North Carolina | 1-1183 | 13-1584302 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
700 Anderson Hill Road, Purchase, New York | 10577 | ||||
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company ¨ |
Exhibit No. | Description | |
99.1 | Press Release issued by PepsiCo, Inc., dated October 2, 2018. |
Exhibit No. | Description | |
PEPSICO, INC. | |||
Date: | October 2, 2018 | By: | /s/ David Yawman |
Name: | David Yawman | ||
Title: | Executive Vice President, Government Affairs, General Counsel and Corporate Secretary | ||
Third Quarter | Year-to-Date | |
Net revenue growth | 1.5% | 2.6% |
Foreign exchange impact on net revenue | (2)% | —% |
EPS | $1.75 | $3.97 |
EPS growth | 18% | 3% |
Foreign exchange impact on EPS | (2)% | —% |
Third Quarter | Year-to-Date | |
Organic revenue growth | 4.9% | 3.4% |
Core EPS | $1.59 | $4.17 |
Core constant currency EPS growth | 9% | 6% |
Revenue | Volume | ||||||
GAAP Reported % Change | Percentage Point Impact | Organic % Change | Organic Volume % Change | ||||
Foreign Exchange Translation | Acquisitions, Divestitures, Structural and Other Changes* | Food/Snacks | Beverages | ||||
FLNA | 3 | — | — | 3 | 0.5 | ||
QFNA | (2) | — | — | (2) | 1 | ||
NAB | 2 | — | — | 2.5 | 1 | ||
Latin America | — | 10 | — | 10 | 3 | 0.5 | |
ESSA | 2 | 5 | 1 | 8 | 5 | 7 | |
AMENA | (2) | 2 | 9 | 9 | 7 | 2 | |
Total | 1.5 | 2 | 1 | 5 | 3 | 2.5 |
Operating Profit and EPS | ||||
GAAP Reported % Change | Percentage Point Impact | Core Constant Currency % Change | ||
Items Affecting Comparability | Foreign Exchange Translation | |||
FLNA | 3.5 | — | — | 4 |
QFNA | (1.5) | — | — | (1) |
NAB | (14) | 2 | — | (11) |
Latin America | — | 2 | 6 | 9 |
ESSA | 3 | 1 | 5 | 9 |
AMENA | 17 | 1 | 1 | 19 |
Corporate Unallocated | 32 | (27) | — | 5 |
Total | (3) | 3 | 2 | 2 |
EPS | 18 | (10) | 2 | 9 |
• | Reported third-quarter and year-ago results were impacted by a provisional transition tax expense related to the Tax Cuts and Jobs Act (TCJ Act), a non-cash tax benefit resulting from the conclusion of certain international tax audits, restructuring charges and commodity mark-to-market net impacts. See A-6 to A-8 for further details. |
• | Reported net revenue increased 1.5 percent. Foreign exchange translation had a 2-percentage-point unfavorable impact on reported net revenue growth. Organic revenue, which excludes the impacts of foreign exchange translation and acquisitions, structural and other changes, grew 4.9 percent. |
• | Reported gross margin contracted 30 basis points and core gross margin contracted 10 basis points. Reported operating margin contracted 75 basis points and core operating margin contracted 25 basis points. |
• | Reported operating profit decreased 3 percent and core constant currency operating profit increased 2 percent. Commodity mark-to-market net impacts and restructuring charges negatively impacted reported operating profit performance by 2 percentage points and 1 percentage point, respectively. Foreign exchange translation negatively impacted reported operating profit performance by 2 percentage points. |
• | The reported and core effective tax rates in the third quarter of 2018 were 7 percent and 17.6 percent, respectively. The reported and core effective tax rates in the third quarter of 2017 were 22.3 and 22.2 percent, respectively. A non-cash tax benefit resulting from the conclusion of certain international tax audits reduced the reported effective tax rate by 13 percentage points. The provisional transition tax expense increased the reported effective tax rate by 3 percentage points. |
• | Reported EPS was $1.75, an increase of 18 percent from the third quarter of 2017. Foreign exchange translation negatively impacted reported EPS growth by 2 percentage points. |
• | Core EPS was $1.59, an increase of 7 percent. Excluding the impact of foreign exchange translation, core constant currency EPS increased 9 percent (see schedule A-11 for a reconciliation to reported EPS, the comparable GAAP measure). |
• | Net cash provided by operating activities was $3.6 billion. |
Revenue | Volume | ||||||
GAAP Reported % Change | Percentage Point Impact | Organic % Change | Organic Volume % Change | ||||
Foreign Exchange Translation | Acquisitions, Divestitures and Structural Changes* | Food/Snacks | Beverages | ||||
FLNA | 3 | — | — | 3 | 2 | ||
QFNA | (2) | — | — | (2) | (0.5) | ||
NAB | — | — | — | — | (1) | ||
Latin America | 3 | 4 | — | 7 | 1 | (2) | |
ESSA | 8 | (1) | 0.5 | 7 | 5 | 7 | |
AMENA | — | (1) | 8 | 7 | 6 | 1 | |
Total | 3 | — | 1 | 3 | 2 | 1 |
Operating Profit and EPS | ||||
GAAP Reported % Change | Percentage Point Impact | Core Constant Currency % Change | ||
Items Affecting Comparability | Foreign Exchange Translation | |||
FLNA | 3 | — | — | 3 |
QFNA | (2) | — | — | (2) |
NAB | (17) | 1 | — | (16) |
Latin America | 15 | (6) | — | 10 |
ESSA | (2) | 1 | (1) | (2) |
AMENA | 34 | 2 | (1) | 34 |
Corporate Unallocated | 10 | (5.5) | — | 5 |
Total | — | 1 | — | — |
EPS | 3 | 4 | — | 6 |
• | Reported year-to-date 2018 and 2017 results were impacted by a provisional transition tax expense related to the TCJ Act and non-cash tax benefits resulting from the conclusion of certain international tax audits and our resolution with the Internal Revenue Service (IRS) of all open matters related to the audits of taxable years 2012 and 2013 (the 2012 and 2013 audit resolution), restructuring charges and commodity mark-to-market net impacts. See A-6 to A-8 for further details. |
• | Reported net revenue increased 2.6 percent. Foreign exchange translation did not have a significant impact on reported net revenue growth. Organic revenue, which excludes the impacts of foreign exchange translation and acquisitions, structural and other changes, grew 3.4 percent. |
• | Reported gross margin contracted 50 basis points and core gross margin contracted 35 basis points. Reported operating margin contracted 50 basis points and core operating margin contracted 40 basis points. |
• | Both reported and core constant currency operating profit did not change significantly compared to the prior year. Commodity mark-to-market net impacts negatively impacted reported operating profit performance by 1 percentage point while restructuring charges had a nominal impact. Foreign exchange translation did not have a significant impact on reported operating profit performance. |
• | The reported and core effective tax rates year-to-date 2018 were 21.5 percent and 19.1 percent, respectively. The reported and core effective tax rates year-to-date 2017 were 22.9 and 22.8 percent, respectively. The favorable conclusion of certain international tax audits and the 2012 and 2013 audit resolution, collectively, reduced the reported effective tax rate by 9 percentage points. The provisional transition tax expense related to the TCJ Act increased the reported effective tax rate by 12 percentage points. |
• | Reported EPS was $3.97, an increase of 3 percent. Foreign exchange translation did not have a significant effect on reported EPS growth. |
• | Core EPS was $4.17, an increase of 6 percent. Foreign exchange translation did not have a significant impact on core EPS growth (see schedule A-12 for a reconciliation to reported EPS, the comparable GAAP measure). |
• | Net cash provided by operating activities was $4.7 billion. |
• | Full year organic revenue growth to be at least 3 percent. |
• | Based on current market consensus rates, foreign exchange translation to have a 1 percentage point negative impact on reported net revenue and earnings per share growth. |
• | A core effective tax rate between 19 and 20 percent, reflecting benefits of the TCJ Act. |
• | Core earnings per share of $5.65, an 8 percent increase compared to 2017 core earnings per share of $5.23 reflecting the expected unfavorable 1 percentage point foreign exchange translation impact. |
• | Approximately $9 billion in cash from operating activities and free cash flow of approximately $6 billion, which now assumes net capital spending of approximately $3.3 billion and a discretionary pension contribution of $1.4 billion. |
• | Core constant currency EPS growth of 9 percent. |
• | The benefit of the TCJ Act to be substantially reinvested in initiatives to benefit the Company’s U.S.-based front line workforce and to otherwise increase the Company’s capabilities. |
• | Total cash returns to shareholders of approximately $7 billion, total dividends to shareholders of approximately $5 billion and share repurchases of approximately $2 billion. |
Contacts: | Investors | Media | |
Jamie Caulfield | Carrie Ratner | ||
Investor Relations | Communications | ||
914-253-3035 | 914-253-3817 | ||
jamie.caulfield@pepsico.com | carrie.ratner@pepsico.com |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||
9/8/2018 | 9/9/2017(a) | Change | 9/8/2018 | 9/9/2017(a) | Change | ||||||||||||||||
Net Revenue | $ | 16,485 | $ | 16,240 | 1.5 | % | $ | 45,137 | $ | 43,999 | 3 | % | |||||||||
Cost of sales | 7,527 | 7,368 | 2 | % | 20,445 | 19,717 | 4 | % | |||||||||||||
Gross profit | 8,958 | 8,872 | 1 | % | 24,692 | 24,282 | 2 | % | |||||||||||||
Selling, general and administrative expenses | 6,114 | 5,948 | 3 | % | 17,013 | 16,576 | 3 | % | |||||||||||||
Operating Profit | 2,844 | 2,924 | (3 | )% | 7,679 | 7,706 | — | % | |||||||||||||
Other pension and retiree medical benefits income | 74 | 69 | 5 | % | 231 | 210 | 10 | % | |||||||||||||
Interest expense | (302 | ) | (269 | ) | 12 | % | (904 | ) | (786 | ) | 15 | % | |||||||||
Interest income and other | 81 | 52 | 55 | % | 248 | 141 | 75 | % | |||||||||||||
Income before income taxes | 2,697 | 2,776 | (3 | )% | 7,254 | 7,271 | — | % | |||||||||||||
Provision for income taxes | 188 | (b) | 620 | (70 | )% | 1,562 | (b) | 1,668 | (6 | )% | |||||||||||
Net income | 2,509 | 2,156 | 16 | % | 5,692 | 5,603 | 2 | % | |||||||||||||
Less: Net income attributable to noncontrolling interests | 11 | 12 | (4 | )% | 31 | 36 | (13 | )% | |||||||||||||
Net Income Attributable to PepsiCo | $ | 2,498 | $ | 2,144 | 16 | % | $ | 5,661 | $ | 5,567 | 2 | % | |||||||||
Diluted | |||||||||||||||||||||
Net Income Attributable to PepsiCo per Common Share | $ | 1.75 | $ | 1.49 | 18 | % | $ | 3.97 | $ | 3.87 | 3 | % | |||||||||
Weighted-average common shares outstanding | 1,424 | 1,438 | 1,427 | 1,440 | |||||||||||||||||
Cash dividends declared per common share | $ | 0.9275 | $ | 0.805 | $ | 2.66 | $ | 2.3625 |
(a) | Reflects the retrospective adoption of guidance requiring the presentation of non-service cost components of net periodic benefit cost below operating profit. The impact from retrospective adoption of this guidance resulted in an increase to cost of sales and selling, general and administrative expenses of $2 million and $67 million, respectively, for the 12 weeks ended September 9, 2017 and $9 million and $201 million, respectively, for the 36 weeks ended September 9, 2017. We recorded a corresponding increase to other pension and retiree medical benefits income below operating profit of $69 million and $210 million for the 12 and 36 weeks ended September 9, 2017, respectively. In addition, the impact of this guidance resulted in a decrease in operating profit of $233 million for the year ended December 30, 2017. The changes described above had no impact on our consolidated net revenue, net interest expense, provision for income taxes, net income attributable to PepsiCo or earnings per share. |
(b) | Includes the provisional impact of the TCJ Act enacted in 2017. See A-7 for additional information. |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||
9/8/2018 | 9/9/2017(a) | Change | 9/8/2018 | 9/9/2017(a) | Change | ||||||||||||||||
Net Revenue | |||||||||||||||||||||
Frito-Lay North America | $ | 3,891 | $ | 3,792 | 3 | % | $ | 11,345 | $ | 10,969 | 3 | % | |||||||||
Quaker Foods North America | 567 | 578 | (2 | )% | 1,695 | 1,729 | (2 | )% | |||||||||||||
North America Beverages | 5,456 | 5,332 | 2 | % | 15,064 | 15,034 | — | % | |||||||||||||
Latin America | 1,868 | 1,873 | — | % | 4,935 | 4,773 | 3 | % | |||||||||||||
Europe Sub-Saharan Africa | 3,161 | 3,098 | 2 | % | 7,945 | 7,355 | 8 | % | |||||||||||||
Asia, Middle East and North Africa | 1,542 | 1,567 | (2 | )% | 4,153 | 4,139 | — | % | |||||||||||||
Total Net Revenue | $ | 16,485 | $ | 16,240 | 1.5 | % | $ | 45,137 | $ | 43,999 | 3 | % | |||||||||
Operating Profit | |||||||||||||||||||||
Frito-Lay North America | $ | 1,241 | $ | 1,199 | 3.5 | % | $ | 3,491 | $ | 3,392 | 3 | % | |||||||||
Quaker Foods North America | 143 | 145 | (1.5 | )% | 443 | 453 | (2 | )% | |||||||||||||
North America Beverages | 703 | 813 | (14 | )% | 1,838 | 2,204 | (17 | )% | |||||||||||||
Latin America | 284 | 284 | — | % | 742 | 645 | 15 | % | |||||||||||||
Europe Sub-Saharan Africa | 439 | 427 | 3 | % | 995 | 1,015 | (2 | )% | |||||||||||||
Asia, Middle East and North Africa | 311 | 267 | 17 | % | 994 | 745 | 34 | % | |||||||||||||
Corporate Unallocated | (277 | ) | (211 | ) | 32 | % | (824 | ) | (748 | ) | 10 | % | |||||||||
Total Operating Profit | $ | 2,844 | $ | 2,924 | (3 | )% | $ | 7,679 | $ | 7,706 | — | % |
(a) | Operating profit reflects the retrospective adoption of guidance requiring the presentation of non-service cost components of net periodic benefit cost below operating profit. The impact from retrospective adoption of this guidance resulted in an increase to cost of sales and selling, general and administrative expenses of $2 million and $67 million, respectively, for the 12 weeks ended September 9, 2017 and $9 million and $201 million, respectively, for the 36 weeks ended September 9, 2017. We recorded a corresponding increase to other pension and retiree medical benefits income below operating profit of $69 million and $210 million for the 12 and 36 weeks ended September 9, 2017, respectively. |
PepsiCo, Inc. and Subsidiaries Condensed Consolidated Statement of Cash Flows (in millions, unaudited) | |||||||
36 Weeks Ended | |||||||
9/8/2018 | 9/9/2017 | ||||||
Operating Activities | |||||||
Net income | $ | 5,692 | $ | 5,603 | |||
Depreciation and amortization | 1,636 | 1,604 | |||||
Share-based compensation expense | 203 | 206 | |||||
Restructuring and impairment charges | 79 | 69 | |||||
Cash payments for restructuring charges | (179 | ) | (83 | ) | |||
Pension and retiree medical plan expenses | 147 | 141 | |||||
Pension and retiree medical plan contributions | (1,664 | ) | (169 | ) | |||
Deferred income taxes and other tax charges and credits | (609 | ) | 284 | ||||
Provisional net tax expense related to the TCJ Act | 854 | — | |||||
Change in assets and liabilities: | |||||||
Accounts and notes receivable | (1,299 | ) | (999 | ) | |||
Inventories | (362 | ) | (424 | ) | |||
Prepaid expenses and other current assets | (158 | ) | (119 | ) | |||
Accounts payable and other current liabilities | 116 | (496 | ) | ||||
Income taxes payable | 633 | 633 | |||||
Other, net | (357 | ) | (163 | ) | |||
Net Cash Provided by Operating Activities | 4,732 | 6,087 | |||||
Investing Activities | |||||||
Capital spending | (1,578 | ) | (1,474 | ) | |||
Sales of property, plant and equipment | 119 | 82 | |||||
Acquisitions and investments in noncontrolled affiliates | (253 | ) | (45 | ) | |||
Divestitures | 294 | 143 | |||||
Short-term investments, by original maturity: | |||||||
More than three months - purchases | (5,637 | ) | (11,742 | ) | |||
More than three months - maturities | 11,874 | 10,400 | |||||
More than three months - sales | 772 | 345 | |||||
Three months or less, net | 7 | 4 | |||||
Other investing, net | — | 9 | |||||
Net Cash Provided by/(Used for) Investing Activities | 5,598 | (2,278 | ) | ||||
Financing Activities | |||||||
Proceeds from issuances of long-term debt | — | 3,525 | |||||
Payments of long-term debt | (2,506 | ) | (3,256 | ) | |||
Short-term borrowings, by original maturity: | |||||||
More than three months - proceeds | 2 | 77 | |||||
More than three months - payments | (17 | ) | (91 | ) | |||
Three months or less, net | (1,384 | ) | 1,526 | ||||
Cash dividends paid | (3,621 | ) | (3,324 | ) | |||
Share repurchases - common | (1,442 | ) | (1,464 | ) | |||
Share repurchases - preferred | (2 | ) | (4 | ) | |||
Proceeds from exercises of stock options | 215 | 396 | |||||
Withholding tax payments on restricted stock units (RSUs), performance stock units (PSUs) and PepsiCo equity performance units (PEPunits) converted | (93 | ) | (131 | ) | |||
Other financing | (23 | ) | (29 | ) | |||
Net Cash Used for Financing Activities | (8,871 | ) | (2,775 | ) | |||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (73 | ) | 76 | ||||
Net Increase in Cash and Cash Equivalents and Restricted Cash | 1,386 | 1,110 | |||||
Cash and Cash Equivalents and Restricted Cash, Beginning of Year | 10,657 | 9,169 | |||||
Cash and Cash Equivalents and Restricted Cash, End of Period | $ | 12,043 | $ | 10,279 |
PepsiCo, Inc. and Subsidiaries Condensed Consolidated Balance Sheet (in millions except per share amounts) | |||||||
(unaudited) | |||||||
9/8/2018 | 12/30/2017 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 11,991 | $ | 10,610 | |||
Short-term investments | 1,907 | 8,900 | |||||
Accounts and notes receivable, net | 7,975 | 7,024 | |||||
Inventories: | |||||||
Raw materials and packaging | 1,401 | 1,344 | |||||
Work-in-process | 164 | 167 | |||||
Finished goods | 1,577 | 1,436 | |||||
3,142 | 2,947 | ||||||
Prepaid expenses and other current assets | 827 | 1,546 | |||||
Total Current Assets | 25,842 | 31,027 | |||||
Property, Plant and Equipment, net | 16,541 | 17,240 | |||||
Amortizable Intangible Assets, net | 1,193 | 1,268 | |||||
Goodwill | 14,332 | 14,744 | |||||
Other nonamortizable intangible assets | 12,273 | 12,570 | |||||
Nonamortizable Intangible Assets | 26,605 | 27,314 | |||||
Investments in Noncontrolled Affiliates | 2,394 | 2,042 | |||||
Other Assets | 1,057 | 913 | |||||
Total Assets | $ | 73,632 | $ | 79,804 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Short-term debt obligations | $ | 4,474 | $ | 5,485 | |||
Accounts payable and other current liabilities | 15,230 | 15,017 | |||||
Total Current Liabilities | 19,704 | 20,502 | |||||
Long-Term Debt Obligations | 30,643 | 33,796 | |||||
Other Liabilities | 9,538 | 11,283 | |||||
Deferred Income Taxes | 3,358 | 3,242 | |||||
Total Liabilities | 63,243 | 68,823 | |||||
Commitments and contingencies | |||||||
Preferred Stock, no par value | — | 41 | |||||
Repurchased Preferred Stock | — | (197 | ) | ||||
PepsiCo Common Shareholders’ Equity | |||||||
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,412 and 1,420 shares, respectively) | 24 | 24 | |||||
Capital in excess of par value | 3,939 | 3,996 | |||||
Retained earnings | 54,404 | 52,839 | |||||
Accumulated other comprehensive loss | (14,253 | ) | (13,057 | ) | |||
Repurchased common stock, in excess of par value (455 and 446 shares, respectively) | (33,828 | ) | (32,757 | ) | |||
Total PepsiCo Common Shareholders’ Equity | 10,286 | 11,045 | |||||
Noncontrolling interests | 103 | 92 | |||||
Total Equity | 10,389 | 10,981 | |||||
Total Liabilities and Equity | $ | 73,632 | $ | 79,804 |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||
9/8/2018 | 9/9/2017 | 9/8/2018 | 9/9/2017 | ||||||||||||
Beginning Net Shares Outstanding | 1,415 | 1,426 | 1,420 | 1,428 | |||||||||||
Options Exercised, RSUs, PSUs and PEPunits Converted | 1 | 2 | 5 | 8 | |||||||||||
Shares Repurchased | (4 | ) | (5 | ) | (14 | ) | (13 | ) | |||||||
Shares issued in connection with preferred stock conversion to common stock | — | — | 1 | — | |||||||||||
Ending Net Shares Outstanding | 1,412 | 1,423 | 1,412 | 1,423 | |||||||||||
Weighted Average Basic | 1,414 | 1,425 | 1,417 | 1,427 | |||||||||||
Dilutive Securities: | |||||||||||||||
Options | 5 | 7 | 5 | 7 | |||||||||||
RSUs, PSUs, PEPunits and Other | 5 | 5 | 5 | 5 | |||||||||||
ESOP Convertible Preferred Stock | — | 1 | — | 1 | |||||||||||
Weighted Average Diluted | 1,424 | 1,438 | 1,427 | 1,440 | |||||||||||
Average Share Price for the Period | $ | 112.20 | $ | 116.27 | $ | 109.74 | $ | 112.44 | |||||||
Growth versus Prior Year | (4 | )% | 9 | % | (2 | )% | 9 | % | |||||||
Options Outstanding | 17 | 20 | 18 | 21 | |||||||||||
Options in the Money | 17 | 20 | 17 | 21 | |||||||||||
Dilutive Shares from Options | 5 | 7 | 5 | 7 | |||||||||||
Dilutive Shares From Options as a % of Options in the Money | 30 | % | 36 | % | 31 | % | 35 | % | |||||||
Average Exercise Price of Options in the Money | $ | 78.51 | $ | 73.81 | $ | 75.95 | $ | 72.35 | |||||||
RSUs, PSUs, PEPunits and Other Outstanding | 7 | 8 | 7 | 8 | |||||||||||
Dilutive Shares from RSUs, PSUs, PEPunits and Other | 5 | 5 | 5 | 5 | |||||||||||
Weighted-Average Grant-Date Fair Value of RSUs and PSUs Outstanding | $ | 105.30 | $ | 102.00 | $ | 105.19 | $ | 101.94 | |||||||
Weighted-Average Grant-Date Fair Value of PEPunits Outstanding | $ | — | $ | 68.94 | $ | — | $ | 68.94 |
GAAP Measure | Non-GAAP Measure | ||||||||||||||||||
Percent Impact | Reported % Change | Organic % Change(a) | |||||||||||||||||
Net Revenue Year over Year % Change | Volume | Effective net pricing | Foreign exchange translation | Acquisitions and divestitures and other structural changes | Sales and certain other taxes(b) | 12 Weeks Ended 9/8/2018 | 12 Weeks Ended 9/8/2018 | ||||||||||||
Frito-Lay North America | 1 | 2 | — | — | — | 3 | 3 | ||||||||||||
Quaker Foods North America | 1 | (2 | ) | — | — | — | (2 | ) | (2 | ) | |||||||||
North America Beverages | 1 | 2 | — | — | — | 2 | 2.5 | ||||||||||||
Latin America | 2 | 8 | (10 | ) | — | — | — | 10 | |||||||||||
Europe Sub-Saharan Africa | 5 | 2 | (5 | ) | — | (1 | ) | 2 | 8 | ||||||||||
Asia, Middle East and North Africa | 5 | 4 | (2 | ) | (9 | ) | — | (2 | ) | 9 | |||||||||
Total PepsiCo | 2 | 3 | (2 | ) | (1 | ) | — | 1.5 | 5 |
GAAP Measure | Non-GAAP Measure | |||||||||||||||||||
Percent Impact | Reported % Change | Organic % Change(a) | ||||||||||||||||||
Net Revenue Year over Year % Change | Volume | Effective net pricing | Foreign exchange translation | Acquisitions and divestitures and other structural changes | Sales and certain other taxes(b) | 36 Weeks Ended 9/8/2018 | 36 Weeks Ended 9/8/2018 | |||||||||||||
Frito-Lay North America | 1 | 2 | — | — | — | 3 | 3 | |||||||||||||
Quaker Foods North America | (0.5 | ) | (2 | ) | — | — | — | (2 | ) | (2 | ) | |||||||||
North America Beverages | (1 | ) | 1 | — | — | — | — | — | ||||||||||||
Latin America | 0.5 | 7 | (4 | ) | — | — | 3 | 7 | ||||||||||||
Europe Sub-Saharan Africa | 5.5 | 2 | 1 | — | (0.5 | ) | 8 | 7 | ||||||||||||
Asia, Middle East and North Africa | 4 | 3 | 1 | (7 | ) | — | — | 7 | ||||||||||||
Total PepsiCo | 1 | 2 | — | (1 | ) | — | 3 | 3 |
(a) | Organic percent change is a financial measure that is not in accordance with GAAP and is calculated by excluding the impact of foreign exchange translation, acquisitions, divestitures and other structural changes and sales and certain other taxes from reported growth. |
(b) | Represents the impact of the exclusion from net revenue of prior year sales, use, value-added and certain excise taxes assessed by governmental authorities on revenue-producing transactions that were not already excluded based on the accounting policy election taken in conjunction with the adoption of the revenue recognition guidance. |
GAAP Measure | Non-GAAP Measure | Non-GAAP Measure | |||||||||||||||||||
Reported % Change | Percent Impact of Items Affecting Comparability | Core(a) % Change | Percent Impact of | Core Constant Currency(a) % Change | |||||||||||||||||
Operating Profit Year over Year % Change | 12 Weeks Ended 9/8/2018 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | Provisional net tax expense related to the TCJ Act | Tax benefit | 12 Weeks Ended 9/8/2018 | Foreign exchange translation | 12 Weeks Ended 9/8/2018 | |||||||||||||
Frito-Lay North America | 3.5 | — | — | — | — | 3 | — | 4 | |||||||||||||
Quaker Foods North America | (1.5 | ) | — | — | — | — | (1 | ) | — | (1 | ) | ||||||||||
North America Beverages | (14 | ) | — | 2 | — | — | (12 | ) | — | (11 | ) | ||||||||||
Latin America | — | — | 2 | — | — | 3 | 6 | 9 | |||||||||||||
Europe Sub-Saharan Africa | 3 | — | 1 | — | — | 4 | 5 | 9 | |||||||||||||
Asia, Middle East and North Africa | 17 | — | 1 | — | — | 18 | 1 | 19 | |||||||||||||
Corporate Unallocated | 32 | (27 | ) | 1 | — | — | 5 | — | 5 | ||||||||||||
Total Operating Profit | (3 | ) | 2 | 1 | — | — | — | 2 | 2 | ||||||||||||
Net Income Attributable to PepsiCo | 16 | 6 | 2 | 8 | |||||||||||||||||
Net Income Attributable to PepsiCo per common share - diluted | 18 | 7 | 2 | 9 |
GAAP Measure | Non-GAAP Measure | Non-GAAP Measure | |||||||||||||||||||
Reported % Change | Percent Impact of Items Affecting Comparability | Core(a) % Change | Percent Impact of | Core Constant Currency(a) % Change | |||||||||||||||||
Operating Profit Year over Year % Change | 36 Weeks Ended 9/8/2018 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | Provisional net tax expense related to the TCJ Act | Tax benefits | 36 Weeks Ended 9/8/2018 | Foreign exchange translation | 36 Weeks Ended 9/8/2018 | |||||||||||||
Frito-Lay North America | 3 | — | — | — | — | 3 | — | 3 | |||||||||||||
Quaker Foods North America | (2 | ) | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||
North America Beverages | (17 | ) | — | 1 | — | — | (15 | ) | — | (16 | ) | ||||||||||
Latin America | 15 | — | (6 | ) | — | — | 10 | — | 10 | ||||||||||||
Europe Sub-Saharan Africa | (2 | ) | — | 1 | — | — | (1 | ) | (1 | ) | (2 | ) | |||||||||
Asia, Middle East and North Africa | 34 | — | 2 | — | — | 36 | (1 | ) | 34 | ||||||||||||
Corporate Unallocated | 10 | (6 | ) | — | — | — | 5 | — | 5 | ||||||||||||
Total Operating Profit | — | 1 | — | — | — | — | — | — | |||||||||||||
Net Income Attributable to PepsiCo | 2 | 5 | — | 5 | |||||||||||||||||
Net Income Attributable to PepsiCo per common share - diluted | 3 | 6 | — | 6 |
(a) | Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(b) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-7 for a discussion of this plan. |
12 Weeks Ended 9/8/2018 | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Provision for income taxes(a) | Net income attributable to noncontrolling interests | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 7,527 | $ | 8,958 | $ | 6,114 | $ | 2,844 | $ | 188 | $ | 11 | $ | 2,498 | $ | 1.75 | 7.0 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | (31 | ) | 31 | 2 | 29 | 6 | — | 23 | 0.02 | — | ||||||||||||||||||||||||
Restructuring and impairment charges (c) | — | — | (35 | ) | 35 | 3 | 1 | 31 | 0.02 | (0.1 | ) | |||||||||||||||||||||||
Provisional net tax expense related to the TCJ Act | — | — | — | — | (76 | ) | — | 76 | 0.05 | (2.8 | ) | |||||||||||||||||||||||
Tax benefit | — | — | — | — | 364 | — | (364 | ) | (0.26 | ) | 13.5 | |||||||||||||||||||||||
Core, Non-GAAP Measure (d) | $ | 7,496 | $ | 8,989 | $ | 6,081 | $ | 2,908 | $ | 485 | $ | 12 | $ | 2,264 | $ | 1.59 | 17.6 | % |
12 Weeks Ended 9/9/2017(e) | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Other pension and retiree medical benefits income | Provision for income taxes(a) | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 7,368 | $ | 8,872 | $ | 5,948 | $ | 2,924 | $ | 69 | $ | 620 | $ | 2,144 | $ | 1.49 | 22.3 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | 1 | (1 | ) | 26 | (27 | ) | — | (10 | ) | (17 | ) | (0.01 | ) | (0.1 | ) | |||||||||||||||||||
Restructuring and impairment charges (c) | — | — | (6 | ) | 6 | 2 | 1 | 7 | — | — | ||||||||||||||||||||||||
Core, Non-GAAP Measure (d) | $ | 7,369 | $ | 8,871 | $ | 5,968 | $ | 2,903 | $ | 71 | $ | 611 | $ | 2,134 | $ | 1.48 | 22.2 | % |
(a) | Provision for income taxes is the expected tax benefit/charge on the underlying item based on the tax laws and income tax rates applicable to the underlying item in its corresponding tax jurisdiction. |
(b) | The impact of items affecting comparability on our effective tax rate represents the difference in the effective tax rate resulting from a higher or lower tax rate applicable to the items affecting comparability. |
(c) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-7 for a discussion of this plan. |
(d) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(e) | Reflects the retrospective adoption of guidance requiring the presentation of non-service cost components of net periodic benefit cost below operating profit. |
36 Weeks Ended 9/8/2018 | ||||||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Other pension and retiree medical benefits income | Provision for income taxes(a) | Net income attributable to noncontrolling interests | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | |||||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 20,445 | $ | 24,692 | $ | 17,013 | $ | 7,679 | $ | 231 | $ | 1,562 | $ | 31 | $ | 5,661 | $ | 3.97 | 21.5 | % | ||||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||||||
Commodity mark-to- market net impact | (51 | ) | 51 | (6 | ) | 57 | — | 14 | — | 43 | 0.03 | — | ||||||||||||||||||||||||||
Restructuring and impairment charges (c) | — | — | (75 | ) | 75 | 4 | 12 | 1 | 66 | 0.05 | — | |||||||||||||||||||||||||||
Provisional net tax expense related to the TCJ Act | — | — | — | — | — | (854 | ) | — | 854 | 0.60 | (11.8 | ) | ||||||||||||||||||||||||||
Tax benefits | — | — | — | — | — | 678 | — | (678 | ) | (0.48 | ) | 9.3 | ||||||||||||||||||||||||||
Core, Non-GAAP Measure (d) | $ | 20,394 | $ | 24,743 | $ | 16,932 | $ | 7,811 | $ | 235 | $ | 1,412 | $ | 32 | $ | 5,946 | $ | 4.17 | 19.1 | % |
36 Weeks Ended 9/9/2017(e) | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Other pension and retiree medical benefits income | Provision for income taxes(a) | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(b) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 19,717 | $ | 24,282 | $ | 16,576 | $ | 7,706 | $ | 210 | $ | 1,668 | $ | 5,567 | $ | 3.87 | 22.9 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Commodity mark-to-market net impact | 7 | (7 | ) | (20 | ) | 13 | — | 2 | 11 | 0.01 | — | |||||||||||||||||||||||
Restructuring and impairment charges (c) | — | — | (65 | ) | 65 | 4 | 4 | 65 | 0.05 | (0.2 | ) | |||||||||||||||||||||||
Core, Non-GAAP Measure (d) | $ | 19,724 | $ | 24,275 | $ | 16,491 | $ | 7,784 | $ | 214 | $ | 1,674 | $ | 5,643 | $ | 3.92 | 22.8 | % |
(a) | Provision for income taxes is the expected tax benefit/charge on the underlying item based on the tax laws and income tax rates applicable to the underlying item in its corresponding tax jurisdiction. |
(b) | The impact of items affecting comparability on our effective tax rate represents the difference in the effective tax rate resulting from a higher or lower tax rate applicable to the items affecting comparability. |
(c) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-7 for a discussion of this plan. |
(d) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(e) | Reflects the retrospective adoption of guidance requiring the presentation of non-service cost components of net periodic benefit cost below operating profit. |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||
Reported | Core(a) | ||||||||||||||
Operating Profit | 12 Weeks Ended 9/8/2018 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | 12 Weeks Ended 9/8/2018 | |||||||||||
Frito-Lay North America | $ | 1,241 | $ | — | $ | — | $ | 1,241 | |||||||
Quaker Foods North America | 143 | — | — | 143 | |||||||||||
North America Beverages | 703 | — | 12 | 715 | |||||||||||
Latin America | 284 | — | 4 | 288 | |||||||||||
Europe Sub-Saharan Africa | 439 | — | 17 | 456 | |||||||||||
Asia, Middle East and North Africa | 311 | — | 2 | 313 | |||||||||||
Division Operating Profit | 3,121 | — | 35 | 3,156 | |||||||||||
Corporate Unallocated | (277 | ) | 29 | — | (248 | ) | |||||||||
Total Operating Profit | $ | 2,844 | $ | 29 | $ | 35 | $ | 2,908 |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||
Reported | Core(a) | ||||||||||||||
Operating Profit | 12 Weeks Ended 9/9/2017(c) | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | 12 Weeks Ended 9/9/2017 | |||||||||||
Frito-Lay North America | $ | 1,199 | $ | — | $ | 1 | $ | 1,200 | |||||||
Quaker Foods North America | 145 | — | — | 145 | |||||||||||
North America Beverages | 813 | — | (3 | ) | 810 | ||||||||||
Latin America | 284 | — | (2 | ) | 282 | ||||||||||
Europe Sub-Saharan Africa | 427 | — | 12 | 439 | |||||||||||
Asia, Middle East and North Africa | 267 | — | (3 | ) | 264 | ||||||||||
Division Operating Profit | 3,135 | — | 5 | 3,140 | |||||||||||
Corporate Unallocated | (211 | ) | (27 | ) | 1 | (237 | ) | ||||||||
Total Operating Profit | $ | 2,924 | $ | (27 | ) | $ | 6 | $ | 2,903 |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(b) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-7 for a discussion of this plan. |
(c) | Reflects the retrospective adoption of guidance requiring the presentation of non-service cost components of net periodic benefit cost below operating profit. |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||
Reported | Core(a) | ||||||||||||||
Operating Profit | 36 Weeks Ended 9/8/2018 | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | 36 Weeks Ended 9/8/2018 | |||||||||||
Frito-Lay North America | $ | 3,491 | $ | — | $ | 4 | $ | 3,495 | |||||||
Quaker Foods North America | 443 | — | — | 443 | |||||||||||
North America Beverages | 1,838 | — | 23 | 1,861 | |||||||||||
Latin America | 742 | — | 16 | 758 | |||||||||||
Europe Sub-Saharan Africa | 995 | — | 25 | 1,020 | |||||||||||
Asia, Middle East and North Africa | 994 | — | 6 | 1,000 | |||||||||||
Division Operating Profit | 8,503 | — | 74 | 8,577 | |||||||||||
Corporate Unallocated | (824 | ) | 57 | 1 | (766 | ) | |||||||||
Total Operating Profit | $ | 7,679 | $ | 57 | $ | 75 | $ | 7,811 |
GAAP Measure | Items Affecting Comparability | Non-GAAP Measure | |||||||||||||
Reported | Core(a) | ||||||||||||||
Operating Profit | 36 Weeks Ended 9/9/2017(c) | Commodity mark-to-market net impact | Restructuring and impairment charges(b) | 36 Weeks Ended 9/9/2017 | |||||||||||
Frito-Lay North America | $ | 3,392 | $ | — | $ | 5 | $ | 3,397 | |||||||
Quaker Foods North America | 453 | — | — | 453 | |||||||||||
North America Beverages | 2,204 | — | (2 | ) | 2,202 | ||||||||||
Latin America | 645 | — | 47 | 692 | |||||||||||
Europe Sub-Saharan Africa | 1,015 | — | 19 | 1,034 | |||||||||||
Asia, Middle East and North Africa | 745 | — | (7 | ) | 738 | ||||||||||
Division Operating Profit | 8,454 | — | 62 | 8,516 | |||||||||||
Corporate Unallocated | (748 | ) | 13 | 3 | (732 | ) | |||||||||
Total Operating Profit | $ | 7,706 | $ | 13 | $ | 65 | $ | 7,784 |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-6 through A-7 for a discussion of each of these adjustments. |
(b) | Restructuring and impairment charges include costs associated with the 2014 Multi-Year Productivity Plan. See A-7 for a discussion of this plan. |
(c) | Reflects the retrospective adoption of guidance requiring the presentation of non-service cost components of net periodic benefit cost below operating profit. |
12 Weeks Ended | 36 Weeks Ended | ||||||
9/8/2018 | 9/8/2018 | ||||||
Reported Operating Profit Performance | (3 | ) | % | — | % | ||
Impact of Corporate Unallocated | 2 | 1 | |||||
Division Operating Profit Growth | — | 1 | |||||
Restructuring and Impairment Charges | 1 | — | |||||
Core Division Operating Profit Growth | 1 | 1 | |||||
Foreign Exchange Translation | 1.5 | — | |||||
Core Constant Currency Division Operating Profit Growth | 2 | % | 0.5 | % |
12 Weeks Ended | 36 Weeks Ended | ||||||
9/8/2018 | 9/8/2018 | ||||||
Reported Gross Margin Performance | (29 | ) | bps | (48 | ) | bps | |
Commodity Mark-to-Market Net Impact | 20 | 13 | |||||
Core Gross Margin Performance | (9 | ) | bps | (35 | ) | bps |
12 Weeks Ended | 36 Weeks Ended | ||||||
9/8/2018 | 9/8/2018 | ||||||
Reported Operating Margin Performance | (75 | ) | bps | (50 | ) | bps | |
Commodity Mark-to-Market Net Impact | 34 | 10 | |||||
Restructuring and Impairment Charges | 17 | 2 | |||||
Core Operating Margin Performance | (24 | ) | bps | (39 | ) | bps |
Year Ended | |||
12/30/2017 | |||
Reported Net Revenue Growth | 1 | % | |
Foreign Exchange Translation | — | ||
Acquisitions and Divestitures | — | ||
53rd Reporting Week | 1 | ||
Organic Revenue Growth | 2 | % |
Year Ended | |||
12/30/2017 | |||
Reported Diluted EPS | $ | 3.38 | |
Commodity Mark-to-Market Net Impact | (0.01 | ) | |
Restructuring and Impairment Charges | 0.16 | ||
Provisional Net Tax Expense Related to the TCJ Act | 1.70 | ||
Core Diluted EPS | $ | 5.23 |
2018 Guidance | ||||
Net Cash Provided by Operating Activities | $ | ~ | 9 | |
Net Capital Spending | ~ | (3 | ) | |
Free Cash Flow | ~ | 6 | ||
Discretionary Pension and Retiree Medical Contributions | ~ | 1 | ||
Net Cash Tax Benefit Related to Discretionary Pension Contributions | ~ | — | ||
Payments Related to Restructuring Charges | ~ | — | ||
Net Cash Tax Benefit Related to Restructuring Charges | ~ | — | ||
State Transition Tax Payments Related to the TCJ Act | ~ | — | ||
Free Cash Flow Excluding Certain Items | $ | ~ | 7 |