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0000950123-08-008194.txt : 20080723
0000950123-08-008194.hdr.sgml : 20080723
20080723094340
ACCESSION NUMBER: 0000950123-08-008194
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20080723
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20080723
DATE AS OF CHANGE: 20080723
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: 1229
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-01183
FILM NUMBER: 08964789
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
y63785e8vk.htm
FORM 8-K
8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 23, 2008
PepsiCo, Inc.
(Exact Name of Registrant as Specified in Charter)
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North Carolina
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1-1183
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13-1584302 |
(State or Other Jurisdiction
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(Commission
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(IRS Employer |
of Incorporation)
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File Number)
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Identification No.) |
700 Anderson Hill Road
Purchase, New York 10577
(Address of Principal Executive Offices)
Registrants telephone number, including area code: (914) 253-2000
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
The information in this Item 2.02, including the exhibit attached hereto, is being furnished and
shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934,
as amended, or otherwise subject to the liabilities of that Section. The information in this Item
2.02 shall not be incorporated by reference into any registration statement or other document
pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.
Attached as Exhibit 99.1 and incorporated by reference into this Item 2.02 is a copy of the press
release issued by PepsiCo, Inc., dated July 23, 2008, reporting PepsiCo, Inc.s financial results
for the 12 and 24 weeks ended June 14, 2008.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 |
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Press Release issued by PepsiCo, Inc., dated July 23, 2008. |
-2-
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.
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Date: July 23, 2008 |
PepsiCo, Inc.
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By: |
/s/ Thomas H. Tamoney, Jr.
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Thomas H. Tamoney, Jr. |
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Senior Vice President, Deputy General
Counsel and Assistant Secretary |
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-3-
INDEX TO EXHIBITS
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Exhibit Number |
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Description |
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99.1
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Press Release issued by PepsiCo, Inc., dated July 23, 2008. |
-4-
EX-99.1
2
y63785exv99w1.htm
EX-99.1: PRESS RELEASE
EX-99.1
Exhibit 99.1
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Contacts:
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Media |
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Jenny Schiavone |
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Director, Financial Communications |
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914-253-3941 |
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Investors |
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Jane Nielsen/ Mike Nathenson |
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VP Investor Relations |
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914-253-3035 |
PepsiCo Reports Second-Quarter 2008 Results
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Strong Net Revenue Growth of 14 Percent |
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Operating Profit Increased 12 Percent and Net Income Grew 9 Percent |
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EPS Increased to $1.05; Excluding Mark-to-Market Gains, EPS Was up 11
Percent to $1.03 |
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PepsiCo Confirms Full-Year Earnings Per Share Guidance of at Least $3.72,
excluding Mark-to-Market Gains/Losses |
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Company Raises Intended 2008 Share Repurchases by at Least $1 Billion |
PURCHASE,
N.Y. (July 23, 2008) PepsiCo, Inc. (NYSE: PEP) today reported strong second-quarter
operating results, with 14 percent net revenue and 12 percent operating profit growth. The Company
delivered earnings per share of $1.05. Excluding current and prior year mark-to-market gains on
commodity positions included in corporate unallocated expenses, earnings per share would have
totaled $1.03, up 11 percent.
Summary of PepsiCo Second-Quarter and Year-to-Date 2008 Results
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Quarter Alone |
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Year-to-Date |
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% Growth |
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% Growth |
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Volume (Servings) |
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5 |
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4.5 |
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Revenue |
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14 |
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14 |
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Division Operating Profit |
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7 |
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8 |
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Operating Profit |
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12 |
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11 |
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Net Income |
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9 |
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7 |
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Earnings Per Share (EPS) |
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13 |
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10 |
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EPS ex-Mark-to-Market |
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11 |
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10 |
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PepsiCo Chairman and Chief Executive Officer, Indra Nooyi said, The strength and breadth of our
global portfolio and geographic footprint delivered another quarter of solid results. PepsiCo
continued to drive growth across its worldwide snacks and beverage businesses primarily through
strong product innovation, well-executed pricing actions and focus on expense control and
productivity. Nooyi continued, We are proud of our first-half performance and confident that we
are well-positioned to deliver on our outlook amidst a challenging macroeconomic environment.
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Summary of Division Reported Q2 and YTD 2008 Results |
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Q2 % Growth |
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Year-to-Date % Growth |
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Div. |
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Div. |
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Operating |
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Operating |
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Volume |
Revenue |
Profit |
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Volume |
Revenue |
Profit |
PAF |
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2 |
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16 |
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13 |
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3 |
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15 |
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10 |
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FLNA |
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2 |
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8 |
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8 |
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2 |
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8 |
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6 |
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QFNA |
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2 |
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4 |
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4 |
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1 |
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6 |
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5.5 |
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LAF |
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4 |
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41 |
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38 |
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5.5 |
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39 |
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33 |
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PAB |
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-1 |
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1 |
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-7 |
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-1 |
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3 |
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-1 |
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PI |
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10 / 13 |
* |
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25 |
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18 |
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10 / 13 |
* |
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25 |
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20 |
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UKEU |
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8 / 20 |
* |
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24 |
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19 |
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8 / 22 |
* |
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24 |
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19 |
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MEAA |
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13 / 10 |
* |
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25 |
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16 |
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14 / 10 |
* |
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27 |
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22 |
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Total PepsiCo |
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4 / 5 |
* |
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14 |
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7 |
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4 / 4 |
* |
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14 |
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8 |
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The results at PepsiCo Americas Foods (PAF) reflected solid top- and bottom-line performance across
all segments of the business in spite of difficult macroeconomic conditions and rapidly escalating
commodity costs.
Frito-Lay North America (FLNA). Our strong brands enabled 2 percent volume growth even as
high-single-digit net price increases were realized from weight-outs and visual pricing to offset
commodity inflation. FLNA revenue growth of 8 percent was broad based, and operating profit grew 8
percent, driven by net revenue growth and productivity, partially offset by higher costs for
cooking oil, energy and fuel.
Volume growth was driven by double-digit growth in trademark Cheetos, Ruffles, Quaker Chewy Granola
and SunChips. Innovation was the key for both Cheetos (e.g. Cracker Trax) and SunChips, which
introduced new flavors and was supported by the Made From the Sun marketing campaign.
Weight-outs and a promotional shift to help manage potato supply constraints led to a
high-single-digit volume decrease in trademark Lays; but revenues were up high-single-digits.
While pricing actions also contributed to a mid-single-digit volume decrease in trademark Doritos,
revenues were up low-single digits. Single serve packages continued to provide volume growth.
- 2 -
At Quaker Foods North America (QFNA), volume grew 2 percent, reflecting an increase in Quaker
Oatmeal, grits and Rice-A-Roni. Revenue and operating profit grew 4 percent.
At the end of the second quarter, flooding in Cedar Rapids, Iowa, shut down our major Quaker
manufacturing facility. The Company expects to be back to full production levels by mid-August,
but we are experiencing supply disruptions, and many Quaker products have been on allocation. We
expect insurance to cover asset damage and business interruption exposures in the second half of
the year.
At Latin America Foods (LAF) organic revenue and profit increased 10 percent and 21 percent,
respectively, despite higher commodity costs. Revenue growth was driven by broad based pricing
actions at our key businesses of Sabritas and Gamesa. At Sabritas unit volumes grew mid-single
digits; kilo volume declined by low-single digits as expected, largely due to weight-outs. Also
consistent with expectations, Gamesa experienced double-digit net revenue growth due to favorable
pricing actions; its volume was essentially flat in the quarter lapping double-digit growth in the
prior year. In total, LAF volume grew 4 percent, benefiting from the Lucky brands acquisition in
Brazil in the fourth quarter of 2007.
PepsiCo Americas Beverages (PAB). In North America, the economic slowdown continues to pressure
the liquid refreshment beverage category with a decline across convenience channels and a reduction
in the growth of unflavored water. In this environment, PAB volume decreased 1 percent during the
quarter, driven by a 3 percent decline in North America that was partially offset by a
mid-single-digit volume increase in Latin America. As a result, net revenue grew 1 percent and
operating profit declined 7 percent.
The North American carbonated soft drink (CSD) portfolio gained market share in measured channels.
While showing sequential improvement, CSD volume declined 2 percent due to category softness.
Trademarks Mountain Dew and Sierra Mist both grew low-single digits, partially offsetting a
mid-single digit decline in trademark Pepsi. Non-carbonated beverages (NCB) volume declined 4
percent primarily due to a double-digit decline in unflavored water. Volume growth in the
Companys North American energy drinks portfolio led by triple-digit volume growth for Amp Energy
and more than 50 percent volume growth for SoBe Life Water was partially offset by
mid-single-digit declines in juice. Gatorade volume was up slightly for the quarter.
The Companys Latin America Beverage business (LAB) continues to produce strong top- and
bottom-line growth. LABs broad-based volume growth was driven by mid-single-digit growth in the
CSD portfolio and double-digit growth in NCBs.
PepsiCo International (PI) continued to deliver strong performance while lapping over 20 percent
revenue growth and over 30 percent profit growth from prior year. PI captured broad-based volume
gains in snacks and beverages even as the Company continued to implement pricing actions across its
markets.
In the UK/Europe (UKEU) segment, broad-based snack volume growth of 8 percent was driven by
double-digit growth in Russia and high-single-digit growth in Poland. Additionally, Walkers in the
United Kingdom grew at a mid-single-digit rate. The acquisition of the Penelopa nuts and seeds
business in Bulgaria increased total snack volume by 1 point. UKEU beverage volume grew
- 3 -
20 percent, primarily reflecting the Sandora acquisition and the expansion of the Pepsi Lipton
International joint venture, which together contributed 17 percentage points to volume growth.
UKEU net revenue increased 24 percent, reflecting volume growth and effective net pricing in major
markets; foreign exchange contributed 11 percentage points and acquisitions 4 percentage points of growth.
Operating profit grew 19 percent driven by net revenue growth and partially offset by increased
commodity costs; foreign exchange added 9 percentage points and acquisitions 4 percentage points to growth.
Middle East/Africa/Asia (MEAA) segment snack volume grew 13 percent, led by double-digit growth
across the Middle East, India, South Africa and China. In beverages, 10 percent volume growth in
the MEAA segment reflected broad-based gains led primarily by double-digit growth in the Middle
East, China and India. CSD volume grew at a high-single-digit rate and NCBs grew at a double-digit
rate. Net revenue for snacks and beverages increased 25 percent, reflecting volume growth and
effective net pricing; foreign exchange contributed 6 percentage points to net revenue growth.
Operating profit grew 16 percent as a result of revenue growth, partially offset by higher
commodity costs; foreign exchange contributed 4 percentage points to growth.
Commodity
mark-to-market valuation gains contributed to EPS growth.
For the quarter, corporate unallocated expenses decreased $71 million compared to last year,
primarily due to increased mark-to-market gains on commodity hedges ($61 million this quarter
compared with $13 million in the second quarter last year). Excluding this net $48 million
mark-to-market valuation change, corporate unallocated costs would have decreased $23 million
compared to last year, driven by lower employee-related costs, which were partially offset by
continued investment in our business transformation initiative and higher investments in research
and development. Net interest expense increased $21 million. For the quarter, the reported tax
rate was 26.7 percent versus 26.5 percent in the previous year.
For the Company in total, foreign exchange contributed 4 percentage points to revenue growth and 3
percentage points to operating profit growth. Acquisitions accounted for 3 percentage points to
revenue growth and 1 percentage point to operating profit growth.
2008 GUIDANCE
The Company expects full-year 2008 performance of three to five percent volume growth,
low-double-digit net revenue growth (including acquisitions and foreign exchange) and EPS of at
least $3.72 excluding the impact of any mark-to-market gains/losses. The Company is not able to
provide guidance on the 2008 projected EPS growth including the impact of the mark-to-market gains
or losses on commodity hedges due to the unpredictability of future changes in commodity prices.
Cash provided by operating activities is expected to be approximately $7.6 billion and capital
spending about $2.7 billion. In 2008, the Company intends to repurchase at least $5.3 billion of
its shares, subject to market conditions. This represents an increase of at least $1 billion from
its previously announced intention to spend $4.3 billion in share repurchases in 2008. As of the
end of the second quarter, the Company spent $2.9 billion repurchasing its shares in 2008.
- 4 -
About PepsiCo
PepsiCo is one of the worlds largest food and beverage companies, with 2007 annual revenues of
more than $39 billion. The Company employs approximately 185,000 people worldwide, and its products
are sold in approximately 200 countries. Its principal businesses include: Frito-Lay snacks,
Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The PepsiCo
portfolio includes 18 brands that generate $1 billion or more each in annual retail sales.
PepsiCos commitment to sustainable growth, defined as Performance with Purpose, is focused on
generating healthy financial returns while giving back to communities the Company serves. This
includes meeting consumer needs for a spectrum of convenient foods and beverages, reducing the
Companys impact on the environment through water, energy and packaging initiatives, and supporting
its employees through a diverse and inclusive culture that recruits and retains world-class talent.
PepsiCo is listed on the Dow Jones Sustainability North America Index and the Dow Jones
Sustainability World Index. For more information, please visit
www.pepsico.com.
Cautionary Statement
This release contains statements concerning PepsiCos expectations for future performance,
including our 2008 guidance. These forward-looking statements are based on currently available
information, operating plans and projections about future events and trends. They inherently
involve risks and uncertainties that could cause actual results to differ materially from those
predicted in such forward-looking statements. Such risks and uncertainties include, but are not
limited to: changes in demand for our products, as a result of shifts in consumer preferences or
otherwise; our ability to maintain our reputation; our ability to build and sustain our information
technology infrastructure, successfully implement our business process transformation initiative or
outsource certain functions effectively; fluctuations in the cost and availability of raw
materials; our ability to compete effectively; disruption of our supply chain; trade consolidation,
the loss of any key customer, or failure to maintain good relationships with our bottling partners;
changes in the legal or regulatory environment; our ability to hire or retain key employees;
unfavorable economic, environmental or political conditions in the countries where we operate; and
market risks arising from changes in commodity prices, foreign exchange rates and interest rates.
For additional information on these and other factors that could cause our actual results to
materially differ from those set forth herein, please see our filings with the Securities and
Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on
Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such
forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no
obligation to update any forward-looking statements, whether as a result of new information, future
events or otherwise.
Miscellaneous Disclosures
Conference Call. At 11 a.m. (Eastern Time) today, the Company will host a conference call with
investors to discuss second-quarter 2008 results and the outlook for the full-year 2008. For
details, visit the Companys website at www.pepsico.com, under Financial Press Releases in the
Investors section.
Reconciliation. In discussing financial results and guidance, the Company may refer to certain
non-GAAP measures. Reconciliations of any such non-GAAP measures to the most directly comparable
financial measures in accordance with GAAP can be found under PepsiCo Financial Press Releases on
the Companys website in the Investors section at www.pepsico.com.
- 5 -
Bottler Volume. Volume for products sold by PepsiCos bottlers is reported by PepsiCo on a monthly
basis, with the second quarter comprising April and May for North America, and March, April and May
for our bottlers outside of North America.
Bottler Case Sales (BCS). BCS represents physical beverage volume shipped to retailers and
independent distributors from both PepsiCo and our bottlers.
Concentrate Shipment Equivalents (CSE). CSE represents PepsiCos physical beverage volume
shipments to bottlers, retailers and independent distributors.
Effective net pricing refers to the combined impact of mix and price. Net pricing refers to
the combined impact of list price changes, discounts and allowances. Pricing refers to the
impact of list price changes.
Mark-to-market gain or loss. The change in market value for financial instruments, such as
commodity contracts, that we purchase to mitigate the volatility in costs of energy and raw
materials that we consume. The market value is determined based on average prices on national
exchanges and recently reported transactions in the marketplace.
Organic revenue and/or profit growth. Growth excluding the impact of foreign exchange and
acquisition/divestiture activity.
Division Operating Profit. The aggregation of the operating profit for each of our reportable
segments, which excludes the impact of corporate unallocated expenses.
###
- 6 -
PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Income
(in millions except per share amounts, unaudited)
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12 Weeks Ended |
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24 Weeks Ended |
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6/14/08 |
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6/16/07 |
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6/14/08 |
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6/16/07 |
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Net Revenue |
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$ |
10,945 |
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$ |
9,607 |
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$ |
19,278 |
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$ |
16,957 |
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Costs and Expenses |
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Cost of sales |
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5,078 |
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4,342 |
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8,912 |
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7,627 |
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Selling, general and administrative expenses |
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3,664 |
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3,295 |
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6,598 |
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5,930 |
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Amortization of intangible assets |
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18 |
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11 |
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30 |
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22 |
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Operating Profit |
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2,185 |
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1,959 |
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3,738 |
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3,378 |
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Bottling Equity Income |
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168 |
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173 |
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238 |
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247 |
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Interest Expense |
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(74 |
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(54 |
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(132 |
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(96 |
) |
Interest Income |
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38 |
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39 |
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39 |
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61 |
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Income before Income Taxes |
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2,317 |
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2,117 |
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3,883 |
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3,590 |
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Provision for Income Taxes |
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618 |
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560 |
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1,036 |
|
|
|
937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
1,699 |
|
|
$ |
1,557 |
|
|
$ |
2,847 |
|
|
$ |
2,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Common Share |
|
$ |
1.05 |
|
|
$ |
0.94 |
|
|
$ |
1.76 |
|
|
$ |
1.59 |
|
Average Shares Outstanding |
|
|
1,612 |
|
|
|
1,665 |
|
|
|
1,622 |
|
|
|
1,669 |
|
A 1
PepsiCo, Inc. and Subsidiaries
Supplemental Financial Information
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
|
24 Weeks Ended |
|
|
|
6/14/08 |
|
|
6/16/07 |
|
|
6/14/08 |
|
|
6/16/07 |
|
Net Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frito-Lay North America |
|
$ |
2,950 |
|
|
$ |
2,723 |
|
|
$ |
5,680 |
|
|
$ |
5,276 |
|
Quaker Foods North America |
|
|
406 |
|
|
|
390 |
|
|
|
901 |
|
|
|
853 |
|
Latin America Foods |
|
|
1,523 |
|
|
|
1,079 |
|
|
|
2,494 |
|
|
|
1,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas Foods |
|
|
4,879 |
|
|
|
4,192 |
|
|
|
9,075 |
|
|
|
7,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas Beverages |
|
|
2,880 |
|
|
|
2,855 |
|
|
|
5,240 |
|
|
|
5,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom & Europe |
|
|
1,727 |
|
|
|
1,396 |
|
|
|
2,638 |
|
|
|
2,136 |
|
Middle East, Africa & Asia |
|
|
1,459 |
|
|
|
1,164 |
|
|
|
2,325 |
|
|
|
1,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo International |
|
|
3,186 |
|
|
|
2,560 |
|
|
|
4,963 |
|
|
|
3,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Revenue |
|
$ |
10,945 |
|
|
$ |
9,607 |
|
|
$ |
19,278 |
|
|
$ |
16,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frito-Lay North America |
|
$ |
735 |
|
|
$ |
682 |
|
|
$ |
1,368 |
|
|
$ |
1,292 |
|
Quaker Foods North America |
|
|
122 |
|
|
|
117 |
|
|
|
288 |
|
|
|
273 |
|
Latin America Foods |
|
|
254 |
|
|
|
183 |
|
|
|
421 |
|
|
|
316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas Foods |
|
|
1,111 |
|
|
|
982 |
|
|
|
2,077 |
|
|
|
1,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas Beverages |
|
|
681 |
|
|
|
729 |
|
|
|
1,185 |
|
|
|
1,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom & Europe |
|
|
262 |
|
|
|
220 |
|
|
|
364 |
|
|
|
306 |
|
Middle East, Africa & Asia |
|
|
233 |
|
|
|
201 |
|
|
|
372 |
|
|
|
306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo International |
|
|
495 |
|
|
|
421 |
|
|
|
736 |
|
|
|
612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Division Operating Profit |
|
|
2,287 |
|
|
|
2,132 |
|
|
|
3,998 |
|
|
|
3,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
(102 |
) |
|
|
(173 |
) |
|
|
(260 |
) |
|
|
(317 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Profit |
|
$ |
2,185 |
|
|
$ |
1,959 |
|
|
$ |
3,738 |
|
|
$ |
3,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A 2
PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
24 Weeks Ended |
|
|
|
6/14/08 |
|
|
6/16/07 |
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
2,847 |
|
|
$ |
2,653 |
|
Depreciation and amortization |
|
|
678 |
|
|
|
608 |
|
Stock-based compensation expense |
|
|
112 |
|
|
|
123 |
|
Excess tax benefits from share-based payment arrangements |
|
|
(65 |
) |
|
|
(86 |
) |
Pension and retiree medical plan contributions |
|
|
(86 |
) |
|
|
(116 |
) |
Pension and retiree medical plan expenses |
|
|
211 |
|
|
|
240 |
|
Bottling equity income, net of dividends |
|
|
(196 |
) |
|
|
(207 |
) |
Deferred income taxes and other tax charges and credits |
|
|
222 |
|
|
|
64 |
|
Change in accounts and notes receivable |
|
|
(1,102 |
) |
|
|
(852 |
) |
Change in inventories |
|
|
(602 |
) |
|
|
(526 |
) |
Change in prepaid expenses and other current assets |
|
|
(219 |
) |
|
|
(69 |
) |
Change in accounts payable and other current liabilities |
|
|
125 |
|
|
|
(28 |
) |
Change in income taxes payable |
|
|
427 |
|
|
|
369 |
|
Other, net |
|
|
(159 |
) |
|
|
(155 |
) |
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities |
|
|
2,193 |
|
|
|
2,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Capital spending |
|
|
(896 |
) |
|
|
(743 |
) |
Sales of property, plant and equipment |
|
|
65 |
|
|
|
15 |
|
Acquisitions and investments in noncontrolled affiliates |
|
|
(262 |
) |
|
|
(853 |
) |
Cash proceeds from sale of The Pepsi Bottling Group
(PBG) and PepsiAmericas, Inc. (PAS) stock |
|
|
200 |
|
|
|
192 |
|
Short-term investments, net |
|
|
1,255 |
|
|
|
326 |
|
|
|
|
|
|
|
|
Net Cash Provided by/(Used for) Investing Activities |
|
|
362 |
|
|
|
(1,063 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from issuances of long-term debt |
|
|
1,733 |
|
|
|
1,005 |
|
Payments of long-term debt |
|
|
(437 |
) |
|
|
(534 |
) |
Short-term borrowings, net |
|
|
705 |
|
|
|
266 |
|
Cash dividends paid |
|
|
(1,209 |
) |
|
|
(989 |
) |
Share repurchases common |
|
|
(2,904 |
) |
|
|
(1,964 |
) |
Share repurchases preferred |
|
|
(3 |
) |
|
|
(4 |
) |
Proceeds from exercises of stock options |
|
|
339 |
|
|
|
485 |
|
Excess tax benefits from share-based payment arrangements |
|
|
65 |
|
|
|
86 |
|
|
|
|
|
|
|
|
Net Cash Used for Financing Activities |
|
|
(1,711 |
) |
|
|
(1,649 |
) |
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
|
14 |
|
|
|
41 |
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Cash and Cash Equivalents |
|
|
858 |
|
|
|
(653 |
) |
Cash and Cash Equivalents Beginning of year |
|
|
910 |
|
|
|
1,651 |
|
|
|
|
|
|
|
|
Cash and Cash Equivalents End of period |
|
$ |
1,768 |
|
|
$ |
998 |
|
|
|
|
|
|
|
|
A 3
PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in millions)
|
|
|
|
|
|
|
|
|
|
|
6/14/08 |
|
|
12/29/07 |
|
|
|
(unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,768 |
|
|
$ |
910 |
|
Short-term investments |
|
|
305 |
|
|
|
1,571 |
|
|
|
|
|
|
|
|
|
|
Accounts and notes receivable, net |
|
|
5,617 |
|
|
|
4,389 |
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
Raw materials |
|
|
1,275 |
|
|
|
1,056 |
|
Work-in-process |
|
|
331 |
|
|
|
157 |
|
Finished goods |
|
|
1,329 |
|
|
|
1,077 |
|
|
|
|
|
|
|
|
|
|
|
2,935 |
|
|
|
2,290 |
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
1,026 |
|
|
|
991 |
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
11,651 |
|
|
|
10,151 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
11,600 |
|
|
|
11,228 |
|
Amortizable intangible assets, net |
|
|
847 |
|
|
|
796 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
5,511 |
|
|
|
5,169 |
|
Other nonamortizable intangible assets |
|
|
1,375 |
|
|
|
1,248 |
|
|
|
|
|
|
|
|
Nonamortizable Intangible Assets |
|
|
6,886 |
|
|
|
6,417 |
|
|
|
|
|
|
|
|
|
|
Investments in noncontrolled affiliates |
|
|
4,519 |
|
|
|
4,354 |
|
Other assets |
|
|
1,276 |
|
|
|
1,682 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
36,779 |
|
|
$ |
34,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities |
|
$ |
7,986 |
|
|
$ |
7,602 |
|
Income taxes payable |
|
|
353 |
|
|
|
151 |
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
8,339 |
|
|
|
7,753 |
|
|
|
|
|
|
|
|
|
|
Long-term debt obligations |
|
|
6,053 |
|
|
|
4,203 |
|
Other liabilities |
|
|
4,982 |
|
|
|
4,792 |
|
Deferred income taxes |
|
|
752 |
|
|
|
646 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
20,126 |
|
|
|
17,394 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par value |
|
|
41 |
|
|
|
41 |
|
Repurchased preferred stock |
|
|
(135 |
) |
|
|
(132 |
) |
|
|
|
|
|
|
|
|
|
Common Shareholders Equity |
|
|
|
|
|
|
|
|
Common stock |
|
|
30 |
|
|
|
30 |
|
Capital in excess of par value |
|
|
345 |
|
|
|
450 |
|
Retained earnings |
|
|
29,669 |
|
|
|
28,184 |
|
Accumulated other comprehensive loss |
|
|
(473 |
) |
|
|
(952 |
) |
|
|
|
|
|
|
|
|
|
|
29,571 |
|
|
|
27,712 |
|
Less: Repurchased common stock |
|
|
(12,824 |
) |
|
|
(10,387 |
) |
|
|
|
|
|
|
|
Total Common Shareholders Equity |
|
|
16,747 |
|
|
|
17,325 |
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders Equity |
|
$ |
36,779 |
|
|
$ |
34,628 |
|
|
|
|
|
|
|
|
A 4
PepsiCo, Inc. and Subsidiaries
Supplemental Share and Stock-Based Compensation Data
(in millions, except dollar amounts, and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
|
24 Weeks Ended |
|
|
|
6/14/08 |
|
|
6/16/07 |
|
|
6/14/08 |
|
|
6/16/07 |
|
Beginning Net Shares Outstanding |
|
|
1,591 |
|
|
|
1,632 |
|
|
|
1,605 |
|
|
|
1,639 |
|
Options Exercised/Restricted Stock Units
Converted |
|
|
3 |
|
|
|
6 |
|
|
|
10 |
|
|
|
14 |
|
Shares Repurchased |
|
|
(22 |
) |
|
|
(17 |
) |
|
|
(43 |
) |
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Net Shares Outstanding |
|
|
1,572 |
|
|
|
1,621 |
|
|
|
1,572 |
|
|
|
1,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Basic |
|
|
1,582 |
|
|
|
1,628 |
|
|
|
1,591 |
|
|
|
1,632 |
|
Dilutive Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
25 |
|
|
|
31 |
|
|
|
27 |
|
|
|
31 |
|
Restricted Stock Units |
|
|
4 |
|
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
ESOP Convertible Preferred Stock/Other |
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Diluted |
|
|
1,612 |
|
|
|
1,665 |
|
|
|
1,622 |
|
|
|
1,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Share Price for the Period |
|
$ |
69.07 |
|
|
$ |
66.32 |
|
|
$ |
70.27 |
|
|
$ |
65.15 |
|
Growth Versus Prior Year |
|
|
4 |
% |
|
|
13 |
% |
|
|
8 |
% |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding |
|
|
111 |
|
|
|
125 |
|
|
|
113 |
|
|
|
129 |
|
Options in the Money |
|
|
111 |
|
|
|
125 |
|
|
|
113 |
|
|
|
123 |
|
Dilutive Shares from Options |
|
|
25 |
|
|
|
31 |
|
|
|
27 |
|
|
|
31 |
|
Dilutive Shares from Options as a % of
Options in the Money |
|
|
23 |
% |
|
|
25 |
% |
|
|
24 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Exercise Price of Options in the
Money |
|
$ |
49.98 |
|
|
$ |
46.49 |
|
|
$ |
49.94 |
|
|
$ |
45.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units Outstanding |
|
|
7 |
|
|
|
8 |
|
|
|
7 |
|
|
|
8 |
|
Dilutive Shares from Restricted Stock Units |
|
|
4 |
|
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Intrinsic Value of Restricted
Stock Units Outstanding* |
|
$ |
63.04 |
|
|
$ |
58.46 |
|
|
$ |
63.04 |
|
|
$ |
58.44 |
|
|
|
|
* |
|
Weighted-average intrinsic value at grant date |
A 5
Reconciliation of GAAP and Non-GAAP Information
(unaudited)
In the 12 and 24 weeks ended June 14, 2008, we recognized $61 million and $57 million,
respectively, of mark-to-market net gains on commodity hedges in corporate unallocated expenses.
In the 12 and 24 weeks ended June 16, 2007, we recognized $13 million and $30 million,
respectively, of mark-to-market net gains on commodity hedges in corporate unallocated expenses.
We centrally manage commodity derivatives on behalf of our divisions. Certain of these commodity
derivatives do not qualify for hedge accounting treatment and are marked to market with the
resulting gains and losses recognized in corporate unallocated expenses. These gains and losses
are subsequently reflected in division results when the divisions take delivery of the underlying
commodity. We are not able to predict our 2008 projected diluted EPS growth including the impact
of the mark-to-market gains or losses on commodity hedges due to the unpredictability of future
changes in commodity prices, and we therefore are unable to provide a reconciliation of our 2008
projected diluted EPS including such impact.
The financial measures listed below are not measures defined by generally accepted accounting
principles (GAAP). However, we believe investors should consider these measures as they are more
indicative of our ongoing performance and how management evaluates our operational results and
trends. Specifically, investors should consider the following with respect to our results:
|
|
|
Our 2008 and 2007 division operating profit; |
|
|
|
|
Our 2008 division operating profit growth; |
|
|
|
|
Our 2008 Latin America Foods (LAF) revenue growth and operating profit growth without
the impact of M&A activity and foreign currency; and |
|
|
|
|
Our 2008 diluted EPS and EPS growth excluding the impact of mark-to-market net gains on
commodity hedges recognized in corporate unallocated expenses. |
Operating Profit Growth Reconciliation
|
|
|
|
|
|
|
|
|
|
|
12 Weeks |
|
24 Weeks |
|
|
Ended |
|
Ended |
|
|
6/14/08 |
|
6/14/08 |
Division Operating Profit Growth |
|
|
7 |
% |
|
|
8 |
% |
Impact of Corporate Unallocated |
|
|
4 |
|
|
|
2.5 |
|
|
|
|
|
|
|
|
Total Operating Profit Growth |
|
|
12 |
%* |
|
|
11 |
%* |
|
|
|
|
|
|
|
|
|
|
* |
|
Does not sum due to rounding. |
LAF Revenue Growth and Operating Profit Growth Reconciliation
|
|
|
|
|
|
|
12 Weeks |
|
|
Ended |
|
|
6/14/08 |
Revenue Growth |
|
|
41 |
% |
Impact of M&A Activity |
|
|
(23 |
) |
Impact of Foreign Currency |
|
|
(8 |
) |
|
|
|
|
Revenue Growth Excluding above Items |
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
Operating Profit Growth |
|
|
38 |
% |
Impact of M&A Activity |
|
|
(10 |
) |
Impact of Foreign Currency |
|
|
(7 |
) |
|
|
|
|
Operating Profit Growth Excluding above Items |
|
|
21 |
% |
|
|
|
|
A 6
Reconciliation of GAAP and Non-GAAP Information (cont.)
(unaudited)
Diluted EPS Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks |
|
|
12 Weeks |
|
|
|
|
|
|
Ended |
|
|
Ended |
|
|
|
|
|
|
6/14/08 |
|
|
6/16/07 |
|
|
Growth |
|
Reported Diluted EPS |
|
$ |
1.05 |
|
|
$ |
0.94 |
|
|
|
13 |
% |
Mark-to-Market Net Gains on Commodity Hedges |
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Excluding above Item |
|
$ |
1.03 |
|
|
$ |
0.93 |
* |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Does not sum due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 Weeks |
|
|
24 Weeks |
|
|
|
|
|
|
Ended |
|
|
Ended |
|
|
|
|
|
|
6/14/08 |
|
|
6/16/07 |
|
|
Growth |
|
Reported Diluted EPS |
|
$ |
1.76 |
|
|
$ |
1.59 |
|
|
|
10 |
% |
Mark-to-Market Net Gains on Commodity Hedges |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Excluding above Item |
|
$ |
1.73 |
* |
|
$ |
1.58 |
|
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Does not sum due to rounding. |
A 7
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end
-----END PRIVACY-ENHANCED MESSAGE-----