Pepsi 2015 Annual Report Download - page 96

Table of Contents
79
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.
Raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly
related to production planning, inspection costs and raw materials 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,
share-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.
Prior to the end of the third quarter of 2015, the financial position and results of operations of our Venezuelan
snack and beverage businesses were included in our consolidated financial statements. Effective as of the
end of the third quarter of 2015, we did not meet the accounting criteria for control over our wholly-owned
Venezuelan subsidiaries and significant influence over our joint venture, and therefore we deconsolidated
our Venezuelan subsidiaries from our consolidated financial statements and began accounting for our
investments in our wholly-owned Venezuelan subsidiaries and our joint venture using the cost method of
accounting. See subsequent discussion of “Venezuela”; for further unaudited information, see “Our Business
Risks” and “Our Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Our fiscal year ends on the last Saturday of each December, resulting in an additional week of results every
five or six years (and our fiscal 2016 results will include an extra week). While our 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