory fees related to our acquisitions of PBG and PAS. In addi-
tion, in the year ended December25, 2010, we recorded $9million
of merger- related charges, representing our share of the respective
merger costs of PBG and PAS, in bottling equity income.
Restructuring Charges
In the year ended December31, 2011, we incurred charges of
$383million in conjunction with our multi- year productivity plan
(Productivity Plan), including $76million recorded in the FLNA
segment, $18million recorded in the QFNA segment, $48million
recorded in the LAF segment, $81million recorded in the PAB
segment, $77million recorded in the Europe segment, $9million
recorded in the AMEA segment and $74million recorded in corpo-
rate unallocated expenses. The Productivity Plan includes actions
in all segments of our business that we believe will strengthen our
complementary food, snack and beverage businesses through
a new integrated operating model designed to streamline our
organization, accelerate information sharing, facilitate timely
decision- making and drive operational productivity. In the year
ended December30, 2006, we recorded restructuring and impair-
ment charges of $67million in conjunction with consolidating the
manufacturing network at Frito- Lay.
Gain on Previously Held Equity Interests in PBG and PAS
In the rst quarter of 2010, in connection with our acquisitions of
PBG and PAS, we recorded a gain on our previously held equity
interests of $958million, comprising $735million which is non-
taxable and recorded in bottling equity income and $223million
related to the reversal of deferred tax liabilities associated with these
previously held equity interests.
Inventory Fair Value Adjustments
In the year ended December31, 2011, we recorded $46million
of incremental costs in cost of sales related to fair value adjust-
ments to the acquired inventory included in WBD’s balance sheet
at the acquisition date and hedging contracts included in PBG’s
and PAS’s balance sheets at the acquisition date. In the year ended
December25, 2010, we recorded $398million of incremental costs,
substantially all in cost of sales, related to fair value adjustments
to the acquired inventory and other related hedging contracts
included in PBG’s and PAS’s balance sheets at the acquisition date,
including $358million recorded in the PAB segment and $40million
recorded in the Europe segment.
Venezuela Currency Devaluation
As of the beginning of our 2010 scal year, we recorded a one- time
$120million net charge related to our change to hyperinationary
accounting for our Venezuelan businesses and the related devalu-
ation of the bolivar fuerte (bolivar). $129million of this net charge
was recorded in corporate unallocated expenses, with the balance
(income of $9million) recorded in our PAB segment.
Asset Write- O
In the rst quarter of 2010, we recorded a $145million charge related
to a change in scope of one release in our ongoing migration to SAP
software. This change was driven, in part, by a review of our North
America systems strategy following our acquisitions of PBG and PAS.
This change does not impact our overall commitment to continue
our implementation of SAP across our global operations over the
next few years.
Foundation Contribution
In the rst quarter of 2010, we made a $100million contribution
to The PepsiCo Foundation, Inc. (Foundation), in order to fund
charitable and social programs over the next several years. This con-
tribution was recorded in corporate unallocated expenses.
Reconciliation of GAAP and Non- GAAP Information
PepsiCo, Inc.  Annual Report
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