Pepsi 2014 Annual Report Download - page 72

52
and reflect how management evaluates our operational results and trends. These measures are not, and should
not be viewed as, a substitute for U.S. GAAP reporting measures. See also “Organic Revenue Growth” and
“Free Cash Flow.”
Results of Operations — Consolidated Review
In the discussions of net revenue and operating profit below, “effective net pricing” reflects the year-over-
year impact of discrete pricing actions, sales incentive activities and mix resulting from selling varying
products in different package sizes and in different countries and “net pricing” reflects the year-over-year
combined impact of list price changes, weight changes per package, discounts and allowances. Additionally,
“acquisitions and divestitures,” except as otherwise noted, reflect all mergers and acquisitions activity,
including the impact of acquisitions, divestitures and changes in ownership or control in consolidated
subsidiaries and nonconsolidated equity investees.
Volume
Our beverage volume in the PAB, Europe and AMEA segments reflects sales to authorized bottlers,
independent distributors and retailers, as well as the sale of beverages bearing Company-owned or licensed
trademarks that have been sold through our authorized independent bottlers. Bottler case sales (BCS) and
concentrate shipments and equivalents (CSE) are not necessarily equal during any given period due to
seasonality, timing of product launches, product mix, bottler inventory practices and other factors. While our
beverage revenues are not entirely based on BCS volume, as there are independent bottlers in the supply
chain, we believe that BCS is a valuable measure as it quantifies the sell-through of our beverage products
at the consumer level. Sales of products from our unconsolidated joint ventures are reflected in our reported
volume. PAB, AMEA and Europe, either independently or in conjunction with third parties, make, market,
distribute and sell ready-to-drink tea products through a joint venture with Unilever (under the Lipton brand
name), and PAB further, either independently or in conjunction with third parties, makes, markets, distributes
and sells ready-to-drink coffee products through a joint venture with Starbucks. In addition, AMEA licenses
the Tropicana brand for use in China on co-branded juice products in connection with a strategic alliance
with Tingyi.
Our food and snacks volume in the FLNA, QFNA, LAF, Europe and AMEA segments is reported on a system-
wide basis, which includes our own sales and the sales by our noncontrolled affiliates of snacks bearing
Company-owned or licensed trademarks.
Servings
Since our divisions each use different measures of physical unit volume (i.e., kilos, gallons, pounds and case
sales), a common servings metric is necessary to reflect our consolidated physical unit volume. Our divisions’
physical volume measures are converted into servings based on U.S. Food and Drug Administration guidelines
for single-serving sizes of our products.
In 2014, total servings increased 1% compared to 2013. In 2013, total servings increased 2% compared to
2012. Servings growth in 2013 reflects an adjustment to the base year for divestitures and business changes.
Table of Contents