-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IXupSNCtKxK6aDfWochTXnJmfOTEGDynSCbjXmZT21JI8Bd3b2xZcl91zxzV6NIQ BnruFZ7dp+KT+P343+7ksw== 0000077476-96-000005.txt : 19960208 0000077476-96-000005.hdr.sgml : 19960208 ACCESSION NUMBER: 0000077476-96-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960206 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960207 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEPSICO INC CENTRAL INDEX KEY: 0000077476 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 131584302 STATE OF INCORPORATION: NC FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01183 FILM NUMBER: 96512454 BUSINESS ADDRESS: STREET 1: 700 ANDERSON HILL RD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9142532000 MAIL ADDRESS: STREET 1: 700 ANDERSON HILL ROAD CITY: PURCHASE STATE: NY ZIP: 10577-1444 FORMER COMPANY: FORMER CONFORMED NAME: PEPSI COLA CO DATE OF NAME CHANGE: 19700903 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 February 7, 1996 (February 6, 1996) -------------------------------------- Date of Report (Date of earliest event reported) PEPSICO, INC. ---------------------------------------- (Exact name of registrant as specified in its charter) North Carolina --------------------------------- (State or other jurisdiction of incorporation) 1-1183 13-1584302 (Commission File Number) (IRS Employer Identification No.) 700 Anderson Hill Road, Purchase, New York, 10577 ------------------------------------------- (Address of Principal Executive Offices) Registrant's telephone number, including area code: (914) 253-2000 Item 5. Other Events The information contained in Exhibit 20 hereto is incorporated herein by reference. Item 7. Financial Statements and Exhibits (c) Exhibits 20 Press release dated February 6, 1996 from PepsiCo, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: February 6, 1996 PepsiCo, Inc. By: /s/ LAWRENCE F. DICKIE ------------------------ Lawrence F. Dickie Vice President, Associate General Counsel and Assistant Secretary EX-20 2 EXHIBIT 20 PURCHASE, NEW YORK (February 6, 1996) -- PepsiCo, Inc. today announced results for the fourth quarter and full year ended December 30, 1995. Excluding the previously announced initial, noncash charge from the adoption of SFAS 121, a required accounting change, earnings per share were $0.70 for the fourth quarter and $2.48 for the full year. SFAS 121 is described at the end of the release. The following explanation of fourth quarter and full year results is based on ongoing earnings as shown below:
Summary of 1995 Operating Performance ($MM except per share data) Q4 FY ------------------------------- ------------------------------ ------------ ------------ ------- ------------ ------------- ------ 1995 1994 1995 1994 $ $ % $ $ % - - - - - - ------------ ------------ ------- ------------ ------------- ------ - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ Net Sales 9,251 9,122 1 30,421 28,472 7 - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ Net Income 181 513 (65) 1,606 1,752 (8) - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ Reported EPS 0.22 0.64 (66) 2.00 2.18 (8) - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ BAESA Gain N/A N/A N/A N/A (0.02) N/A - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ Accounting Changes 0.48 N/A N/A 0.48 0.04 N/A ---- --- ---- ---- - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ Ongoing EPS 0.70 0.64 9 2.48 2.20 13 - ---------------------------------- ------------ ------------ ------- ------------ ------------- ------ [Note: The impact of one less week in 1995 on sales and earnings is described more fully at the end of this release and is detailed in the attachments. Volume trends are reported on a comparable basis and are not affected by the shorter reporting period.]
Wayne Calloway, PepsiCo Chairman and Chief Executive Officer, said, "We had a terrific year in 1995 and that has set the stage for an even better 1996. Our businesses showed remarkable strength, generating a healthy 13 percent increase in ongoing earnings per share, despite some big challenges - including a huge currency devaluation in Mexico, our largest international market, and the fact that, for reporting comparisons, we had one less week this year. In fact, looking at a comparable number of weeks, we would have posted 15 percent growth in earnings per share for the year due, in large part, to earnings growth of more than 20 percent by our businesses outside of Mexico. "These solid operating results helped our overall cash picture, but the big cash story was in restaurants where we generated a favorable increase of about $500 million in cash compared to last year. "With this kind of financial strength, we're very optimistic about 1996 and remain committed to using some of our excess cash to buy at least one to two percent of our outstanding stock each year over the next several years." BEVERAGES
Summary of 1995 Ongoing Beverage Results ($MM) Q4 FY -------------------------------------- ------------------------------------------- Sales Profits Vol Sales Profits Vol - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- $ % $ % % $ % $ % % - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- U.S. 2,042 5 269 1 3 6,977 7 1,145 12 4 - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- Int'l 1,056 7 34 100 5 3,571 14 226 16 8 ----- -- ----- --- - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- Total 3,098 5 303 7 N/A 10,548 9 1,371 13 N/A - ---------------- -------- ------ -------- ------ --------- ---------- ------ ---------- ------ ----------- [Note: Volume is measured by systemwide bottler case sales (BCS) of Pepsi Corporate brands. The quarter includes the months of September, October, November and December, a practice consistent with prior years.] -2-
"Our beverage segment had an excellent year," said Mr. Calloway. "In the United States, despite the highest annual increase in retail prices in the soft drink industry since the late `80's, we were able to grow volume by a very solid four percent - on top of a six percent gain last year. We achieved this, in part, by offering the consumer exciting packaging options like 20 oz. plastic bottles and "The Cube", a 24-can package. "Our international beverage business also showed great strength. Our international volume grew eight percent despite the weak economy in Mexico, a country which accounted for almost 20 percent of our international volume last year. We also began to see the results of our investments in high-potential emerging markets. For example, we regained cola share leadership in key Eastern European markets, like Hungary and Poland. We also jumped to a 40 percent market share in India and almost doubled our volume in Brazil. In summary, our global beverage business is well positioned for continued strong growth, in both the U.S. and international markets." Fourth Quarter The five percent increase in U.S. sales was primarily driven by price increases initiated in the first quarter and volume gains partially offset by the impact of the shorter reporting period. The three percent increase in bottler case sales, on top of an eight percent gain last year, reflected solid growth in both our core brands and alternative beverages. However, the key driver of the growth was packaging news led by the 20 oz. plastic bottle and the 24-can Cube package. As a result, we achieved market share gains in our major bottle and can channels. Alternative beverages grew 18 percent, primarily due to double-digit growth in our single-serve Lipton Tea products and in All Sport. For the second consecutive year, Lipton was the market share leader, with a 40 percent share in single-serve teas in supermarkets. Despite the robust growth in sales, U.S. beverage profits increased only one percent due, in part, to the shorter reporting period. Included in the quarter was spending on strategic volume-building initiatives, like preparing to take our Mug Root Beer brand national, as well as investments made to add new accounts like Circle K, Jack-In-the-Box and Toys "R" Us. -3- International sales growth in the fourth quarter primarily was driven by volume. Systemwide, the gain in bottler case sales was particularly impressive on top of the 11 percent growth achieved in the fourth quarter of last year. Nearly 40 percent of the BCS growth this quarter comes from emerging markets in Eastern Europe, Central Asia, and India. In addition, Brazil, Venezuela and Thailand had particularly strong volume growth. International beverage profits doubled in the quarter. Although this performance is very strong, profits would have increased 162 percent if not for the shorter reporting period. These excellent results come from lower advertising and marketing expenses and a gain on the sale of assets in Greece, as well as improved performances in Poland, Saudi Arabia, and Brazil. This performance was particularly powerful since Mexico, our largest profit contributor in 1994, continued to post lower volume and profits due to the adverse economic environment. SNACK FOODS
Summary of 1995 Ongoing Snack Food Results ($MM) Q4 FY ------------------------------------------------ -------------------------------------------- Sales Profits Vol Sales Profits Vol - ------------------ -------- ------ -------- ------ ------------------- -------- ----- -------- ------ ------------------ $ % $ % % $ % $ % % - ------------------ -------- ------ -------- ------ ------------------- -------- ----- -------- ------ ------------------ U.S. 1,669 4 347 6 9 5,495 10 1,132 10 11 - ------------------ -------- ------ -------- ------ ------------------- -------- ----- -------- ------ ------------------ Sweet Salty Sweet Salty - ------------------ -------- ------ -------- ------ --------- --------- -------- ----- -------- ------ --------- -------- Int'l. 988 (13) 103 (9) 9 7 3,050 (6) 304 (14) 12 10 --- --- ----- --- - ------------------ -------- ------ -------- ------ --------- --------- -------- ----- -------- ------ --------- -------- Total 2,657 (3) 450 3 N/A N/A 8,545 3 1,436 4 N/A N/A - ------------------ -------- ------ -------- ------ --------- --------- -------- ----- -------- ------ --------- -------- [Note: U.S. volume is measured in pounds; international volume in kilos.]
"Our snack business also had a terrific year," said Mr. Calloway. "In the U.S. we achieved our second consecutive year of double-digit volume growth. We also posted double-digit profit gains while investing aggressively in several strategic initiatives - like the re-engineering of our distribution process and our joint venture with Sara Lee focused on single-serve baked goods. -4- "Outside the United States, our snack business showed great resilience despite the dramatic effect of the Mexican peso devaluation. In 1994, Mexico accounted for over 60 percent of our international snack profits, so overcoming a peso devaluation of about 50 percent was a major challenge. However, our snack businesses outside of Mexico grew profits more than 50 percent, led by strong gains in the U.K. and Brazil. This enabled us to end the year with international snack profits down only 14 percent - quite a remarkable feat." Fourth Quarter The growth in U.S. sales was led by volume gains, moderated by the impact of the shorter reporting period, and by increased pricing. Pound growth came from double-digit gains in Tostitos brand salsas and tortilla chips as well as in Rold Gold brand pretzels. The "Better For You" line of lowfat and no-fat products contributed about 70 percent of the growth in sales and nearly 40 percent of the growth in overall pound volume. Baked Lay's, which was rolled out nationally but was still unadvertised in the fourth quarter, contributed almost 25 percent of the total growth in "Better for You" volume. Margins were relatively consistent with prior year, as volume gains and lower marketplace investment spending in 1995 were largely offset by investments in distribution and system improvements. International snack sales declined because of the adverse translation impact of the devalued Mexican peso, volume declines at Sabritas, our salty snack business in Mexico and the shorter reporting period. All of our other major businesses posted volume gains. The increase in salty snack volume was led by an almost 60 percent increase in Korea and a 34 percent increase in the Netherlands, both driven by successful in-bag promotions. Brazil grew volume almost 30 percent on top of an exceptional gain last year, capturing more than 50 percent of the market. Volume declines at Sabritas were significantly less than in the previous quarter. The growth in sweet snack volume reflected continued double-digit gains from our Mexican cookie business, Gamesa, and from Poland and France. International margins improved modestly in the quarter as improved profitability in the U.K., Gamesa and Poland were partially offset by profit declines at Sabritas and global brand marketing investments. -5- RESTAURANTS
Summary of 1995 Ongoing Restaurant Results ($MM) Q4 FY ---------------------------------------- ----------------------------------------- Sales Profits Vol Sales Profits Vol - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- $ % $ % % $ % $ % % - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- PH 1,174 (1) 123 35 3 3,977 7 376 32 4 - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- TB 1,091 (2) 116 20 (5) 3,503 5 274 - (4) - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- KFC 555 8 32 - 14 1,722 5 103 2 7 --- -- ----- --- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- Total U.S. 2,820 - 271 23 N/A 9,202 6 753 14 N/A - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- Int'l 676 5 27 50 N/A 2,126 16 114 61 N/A --- -- ----- --- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- Total 3,496 1 298 25 N/A 11,328 8 867 19 N/A - ------------------- -------- ------ --------- ------ ---------- --------- ------- -------- ----- ---------- [Note: U.S. volume growth is measured by same store sales.]
"In 1995, we made tremendous progress in reinvigorating our restaurants, a fact reflected very clearly in a 19 percent gain in ongoing profits and about a $500 million improvement in free cash," said Mr. Calloway. "Early in the year we set out a new restaurant strategy focused on several major efforts, including leveraging our scale, relying more heavily on franchisees for system unit growth and upgrading our overall restaurant portfolio. Our goal was to return the business to solid double-digit profit growth. "We've already made great strides. In international markets, we consolidated our concepts under one management team and, as a result, we will now report international restaurant financial results as one unit. We also took advantage of our scale in the U.S. and began the consolidation of the purchasing and accounting functions for our three major U.S. businesses. For the first time in many years, we offered franchisees the opportunity to take a greater role in our system development and significantly expand their existing markets, particularly in the U.S. As a result, we refranchised or licensed some 300 company-owned stores worldwide in 1995. We also upgraded our company-owned restaurant portfolio by closing about 300 stores we considered underperformers. These actions helped us reduce the proportion of company-owned stores worldwide by almost three percent in 1995. In addition, we provided for the cost of closing nearly 200 additional stores in 1996. -6- When you add it all up, we had a great year in restaurants and are clearly well on our way to achieving the goals we set for ourselves last year." Fourth Quarter Worldwide restaurant sales advanced only one percent largely because of the impact of having one less week in the reporting period. For example, in the U.S. sales would have been up about six percent for a comparable 16 week quarter. This increase reflects same store sales gains at KFC (U.S.) and Pizza Hut (U.S.) and the impact of new units at Taco Bell. The same store sales increase at KFC (U.S.) was driven by the extraordinary success of new products like Crispy Strips and Chicken Pot Pie. The same store sales gains at Pizza Hut (U.S.) reflected the continued benefits of the success of Stuffed Crust Pizza and Chicken Wings. International dollar sales growth was driven by new units, primarily Pizza Huts. Worldwide profit growth primarily reflected the $56 million increase in refranchising gains net of store closures somewhat moderated by the effect of the shorter reporting period. The refranchising gains came primarily in the U.S. from Taco Bell and Pizza Hut and therefore, was a key factor in the U.S. profit growth in the quarter. The store closures occurred at all four business units, KFC, Pizza Hut, Taco Bell and PepsiCo Restaurants International. International profit growth was favorably affected by the lapping of a 1994 charge to consolidate our international restaurant concepts into one unit and by new stores. Excluding the impact of the shorter reporting period and the net refranchising activity, worldwide restaurant profits achieved a 12 percent growth rate. OTHER ITEMS 1995 53rd Week PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added to the fourth quarter and full year every five or six years. The extra week in 1994 is estimated to have increased 1994 full year and fourth quarter sales by $434 million and earnings by $0.04 per share. The attachments titled "Supplemental Schedule of Ongoing Operating Profit" indicate the impact this had on profit growth by segment for the quarter and full year. -7- Acquisition Dilution Dilution from acquisitions in their first year of ownership reduced earnings per share by $0.03 and $0.04 in the quarter and full year, respectively. Share Repurchases During 1995, PepsiCo repurchased 12 million shares of its capital stock which represented one and one-half percent of the shares outstanding at the beginning of fiscal 1995. PepsiCo has continued to repurchase shares in 1996. Capital Spending Capital spending for the year was approximately $2.1 billion. This was slightly less than 1994 and reflects a reduction of approximately $300 million in restaurants and an increase of $200 million in snack foods. 1995 Accounting Change As announced on January 9, 1996, PepsiCo adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS 121), as of the beginning of the fourth quarter of 1995. SFAS 121 was issued in March of 1995 and is required to be adopted by 1996. SFAS 121, which had no cash impact, is a required accounting change in the method of determining and measuring impairment for long-lived assets used in the business. The new standard resulted in an initial, noncash charge in the fourth quarter of $384 million after-tax ($0.48 per share). The charge results from a change in the grouping of long-lived assets and is primarily related to our restaurant business. During the quarter, a decision was made to close some of the restaurants included in the charge. Of the $0.48 charge, approximately $0.06 is related to these stores. An additional $0.02 was recorded in the quarter for other costs to close these stores, primarily future lease obligations. The SFAS 121 charge resulted in a noncash benefit to fourth quarter earnings of approximately $0.02 per share from reduced depreciation and amortization expense. There will also be a benefit from reduced depreciation and amortization in future years. -8- 1994 BAESA Gain PepsiCo recorded a one-time, noncash gain of $18 million ($17 million after-tax or $0.02 per share) resulting from a public offering of shares by BAESA, a franchised bottling affiliate in South America. Accounting for Pension Assets PepsiCo changed to a preferred method of accounting for pension plan assets in the determination of annual pension expense. The cumulative effect of this noncash item relating to years prior to 1994 was a credit of $38 million ($23 million after-tax or $0.03 per share). Accounting for Postemployment Benefits PepsiCo was required to adopt Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS 112). The cumulative effect of adopting SFAS 112, an $84 million noncash charge ($55 million after-tax or $0.07 per share), principally represented estimated future severance costs related to services provided by employees prior to 1994. -9- PepsiCo, Inc. and Subsidiaries Consolidated Statement of Income (in millions except per share amounts, unaudited) 16 Weeks 17 Weeks % Change Ended Ended As On- 12/30/95 12/31/94 Rept'd going (a) (b) Net Sales $9,251 $9,122 1 1 Costs and Expenses, net: Cost of sales 4,562 4,413 3 3 Selling, general and administrative expenses 3,609 (c) 3,707 (3) (3) Amortization of intangible assets 102 98 4 4 Impairment of long-lived assets 520 (d) - NM NM ----- ----- Operating Profit 458 (e) 904 (49) 8 Interest expense (200) (211) (5) (5) Interest income 42 31 35 35 ----- ----- Income Before Income Taxes 300 724 (59) 13 Provision for Income Taxes(f) 119 211 (44) 2 ----- ----- Net Income $ 181 $ 513 (65) 10 Net Income Per Share $ 0.22 $ 0.64 (66) 9 Average shares outstanding 807 801 1 1 NM = Not Meaningful. NOTES: (a) PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added every 5 or 6 years. The 17th week increased fourth quarter 1994 net sales by approximately $434 and earnings by approximately $54 ($35 after-tax or $0.04 per share). See Supplemental Schedules of Net Sales and Operating Profit and Ongoing Operating Profit. (b) Excludes the initial, noncash charge upon adoption of SFAS 121. See Note (d). (c) Includes a net gain of $51 ($28 after-tax or $0.03 per share) in 1995 from sales of restaurants in excess of the costs of closing other restaurants. (d) Represents the initial, noncash charge ($384 after-tax or $0.48 per share) upon adoption of SFAS 121 as of the beginning of the fourth quarter which included $68 ($49 after-tax or $0.06 per share) related to restaurants for which closure decisions were made during the fourth quarter. (e) As a result of the reduced carrying amount of certain long-lived assets to be held and used in the business, due to the SFAS 121 initial, noncash charge, depreciation and amortization expense was reduced by $21 ($15 after-tax or $0.02 per share). (f) The effective tax rates were 39.7% (31.1% Ongoing - see Note (b)) in 1995 and 29.1% in 1994. -10- PepsiCo, Inc. and Subsidiaries Supplemental Schedule of Net Sales and Operating Profit (in millions, unaudited) Net Sales Operating Profit/(Loss) 16 Weeks 17 Weeks 16 Weeks 17 Weeks Ended Ended % Ended Ended % 12/30/95 12/31/94 Change 12/30/95 12/31/94 Change (a) (b) (a) Beverages - -U.S. $2,042 $1,951 5 $ 269 $266 1 - -Int'l 1,056 988 7 (28) 17 NM ----- ----- --- --- 3,098 2,939 5 241 283 (15) Snack Foods - -U.S. 1,669 1,599 4 347 326 6 - -Int'l 988 1,131 (13) 99 113 (12) ----- --- --- --- 2,657 2,730 (3) 446 439 2 Restaurants (c) - -U.S. 2,820 2,808 - (31) 220 NM - -Int'l 676 645 5 (108) 18 NM ----- ----- --- --- 3,496 3,453 1 (139) 238 NM Total - -U.S. 6,531 6,358 3 585 812 (28) - -Int'l 2,720 2,764 (2) (37) 148 NM ----- ----- --- --- $9,251 $9,122 1 548 960 (43) Equity (Loss)/Income (22) 3 NM Other Unallocated Expenses, net (d) (68) (59) 15 --- --- Operating Profit $ 458 $904 (49) Results by U.S. Restaurant Chain (e): Pizza Hut $1,174 $1,184 (1) $ 55 $ 91 (40) Taco Bell 1,091 1,109 (2) (53) 97 NM KFC 555 515 8 (33) 32 NM ----- ----- --- --- Total U.S. $2,820 $2,808 - $ (31) $220 NM NM = Not Meaningful. -11- NOTES: (a) PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added every 5 or 6 years. The additional week in 1994 adversely affected the 1995 fourth quarter growth rate of each business segment's net sales by approximately five or six points. On a consolidated basis, net sales growth was adversely affected by approximately five points, although U.S. and international operations were adversely affected by six and four points, respectively. See Supplemental Schedule of Ongoing Operating Profit for the effect of the additional week on the growth rates of ongoing operating profit. (b) Includes the initial, noncash charge upon adoption of SFAS 121. See Supplemental Schedule of Ongoing Operating Profit for the effect of the charge on each business segment and equity income and the growth rates for ongoing operating profit. (c) Includes a net gain of $51 (Pizza Hut-$20, Taco Bell-$39, KFC-($5) and International-($3)) in 1995 from sales of restaurants in excess of the costs of closing other restaurants. (d) Includes corporate headquarters expenses, minority interests, foreign exchange translation and transaction gains and losses and other items not allocated to the business segments. (e) PepsiCo has historically provided results for each of its three major restaurant concepts (which included the results of other U.S. concepts managed by Taco Bell and Pizza Hut) on a worldwide basis. Beginning with the fourth quarter of 1995, PepsiCo has changed the presentation of the restaurant results to more closely reflect how we currently manage the business. Net sales and operating profit are now provided for each of PepsiCo's three major U.S. concepts (including the results of the other concepts managed by Taco Bell and Pizza Hut) and in total for the international restaurant operations. Previously reported amounts have been restated to conform to the current presentation. -12- PepsiCo, Inc. and Subsidiaries Supplemental Schedule of Ongoing Operating Profit For the 16 Weeks Ended December 30, 1995 ($ in millions, unaudited) Operating Profit/(Loss) Growth Rates vs. 1994 SFAS Ongoing As 121 On- As On- Ex 17th Rpt'd Chrg going Rpt'd going Week (a) (b) Beverages - -U.S. $ 269 $ - $ 269 1 1 6 - -Int'l (28) 62 34 NM 100 162 --- -- --- 241 62 303 (15) 7 14 Snack Foods - -U.S. 347 - 347 6 6 15 - -Int'l 99 4 103 (12) (9) (6) --- -- --- 446 4 450 2 3 9 Restaurants - -U.S. (31) 302 271 NM 23 36 - -Int'l (108) 135 27 NM 50 80 ---- --- --- (139) 437 298 NM 25 39 Total - -U.S. 585 302 887 (28) 9 17 - -Int'l (37) 201 164 NM 11 19 --- --- ----- 548 503 1,051 (43) 9 18 Equity (Loss)/ Income (22) 17 (5) NM NM NM Other Unallocated Expenses, net (68) - (68) 15 15 17 --- --- ----- Operating Profit $ 458 $520 $ 978 (49) 8 17 Results by U.S. Restaurant Chain (c): Pizza Hut $ 55 $ 68 $ 123 (40) 35 46 Taco Bell (53) 169(d) 116 NM 20 32 KFC (33) 65 32 NM - 14 ----- --- --- Total U.S. $ (31) $302 $ 271 NM 23 36 NM = Not Meaningful. -13- NOTES: (a) Represents the initial, noncash charge upon adoption of SFAS 121. (b) PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added every 5 or 6 years. The estimated operating profit for the additional week in 1994 has been excluded in determining the growth rates. (c) PepsiCo has historically provided results for each of its three major restaurant concepts (which included the results of other U.S. concepts managed by Taco Bell and Pizza Hut) on a worldwide basis. Beginning with the fourth quarter of 1995, PepsiCo has changed the presentation of the restaurant results to more closely reflect how we currently manage the business. Net sales and operating profit are now provided for each of PepsiCo's three major U.S. concepts (including the results of the other concepts managed by Taco Bell and Pizza Hut) and in total for the international restaurant operations. Previously reported amounts have been restated to conform to the current presentation. (d) More than half of the Taco Bell charge is attributable to Hot 'n Now and Chevys. -14- PepsiCo, Inc. and Subsidiaries Consolidated Statement of Income (in millions except per share amounts, unaudited) 52 Weeks 53 Weeks % Change Ended Ended As On- 12/30/95 12/31/94 Rept'd going (a) (b) Net Sales $30,421 $28,472 7 7 Costs and Expenses, net: Cost of sales 14,886 13,715 9 9 Selling, general and administrative expenses 11,712(c) 11,244 4 4 Amortization of intangible assets 316 312 1 1 Impairment of long-lived assets 520(d) - NM NM ------- ------ Operating Profit 2,987(e) 3,201 (7) 10 Gain on stock offering by an affiliate - 18(f) NM NM Interest expense (682) (645) 6 6 Interest income 127 90 41 41 ------ ------ Income Before Income Taxes and Cumulative Effect of Accounting Changes 2,432 2,664 (9) 12 Provision for Income Taxes (g) 826 880 (6) 9 ------ ------ Income Before Cumulative Effect of Accounting Changes 1,606 1,784 (10) 13 Cumulative Effect of Accounting Changes: Postemployment benefits (net of tax benefit of $29) - (55)(h) NM NM Pension assets (net of tax expense of $15) - 23 (h) NM NM ------ ------ Net Income $ 1,606 $ 1,752 (8) 15 Income (Charge) Per Share: Before cumulative effect of accounting changes 2.00 2.22 (10) 13 Cumulative effect of accounting changes: Postemployment benefits - (0.07)(h) NM NM Pension assets - 0.03 (h) NM NM ------ ------ Net Income Per Share $ 2.00 $ 2.18 (8) 15 Average shares outstanding 804 804 - - NM = Not Meaningful. -15- NOTES: (a) PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added every 5 or 6 years. The 53rd week increased 1994 net sales by approximately $434 and earnings by approximately $54 ($35 after-tax or $0.04 per share). See Supplemental Schedules of Net Sales and Operating Profit and Ongoing Operating Profit. (b) Excludes the initial, noncash charge upon adoption of SFAS 121 (see Note (d)) and the one-time, noncash BAESA gain (see Note (f)). (c) Includes a net gain of $51 ($27 after-tax or $0.03 per share) in 1995 from sales of restaurants in excess of the costs of closing other restaurants. (d) Represents the initial, noncash charge ($384 after-tax or $0.48 per share) upon adoption of SFAS 121 as of the beginning of the fourth quarter which included $68 ($49 after-tax or $0.06 per share) related to restaurants for which closure decisions were made during the fourth quarter. (e) As a result of the reduced carrying amount of certain long-lived assets to be held and used in the business, due to the SFAS 121 initial, noncash charge, depreciation and amortization expense for the fourth quarter was reduced by $21 ($15 after-tax or $0.02 per share) (f) Represents a one-time, noncash gain ($17 after-tax or $0.02 per share) arising from a public share offering by BAESA, a franchised bottling affiliate in South America. (g) The effective tax rates were 34.0% (32.6% Ongoing - see Note (b)) in 1995 and 33.0% in 1994. (h) Represents the cumulative effect of the required adoption of Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits," and a change to a preferable method of accounting for pension plan assets in the determination of pension expense. The cumulative effect of accounting changes represents the effect on years prior to 1994. -16- PepsiCo, Inc. and Subsidiaries Supplemental Schedule of Net Sales and Operating Profit (in millions, unaudited) Net Sales Operating Profit/(Loss) 52 Weeks 53 Weeks 52 Weeks 53 Weeks Ended Ended % Ended Ended % 12/30/95 12/31/94 Change 12/30/95 12/31/94 Change (a) (b) (a) Beverages - -U.S. $ 6,977 $ 6,541 7 $1,145 $1,022 12 - -Int'l 3,571 3,146 14 164 195 (16 ------ ------ ----- ----- 10,548 9,687 9 1,309 1,217 8 Snack Foods - -U.S. 5,495 5,011 10 1,132 1,025 10 - -Int'l 3,050 3,253 (6) 300 352 (15) ------ ------ ----- ----- 8,545 8,264 3 1,432 1,377 4 Restaurants (c) - -U.S. 9,202 8,694 6 451 659 (32) - -Int'l 2,126 1,827 16 (21) 71 NM ------ ------ ----- ----- 11,328 10,521 8 430 730 (41) Total - -U.S. 21,674 20,246 7 2,728 2,706 1 - -Int'l 8,747 8,226 6 443 618 (28) ------ ------ ----- ----- $30,421 $28,472 7 3,171 3,324 (5) Equity (Loss)/Income (3) 38 NM Other Unallocated Expenses, net (d) (181) (161) 12 ----- ----- Operating Profit $2,987 $3,201 (7) Results by U.S. Restaurant Chain (e): Pizza Hut $ 3,977 $ 3,712 7 $ 308 $ 285 8 Taco Bell 3,503 3,340 5 105 273 (62) KFC 1,722 1,642 5 38 101 (62) ------ ------ ----- ----- Total U.S. $ 9,202 $ 8,694 6 $ 451 $ 659 (32) NM = Not Meaningful. -17- NOTES: (a) PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added every 5 or 6 years. The additional week in 1994 adversely affected the 1995 growth rate of each business segment's net sales by approximately one or two points. Consolidated net sales growth was adversely affected by approximately two points, as were U.S. and international operations. See Supplemental Schedule of Ongoing Operating Profit for the effect of the additional week on the growth rates of ongoing operating profit. (b) Includes the initial, noncash charge upon adoption of SFAS 121. See Supplemental Schedule of Ongoing Operating Profit for the effect of the charge on each business segment and equity income and the growth rates for ongoing profit. (c) Includes a net gain of $51 (Pizza Hut-$24, Taco Bell-$38, KFC-($7) and International-($4)) in 1995 from sales of restaurants in excess of the costs of closing other restaurants. (d) Includes corporate headquarters expenses, minority interests, foreign exchange translation and transaction gains and losses and other items not allocated to the business segments. (e) PepsiCo has historically provided results for each of its three major restaurant concepts (which included the results of other U.S. concepts managed by Taco Bell and Pizza Hut) on a worldwide basis. Beginning with the fourth quarter of 1995, PepsiCo has changed the presentation of the restaurant results to more closely reflect how we currently manage the business. Net sales and operating profit are now provided for each of PepsiCo's three major U.S. concepts (including the results of the other concepts managed by Taco Bell and Pizza Hut) and in total for the international restaurant operations. Previously reported amounts have been restated to conform to the current presentation. -18- PepsiCo, Inc. and Subsidiaries Supplemental Schedule of Ongoing Operating Profit For the 52 Weeks Ended December 30, 1995 ($ in millions, unaudited) Operating Profit/(Loss) Growth Rates vs. 1994 SFAS Ongoing As 121 On- As On- Ex 53rd Rpt'd Chrg going Rpt'd going Week (a) (b) Beverages - -U.S. $1,145 - $1,145 12 12 13 - -Int'l 164 62 226 (16) 16 18 ----- ----- ----- 1,309 62 1,371 8 13 14 Snack Foods - -U.S. 1,132 - 1,132 10 10 13 - -Int'l 300 4 304 (15) (14) (13) ----- ----- ----- 1,432 4 1,436 4 4 6 Restaurants - -U.S. 451 302 753 (32) 14 18 - -Int'l (21) 135 114 NM 61 6 ----- ----- ----- 430 437 867 (41) 19 23 Total - -U.S. 2,728 302 3,030 1 12 14 - -Int'l 443 201 644 (28) 4 6 ----- ----- ----- 3,171 503 3,674 (5) 11 13 Equity (Loss)/ Income (3) 17 14 NM (63) (63) Other Unallocated Expenses, net (181) - (181) 12 12 13 ----- ----- ----- Operating Profit $2,987 $ 520 $3,507 (7) 10 11 Results by U.S. Restaurant Chain (c): Pizza Hut $ 308 $ 68 $ 376 8 32 35 Taco Bell 105 169(d) 274 (62) - 4 KFC 38 65 103 (62) 2 6 ----- ----- ----- Total U.S. $ 451 $ 302 $ 753 (32) 14 18 NM = Not Meaningful. -19- NOTES: (a) Represents the initial, noncash charge upon adoption of SFAS 121. (b) PepsiCo's fiscal year ends on the last Saturday in December and, as a result, a week is added every 5 or 6 years. The estimated operating profit for the additional week in 1994 has been excluded in determining the growth rates. (c) PepsiCo has historically provided results for each of its three major restaurant concepts (which included the results of other U.S. concepts managed by Taco Bell and Pizza Hut) on a worldwide basis. Beginning with the fourth quarter of 1995, PepsiCo has changed the presentation of the restaurant results to more closely reflect how we currently manage the business. Net sales and operating profit are now provided for each of PepsiCo's three major U.S. concepts (including the results of the other concepts managed by Taco Bell and Pizza Hut) and in total for the international restaurant operations. Previously reported amounts have been restated to conform to the current presentation. (d) More than half of the Taco Bell charge is attributable to Hot 'n Now and Chevys. -20- -----END PRIVACY-ENHANCED MESSAGE-----