Pepsi 2013 Annual Report Download - page 160

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Tax Benefi ts
In the year ended December28, 2013, we recognized a non-cash
tax benefit of $209 million associated with our agreement with
the IRS resolving all open matters related to the audits for taxable
years 2003 through 2009, which reduced our reserve for uncertain
tax positions for the tax years 2003 through 2012. In the year ended
December 29, 2012, we recognized a non-cash tax benefit of
$217million associated with a favorable tax court decision related
to the classification of financial instruments.
Restructuring and Other Charges Related to the
Transaction With Tingyi
In the year ended December29, 2012, we recorded restructuring
and other charges of $150million in the AMEA segment related to
the transaction with Tingyi.
Pension Lump Sum Settlement Charge
In the year ended December29, 2012, we recorded a pension lump
sum settlement charge of $195million.
Free Cash Flow (excluding certain items)
Free cash flow (excluding the items noted in the Net Cash Provided
by Operating Activities Reconciliation table on page 65) is the
primary measure management uses to monitor cash flow perfor-
mance. This is not a measure defined by GAAP. Since net capital
spending is essential to our product innovation initiatives and
maintaining our operational capabilities, we believe that it is a
recurring and necessary use of cash. As such, we believe investors
should also consider net capital spending when evaluating our
cash from operating activities. Additionally, we consider certain
other items (included in the Net Cash Provided by Operating
Activities Reconciliation table) in evaluating free cash flow which
we believe investors should consider in evaluating our free cash
flow results.
Organic Revenue
Organic revenue growth is a non-GAAP financial measure that
excludes certain items. See page 55 “Results of Operations —
Division Review” in Management’s Discussion and Analysis for a
reconciliation to the most directly comparable financial measure
in accordance with GAAP.
Core Constant Currency EPS
Core constant currency EPS growth is a non-GAAP financial
measure that excludes certain items. See page 53 “Results of
Operations — Consolidated Review” in Management’s Discussion
and Analysis for a reconciliation to the most directly comparable
financial measure in accordance with GAAP.
Gross Margin Growth Reconciliation
Year Ended 12/28/13
Reported Gross Margin Growth 74 bps
Commodity Mark-to-Market NetImpact 16
Core Gross Margin Growth 90 bps
Operating Margin Growth Reconciliation
Year Ended 12/28/13
Reported Operating Margin Growth 70 bps
Commodity Mark-to-Market NetImpact 21
Merger and Integration Charges –
Restructuring and ImpairmentCharges (18)
Venezuela Currency Devaluation 17
Restructuring and Other Charges Related to the Transaction
WithTingyi (23)
Pension Lump Sum SettlementCharge (30)
Core Operating Margin Growth 37 bps
Return on Invested Capital (ROIC) Growth
Reconciliation
Year Ended 12/28/13
Reported ROIC Growth 37 bps
Impact of:
Cash, Cash Equivalents and Short-Term Investments 104
Commodity Mark-to-Market NetImpact 15
Merger and Integration Charges 10
Restructuring and ImpairmentCharges (21)
Venezuela Currency Devaluation 21
Tax Benefits 9
Restructuring and Other Charges Related to the
Transaction WithTingyi (37)
Pension Lump Sum SettlementCharge (29)
Core Net ROIC Growth 110 bps
Note – The impact of all other reconciling items to reported ROIC growth rounds to zero.
Developing and Emerging Markets Net Revenue
GrowthReconciliation
Year Ended 12/28/13
Reported Developing and Emerging Markets Net Revenue Growth 3%
Impact of Acquisitions andDivestitures 3
Impact of Foreign ExchangeTranslation 4
Developing and Emerging Markets Organic Revenue Growth 10%
Reconciliation of GAAP and Non- GAAP Information
(continued)
Note – Certain amounts above may not sum due to rounding.