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8-K - FORM 8-K - PEPSICO INC | y90977e8vk.htm |
EXHIBIT 99.1
Purchase, New York Telephone: 914-253-2000 www.pepsico.com
Contacts:
|
Investor Jamie Caulfield Senior Vice President, Investor Relations 914-253-3035 jamie.caulfield@pepsico.com |
Media Jeff Dahncke Senior Director, Media Bureau 914-253-3941 jeff.dahncke@pepsico.com |
PepsiCo Delivers Solid Financial Results on Strong Top-Line
Performance for First Quarter 2011
Performance for First Quarter 2011
| Reported EPS $0.71 and core* EPS $0.74, in line with managements expectations | ||
| Worldwide snacks and beverage volume grew 3 percent and 12 percent, respectively; global beverage volume increased 3.5 percent on an organic basis | ||
| Reported net revenue increased 27 percent; up 5 percent on a pro forma basis (adjusting for comparability of prior year bottler acquisitions) and excluding the impact of the Wimm-Bill-Dann acquisition | ||
| The company expects to deliver 2011 core, constant currency* EPS growth of 7-8 percent, consistent with its previous guidance |
PURCHASE, N.Y. April 28, 2011 PepsiCo, Inc. (NYSE: PEP) today reported volume, revenue and
operating profit growth for the first quarter of 2011 driven by top-line gains across its worldwide
snacks and beverage businesses, and from the acquisitions of its anchor bottlers.
Global snacks volume increased 3 percent reflecting broad-based gains in the core snacks portfolio.
Core snacks volume gains were partially offset by declines in food volume (which is included in
overall reported snacks volume) in North America and Brazil. Global beverage volume increased 12
percent, and organic beverage volume increased 3.5 percent. In North America, beverage volume grew
2 percent on an organic basis.
Net revenue increased 27 percent reflecting the benefits of organic volume growth, effective net
pricing, the impact of the bottler acquisitions and the acquisition of Wimm-Bill-Dann (WBD), the
leading Russian dairy and juice company. Net revenue on a pro forma basis (adjusting for
comparability of prior year bottler acquisitions) grew 7 percent and included 2 percentage points of
revenue growth from the acquisition of WBD.
Reported total operating profit increased 105 percent, reflecting the benefit of higher
non-core charges in the prior year, primarily related to the bottler acquisitions. Reported net
income and EPS each declined 20 percent, lapping a reported EPS
increase in the prior year of 23 percent which reflected
the impact of a $958 million non-core accounting gain recorded below the operating profit line in 2010.
Core operating profit increased 4 percent, reflecting the benefits of net revenue gains, synergies
from the anchor bottler acquisitions and productivity, offset somewhat by higher commodity costs,
investment spending on brand building and emerging markets infrastructure, and seasonal losses
associated with the operations of the acquired bottlers. Core EPS of $0.74 was in line with
managements expectations and declined 2 percent reflecting higher net interest expense in 2011,
primarily related to the bottler acquisitions, and a higher core tax rate.
* | Please refer to the Glossary for definitions of constant currency and core. Core results and core constant currency results are non-GAAP financial measures that exclude certain items. Please refer to Reconciliation of GAAP and Non-GAAP information in the attached exhibits for a description of these items. |
The company affirmed its full-year earnings outlook of 7-8 percent core, constant currency EPS
growth.
We are pleased with the broad-based volume and net revenue growth in the quarter. Growth in
emerging markets was strong, driving attractive gains in Eastern Europe, Asia and the Middle East,
said PepsiCo Chairman and CEO Indra Nooyi. Importantly, we had strong volume growth in both our
Frito-Lay snacks and North American beverage businesses, with each up 2 percent on an organic basis
over the prior year. We continue to make investments in innovation, brand building and emerging
markets growth, and our first quarter results give us confidence that our investments are paying
off. We are focused on managing our global portfolio to succeed in the marketplace and, at the same
time, drive profitable growth and strong returns for our shareholders.
PepsiCo Chief Financial Officer Hugh Johnston said, Strong top-line performance in the first
quarter translated to solid financial results. As expected, we are experiencing a high level of
input cost inflation, which we are addressing with productivity programs, prudent pricing actions
and systematic hedging that give us good visibility into our cost outlook for the year. We are
executing as planned and remain confident in our full-year outlook.
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Summary First Quarter 2011 Performance (Percent Growth)*
Constant Currency* | ||||||||||||||||||||||||
Core* | Core* | |||||||||||||||||||||||
Division | Division | |||||||||||||||||||||||
Operating | Operating | Operating | ||||||||||||||||||||||
Volume | Net Revenue | Profit | Net Revenue | Profit | Profit | |||||||||||||||||||
PAF |
| 1 | 7 | 3 | 8 | 8 | ||||||||||||||||||
FLNA |
2 | 1 | 6 | 1.5 | 6 | 6 | ||||||||||||||||||
LAF |
2 | 7 | 13 | 13 | 17 | 17 | ||||||||||||||||||
QFNA |
(8 | ) | (7 | ) | 9 | (6 | ) | 9 | 9 | |||||||||||||||
PAB |
12 | 63 | 9 | 64 | 9 | 669 | ||||||||||||||||||
Europe |
24/28 | ** | 58 | (31 | ) | 56 | (33 | ) | (47 | ) | ||||||||||||||
AMEA |
12/5.5 | ** | 7 | (9 | ) | 10 | (6 | ) | (6 | ) | ||||||||||||||
Total Divisions |
3/12 | ** | 26 | 4 | 27 | 5 | 36 | |||||||||||||||||
Total PepsiCo |
4 | 105 | *** |
* | The above core results and core constant currency results are non-GAAP financial measures that exclude certain items affecting comparability. For more information about our core results and core constant currency results, see Reconciliation of GAAP and Non-GAAP Information in the attached exhibits. Please refer to the Glossary for definitions of Constant Currency and Core. | |
** | Snacks/Beverage | |
*** | The reported operating profit growth was impacted by certain items excluded from our core results in both 2011 and 2010. See Reconciliation of GAAP and Non-GAAP Information in the attached exhibits for more information about these items. Please refer to the Glossary for the definition of Core. |
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All references below to net revenue are on a constant currency basis, and to operating profit
are on a core constant currency basis. In addition, all comparisons are on a year-over-year basis
unless otherwise noted.
Division Operating Summaries
PepsiCo Americas Foods (PAF)
Frito-Lay North America (FLNA)
FLNA increased volume 2 percent in the quarter reflecting solid performance across retail channels,
with strong growth in the important mass merchandise and convenience channels. Growth was
supported by innovation on key brands such as Lays, Ruffles, Doritos and Rold Gold, and the Sabra
joint venture contributed 1 percentage point of volume growth. Operating margins expanded by 1.3
percentage points, driven by gross margin expansion.
Latin America Foods (LAF)
Volume growth in the quarter was led by gains in Mexico and Argentina. In Brazil, volume
performance was hampered by declines in canned fish and milk modifiers, while core snacks posted 12
percent volume growth. Strong effective net pricing and productivity drove operating margin
improvement.
Quaker Foods North America (QFNA)
Declines in volume and net revenue in the quarter were driven by declines in the center-of-store
categories of ready-to-eat cereals, side dishes and mixes. Operating profit performance reflected
the benefit of an inventory accounting change, which contributed 7 percentage points of growth in
the quarter, as well as positive net pricing and productivity.
PepsiCo Americas Beverages (PAB)
PAB organic volume growth of 2 percent was broad-based, with gains in both North America and Latin
America. CSD volume was even with the prior year and non-carbonated beverages grew 7 percent, on
an organic basis. Within CSDs, in North America, trademark Mtn Dew grew mid-single-digits, Sierra
Mist posted low-single-digit gains, and Pepsi Max grew nearly 130 percent to achieve a 0.8 point
volume share of the CSD category. In non-carbonated beverages, Gatorade led the volume increase
with 20 percent growth in North America in the quarter. Net revenue included the benefit of net
pricing in the quarter.
Reported net revenue and operating profit included the benefit of the anchor bottler acquisitions.
Increased commodity costs and higher advertising and marketing expenses in the quarter offset the
benefits of net pricing, productivity and synergies from the anchor
bottler acquisitions.
Europe
Volume, revenue and operating profit results for the quarter included the benefit of the companys
acquisition of a controlling 77 percent stake in WBD.
Organic snacks volume increased 6 percent led by growth in Russia and Turkey, and organic beverage
volume grew 8 percent driven by double-digit gains in Russia and Turkey, and high-single-digit
growth in Germany and the United Kingdom. Organic beverage volume growth was broad-based, with
non-carbonated beverages up 7 percent and carbonated soft drinks growing 8 percent. Net revenue on
a pro forma basis (adjusting for comparability of the prior year bottler acquisitions) and
excluding the impact of the WBD acquisition, increased 5 percent.
Operating profit performance comparisons to the prior year are primarily impacted by seasonal
losses associated with the operations of the acquired anchor bottlers, which are included in 2011, but not in 2010 for the
period prior to the bottler acquisition date. In addition, operating
profit performance reflected commodity inflation and investments in Eastern Europe to expand
selling and distribution to support continued growth in those markets. WBD contributed 2 percentage
points to reported operating profit growth and 11 percentage points to core operating profit
growth.
Asia, Middle East & Africa (AMEA)
Snacks and beverage volume gains were led by strong performance in key emerging markets.
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The Middle East, India and China each grew snacks volume strong double digits, and acquisitions
contributed one percentage point to snacks volume growth. Beverage performance for the quarter was
led by double-digit growth in India and mid-single-digit growth in the Middle East and China.
Growth in both snacks and beverages was lapping very strong growth from the year-ago quarter, in
which snacks grew 13 percent and beverages grew 10 percent.
Operating profit reflected the volume gains and effective net pricing,
which were more than offset by higher commodity costs, continued investments in emerging markets infrastructure,
and the impact of business interruption related to political unrest in some markets.
Tax Rate
PepsiCos reported tax rate was 26.8 percent in the first quarter of 2011 versus a 2.3 percent
benefit in the first quarter of 2010. The prior year tax benefit reflected a non-taxable gain and
the reversal of deferred taxes associated with the bottler acquisitions. PepsiCos core tax rate
was 26.0 percent in the first quarter of 2011, which compares to a core tax rate of 22.9 percent in
the first quarter of 2010.
Cash Flow
Cash flow from operating activities was $380 million. Management operating cash flow, net of
capital expenditures, was a use of $41 million, including $97 million of merger and integration
payments associated with the bottler and WBD acquisitions, $21 million of capital spending related
to the bottler integrations, and other items as set out in the attached financial schedules.
Management operating cash flow excluding these items was $78 million.
Guidance
For 2011, the company is targeting earnings per share growth of 7 to 8 percent on a 52-week, core
constant currency basis from its fiscal 2010 core EPS of $4.13. The companys outlook for 2011
anticipates high global commodity cost inflation, difficult macroeconomic conditions in developed
markets and ongoing strategic investments in emerging markets and in brand-building activities.
The company expects to benefit from synergies from the bottler acquisitions and the acquisition of
Wimm-Bill-Dann. In addition, the company expects higher net interest expense and a core tax rate
of approximately 27 percent. Based on recent consensus rates, management estimates foreign
exchange translation will have between a one-and two-point favorable impact on the companys
full-year, core EPS growth. The company anticipates share repurchases of approximately $2.5
billion in 2011. Beyond 2011, the company expects high-single-digit core constant currency EPS
growth reflecting, in part, its outlook for commodity cost inflation and macroeconomic uncertainty.
Please refer to the glossary for more information about the items excluded from the companys 2011
core tax rate guidance and 2011 and longer-term core constant currency EPS guidance.
Anchor Bottler Synergies
The company expects total synergies of more than $550 million from the acquisitions of its anchor
bottlers through 2012, with one-time costs of approximately $925 million, of which approximately
$250 million is non-cash.
Conference Call
At 8 a.m. (Eastern Time) today, the company will host a conference call with investors to discuss
first-quarter results and the outlook for 2011. Further details, including a slide presentation
accompanying the call, will be accessible on the companys website at www.pepsico.com/investors in
advance of the call.
About PepsiCo
PepsiCo offers the worlds largest portfolio of billion-dollar food and beverage brands, including
19 different product lines that generate more than $1 billion in annual retail sales each. Our main
businesses Quaker, Tropicana, Gatorade, Frito-Lay, and Pepsi Cola also make hundreds of other
enjoyable foods and beverages that are respected household names throughout the world. With net
revenues of approximately $60 billion, PepsiCos people are united by our unique commitment to
sustainable growth by investing in a healthier future for people and our planet, which we believe
also means a more successful future for PepsiCo. We call this commitment Performance with Purpose:
PepsiCos promise to provide a wide range of
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foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment,
including by conserving energy and water usage, and reducing packaging volume; to provide a great
workplace for our associates; and to respect, support, and invest in the local communities where we
operate. For more information, please visit www.pepsico.com.
Cautionary Statement
Statements in this communication that are forward-looking statements, including our 2011 and
longer-term guidance, 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 PepsiCos products,
as a result of changes in consumer preferences and tastes or otherwise; damage to PepsiCos
reputation; PepsiCos ability to grow its business in developing and emerging markets or unstable
political conditions, civil unrest or other developments and risks in the countries where PepsiCo
operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory
environment; PepsiCos ability to build and sustain proper information technology infrastructure,
successfully implement its ongoing business transformation initiative or outsource certain
functions effectively; unfavorable economic conditions in the countries in which PepsiCo operates;
fluctuations in foreign exchange rates; PepsiCos ability to compete effectively; increased costs,
disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCos
supply chain; climate change, or legal, regulatory or market measures to address climate change;
PepsiCos ability to hire or retain key employees or a highly skilled and diverse workforce;
failure to successfully renew collective bargaining agreements or strikes or work stoppages; and
failure to successfully complete or integrate acquisitions and joint ventures into PepsiCos
existing operations.
For additional information on these and other factors that could cause PepsiCos actual results to
materially differ from those set forth herein, please see PepsiCos filings with the SEC, including
its 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
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 in the attached exhibits, as well as on the
companys website at www.pepsico.com in the Investors section under Investor Presentations. Our
non-GAAP measures exclude from reported results those items that management believes are not
indicative of our ongoing performance and how management evaluates our operating results and
trends.
Glossary
Beverage volume: Volume shipped to retailers and independent distributors from both PepsiCo and our
bottlers.
Core: Core results are non-GAAP financial measures which exclude the following items in our
historical results: in 2011, core results exclude the commodity mark-to-market net impact included
in corporate unallocated expenses; as well as merger and integration costs and certain inventory
fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG),
PepsiAmericas, Inc. (PAS) and WBD. In 2010, core results exclude the commodity mark-to-market net
impact included in corporate unallocated expenses, a one-time net charge related to the change to
hyperinflationary accounting and currency devaluation in Venezuela, a contribution to The PepsiCo
Foundation, Inc. and an asset write-off charge for SAP software. Additionally, with respect to our
acquisitions of PBG and PAS, 2010 core results also exclude our gain on previously held equity
interests, merger and integration costs, as well as our share of
6
PBGs and PASs respective merger and integration costs, and certain inventory fair value
adjustments. With respect to our 2011 and longer-term guidance, our core results exclude: the
commodity mark-to-market net impact included in corporate unallocated expenses; certain inventory
fair value adjustments and merger and integration charges related to PBG, PAS and WBD; and the
impact of the 53rd week in 2011. For more details and reconciliations of our 2011 and
2010 core and core constant currency results and full-year 2011 core tax rate guidance and
full-year 2011 and longer-term core constant currency EPS guidance, see Reconciliation of GAAP and
Non-GAAP Information in the exhibits attached hereto.
Constant currency: Financial results (historical and projected) assuming constant foreign currency
exchange rates used for translation based on the rates in effect for the comparable prior-year
period. In addition, the impact on EPS growth is computed by adjusting core EPS growth by the
after-tax foreign currency translation impact on core operating profit growth using PepsiCos core
effective tax rate.
Division operating profit: The aggregation of the operating profit for each of our reportable
segments, which excludes the impact of corporate unallocated expenses.
Effective net pricing: The combined impact of mix and price.
Management operating cash flow: Net cash provided by operating activities less capital spending
plus sales of property, plant and equipment. This non-GAAP financial measure is our primary measure
used to monitor cash flow performance. See the attached exhibits for a reconciliation of this
measure to the most directly comparable financial measure in accordance with GAAP (operating cash
flow).
Management operating cash flow, excluding certain items: Management operating cash flow, excluding:
(1) discretionary pension contributions, (2) restructuring payments in connection with our
Productivity for Growth initiative, (3) merger and integration payments in connection with our PBG,
PAS and WBD acquisitions, (4) a contribution to The PepsiCo Foundation, (5) capital investments
related to the bottling integration, and (6) the tax impacts associated with each of these items,
as applicable. See the attached exhibits for a reconciliation of this non-GAAP financial measure to
the most directly comparable financial measure in accordance with GAAP (operating cash flow).
Mark-to-market gain or loss or net impact: Change in market value for 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.
Net pricing: The combined impact of list price changes, weight changes per package, discounts and
allowances.
Net capital spending: Capital spending less cash proceeds from sales of property, plant and
equipment.
Net revenue on a pro forma basis (adjusting for comparability of prior year bottler acquisitions):
Unaudited consolidated pro forma financial information as if the closing of our acquisitions of PBG
and PAS had occurred on December 27, 2009 for purposes of the financial information presented for
the 12 weeks ended March 20, 2010. This information was prepared in accordance with the
acquisition method of accounting under existing standards, and the regulations of the U.S.
Securities and Exchange Commission, and is not necessarily indicative of the results of operations
that would have occurred if our acquisitions of PBG and PAS had been completed on the date
indicated, nor is it indicative of the future operating results of PepsiCo. This information has
been adjusted to give effect to pro forma events that are (1) directly attributable to the
acquisitions, (2) factually supportable, and (3) expected to have a continuing impact on the
combined results of PepsiCo, PBG and PAS.
Organic: A measure that excludes the impact of acquisitions.
Pricing: The impact of list price changes and weight changes per package.
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Transaction foreign exchange: The foreign exchange impact on our financial results of transactions,
such as purchases of imported raw materials, commodities, or services, occurring in currencies
other than the local, functional currency.
# # #
8
PepsiCo, Inc. and Subsidiaries
Summary of PepsiCo First Quarter 2011 Results
(unaudited)
Summary of PepsiCo First Quarter 2011 Results
(unaudited)
Core Constant | ||||||||||||
Reported | Core* | Currency* Growth | ||||||||||
Growth (%) | Growth (%) | (%) | ||||||||||
Volume (Servings) |
9 | 9 | ||||||||||
Net Revenue |
27 | 27 | 26 | |||||||||
Division Operating Profit |
36 | 5 | 4 | |||||||||
Total Operating Profit |
105 | 4 | ||||||||||
Net Income Attributable to PepsiCo |
(20 | ) | (2 | ) | (3 | ) | ||||||
Earnings per Share (EPS) |
(20 | ) | (2 | ) | (3 | ) |
* | Core results and core constant currency results are financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP) and, in 2011, exclude the commodity mark-to-market net impact included in corporate unallocated expenses, as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS) and Wimm-Bill-Dann Foods OJSC (WBD). Core results also exclude, in 2010, the commodity mark-to-market net impact included in corporate unallocated expenses, a one-time net charge related to the change to hyperinflationary accounting and currency devaluation in Venezuela, a contribution to The PepsiCo Foundation, Inc. and an asset write-off charge for SAP software. Additionally, with respect to our acquisitions of PBG and PAS, 2010 core results also exclude our gain on previously held equity interests, merger and integration costs, as well as our share of PBGs and PASs respective merger and integration costs, and certain inventory fair value adjustments. Core growth, on a constant currency basis, assumes constant foreign currency exchange rates used for translation based on the rates in effect for the comparable period during 2010. In addition, core constant currency EPS growth is computed by adjusting core EPS growth by the after-tax foreign currency translation impact on core operating profit growth using PepsiCos core effective tax rate. See schedules A-7 through A-15 for a discussion of these items and reconciliations to the most directly comparable financial measures in accordance with GAAP. |
A-1
PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Income
(in millions, except per share amounts, and unaudited)
Condensed Consolidated Statement of Income
(in millions, except per share amounts, and unaudited)
Quarter Ended | ||||||||||||
3/19/11 | 3/20/10 | Change | ||||||||||
Net Revenue |
$ | 11,937 | $ | 9,368 | 27 | % | ||||||
Cost of sales |
5,447 | 4,463 | 22 | % | ||||||||
Selling, general and administrative expenses |
4,739 | 4,049 | 17 | % | ||||||||
Amortization of intangible assets |
25 | 16 | 60 | % | ||||||||
Operating Profit |
1,726 | 840 | 105 | % | ||||||||
Bottling equity income |
| 709 | n/m | |||||||||
Interest expense |
(180 | ) | (154 | ) | 17 | % | ||||||
Interest income |
17 | 6 | 174 | % | ||||||||
Income before income taxes |
1,563 | 1,401 | 12 | % | ||||||||
Provision for/(Benefit from) income taxes |
419 | (33 | ) | n/m | ||||||||
Net income |
1,144 | 1,434 | (20 | )% | ||||||||
Less: Net income attributable to
noncontrolling interests |
1 | 4 | (73 | )% | ||||||||
Net Income Attributable to PepsiCo |
$ | 1,143 | $ | 1,430 | (20 | )% | ||||||
Diluted |
||||||||||||
Net Income Attributable to PepsiCo per
Common Share |
$ | 0.71 | $ | 0.89 | (20 | )% | ||||||
Average Shares Outstanding |
1,605 | 1,606 | ||||||||||
Cash dividends declared per common share |
$ | 0.48 | $ | 0.45 |
n/m = not meaningful |
A-2
PepsiCo, Inc. and Subsidiaries
Supplemental Financial Information
(in millions, unaudited)
Supplemental Financial Information
(in millions, unaudited)
Quarter Ended | ||||||||||||
3/19/11 | 3/20/10 | Change | ||||||||||
Net
Revenue |
||||||||||||
Frito-Lay North America |
$ | 2,904 | $ | 2,864 | 1.5 | % | ||||||
Quaker Foods North America |
640 | 683 | (6 | )% | ||||||||
Latin America Foods |
1,108 | 983 | 13 | % | ||||||||
PepsiCo Americas Foods |
4,652 | 4,530 | 3 | % | ||||||||
PepsiCo Americas Beverages |
4,531 | 2,765 | 64 | % | ||||||||
Europe |
1,626 | 1,044 | 56 | % | ||||||||
Asia, Middle East & Africa |
1,128 | 1,029 | 10 | % | ||||||||
Total Net Revenue |
$ | 11,937 | $ | 9,368 | 27 | % | ||||||
Operating Profit |
||||||||||||
Frito-Lay North America |
$ | 774 | $ | 728 | 6 | % | ||||||
Quaker Foods North America |
214 | 195 | 9 | % | ||||||||
Latin America Foods |
171 | 145 | 17 | % | ||||||||
PepsiCo Americas Foods |
1,159 | 1,068 | 8 | % | ||||||||
PepsiCo Americas Beverages |
558 | 73 | 669 | % | ||||||||
Europe |
63 | 118 | (47 | )% | ||||||||
Asia, Middle East & Africa |
146 | 155 | (6 | )% | ||||||||
Division Operating Profit |
1,926 | 1,414 | 36 | % | ||||||||
Corporate Unallocated |
||||||||||||
Net Impact of Mark-to-Market on
Commodity Hedges |
31 | 46 | (33 | )% | ||||||||
Merger and Integration Charges |
(42 | ) | (88 | ) | (52 | )% | ||||||
Venezuela Currency Devaluation |
| (129 | ) | n/m | ||||||||
Asset Write-Off |
| (145 | ) | n/m | ||||||||
Foundation Contribution |
| (100 | ) | n/m | ||||||||
Other |
(189 | ) | (158 | ) | 19 | % | ||||||
(200 | ) | (574 | ) | (65 | )% | |||||||
Total Operating Profit |
$ | 1,726 | $ | 840 | 105 | % | ||||||
n/m = not meaningful |
A-3
PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in millions)
Condensed Consolidated Statement of Cash Flows
(in millions)
Year Ended | ||||||||
3/19/11 | 3/20/10 | |||||||
(unaudited) | ||||||||
Operating Activities |
||||||||
Net income |
$ | 1,144 | $ | 1,434 | ||||
Depreciation and amortization |
523 | 376 | ||||||
Stock-based compensation expense |
72 | 47 | ||||||
Cash payments for restructuring charges |
(1 | ) | (26 | ) | ||||
Merger and integration costs |
55 | 321 | ||||||
Cash payments for merger and integration costs |
(117 | ) | (85 | ) | ||||
Gain on previously held equity interests in PBG and PAS |
| (958 | ) | |||||
Asset write-off |
| 145 | ||||||
Non-cash foreign exchange loss related to Venezuela devaluation |
| 120 | ||||||
Excess tax benefits from share-based payment arrangements |
(24 | ) | (29 | ) | ||||
Pension and retiree medical plan contributions |
(59 | ) | (640 | ) | ||||
Pension and retiree medical plan expenses |
119 | 113 | ||||||
Bottling equity income, net of dividends |
| 46 | ||||||
Deferred income taxes and other tax charges and credits |
(98 | ) | (127 | ) | ||||
Change in accounts and notes receivable |
(271 | ) | (155 | ) | ||||
Change in inventories |
(77 | ) | 309 | |||||
Change in prepaid expenses and other current assets |
(137 | ) | (98 | ) | ||||
Change in accounts payable and other current liabilities |
(1,028 | ) | (616 | ) | ||||
Change in income taxes payable |
362 | 186 | ||||||
Other, net |
(83 | ) | (122 | ) | ||||
Net Cash Provided by Operating Activities |
380 | 241 | ||||||
Investing Activities |
||||||||
Capital spending |
(433 | ) | (274 | ) | ||||
Sales of property, plant and equipment |
12 | 16 | ||||||
Acquisitions of PBG and PAS, net of cash and cash equivalents acquired |
| (2,833 | ) | |||||
Acquisition of manufacturing and distribution rights from Dr Pepper
Snapple Group, Inc. (DPSG) |
| (900 | ) | |||||
Acquisition of WBD, net of cash and cash equivalents acquired |
(2,428 | ) | | |||||
Investment in WBD |
(164 | ) | | |||||
Other acquisitions and investments in noncontrolled affiliates |
(28 | ) | (15 | ) | ||||
Short-term investments, net |
63 | (2 | ) | |||||
Other investing, net |
(1 | ) | (3 | ) | ||||
Net Cash Used for Investing Activities |
(2,979 | ) | (4,011 | ) | ||||
Financing Activities |
||||||||
Proceeds from issuances of long-term debt |
9 | 4,216 | ||||||
Payments of long-term debt |
(10 | ) | (7 | ) | ||||
Short-term borrowings, net |
1,117 | 1,028 | ||||||
Cash dividends paid |
(769 | ) | (712 | ) | ||||
Share repurchases common |
(361 | ) | (735 | ) | ||||
Share repurchases preferred |
(2 | ) | (1 | ) | ||||
Proceeds from exercises of stock options |
218 | 267 | ||||||
Excess tax benefits from share-based payment arrangements |
24 | 29 | ||||||
Acquisition of noncontrolling interest in Lebedyansky from PBG |
| (159 | ) | |||||
Other financing |
| (5 | ) | |||||
Net Cash Provided by Financing Activities |
226 | 3,921 | ||||||
Effect of exchange rate changes on cash and cash equivalents |
92 | (145 | ) | |||||
Net (Decrease)/Increase in Cash and Cash Equivalents |
(2,281 | ) | 6 | |||||
Cash and Cash Equivalents Beginning of Year |
5,943 | 3,943 | ||||||
Cash and Cash Equivalents End of Period |
$ | 3,662 | $ | 3,949 | ||||
Non-cash activity: |
||||||||
Issuance of common stock and equity awards in connection with our
acquisitions of PBG and PAS, as reflected in investing and financing
activities |
| $ | 4,451 | |||||
A-4
PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in millions except per share amounts)
Condensed Consolidated Balance Sheet
(in millions except per share amounts)
3/19/11 | 12/25/10 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 3,662 | $ | 5,943 | ||||
Short-term investments |
367 | 426 | ||||||
Accounts and notes receivable, net |
6,937 | 6,323 | ||||||
Inventories |
||||||||
Raw materials |
1,907 | 1,654 | ||||||
Work-in-process |
173 | 128 | ||||||
Finished goods |
1,751 | 1,590 | ||||||
3,831 | 3,372 | |||||||
Prepaid expenses and other current assets |
1,715 | 1,505 | ||||||
Total Current Assets |
16,512 | 17,569 | ||||||
Property, plant and equipment, net |
20,329 | 19,058 | ||||||
Amortizable intangible assets, net |
2,477 | 2,025 | ||||||
Goodwill |
15,824 | 14,661 | ||||||
Other nonamortizable intangible assets |
15,418 | 11,783 | ||||||
Nonamortizable Intangible Assets |
31,242 | 26,444 | ||||||
Investments in noncontrolled affiliates |
1,408 | 1,368 | ||||||
Other assets |
1,117 | 1,689 | ||||||
Total Assets |
$ | 73,085 | $ | 68,153 | ||||
Liabilities and Equity |
||||||||
Current Liabilities |
||||||||
Short-term obligations |
$ | 6,256 | $ | 4,898 | ||||
Accounts payable and other current liabilities |
10,243 | 10,923 | ||||||
Income taxes payable |
341 | 71 | ||||||
Total Current Liabilities |
16,840 | 15,892 | ||||||
Long-term debt obligations |
20,942 | 19,999 | ||||||
Other liabilities |
6,657 | 6,729 | ||||||
Deferred income taxes |
4,972 | 4,057 | ||||||
Total Liabilities |
49,411 | 46,677 | ||||||
Commitments and Contingencies |
||||||||
Preferred stock, no par value |
41 | 41 | ||||||
Repurchased preferred stock |
(152 | ) | (150 | ) | ||||
PepsiCo Common Shareholders Equity |
||||||||
Common stock, par value 12/3¢ per share (authorized 3,600
shares, issued 1,865 shares) |
31 | 31 | ||||||
Capital in excess of par value |
4,407 | 4,527 | ||||||
Retained earnings |
37,466 | 37,090 | ||||||
Accumulated other comprehensive loss |
(3,035 | ) | (3,630 | ) | ||||
Repurchased common stock, at cost (284 shares) |
(16,773 | ) | (16,745 | ) | ||||
Total PepsiCo Common Shareholders Equity |
22,096 | 21,273 | ||||||
Noncontrolling interests |
1,689 | 312 | ||||||
Total Equity |
23,674 | 21,476 | ||||||
Total Liabilities and Equity |
$ | 73,085 | $ | 68,153 | ||||
A-5
PepsiCo, Inc. and Subsidiaries
Supplemental Share and Stock-Based Compensation Data
(in millions, except dollar amounts, and unaudited)
Supplemental Share and Stock-Based Compensation Data
(in millions, except dollar amounts, and unaudited)
Quarter Ended | ||||||||
3/19/11 | 3/20/10 | |||||||
Beginning Net Shares Outstanding |
1,582 | 1,565 | ||||||
Shares Issued in Connection with our Acquisitions of PBG and PAS |
| 67 | ||||||
Options Exercised/Restricted Stock Units Converted |
6 | 9 | ||||||
Shares Repurchased |
(7 | ) | (14 | ) | ||||
Ending Net Shares Outstanding |
1,581 | 1,627 | ||||||
Weighted Average Basic |
1,583 | 1,582 | ||||||
Dilutive securities: |
||||||||
Options |
15 | 19 | ||||||
Restricted Stock Units |
6 | 4 | ||||||
ESOP Convertible Preferred Stock/Other |
1 | 1 | ||||||
Weighted Average Diluted |
1,605 | 1,606 | ||||||
Average Share Price for the period |
$ | 64.65 | $ | 62.17 | ||||
Growth Versus Prior Year |
4 | % | 22 | % | ||||
Options Outstanding |
107 | 112 | ||||||
Options in the Money |
76 | 91 | ||||||
Dilutive Shares from Options |
15 | 19 | ||||||
Dilutive Shares from Options as a % of Options in the Money |
20 | % | 21 | % | ||||
Average Exercise Price of Options in the Money |
$ | 50.08 | $ | 47.84 | ||||
Restricted Stock Units Outstanding |
13 | 6 | ||||||
Dilutive Shares from Restricted Stock Units |
6 | 4 | ||||||
Average Intrinsic Value of Restricted Stock Units Outstanding* |
$ | 62.90 | $ | 60.36 |
* | Weighted-average intrinsic value at grant date. |
A-6
Reconciliation of GAAP and Non-GAAP Information
(unaudited)
(unaudited)
Division operating profit, core results and core constant currency results are non-GAAP
financial measures as they exclude certain items noted below. However, we believe investors should
consider these measures as they are more indicative of our ongoing performance and with how
management evaluates our operational results and trends.
Commodity mark-to-market net impact
In the quarter ended March 19, 2011, we recognized $31 million of mark-to-market net gains on
commodity hedges in corporate unallocated expenses. In the quarter ended March 20, 2010, we
recognized $46 million of mark-to-market net gains on commodity hedges in corporate unallocated
expenses. In the year ended December 25, 2010, we recognized $91 million 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.
Merger and integration charges
In the quarter ended March 19, 2011, we incurred merger and integration charges of $55 million
related to our acquisitions of PBG, PAS and WBD, including $21 million recorded in the PAB segment,
$42 million recorded in corporate unallocated expenses and a credit of $8 million recorded in the
Europe segment, primarily reflecting a gain on our previously held equity interest in WBD. These
charges also include closing costs and advisory fees related to our acquisition of WBD. In the
quarter ended March 20, 2010, we incurred merger and integration charges of $312 million related to
our acquisitions of PBG and PAS, including $193 million recorded in the PAB segment, $1 million
recorded in the Europe segment, $88 million recorded in corporate unallocated expenses and $30
million recorded in interest expense. These charges also include closing costs, one-time financing
costs and advisory fees related to our acquisitions of PBG and PAS. In addition, in the quarter
ended March 20, 2010, we recorded $9 million of charges, representing our share of the respective
merger costs of PBG and PAS, in bottling equity income. In the year ended December 25, 2010, we
incurred merger and integration charges of $799 million related to our acquisitions of PBG and PAS,
as well as advisory fees in connection with our acquisition of WBD, including $467 million recorded
in the PAB segment, $111 million recorded in the Europe segment, $191 million recorded in corporate
unallocated expenses and $30 million recorded in interest expense. These charges also include
closing costs, one-time financing costs and advisory fees related to our acquisitions of PBG and
PAS. In addition, in the year ended December 25, 2010, we recorded $9 million of charges,
representing our share of the respective merger costs of PBG and PAS, recorded in bottling equity
income.
Gain on previously held equity interests in PBG and PAS
In the first quarter of 2010, in connection with our acquisitions of PBG and PAS, we recorded a
gain on our previously held equity interests of $958 million, comprising $735 million which is
non-taxable and recorded in bottling equity income and $223 million related to the reversal of
deferred tax liabilities associated with these previously held equity interests.
Inventory fair value adjustments
In the quarter ended March 19, 2011, we recorded $34 million of incremental costs in cost of sales
related to fair value adjustments to the acquired inventory included in WBDs balance sheet at the
acquisition date and hedging contracts included in PBGs and PASs balance sheets at the
acquisition date. In the quarter ended March 20, 2010, we recorded $281 million of incremental
costs in cost of sales related to fair value adjustments to the acquired inventory and other
related hedging contracts included in PBGs and PASs balance sheets at the acquisition date. In
the year ended December 25, 2010, we recorded $398 million of incremental costs, substantially all
in cost of sales, related to fair value adjustments to the acquired inventory and other related
hedging contracts included in PBGs and PASs balance sheets at the acquisition date.
Venezuela currency devaluation
As of the beginning of our 2010 fiscal year, we recorded a one-time $120 million net charge related
to our change to hyperinflationary accounting for our Venezuelan businesses and the related
devaluation of the bolivar fuerte (bolivar). $129 million of this net charge was recorded in
corporate unallocated expenses, with the balance (income of $9 million) recorded in our PAB
segment.
Asset write-off
In the first quarter of 2010, we recorded a $145 million charge related to a change in scope
of one release in our ongoing migration to SAP software. This change was driven, in part, by a
review of our North America systems strategy following our acquisitions of PBG and PAS. This
change does not impact our overall commitment to continue our implementation of SAP across our
global operations over the next few years.
A-7
Reconciliation of GAAP and Non-GAAP Information (cont.)
(unaudited)
(unaudited)
Foundation contribution
In the first quarter of 2010, we made a $100 million contribution to The PepsiCo Foundation, Inc.
(Foundation), in order to fund charitable and social programs over the next several years. This
contribution was recorded in corporate unallocated expenses.
Interest expense incurred in connection with debt repurchase
In the year ended December 25, 2010, we paid $672 million in a cash tender offer to repurchase $500
million (aggregate principal amount) of our 7.90% senior unsecured notes maturing in 2018. As a
result of this debt repurchase, we recorded a $178 million charge to interest expense, primarily
representing the premium paid in the tender offer.
Management operating cash flow
Additionally, management operating cash flow is the primary measure management uses to monitor cash
flow performance. This is not a measure defined by GAAP. Since net capital spending is essential
to our product innovation initiatives and maintaining our operational capabilities, we believe that
it is a recurring and necessary use of cash. As such, we believe investors should also consider
net capital spending when evaluating our cash from operating activities.
Net revenue on a pro forma basis
Net revenue on a pro forma basis includes unaudited consolidated pro forma financial information as
if the closing of our acquisitions of PBG and PAS had occurred on December 27, 2009 for purposes of
the financial information presented for the quarter ended March 20, 2010. This information was
prepared in accordance with the acquisition method of accounting under existing standards, and the
regulations of the U.S. Securities and Exchange Commission, and is not necessarily indicative of
the results of operations that would have occurred if our acquisitions of PBG and PAS had been
completed on the date indicated, nor is it indicative of the future operating results of PepsiCo.
This information has been adjusted to give effect to pro forma events that are (1) directly
attributable to the acquisitions, (2) factually supportable, and (3) expected to have a continuing
impact on the combined results of PepsiCo, PBG and PAS. Growth in total net revenue and Europe net revenue, each on a pro forma basis and excluding the
impact of the WBD acquisition, are not measures defined by GAAP. However, we believe that
investors should consider these measures when evaluating our net revenue performance as they are
more indicative of our ongoing performance.
2011 and longer-term guidance
Our 2011 core tax rate guidance and our 2011 and longer-term core constant currency EPS guidance
exclude the commodity mark-to-market net impact included in corporate unallocated expenses; merger
and integration charges related to PBG, PAS and WBD; and the impact of the 53rd week in
2011. We are not able to reconcile our full-year projected 2011 core tax rate to our full-year
projected 2011 reported tax rate or our full-year projected 2011 and longer-term core constant
currency EPS to our full-year projected 2011 and longer-term reported EPS because we are unable to
predict the 2011 and longer-term impacts of foreign exchange or the mark-to-market net gains or
losses on commodity hedges due to the unpredictability of future changes in foreign exchange rates
and commodity prices. Therefore, we are unable to provide a reconciliation of these measures.
A-8
Reconciliation of GAAP and Non-GAAP Information (cont.)
($ in millions, unaudited)
($ in millions, unaudited)
Operating Profit Growth Reconciliation
Quarter | ||||
Ended | ||||
3/19/11 | ||||
Division Operating Profit Growth |
36 | % | ||
Impact of Corporate Unallocated |
69 | |||
Reported Total Operating Profit Growth |
105 | % | ||
Operating Profit Growth Reconciliation
Quarter Ended | ||||||||||||
3/19/11 | 3/20/10 | Growth | ||||||||||
Reported Total Operating Profit Growth |
$ | 1,726 | $ | 840 | 105 | % | ||||||
Mark-to-Market Net Gains |
(31 | ) | (46 | ) | ||||||||
Merger and Integration Charges |
55 | 282 | ||||||||||
Inventory Fair Value Adjustments |
34 | 281 | ||||||||||
Venezuela Currency Devaluation |
| 120 | ||||||||||
Asset Write-Off |
| 145 | ||||||||||
Foundation Contribution |
| 100 | ||||||||||
Core Total Operating Profit Growth |
$ | 1,784 | $ | 1,722 | 4 | % | ||||||
Effective Tax Rate Reconciliation
Quarter Ended | ||||||||||||
3/19/11 | ||||||||||||
Effective | ||||||||||||
Pre-Tax Income | Income Taxes | Tax Rate | ||||||||||
Reported Effective Tax Rate |
$ | 1,563 | $ | 419 | 26.8 | % | ||||||
Mark-to-Market Net Gains |
(31 | ) | (12 | ) | ||||||||
Merger and Integration Charges |
55 | 6 | ||||||||||
Inventory Fair Value Adjustments |
34 | 8 | ||||||||||
Core Effective Tax Rate |
$ | 1,621 | $ | 421 | 26.0 | % | ||||||
Quarter Ended | ||||||||||||
3/20/10 | ||||||||||||
Effective | ||||||||||||
Pre-Tax Income | Income Taxes | Tax Rate | ||||||||||
Reported Effective Tax Rate |
$ | 1,401 | $ | (33 | ) | (2.3 | )% | |||||
Mark-to-Market Net Gains |
(46 | ) | (17 | ) | ||||||||
Gain on Previously Held Equity Interests |
(735 | ) | 223 | |||||||||
Merger and Integration Charges |
321 | 60 | ||||||||||
Inventory Fair Value Adjustments |
281 | 41 | ||||||||||
Venezuela Currency Devaluation |
120 | | ||||||||||
Asset Write-Off |
145 | 53 | ||||||||||
Foundation Contribution |
100 | 36 | ||||||||||
Core Effective Tax Rate |
$ | 1,587 | $ | 363 | 22.9 | % | ||||||
A-9
Reconciliation of GAAP and Non-GAAP Information (cont.)
($ in millions, except per share amounts, unaudited)
($ in millions, except per share amounts, unaudited)
Diluted EPS Reconciliation
Year Ended | ||||
12/25/10 | ||||
Reported Diluted EPS |
$ | 3.91 | ||
Mark-to-Market Net Gains |
(0.04 | ) | ||
Gain on Previously Held Equity Interests |
(0.60 | ) | ||
Merger and Integration Charges |
0.40 | |||
Inventory Fair Value Adjustments |
0.21 | |||
Venezuela Currency Devaluation |
0.07 | |||
Asset Write-Off |
0.06 | |||
Foundation Contribution |
0.04 | |||
Debt Repurchase |
0.07 | |||
Core Diluted EPS |
$ | 4.13 | * | |
* | Does not sum due to rounding. |
Diluted EPS Reconciliation
Quarter Ended | ||||||||||||
3/19/11 | 3/20/10 | Growth | ||||||||||
Reported Diluted EPS |
$ | 0.71 | $ | 0.89 | (20 | )% | ||||||
Mark-to-Market Net Gains |
(0.01 | ) | (0.02 | ) | ||||||||
Gain on Previously Held Equity Interests |
| (0.60 | ) | |||||||||
Merger and Integration Charges |
0.03 | 0.16 | ||||||||||
Inventory Fair Value Adjustments |
0.01 | 0.15 | ||||||||||
Venezuela Currency Devaluation |
| 0.07 | ||||||||||
Asset Write-Off |
| 0.06 | ||||||||||
Foundation Contribution |
| 0.04 | ||||||||||
Core Diluted EPS |
$ | 0.74 | $ | 0.76 | * | (2 | )% | |||||
* | Does not sum due to rounding. |
Net Cash Provided by Operating Activities Reconciliation
Quarter | ||||
Ended | ||||
3/19/11 | ||||
Net Cash Provided by Operating Activities |
$ | 380 | ||
Capital Spending |
(433 | ) | ||
Sales of Property, Plant and Equipment |
12 | |||
Management Operating Cash Flow |
(41 | ) | ||
Payments Related to 2009 Restructuring Charges |
1 | |||
Merger and Integration Payments (after-tax) |
97 | |||
Capital Investments Related to the PBG/PAS Integration |
21 | |||
Management Operating Cash Flow Excluding above Items |
$ | 78 | ||
WBD Contribution to Europe Operating Profit Growth Reconciliation
Quarter Ended | ||||||||||||
3/19/11 | 3/20/10 | |||||||||||
WBD | Europe | Impact | ||||||||||
WBD Contribution to Reported Europe Operating Profit Growth |
$ | 2 | $ | 118 | 2 pps | |||||||
Merger and Integration Charges |
(14 | ) | 1 | |||||||||
Inventory Fair Value Adjustments |
25 | | ||||||||||
WBD Contribution to Core Europe Operating Profit Growth |
$ | 13 | $ | 119 | 11 pps | |||||||
A-10
Growth in Total Net Revenue on a Pro Forma Basis Reconciliation
Quarter Ended | ||||
3/19/11 | ||||
Growth in Total Net Revenue on a Pro Forma Basis |
7 | % | ||
Impact of WBD |
(2 | ) | ||
Growth in Total Net Revenue on a Pro Forma Basis Excluding
WBD |
5 | % | ||
Growth in Europe Net Revenue on a Pro Forma Basis Reconciliation
Quarter Ended | ||||
3/19/11 | ||||
Growth in Europe Net Revenue on a Pro Forma Basis |
23 | % | ||
Impact of WBD |
(17 | ) | ||
Growth in Europe Net Revenue on a Pro Forma Basis Excluding
WBD |
5 | %* | ||
*Does not sum due to rounding
A-11
PepsiCo, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information (cont.)
Certain Line Items
12 Weeks Ended March 19, 2011 and March 20, 2010
(in millions, except per share amounts, and unaudited)
Reconciliation of GAAP and Non-GAAP Information (cont.)
Certain Line Items
12 Weeks Ended March 19, 2011 and March 20, 2010
(in millions, except per share amounts, and unaudited)
GAAP | Non-GAAP | |||||||||||||||||||||||||||||||||||
Measure | Measure | |||||||||||||||||||||||||||||||||||
Reported | Gain on previously | Core* | ||||||||||||||||||||||||||||||||||
Quarter | held equity | Inventory fair | Merger and | Venezuela | Commodity | Quarter | ||||||||||||||||||||||||||||||
Ended | interests in PBG | value | integration | Foundation | currency | mark-to-market | Ended | |||||||||||||||||||||||||||||
3/19/11 | and PAS | adjustments | charges | Asset write-off | contribution | devaluation | net gains | 3/19/11 | ||||||||||||||||||||||||||||
Cost of sales |
$ | 5,447 | $ | | $ | (34 | ) | $ | | $ | | $ | | $ | | $ | | $ | 5,413 | |||||||||||||||||
Selling, general and administrative expenses |
$ | 4,739 | $ | | $ | | $ | (55 | ) | $ | | $ | | $ | | $ | 31 | $ | 4,715 | |||||||||||||||||
Operating profit |
$ | 1,726 | $ | | $ | 34 | $ | 55 | $ | | $ | | $ | | $ | (31 | ) | $ | 1,784 | |||||||||||||||||
Provision for income taxes |
$ | 419 | $ | | $ | 8 | $ | 6 | $ | | $ | | $ | | $ | (12 | ) | $ | 421 | |||||||||||||||||
Noncontrolling interests |
$ | 1 | $ | | $ | 5 | $ | | $ | | $ | | $ | | $ | | $ | 6 | ||||||||||||||||||
Net income attributable to PepsiCo |
$ | 1,143 | $ | | $ | 21 | $ | 49 | $ | | $ | | $ | | $ | (19 | ) | $ | 1,194 | |||||||||||||||||
Net income attributable to PepsiCo per common share diluted |
$ | 0.71 | $ | | $ | 0.01 | $ | 0.03 | $ | | $ | | $ | | $ | (0.01 | ) | $ | 0.74 |
GAAP | Non-GAAP | |||||||||||||||||||||||||||||||||||
Measure | Measure | |||||||||||||||||||||||||||||||||||
Reported | Gain on previously | Core* | ||||||||||||||||||||||||||||||||||
Quarter | held equity | Inventory fair | Merger and | Venezuela | Commodity | Quarter | ||||||||||||||||||||||||||||||
Ended | interests in PBG | value | integration | Foundation | currency | mark-to-market | Ended | |||||||||||||||||||||||||||||
3/20/10 | and PAS | adjustments | charges | Asset write-off | contribution | devaluation | net gains | 3/20/10 | ||||||||||||||||||||||||||||
Cost of sales |
$ | 4,463 | $ | | $ | (281 | ) | $ | | $ | | $ | | $ | | $ | | $ | 4,182 | |||||||||||||||||
Selling, general and administrative expenses |
$ | 4,049 | $ | | $ | | $ | (282 | ) | $ | (145 | ) | $ | (100 | ) | $ | (120 | ) | $ | 46 | $ | 3,448 | ||||||||||||||
Operating profit |
$ | 840 | $ | | $ | 281 | $ | 282 | $ | 145 | $ | 100 | $ | 120 | $ | (46 | ) | $ | 1,722 | |||||||||||||||||
Bottling equity income |
$ | 709 | $ | (735 | ) | $ | | $ | 9 | $ | | $ | | $ | | $ | | $ | (17 | ) | ||||||||||||||||
Interest expense |
$ | (154 | ) | $ | | $ | | $ | 30 | $ | | $ | | $ | | $ | | $ | (124 | ) | ||||||||||||||||
(Benefit from)/provision for income taxes |
$ | (33 | ) | $ | 223 | $ | 41 | $ | 60 | $ | 53 | $ | 36 | $ | | $ | (17 | ) | $ | 363 | ||||||||||||||||
Net income attributable to PepsiCo |
$ | 1,430 | $ | (958 | ) | $ | 240 | $ | 261 | $ | 92 | $ | 64 | $ | 120 | $ | (29 | ) | $ | 1,220 | ||||||||||||||||
Net income attributable to PepsiCo per common share diluted |
$ | 0.89 | $ | (0.60 | ) | $ | 0.15 | $ | 0.16 | $ | 0.06 | $ | 0.04 | $ | 0.07 | $ | (0.02 | ) | $ | 0.76 | ** |
* | Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments. | |
** | Does not sum due to rounding. |
A-12
PepsiCo, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information (cont.)
Operating Profit by Division
12 Weeks Ended March 19, 2011 and March 20, 2010
(in millions and unaudited)
Reconciliation of GAAP and Non-GAAP Information (cont.)
Operating Profit by Division
12 Weeks Ended March 19, 2011 and March 20, 2010
(in millions and unaudited)
GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
Measure | Measure | |||||||||||||||||||||||||||||||
Reported | Core* | |||||||||||||||||||||||||||||||
Quarter | Merger and | Venezuela | Commodity | Quarter | ||||||||||||||||||||||||||||
Ended | Inventory fair | integration | Foundation | currency | mark-to-market | Ended | ||||||||||||||||||||||||||
3/19/11 | value adjustments | charges | Asset write-off | contribution | devaluation | net gains | 3/19/11 | |||||||||||||||||||||||||
Operating Profit |
||||||||||||||||||||||||||||||||
Frito Lay North America |
$ | 774 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 774 | ||||||||||||||||
Quaker Foods North America |
214 | | | | | | | 214 | ||||||||||||||||||||||||
Latin America Foods |
171 | | | | | | | 171 | ||||||||||||||||||||||||
PepsiCo Americas Foods |
1,159 | | | | | | | 1,159 | ||||||||||||||||||||||||
PepsiCo Americas Beverages |
558 | 9 | 21 | | | | | 588 | ||||||||||||||||||||||||
Europe |
63 | 25 | (8 | ) | | | | | 80 | |||||||||||||||||||||||
Asia, Middle East & Africa |
146 | | | | | | | 146 | ||||||||||||||||||||||||
Division Operating Profit |
1,926 | 34 | 13 | | | | | 1,973 | ||||||||||||||||||||||||
Corporate Unallocated |
(200 | ) | | 42 | | | | (31 | ) | (189 | ) | |||||||||||||||||||||
Total Operating Profit |
$ | 1,726 | $ | 34 | $ | 55 | $ | | $ | | $ | | $ | (31 | ) | $ | 1,784 | |||||||||||||||
GAAP | Non-GAAP | |||||||||||||||||||||||||||||||
Measure | Measure | |||||||||||||||||||||||||||||||
Reported | Core* | |||||||||||||||||||||||||||||||
Quarter | Merger and | Venezuela | Commodity | Quarter | ||||||||||||||||||||||||||||
Ended | Inventory fair | integration | Foundation | currency | mark-to-market | Ended | ||||||||||||||||||||||||||
3/20/10 | value adjustments | charges | Asset write-off | contribution | devaluation | net gains | 3/20/10 | |||||||||||||||||||||||||
Operating Profit |
||||||||||||||||||||||||||||||||
Frito Lay North America |
$ | 728 | $ | | $ | | $ | | $ | | $ | | $ | | $ | 728 | ||||||||||||||||
Quaker Foods North America |
195 | | | | | | | 195 | ||||||||||||||||||||||||
Latin America Foods |
145 | | | | | | | 145 | ||||||||||||||||||||||||
PepsiCo Americas Foods |
1,068 | | | | | | | 1,068 | ||||||||||||||||||||||||
PepsiCo Americas Beverages |
73 | 281 | 193 | | | (9 | ) | | 538 | |||||||||||||||||||||||
Europe |
118 | | 1 | | | | | 119 | ||||||||||||||||||||||||
Asia, Middle East & Africa |
155 | | | | | | | 155 | ||||||||||||||||||||||||
Division Operating Profit |
1,414 | 281 | 194 | | | (9 | ) | | 1,880 | |||||||||||||||||||||||
Corporate Unallocated |
(574 | ) | | 88 | 145 | 100 | 129 | (46 | ) | (158 | ) | |||||||||||||||||||||
Total Operating Profit |
$ | 840 | $ | 281 | $ | 282 | $ | 145 | $ | 100 | $ | 120 | $ | (46 | ) | $ | 1,722 | |||||||||||||||
* | Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 through A-8 for a discussion of each of these non-core adjustments. |
A-13
PepsiCo, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information (cont.)
Core Growth and Core Constant Currency Growth*
(unaudited)
Reconciliation of GAAP and Non-GAAP Information (cont.)
Core Growth and Core Constant Currency Growth*
(unaudited)
Quarter Ended | ||||||||
3/19/11 | ||||||||
Net Revenue | Operating Profit | |||||||
Frito-Lay North America |
||||||||
Reported Growth |
1.5 | % | 6 | % | ||||
Merger and Integration Charges |
| | ||||||
Core Growth |
1.5 | 6 | ||||||
Impact of Foreign Currency Translation |
| | ||||||
Core Constant Currency Growth |
1 | % | 6 | % | ||||
Quaker Foods North America |
||||||||
Reported Growth |
(6 | )% | 9 | % | ||||
Merger and Integration Charges |
| | ||||||
Core Growth |
(6 | ) | 9 | |||||
Impact of Foreign Currency Translation |
(1 | ) | (1 | ) | ||||
Core Constant Currency Growth |
(7 | )% | 9 | % | ||||
Latin America Foods |
||||||||
Reported Growth |
13 | % | 17 | % | ||||
Merger and Integration Charges |
| | ||||||
Core Growth |
13 | 17 | ||||||
Impact of Foreign Currency Translation |
(6 | ) | (5 | ) | ||||
Core Constant Currency Growth |
7 | % | 13 | % | ||||
PepsiCo Americas Foods |
||||||||
Reported Growth |
3 | % | 8 | % | ||||
Merger and Integration Charges |
| | ||||||
Core Growth |
3 | 8 | ||||||
Impact of Foreign Currency Translation |
(2 | ) | (1 | ) | ||||
Core Constant Currency Growth |
1 | % | 7 | % | ||||
PepsiCo Americas Beverages |
||||||||
Reported Growth |
64 | % | 669 | % | ||||
Merger and Integration Charges |
| (262 | ) | |||||
Inventory Fair Value Adjustments |
| (411 | ) | |||||
Venezuela Currency Devaluation |
| 13 | ||||||
Core Growth |
64 | 9 | ||||||
Impact of Foreign Currency Translation |
(0.5 | ) | (1 | ) | ||||
Core Constant Currency Growth |
63 | % | 9 | % | ||||
* | Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments. | |
Note certain amounts above may not sum due to rounding. |
A-14
PepsiCo, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information (cont.)
Core Growth and Core Constant Currency Growth*
(unaudited)
Reconciliation of GAAP and Non-GAAP Information (cont.)
Core Growth and Core Constant Currency Growth*
(unaudited)
Quarter Ended | ||||||||
3/19/11 | ||||||||
Net Revenue | Operating Profit | |||||||
Europe |
||||||||
Reported Growth |
56 | % | (47 | )% | ||||
Merger and Integration Charges |
| (8 | ) | |||||
Inventory Fair Value Adjustments |
| 21 | ||||||
Core Growth |
56 | (33 | ) | |||||
Impact of Foreign Currency Translation |
2 | 2 | ||||||
Core Constant Currency Growth |
58 | % | (31 | )% | ||||
Asia, Middle East & Africa |
||||||||
Reported Growth |
10 | % | (6 | )% | ||||
Merger and Integration Charges |
| | ||||||
Core Growth |
10 | (6 | ) | |||||
Impact of Foreign Currency Translation |
(2 | ) | (3 | ) | ||||
Core Constant Currency Growth |
7 | % | (9 | )% | ||||
Total Divisions |
||||||||
Reported Growth |
27 | % | 36 | % | ||||
Merger and Integration Charges |
| (14 | ) | |||||
Inventory Fair Value Adjustments |
| (18 | ) | |||||
Venezuela Currency Devaluation |
| 1 | ||||||
Core Growth |
27 | 5 | ||||||
Impact of Foreign Currency Translation |
(1 | ) | (1 | ) | ||||
Core Constant Currency Growth |
26 | % | 4 | % | ||||
* | Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments. See schedules A-7 and A-8 for a discussion of each of these non-core adjustments. | |
Note certain amounts above may not sum due to rounding. |
A-15