Pepsi 2012 Annual Report Download - page 60

Other Consolidated Results
Change
2012 2011 2010 2012 2011
Bottling equity income – – $ 735 – $ (735)
Interest expense, net $ (808) $ (799) $ (835) $ (9) $ 36
Annual tax rate 25.2% 26.8% 23.0%
Net income attributable to PepsiCo $ 6,178 $ 6,443 $ 6,320 (4)% 2%
Net income attributable to PepsiCo per common share — diluted $ 3.92 $ 4.03 $ 3.91 (3)% 3%
Mark-to-market net impact (gains)/losses (0.03) 0.04 (0.04)
Merger and integration charges 0.01 0.17 0.40
Restructuring and impairment charges 0.14 0.18 –
Restructuring and other charges related to the transaction with Tingyi 0.11 – –
Pension lump sum settlement charge 0.08 – –
Tax benefit related to tax court decision (0.14) – –
53rd week – (0.04) –
Inventory fair value adjustments – 0.02 0.21
Gain on previously held equity interests – – (0.60)
Venezuela currency devaluation – – 0.07
Asset write-off – – 0.06
Foundation contribution – – 0.04
Debt repurchase – – 0.07
Net income attributable to PepsiCo per common share — diluted,
excluding above items* $ 4.10** $ 4.40 $ 4.13** (7)% 7%
Impact of foreign exchange translation 2 (1)
Growth in net income attributable to PepsiCo per common share —
diluted, excluding above items, on a constant currency basis* (5)% 5%**
* See “Non-GAAP Measures”
** Does not sum due to rounding
2012
Net interest expense increased $9million, primarily reflecting
higher average debt balances and higher rates on our debt
balances, partially offset by gains in the market value of invest-
ments used to economically hedge a portion of our deferred
compensation costs and the impact of the 53rd week in the
prior year.
The tax rate decreased 1.6percentage points compared
to 2011, primarily reflecting the tax impact of a favorable tax
court decision combined with the pre-payment of Medicare
subsidy liabilities, partially offset by the tax impact of the trans-
action with Tingyi and the lapping of prior year tax benefits
related to a portion of our international bottling operations.
Net income attributable to PepsiCo decreased 4% and net
income attributable to PepsiCo per common share decreased
3%. Items affecting comparability (see “Items Affecting
Comparability”) positively contributed 4 percentage points
to both net income attributable to PepsiCo and net income
attributable to PepsiCo per common share.
2011
Bottling equity income decreased $735million, reflecting the
gain in the prior year on our previously held equity interests
in connection with our acquisitions of PBG and PAS. Prior to
our acquisitions of PBG and PAS on February26, 2010, we
had noncontrolling interests in each of these bottlers and
consequently included our share of their net income in bottling
equity income. Upon consummation of the acquisitions in the
first quarter of 2010, we began to consolidate the results of
these bottlers and recorded this gain in bottling equity income
associated with revaluing our previously held equity interests
in PBG and PAS to fair value.
Net interest expense decreased $36 million, primarily
reflecting interest expense in the prior year in connection with
our cash tender offer to repurchase debt in 2010, partially
offset by higher average debt balances in 2011.
The tax rate increased 3.8percentage points compared to
2010, primarily reflecting 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 affecting comparability (see “Items Affecting
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.
Management’s Discussion and Analysis
2012 PEPSICO ANNUAL REPORT58