Pepsi 2012 Annual Report Download - page 99

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The effective 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
(Gains)/Losses Recognized in
Income Statement(a)
Losses/(Gains) Recognized
in Accumulated Other
Comprehensive Loss
Losses/(Gains) Reclassified
from Accumulated Other
Comprehensive Loss into
Income Statement(b)
2012 2011 2012 2011 2012 2011
Foreign exchange contracts $ (23) $ 14 $ 41 $ (9) $ 8 $ 26
Interest rate derivatives 17 (113) (2) 84 19 15
Commodity contracts (23) 25 11 51 63 (36)
Total $ (29) $ (74) $ 50 $ 126 $ 90 $ 5
(a) Interest rate derivative losses are primarily from fair value hedges and are included in interest expense. These losses are substantially offset by decreases 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 prin-
cipally 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29, 2012 and December31, 2011 was $30.5bil-
lion and $29.8billion, respectively, based upon prices of similar
instruments in the marketplace.
Note— 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 effect 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 9.6million shares in 2012, 25.9million shares in 2011 and 24.4million shares in 2010 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 $67.64 in 2012, $66.99 in 2011 and $67.26 in 2010.
The computations of basic and diluted net income attributable to PepsiCo per common share are as follows:
2012 2011 2010
Income Shares(a) Income Shares(a) Income Shares(a)
Net income attributable to PepsiCo $ 6,178 $ 6,443 $ 6,320
Preferred shares:
Dividends (1) (1) (1)
Redemption premium (6) (6) (5)
Net income available for PepsiCo common shareholders $ 6,171 1,557 $ 6,436 1,576 $ 6,314 1,590
Basic net income attributable to PepsiCo per common share $ 3.96 $ 4.08 $ 3.97
Net income available for PepsiCo common shareholders $ 6,171 1,557 $ 6,436 1,576 $ 6,314 1,590
Dilutive securities:
Stock options and RSUs – 17 – 20 – 23
Employee Stock Ownership Plan (ESOP) convertible
preferred stock 7 1 7 1 6 1
Diluted $ 6,178 1,575 $ 6,443 1,597 $ 6,320 1,614
Diluted net income attributable to PepsiCo per common share $ 3.92 $ 4.03 $ 3.91
(a) Weighted-average common shares outstanding (in millions).
2012 PEPSICO ANNUAL REPORT 97
Notes to Consolidated Financial Statements