Basis of Presentation

3 Months Ended

Mar. 21, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Our Divisions

Basis of Presentation

When used in this report, the terms “we,” “us,” “our,” “PepsiCo” and the “Company” mean PepsiCo, Inc. and its consolidated subsidiaries, collectively.

Our Condensed Consolidated Balance Sheet as of March 21, 2015 and Condensed Consolidated Statements of Income, Comprehensive Income, Cash Flows and Equity for the 12 weeks endedMarch 21, 2015 and March 22, 2014 have not been audited. These statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our Annual Report on Form 10-K for the fiscal year ended December 27, 2014. In our opinion, these financial statements include all normal and recurring adjustments necessary for a fair presentation. The results for the 12 weeks endedMarch 21, 2015 are not necessarily indicative of the results expected for the full year.

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” and “Our Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

While our results in the United States and Canada (North America) are reported on a 12-week basis, most of our international operations report on a monthly calendar basis for which the months of January and February are reflected in our first quarter results.

Our significant interim accounting policies include the recognition of a pro rata share of certain estimated annual sales incentives and certain advertising and marketing costs in proportion to revenue or volume, as applicable, and the recognition of income taxes using an estimated annual effective tax rate. 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 following information is unaudited. Tabular dollars are in millions, except per share amounts. All per share amounts reflect common per share amounts, assume dilution unless otherwise noted, and are based on unrounded amounts. This report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 27, 2014.

Our Divisions

We are organized into six reportable segments (also referred to as divisions), as follows:

1) Frito-Lay North America (FLNA);

2) Quaker Foods North America (QFNA);

3) Latin America Foods (LAF), which includes all of our food and snack businesses in Latin America;

4) PepsiCo Americas Beverages (PAB), which includes all of our North American and Latin American beverage businesses;

5) PepsiCo Europe (Europe), which includes all beverage, food and snack businesses in Europe and South Africa; and

6) PepsiCo Asia, Middle East and Africa (AMEA), which includes all beverage, food and snack businesses in Asia, Middle East and Africa, excluding South Africa.

Net revenue and operating profit of each division are as follows:

	12 Weeks Ended
	Net Revenue				Operating Profit
	3/21/2015		3/22/2014		3/21/2015			3/22/2014
FLNA	$	3,319	$	3,219	$	920		$	862
QFNA (a)	639		634		99			160
LAF	1,279		1,338		204			232
PAB	4,433		4,426		468			429
Europe	1,477		1,961		100			152
AMEA (b)	1,070		1,045		242			194
Total division	12,217		12,623		2,033			2,029
Corporate Unallocated
Mark-to-market net (losses)/gains					(1		)	34
Restructuring and impairment charges (c)					(6		)	3
Other					(229		)	(259		)
	$	12,217	$	12,623	$	1,797		$	1,807

(a) Operating profit for QFNA for the 12 weeks ended March 21, 2015 includes a pre-tax impairment charge of $65 million ($50 million after-tax) associated with our Muller Quaker Dairy (MQD) joint venture investment.

(b) Operating profit for AMEA for the 12 weeks ended March 21, 2015 includes a pre-tax gain of $39 million ($28 million after-tax) associated with refranchising a portion of our bottling operations in India.

(c) Income amount represents adjustments for changes in estimates of previously recorded amounts.

Total assets of each division are as follows:

	Total Assets
	3/21/2015		12/27/2014
FLNA	$	5,247	$	5,307
QFNA	932		982
LAF	4,661		4,760
PAB	30,560		30,188
Europe	13,232		13,902
AMEA	5,889		5,887
Total division	60,521		61,026
Corporate (a)	9,104		9,483
	$	69,625	$	70,509

(a) Corporate assets consist principally of certain cash and cash equivalents, short-term investments, derivative instruments, property, plant and equipment and pension and tax assets.