Pepsi 2006 Annual Report Download - page 29

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OUR BUSINESS
Our Operations.................................................................... 28
Our Customers ..................................................................... 29
Our Distribution Network ................................................... 30
Our Competition.................................................................. 30
Other Relationships ............................................................. 30
Our Business Risks................................................................ 31
OUR CRITICAL ACCOUNTING POLICIES
Revenue Recognition .......................................................... 37
Brand and Goodwill Valuations .......................................... 38
Income Tax Expense and Accruals....................................... 39
Stock-Based Compensation Expense................................... 40
Pension and Retiree Medical Plans ..................................... 42
OUR FINANCIAL RESULTS
Items Affecting Comparability............................................ 44
Results of Continuing Operations —
Consolidated Review........................................................ 45
Results of Continuing Operations — Division Review........ 47
Frito-Lay North America .................................................. 48
PepsiCo Beverages North America................................... 49
PepsiCo International....................................................... 50
Quaker Foods North America.......................................... 51
Our Liquidity and Capital Resources................................... 52
CONSOLIDATED STATEMENT OF INCOME .......................... 54
CONSOLIDATED STATEMENT OF CASH FLOWS.................. 55
CONSOLIDATED BALANCE SHEET....................................... 56
CONSOLIDATED STATEMENT OF COMMON
SHAREHOLDERS’ EQUITY ................................................ 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Basis of Presentation and Our Divisions........... 58
Note 2 — Our Significant Accounting Policies ................. 60
Note 3 — Restructuring and Impairment Charges ........... 62
Note 4 — Property, Plant and Equipment and
Intangible Assets ............................................ 62
Note 5 — Income Taxes ..................................................... 64
Note 6 — Stock-Based Compensation .............................. 65
Note 7 — Pension, Retiree Medical and Savings Plans..... 67
Note 8 — Noncontrolled Bottling Affiliates..................... 71
Note 9 — Debt Obligations and Commitments................ 72
Note 10 — Risk Management ............................................. 73
Note 11 — Net Income per Common Share from
Continuing Operations .................................. 75
Note 12 — Preferred and Common Stock .......................... 76
Note 13 — Accumulated Other Comprehensive Loss......... 76
Note 14 — Supplemental Financial Information................ 77
MANAGEMENT’S RESPONSIBILITY FOR
FINANCIAL REPORTING.................................................... 78
MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING.......................................... 79
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.......................................................... 80
SELECTED FINANCIAL DATA ................................................ 81
RECONCILIATION OF GAAP AND NON-GAAP
INFORMATION.................................................................. 82
GLOSSARY ........................................................................... 82
Management’s Discussion and Analysis
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