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Our Financial Results
Items Aecting Comparability
The year-over-year comparisons of our financial results are
affected by the following items:
2012 2011 2010
Net revenue
53rd week – $ 623 –
Operating profit
Mark-to-market net impact gains/(losses) $ 65 $ (102) $ 91
Merger and integration charges $ (11) $ (313) $ (769)
Restructuring and impairment charges $ (279) $ (383) –
Restructuring and other charges related
to the transaction with Tingyi $ (150) – –
Pension lump sum settlement charge $ (195) – –
53rd week – $ 109 –
Inventory fair value adjustments – $ (46) $ (398)
Venezuela currency devaluation – – $ (120)
Asset write-off – – $ (145)
Foundation contribution – – $ (100)
Bottling equity income
Merger and integration charges – – $ (9)
Gain on previously held equity interests – – $ 735
Interest expense
Merger and integration charges $ (5) $ (16) $ (30)
53rd week – $ (16) –
Debt repurchase – – $ (178)
Net income attributable to PepsiCo
Mark-to-market net impact gains/(losses) $ 41 $ (71) $ 58
Merger and integration charges $ (12) $ (271) $ (648)
Restructuring and impairment charges $ (215) $ (286) –
Restructuring and other charges related
to the transaction with Tingyi $ (176) – –
Pension lump sum settlement charge $ (131) – –
Tax benefit related to tax court decision $ 217 – –
53rd week – $ 64 –
Inventory fair value adjustments – $ (28) $ (333)
Gain on previously held equity interests – – $ 958
Venezuela currency devaluation – – $ (120)
Asset write-off – – $ (92)
Foundation contribution – – $ (64)
Debt repurchase – – $ (114)
Net income attributable to PepsiCo per
common share —  diluted
Mark-to-market net impact gains/(losses) $ 0.03 $ (0.04) $ 0.04
Merger and integration charges $ (0.01) $ (0.17) $ (0.40)
Restructuring and impairment charges $ (0.14) $ (0.18) –
Restructuring and other charges related
to the transaction with Tingyi $ (0.11) – –
Pension lump sum settlement charge $ (0.08) – –
Tax benefit related to tax court decision $ 0.14 – –
53rd week – $ 0.04 –
Inventory fair value adjustments – $ (0.02) $ (0.21)
Gain on previously held equity interests – – $ 0.60
Venezuela currency devaluation – – $ (0.07)
Asset write-off – – $ (0.06)
Foundation contribution – – $ (0.04)
Debt repurchase – – $ (0.07)
Mark-to-Market Net Impact
We centrally manage commodity derivatives on behalf of our
divisions. These commodity derivatives include agricultural
products, metals and energy. Certain of these commodity
derivatives do not qualify for hedge accounting treatment
and are marked to market with the resulting gains and losses
recognized in corporate unallocated expenses. These gains
and losses are subsequently reflected in division results when
the divisions take delivery of the underlying commodity.
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 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 commod-
ity hedges in corporate unallocated expenses.
In 2010, we recognized $91million ($58million after-tax or
$0.04 per share) of mark-to-market net gains on commodity
hedges in corporate unallocated expenses.
Merger and Integration Charges
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 PBG, PAS and WBD, including $112mil-
lion recorded in the PAB segment, $123million recorded in
the Europe segment, $78million recorded in corporate unallo-
cated expenses and $16million recorded in interest expense.
These charges also include closing costs and advisory fees
related to our acquisition of WBD.
In 2010, we incurred merger and integration charges of
$799 million related to our acquisitions of PBG and PAS, as
well as advisory fees in connection with our acquisition of
WBD. $467million of these charges were recorded in the
PAB segment, $111million recorded in the Europe segment,
$191million recorded in corporate unallocated expenses and
$30 million recorded in interest expense. The merger and
integration charges related to our acquisitions of PBG and PAS
were incurred to help create a more fully integrated supply
chain and go-to-market business model, to improve the effec-
tiveness and efficiency of the distribution of our brands and to
enhance our revenue growth. These charges also include clos-
ing costs, one-time financing costs and advisory fees related
to our acquisitions of PBG and PAS. In addition, we recorded
$9million of merger-related charges, representing our share
of the respective merger costs of PBG and PAS, in bottling
Management’s Discussion and Analysis
2012 PEPSICO ANNUAL REPORT54