Pepsi 2011 Annual Report Download - page 77

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The eective portion of the pre- tax (gains)/losses on our derivative instruments are categorized in the table below.
Fair Value/
Non-designated Hedges Cash Flow Hedges
Losses/(Gains) Recognized
in Income Statement(a)
(Gains)/Losses Recognized
in Accumulated Other
Comprehensive Loss
Losses/(Gains) Reclassied from
Accumulated Other Comprehensive
Loss into Income Statement(b)
2011 2010 2011 2010 2011 2010
Forward exchange contracts $ 14 $ 6 $ (9) $ 26 $ 26 $ 40
Interest rate derivatives (113) (104) 84 75 15 7
Commodity contracts 25 (30) 51 (32) (36) 28
Total $ (74) $ (128) $ 126 $ 69 $ 5 $ 75
(a) Interest rate derivative gains are primarily from fair value hedges and are included in interest expense. These gains are substantially oset by increases in the value of the underlying debt,
which is also included in interest expense. All other gains/losses are from non- designated hedges and are included in corporate unallocated expenses.
(b) Interest rate derivative losses are included in interest expense. All other gains/losses are primarily included in cost of sales.
The carrying amounts of our cash and cash equivalents and short- term investments approximate fair value due to the short- term maturity.
Short- term investments consist principally of short- term time deposits and index funds used to manage a portion of market risk arising from
our deferred compensation liability. The fair value of our debt obligations as of December31, 2011 and December25, 2010 was $29.8billion
and $25.9billion, respectively, based upon prices of similar instruments in the marketplace.
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 calcu-
lated 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 25.9million shares in
2011, 24.4million shares in 2010 and 39.0million shares in 2009 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 $66.99 in 2011, $67.26 in 2010 and
$61.52 in 2009.
The computations of basic and diluted net income attributable to PepsiCo per common share are as follows:
2011 2010 2009
Income Shares(a) Income Shares(a) Income Shares(a)
Net income attributable to PepsiCo $ 6,443 $ 6,320 $ 5,946
Preferred shares:
Dividends (1) (1) (1)
Redemption premium (6) (5) (5)
Net income available for PepsiCo common shareholders $ 6,436 1,576 $ 6,314 1,590 $ 5,940 1,558
Basic net income attributable to PepsiCo per common share $ 4.08 $ 3.97 $ 3.81
Net income available for PepsiCo common shareholders $ 6,436 1,576 $ 6,314 1,590 $ 5,940 1,558
Dilutive securities:
Stock options and RSUs – 20 – 23 – 17
ESOP convertible preferred stock 7 1 6 1 6 2
Diluted $ 6,443 1,597 $ 6,320 1,614 $ 5,946 1,577
Diluted net income attributable to PepsiCo per common share $ 4.03 $ 3.91 $ 3.77
(a) Weighted- average common shares outstanding (in millions).
PepsiCo, Inc.  Annual Report

Notes to Consolidated Financial Statements