Pepsi 2013 Annual Report Download - page 159

141
Reconciliation of
GAAP and Non- GAAP
Information
Organic, core and constant currency results, as well as free cash
flow excluding certain items, are non-GAAP financial measures
as they exclude certain items noted below. However, we believe
investors should consider these measures as they are more indica-
tive of our ongoing performance and with how management
evaluates our operational results and trends.
Commodity Mark-to-Market Net Impact
In the year ended December 28, 2013, we recognized $72 mil-
lion of mark-to-market net losses on commodity hedges in
corporate unallocated expenses. In the year ended December29,
2012, we recognized $65 million of mark-to-market net gains
on commodity hedges in corporate unallocated expenses. These
commodity derivatives include agricultural products, energy and
metals. 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, as either cost of sales or selling, general and administra-
tive expenses, depending on the underlying commodity. These
gains and losses are subsequently reflected in division results when
the divisions recognize the cost of the underlying commodity in
net income.
Merger and Integration Charges
In the year ended December28, 2013, we incurred merger and
integration charges of $10 million related to our acquisition
of WBD recorded in the Europe segment. In the year ended
December29, 2012, we incurred merger and integration charges
of $16million related to our acquisition of WBD, including $11mil-
lion recorded in the Europe segment and $5million recorded in
interest expense.
Restructuring and Impairment Charges
2014 Multi-Year Productivity Plan
In the year ended December28, 2013, we incurred restructur-
ing and impairment charges of $53 million in conjunction with
the multi-year productivity plan we publicly announced on
February 13, 2014 (2014 Productivity Plan), including $11 million
recorded in the FLNA segment, $3million recorded in the QFNA
segment, $5million recorded in the LAF segment, $10million
recorded in the PAB segment, $10million recorded in the Europe
segment, $1million recorded in the AMEA segment and $13million
recorded in corporate unallocated expenses. The 2014 Productivity
Plan includes the next generation of productivity initiatives that we
believe will strengthen our food, snack and beverage businesses
by accelerating our investment in manufacturing automation;
further optimizing our global manufacturing footprint, includ-
ing closing certain manufacturing facilities; re-engineering our
go-to-market systems in developed markets; expanding shared
services; and implementing simplified organization structures to
drive efficiency.
2012 Multi-Year Productivity Plan
In the year ended December28, 2013, we incurred restructur-
ing and impairment charges of $110million in conjunction with
the multi-year productivity plan we announced on February 9,
2012 (2012 Productivity Plan), including $8million recorded in
the FLNA segment, $1million recorded in the QFNA segment,
$7million recorded in the LAF segment, $21million recorded in
the PAB segment, $50 million recorded in the Europe segment,
$25million recorded in the AMEA segment and income of $2mil-
lion recorded in corporate unallocated expenses, representing
adjustments of previously recorded amounts. In the year ended
December29, 2012, we incurred restructuring charges of $279mil-
lion in conjunction with the 2012 Productivity Plan, including
$38million recorded in the FLNA segment, $9million recorded
in the QFNA segment, $50million recorded in the LAF segment,
$102million recorded in the PAB segment, $42million recorded in
the Europe segment, $28million recorded in the AMEA segment
and $10 million recorded in corporate unallocated expenses.
The 2012 Productivity Plan includes actions in every aspect of
our business that we believe will strengthen our complemen-
tary food, snack and beverage businesses by leveraging new
technologies and processes across PepsiCo’s operations, go-to-
market and information systems; heightening the focus on best
practice sharing across the globe; consolidating manufacturing,
warehouse and sales facilities; and implementing simplified orga-
nization structures, with wider spans of control and fewer layers
of management.
Venezuela Currency Devaluation
In the year ended December28, 2013, we recorded a $111mil-
lion net charge related to the devaluation of the bolivar for our
Venezuela businesses. $124million of this charge was recorded in
corporate unallocated expenses, with the balance (equity income
of $13million) recorded in the PAB segment.