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Document and Entity Information
6 Months Ended
Jun. 16, 2012
Jul. 16, 2012
Document Information [Line Items]
Document Type 10-Q
Amendment Flag false
Document Period End Date Jun 16, 2012
Document Fiscal Year Focus 2012
Document Fiscal Period Focus Q2
Trading Symbol PEP
Entity Registrant Name PEPSICO INC
Entity Central Index Key 0000077476
Current Fiscal Year End Date --12-29
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 1,556,274,656
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CONDENSED CONSOLIDATED STATEMENT OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Net Revenue $ 16,458 $ 16,827 $ 28,886 $ 28,764
Cost of sales 7,915 7,963 13,804 13,410
Selling, general and administrative expenses 6,136 6,070 10,928 10,809
Amortization of intangible assets 30 40 55 65
Operating Profit 2,377 2,754 4,099 4,480
Interest expense (209) (199) (407) (379)
Interest income and other 1 20 24 37
Income before income taxes 2,169 2,575 3,716 4,138
Provision for income taxes 668 670 1,082 1,089
Net income 1,501 1,905 2,634 3,049
Less: Net income attributable to noncontrolling interests 13 20 19 21
Net Income Attributable to PepsiCo $ 1,488 $ 1,885 $ 2,615 $ 3,028
Net Income Attributable to PepsiCo per Common Share
Basic $ 0.95 $ 1.19 $ 1.67 $ 1.91
Diluted $ 0.94 $ 1.17 $ 1.65 $ 1.89
Weighted-average common shares outstanding
Basic 1,563 [1] 1,583 [1] 1,565 [1] 1,583 [1]
Diluted 1,581 [1] 1,605 [1] 1,583 [1] 1,605 [1]
Cash dividends declared per common share $ 0.5375 $ 0.515 $ 1.0525 $ 0.995
[1] Weighted-average common shares outstanding (in millions).
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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Net income $ 1,501 $ 1,905 $ 2,634 $ 3,049
Other Comprehensive (Loss)/Income
Currency translation adjustment (2,231) 809 (544) 1,454
Cash flow hedges, net of tax:
Net derivative losses (11) [1] (25) [1] (25) [1] (17) [1]
Reclassification of net losses to net income 17 [2] 3 [2] 24 [2] 7 [2]
Pension and retiree medical, net of tax:
Reclassification of losses to net income 61 [3] 26 [3] 86 [3] 23 [3]
Remeasurement of net liabilities 7 [4]
Unrealized (losses)/gains on securities, net of tax (10) [5] 11 [5] 3 [5] (2) [5]
Other 1 36 (17)
Total Other Comprehensive (Loss)/Income (2,174) 825 (413) 1,448
Comprehensive (Loss)/Income (673) 2,730 2,221 4,497
Comprehensive income attributable to noncontrolling interests (11) (64) (13) (93)
Comprehensive (Loss)/Income Attributable to PepsiCo $ (684) $ 2,666 $ 2,208 $ 4,404
[1] Net of tax benefits of $11 million and $12 million for the 12 and 24 weeks in 2012, respectively. Net of tax benefits of $7 million and tax expense of $6 million for the 12 and 24 weeks in 2011, respectively.
[2] Net of tax benefits of $9 million and $14 million for the 12 and 24 weeks in 2012, respectively. Net of tax expense of $3 million and $5 million for the 12 and 24 weeks in 2011, respectively.
[3] Net of tax benefits of $29 million and $44 million for the 12 and 24 weeks in 2012, respectively. Net of tax benefits of $13 million and $14 million for the 12 and 24 weeks in 2011, respectively.
[4] Net of tax expense of $4 million for the 24 weeks in 2012.
[5] Net of tax expense of $4 million and tax benefits of $1 million for the 12 and 24 weeks in 2011, respectively.
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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Net derivative (losses)/gains, Tax Effect $ 11 $ 7 $ 12 $ 6
Reclassification of net losses to net income, Tax Effect 9 3 14 5
Reclassification of losses/(gains) to net income, Tax Effect 29 13 44 14
Remeasurement of net liabilities, Tax Effect 4
Unrealized gains/(losses) on securities, Tax Effect $ 4 $ 1
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Operating Activities
Net income $ 2,634 $ 3,049
Depreciation and amortization 1,201 1,187
Stock-based compensation expense 125 146
Restructuring and impairment charges 110
Cash payments for restructuring charges (140) (1)
Merger and integration charges 5 113
Cash payments for merger and integration charges (47) (207)
Excess tax benefits from share-based payment arrangements (53) (52)
Pension and retiree medical plan contributions (1,169) (116)
Pension and retiree medical plan expenses 271 254
Deferred income taxes and other tax charges and credits 85 (146)
Change in accounts and notes receivable (1,084) (1,491)
Change in inventories (643) (742)
Change in prepaid expenses and other current assets (196) (144)
Change in accounts payable and other current liabilities (193) (65)
Change in income taxes payable 432 849
Other, net (166) (281)
Net Cash Provided by Operating Activities 1,247 2,353
Investing Activities
Capital spending (901) (1,231)
Sales of property, plant and equipment 42 34
Investment in WBD (164)
Other acquisitions and investments in noncontrolled affiliates (49) (61)
Divestitures 14
Short-term investments, by original maturity
More than three months - maturities 10
Three months or less, net 41 (10)
Other investing, net 13 (2)
Net Cash Used for Investing Activities (1,138) (3,852)
Financing Activities
Proceeds from issuances of long-term debt 2,733 1,754
Payments of long-term debt (1,034) (285)
Short-term borrowings, by original maturity
More than three months - proceeds 53 180
More than three months - payments (189) (152)
Three months or less, net 462 (290)
Cash dividends paid (1,626) (1,530)
Share repurchases - common (1,206) (746)
Share repurchases - preferred (3) (4)
Proceeds from exercises of stock options 496 652
Excess tax benefits from share-based payment arrangements 53 52
Acquisition of noncontrolling interests (12) (1,327)
Other financing (19) (3)
Net Cash Used for Financing Activities (292) (1,699)
Effect of exchange rate changes on cash and cash equivalents (21) 168
Net Decrease in Cash and Cash Equivalents (204) (3,030)
Cash and Cash Equivalents, Beginning of Year 4,067 5,943
Cash and Cash Equivalents, End of Period 3,863 2,913
Tingyi
Operating Activities
Restructuring and other charges related to the transaction with Tingyi (Cayman Islands) Holding Corp. (Tingyi) 163
Cash payments for restructuring and other charges related to the transaction with Tingyi (88)
Investing Activities
Cash payments related to the transaction with Tingyi (298)
Wbd
Investing Activities
Acquisition of Wimm-Bill-Dann Foods OJSC (WBD), net of cash and cash equivalents acquired $ (2,428)
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CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Millions, unless otherwise specified
Jun. 16, 2012
Dec. 31, 2011
Current Assets
Cash and cash equivalents $ 3,863 $ 4,067
Short-term investments 330 358
Accounts and notes receivable, less allowance: 6/12 - $159, 12/11 - $157 7,721 6,912
Inventories
Raw materials 1,991 1,883
Work-in-process 351 207
Finished goods 1,932 1,737
Inventory, Net, Total 4,274 3,827
Prepaid expenses and other current assets 1,845 2,277
Total Current Assets 18,033 17,441
Property, Plant and Equipment 34,271 35,140
Accumulated Depreciation (15,757) (15,442)
Property, Plant and Equipment, Net, Total 18,514 19,698
Amortizable Intangible Assets, net 1,809 1,888
Goodwill 16,456 16,800
Other Nonamortizable Intangible Assets 14,399 14,557
Nonamortizable Intangible Assets 30,855 31,357
Investments in Noncontrolled Affiliates 1,562 1,477
Other Assets 1,617 1,021
Total Assets 72,390 72,882
Current Liabilities
Short-term obligations 7,038 6,205
Accounts payable and other current liabilities 11,153 11,757
Income taxes payable 78 192
Total Current Liabilities 18,269 18,154
Long-term Debt Obligations 21,294 20,568
Other Liabilities 7,365 8,266
Deferred Income Taxes 4,867 4,995
Total Liabilities 51,795 51,983
Commitments and Contingencies      
Preferred Stock, par value 41 41
PepsiCo Common Shareholders' Equity
Common stock, par value 1 2/3 cents per share: Authorized 3,600 shares, issued 6/12 and 12/11 - 1,865 shares 31 31
Capital in excess of par value 4,223 4,461
Retained earnings 41,274 40,316
Accumulated other comprehensive loss (6,636) (6,229)
Total PepsiCo Common Shareholders' Equity 20,576 20,704
Noncontrolling interests 138 311
Total Equity 20,595 20,899
Total Liabilities and Equity 72,390 72,882
Preferred Stock
Current Liabilities
Repurchased stock (160) (157)
PepsiCo Common Shareholders' Equity
Repurchased stock (160) (157)
Total Equity 41
Common Stock
Current Liabilities
Repurchased stock (18,316) (17,875)
PepsiCo Common Shareholders' Equity
Repurchased stock (18,316) (17,875)
Total Equity $ 31
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CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
In Millions, except Per Share data, unless otherwise specified
Jun. 16, 2012
Dec. 31, 2011
Accounts and notes receivable, allowance $ 159 $ 157
Preferred Stock, no par value      
Common stock, Par value $ 0.0167 $ 0.0167
Common stock, Authorized 3,600 3,600
Common stock, Issued 1,865 1,865
Repurchased common stock, shares 307 301
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CONDENSED CONSOLIDATED STATEMENT OF EQUITY (USD $)
In Millions, unless otherwise specified
Total
Preferred Stock
Repurchased Preferred Stock
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Repurchased Common Stock
Noncontrolling Interests
Balance, beginning of year at Dec. 25, 2010 $ (150) $ 4,527 $ 37,090 $ (3,630) $ (16,745) $ 312
Balance, beginning of year at Dec. 25, 2010 0.6 (284)
Redemptions (4)
Stock-based compensation expense 146
Stock option exercises/RSUs converted (281) [1] 858
Withholding tax on RSUs converted (50)
Other 16
Net income attributable to PepsiCo 3,028 3,028
Cash dividends declared - common (1,580)
Cash dividends declared - preferred (1)
Cash dividends declared - RSUs (10)
Currency translation adjustment 1,382 72
Cash flow hedges, net of tax:
Net derivative losses (17) [2] (17)
Reclassification of net losses to net income 7 [3] 7
Pension and retiree medical, net of tax:
Reclassification of net losses to net income 23 [4] 23
Unrealized gains/(losses) on securities, net of tax (2) [5] (2)
Other (17) 101
Share repurchases (in shares) (12)
Share repurchases (811)
Stock option exercises/RSUs converted (in shares) 14
Other (in shares) 1
Net income attributable to noncontrolling interests (21) 21
Distributions to noncontrolling interests (9)
Acquisitions and divestitures 22
Total Common Shareholders' Equity at Jun. 11, 2011 24,065
Balance, end of period at Jun. 11, 2011 24,370 41 (154) 31 4,358 38,527 (2,254) (16,597) 418
Balance, end of period at Jun. 11, 2011 0.8 0.6 1,865 (281)
Balance, beginning of year at Dec. 31, 2011 20,899 (157) 4,461 40,316 (6,229) (17,875) 311
Balance, beginning of year at Dec. 31, 2011 0.6 (301)
Redemptions (3)
Stock-based compensation expense 125
Stock option exercises/RSUs converted (275) [1] 676
Withholding tax on RSUs converted (60)
Other (28)
Net income attributable to PepsiCo 2,615 2,615
Cash dividends declared - common (1,649)
Cash dividends declared - preferred (1)
Cash dividends declared - RSUs (7)
Currency translation adjustment (538) (6)
Cash flow hedges, net of tax:
Net derivative losses (25) [2] (25)
Reclassification of net losses to net income 24 [3] 24
Pension and retiree medical, net of tax:
Reclassification of net losses to net income 86 [4] 86
Remeasurement of net liabilities (7) [6] 7
Unrealized gains/(losses) on securities, net of tax 3 [5] 3
Other 36 136
Share repurchases (in shares) (19)
Share repurchases (1,253)
Stock option exercises/RSUs converted (in shares) 11
Other (in shares) 2
Net income attributable to noncontrolling interests (19) 19
Distributions to noncontrolling interests (15)
Acquisitions and divestitures (171)
Total Common Shareholders' Equity at Jun. 16, 2012 20,576
Balance, end of period at Jun. 16, 2012 $ 20,595 $ 41 $ (160) $ 31 $ 4,223 $ 41,274 $ (6,636) $ (18,316) $ 138
Balance, end of period at Jun. 16, 2012 0.8 0.6 1,865 (307)
[1] Includes total tax benefits of $27 million in 2012 and $33 million in 2011.
[2] Net of tax benefits of $11 million and $12 million for the 12 and 24 weeks in 2012, respectively. Net of tax benefits of $7 million and tax expense of $6 million for the 12 and 24 weeks in 2011, respectively.
[3] Net of tax benefits of $9 million and $14 million for the 12 and 24 weeks in 2012, respectively. Net of tax expense of $3 million and $5 million for the 12 and 24 weeks in 2011, respectively.
[4] Net of tax benefits of $29 million and $44 million for the 12 and 24 weeks in 2012, respectively. Net of tax benefits of $13 million and $14 million for the 12 and 24 weeks in 2011, respectively.
[5] Net of tax expense of $4 million and tax benefits of $1 million for the 12 and 24 weeks in 2011, respectively.
[6] Net of tax expense of $4 million for the 24 weeks in 2012.
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CONDENSED CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Stock option exercises/RSUs converted, tax benefits $ 27 $ 33
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Basis of Presentation
6 Months Ended
Jun. 16, 2012
Basis of Presentation

Basis of Presentation and Our Divisions

 

Basis of Presentation

 

Our Condensed Consolidated Balance Sheet as of June 16, 2012 and the Condensed Consolidated Statements of Income and Comprehensive Income for the 12 and 24 weeks ended June 16, 2012 and June 11, 2011, and the Condensed Consolidated Statements of Cash Flows and Equity for the 24 weeks ended June 16, 2012 and June 11, 2011 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 31, 2011. In our opinion, these financial statements include all normal and recurring adjustments necessary for a fair presentation. The results for the 12 and 24 weeks are not necessarily indicative of the results expected for the full year.

While the majority of our results are reported on a period basis, most of our international operations report on a monthly calendar basis for which the months of March, April and May are reflected in our second quarter results.

In the first quarter of 2011, Quaker Foods North America (QFNA) changed its method of accounting for certain U.S. inventories from the last-in, first-out (LIFO) method to the average cost method. This change was considered preferable by management as we believe that the average cost method of accounting for all U.S. foods inventories improves our financial reporting by better matching revenues and expenses and better reflecting the current value of inventory. In addition, the change from the LIFO method to the average cost method enhances the comparability of QFNA’s financial results with our other food businesses, as well as with peer companies where the average cost method is widely used. The impact of this change on consolidated net income in the first quarter of 2011 was approximately $9 million (or less than a penny per share).

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 and 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. Certain reclassifications were made to the prior year’s amounts to conform to the 2012 presentation. This report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

 

Our Divisions

We are organized into four business units, as follows:

 

  1.

PepsiCo Americas Foods (PAF), which includes Frito-Lay North America (FLNA), Quaker Foods North America (QFNA) and all of our Latin American food and snack businesses (LAF);

 

  2.

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

 

  3.

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

 

  4.

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

Our four business units comprise six reportable segments (also referred to as divisions), as follows:

 

   

FLNA,

 

   

QFNA,

 

   

LAF,

 

   

PAB,

 

   

Europe, and

 

   

AMEA.

 

     12 Weeks Ended     24 Weeks Ended  
     6/16/12     6/11/11     6/16/12     6/11/11  

Net Revenue

        

FLNA

   $ 3,193      $ 3,090      $ 6,203      $ 5,994   

QFNA

     583        583        1,206        1,223   

LAF

     1,948        1,808        3,183        2,916   

PAB

     5,352        5,629        9,800        10,160   

Europe

     3,617        3,794        5,462        5,420   

AMEA

     1,765        1,923        3,032        3,051   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 16,458      $ 16,827      $ 28,886      $ 28,764   
  

 

 

   

 

 

   

 

 

   

 

 

 
     12 Weeks Ended     24 Weeks Ended  
     6/16/12     6/11/11     6/16/12     6/11/11  

Operating Profit

        

FLNA

   $ 835      $ 853      $   1,615      $   1,627   

QFNA

     154        167        341        381   

LAF

     271        274        454        445   

PAB

     840        983        1,365        1,541   

Europe

     453        407        534        470   

AMEA

     165        299        313        445   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total division

     2,718        2,983        4,622        4,909   

Corporate Unallocated

        

Net impact of mark-to-market on commodity hedges

     (79     (9     5        22   

Restructuring and impairment charges

     (3            (1       

Merger and integration charges

     (2     (12     (2     (54

Other

     (257     (208     (525     (397
  

 

 

   

 

 

   

 

 

   

 

 

 
   $   2,377      $   2,754      $ 4,099      $ 4,480   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Total Assets  
     6/16/12      12/31/11  

FLNA

   $ 6,109       $ 6,120   

QFNA

     1,177         1,174   

LAF

     4,613         4,731   

PAB

     31,980         31,187   

Europe

     18,523         18,479   

AMEA

     5,511         6,048   
  

 

 

    

 

 

 

Total division

     67,913         67,739   

Corporate(a)

     4,477         5,143   
  

 

 

    

 

 

 
   $ 72,390       $ 72,882   
  

 

 

    

 

 

 

 

(a) 

Corporate assets consist principally of cash and cash equivalents, short-term investments, derivative instruments and property, plant and equipment.

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Acquisitions and Divestitures
6 Months Ended
Jun. 16, 2012
Acquisitions and Divestitures

Acquisitions and Divestitures

 

WBD

On February 3, 2011, we acquired the ordinary shares, including shares underlying American Depositary Shares (ADS) and Global Depositary Shares (GDS), of WBD, a company incorporated in the Russian Federation, which represented in the aggregate approximately 66% of WBD’s outstanding ordinary shares, pursuant to the purchase agreement dated December 1, 2010 between PepsiCo and certain selling shareholders of WBD for approximately $3.8 billion in cash. The acquisition of those shares increased our total ownership to approximately 77%, giving us a controlling interest in WBD. Under the guidance on accounting for business combinations, once a controlling interest is obtained, we are required to recognize and measure 100% of the identifiable assets acquired, liabilities assumed and noncontrolling interests at their full fair values. Our fair market valuations of the identifiable assets acquired and liabilities assumed have been completed and the final valuations did not materially differ from those fair values reported as of December 31, 2011.

On March 10, 2011, we commenced tender offers in Russia and the U.S. for all remaining outstanding ordinary shares and ADSs of WBD for 3,883.70 Russian rubles per ordinary share and 970.925 Russian rubles per ADS, respectively. The Russian offer was made to all holders of ordinary shares and the U.S. offer was made to all holders of ADSs. We completed the Russian offer on May 19, 2011 and the U.S. offer on May 16, 2011. After completion of the offers, we paid approximately $1.3 billion for WBD’s ordinary shares (including shares underlying ADSs) and increased our total ownership of WBD to approximately 98.6%.

On June 30, 2011, we elected to exercise our squeeze-out rights under Russian law with respect to all remaining WBD ordinary shares not already owned by us. Therefore, under Russian law, all remaining WBD shareholders were required to sell their ordinary shares (including those underlying ADSs) to us at the same price that was offered to WBD shareholders in the Russian tender offer. Accordingly, all registered holders of ordinary shares on August 15, 2011 (including the ADS depositary) received 3,883.70 Russian rubles per ordinary share. After completion of the squeeze-out in September 2011 (during our fourth quarter), we paid approximately $79 million for WBD’s ordinary shares (including shares underlying ADSs) and increased our total ownership to 100% of WBD.

Tingyi-Asahi Beverages Holding Co Ltd

On March 31, 2012 (during our second quarter), we completed a transaction with Tingyi. Under the terms of the agreement, we contributed our company-owned and joint venture bottling operations in China to Tingyi’s beverage subsidiary, Tingyi-Asahi Beverages Holding Co., Ltd (TAB), and received as consideration a 5% indirect equity interest in TAB. As a result of this transaction, TAB is now our franchise bottler in China. We also have a call option to increase our indirect holding in TAB to 20% by 2015. We recorded restructuring and other charges of $137 million ($163 million after-tax or $0.10 per share), primarily consisting of employee-related charges, in our second quarter results. This charge is reflected in items affecting comparability (see “Items Affecting Comparability” in Management’s Discussion and Analysis of Financial Condition and Results of Operations).

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Intangible Assets
6 Months Ended
Jun. 16, 2012
Intangible Assets

Intangible Assets

 

 

     6/16/12     12/31/11  

Amortizable intangible assets, net

    

Acquired franchise rights

   $ 921      $ 916   

Reacquired franchise rights

     111        110   

Brands

     1,408        1,417   

Other identifiable intangibles

     712        777   
  

 

 

   

 

 

 
     3,152        3,220   

Accumulated amortization

     (1,343     (1,332
  

 

 

   

 

 

 
   $ 1,809      $ 1,888   
  

 

 

   

 

 

 

 

The change in the book value of nonamortizable intangible assets is as follows:

 

     Balance
12/31/11
     Acquisitions/
(Divestitures)
    Translation
and Other
    Balance
6/16/12
 

FLNA

         

Goodwill

   $ 311       $      $      $ 311   

Brands

     30                       30   
  

 

 

    

 

 

   

 

 

   

 

 

 
     341                       341   
  

 

 

    

 

 

   

 

 

   

 

 

 

QFNA

         

Goodwill

     175                       175   
  

 

 

    

 

 

   

 

 

   

 

 

 

LAF

         

Goodwill

     793         (162     (10     621   

Brands

     157         112        (14     255   
  

 

 

    

 

 

   

 

 

   

 

 

 
     950         (50     (24     876   
  

 

 

    

 

 

   

 

 

   

 

 

 

PAB

         

Goodwill

     9,932         19        1        9,952   

Reacquired franchise rights

     7,342         (33            7,309   

Acquired franchise rights

     1,562         10               1,572   

Brands

     168                (1     167   
  

 

 

    

 

 

   

 

 

   

 

 

 
     19,004         (4            19,000   
  

 

 

    

 

 

   

 

 

   

 

 

 

Europe

         

Goodwill

     4,900         78        (110     4,868   

Reacquired franchise rights

     732                (20     712   

Acquired franchise rights

     218                (9     209   

Brands

     4,178         (96     (76     4,006   
  

 

 

    

 

 

   

 

 

   

 

 

 
     10,028         (18     (215     9,795   
  

 

 

    

 

 

   

 

 

   

 

 

 

AMEA

         

Goodwill

     689         (143     (17     529   

Brands

     170         (25     (6     139   
  

 

 

    

 

 

   

 

 

   

 

 

 
     859         (168     (23     668   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total goodwill

     16,800         (208     (136     16,456   

Total reacquired franchise rights

     8,074         (33     (20     8,021   

Total acquired franchise rights

     1,780         10        (9     1,781   

Total brands

     4,703         (9     (97     4,597   
  

 

 

    

 

 

   

 

 

   

 

 

 
   $ 31,357       $ (240   $ (262   $ 30,855   
  

 

 

    

 

 

   

 

 

   

 

 

 
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Stock-Based Compensation
6 Months Ended
Jun. 16, 2012
Stock-Based Compensation

Stock-Based Compensation

 

For the 12 weeks ended June 16, 2012, we recognized stock-based compensation expense of $69 million. For the 24 weeks ended June 16, 2012, we recognized stock-based compensation expense of $119 million ($125 million recorded as stock-based compensation expense, $1 million included in merger and integration charges and income of $7 million included in restructuring and impairment charges). For the 12 weeks ended June 11, 2011, we recognized stock-based compensation expense of $76 million ($74 million recorded as stock-based compensation expense and $2 million included in merger and integration charges). For the 24 weeks ended June 11, 2011, we recognized stock-based compensation expense of $155 million ($146 million recorded as stock-based compensation expense and $9 million included in merger and integration charges).

In connection with our multi-year productivity plan (Productivity Plan) announced in February 2012, the Compensation Committee of PepsiCo’s Board of Directors elected to delay the grant of the annual equity award from the first quarter of 2012 to the second quarter of 2012, in order to appropriately administer the award following employee headcount reductions. Therefore, for the 12 and 24 weeks ended June 16, 2012, we granted 3.4 million stock options and 4.2 million restricted stock units (RSU) at a weighted-average grant price of $66.50, under the terms of our 2007 Long-Term Incentive Plan. For the 12 weeks ended June 11, 2011, our grants of stock options and RSUs were nominal. For the 24 weeks ended June 11, 2011, we granted 6.4 million stock options and 5.2 million RSUs at weighted-average grant prices of $63.78 and $63.81, respectively, under the terms of our 2007 Long-Term Incentive Plan.

Our weighted-average Black-Scholes fair value assumptions are as follows:

 

     24 Weeks
Ended
 
     6/16/12     6/11/11  

Expected life

     6 yrs.        6 yrs.   

Risk free interest rate

     1.3     2.6

Expected volatility(a)

     17     16

Expected dividend yield

     3.0     2.9

 

 

(a) 

Reflects movements in our stock price over the most recent historical period equivalent to the expected life.

As part of our 2007 Long-Term Incentive Plan, we granted a nominal amount of PepsiCo equity performance units (PEPUnits) to certain executive officers. These PEPUnits are earned based on achievement of a cumulative net income performance target and provide an opportunity to earn shares of PepsiCo Common Stock with a value that adjusts based upon absolute changes in PepsiCo’s stock price as well as PepsiCo’s Total Shareholder Return relative to the S&P 500 over a three-year performance period.

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Pension and Retiree Medical Benefits
6 Months Ended
Jun. 16, 2012
Pension and Retiree Medical Benefits

Pension and Retiree Medical Benefits

 

The components of net periodic benefit cost for pension and retiree medical plans are as follows:

 

     12 Weeks Ended  
     Pension     Retiree
Medical
 
     6/16/12     6/11/11     6/16/12     6/11/11     6/16/12     6/11/11  
     U.S.     International        

Service cost

   $ 94      $ 80      $ 24      $ 23      $ 11      $ 11   

Interest cost

     123        126        28        28        15        21   

Expected return on plan assets

     (183     (162     (35     (33     (5     (4

Amortization of prior service cost/(benefit)

     4        4        1        1        (6     (6

Amortization of experience loss

     59        34        12        9               3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     97        82        30        28        15        25   

Settlement loss

                   3                        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expense

   $ 97      $ 82      $ 33      $ 28      $ 15      $ 25   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     24 Weeks Ended  
     Pension     Retiree
Medical
 
     6/16/12     6/11/11     6/16/12     6/11/11     6/16/12     6/11/11  
     U.S.     International        

Service cost

   $ 189      $ 162      $ 42      $ 40      $ 23      $ 23   

Interest cost

     246        252        48        49        30        41   

Expected return on plan assets

     (367     (324     (61     (57     (10     (7

Amortization of prior service cost/(benefit)

     8        7        1        1        (12     (13

Amortization of experience loss

     119        67        22        16               6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     195        164        52        49        31        50   

Settlement/Curtailment (gain)/loss

     (7     (9     3                        

Special termination benefits

     4        10                      4        1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expense

   $ 192      $ 165      $ 55      $ 49      $ 35      $ 51   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

During the first quarter of 2012, we made discretionary contributions of $860 million to our pension plans and $140 million to our retiree medical plans.

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Income Taxes
6 Months Ended
Jun. 16, 2012
Income Taxes

Income Taxes

 

A rollforward of our reserves for all federal, state and foreign tax jurisdictions is as follows:

 

     6/16/12     12/31/11  

Balance, beginning of year

   $ 2,167      $ 2,022   

Additions for tax positions related to the current year

     122        233   

Additions for tax positions from prior years

     21        147   

Reductions for tax positions from prior years

     (25     (46

Settlement payments

     (10     (156

Statute of limitations expiration

            (15

Translation and other

     (1     (18
  

 

 

   

 

 

 

Balance, end of period

   $ 2,274      $ 2,167   
  

 

 

   

 

 

 
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Net Income Attributable to PepsiCo per Common Share
6 Months Ended
Jun. 16, 2012
Net Income Attributable to PepsiCo per Common Share

Net Income Attributable to PepsiCo per Common Share

 

The computations of basic and diluted net income attributable to PepsiCo per common share are as follows:

 

     12 Weeks Ended  
     6/16/12      6/11/11  
     Income     Shares(a)      Income     Shares(a)  

Net income attributable to PepsiCo

   $ 1,488         $ 1,885     

Preferred shares:

         

Dividends

     (1        (1  

Redemption premium

     (2        (1  
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 1,485        1,563       $ 1,883        1,583   
  

 

 

      

 

 

   

Basic net income attributable to PepsiCo per common share

   $ 0.95         $ 1.19     
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 1,485        1,563       $ 1,883        1,583   

Dilutive securities:

         

Stock options and RSUs(b)

            17                21   

ESOP convertible preferred stock

     3        1         2        1   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ 1,488        1,581       $ 1,885        1,605   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted net income attributable to PepsiCo per common share

   $ 0.94         $ 1.17     
  

 

 

      

 

 

   

 

     24 Weeks Ended  
     6/16/12      6/11/11  
     Income     Shares(a)      Income     Shares(a)  

Net income attributable to PepsiCo

   $ 2,615         $ 3,028     

Preferred shares:

         

Dividends

     (1        (1  

Redemption premium

     (3        (3  
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 2,611        1,565       $ 3,024        1,583   
  

 

 

      

 

 

   

Basic net income attributable to PepsiCo per common share

   $ 1.67         $ 1.91     
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 2,611        1,565       $ 3,024        1,583   

Dilutive securities:

         

Stock options and RSUs(b)

            17                21   

ESOP convertible preferred stock

     4        1         4        1   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ 2,615        1,583       $ 3,028        1,605   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted net income attributable to PepsiCo per common share

   $ 1.65         $ 1.89     
  

 

 

      

 

 

   

 

(a) 

Weighted-average common shares outstanding (in millions).

 

(b) 

Options to purchase 10.2 million and 19.9 million shares, respectively, for the 12 and 24 weeks in 2012 were not included in the calculation of earnings per share because these options were out-of-the-money. These out-of-the-money options had average exercise prices of $68.93 and $67.44, respectively. Options to purchase 10.1 million and 20.7 million shares, respectively, for the 12 and 24 weeks in 2011 were not included in the calculation of earnings per share because these options were out-of-the-money. Out-of-the-money options for the 12 and 24 weeks in 2011 had average exercise prices of $68.88 and $67.35, respectively.

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Debt Obligations and Commitments
6 Months Ended
Jun. 16, 2012
Debt Obligations and Commitments

Debt Obligations and Commitments

 

In the first quarter of 2012, we issued:

 

   

$750 million of 0.750% senior notes maturing in 2015;

 

   

$1.250 billion of 2.750% senior notes maturing in 2022; and

 

   

$750 million of 4.000% senior notes maturing in 2042.

The net proceeds from the issuances of the above notes were used for general corporate purposes, including the repayment of commercial paper.

In the second quarter of 2012, we extended the termination date of our four-year unsecured revolving credit agreement (Four-Year Credit Agreement) from June 14, 2015 to June 14, 2016 and the termination date of our 364-day unsecured revolving credit agreement (364-Day Credit Agreement) from June 12, 2012 to June 11, 2013. Funds borrowed under the Four-Year Credit Agreement and the 364-Day Credit Agreement may be used for general corporate purposes of PepsiCo and its subsidiaries, including, but not limited to, working capital, capital investments and acquisitions.

As of June 16, 2012, we had $3.3 billion of commercial paper outstanding.

Long-Term Contractual Commitments(a)

 

     Payments Due by Period  
     Total      2012      2013 –
2014
     2015 –
2016
     2017 and
beyond
 

Long-term debt obligations(b)

   $ 20,530       $       $ 4,169       $ 4,195       $ 12,166   

Interest on debt obligations(c)

     8,304         495         1,545         1,223         5,041   

Operating leases

     1,767         246         647         363         511   

Purchasing commitments

     3,033         873         1,682         418         60   

Marketing commitments

     2,410         131         595         535         1,149   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 36,044       $ 1,745       $ 8,638       $ 6,734       $ 18,927   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Reflects non-cancelable commitments as of June 16, 2012 based on foreign exchange rates in effect on the balance sheet date and excludes any reserves for uncertain tax positions as we are unable to reasonably predict the ultimate amount or timing of settlement.

 

(b) 

Excludes $3,367 million related to current maturities of long-term debt, $415 million related to the fair value step-up of debt acquired in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS), and $349 million related to the increase in carrying value of long-term debt reflecting the gains on our fair value interest rate swaps.

 

(c) 

Interest payments on floating-rate debt are estimated using interest rates effective as of June 16, 2012.

Most long-term contractual commitments, except for our long-term debt obligations, are not recorded on our balance sheet. Non-cancelable operating leases primarily represent building leases. Non-cancelable purchasing commitments are primarily for packaging materials, sugar and other sweeteners, oranges and orange juice. Non-cancelable marketing commitments are primarily for sports marketing. Bottler funding to independent bottlers is not reflected in our long-term contractual commitments as it is negotiated on an annual basis. Accrued liabilities for pension and retiree medical plans are not reflected in our long-term contractual commitments because they do not represent expected future cash outflows. See Pension and Retiree Medical Benefits for additional information regarding our pension and retiree medical obligations.

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Restructuring, Impairment and Integration Charges
6 Months Ended
Jun. 16, 2012
Restructuring, Impairment and Integration Charges

Restructuring, Impairment and Integration Charges

 

In the 12 weeks ended June 16, 2012, we incurred restructuring and impairment charges of $77 million ($57 million after-tax or $0.04 per share) in conjunction with our Productivity Plan, including $24 million recorded in the FLNA segment, $1 million recorded in the QFNA segment, $6 million recorded in the LAF segment, $35 million recorded in the PAB segment, $8 million recorded in the AMEA segment and $3 million recorded in corporate unallocated expenses. In the 24 weeks ended June 16, 2012, we incurred restructuring and impairment charges of $110 million ($80 million after-tax or $0.05 per share) in conjunction with our Productivity Plan, including $32 million recorded in the FLNA segment, $6 million recorded in the QFNA segment, $12 million recorded in the LAF segment, $43 million recorded in the PAB segment, $17 million recorded in the AMEA segment, $1 million recorded in corporate unallocated expenses and income of $1 million recorded in the Europe segment representing adjustments of previously recorded amounts. All of these net charges were recorded in selling, general and administrative expenses. Substantially all cash payments related to these charges are expected to be paid by the end of 2012. The Productivity Plan includes actions in every aspect of our business that we believe will strengthen our complementary food, snack and beverage businesses by leveraging 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 manufacturing, warehouse and sales facilities; and implementing simplified organization structures, with wider spans of control and fewer layers of management. The Productivity Plan is expected to enhance PepsiCo’s cost-competitiveness, provide a source of funding for future brand-building and innovation initiatives, and serve as a financial cushion for potential macroeconomic uncertainty beyond 2012.

A summary of our Productivity Plan activity in 2012 is as follows:

 

     Severance and Other
Employee Costs
    Asset
Impairment
    Other
Costs
    Total  

Liability as of December 31, 2011

   $ 249      $      $ 27      $ 276   

2012 restructuring and impairment charges

     40        26        44        110   

Cash payments

     (102            (38     (140

Non-cash charges

     (6     (26     (3     (35
  

 

 

   

 

 

   

 

 

   

 

 

 

Liability as of June 16, 2012

   $ 181      $      $ 30      $ 211   
  

 

 

   

 

 

   

 

 

   

 

 

 

In the 12 weeks ended June 16, 2012, we incurred merger and integration charges of $3 million ($2 million after-tax with a nominal amount per share) related to our acquisition of WBD, including $1 million recorded in the Europe segment and $2 million recorded in corporate unallocated expenses. In the 24 weeks ended June 16, 2012, we incurred merger and integration charges of $5 million ($4 million after-tax with a nominal amount per share) related to our acquisition of WBD, including $3 million recorded in the Europe segment and $2 million recorded in corporate unallocated expenses. These charges were recorded in selling, general and administrative expenses. Cash payments related to these charges are expected to be paid by the end of 2012.

In the 12 weeks ended June 11, 2011, we incurred merger and integration charges of $58 million ($45 million after-tax or $0.03 per share) related to our acquisitions of PBG, PAS and WBD, including $32 million recorded in the PAB segment, $14 million recorded in the Europe segment and $12 million recorded in corporate unallocated expenses. In the 24 weeks ended June 11, 2011, we incurred merger and integration charges of $113 million ($94 million after-tax or $0.06 per share) related to our acquisitions of PBG, PAS and WBD, including $53 million recorded in the PAB segment, $6 million recorded in the Europe segment and $54 million recorded in corporate unallocated expenses. All of these net charges were recorded in selling, general and administrative expenses. These charges also include closing costs and advisory fees related to our acquisition of WBD. Substantially all cash payments related to these charges were paid by the end of 2011.

A summary of our merger and integration activity in 2012 is as follows:

 

     Severance and Other
Employee Costs
    Other Costs     Total  

Liability as of December 31, 2011

   $ 98      $ 7      $ 105   

2012 merger and integration charges

     3        2        5   

Cash payments

     (43     (4     (47

Non-cash charges

     (5            (5
  

 

 

   

 

 

   

 

 

 

Liability as of June 16, 2012

   $ 53      $ 5      $ 58   
  

 

 

   

 

 

   

 

 

 
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Financial Instruments
6 Months Ended
Jun. 16, 2012
Financial Instruments

Financial Instruments

 

We are exposed to market risks arising from adverse changes in:

 

   

commodity prices, affecting the cost of our raw materials and energy,

 

   

foreign exchange rates and currency restrictions, and

 

   

interest rates.

In the normal course of business, we manage these risks through a variety of strategies, including productivity initiatives, global purchasing programs and hedging strategies. Our hedging strategies include the use of derivatives. Certain derivatives are designated as either cash flow or fair value hedges and qualify for hedge accounting treatment, while others do not qualify and are marked to market through earnings. Cash flows from derivatives used to manage commodity, foreign exchange or interest risks are classified as operating activities. See “Our Business Risks” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for further unaudited information on our business risks.

For cash flow hedges, changes in fair value are deferred in accumulated other comprehensive loss within common shareholders’ equity until the underlying hedged item is recognized in net income. For fair value hedges, changes in fair value are recognized immediately in earnings, consistent with the underlying hedged item. Hedging transactions are limited to an underlying exposure. As a result, any change in the value of our derivative instruments would be substantially offset by an opposite change in the value of the underlying hedged items. Hedging ineffectiveness and a net earnings impact occur when the change in the value of the hedge does not offset the change in the value of the underlying hedged item. If the derivative instrument is terminated, we continue to defer the related gain or loss and then include it as a component of the cost of the underlying hedged item. Upon determination that the underlying hedged item will not be part of an actual transaction, we recognize the related gain or loss in net income immediately.

We also use derivatives that do not qualify for hedge accounting treatment. We account for such derivatives at market value with the resulting gains and losses reflected in our income statement. We do not use derivative instruments for trading or speculative purposes. We perform assessments of our counterparty credit risk regularly, including a review of credit ratings, credit default swap rates and potential nonperformance of the counterparty. Based on our most recent assessment of our counterparty credit risk, we consider this risk to be low. In addition, we enter into derivative contracts with a variety of financial institutions that we believe are creditworthy in order to reduce our concentration of credit risk.

Commodity Prices

We are subject to commodity price risk because our ability to recover increased costs through higher pricing may be limited in the competitive environment in which we operate. This risk is managed through the use of fixed-price purchase orders, pricing agreements and derivatives. In addition, risk to our supplies of certain raw materials is mitigated through purchases from multiple geographies and suppliers. We use derivatives, with terms of no more than three years, to economically hedge price fluctuations related to a portion of our anticipated commodity purchases, primarily for metals, energy and agricultural products. For those derivatives that qualify for hedge accounting, any ineffectiveness is recorded immediately in corporate unallocated expenses. Ineffectiveness is not material. We classify both the earnings and cash flow impact from these derivatives consistent with the underlying hedged item. During the next 12 months, we expect to reclassify net losses of $65 million related to these hedges from accumulated other comprehensive loss into net income. Derivatives used to hedge commodity price risk that do not qualify for hedge accounting are marked to market each period and reflected in our income statement.

Our open commodity derivative contracts that qualify for hedge accounting had a face value of $538 million as of June 16, 2012 and $590 million as of June 11, 2011.

Our open commodity derivative contracts that do not qualify for hedge accounting had a face value of $563 million as of June 16, 2012 and $356 million as of June 11, 2011.

Foreign Exchange

Financial statements of foreign subsidiaries are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and expenses. Adjustments resulting from translating net assets are reported as a separate component of accumulated other comprehensive loss within common shareholders’ equity as currency translation adjustment.

We enter into derivatives, primarily forward contracts with terms of no more than two years, to manage our exposure to foreign currency transaction risk. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in our income statement as incurred.

Our foreign currency derivatives had a total face value of $2.6 billion as of June 16, 2012 and $2.3 billion as of June 11, 2011. During the next 12 months, we expect to reclassify net gains of $27 million related to foreign currency contracts that qualify for hedge accounting from accumulated other comprehensive loss into net income. Additionally, ineffectiveness is not material. For foreign currency derivatives that do not qualify for hedge accounting treatment, all losses and gains were offset by changes in the underlying hedged items, resulting in no net material impact on earnings.

Interest Rates

We centrally manage our debt and investment portfolios considering investment opportunities and risks, tax consequences and overall financing strategies. We use various interest rate derivative instruments including, but not limited to, interest rate swaps, cross currency interest rate swaps, Treasury locks and swap locks to manage our overall interest expense and foreign exchange risk. These instruments effectively change the interest rate and currency of specific debt issuances. Certain of our fixed rate indebtedness has been swapped to floating rates. The notional amount, interest payment and maturity date of the interest rate and cross-currency swaps match the principal, interest payment and maturity date of the related debt. Our Treasury locks and swap locks are entered into to protect against unfavorable interest rate changes relating to forecasted debt transactions.

The notional amounts of the interest rate derivative instruments outstanding as of June 16, 2012 and June 11, 2011 were $7.3 billion and $8.7 billion, respectively. We classify both the earnings and cash flow impact from these interest rate derivative instruments consistent with the underlying hedged item. For those interest rate derivative instruments that qualify for cash flow hedge accounting, any ineffectiveness is recorded immediately. Ineffectiveness is not material. During the next 12 months, we expect to reclassify net losses of $23 million related to these hedges from accumulated other comprehensive loss into net income.

As of June 16, 2012, approximately 34% of total debt, after the impact of the related interest rate derivative instruments, was exposed to variable rates, compared to 38% as of December 31, 2011.

Fair Value Measurements

The fair values of our financial assets and liabilities as of June 16, 2012 and June 11, 2011 are categorized as follows:

 

     2012      2011  
     Assets(a)      Liabilities(a)      Assets(a)      Liabilities(a)  

Available-for-sale securities(b)

   $ 62       $       $ 85       $   

Short-term investments – index funds(c)

   $ 158       $       $ 176       $   

Prepaid forward contracts(d)

   $ 40       $       $ 41       $   

Deferred compensation(e)

   $       $ 501       $       $ 547   

Derivatives designated as fair value hedging instruments:

           

Interest rate derivatives(f)

   $ 289       $       $ 345       $   

Derivatives designated as cash flow hedging instruments:

        

Foreign exchange contracts(g)

   $ 41       $ 14       $ 7       $ 36   

Interest rate derivatives(f)

                             14   

Commodity contracts(h)

             79         74         13   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 41       $ 93       $ 81       $ 63   

Derivatives not designated as hedging instruments:

           

Foreign exchange contracts(g)

   $ 17       $ 16       $ 8       $ 15   

Interest rate derivatives(f)

     124         156         44         81   

Commodity contracts(h)

     17         72         47         2   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 158       $ 244       $ 99       $ 98   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives at fair value

   $ 488       $ 337       $ 525       $ 161   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 748       $ 838       $ 827       $ 708   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Financial assets are classified on our balance sheet within prepaid expenses and other current assets and other assets, with the exception of available-for-sale securities and short-term investments. Financial liabilities are classified on our balance sheet within accounts payable, other current liabilities and other liabilities. Unless specifically indicated, all financial assets and liabilities are categorized as Level 2 assets or liabilities.

 

(b) 

Based on the price of common stock. Categorized as a Level 1 asset.

 

(c) 

Based on price changes in index funds used to manage a portion of market risk arising from our deferred compensation liability. Categorized as a Level 1 asset.

 

(d) 

Based primarily on the price of our common stock.

 

(e) 

Based on the fair value of investments corresponding to employees’ investment elections. As of June 16, 2012 and June 11, 2011, $11 million and $46 million, respectively, are categorized as Level 1 liabilities. The remaining balances are categorized as Level 2 liabilities.

 

(f) 

Based on LIBOR forward rates.

 

(g) 

Based on recently reported market transactions of spot and forward rates.

 

(h) 

Based on recently reported market transactions, primarily swap arrangements, except for liabilities as of June 11, 2011, which primarily related to commodity futures contracts. The futures contracts are valued based on average prices on futures exchanges and categorized as Level 1 liabilities.

The fair value of our debt obligations as of June 16, 2012 was $31 billion, based upon prices of similar instruments in the marketplace.

The effective portion of the pre-tax losses/(gains) on our derivative instruments are categorized in the tables below.

 

     12 Weeks Ended  
     Fair Value/Non-
designated Hedges
    Cash Flow Hedges  
     Losses/(Gains)
Recognized in

Income Statement(a)
    (Gains)/Losses
Recognized in
Accumulated Other
Comprehensive Loss
    Losses/(Gains)
Reclassified from
Accumulated Other
Comprehensive Loss
into Income
Statement(b)
 
     6/16/12        6/11/11        6/16/12        6/11/11        6/16/12         6/11/11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Foreign exchange contracts

   $ 3      $ 2      $ (33   $ 12      $ 5       $ 16   

Interest rate derivatives

     (19     (56            35        5         3   

Commodity contracts

     72        (7     55        (15     16         (19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 56      $ (61   $ 22      $ 32      $ 26       $   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

     24 Weeks Ended  
     Fair Value/Non-
designated Hedges
    Cash Flow Hedges  
     (Gains)/Losses
Recognized in

Income Statement(a)
    (Gains)/Losses
Recognized in
Accumulated Other
Comprehensive Loss
    Losses/(Gains)
Reclassified from
Accumulated Other
Comprehensive Loss
into Income
Statement(b)
 
     6/16/12        6/11/11        6/16/12        6/11/11        6/16/12         6/11/11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Foreign exchange contracts

   $ (7   $ 1      $ (4   $ 37      $ 2       $ 21   

Interest rate derivatives

     8        (78     4        29        9         6   

Commodity contracts

     23        (46     37        (55     27         (25
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 24      $ (123   $ 37      $ 11      $ 38       $ 2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(a) 

Interest rate derivatives 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. All other gains/losses are from non-designated hedges and are included in corporate unallocated expenses.

 

(b) 

Interest rate losses are included in interest expense. All other gains/losses are primarily included in cost of sales.

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Recent Accounting Pronouncements
6 Months Ended
Jun. 16, 2012
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In the second quarter of 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law. The PPACA changes the tax treatment related to an existing retiree drug subsidy (RDS) available to sponsors of retiree health benefit plans that provide a benefit that is at least actuarially equivalent to the benefits under Medicare Part D. As a result of the PPACA, RDS payments will effectively become taxable in tax years beginning in 2013, by requiring the amount of the subsidy received to be offset against our deduction for health care expenses. The provisions of the PPACA required us to record the effect of this tax law change beginning in our second quarter of 2010, and consequently we recorded a one-time related tax charge of $41 million in the second quarter of 2010. In the first quarter of 2012, we began pre-paying funds within our 401(h) voluntary employee beneficiary associations (VEBA) trust to fully cover prescription drug benefit liabilities for Medicare eligible retirees. As a result, the receipt of future Medicare subsidy payments for prescription drugs will not be taxable and, consequently, we recorded a $55 million tax benefit reflecting this change in the first quarter of 2012.

In June 2011, the Financial Accounting Standards Board (FASB) amended its accounting guidance on the presentation of comprehensive income in financial statements to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items that are recorded in other comprehensive income. The new accounting guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. In December 2011, the FASB approved a deferral of the effective date of certain requirements related to the presentation and disclosure of reclassification adjustments from other comprehensive income to net income. The provisions of the retained guidance were effective as of the beginning of our 2012 fiscal year. Accordingly, we have presented the components of net income and other comprehensive income for the 12 and 24 weeks ended June 16, 2012 and June 11, 2011 as two separate but consecutive statements. In June 2012, the FASB decided not to reinstate the previously deferred presentation and disclosure requirements for reclassification adjustments from other comprehensive income to net income. As an alternative, the FASB decided to issue a proposal that would require an entity to provide enhanced footnote disclosures to explain the effect of reclassification adjustments on other comprehensive income by component. In addition, an entity would be required to provide a tabular disclosure in the footnotes showing the effect of items reclassified from accumulated other comprehensive income on the line items of net income. We will continue to monitor the FASB’s activities related to the proposed guidance.

In September 2011, the FASB issued new accounting guidance that permits an entity to first assess qualitative factors of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. An entity would continue to perform the historical first step of the impairment test if it fails the qualitative assessment, while no further analysis would be required if it passes. The provisions of the new guidance are effective for our 2012 annual goodwill impairment test.

In December 2011, the FASB issued new disclosure requirements that are intended to enhance current disclosures on offsetting financial assets and liabilities. The new disclosures require an entity to disclose both gross and net information about financial instruments eligible for offset on the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The provisions of the new disclosure requirements are effective as of the beginning of our 2014 fiscal year. We are currently evaluating the impact of the new guidance on our financial statements.

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Basis of Presentation (Tables)
6 Months Ended
Jun. 16, 2012
Segment Reporting Information, By Segment
     12 Weeks Ended     24 Weeks Ended  
     6/16/12     6/11/11     6/16/12     6/11/11  

Net Revenue

        

FLNA

   $ 3,193      $ 3,090      $ 6,203      $ 5,994   

QFNA

     583        583        1,206        1,223   

LAF

     1,948        1,808        3,183        2,916   

PAB

     5,352        5,629        9,800        10,160   

Europe

     3,617        3,794        5,462        5,420   

AMEA

     1,765        1,923        3,032        3,051   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 16,458      $ 16,827      $ 28,886      $ 28,764   
  

 

 

   

 

 

   

 

 

   

 

 

 
     12 Weeks Ended     24 Weeks Ended  
     6/16/12     6/11/11     6/16/12     6/11/11  

Operating Profit

        

FLNA

   $ 835      $ 853      $   1,615      $   1,627   

QFNA

     154        167        341        381   

LAF

     271        274        454        445   

PAB

     840        983        1,365        1,541   

Europe

     453        407        534        470   

AMEA

     165        299        313        445   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total division

     2,718        2,983        4,622        4,909   

Corporate Unallocated

        

Net impact of mark-to-market on commodity hedges

     (79     (9     5        22   

Restructuring and impairment charges

     (3            (1       

Merger and integration charges

     (2     (12     (2     (54

Other

     (257     (208     (525     (397
  

 

 

   

 

 

   

 

 

   

 

 

 
   $   2,377      $   2,754      $ 4,099      $ 4,480   
  

 

 

   

 

 

   

 

 

   

 

 

 
Segment Reporting Information By Total Assets
     Total Assets  
     6/16/12      12/31/11  

FLNA

   $ 6,109       $ 6,120   

QFNA

     1,177         1,174   

LAF

     4,613         4,731   

PAB

     31,980         31,187   

Europe

     18,523         18,479   

AMEA

     5,511         6,048   
  

 

 

    

 

 

 

Total division

     67,913         67,739   

Corporate(a)

     4,477         5,143   
  

 

 

    

 

 

 
   $ 72,390       $ 72,882   
  

 

 

    

 

 

 

 

(a) 

Corporate assets consist principally of cash and cash equivalents, short-term investments, derivative instruments and property, plant and equipment.

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Intangible Assets (Tables)
6 Months Ended
Jun. 16, 2012
Schedule Of Amortizable Intangible Assets
     6/16/12     12/31/11  

Amortizable intangible assets, net

    

Acquired franchise rights

   $ 921      $ 916   

Reacquired franchise rights

     111        110   

Brands

     1,408        1,417   

Other identifiable intangibles

     712        777   
  

 

 

   

 

 

 
     3,152        3,220   

Accumulated amortization

     (1,343     (1,332
  

 

 

   

 

 

 
   $ 1,809      $ 1,888   
  

 

 

   

 

 

 
Schedule Of Change In Book Value Of Nonamortizable Intangible Assets

The change in the book value of nonamortizable intangible assets is as follows:

 

     Balance
12/31/11
     Acquisitions/
(Divestitures)
    Translation
and Other
    Balance
6/16/12
 

FLNA

         

Goodwill

   $ 311       $      $      $ 311   

Brands

     30                       30   
  

 

 

    

 

 

   

 

 

   

 

 

 
     341                       341   
  

 

 

    

 

 

   

 

 

   

 

 

 

QFNA

         

Goodwill

     175                       175   
  

 

 

    

 

 

   

 

 

   

 

 

 

LAF

         

Goodwill

     793         (162     (10     621   

Brands

     157         112        (14     255   
  

 

 

    

 

 

   

 

 

   

 

 

 
     950         (50     (24     876   
  

 

 

    

 

 

   

 

 

   

 

 

 

PAB

         

Goodwill

     9,932         19        1        9,952   

Reacquired franchise rights

     7,342         (33            7,309   

Acquired franchise rights

     1,562         10               1,572   

Brands

     168                (1     167   
  

 

 

    

 

 

   

 

 

   

 

 

 
     19,004         (4            19,000   
  

 

 

    

 

 

   

 

 

   

 

 

 

Europe

         

Goodwill

     4,900         78        (110     4,868   

Reacquired franchise rights

     732                (20     712   

Acquired franchise rights

     218                (9     209   

Brands

     4,178         (96     (76     4,006   
  

 

 

    

 

 

   

 

 

   

 

 

 
     10,028         (18     (215     9,795   
  

 

 

    

 

 

   

 

 

   

 

 

 

AMEA

         

Goodwill

     689         (143     (17     529   

Brands

     170         (25     (6     139   
  

 

 

    

 

 

   

 

 

   

 

 

 
     859         (168     (23     668   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total goodwill

     16,800         (208     (136     16,456   

Total reacquired franchise rights

     8,074         (33     (20     8,021   

Total acquired franchise rights

     1,780         10        (9     1,781   

Total brands

     4,703         (9     (97     4,597   
  

 

 

    

 

 

   

 

 

   

 

 

 
   $ 31,357       $ (240   $ (262   $ 30,855   
  

 

 

    

 

 

   

 

 

   

 

 

 
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Stock-Based Compensation (Tables)
6 Months Ended
Jun. 16, 2012
Schedule Of Weighted-Average Black-Scholes Fair Value Assumptions

Our weighted-average Black-Scholes fair value assumptions are as follows:

 

     24 Weeks
Ended
 
     6/16/12     6/11/11  

Expected life

     6 yrs.        6 yrs.   

Risk free interest rate

     1.3     2.6

Expected volatility(a)

     17     16

Expected dividend yield

     3.0     2.9

 

 

(a) 

Reflects movements in our stock price over the most recent historical period equivalent to the expected life.

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Pension and Retiree Medical Benefits (Tables)
6 Months Ended
Jun. 16, 2012
Components Of Benefit Expense

The components of net periodic benefit cost for pension and retiree medical plans are as follows:

 

     12 Weeks Ended  
     Pension     Retiree
Medical
 
     6/16/12     6/11/11     6/16/12     6/11/11     6/16/12     6/11/11  
     U.S.     International        

Service cost

   $ 94      $ 80      $ 24      $ 23      $ 11      $ 11   

Interest cost

     123        126        28        28        15        21   

Expected return on plan assets

     (183     (162     (35     (33     (5     (4

Amortization of prior service cost/(benefit)

     4        4        1        1        (6     (6

Amortization of experience loss

     59        34        12        9               3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     97        82        30        28        15        25   

Settlement loss

                   3                        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expense

   $ 97      $ 82      $ 33      $ 28      $ 15      $ 25   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     24 Weeks Ended  
     Pension     Retiree
Medical
 
     6/16/12     6/11/11     6/16/12     6/11/11     6/16/12     6/11/11  
     U.S.     International        

Service cost

   $ 189      $ 162      $ 42      $ 40      $ 23      $ 23   

Interest cost

     246        252        48        49        30        41   

Expected return on plan assets

     (367     (324     (61     (57     (10     (7

Amortization of prior service cost/(benefit)

     8        7        1        1        (12     (13

Amortization of experience loss

     119        67        22        16               6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     195        164        52        49        31        50   

Settlement/Curtailment (gain)/loss

     (7     (9     3                        

Special termination benefits

     4        10                      4        1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expense

   $ 192      $ 165      $ 55      $ 49      $ 35      $ 51   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
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Income Taxes (Tables)
6 Months Ended
Jun. 16, 2012
Reserves Rollforward

A rollforward of our reserves for all federal, state and foreign tax jurisdictions is as follows:

 

     6/16/12     12/31/11  

Balance, beginning of year

   $ 2,167      $ 2,022   

Additions for tax positions related to the current year

     122        233   

Additions for tax positions from prior years

     21        147   

Reductions for tax positions from prior years

     (25     (46

Settlement payments

     (10     (156

Statute of limitations expiration

            (15

Translation and other

     (1     (18
  

 

 

   

 

 

 

Balance, end of period

   $ 2,274      $ 2,167   
  

 

 

   

 

 

 
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Net Income Attributable to PepsiCo per Common Share (Tables)
6 Months Ended
Jun. 16, 2012
Basic And Diluted Net Income Attributable To PepsiCo Per Common Share

The computations of basic and diluted net income attributable to PepsiCo per common share are as follows:

 

     12 Weeks Ended  
     6/16/12      6/11/11  
     Income     Shares(a)      Income     Shares(a)  

Net income attributable to PepsiCo

   $ 1,488         $ 1,885     

Preferred shares:

         

Dividends

     (1        (1  

Redemption premium

     (2        (1  
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 1,485        1,563       $ 1,883        1,583   
  

 

 

      

 

 

   

Basic net income attributable to PepsiCo per common share

   $ 0.95         $ 1.19     
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 1,485        1,563       $ 1,883        1,583   

Dilutive securities:

         

Stock options and RSUs(b)

            17                21   

ESOP convertible preferred stock

     3        1         2        1   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ 1,488        1,581       $ 1,885        1,605   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted net income attributable to PepsiCo per common share

   $ 0.94         $ 1.17     
  

 

 

      

 

 

   

 

     24 Weeks Ended  
     6/16/12      6/11/11  
     Income     Shares(a)      Income     Shares(a)  

Net income attributable to PepsiCo

   $ 2,615         $ 3,028     

Preferred shares:

         

Dividends

     (1        (1  

Redemption premium

     (3        (3  
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 2,611        1,565       $ 3,024        1,583   
  

 

 

      

 

 

   

Basic net income attributable to PepsiCo per common share

   $ 1.67         $ 1.91     
  

 

 

      

 

 

   

Net income available for PepsiCo common shareholders

   $ 2,611        1,565       $ 3,024        1,583   

Dilutive securities:

         

Stock options and RSUs(b)

            17                21   

ESOP convertible preferred stock

     4        1         4        1   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ 2,615        1,583       $ 3,028        1,605   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted net income attributable to PepsiCo per common share

   $ 1.65         $ 1.89     
  

 

 

      

 

 

   

 

(a) 

Weighted-average common shares outstanding (in millions).

 

(b) 

Options to purchase 10.2 million and 19.9 million shares, respectively, for the 12 and 24 weeks in 2012 were not included in the calculation of earnings per share because these options were out-of-the-money. These out-of-the-money options had average exercise prices of $68.93 and $67.44, respectively. Options to purchase 10.1 million and 20.7 million shares, respectively, for the 12 and 24 weeks in 2011 were not included in the calculation of earnings per share because these options were out-of-the-money. Out-of-the-money options for the 12 and 24 weeks in 2011 had average exercise prices of $68.88 and $67.35, respectively.

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Debt Obligations and Commitments (Tables)
6 Months Ended
Jun. 16, 2012
Schedule Of Long-Term Contractual Commitments

Long-Term Contractual Commitments(a)

 

     Payments Due by Period  
     Total      2012      2013 –
2014
     2015 –
2016
     2017 and
beyond
 

Long-term debt obligations(b)

   $ 20,530       $       $ 4,169       $ 4,195       $ 12,166   

Interest on debt obligations(c)

     8,304         495         1,545         1,223         5,041   

Operating leases

     1,767         246         647         363         511   

Purchasing commitments

     3,033         873         1,682         418         60   

Marketing commitments

     2,410         131         595         535         1,149   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 36,044       $ 1,745       $ 8,638       $ 6,734       $ 18,927   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Reflects non-cancelable commitments as of June 16, 2012 based on foreign exchange rates in effect on the balance sheet date and excludes any reserves for uncertain tax positions as we are unable to reasonably predict the ultimate amount or timing of settlement.

 

(b) 

Excludes $3,367 million related to current maturities of long-term debt, $415 million related to the fair value step-up of debt acquired in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS), and $349 million related to the increase in carrying value of long-term debt reflecting the gains on our fair value interest rate swaps.

 

(c) 

Interest payments on floating-rate debt are estimated using interest rates effective as of June 16, 2012.

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Restructuring, Impairment and Integration Charges (Tables)
6 Months Ended
Jun. 16, 2012
Summary Of Productivity Plan Activity

A summary of our Productivity Plan activity in 2012 is as follows:

 

     Severance and Other
Employee Costs
    Asset
Impairment
    Other
Costs
    Total  

Liability as of December 31, 2011

   $ 249      $      $ 27      $ 276   

2012 restructuring and impairment charges

     40        26        44        110   

Cash payments

     (102            (38     (140

Non-cash charges

     (6     (26     (3     (35
  

 

 

   

 

 

   

 

 

   

 

 

 

Liability as of June 16, 2012

   $ 181      $      $ 30      $ 211   
  

 

 

   

 

 

   

 

 

   

 

 

 
Schedule Of Merger And Integration Activity

A summary of our merger and integration activity in 2012 is as follows:

 

     Severance and Other
Employee Costs
    Other Costs     Total  

Liability as of December 31, 2011

   $ 98      $ 7      $ 105   

2012 merger and integration charges

     3        2        5   

Cash payments

     (43     (4     (47

Non-cash charges

     (5            (5
  

 

 

   

 

 

   

 

 

 

Liability as of June 16, 2012

   $ 53      $ 5      $ 58   
  

 

 

   

 

 

   

 

 

 
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Financial Instruments (Tables)
6 Months Ended
Jun. 16, 2012
Fair Values of Financial Assets and Liabilities

The fair values of our financial assets and liabilities as of June 16, 2012 and June 11, 2011 are categorized as follows:

 

     2012      2011  
     Assets(a)      Liabilities(a)      Assets(a)      Liabilities(a)  

Available-for-sale securities(b)

   $ 62       $       $ 85       $   

Short-term investments – index funds(c)

   $ 158       $       $ 176       $   

Prepaid forward contracts(d)

   $ 40       $       $ 41       $   

Deferred compensation(e)

   $       $ 501       $       $ 547   

Derivatives designated as fair value hedging instruments:

           

Interest rate derivatives(f)

   $ 289       $       $ 345       $   

Derivatives designated as cash flow hedging instruments:

        

Foreign exchange contracts(g)

   $ 41       $ 14       $ 7       $ 36   

Interest rate derivatives(f)

                             14   

Commodity contracts(h)

             79         74         13   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 41       $ 93       $ 81       $ 63   

Derivatives not designated as hedging instruments:

           

Foreign exchange contracts(g)

   $ 17       $ 16       $ 8       $ 15   

Interest rate derivatives(f)

     124         156         44         81   

Commodity contracts(h)

     17         72         47         2   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 158       $ 244       $ 99       $ 98   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives at fair value

   $ 488       $ 337       $ 525       $ 161   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 748       $ 838       $ 827       $ 708   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) 

Financial assets are classified on our balance sheet within prepaid expenses and other current assets and other assets, with the exception of available-for-sale securities and short-term investments. Financial liabilities are classified on our balance sheet within accounts payable, other current liabilities and other liabilities. Unless specifically indicated, all financial assets and liabilities are categorized as Level 2 assets or liabilities.

 

(b) 

Based on the price of common stock. Categorized as a Level 1 asset.

 

(c) 

Based on price changes in index funds used to manage a portion of market risk arising from our deferred compensation liability. Categorized as a Level 1 asset.

 

(d) 

Based primarily on the price of our common stock.

 

(e) 

Based on the fair value of investments corresponding to employees’ investment elections. As of June 16, 2012 and June 11, 2011, $11 million and $46 million, respectively, are categorized as Level 1 liabilities. The remaining balances are categorized as Level 2 liabilities.

 

(f) 

Based on LIBOR forward rates.

 

(g) 

Based on recently reported market transactions of spot and forward rates.

 

(h) 

Based on recently reported market transactions, primarily swap arrangements, except for liabilities as of June 11, 2011, which primarily related to commodity futures contracts. The futures contracts are valued based on average prices on futures exchanges and categorized as Level 1 liabilities.

Effective Portion Of Pre-Tax (Gains)/Losses On Derivative Instruments

The effective portion of the pre-tax losses/(gains) on our derivative instruments are categorized in the tables below.

 

     12 Weeks Ended  
     Fair Value/Non-
designated Hedges
    Cash Flow Hedges  
     Losses/(Gains)
Recognized in

Income Statement(a)
    (Gains)/Losses
Recognized in
Accumulated Other
Comprehensive Loss
    Losses/(Gains)
Reclassified from
Accumulated Other
Comprehensive Loss
into Income
Statement(b)
 
     6/16/12        6/11/11        6/16/12        6/11/11        6/16/12         6/11/11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Foreign exchange contracts

   $ 3      $ 2      $ (33   $ 12      $ 5       $ 16   

Interest rate derivatives

     (19     (56            35        5         3   

Commodity contracts

     72        (7     55        (15     16         (19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 56      $ (61   $ 22      $ 32      $ 26       $   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

     24 Weeks Ended  
     Fair Value/Non-
designated Hedges
    Cash Flow Hedges  
     (Gains)/Losses
Recognized in

Income Statement(a)
    (Gains)/Losses
Recognized in
Accumulated Other
Comprehensive Loss
    Losses/(Gains)
Reclassified from
Accumulated Other
Comprehensive Loss
into Income
Statement(b)
 
     6/16/12        6/11/11        6/16/12        6/11/11        6/16/12         6/11/11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Foreign exchange contracts

   $ (7   $ 1      $ (4   $ 37      $ 2       $ 21   

Interest rate derivatives

     8        (78     4        29        9         6   

Commodity contracts

     23        (46     37        (55     27         (25
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 24      $ (123   $ 37      $ 11      $ 38       $ 2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(a) 

Interest rate derivatives 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. All other gains/losses are from non-designated hedges and are included in corporate unallocated expenses.

 

(b) 

Interest rate losses are included in interest expense. All other gains/losses are primarily included in cost of sales.

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Basis of Presentation and Our Divisions - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Mar. 19, 2011
Jun. 16, 2012
Segment
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Change in accounting method (LIFO to average cost), effect on net income $ 9
Business Segments 4
Reportable Business Segment 6
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Segment Reporting Information by Segment (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Segment Reporting Information [Line Items]
Net Revenue $ 16,458 $ 16,827 $ 28,886 $ 28,764
Operating Profit 2,377 2,754 4,099 4,480
FLNA
Segment Reporting Information [Line Items]
Net Revenue 3,193 3,090 6,203 5,994
Operating Profit 835 853 1,615 1,627
QFNA
Segment Reporting Information [Line Items]
Net Revenue 583 583 1,206 1,223
Operating Profit 154 167 341 381
LAF
Segment Reporting Information [Line Items]
Net Revenue 1,948 1,808 3,183 2,916
Operating Profit 271 274 454 445
PAB
Segment Reporting Information [Line Items]
Net Revenue 5,352 5,629 9,800 10,160
Operating Profit 840 983 1,365 1,541
Europe
Segment Reporting Information [Line Items]
Net Revenue 3,617 3,794 5,462 5,420
Operating Profit 453 407 534 470
AMEA
Segment Reporting Information [Line Items]
Net Revenue 1,765 1,923 3,032 3,051
Operating Profit 165 299 313 445
Total Division
Segment Reporting Information [Line Items]
Operating Profit 2,718 2,983 4,622 4,909
Corporate Unallocated Net Impact Of Mark To Market On Commodity Hedges
Segment Reporting Information [Line Items]
Operating Profit (79) (9) 5 22
Corporate Unallocated Restructuring And Impairment Charges
Segment Reporting Information [Line Items]
Operating Profit (3) (1)
Corporate Unallocated Merger And Integration Charges
Segment Reporting Information [Line Items]
Operating Profit (2) (12) (2) (54)
Corporate Unallocated Other
Segment Reporting Information [Line Items]
Operating Profit $ (257) $ (208) $ (525) $ (397)
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Segment Reporting Information by Total Assets (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 16, 2012
Dec. 31, 2011
Segment Reporting Information [Line Items]
Total Assets $ 72,390 $ 72,882
FLNA
Segment Reporting Information [Line Items]
Total Assets 6,109 6,120
QFNA
Segment Reporting Information [Line Items]
Total Assets 1,177 1,174
LAF
Segment Reporting Information [Line Items]
Total Assets 4,613 4,731
PAB
Segment Reporting Information [Line Items]
Total Assets 31,980 31,187
Europe
Segment Reporting Information [Line Items]
Total Assets 18,523 18,479
AMEA
Segment Reporting Information [Line Items]
Total Assets 5,511 6,048
Total Division
Segment Reporting Information [Line Items]
Total Assets 67,913 67,739
Corporate
Segment Reporting Information [Line Items]
Total Assets $ 4,477 [1] $ 5,143 [1]
[1] Corporate assets consist principally of cash and cash equivalents, short-term investments, derivative instruments and property, plant and equipment.
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Acquisitions and Divestitures - Additional Information (Detail)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 1 Months Ended 4 Months Ended 6 Months Ended
Jun. 16, 2012
USD ($)
Jun. 16, 2012
USD ($)
May 19, 2011
Wbd
USD ($)
Feb. 03, 2011
Wbd
USD ($)
Dec. 31, 2011
Wbd
USD ($)
Aug. 15, 2011
Wbd
RUB
Mar. 10, 2011
Wbd
ADS
RUB
Jun. 16, 2012
Tab
Jun. 16, 2012
Tab
Call Option Latest Use Date 2015
Jun. 16, 2012
Tingyi
USD ($)
Business Acquisition [Line Items]
Cash paid for entity $ 1,300 $ 3,800 $ 79
Percentage of identifiable assets acquired, liabilities assumed and noncontrolling interests recognized 100.00%
Ownership in WBD after acquisition 98.60% 77.00% 100.00%
Outstanding common stock ownership percentage 66.00%
Price paid per ordinary share in Russian rubles 3,883.7 3,883.7
Tender offer for all outstanding American Depositary Share in Russian rubles 970.925
Indirect Equity Interest Percentage 5.00%
Call Option For Indirect Equity Percentage 20.00%
Restructuring and other charges 137
Restructuring and other charges, after-tax $ 163
Restructuring and other charges, after-tax per share $ 0.04 $ 0.05 $ 0.1
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Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 16, 2012
Dec. 31, 2011
Indefinite-lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross $ 3,152 $ 3,220
Accumulated amortization (1,343) (1,332)
Amortizable Intangible Assets, net 1,809 1,888
Acquired franchise rights
Indefinite-lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross 921 916
Reacquired Franchise Rights
Indefinite-lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross 111 110
Brands
Indefinite-lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross 1,408 1,417
Other Intangible Assets
Indefinite-lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross $ 712 $ 777
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Change in Book Value of Nonamortizable Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 16, 2012
Goodwill
Jun. 16, 2012
Brands
Jun. 16, 2012
Reacquired Franchise Rights
Jun. 16, 2012
Acquired franchise rights
Jun. 16, 2012
FLNA
Dec. 31, 2011
FLNA
Jun. 16, 2012
FLNA
Goodwill
Dec. 31, 2011
FLNA
Goodwill
Jun. 16, 2012
FLNA
Brands
Dec. 31, 2011
FLNA
Brands
Jun. 16, 2012
QFNA
Goodwill
Dec. 31, 2011
QFNA
Goodwill
Jun. 16, 2012
LAF
Jun. 16, 2012
LAF
Goodwill
Jun. 16, 2012
LAF
Brands
Jun. 16, 2012
PAB
Jun. 16, 2012
PAB
Goodwill
Jun. 16, 2012
PAB
Brands
Jun. 16, 2012
PAB
Reacquired Franchise Rights
Jun. 16, 2012
PAB
Acquired franchise rights
Jun. 16, 2012
Europe
Jun. 16, 2012
Europe
Goodwill
Jun. 16, 2012
Europe
Brands
Jun. 16, 2012
Europe
Reacquired Franchise Rights
Jun. 16, 2012
Europe
Acquired franchise rights
Jun. 16, 2012
AMEA
Jun. 16, 2012
AMEA
Goodwill
Jun. 16, 2012
AMEA
Brands
Indefinite-lived Intangible Assets [Line Items]
Balance, Beginning $ 31,357 $ 16,800 $ 4,703 $ 8,074 $ 1,780 $ 341 $ 341 $ 311 $ 311 $ 30 $ 30 $ 175 $ 175 $ 950 $ 793 $ 157 $ 19,004 $ 9,932 $ 168 $ 7,342 $ 1,562 $ 10,028 $ 4,900 $ 4,178 $ 732 $ 218 $ 859 $ 689 $ 170
Acquisitions/ (Divestitures) (240) (208) (9) (33) 10 (50) (162) 112 (4) 19 (33) 10 (18) 78 (96) (168) (143) (25)
Translation and Other (262) (136) (97) (20) (9) (24) (10) (14) 1 (1) (215) (110) (76) (20) (9) (23) (17) (6)
Balance, End $ 30,855 $ 16,456 $ 4,597 $ 8,021 $ 1,781 $ 341 $ 341 $ 311 $ 311 $ 30 $ 30 $ 175 $ 175 $ 876 $ 621 $ 255 $ 19,000 $ 9,952 $ 167 $ 7,309 $ 1,572 $ 9,795 $ 4,868 $ 4,006 $ 712 $ 209 $ 668 $ 529 $ 139
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Stock-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized stock-based compensation expense $ 69 $ 76 $ 119 $ 155
Stock-based compensation expense 74 125 146
Merger and integration costs included in stock-based compensation 2 1 9
Restructuring and impairment charges $ 7
Stock options granted 3.4 3.4 6.4
RSUs issued 4.2 4.2 5.2
Weighted-average grant price, Options and RSUs $ 66.5 $ 66.5
Weighted-average grant price, Options $ 63.78
Restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant price, RSUs $ 63.81
Performance Stock Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity performance granted performance period 3 years
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Weighted Average Black Scholes Fair Value Assumptions (Detail)
6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life 6 years 6 years
Risk free interest rate 1.30% 2.60%
Expected volatility 17.00% [1] 16.00% [1]
Expected dividend yield 3.00% 2.90%
[1] Reflects movements in our stock price over the most recent historical period equivalent to the expected life.
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Components of Net Periodic Benefit Cost for Pension and Retiree Medical Plans (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
U.S.
Defined Benefit Plan Disclosure [Line Items]
Service cost $ 94 $ 80 $ 189 $ 162
Interest cost 123 126 246 252
Expected return on plan assets (183) (162) (367) (324)
Amortization of prior service cost/(benefit) 4 4 8 7
Amortization of experience loss 59 34 119 67
Gross total 97 82 195 164
Settlement/Curtailment (gain)/loss (7) (9)
Special termination benefits 4 10
Total expense 97 82 192 165
International
Defined Benefit Plan Disclosure [Line Items]
Service cost 24 23 42 40
Interest cost 28 28 48 49
Expected return on plan assets (35) (33) (61) (57)
Amortization of prior service cost/(benefit) 1 1 1 1
Amortization of experience loss 12 9 22 16
Gross total 30 28 52 49
Settlement/Curtailment (gain)/loss 3 3
Total expense 33 28 55 49
Retiree Medical
Defined Benefit Plan Disclosure [Line Items]
Service cost 11 11 23 23
Interest cost 15 21 30 41
Expected return on plan assets (5) (4) (10) (7)
Amortization of prior service cost/(benefit) (6) (6) (12) (13)
Amortization of experience loss 3 6
Gross total 15 25 31 50
Special termination benefits 4 1
Total expense $ 15 $ 25 $ 35 $ 51
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Pension and Retiree Medical Benefits - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 24, 2012
Defined Benefit Plan Disclosure [Line Items]
Discretionary, pension contributions $ 860
Retiree medical plans $ 140
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Rollforward of Reserves for Federal State and Foreign Tax Jurisdictions (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 16, 2012
Dec. 31, 2011
Income Taxes [Line Items]
Balance, beginning of year $ 2,167 $ 2,022
Additions for tax positions related to the current year 122 233
Additions for tax positions from prior years 21 147
Reductions for tax positions from prior years (25) (46)
Settlement payments (10) (156)
Statute of limitations expiration (15)
Translation and other (1) (18)
Balance, end of period $ 2,274 $ 2,167
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Basic and Diluted Net Income Attributable to PepsiCo (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Earnings Per Share Disclosure [Line Items]
Net income attributable to PepsiCo $ 1,488 $ 1,885 $ 2,615 $ 3,028
Dividends (1) (1) (1) (1)
Redemption premium (2) (1) (3) (3)
Net income available for PepsiCo common shareholders - Value 1,485 1,883 2,611 3,024
Net income available for PepsiCo common shareholders - Shares 1,563 [1] 1,583 [1] 1,565 [1] 1,583 [1]
Basic net income attributable to PepsiCo per common share $ 0.95 $ 1.19 $ 1.67 $ 1.91
Stock options and RSUs 17 [1],[2] 21 [1],[2] 17 [1],[2] 21 [1],[2]
ESOP convertible preferred stock - Value 3 2 4 4
ESOP convertible preferred stock - Shares 1 [1] 1 [1] 1 [1] 1 [1]
Diluted shares - Value $ 1,488 $ 1,885 $ 2,615 $ 3,028
Diluted shares - Shares 1,581 [1] 1,605 [1] 1,583 [1] 1,605 [1]
Diluted net income attributable to PepsiCo per common share $ 0.94 $ 1.17 $ 1.65 $ 1.89
[1] Weighted-average common shares outstanding (in millions).
[2] Options to purchase 10.2 million and 19.9 million shares, respectively, for the 12 and 24 weeks in 2012 were not included in the calculation of earnings per share because these options were out-of-the-money. These out-of-the-money options had average exercise prices of $68.93 and $67.44, respectively. Options to purchase 10.1 million and 20.7 million shares, respectively, for the 12 and 24 weeks in 2011 were not included in the calculation of earnings per share because these options were out-of-the-money. Out-of-the-money options for the 12 and 24 weeks in 2011 had average exercise prices of $68.88 and $67.35, respectively.
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Basic and Diluted Net Income Attributable to PepsiCo (Parenthetical) (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Earnings Per Share Disclosure [Line Items]
Out-of-the-money options excluded from earnings per share 10.2 10.1 19.9 20.7
Out-of-the-money options average exercise price $ 68.93 $ 68.88 $ 67.44 $ 67.35
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Debt Obligations and Commitments - Additional Information (Detail) (USD $)
Jun. 16, 2012
Jun. 16, 2012
Four-Year Credit Agreement
Before Amendment
Jun. 16, 2012
Four-Year Credit Agreement
After Amendment
Jun. 16, 2012
364-Day Credit Agreement
Before Amendment
Jun. 16, 2012
364-Day Credit Agreement
After Amendment
Mar. 24, 2012
0.750% Senior Notes
Mar. 24, 2012
2.750% Senior Notes
Mar. 24, 2012
4.000% Senior Notes
Debt Instrument [Line Items]
Fixed and floating rate notes issued $ 750,000,000 $ 1,250,000,000 $ 750,000,000
Interest rate on debt 0.75% 2.75% 4.00%
Debt instrument maturity year 2015 2022 2042
Extended termination date of unsecured credit agreement Jun 14, 2015 Jun 14, 2016 Jun 12, 2012 Jun 11, 2013
Commercial paper outstanding $ 3,300,000,000
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Long Term Contractual Commitments (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 16, 2012
Debt Instrument [Line Items]
Total Long Term Contractual Commitments $ 36,044 [1]
Long-Term Debt Obligations
Debt Instrument [Line Items]
Long-term debt obligations 20,530 [1],[2]
Interest On Debt Obligations
Debt Instrument [Line Items]
Interest on debt obligations 8,304 [1],[3]
Operating Leases
Debt Instrument [Line Items]
Operating leases 1,767 [1]
Purchasing Commitments
Debt Instrument [Line Items]
Purchasing commitments 3,033 [1]
Marketing Commitments
Debt Instrument [Line Items]
Marketing commitments 2,410 [1]
Payments Due By Period 2012
Debt Instrument [Line Items]
Total Long Term Contractual Commitments 1,745 [1]
Payments Due By Period 2012 | Interest On Debt Obligations
Debt Instrument [Line Items]
Interest on debt obligations 495 [1],[3]
Payments Due By Period 2012 | Operating Leases
Debt Instrument [Line Items]
Operating leases 246 [1]
Payments Due By Period 2012 | Purchasing Commitments
Debt Instrument [Line Items]
Purchasing commitments 873 [1]
Payments Due By Period 2012 | Marketing Commitments
Debt Instrument [Line Items]
Marketing commitments 131 [1]
Payments Due By Period 2013-2014
Debt Instrument [Line Items]
Total Long Term Contractual Commitments 8,638 [1]
Payments Due By Period 2013-2014 | Long-Term Debt Obligations
Debt Instrument [Line Items]
Long-term debt obligations 4,169 [1],[2]
Payments Due By Period 2013-2014 | Interest On Debt Obligations
Debt Instrument [Line Items]
Interest on debt obligations 1,545 [1],[3]
Payments Due By Period 2013-2014 | Operating Leases
Debt Instrument [Line Items]
Operating leases 647 [1]
Payments Due By Period 2013-2014 | Purchasing Commitments
Debt Instrument [Line Items]
Purchasing commitments 1,682 [1]
Payments Due By Period 2013-2014 | Marketing Commitments
Debt Instrument [Line Items]
Marketing commitments 595 [1]
Payments Due By Period 2015-2016
Debt Instrument [Line Items]
Total Long Term Contractual Commitments 6,734 [1]
Payments Due By Period 2015-2016 | Long-Term Debt Obligations
Debt Instrument [Line Items]
Long-term debt obligations 4,195 [1],[2]
Payments Due By Period 2015-2016 | Interest On Debt Obligations
Debt Instrument [Line Items]
Interest on debt obligations 1,223 [1],[3]
Payments Due By Period 2015-2016 | Operating Leases
Debt Instrument [Line Items]
Operating leases 363 [1]
Payments Due By Period 2015-2016 | Purchasing Commitments
Debt Instrument [Line Items]
Purchasing commitments 418 [1]
Payments Due By Period 2015-2016 | Marketing Commitments
Debt Instrument [Line Items]
Marketing commitments 535 [1]
Payments Due By Period 2017 And Beyond
Debt Instrument [Line Items]
Total Long Term Contractual Commitments 18,927 [1]
Payments Due By Period 2017 And Beyond | Long-Term Debt Obligations
Debt Instrument [Line Items]
Long-term debt obligations 12,166 [1],[2]
Payments Due By Period 2017 And Beyond | Interest On Debt Obligations
Debt Instrument [Line Items]
Interest on debt obligations 5,041 [1],[3]
Payments Due By Period 2017 And Beyond | Operating Leases
Debt Instrument [Line Items]
Operating leases 511 [1]
Payments Due By Period 2017 And Beyond | Purchasing Commitments
Debt Instrument [Line Items]
Purchasing commitments 60 [1]
Payments Due By Period 2017 And Beyond | Marketing Commitments
Debt Instrument [Line Items]
Marketing commitments $ 1,149 [1]
[1] Reflects non-cancelable commitments as of June 16, 2012 based on foreign exchange rates in effect on the balance sheet date and excludes any reserves for uncertain tax positions as we are unable to reasonably predict the ultimate amount or timing of settlement.
[2] Excludes $3,367 million related to current maturities of long-term debt, $415 million related to the fair value step-up of debt acquired in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS), and $349 million related to the increase in carrying value of long-term debt reflecting the gains on our fair value interest rate swaps.
[3] Interest payments on floating-rate debt are estimated using interest rates effective as of June 16, 2012.
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Long Term Contractual Commitments (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 16, 2012
Long-Term Debt Obligations
Debt Instrument [Line Items]
Long-term debt obligations, 2012 $ 3,367
Increase in carrying value of long-term debt 349
Pbg And Pas Acquisition
Debt Instrument [Line Items]
Fair value step-up of debt acquired in connection with our acquisitions of PBG and PAS $ 415
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Restructuring Impairment and Integration Charges - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges, after tax $ 57 $ 80
Restructuring and impairment charges, after tax impact per share $ 0.04 $ 0.05
Restructuring and impairment charges (7)
Merger and integration charges 5 113
Productivity Plan
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 77 110
FLNA
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 24 32
QFNA
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 1 6
LAF
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 6 12
PAB
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 35 43
Merger and integration charges 32 53
AMEA
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 8 17
Corporate Unallocated Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 3 1
Merger and integration charges 2 12 2 54
Europe
Restructuring Cost and Reserve [Line Items]
Restructuring income representing adjustments of previous recorded amounts 1
Merger and integration charges 1 14 3 6
Wimm Bill Dann Acquisition
Restructuring Cost and Reserve [Line Items]
Merger and integration charges 3
Merger and integration charges after-tax 2
PBG, PAS And WBD Acquisitions
Restructuring Cost and Reserve [Line Items]
Merger and integration charges 58 5 113
Merger and integration charges after-tax $ 45 $ 4 $ 94
Merger and integration charges, after-tax impact per share $ 0.03 $ 0.06
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Productivity Plan Activity (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 16, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges $ (7)
Productivity Plan
Restructuring Cost and Reserve [Line Items]
Liability as of December 31, 2011 276
Restructuring and impairment charges 77 110
Cash payments (140)
Non-cash charges (35)
Liability as of June 16, 2012 211 211
Productivity Plan | Severance And Other Employee Costs
Restructuring Cost and Reserve [Line Items]
Liability as of December 31, 2011 249
Restructuring and impairment charges 40
Cash payments (102)
Non-cash charges (6)
Liability as of June 16, 2012 181 181
Productivity Plan | Asset Impairment
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment charges 26
Non-cash charges (26)
Productivity Plan | Other Costs
Restructuring Cost and Reserve [Line Items]
Liability as of December 31, 2011 27
Restructuring and impairment charges 44
Cash payments (38)
Non-cash charges (3)
Liability as of June 16, 2012 $ 30 $ 30
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Merger and Integration Activity (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Restructuring Cost and Reserve [Line Items]
Liability as of December 31, 2011 $ 105
2012 merger and integration charges 5 113
Cash payments (47) (207)
Non-cash charges (5)
Liability as of June 16, 2012 58
Severance And Other Employee Costs
Restructuring Cost and Reserve [Line Items]
Liability as of December 31, 2011 98
2012 merger and integration charges 3
Cash payments (43)
Non-cash charges (5)
Liability as of June 16, 2012 53
Other Costs
Restructuring Cost and Reserve [Line Items]
Liability as of December 31, 2011 7
2012 merger and integration charges 2
Cash payments (4)
Liability as of June 16, 2012 $ 5
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Financial Instruments - Additional Information (Detail) (USD $)
6 Months Ended
Jun. 16, 2012
Dec. 31, 2011
Jun. 11, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Debt obligations $ 31,000,000,000
Foreign Exchange Contract
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Maturity Term 2 years
Commodity Contract
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Maturity Term 3 years
Expected reclassification of net gains (losses) related to hedge from accumulated OCI into net income within the next 12 months (65,000,000)
Face value of open commodity derivative contracts qualified for hedging 538,000,000 590,000,000
Face value of open commodity derivative contracts not qualified for hedging 563,000,000 356,000,000
Foreign Exchange Contract
Derivative Instruments, Gain (Loss) [Line Items]
Expected reclassification of net gains (losses) related to hedge from accumulated OCI into net income within the next 12 months 27,000,000
Foreign currency derivatives at face value, net 2,600,000,000 2,300,000,000
Interest rate derivatives
Derivative Instruments, Gain (Loss) [Line Items]
Expected reclassification of net gains (losses) related to hedge from accumulated OCI into net income within the next 12 months (23,000,000)
Notional amount of interest rate derivatives $ 7,300,000,000 $ 8,700,000,000
Percentage of total debt, net of related interest rate derivatives, exposed to variable interest rates 34.00% 38.00%
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Fair Values of Financial Assets and Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 16, 2012
Jun. 11, 2011
Derivatives, Fair Value [Line Items]
Available-for-sale securities $ 62 [1],[2] $ 85 [1],[2]
Short-term investments - index funds 158 [1],[3] 176 [1],[3]
Prepaid forward contracts 40 [1],[4] 41 [1],[4]
Deferred compensation    [1],[5]    [1],[5]
Total derivatives at fair value 488 [1] 525 [1]
Total Financial Assets at fair value 748 [1] 827 [1]
Deferred compensation 501 [1],[5] 547 [1],[5]
Total derivatives at fair value 337 [1] 161 [1]
Total Financial Liabilities at fair Value 838 [1] 708 [1]
Derivatives Designated As Fair Value Hedging Instruments Assets
Derivatives, Fair Value [Line Items]
Interest rate derivatives 289 [1],[6] 345 [1],[6]
Derivatives Designated As Hedging Instruments Assets
Derivatives, Fair Value [Line Items]
Foreign exchange contracts 41 [1],[7] 7 [1],[7]
Interest rate derivatives    [1],[6]    [1],[6]
Commodity contracts 74 [1],[8]
Derivatives designated as hedging instruments, Assets, Total 41 [1] 81 [1]
Derivatives Not Designated As Hedging Instruments Assets
Derivatives, Fair Value [Line Items]
Foreign exchange contracts 17 [1],[7] 8 [1],[7]
Interest rate derivatives 124 [1],[6] 44 [1],[6]
Commodity contracts 17 [1],[8] 47 [1],[8]
Derivatives not designated as hedging instruments, Assets, Total 158 [1] 99 [1]
Derivatives Designated As Fair Value Hedging Instruments Liabilities
Derivatives, Fair Value [Line Items]
Interest rate derivatives    [1],[6]    [1],[6]
Derivatives Designated As Hedging Instruments Liabilities
Derivatives, Fair Value [Line Items]
Foreign exchange contracts 14 [1],[7] 36 [1],[7]
Interest rate derivatives 14 [1],[6]
Commodity contracts 79 [1],[8] 13 [1],[8]
Derivatives designated as hedging instruments, Liabilities, Total 93 [1] 63 [1]
Derivatives Not Designated As Hedging Instruments Liabilities
Derivatives, Fair Value [Line Items]
Foreign exchange contracts 16 [1],[7] 15 [1],[7]
Interest rate derivatives 156 [1],[6] 81 [1],[6]
Commodity contracts 72 [1],[8] 2 [1],[8]
Derivatives not designated as hedging instruments, Liabilities, Total $ 244 [1] $ 98 [1]
[1] Financial assets are classified on our balance sheet within prepaid expenses and other current assets and other assets, with the exception of available-for-sale securities and short-term investments. Financial liabilities are classified on our balance sheet within accounts payable, other current liabilities and other liabilities. Unless specifically indicated, all financial assets and liabilities are categorized as Level 2 assets or liabilities.
[2] Based on the price of common stock. Categorized as a Level 1 asset.
[3] Based on price changes in index funds used to manage a portion of market risk arising from our deferred compensation liability. Categorized as a Level 1 asset.
[4] Based primarily on the price of our common stock.
[5] Based on the fair value of investments corresponding to employees' investment elections. As of June 16, 2012 and June 11, 2011, $11 million and $46 million, respectively, are categorized as Level 1 liabilities. The remaining balances are categorized as Level 2 liabilities.
[6] Based on LIBOR forward rates.
[7] Based on recently reported market transactions of spot and forward rates.
[8] Based on recently reported market transactions, primarily swap arrangements, except for liabilities as of June 11, 2011, which primarily related to commodity futures contracts. The futures contracts are valued based on average prices on futures exchanges and categorized as Level 1 liabilities.
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Fair Values of Financial Assets and Liabilities (Parenthetical) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 16, 2012
Jun. 11, 2011
Derivatives, Fair Value [Line Items]
Deferred compensation, Liabilities $ 501 [1],[2] $ 547 [1],[2]
Level 1 Fair Values Of Assets And Liabilities
Derivatives, Fair Value [Line Items]
Deferred compensation, Liabilities $ 11 $ 46
[1] Financial assets are classified on our balance sheet within prepaid expenses and other current assets and other assets, with the exception of available-for-sale securities and short-term investments. Financial liabilities are classified on our balance sheet within accounts payable, other current liabilities and other liabilities. Unless specifically indicated, all financial assets and liabilities are categorized as Level 2 assets or liabilities.
[2] Based on the fair value of investments corresponding to employees' investment elections. As of June 16, 2012 and June 11, 2011, $11 million and $46 million, respectively, are categorized as Level 1 liabilities. The remaining balances are categorized as Level 2 liabilities.
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Effective Portion of Pre Tax Gains and Losses on Derivative Instruments (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 16, 2012
Jun. 11, 2011
Jun. 16, 2012
Jun. 11, 2011
Fair Value/Non-Designated Hedges
Derivatives, Fair Value [Line Items]
(Gains) /Losses Recognized in Income Statement $ 56 [1] $ (61) [1] $ 24 [1] $ (123) [1]
Fair Value/Non-Designated Hedges | Foreign Exchange Forward
Derivatives, Fair Value [Line Items]
(Gains) /Losses Recognized in Income Statement 3 [1] 2 [1] (7) [1] 1 [1]
Fair Value/Non-Designated Hedges | Interest rate derivatives
Derivatives, Fair Value [Line Items]
(Gains) /Losses Recognized in Income Statement (19) [1] (56) [1] 8 [1] (78) [1]
Fair Value/Non-Designated Hedges | Commodity Contract
Derivatives, Fair Value [Line Items]
(Gains) /Losses Recognized in Income Statement 72 [1] (7) [1] 23 [1] (46) [1]
Cash Flow Hedging
Derivatives, Fair Value [Line Items]
Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss 22 32 37 11
(Gains)/Losses Reclassified from Accumulated Other Comprehensive Loss into Income Statement 26 [2] 38 [2] 2 [2]
Cash Flow Hedging | Foreign Exchange Forward
Derivatives, Fair Value [Line Items]
Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss (33) 12 (4) 37
(Gains)/Losses Reclassified from Accumulated Other Comprehensive Loss into Income Statement 5 [2] 16 [2] 2 [2] 21 [2]
Cash Flow Hedging | Interest rate derivatives
Derivatives, Fair Value [Line Items]
Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss 35 4 29
(Gains)/Losses Reclassified from Accumulated Other Comprehensive Loss into Income Statement 5 [2] 3 [2] 9 [2] 6 [2]
Cash Flow Hedging | Commodity Contract
Derivatives, Fair Value [Line Items]
Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss 55 (15) 37 (55)
(Gains)/Losses Reclassified from Accumulated Other Comprehensive Loss into Income Statement $ 16 [2] $ (19) [2] $ 27 [2] $ (25) [2]
[1] Interest rate derivatives 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. All other gains/losses are from non-designated hedges and are included in corporate unallocated expenses.
[2] Interest rate losses are included in interest expense. All other gains/losses are primarily included in cost of sales.
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Recent Accounting Pronouncements - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 24, 2012
Jun. 12, 2010
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
One-time related tax charge $ 41
Prescription drug benefit subsidy, income tax benefit $ 55
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