Pepsi 2012 Annual Report Download - page 58

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Venezuela Currency Devaluation
As of the beginning of our 2010 fiscal year, we recorded a
$120million net charge related to our change to hyperinfla-
tionary accounting for our Venezuelan businesses and the
related devaluation of the 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. In total, this net charge had an after-tax impact of
$120million or $0.07 per share.
Asset Write-O
In 2010, we recorded a $145million charge ($92million after-
tax or $0.06 per share) 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.
Foundation Contribution
In 2010, we made a $100 million ($64 million after-tax or
$0.04 per share) contribution to the PepsiCo Foundation, Inc.,
in order to fund charitable and social programs over the next
several years. This contribution was recorded in corporate
unallocated expenses.
Debt Repurchase
In 2010, we paid $672million in a cash tender offer to repur-
chase $500million (aggregate principal amount) of our 7.90%
senior unsecured notes maturing in 2018. As a result of this
debt repurchase, we recorded a $178million charge to interest
expense ($114million after-tax or $0.07 per share), primarily
representing the premium paid in the tender offer.
Non-GAAP Measures
Certain measures contained in this Annual Report are financial
measures that are adjusted for items affecting comparabil-
ity (see “Items Affecting Comparability” for a detailed list
and description of each of these items), as well as, in certain
instances, adjusted for foreign exchange. These measures
are not in accordance with Generally Accepted Accounting
Principles (GAAP). Items adjusted for currency assume foreign
currency exchange rates used for translation based on the
rates in effect for the comparable prior-year period. In order to
compute our constant currency results, we multiply or divide,
as appropriate, our current year U.S. dollar results by the cur-
rent year average foreign exchange rates and then multiply or
divide, as appropriate, those amounts by the prior year average
foreign exchange rates. We believe investors should consider
these non-GAAP measures in evaluating our results as they
are more indicative of our ongoing performance and with how
management evaluates our operational results and trends.
These measures are not, and should not be viewed as, a sub-
stitute for U.S. GAAP reporting measures. See also “Organic
Revenue Growth” and “Management Operating Cash Flow.”
Results of Operations— Consolidated Review
In the discussions of net revenue and operating profit below,
“effective net pricing” reflects the year-over-year impact of
discrete pricing actions, sales incentive activities and mix
resulting from selling varying products in different package
sizes and in different countries and “net pricing” reflects the
year-over-year combined impact of list price changes, weight
changes per package, discounts and allowances. Additionally,
“acquisitions and divestitures,” except as otherwise noted,
reflect all mergers and acquisitions activity, including the
impact of acquisitions, divestitures and changes in ownership
or control in consolidated subsidiaries and nonconsolidated
equity investees.
Servings
Since our divisions each use different measures of physi-
cal unit volume (i.e., kilos, gallons, pounds and case sales),
a common servings metric is necessary to reflect our con-
solidated physical unit volume. Our divisions’ physical volume
measures are converted into servings based on U.S. Food
and Drug Administration guidelines for single-serving sizes of
our products.
In 2012, total servings increased 3% compared to 2011.
Excluding the impact of the 53rd week, total servings also
increased 3% compared to 2011. In 2011, total servings
increased 6% compared to 2010. Excluding the impact of the
53rd week, total servings increased 5% compared to 2010.
2012 and 2011 servings growth reflects an adjustment to the
base year for divestitures that occurred in 2012 and 2011,
as applicable.
Management’s Discussion and Analysis
2012 PEPSICO ANNUAL REPORT56