Pepsi 2014 Annual Report Download - page 93

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Notes to Consolidated Financial Statements
Note 1 — Basis of Presentation and Our Divisions
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. GAAP and include the
consolidated accounts of PepsiCo, Inc. and the affiliates that we control. In addition, we include our share
of the results of certain other affiliates using the equity method based on our economic ownership interest,
our ability to exercise significant influence over the operating or financial decisions of these affiliates or our
ability to direct their economic resources. We do not control these other affiliates, as our ownership in these
other affiliates is generally 50% or less. Intercompany balances and transactions are eliminated. Our fiscal
year ends on the last Saturday of each December, resulting in an additional week of results every five or six
years.
The results of our Venezuelan businesses have been reported under highly inflationary accounting since the
beginning of 2010. See further unaudited information in “Our Business Risks,” “Items Affecting
Comparability” and “Our Liquidity and Capital Resources” in Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly
related to production planning, inspection costs and raw material handling facilities, are included in cost of
sales. The costs of moving, storing and delivering finished product are included in selling, general and
administrative expenses.
The preparation of our consolidated financial statements requires us to make estimates and assumptions that
affect reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and
liabilities. Estimates are used in determining, among other items, sales incentives accruals, tax reserves,
stock-based compensation, pension and retiree medical accruals, amounts and useful lives for intangible
assets, and future cash flows associated with impairment testing for perpetual brands, goodwill and other
long-lived assets. We evaluate our estimates on an ongoing basis using our historical experience, as well as
other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust
or revise our estimates as circumstances change. As future events and their effect cannot be determined with
precision, actual results could differ significantly from these estimates.
While our United States and Canada (North America) results are reported on a weekly calendar basis, most
of our international operations report on a monthly calendar basis. The following chart details our quarterly
reporting schedule for all reporting periods presented:
Quarter U.S. and Canada International
First Quarter 12 weeks January, February
Second Quarter 12 weeks March, April and May
Third Quarter 12 weeks June, July and August
Fourth Quarter
16 weeks September, October, November
and December
See “Our Divisions” below, and for additional unaudited information on items affecting the comparability
of our consolidated results, see further unaudited information in “Items Affecting Comparability” in
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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