Pepsi 2015 Annual Report Download - page 132
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Table of Contents
115
The carrying amounts of our cash and cash equivalents and short-term investments approximate fair value
due to their short-term maturity. The fair value of our debt obligations as of December 26, 2015 and
December 27, 2014 was $35 billion and $31 billion, respectively, based upon prices of similar instruments
in the marketplace, which are considered Level 2 inputs.
Pre-tax losses/(gains) on our derivative instruments are categorized as follows:
Fair Value/Non-
designated Hedges Cash Flow Hedges
Losses/(Gains)
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)
2015 2014 2015 2014 2015 2014
Foreign exchange $ (14) $2
$ (112) $ (70) $ (97) $ (16)
Interest rate 17 21 195 135 174 233
Commodity 218 170 12 23 20 32
Total $ 221 $ 193 $ 95 $ 88 $ 97 $ 249
(a) Foreign exchange derivative gains/losses are primarily included in selling, general and administrative expenses. Interest rate derivative
gains/losses are primarily from fair value hedges and are included in interest expense. These gains/losses are substantially offset by increases/
decreases in the value of the underlying debt, which are also included in interest expense. Commodity derivative gains/losses are included
in either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.
(b) Foreign exchange derivative gains/losses are primarily included in cost of sales. Interest rate derivative gains/losses are included in interest
expense. Commodity derivative gains/losses are included in either cost of sales or selling, general and administrative expenses, depending
on the underlying commodity.
Based on current market conditions, we expect to reclassify net gains of $33 million related to our cash flow
hedges from accumulated other comprehensive loss into net income during the next 12 months.
Note 11 — 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, PSUs, PEPunits and preferred shares were converted into common shares. Options to
purchase 1.5 million shares in 2015 and 0.6 million shares in 2013 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
during 2014 were nominal. These out-of-the-money options had average exercise prices of $99.25 in 2015,
$82.25 in 2014 and $75.69 in 2013.