Pepsi 2010 Annual Report Download - page 98

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97
Note 11 Net Income Attributable to PepsiCo per Common Share
Basic net income attributable to PepsiCo per common share is net income available for PepsiCo common shareholders divided by the
weighted average of common shares outstanding during the period. Diluted net income attributable to PepsiCo per common share is
calculated using the weighted average of common shares outstanding adjusted to include the eect that would occur if in-the-money
employee stock options were exercised and RSUs and preferred shares were converted into common shares. Options to purchase
24.4million shares in 2010, 39.0million shares in 2009 and 9.8million shares in 2008 were not included in the calculation of diluted
earnings per common share because these options were out-of-the-money. Out-of-the-money options had average exercise prices of
$67.26 in 2010, $61.52 in 2009 and $67.59 in 2008.
The computations of basic and diluted net income attributable to PepsiCo per common share are as follows:
2010 2009 2008
Income Shares(a) Income Shares(a) Income Shares(a)
Net income attributable to PepsiCo $6,320 $5,946 $5,142
Preferred shares:
Dividends (1) (1) (2)
Redemption premium (5) (5) (6)
Net income available for PepsiCo common shareholders $6,314 1,590 $5,940 1,558 $5,134 1,573
Basic net income attributable to PepsiCo per common share $ 3.97 $ 3.81 $ 3.26
Net income available for PepsiCo common shareholders $6,314 1,590 $5,940 1,558 $5,134 1,573
Dilutive securities:
Stock options and RSUs – 23 – 17 – 27
ESOP convertible preferred stock 6 1 6 2 8 2
Diluted $6,320 1,614 $5,946 1,577 $5,142 1,602
Diluted net income attributable to PepsiCo per common share $ 3.91 $ 3.77 $ 3.21
(a) Weighted-average common shares outstanding (in millions).
Note 12 Preferred Stock
As of December25, 2010 and December 26, 2009, there were 3million shares of convertible preferred stock authorized. The preferred
stock was issued for an ESOP established by Quaker and these shares are redeemable for common stock by the ESOP participants. The
preferred stock accrues dividends at an annual rate of $5.46 per share. At year-end 2010 and 2009, there were 803,953 preferred shares
issued and 227,653 and 243,553 shares outstanding, respectively. The outstanding preferred shares had a fair value of $74million as
of December25, 2010 and $73million as of December 26, 2009. Each share is convertible at the option of the holder into 4.9625 shares of
common stock. The preferred shares may be called by us upon written notice at $78 per share plus accrued and unpaid dividends.
Quaker made the final award to its ESOP plan in June 2001.
2010 2009 2008
Shares(a) Amount Shares(a) Amount Shares(a) Amount
Preferred stock 0.8 $ 41 0.8 $ 41 0.8 $ 41
Repurchased preferred stock
Balance, beginning of year 0.6 $145 0.5 $138 0.5 $132
Redemptions – 5 0.1 7 – 6
Balance, end of year 0.6 $150 0.6 $145 0.5 $138
(a) In millions.