Pepsi 2013 Annual Report Download - page 66

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48
Mark-to-Market Net Impact
We centrally manage commodity derivatives on behalf of our divisions. These commodity derivatives include
agricultural products, energy and metals. Certain of these commodity derivatives do not qualify for hedge
accounting treatment and are marked to market with the resulting gains and losses recorded in corporate
unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on
the underlying commodity. These gains and losses are subsequently reflected in division results when the
divisions recognize the cost of the underlying commodity in net income. Therefore, the divisions realize the
economic effects of the derivative without experiencing any resulting mark-to-market volatility, which
remains in corporate unallocated expenses.
In 2013, we recognized $72 million ($44 million after-tax or $0.03 per share) of mark-to-market net losses
on commodity hedges in corporate unallocated expenses.
In 2012, we recognized $65 million ($41 million after-tax or $0.03 per share) of mark-to-market net gains
on commodity hedges in corporate unallocated expenses.
In 2011, we recognized $102 million ($71 million after-tax or $0.04 per share) of mark-to-market net losses
on commodity hedges in corporate unallocated expenses.
Merger and Integration Charges
In 2013, we incurred merger and integration charges of $10 million ($8 million after-tax or $0.01 per share)
related to our acquisition of WBD, all of which were recorded in the Europe segment.
In 2012, we incurred merger and integration charges of $16 million ($12 million after-tax or $0.01 per share)
related to our acquisition of WBD, including $11 million recorded in the Europe segment and $5 million
recorded in interest expense.
In 2011, we incurred merger and integration charges of $329 million ($271 million after-tax or $0.17 per
share) related to our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (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.
Restructuring and Impairment Charges
2014 Multi-Year Productivity Plan
The multi-year productivity plan we publicly announced on February 13, 2014 (2014 Productivity Plan)
includes the next generation of productivity initiatives that we believe will strengthen our food, snack and
beverage businesses by accelerating our investment in manufacturing automation; further optimizing our
global manufacturing footprint, including closing certain manufacturing facilities; re-engineering our go-to-
market systems in developed markets; expanding shared services; and implementing simplified organization
structures to drive efficiency. The 2014 Productivity Plan is in addition to the productivity plan we began
implementing in 2012 and is expected to continue the benefits of that plan.
In 2013, we incurred restructuring charges of $53 million ($39 million after-tax or $0.02 per share) in
conjunction with our 2014 Productivity Plan, including $11 million in the FLNA segment, $3 million in the
QFNA segment, $5 million in the LAF segment, $10 million in the PAB segment, $10 million in the Europe
segment, $1 million in the AMEA segment and $13 million recorded in corporate unallocated expenses.
We expect to incur pre-tax charges of approximately $990 million, $53 million of which was reflected in our
2013 results, approximately $440 million of which will be reflected in our 2014 results and the balance of