Pepsi 2007 Annual Report Download - page 88

Reconciliation of GAAP and Non-GAAP Information
GLOSSARY
The financial measures listed below are not measures defined by
generally accepted accounting principles. However, we believe
investors should consider these measures as they are more
indicative of our ongoing performance and how management
evaluates our operational results and trends. Specifically,
investors should consider the following:
Our 2007 and 2006 division operating profi t;
•
Our 2007 and 2006 division operating profi t and total operat-•
ing profi t without the impact of restructuring and impairment
charges; and our 2007 division operating profi t growth and
total operating profi t growth without the impact of restructur-
ing and impairment charges;
Our 2007 and 2006 net income without the impact of our
•
2007 and 2006 non-cash tax benefi ts and restructuring and
impairment charges; our 2007 net income growth without the
impact of the aforementioned items; and
Our 2007 and 2006 diluted EPS without the impact of our
•
2007 and 2006 non-cash tax benefi ts and restructuring and
impairment charges; our 2007 diluted EPS growth without the
impact of the aforementioned items; and our 2005 diluted
EPS without the impact of the AJCA tax charge, restructuring
charges and the extra week in 2005.
Operating Profit Reconciliation
2007 2006 Growth
Total PepsiCo Reported Operating Profit $7,170 $6,502 10%
Impact of Restructuring and Impairment Charges 102 67
Total Operating Profit Excluding above Item 7,272 6,569 11%
Impact of Corporate Unallocated 753 738
PepsiCo Total Division Operating
Profit Excluding above Items $8,025 $7,307 10%
2007
Percentage
Operating Profit Reconciliation 2007 2006 of Total
Frito-Lay North America Operating Profit $2,845 $2,615 36%
Quaker Foods North America Operating Profit 568 554 7
Latin America Foods Operating Profit 714 655 9
PepsiCo Americas Beverages Operating Profit 2,487 2,315 31
United Kingdom & Europe Operating Profit 774 700 10
Middle East, Africa & Asia Operating Profit 535 401 7
PepsiCo Total Division Operating Profit 7,923 7,240 100%
Impact of Corporate Unallocated (753) (738)
Total PepsiCo Reported Operating Profit $7,170 $6,502
Net Income Reconciliation 2007 2006 Growth
Reported Net Income $5,658 $5,642 –
Tax Benefits (129) (620)
Restructuring and Impairment Charges 70 43
Net Income Excluding above Items $5,599 $5,065 11%
2007
Diluted EPS Reconciliation 2007 2006 Growth 2005
Reported Diluted EPS $ 3.41 $ 3.34 2% $ 2.39
Tax Benefits (0.08) (0.37)
AJCA Tax Charge 0.27
Extra Week (0.03)
Restructuring and Impairment Charges 0.04 0.03 0.03
Diluted EPS Excluding above Items $ 3.38* $ 3.00 13% $ 2.66
*Does not sum due to rounding.
Anchor bottlers: The Pepsi Bottling Group
(PBG), PepsiAmericas (PAS) and Pepsi Bottling
Ventures (PBV).
Bottler: customers to whom we have granted
exclusive contracts to sell and manufacture
certain beverage products bearing our trademarks
within a specific geographical area.
Bottler Case Sales (BCS): measure of physical
beverage volume shipped to retailers and
independent distributors from both PepsiCo and
our bottlers.
Bottler funding: financial incentives we give
to our bottlers to assist in the distribution and
promotion of our beverage products.
Concentrate Shipments and Equivalents
(CSE): measure of our physical beverage volume
shipments to bottlers, retailers and independent
distributors. This measure is reported on our fiscal
year basis.
Consumers: people who eat and drink
our products.
CSD: carbonated soft drinks.
Customers: authorized bottlers and
independent distributors and retailers.
Derivatives: financial instruments that we
use to manage our risk arising from changes in
commodity prices, interest rates, foreign exchange
rates and stock prices.
Direct-Store-Delivery (DSD): delivery system
used by us and our bottlers to deliver snacks
and beverages directly to retail stores where our
products are merchandised.
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.
Management operating cash fl ow: net
cash provided by operating activities less capital
spending plus sales of property, plant and
equipment. It is our primary measure used to
monitor cash flow performance.
Marketplace spending: sales incentives
offered through various programs to our
customers and consumers (trade spending), as
well as advertising and other marketing activities.
Servings: common metric reflecting our
consolidated physical unit volume. Our
divisions’ physical unit measures are converted
into servings based on U.S. Food and Drug
Administration guidelines for single-serving sizes
of our products.
Smart Spot: our initiative that helps consumers
find our products that can contribute to healthier
lifestyles.
Transaction gains and losses: the impact on
our consolidated financial statements of exchange
rate changes arising from specific transactions.
Translation adjustments: the impact of the
conversion of our foreign affiliates’ financial
statements to U.S. dollars for the purpose of
consolidating our financial statements.
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