Pepsi 2015 Annual Report Download - page 161

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 non-GAAP measures in evaluating our results
as they are indicative of our ongoing performance 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.
Commodity Mark-To- Market Net Impact
In the year ended December 26, 2015, we recognized $11 mil-
lion of mark-to- market net gains on commodity hedges in
corporate unallocated expenses. In the years ended December27,
2014, December28, 2013 and December 29, 2012, we recognized
$68 million and $72 million of mark-to- market net losses and
$65million of mark-to- market net gains, respectively, on commod-
ity hedges in corporate unallocated expenses. We centrally manage
commodity derivatives on behalf of our divisions. These commod-
ity derivatives include agricultural products, metals and energy.
Commodity derivatives that do not qualify for hedge accounting
treatment are marked to market each period with the resulting
gains and losses recorded in corporate unallocated expenses, as
either cost of sales or selling, general and administrative 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 operating profit.
Restructuring and Impairment Charges
2014 Multi-Year Productivity Plan
In the year ended December 26, 2015, we incurred restructuring
charges of $169million in conjunction with the 2014 Productivity
Plan. In the years ended December27, 2014 and December28, 2013,
we incurred restructuring charges of $357million and $53million,
respectively, in conjunction with our 2014 Productivity Plan. The
2014 Productivity Plan includes the next generation of productivity
initiatives that we believe will strengthen our food, snack and bev-
erage businesses by: accelerating our investment in manufacturing
automation; further optimizing our global manufacturing footprint,
including 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. The 2014 Productivity Plan is in addition to the
2012 Productivity Plan and is expected to continue the benefits of
that plan.
2012 Multi-Year Productivity Plan
In the year ended December 26, 2015, we incurred restructuring
charges of $61 million in conjunction with the 2012 Productivity
Plan. In the years ended December27, 2014, December28, 2013 and
December29, 2012, we incurred restructuring charges of $61million,
$110million and $279million, respectively, in conjunction with our
2012 Productivity Plan. The 2012 Productivity Plan included actions
in every aspect of our business that we believe would strengthen
our complementary food, snack and beverage businesses by: lever-
aging 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 manufactur-
ing, warehouse and sales facilities; and implementing simplified
organization structures, with wider spans of control and fewer layers
of management. The 2012 Productivity Plan has enhanced PepsiCo’s
cost- competitiveness and provided a source of funding for future
brand- building and innovation initiatives.
Pension- Related Settlements
In the year ended December26, 2015, we recorded pension- related
settlement benefits of $67 million in the NAB segment associ-
ated with the settlement of pension- related liabilities from
previous acquisitions. In the years ended December 27, 2014 and
December 29, 2012, we recorded pension lump sum settlement
charges of $141million and $195million, respectively, related to pay-
ments for pension liabilities to certain former employees who had
vested benefits.
Restructuring and Other Charges Related to the
Transaction with Tingyi
In the year ended December 26, 2015, we recorded a charge of
$73 million in the AMENA segment related to a write-off of the
recorded value of a call option to increase our holding in TAB to 20%.
In the year ended December 29, 2012, we recorded restructuring
and other charges of $150million in the AMENA segment related to
the transaction with Tingyi.
Venezuela Impairment Charges
In the year ended December 26, 2015, we recorded charges of
$1.4billion in the Latin America segment related to the impairment
of investments in our wholly-owned Venezuelan subsidiaries and
beverage joint venture.
Venezuela Remeasurement Charges
In the year ended December27, 2014, we recorded a $105million
net charge related to our remeasurement of the bolivar for certain
2015 ANNUAL REPORT 143