PURCHASE, N.Y., July 23, 2014 /PRNewswire/ -- PepsiCo, Inc.
(NYSE: PEP) today reported organic revenue growth of 3.6 percent
and core earnings per share of $1.32
for the second quarter.
"Despite operating in what continues to be a challenging and
volatile macro environment, we are delivering consistent, strong
results," said Chairman and CEO Indra
Nooyi.
"Our results reflect the power of our portfolio of products and
brands, and the strength of our geographic footprint. They also
reflect the hard work we've done to position our business for
sustainable success.
"Based on the strength of our year-to-date results and our
outlook for the remainder of the year, we're increasing our
full-year, core constant currency EPS growth target to eight
percent."
1Please
refer to the Glossary for the definitions of Non-GAAP financial
measures including core, constant currency, organic and free cash
flow.
|
Summary Second Quarter 2014 Performance (Percent
Growth)
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
Core Constant
Currencya
|
Organicb
|
Volume
|
|
|
|
Snacks
|
1
|
|
1
|
Beverages
|
1
|
|
1
|
Net
Revenue
|
0.5
|
|
4
|
Operating
Profitc
|
1
|
3
|
|
EPS
|
1
|
3
|
|
|
|
|
|
Organic
Volumeb
|
Net
Revenue
|
Operating
Profitc
|
Organic
Revenueb
|
Core
Constant
Currency
Operating
Profita
|
PAF
|
--
|
1
|
3
|
4
|
6
|
FLNA
|
2.5
|
2
|
3
|
2
|
5
|
LAF
|
(2)
|
--
|
2
|
8
|
9
|
QFNA
|
--
|
(2)
|
4
|
(1)
|
5
|
|
|
|
|
|
|
PAB
|
0.5
|
--
|
(2)
|
1
|
4
|
Europe
|
1/1d
|
--
|
6
|
5
|
10
|
AMEA
|
7/2d
|
1
|
(27)
|
7
|
(24)
|
Total
Divisions
|
1/1d
|
0.5
|
(3)
|
4
|
1
|
Total
PepsiCo
|
1/1d
|
0.5
|
1
|
4
|
3
|
|
a
Core constant currency results are non-GAAP financial measures
that exclude certain items affecting comparability. For more
information about our core constant currency results, see
"Reconciliation of GAAP and Non-GAAP Information" in the attached
exhibits. Please refer to the Glossary for definitions of "Core"
and "Constant Currency."
|
|
b
Organic results are non-GAAP financial measures that adjust for
impacts of acquisitions, divestitures and other structural changes
and foreign exchange translation. For more information about our
organic results, see "Reconciliation of GAAP and Non-GAAP
Information" in the attached exhibits. Please refer to the Glossary
for the definition of "Organic."
|
|
c
The reported operating profit performance was impacted by
certain items excluded from our core results in both 2014 and 2013.
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."
|
|
d Snacks/Beverages.
|
|
Summary of Second Quarter Financial Performance:
- Organic revenue grew 3.6 percent and reported net revenue grew
0.5 percent versus the prior-year quarter. Foreign exchange
translation had a 3-percentage-point unfavorable impact on reported
net revenue and structural change related to the 2013
refranchising of the company's bottling operations in Vietnam had a slight negative impact in the
quarter.
- Organic revenue grew 5 percent for global snacks and 2 percent
for global beverages in the quarter. On a reported basis, net
revenue grew 2 percent for global snacks, reflecting unfavorable
foreign exchange translation, and declined 1 percent for global
beverages, reflecting unfavorable foreign exchange translation and
the Vietnam refranchising.
- Developing and emerging market organic revenue grew 8 percent
in the quarter. On a reported basis, developing and emerging market
net revenue declined 1 percent in the quarter, reflecting the
Vietnam refranchising and
unfavorable foreign exchange translation.
- Core gross margin expanded 60 basis points in the quarter
reflecting implementation of effective revenue management
strategies and productivity initiatives. Core operating margin
expanded 10 basis points in the quarter. Excluding the gain related
to the Vietnam refranchising, net
of incremental investments from the prior-year quarter results,
core operating margin expanded 65 basis points in the quarter.
Reported gross margin increased 95 basis points and reported
operating margin increased 10 basis points in the quarter.
- Core constant currency operating profit increased 3 percent.
Excluding the $137 million gain
recorded in the prior-year quarter related to the Vietnam refranchising, net of incremental
investments, core constant currency operating profit increased 6
percent. Reported operating profit increased 1 percent and included
the net impact of mark-to-market gains on commodity hedges and
restructuring and impairment charges.
- The company's core effective tax rate was 26.3 percent and the
reported effective tax rate was 26.5 percent, both of which were
two percentage points higher than the prior-year quarter.
- Core EPS was $1.32 and reported
EPS was $1.29. Core EPS excludes a
positive net impact of $0.01 per
share related to mark-to-market net gains on commodity hedges and a
$0.04 per share negative impact from
restructuring and impairment charges. Mark-to-market net gains and
losses on commodity hedges are subsequently reflected in core
division results when the divisions recognize the cost of the
underlying commodity in operating profit.
- On track to deliver targeted $1
billion of productivity savings in 2014.
- Cash flow provided by operating activities was $2.7 billion year to date. Free cash flow
(excluding certain items) was $1.9
billion year to date.
- The company expects to return a total of $8.7 billion to shareholders in 2014 through
approximately $5.0 billion in share
repurchases and $3.7 billion in
dividends.
Division Operating Summaries:
PepsiCo Americas Foods (PAF)
Organic revenue grew 4
percent in the quarter, primarily driven by effective net pricing.
Reported net revenue increased 1 percent, reflecting a
3-percentage-point unfavorable impact from foreign exchange
translation.
Core constant currency operating profit increased 6 percent,
reflecting organic revenue gains and productivity initiatives,
partially offset by operating cost and commodity cost
inflation.
Frito-Lay North America
(FLNA)
Organic and reported net revenue increased 2
percent in the quarter, reflecting volume growth in an otherwise
sluggish period for the U.S. packaged food industry.
Core constant currency operating profit grew 5 percent in the
quarter, reflecting organic revenue gains, productivity savings, a
favorable actuarial adjustment driven by improved safety
performance and lower commodity costs, partially offset by
operating cost inflation.
Latin America Foods (LAF)
Organic revenue grew
8 percent in the quarter, reflecting 11 percentage points of
effective net pricing, partially offset by a 2 percent volume
decline. Reported net revenue was even versus the prior-year
quarter, reflecting an 8-percentage-point unfavorable foreign
exchange translation impact.
Organic revenue in Mexico
declined low-single-digits reflecting the adverse impact of the
enactment of taxes on certain food products. The balance of our
Latin America Foods business experienced double-digit organic
revenue growth led by Venezuela
and Argentina. Reported net
revenue declined mid-single-digits in Mexico and increased high-single-digits in the
balance of our Latin America Foods business, both reflecting the
impact of unfavorable foreign exchange translation.
Core constant currency operating profit increased 9 percent
reflecting organic revenue growth, productivity gains and lapping
of incremental investments in the prior year, partially offset by
operating cost and commodity cost inflation.
Quaker Foods North America (QFNA)
Organic
revenue declined 1 percent reflecting even volume versus the
prior-year quarter and unfavorable net pricing, partially offset by
favorable product mix. Reported net revenue declined 2 percent in
the quarter, reflecting a 1-percentage-point unfavorable foreign
exchange translation impact. Quaker gained value share in the
quarter in each of its core categories in the U.S., which include
hot cereal, ready-to-eat cereal and snack bars.
Core constant currency operating profit grew 5 percent,
reflecting productivity gains, improvement in the operating results
of the Muller Quaker Dairy joint venture, lower commodity costs and
the lapping of incremental investments in the prior year, partially
offset by the organic revenue decline.
PepsiCo Americas Beverages (PAB)
Organic revenue
increased 1 percent in the quarter, reflecting slight organic
volume gains and effective net pricing. During the quarter, PAB
grew its liquid refreshment beverage value market share position in
the U.S. in measured channels. Reported net revenue was even versus
the prior-year quarter, reflecting a 1-percentage-point impact from
unfavorable foreign exchange translation.
In North America,
non-carbonated beverage volume grew 1 percent and carbonated soft
drink volume declined 2 percent. Latin
America organic beverage volume increased 3 percent.
Core constant currency operating profit increased 4 percent,
reflecting effective net pricing, lower commodity costs and
productivity gains, partially offset by operating cost
inflation.
Europe
Organic
revenue grew 5 percent, reflecting 5 percentage points of effective
net pricing and volume growth of 1 percent in both snacks and
beverages. Reported net revenue was even versus the prior-year
quarter, reflecting a 4.5-percentage-point unfavorable foreign
exchange translation impact.
Core constant currency operating profit grew 10 percent,
reflecting organic revenue growth, productivity savings and lapping
of incremental investments in the prior year, partially offset by
higher commodity costs, increased advertising and marketing expense
and operating cost inflation.
Asia, Middle East & Africa (AMEA)
Organic revenue grew 7
percent in the quarter, lapping double-digit organic revenue growth
in the prior-year quarter. Growth was driven by 7 percent volume
growth in snacks and 2 percent volume growth in beverages. Reported
net revenue grew 1 percent, primarily reflecting a
5-percentage-point unfavorable impact from foreign exchange
translation and a 2-percentage-point negative impact from the 2013
Vietnam refranchising.
Core constant currency operating profit declined 24 percent,
reflecting the lapping of the gain related to the Vietnam refranchising. Excluding the impact of
the gain, core constant currency operating profit rose 2 percent,
reflecting organic revenue gains and productivity savings,
partially offset by operating cost inflation.
2014 Guidance and Outlook:
The company now expects 8
percent (an increase from the company's previous target of 7
percent) core constant currency EPS growth in fiscal 2014 versus
its fiscal 2013 core EPS of $4.37.
Based on the current foreign exchange market consensus, the company
currently expects foreign exchange translation to have an
unfavorable impact of approximately 4 percentage points on full
year core EPS growth in 2014.
Excluding the impact of structural changes and foreign exchange
translation, organic revenue in 2014 is expected to grow mid-single
digits versus 2013, consistent with the company's long-term target.
Based on the current foreign exchange market consensus, the company
currently expects foreign exchange translation to have an
unfavorable impact of approximately 3 percentage points on full
year net revenue growth in 2014.
For 2014, the company expects low-single digit commodity
inflation and productivity savings of approximately $1 billion. The company expects higher interest
expense driven by increased debt balances and a core effective tax
rate of approximately 25 percent.
The company is targeting over $10
billion in cash flow from operating activities and more than
$7 billion in free cash flow
(excluding certain items) in 2014. Net capital spending is expected
to be approximately $3 billion in
2014, within the company's long-term capital spending target of
less than or equal to 5 percent of net revenue.
The company expects to return a total of $8.7 billion to shareholders in 2014 through
dividends of approximately $3.7
billion and share repurchases of approximately $5.0 billion.
Conference Call:
At 8 a.m. (Eastern Time) today, the
company will host a conference call with investors and financial
analysts to discuss second-quarter 2014 results and the outlook for
2014. Further details, including a slide presentation accompanying
the call, will be accessible on the company's website at
www.pepsico.com/investors.
PepsiCo, Inc. and
Subsidiaries
|
Condensed
Consolidated Statement of Income
|
(in millions
except per share amounts, and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
24 Weeks
Ended
|
|
6/14/14
|
|
|
6/15/13
|
|
|
Change
|
|
6/14/14
|
|
|
6/15/13
|
|
|
Change
|
Net
Revenue
|
$
|
16,894
|
|
|
$
|
16,807
|
|
|
0.5
|
%
|
|
$
|
29,517
|
|
|
$
|
29,388
|
|
|
—
|
%
|
Cost of
sales
|
7,778
|
|
|
7,898
|
|
|
(1.5)
|
%
|
|
13,525
|
|
|
13,732
|
|
|
(1.5)
|
%
|
Selling, general and
administrative expenses
|
6,198
|
|
|
6,013
|
|
|
3
|
%
|
|
11,246
|
|
|
11,079
|
|
|
1.5
|
%
|
Amortization of
intangible assets
|
22
|
|
|
27
|
|
|
(18)
|
%
|
|
43
|
|
|
50
|
|
|
(14)
|
%
|
Operating
Profit
|
2,896
|
|
|
2,869
|
|
|
1
|
%
|
|
4,703
|
|
|
4,527
|
|
|
4
|
%
|
Interest
expense
|
(209)
|
|
|
(208)
|
|
|
1
|
%
|
|
(410)
|
|
|
(422)
|
|
|
(3)
|
%
|
Interest income and
other
|
18
|
|
|
18
|
|
|
1
|
%
|
|
28
|
|
|
45
|
|
|
(37)
|
%
|
Income before income
taxes
|
2,705
|
|
|
2,679
|
|
|
1
|
%
|
|
4,321
|
|
|
4,150
|
|
|
4
|
%
|
Provision for income
taxes
|
718
|
|
|
654
|
|
|
10
|
%
|
|
1,107
|
|
|
1,040
|
|
|
7
|
%
|
Net income
|
1,987
|
|
|
2,025
|
|
|
(2)
|
%
|
|
3,214
|
|
|
3,110
|
|
|
3
|
%
|
Less: Net income
attributable to noncontrolling interests
|
9
|
|
|
15
|
|
|
(39)
|
%
|
|
20
|
|
|
25
|
|
|
(20)
|
%
|
Net Income
Attributable to PepsiCo
|
$
|
1,978
|
|
|
$
|
2,010
|
|
|
(2)
|
%
|
|
$
|
3,194
|
|
|
$
|
3,085
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to PepsiCo per Common
Share
|
$
|
1.29
|
|
|
$
|
1.28
|
|
|
1
|
%
|
|
$
|
2.08
|
|
|
$
|
1.97
|
|
|
5.5
|
%
|
Weighted-average
common shares outstanding
|
1,532
|
|
|
1,567
|
|
|
|
|
1,536
|
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
0.655
|
|
|
$
|
0.5675
|
|
|
|
|
$
|
1.2225
|
|
|
$
|
1.105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo, Inc. and
Subsidiaries
Supplemental
Financial Information
(in millions,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
24 Weeks
Ended
|
|
6/14/14
|
|
6/15/13
|
|
Change
|
|
6/14/14
|
|
6/15/13
|
|
Change
|
Net
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frito-Lay North
America
|
$
|
3,387
|
|
$
|
3,332
|
|
2
|
%
|
|
$
|
6,606
|
|
$
|
6,455
|
|
2
|
%
|
Quaker Foods North
America
|
564
|
|
577
|
|
(2)
|
%
|
|
1,198
|
|
1,211
|
|
(1)
|
%
|
Latin America
Foods
|
2,122
|
|
2,116
|
|
—
|
%
|
|
3,460
|
|
3,483
|
|
(1)
|
%
|
PepsiCo Americas
Foods
|
6,073
|
|
6,025
|
|
1
|
%
|
|
11,264
|
|
11,149
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas
Beverages
|
5,281
|
|
5,260
|
|
—
|
%
|
|
9,707
|
|
9,680
|
|
—
|
%
|
Europe
|
3,657
|
|
3,653
|
|
—
|
%
|
|
5,618
|
|
5,595
|
|
—
|
%
|
Asia, Middle East
& Africa
|
1,883
|
|
1,869
|
|
1
|
%
|
|
2,928
|
|
2,964
|
|
(1)
|
%
|
Total Net
Revenue
|
$
|
16,894
|
|
$
|
16,807
|
|
0.5
|
%
|
|
$
|
29,517
|
|
$
|
29,388
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
|
|
Frito-Lay North
America
|
$
|
937
|
|
$
|
906
|
|
3
|
%
|
|
$
|
1,799
|
|
$
|
1,734
|
|
4
|
%
|
Quaker Foods North
America
|
139
|
|
133
|
|
4
|
%
|
|
299
|
|
313
|
|
(4.5)
|
%
|
Latin America
Foods
|
323
|
|
318
|
|
2
|
%
|
|
555
|
|
534
|
|
4
|
%
|
PepsiCo Americas
Foods
|
1,399
|
|
1,357
|
|
3
|
%
|
|
2,653
|
|
2,581
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas
Beverages
|
868
|
|
882
|
|
(2)
|
%
|
|
1,297
|
|
1,447
|
|
(10)
|
%
|
Europe
|
451
|
|
425
|
|
6
|
%
|
|
603
|
|
513
|
|
18
|
%
|
Asia, Middle East
& Africa
|
381
|
|
524
|
|
(27)
|
%
|
|
575
|
|
708
|
|
(19)
|
%
|
Division Operating
Profit
|
3,099
|
|
3,188
|
|
(3)
|
%
|
|
5,128
|
|
5,249
|
|
(2)
|
%
|
Corporate
Unallocated
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
Mark-to-Market Net Impact
|
31
|
|
(39)
|
|
|
|
65
|
|
(55)
|
|
|
Restructuring and
Impairment Charges
|
(8)
|
|
(1)
|
|
|
|
(5)
|
|
(2)
|
|
|
Venezuela Currency
Devaluation
|
—
|
|
—
|
|
|
|
—
|
|
(124)
|
|
|
Other
|
(226)
|
|
(279)
|
|
|
|
(485)
|
|
(541)
|
|
|
|
(203)
|
|
(319)
|
|
(36)
|
%
|
|
(425)
|
|
(722)
|
|
(41)
|
%
|
Total Operating
Profit
|
$
|
2,896
|
|
$
|
2,869
|
|
1
|
%
|
|
$
|
4,703
|
|
$
|
4,527
|
|
4
|
%
|
|
|
PepsiCo, Inc. and
Subsidiaries
Condensed
Consolidated Statement of Cash Flows
(in millions,
unaudited)
|
|
|
|
|
|
|
|
24 Weeks
Ended
|
|
6/14/14
|
|
6/15/13
|
Operating
Activities
|
|
|
|
Net income
|
$
|
3,214
|
|
$
|
3,110
|
Depreciation and
amortization
|
1,162
|
|
1,185
|
Stock-based
compensation expense
|
140
|
|
149
|
Cash payments for
merger and integration charges
|
—
|
|
(17)
|
Restructuring and
impairment charges
|
190
|
|
30
|
Cash payments for
restructuring charges
|
(112)
|
|
(74)
|
Cash payments for
restructuring and other charges related to the transaction with
Tingyi (Cayman Islands)
Holding Corp. (Tingyi)
|
—
|
|
(18)
|
Non-cash foreign
exchange loss related to Venezuela devaluation
|
—
|
|
111
|
Excess tax benefits
from share-based payment arrangements
|
(64)
|
|
(83)
|
Pension and retiree
medical plan expenses
|
243
|
|
306
|
Pension and retiree
medical plan contributions
|
(155)
|
|
(180)
|
Deferred income taxes
and other tax charges and credits
|
35
|
|
(189)
|
Change in accounts
and notes receivable
|
(1,554)
|
|
(1,088)
|
Change in
inventories
|
(822)
|
|
(659)
|
Change in prepaid
expenses and other current assets
|
(152)
|
|
(241)
|
Change in accounts
payable and other current liabilities
|
120
|
|
400
|
Change in income
taxes payable
|
636
|
|
543
|
Other, net
|
(209)
|
|
(270)
|
Net Cash Provided
by Operating Activities
|
2,672
|
|
3,015
|
|
|
|
|
Investing
Activities
|
|
|
|
Capital
spending
|
(921)
|
|
(911)
|
Sales of property,
plant and equipment
|
42
|
|
30
|
Cash payments related
to the transaction with Tingyi
|
—
|
|
(3)
|
Acquisitions and
investments in noncontrolled affiliates
|
(31)
|
|
(59)
|
Divestitures
|
123
|
|
174
|
Short-term
investments, net
|
(3,380)
|
|
(4)
|
Other
investing
|
5
|
|
(13)
|
Net Cash Used for
Investing Activities
|
(4,162)
|
|
(786)
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from
issuances of long-term debt
|
3,364
|
|
2,491
|
Payments of long-term
debt
|
(1,655)
|
|
(1,945)
|
Short-term
borrowings, net
|
1,548
|
|
753
|
Cash dividends
paid
|
(1,752)
|
|
(1,677)
|
Share repurchases –
common
|
(2,199)
|
|
(1,028)
|
Share repurchases –
preferred
|
(3)
|
|
(4)
|
Proceeds from
exercises of stock options
|
381
|
|
823
|
Excess tax benefits
from share-based payment arrangements
|
64
|
|
83
|
Acquisition of
noncontrolling interests
|
—
|
|
(20)
|
Other
financing
|
(3)
|
|
(3)
|
Net Cash Used for
Financing Activities
|
(255)
|
|
(527)
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(23)
|
|
(206)
|
Net
(Decrease)/Increase in Cash and Cash Equivalents
|
(1,768)
|
|
1,496
|
Cash and Cash
Equivalents, Beginning of Year
|
9,375
|
|
6,297
|
Cash and Cash
Equivalents, End of Period
|
$
|
7,607
|
|
$
|
7,793
|
|
|
PepsiCo, Inc. and
Subsidiaries
Condensed
Consolidated Balance Sheet
(in millions
except per share amounts)
|
|
|
|
|
|
|
|
6/14/14
|
|
12/28/13
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
7,607
|
|
$
|
9,375
|
Short-term
investments
|
3,692
|
|
303
|
Accounts and notes
receivable, net
|
8,470
|
|
6,954
|
Inventories
|
|
|
|
Raw
materials
|
1,965
|
|
1,732
|
Work-in-process
|
341
|
|
168
|
Finished
goods
|
1,888
|
|
1,509
|
|
4,194
|
|
3,409
|
Prepaid expenses and
other current assets
|
1,832
|
|
2,162
|
Total Current
Assets
|
25,795
|
|
22,203
|
Property, plant and
equipment, net
|
18,174
|
|
18,575
|
Amortizable
intangible assets, net
|
1,585
|
|
1,638
|
Goodwill
|
16,457
|
|
16,613
|
Other nonamortizable
intangible assets
|
14,205
|
|
14,401
|
Nonamortizable
Intangible Assets
|
30,662
|
|
31,014
|
Investments in
noncontrolled affiliates
|
1,902
|
|
1,841
|
Other
assets
|
2,315
|
|
2,207
|
Total
Assets
|
$
|
80,433
|
|
$
|
77,478
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Short-term
obligations
|
$
|
7,242
|
|
$
|
5,306
|
Accounts payable and
other current liabilities
|
12,986
|
|
12,533
|
Total Current
Liabilities
|
20,228
|
|
17,839
|
Long-term debt
obligations
|
25,606
|
|
24,333
|
Other
liabilities
|
4,927
|
|
4,931
|
Deferred income
taxes
|
6,072
|
|
5,986
|
Total
Liabilities
|
56,833
|
|
53,089
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
Preferred stock, no
par value
|
41
|
|
41
|
Repurchased preferred
stock
|
(174)
|
|
(171)
|
PepsiCo Common
Shareholders' Equity
|
|
|
|
Common stock, par
value 12/3¢ per share (authorized 3,600
shares, issued, net of repurchased common
stock at par value:
1,511 shares and 1,529 shares, respectively)
|
25
|
|
25
|
Capital in excess of
par value
|
3,978
|
|
4,095
|
Retained
earnings
|
47,748
|
|
46,420
|
Accumulated other
comprehensive loss
|
(5,481)
|
|
(5,127)
|
Repurchased common
stock, in excess of par value (355 and 337 shares,
respectively)
|
(22,666)
|
|
(21,004)
|
Total PepsiCo Common
Shareholders' Equity
|
23,604
|
|
24,409
|
Noncontrolling
interests
|
129
|
|
110
|
Total
Equity
|
23,600
|
|
24,389
|
Total
Liabilities and Equity
|
$
|
80,433
|
|
$
|
77,478
|
|
|
PepsiCo, Inc. and
Subsidiaries
|
Supplemental Share
and Stock-Based Compensation Data
|
(in millions
except dollar amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
24 Weeks
Ended
|
|
6/14/14
|
|
|
6/15/13
|
|
|
6/14/14
|
|
|
6/15/13
|
|
Beginning Net Shares
Outstanding
|
1,519
|
|
|
1,545
|
|
|
1,529
|
|
|
1,544
|
|
Options Exercised and
Restricted Stock Units Converted
|
4
|
|
|
8
|
|
|
9
|
|
|
18
|
|
Shares
Repurchased
|
(12)
|
|
|
(6)
|
|
|
(27)
|
|
|
(15)
|
|
Ending Net Shares
Outstanding
|
1,511
|
|
|
1,547
|
|
|
1,511
|
|
|
1,547
|
|
|
|
|
|
|
|
|
|
Weighted Average
Basic
|
1,515
|
|
|
1,548
|
|
|
1,519
|
|
|
1,546
|
|
Dilutive
Securities:
|
|
|
|
|
|
|
|
Options
|
10
|
|
|
12
|
|
|
10
|
|
|
11
|
|
Restricted Stock,
PEPUnits and Other
|
6
|
|
|
6
|
|
|
6
|
|
|
7
|
|
ESOP Convertible
Preferred Stock
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Weighted Average
Diluted
|
1,532
|
|
|
1,567
|
|
|
1,536
|
|
|
1,565
|
|
|
|
|
|
|
|
|
|
Average Share Price
for the Period
|
$
|
85.55
|
|
|
$
|
81.55
|
|
|
$
|
83.32
|
|
|
$
|
77.61
|
|
Growth Versus
Prior Year
|
5
|
%
|
|
22
|
%
|
|
7
|
%
|
|
18
|
%
|
|
|
|
|
|
|
|
|
Options
Outstanding
|
45
|
|
|
55
|
|
|
47
|
|
|
58
|
|
Options in the
Money
|
45
|
|
|
55
|
|
|
47
|
|
|
57
|
|
Dilutive Shares from
Options
|
10
|
|
|
12
|
|
|
10
|
|
|
11
|
|
Dilutive Shares
from Options as a % of Options in the Money
|
22
|
%
|
|
21
|
%
|
|
20
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
Average Exercise
Price of Options in the Money
|
$
|
63.28
|
|
|
$
|
61.17
|
|
|
$
|
63.14
|
|
|
$
|
60.76
|
|
|
|
|
|
|
|
|
|
Restricted Stock,
PEPUnits and Other Outstanding
|
13
|
|
|
13
|
|
|
13
|
|
|
14
|
|
Dilutive Shares from
Restricted Stock, PEPUnits and Other
|
6
|
|
|
6
|
|
|
6
|
|
|
7
|
|
|
|
|
|
|
|
|
|
Average Intrinsic
Value of Restricted Stock Units Outstanding
(a)
|
$
|
74.20
|
|
|
$
|
68.61
|
|
|
$
|
74.17
|
|
|
$
|
68.42
|
|
Average Intrinsic
Value of PEPUnits Outstanding (a)
|
$
|
60.82
|
|
|
$
|
66.65
|
|
|
$
|
60.83
|
|
|
$
|
66.65
|
|
(a)
Weighted-average intrinsic value at grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information
Organic Revenue
Growth Rates
12 Weeks Ended
June 14, 2014 and June 15, 2013
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
Impact
|
|
GAAP
Measure
|
|
Non-GAAP
Measure
|
|
|
|
|
|
Reported
% Change
|
|
Organic
% Change
(a)
|
Net Revenue Year
over Year % Change
|
Volume
|
|
Effective
net
pricing
|
|
Acquisitions
and
divestitures
|
|
Foreign
exchange
translation
|
|
12 Weeks
Ended
6/14/14
|
|
12 Weeks
Ended
6/14/14
|
Frito-Lay North
America
|
2
|
|
—
|
|
—
|
|
(1)
|
|
2
|
|
2
|
Quaker Foods North
America
|
(1)
|
|
(1)
|
|
—
|
|
(1)
|
|
(2)
|
|
(1)
|
Latin America
Foods
|
(3)
|
|
11
|
|
—
|
|
(8)
|
|
—
|
|
8
|
PepsiCo Americas
Foods
|
—
|
|
4
|
|
—
|
|
(3)
|
|
1
|
|
4
|
PepsiCo Americas
Beverages
|
—
|
|
1
|
|
—
|
|
(1)
|
|
—
|
|
1
|
Europe
|
—
|
|
5
|
|
—
|
|
(4.5)
|
|
—
|
|
5
|
Asia, Middle East
& Africa
|
5
|
|
2
|
|
(2)
|
|
(5)
|
|
1
|
|
7
|
Total
PepsiCo
|
0.5
|
|
3
|
|
—
|
|
(3)
|
|
0.5
|
|
4
|
|
|
|
|
|
|
|
|
Percent
Impact
|
|
GAAP
Measure
|
|
Non-GAAP
Measure
|
|
|
|
|
|
Reported
% Change
|
|
Organic
% Change
(a)
|
Net Revenue Year
over Year % Change
|
Volume
|
|
Effective
net
pricing
|
|
Acquisitions
and
divestitures
|
|
Foreign
exchange
translation
|
|
12 Weeks
Ended
6/15/13
|
|
12 Weeks
Ended
6/15/13
|
Frito-Lay North
America
|
2
|
|
2
|
|
—
|
|
—
|
|
4
|
|
4.5
|
Quaker Foods North
America
|
1
|
|
(2)
|
|
—
|
|
—
|
|
(1)
|
|
(1)
|
Latin America
Foods
|
1
|
|
10
|
|
—
|
|
(3)
|
|
9
|
|
12
|
PepsiCo Americas
Foods
|
2
|
|
5
|
|
—
|
|
(1)
|
|
5
|
|
6
|
PepsiCo Americas
Beverages
|
(4.5)
|
|
3
|
|
—
|
|
(0.5)
|
|
(2)
|
|
(1)
|
Europe
|
2
|
|
2
|
|
—
|
|
(3)
|
|
1
|
|
4
|
Asia, Middle East
& Africa
|
7
|
|
7
|
|
(6)
|
|
(3)
|
|
6
|
|
14
|
Total
PepsiCo
|
—
|
|
4
|
|
(1)
|
|
(1.5)
|
|
2
|
|
4
|
|
(a) Organic
percent change is a financial measure that is not in accordance
with GAAP and is calculated by excluding the impact of acquisitions
and
divestitures and
foreign exchange translation from reported growth.
|
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Organic Revenue
Growth Rates
24 Weeks Ended
June 14, 2014 and June 15, 2013
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
Impact
|
|
GAAP
Measure
|
|
Non-GAAP
Measure
|
|
|
|
|
|
|
|
|
|
Reported
% Change
|
|
Organic
% Change
(a)
|
Net Revenue Year
over Year % Change
|
Volume
|
|
Effective
net
pricing
|
|
Acquisitions
and
divestitures
|
|
Foreign
exchange
translation
|
|
24 Weeks
Ended
6/14/14
|
|
24 Weeks
Ended
6/14/14
|
Frito-Lay North
America
|
2
|
|
1
|
|
—
|
|
(1)
|
|
2
|
|
3
|
Quaker Foods North
America
|
—
|
|
(0.5)
|
|
—
|
|
(1)
|
|
(1)
|
|
—
|
Latin America
Foods
|
(3)
|
|
11
|
|
—
|
|
(9)
|
|
(1)
|
|
9
|
PepsiCo Americas
Foods
|
0.5
|
|
4
|
|
—
|
|
(3)
|
|
1
|
|
4.5
|
PepsiCo Americas
Beverages
|
—
|
|
1
|
|
—
|
|
(1)
|
|
—
|
|
1
|
Europe
|
1
|
|
4.5
|
|
—
|
|
(5)
|
|
—
|
|
5
|
Asia, Middle East
& Africa
|
4
|
|
2
|
|
(3)
|
|
(5)
|
|
(1)
|
|
6
|
Total
PepsiCo
|
1
|
|
3
|
|
—
|
|
(3)
|
|
—
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
Impact
|
|
GAAP
Measure
|
|
Non-GAAP
Measure
|
|
|
|
|
|
|
|
|
|
Reported
% Change
|
|
Organic
% Change
(a)
|
Net Revenue Year
over Year % Change
|
Volume
|
|
Effective
net
pricing
|
|
Acquisitions
and
divestitures
|
|
Foreign
exchange
translation
|
|
24 Weeks
Ended
6/15/13
|
|
24 Weeks
Ended
6/15/13
|
Frito-Lay North
America
|
3
|
|
1
|
|
—
|
|
—
|
|
4
|
|
4
|
Quaker Foods North
America
|
2
|
|
(1)
|
|
—
|
|
—
|
|
0.5
|
|
1
|
Latin America
Foods
|
1
|
|
11
|
|
—
|
|
(3)
|
|
9
|
|
13
|
PepsiCo Americas
Foods
|
2
|
|
4
|
|
—
|
|
(1)
|
|
5
|
|
6
|
PepsiCo Americas
Beverages
|
(3.5)
|
|
3
|
|
—
|
|
—
|
|
(1)
|
|
(1)
|
Europe
|
2
|
|
2
|
|
—
|
|
(2)
|
|
2
|
|
4
|
Asia, Middle East
& Africa
|
10
|
|
4
|
|
(14)
|
|
(2)
|
|
(2)
|
|
15
|
Total
PepsiCo
|
1
|
|
3
|
|
(1.5)
|
|
(1)
|
|
2
|
|
4
|
|
(a) Organic
percent change is a financial measure that is not in accordance
with GAAP and is calculated by excluding the impact of acquisitions
and
divestitures and
foreign exchange translation from reported growth.
|
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Year over Year
Growth Rates
12 Weeks Ended
June 14, 2014 and June 15, 2013 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Measure
|
|
|
|
|
|
|
|
Non-
GAAP
Measure
|
|
|
|
Non-
GAAP
Measure
|
|
|
|
Reported
% Change
|
|
Percent Impact of
Non-Core Adjustments
|
|
Core
(a)
% Change
|
|
Percent
Impact of
|
|
Core
Constant
Currency
(a)
% Change
|
|
|
Operating Profit
Year over Year % Change
|
12 Weeks
Ended
6/14/14
|
|
Commodity
mark-to-
market net
impact
|
|
Merger
and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
12 Weeks
Ended
6/14/14
|
|
Foreign
exchange
translation
|
|
12 Weeks
Ended
6/14/14
|
|
|
Frito-Lay North
America
|
3
|
|
—
|
|
—
|
|
1
|
|
5
|
|
0.5
|
|
5
|
|
|
Quaker Foods North
America
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
1
|
|
5
|
|
|
Latin America
Foods
|
2
|
|
—
|
|
—
|
|
1
|
|
3
|
|
6
|
|
9
|
|
|
PepsiCo Americas
Foods
|
3
|
|
—
|
|
—
|
|
1
|
|
4
|
|
2
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas
Beverages
|
(2)
|
|
—
|
|
—
|
|
3.5
|
|
2
|
|
2
|
|
4
|
|
|
Europe
|
6
|
|
—
|
|
—
|
|
4
|
|
10
|
|
0.5
|
|
10
|
|
|
Asia, Middle East
& Africa
|
(27)
|
|
—
|
|
—
|
|
1
|
|
(26)
|
|
2
|
|
(24)
|
|
|
Division Operating
Profit
|
(3)
|
|
—
|
|
—
|
|
2
|
|
(1)
|
|
2
|
|
1
|
|
|
Impact of Corporate
Unallocated
|
4
|
|
(2.5)
|
|
—
|
|
0.5
|
|
2
|
|
—
|
|
2
|
|
|
Total Operating
Profit
|
1
|
|
(2.5)
|
|
—
|
|
2.5
|
|
1
|
|
2
|
|
3
|
|
|
Net Income
Attributable to PepsiCo
|
(2)
|
|
|
|
|
|
|
|
(1)
|
|
2
|
|
1
|
|
|
Net Income
Attributable to PepsiCo per common share -
diluted
|
1
|
|
|
|
|
|
|
|
1
|
|
2
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Measure
|
|
|
|
|
|
|
|
|
|
Non-
GAAP
Measure
|
|
|
|
Non-
GAAP
Measure
|
|
Reported
% Change
|
|
Percent Impact of
Non-Core Adjustments
|
|
|
|
Core
(a)
% Change
|
|
Percent
Impact of
|
|
Core
Constant
Currency
(a)
% Change
|
Operating Profit
Year over Year % Change
|
12 Weeks
Ended
6/15/13
|
|
Commodity
mark-to-
market net
impact
|
|
Merger
and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
Restructuring
and other
charges
related to the
transaction
with
Tingyi
|
|
12 Weeks
Ended
6/15/13
|
|
Foreign
exchange
translation
|
|
12 Weeks
Ended
6/15/13
|
Frito-Lay North
America
|
8
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
6
|
|
—
|
|
6
|
Quaker Foods North
America
|
(14)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14)
|
|
—
|
|
(14)
|
Latin America
Foods
|
17
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
14
|
|
2
|
|
17
|
PepsiCo Americas
Foods
|
8
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
5
|
|
1
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas
Beverages
|
5
|
|
—
|
|
—
|
|
(3.5)
|
|
—
|
|
1.5
|
|
2
|
|
4
|
Europe
|
(6)
|
|
—
|
|
—
|
|
2
|
|
—
|
|
(5)
|
|
3
|
|
(2)
|
Asia, Middle East
& Africa
|
217
|
|
—
|
|
—
|
|
(7)
|
|
(141)
|
|
69
|
|
2
|
|
71
|
Division Operating
Profit
|
17
|
|
—
|
|
—
|
|
(2)
|
|
(5)
|
|
9
|
|
2
|
|
11
|
Impact of Corporate
Unallocated
|
3
|
|
(2)
|
|
—
|
|
—
|
|
(1)
|
|
—
|
|
—
|
|
—
|
Total Operating
Profit
|
21
|
|
(2)
|
|
—
|
|
(2)
|
|
(6)
|
|
9
|
|
2
|
|
11
|
Net Income
Attributable to PepsiCo
|
35
|
|
|
|
|
|
|
|
|
|
16
|
|
2
|
|
18
|
Net Income
Attributable to PepsiCo per common share - diluted
|
36
|
|
|
|
|
|
|
|
|
|
17
|
|
2
|
|
19
|
|
(a) 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 A-18 through A-20 for a
discussion of each
of these adjustments.
|
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Year over Year
Growth Rates
24 Weeks Ended
June 14, 2014 and June 15, 2013
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Measure
|
|
|
|
Non-
GAAP
Measure
|
|
|
|
Non-
GAAP
Measure
|
|
|
|
Reported
% Change
|
|
Percent Impact of
Non-Core Adjustments
|
|
Core
(a)
% Change
|
|
Percent
Impact of
|
|
Core
Constant
Currency
(a)
% Change
|
|
|
Operating Profit
Year over Year % Change
|
24 Weeks
Ended
6/14/14
|
|
Commodity
mark-to-
market net
impact
|
|
Merger
and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
Venezuela
currency
devaluation
|
|
24 Weeks
Ended
6/14/14
|
|
Foreign
exchange
translation
|
|
24 Weeks
Ended
6/14/14
|
|
|
Frito-Lay North
America
|
4
|
|
—
|
|
—
|
|
1
|
|
—
|
|
5
|
|
1
|
|
5.5
|
|
|
Quaker Foods North
America
|
(4.5)
|
|
—
|
|
—
|
|
1
|
|
—
|
|
(4)
|
|
1
|
|
(3)
|
|
|
Latin America
Foods
|
4
|
|
—
|
|
—
|
|
(1)
|
|
—
|
|
3
|
|
8
|
|
11
|
|
|
PepsiCo Americas
Foods
|
3
|
|
—
|
|
—
|
|
1
|
|
—
|
|
4
|
|
2
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas
Beverages
|
(10)
|
|
—
|
|
—
|
|
8
|
|
1
|
|
(1)
|
|
2
|
|
1
|
|
|
Europe
|
18
|
|
—
|
|
—
|
|
2
|
|
—
|
|
19
|
|
1
|
|
20
|
|
|
Asia, Middle East
& Africa
|
(19)
|
|
—
|
|
—
|
|
1
|
|
—
|
|
(18)
|
|
2
|
|
(15)
|
|
|
Division Operating
Profit
|
(2)
|
|
—
|
|
—
|
|
3
|
|
—
|
|
1
|
|
2
|
|
3
|
|
|
Impact of Corporate
Unallocated
|
6
|
|
(3)
|
|
—
|
|
0.5
|
|
(3)
|
|
1
|
|
—
|
|
1.5
|
|
|
Total Operating
Profit
|
4
|
|
(3)
|
|
—
|
|
3.5
|
|
(2)
|
|
2
|
|
2
|
|
4.5
|
|
|
Net Income
Attributable to PepsiCo
|
3.5
|
|
|
|
|
|
|
|
|
|
1
|
|
2
|
|
4
|
|
|
Net Income
Attributable to PepsiCo per common share - diluted
|
5.5
|
|
|
|
|
|
|
|
|
|
3
|
|
2.5
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Measure
|
|
|
|
|
|
|
|
Non-
GAAP
Measure
|
|
|
|
Non-
GAAP
Measure
|
|
Reported
% Change
|
|
Percent Impact of
Non-Core Adjustments
|
|
|
|
Core
(a)
% Change
|
|
Percent
Impact of
|
|
Core
Constant
Currency
(a)
% Change
|
Operating Profit
Year over Year % Change
|
24 Weeks
Ended
6/15/13
|
|
Commodity
mark-to-
market net
impact
|
|
Merger
and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
Restructuring
and
other charges
related to
the
transaction
with
Tingyi
|
|
Venezuela
currency
devaluation
|
|
24 Weeks
Ended
6/15/13
|
|
Foreign
exchange
translation
|
|
24 Weeks
Ended
6/15/13
|
Frito-Lay North
America
|
7
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
6
|
|
—
|
|
6
|
Quaker Foods North
America
|
(8)
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
(10)
|
|
—
|
|
(10)
|
Latin America
Foods
|
18
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
15
|
|
5
|
|
20
|
PepsiCo Americas
Foods
|
7
|
|
—
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
5
|
|
1
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PepsiCo Americas
Beverages
|
6
|
|
—
|
|
—
|
|
(3)
|
|
—
|
|
(1)
|
|
2
|
|
2
|
|
4
|
Europe
|
(4)
|
|
—
|
|
(1)
|
|
2.5
|
|
—
|
|
—
|
|
(2)
|
|
2
|
|
—
|
Asia, Middle East
& Africa
|
126
|
|
—
|
|
—
|
|
(7)
|
|
(67)
|
|
—
|
|
52
|
|
2
|
|
54
|
Division Operating
Profit
|
14
|
|
—
|
|
—
|
|
(2)
|
|
(3)
|
|
—
|
|
8
|
|
1
|
|
9
|
Impact of Corporate
Unallocated
|
(3)
|
|
1.5
|
|
—
|
|
—
|
|
—
|
|
3
|
|
1
|
|
—
|
|
1
|
Total Operating
Profit
|
10
|
|
1.5
|
|
—
|
|
(2)
|
|
(3)
|
|
3
|
|
9
|
|
1.5
|
|
10
|
Net Income
Attributable to PepsiCo
|
18
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
2
|
|
16
|
Net Income
Attributable to PepsiCo per common share - diluted
|
19
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
2
|
|
17
|
|
(a) 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 A-18 through A-20 for a discussion of
each
of these
adjustments.
|
|
|
Note –
Certain amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Certain Line
Items
12 Weeks Ended
June 14, 2014 and June 15, 2013
(in millions
except per share amounts, unaudited)
|
|
|
|
GAAP
Measure
|
|
|
|
|
|
Non-
GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core
(a)
|
|
12 Weeks
Ended
6/14/14
|
|
Commodity
mark-to-
market net
impact
|
|
Restructuring
and
impairment
charges
|
|
12 Weeks
Ended
6/14/14
|
Cost of
sales
|
$
|
7,778
|
|
|
$
|
21
|
|
$
|
—
|
|
$
|
7,799
|
|
Selling, general and
administrative expenses
|
$
|
6,198
|
|
|
$
|
10
|
|
$
|
(92)
|
|
$
|
6,116
|
|
Operating
profit
|
$
|
2,896
|
|
|
$
|
(31)
|
|
$
|
92
|
|
$
|
2,957
|
|
Provision for income
taxes
|
$
|
718
|
|
|
$
|
(11)
|
|
$
|
20
|
|
$
|
727
|
|
Noncontrolling
interests
|
$
|
9
|
|
|
$
|
—
|
|
$
|
3
|
|
$
|
12
|
|
Net income
attributable to PepsiCo
|
$
|
1,978
|
|
|
$
|
(20)
|
|
$
|
69
|
|
$
|
2,027
|
|
Net income
attributable to PepsiCo per common share - diluted
|
|
|
|
|
$
|
1.29
|
|
|
$
|
(0.01)
|
|
$
|
0.04
|
|
$
|
1.32
|
|
Effective tax
rate
|
|
|
|
|
26.5
|
%
|
|
|
|
|
|
26.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Measure
|
|
|
|
|
|
|
|
Non-
GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core
(a)
|
|
12 Weeks
Ended
6/15/13
|
|
Commodity
mark-to-
market net
impact
|
|
Merger
and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
12 Weeks
Ended
6/15/13
|
Cost of
sales
|
$
|
7,898
|
|
|
$
|
(40)
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,858
|
|
Selling, general and
administrative expenses
|
$
|
6,013
|
|
|
$
|
1
|
|
|
$
|
1
|
|
$
|
(19)
|
|
$
|
5,996
|
|
Operating
profit
|
$
|
2,869
|
|
|
$
|
39
|
|
|
$
|
(1)
|
|
$
|
19
|
|
$
|
2,926
|
|
Provision for income
taxes
|
$
|
654
|
|
|
$
|
13
|
|
|
$
|
—
|
|
$
|
4
|
|
$
|
671
|
|
Net income
attributable to PepsiCo
|
$
|
2,010
|
|
|
$
|
26
|
|
|
$
|
(1)
|
|
$
|
15
|
|
$
|
2,050
|
|
Net income
attributable to PepsiCo per common share - diluted
|
$
|
1.28
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
$
|
0.01
|
|
$
|
1.31
|
|
Effective tax
rate
|
24.4
|
%
|
|
|
|
|
|
|
|
24.5
|
%
|
|
(a) Core results
are financial measures that are not in accordance with GAAP and
exclude the above non-core adjustments. See A-18 through A-20 for a
discussion of each
of these
adjustments.
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Certain Line
Items
24 Weeks Ended
June 14, 2014 and June 15, 2013
(in millions
except per share amounts, unaudited)
|
|
|
|
GAAP
Measure
|
|
|
Non-
GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core(a)
|
|
24
Weeks Ended 6/14/14
|
|
Commodity
mark-to- market
net impact
|
|
Restructuring
and impairment charges
|
|
24
Weeks Ended 6/14/14
|
Cost of
sales
|
$
|
13,525
|
|
|
$
|
67
|
|
$
|
—
|
|
$
|
13,592
|
|
Selling, general and
administrative expenses
|
$
|
11,246
|
|
|
$
|
(2)
|
|
$
|
(190)
|
|
$
|
11,054
|
|
Operating
profit
|
$
|
4,703
|
|
|
$
|
(65)
|
|
$
|
190
|
|
$
|
4,828
|
|
Provision for income
taxes
|
$
|
1,107
|
|
|
$
|
(24)
|
|
$
|
42
|
|
$
|
1,125
|
|
Noncontrolling
interests
|
$
|
20
|
|
|
$
|
—
|
|
$
|
3
|
|
$
|
23
|
|
Net income
attributable to PepsiCo
|
$
|
3,194
|
|
|
$
|
(41)
|
|
$
|
145
|
|
$
|
3,298
|
|
Net income
attributable to PepsiCo per common share - diluted
|
$
|
2.08
|
|
|
$
|
(0.03)
|
|
$
|
0.09
|
|
$
|
2.15
|
|
Effective tax
rate
|
25.6
|
%
|
|
|
|
|
|
25.3
|
%
|
|
|
|
GAAP
Measure
|
|
|
|
Non-
GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core(a)
|
|
24 Weeks
Ended
6/15/13
|
|
Commodity
mark-to-
market net
impact
|
|
Merger
and
integration
charges
|
|
Restructuring
and
impairment charges
|
|
Venezuela
currency
devaluation
|
|
24 Weeks
Ended
6/15/13
|
Cost of
sales
|
$
|
13,732
|
|
|
$
|
(54)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
13,678
|
|
Selling, general and
administrative expenses
|
$
|
11,079
|
|
|
$
|
(1)
|
|
$
|
—
|
|
$
|
(30)
|
|
$
|
(111)
|
|
$
|
10,937
|
|
Operating
profit
|
$
|
4,527
|
|
|
$
|
55
|
|
$
|
—
|
|
$
|
30
|
|
$
|
111
|
|
$
|
4,723
|
|
Provision for income
taxes
|
$
|
1,040
|
|
|
$
|
18
|
|
$
|
—
|
|
$
|
7
|
|
$
|
—
|
|
$
|
1,065
|
|
Net income
attributable to PepsiCo
|
$
|
3,085
|
|
|
$
|
37
|
|
$
|
—
|
|
$
|
23
|
|
$
|
111
|
|
$
|
3,256
|
|
Net income
attributable to PepsiCo per common share - diluted
|
$
|
1.97
|
|
|
$
|
0.02
|
|
$
|
—
|
|
$
|
0.01
|
|
$
|
0.07
|
|
$
|
2.08
|
|
Effective tax
rate
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.5
|
%
|
|
(a) Core results
are financial measures that are not in accordance with GAAP and
exclude the above non-core adjustments. See A-18 through A-20 for a
discussion of each of these adjustments.
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Operating Profit
by Division
12 Weeks Ended
June 14, 2014 and June 15, 2013
(in millions,
unaudited)
|
|
|
|
GAAP
Measure
|
|
|
|
Non-GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core
(a)
|
Operating
Profit
|
12 Weeks
Ended
6/14/14
|
|
Commodity
mark-to-
market
net impact
|
|
Restructuring
and
impairment
charges
|
|
12 Weeks
Ended
6/14/14
|
Frito-Lay North
America
|
$
|
937
|
|
$
|
—
|
|
$
|
13
|
|
$
|
950
|
Quaker Foods North
America
|
139
|
|
—
|
|
—
|
|
139
|
Latin America
Foods
|
323
|
|
—
|
|
5
|
|
328
|
PepsiCo Americas
Foods
|
1,399
|
|
—
|
|
18
|
|
1,417
|
PepsiCo Americas
Beverages
|
868
|
|
—
|
|
36
|
|
904
|
Europe
|
451
|
|
—
|
|
23
|
|
474
|
Asia, Middle East
& Africa
|
381
|
|
—
|
|
7
|
|
388
|
Division Operating
Profit
|
3,099
|
|
—
|
|
84
|
|
3,183
|
Corporate
Unallocated
|
(203)
|
|
(31)
|
|
8
|
|
(226)
|
Total Operating
Profit
|
$
|
2,896
|
|
$
|
(31)
|
|
$
|
92
|
|
$
|
2,957
|
|
|
|
GAAP
Measure
|
|
|
|
Non-GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core
(a)
|
Operating
Profit
|
12 Weeks
Ended
6/15/13
|
|
Commodity
mark-to-
market
net impact
|
|
Merger and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
12 Weeks
Ended
6/15/13
|
Frito-Lay North
America
|
$
|
906
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2
|
|
$
|
908
|
Quaker Foods North
America
|
133
|
|
—
|
|
—
|
|
1
|
|
134
|
Latin America
Foods
|
318
|
|
—
|
|
—
|
|
1
|
|
319
|
PepsiCo Americas
Foods
|
1,357
|
|
—
|
|
—
|
|
4
|
|
1,361
|
PepsiCo Americas
Beverages
|
882
|
|
—
|
|
—
|
|
5
|
|
887
|
Europe
|
425
|
|
—
|
|
(1)
|
|
8
|
|
432
|
Asia, Middle East
& Africa
|
524
|
|
—
|
|
—
|
|
1
|
|
525
|
Division Operating
Profit
|
3,188
|
|
—
|
|
(1)
|
|
18
|
|
3,205
|
Corporate
Unallocated
|
(319)
|
|
39
|
|
—
|
|
1
|
|
(279)
|
Total Operating
Profit
|
$
|
2,869
|
|
$
|
39
|
|
$
|
(1)
|
|
$
|
19
|
|
$
|
2,926
|
|
(a) Core results
are financial measures that are not in accordance with GAAP and
exclude the above non-core adjustments.
See A-18 through
A-20 for a discussion of each of these
adjustments.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
Operating Profit
by Division
24 Weeks Ended
June 14, 2014 and June 15, 2013
(in millions,
unaudited)
|
|
|
|
GAAP
Measure
|
|
|
|
Non-GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core
(a)
|
Operating
Profit
|
24 Weeks
Ended
6/14/14
|
|
Commodity
mark-to-market
net impact
|
|
Restructuring
and
impairment
charges
|
|
24 Weeks
Ended
6/14/14
|
Frito-Lay North
America
|
$
|
1,799
|
|
$
|
—
|
|
$
|
26
|
|
$
|
1,825
|
Quaker Foods North
America
|
299
|
|
—
|
|
2
|
|
301
|
Latin America
Foods
|
555
|
|
—
|
|
1
|
|
556
|
PepsiCo Americas
Foods
|
2,653
|
|
—
|
|
29
|
|
2,682
|
PepsiCo Americas
Beverages
|
1,297
|
|
—
|
|
122
|
|
1,419
|
Europe
|
603
|
|
—
|
|
23
|
|
626
|
Asia, Middle East
& Africa
|
575
|
|
—
|
|
11
|
|
586
|
Division Operating
Profit
|
5,128
|
|
—
|
|
185
|
|
5,313
|
Corporate
Unallocated
|
(425)
|
|
(65)
|
|
5
|
|
(485)
|
Total Operating
Profit
|
$
|
4,703
|
|
$
|
(65)
|
|
$
|
190
|
|
$
|
4,828
|
|
|
|
GAAP
Measure
|
|
|
|
Non-GAAP
Measure
|
|
Reported
|
|
Non-Core
Adjustments
|
|
Core
(a)
|
Operating
Profit
|
24 Weeks
Ended
6/15/13
|
|
Commodity
mark-to-market
net impact
|
|
Merger and
integration
charges
|
|
Restructuring
and
impairment
charges
|
|
Venezuela
currency
devaluation
|
|
24 Weeks
Ended
6/15/13
|
Frito-Lay North
America
|
$
|
1,734
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4
|
|
$
|
—
|
|
$
|
1,738
|
Quaker Foods North
America
|
313
|
|
—
|
|
—
|
|
—
|
|
—
|
|
313
|
Latin America
Foods
|
534
|
|
—
|
|
—
|
|
5
|
|
—
|
|
539
|
PepsiCo Americas
Foods
|
2,581
|
|
—
|
|
—
|
|
9
|
|
—
|
|
2,590
|
PepsiCo Americas
Beverages
|
1,447
|
|
—
|
|
—
|
|
5
|
|
(13)
|
|
1,439
|
Europe
|
513
|
|
—
|
|
—
|
|
12
|
|
—
|
|
525
|
Asia, Middle East
& Africa
|
708
|
|
—
|
|
—
|
|
2
|
|
—
|
|
710
|
Division Operating
Profit
|
5,249
|
|
—
|
|
—
|
|
28
|
|
(13)
|
|
5,264
|
Corporate
Unallocated
|
(722)
|
|
55
|
|
—
|
|
2
|
|
124
|
|
(541)
|
Total Operating
Profit
|
$
|
4,527
|
|
$
|
55
|
|
$
|
—
|
|
$
|
30
|
|
$
|
111
|
|
$
|
4,723
|
|
(a) Core results
are financial measures that are not in accordance with GAAP and
exclude the above adjustments. See A-18 through A-20
for a
discussion of each
of these adjustments.
|
|
|
PepsiCo, Inc. and
Subsidiaries
|
Reconciliation of
GAAP and Non-GAAP Information (cont.)
|
(unaudited)
|
|
Global Snacks Net
Revenue Growth Reconciliation
|
|
|
|
|
|
12 Weeks
Ended
|
|
6/14/14
|
Reported Net Revenue
Growth
|
2
|
%
|
Impact of Foreign
Exchange Translation
|
3
|
|
Organic Revenue
Growth
|
5
|
%
|
|
Global Beverages
Net Revenue Growth Reconciliation
|
|
|
|
|
|
12
Weeks Ended
|
|
6/14/14
|
Reported Net Revenue
Growth
|
(1)
|
%
|
Impact of
Acquisitions and Divestitures
|
—
|
|
Impact of Foreign
Exchange Translation
|
3
|
|
Organic Revenue
Growth
|
2
|
%
|
|
Developing and
Emerging Markets Net Revenue Growth Reconciliation
|
|
|
|
|
|
12
Weeks Ended
|
|
6/14/14
|
Reported Developing
and Emerging Markets Net Revenue Growth
|
(1)
|
%
|
Impact of
Acquisitions and Divestitures
|
0.5
|
|
Impact of Foreign
Exchange Translation
|
8
|
|
Developing and
Emerging Markets Organic Revenue Growth
|
8
|
%
|
|
Gross Margin
Growth Reconciliation
|
|
|
|
|
|
12
Weeks Ended
|
|
6/14/14
|
Reported Gross Margin
Growth
|
96
|
bps
|
Commodity
Mark-to-Market Net Impact
|
(36)
|
|
Core Gross Margin
Growth
|
59
|
bps
|
|
Operating Margin
Growth Reconciliation Excluding Vietnam Beverage
Refranchising Gain, Net of Incremental Investments
|
|
|
|
|
|
12
Weeks Ended
|
|
6/14/14
|
Reported Operating
Margin Growth
|
8
|
bps
|
Commodity
Mark-to-Market Net Impact
|
(42)
|
|
Merger and
Integration Charges
|
1
|
|
Restructuring and
Impairment Charges
|
43
|
|
Core Operating Margin
Growth
|
10
|
|
Vietnam Beverage
Refranchising Gain, Net of Incremental Investments
|
55
|
|
Core Operating Margin
Growth Excluding Vietnam Beverage Refranchising Gain, Net of
Incremental Investments
|
64
|
bps
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
(unaudited)
|
|
|
|
|
|
|
AMEA Division
Operating Profit Growth Reconciliation Excluding Vietnam Beverage
Refranchising Gain (in millions)
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
12 Weeks
Ended
|
|
|
|
6/14/14
|
|
6/15/13
|
|
Growth
|
|
Reported Operating
Profit Growth
|
$
|
381
|
|
$
|
524
|
|
(27)
|
%
|
Restructuring and
Impairment Charges
|
7
|
|
1
|
|
|
Core Operating Profit
Growth
|
$
|
388
|
|
$
|
525
|
|
(26)
|
|
Vietnam Beverage
Refranchising Gain
|
|
|
|
|
26
|
|
Core Operating Profit
Growth excluding Vietnam Beverage Refranchising Gain
|
|
|
|
|
—
|
|
Impact of Foreign
Exchange Translation
|
|
|
|
|
2
|
|
Core Constant
Currency Operating Profit Growth Excluding Vietnam
Beverage
Refranchising Gain
|
|
|
|
|
2
|
%
|
|
|
|
|
|
|
Diluted EPS Growth
Reconciliation Excluding Vietnam Beverage Refranchising Gain, Net
of Incremental Investments
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
12 Weeks
Ended
|
|
|
|
|
6/14/14
|
|
6/15/13
|
|
Growth
|
|
Reported Diluted
EPS
|
$
|
1.29
|
|
$
|
1.28
|
|
1
|
%
|
Commodity
Mark-to-Market Net Impact
|
(0.01)
|
|
0.02
|
|
|
|
Merger and
Integration Charges
|
—
|
|
—
|
|
|
|
Restructuring and
Impairment Charges
|
0.04
|
|
0.01
|
|
|
|
Core Diluted
EPS
|
$
|
1.32
|
|
$
|
1.31
|
|
1
|
|
Impact of Foreign
Exchange Translation
|
|
|
2
|
|
Core Constant
Currency Diluted EPS Growth
|
|
|
3
|
|
Vietnam Beverage
Refranchising Gain, Net of Incremental Investments
|
|
|
5.5
|
|
Core Constant
Currency Diluted EPS Growth Excluding Vietnam Beverage
Refranchising Gain, Net of Incremental Investments
|
|
|
9
|
%
|
|
|
|
|
|
Operating Profit
Growth Reconciliation Excluding Vietnam Beverage Refranchising
Gain, Net of Incremental Investments
|
|
|
|
|
12 Weeks
Ended
|
|
|
6/14/14
|
|
Reported Operating
Profit Growth
|
1
|
%
|
Commodity
Mark-to-Market Net Impact
|
(2.5)
|
|
Merger and
Integration Charges
|
—
|
|
Restructuring and
Impairment Charges
|
2.5
|
|
Core Operating Profit
Growth
|
1
|
|
Impact of Foreign
Exchange Translation
|
2
|
|
Core Constant
Currency Operating Profit Growth
|
3
|
|
Vietnam Beverage
Refranchising Gain, Net of Incremental Investments
|
3
|
|
Core Constant
Currency Operating Profit Growth Excluding Vietnam
Beverage
Refranchising Gain, Net of Incremental Investments
|
6
|
%
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
PepsiCo, Inc. and
Subsidiaries
Reconciliation of
GAAP and Non-GAAP Information (cont.)
(unaudited)
|
|
Net Revenue
Year-over-Year Growth Reconciliation
|
|
|
|
|
|
|
|
GAAP
Measure
|
|
|
|
Non-GAAP
Measure
|
|
|
Reported
Growth
|
|
Percent Impact
of
|
|
Organic
Growth
|
|
|
12 Weeks
Ended
|
|
Foreign
Exchange
|
|
12 Weeks
Ended
|
|
|
6/14/14
|
|
Translation
|
|
6/14/14
|
|
Mexico
(Foods)
|
(MSD)
|
%
|
MSD
|
%
|
(LSD)
|
%
|
LAF (excluding
Mexico)
|
HSD
|
%
|
DD
|
%
|
DD
|
%
|
|
|
|
|
Net Cash Provided
by Operating Activities Reconciliation (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
6/14/14
|
|
Net Cash Provided by
Operating Activities
|
|
|
|
|
$
|
2,672
|
|
Capital
Spending
|
|
|
|
|
(921)
|
|
Sales of Property,
Plant and Equipment
|
|
|
|
|
42
|
|
Free Cash
Flow
|
|
|
|
|
1,793
|
|
Discretionary Pension
and Retiree Medical Contributions
|
|
|
|
|
19
|
|
Payments Related to
Restructuring Charges (after-tax)
|
|
|
|
|
117
|
|
Net Capital
Investments Related to Restructuring Plan
|
|
|
|
|
1
|
|
Free Cash Flow
Excluding Above Items
|
|
|
|
|
$
|
1,930
|
|
|
|
|
|
Fiscal 2013
Diluted EPS Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
12/28/13
|
|
Reported Diluted
EPS
|
|
|
|
|
$
|
4.32
|
|
Commodity
Mark-to-Market Net Impact
|
|
|
|
|
0.03
|
|
Merger and
Integration Charges
|
|
|
|
|
0.01
|
|
Restructuring and
Impairment Charges
|
|
|
|
|
0.08
|
|
Venezuela Currency
Devaluation
|
|
|
|
|
0.07
|
|
Tax
Benefits
|
|
|
|
|
(0.13)
|
|
Core Diluted
EPS
|
|
|
|
|
$
|
4.37
|
|
|
Net Cash Provided
by Operating Activities Reconciliation (in billions)
|
|
|
|
|
2014 Guidance
|
|
Net Cash Provided by
Operating Activities
|
|
$
~10
|
|
Net Capital
Spending
|
|
~(3)
|
|
Free Cash
Flow
|
|
~7
|
|
Certain Other Items
(a)
|
|
~0
|
|
Free Cash Flow
Excluding Certain Other Items
|
|
$
~7
|
|
|
(a) Certain other
items include discretionary pension and retiree medical
contributions, payments related to restructuring charges,
net
capital investments
related to restructuring plan and the tax impacts associated with
each of these items as applicable.
|
|
Note – Certain
amounts above may not sum due to rounding.
|
|
|
Cautionary Statement
Statements in this communication
that are "forward-looking statements," including our 2014 guidance,
are based on currently available information, operating plans and
projections about future events and trends. Terminology such as
"aim," "anticipate," "believe," "drive," "estimate," "expect,"
"expressed confidence," "forecast," "future," "goals," "guidance,"
"intend," "may," "objectives," "outlook," "plan," "position,"
"potential," "project," "seek," "should," "strategy," "target,"
"will" or similar statements or variations of such terms are
intended to identify forward-looking statements, although not all
forward-looking statements contain such terms. Forward-looking
statements 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 PepsiCo's
products, as a result of changes in consumer preferences or
otherwise; changes in the legal and regulatory environment;
imposition of new taxes, disagreements with tax authorities or
additional tax liabilities; PepsiCo's ability to compete
effectively; PepsiCo's ability to grow its business in developing
and emerging markets or unstable political conditions, civil unrest
or other developments and risks in the markets where PepsiCo's
products are sold; unfavorable economic conditions in the countries
in which PepsiCo operates; increased costs, disruption of supply or
shortages of raw materials and other supplies; failure to realize
anticipated benefits from PepsiCo's productivity initiatives or
global operating model; disruption of PepsiCo's supply chain;
damage to PepsiCo's reputation; failure to successfully complete or
integrate acquisitions and joint ventures into PepsiCo's existing
operations or to complete or manage divestitures or refranchisings;
PepsiCo's ability to hire or retain key employees or a highly
skilled and diverse workforce; trade consolidation or the loss of
any key customer; any downgrade or potential downgrade of PepsiCo's
credit ratings; PepsiCo's ability to protect its information
systems against a cybersecurity incident; PepsiCo's ability to
build and sustain proper information technology infrastructure,
successfully implement its ongoing business transformation
initiative or share services for certain functions effectively;
fluctuations or other changes in exchange rates; climate change, or
legal, regulatory or market measures to address climate change;
failure to successfully negotiate collective bargaining agreements
or strikes or work stoppages; any infringement of or challenge to
PepsiCo's intellectual property rights; potential liabilities and
costs from litigation or legal proceedings; and other factors that
may adversely affect the price of PepsiCo's common stock and
financial performance.
For additional information on these and other factors that could
cause PepsiCo's actual results to materially differ from those set
forth herein, please see PepsiCo's filings with the Securities and
Exchange Commission, 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
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 company's
website at www.pepsico.com in the "Investors" section under "Events
& Presentations." Our non-GAAP measures exclude from reported
results those items that management believes are not indicative of
our ongoing performance and reflect how management evaluates our
operating results and trends.
Glossary
Acquisitions and divestitures: All merger and
acquisition activity, including the impact of acquisitions,
divestitures and changes in ownership or control in consolidated
subsidiaries and nonconsolidated equity investees.
Beverage volume: Volume shipped to retailers and independent
distributors from both PepsiCo and our bottlers.
Constant currency: Financial results assuming constant foreign
currency exchange rates used for translation based on the rates in
effect for the comparable prior-year period. In order to compute
our constant currency results, we multiply or divide, as
appropriate, our current year U.S. dollar results by the current
year average foreign exchange rates and then multiply or divide, as
appropriate, those amounts by the prior year average foreign
exchange rates.
Core: Core results are non-GAAP financial measures which exclude
certain items from our historical results. In 2014, core results
exclude the commodity mark-to-market net impact included in
corporate unallocated expenses and restructuring and impairment
charges. In 2013, core results exclude the commodity mark-to-market
net impact included in corporate unallocated expenses, merger and
integration charges in connection with our acquisition of
Wimm-Bill-Dann Foods OJSC (WBD), restructuring and impairment
charges, a charge related to the 2013 Venezuela currency
devaluation and a tax benefit. See "Reconciliation of GAAP and
Non-GAAP Information" for additional information.
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: Reflects the year-over-year impact of
discrete pricing actions, sales incentive activities and mix
resulting from selling varying products in different package sizes
and in different countries.
Free cash flow: Net cash provided by operating activities less
capital spending plus sales of property, plant and equipment. See
above for a reconciliation of this non-GAAP financial measure to
the most directly comparable financial measure in accordance with
GAAP (operating cash flow).
Free cash flow, excluding certain items: Free cash flow,
excluding: (1) discretionary pension and retiree medical
contributions, (2) payments related to restructuring charges, (3)
net capital investments related to restructuring plan and (4) the
tax impacts associated with each of these items, as applicable.
This non-GAAP financial measure is our primary measure used to
monitor cash flow performance. See above for a reconciliation of
this non-GAAP financial measure to the most directly comparable
financial measure in accordance with GAAP (operating cash flow).
See "Reconciliation of GAAP and Non-GAAP Information" for
additional information.
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 capital spending: Capital spending less cash proceeds from
sales of property, plant and equipment.
Organic: A measure that adjusts for impacts of acquisitions,
divestitures and other structural changes, and in the case of
organic revenue, foreign exchange translation. In excluding the
impact of foreign exchange translation, we assume constant foreign
exchange rates used for translation based on the rates in effect
for the comparable prior-year period. See the definition of
"Constant currency" for additional information.
Reconciliation of GAAP and Non-GAAP Information
(unaudited)
Division operating profit, core results, core
constant currency results and organic 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 reflect how
management evaluates our operational results and trends. These
measures are not, and should not be viewed as, substitutes for GAAP
reporting measures.
Commodity mark-to-market net impact
In the 12 weeks ended June 14,
2014, we recognized $31
million of mark-to-market net gains on commodity hedges in
corporate unallocated expenses. In the 24 weeks ended June 14, 2014, we recognized $65 million of mark-to-market net gains on
commodity hedges in corporate unallocated expenses. In the 12 weeks
ended June 15, 2013, we recognized
$39 million of mark-to-market net
losses on commodity hedges in corporate unallocated expenses. In
the 24 weeks ended June 15, 2013, we
recognized $55 million of
mark-to-market net losses on commodity hedges in corporate
unallocated expenses. In the 12 weeks ended June 16, 2012, we recognized $79 million of mark-to-market net losses on
commodity hedges in corporate unallocated expenses. In the 24 weeks
ended June 16, 2012, we recognized
$5 million of
mark-to-market net gains on commodity hedges in corporate
unallocated expenses. In the year ended December 28, 2013, we recognized $72 million of mark-to-market net losses on
commodity hedges in corporate unallocated expenses. We centrally
manage commodity derivatives on behalf of our divisions. These
commodity derivatives include agricultural products, energy and
metals. 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, as either cost of sales or selling, general and
administrative expenses, depending on the underlying commodity.
These gains and losses are subsequently reflected in division
results when the divisions recognize the cost of the underlying
commodity in operating profit.
Merger and integration charges
In the 12 weeks ended June 15,
2013, we recorded income for merger and integration of
$1 million in the Europe segment related to our acquisition of
WBD, representing adjustments of previously recorded amounts. In
the 24 weeks ended June 15, 2013,
merger and integration charges were nominal. In the 12 weeks ended
June 16, 2012, we incurred merger and
integration charges of $3 million
related to our acquisition of WBD, including $1 million recorded in the Europe segment and $2
million recorded in corporate unallocated expenses. In the
24 weeks ended June 16, 2012, we
incurred merger and integration charges of $5 million related to our acquisition of WBD,
including $3 million recorded in the
Europe segment and $2 million recorded in corporate unallocated
expenses. In the year ended December 28,
2013, we incurred merger and integration charges of
$10 million related to our
acquisition of WBD recorded in the Europe segment.
Restructuring and impairment charges
2014 Multi-Year Productivity Plan
In the 12 weeks ended June 14,
2014, we incurred restructuring and impairment charges of
$77 million in conjunction with the
multi-year productivity plan we publicly announced on February 13, 2014 (2014 Productivity Plan),
including $12 million recorded in the
FLNA segment, $5 million recorded in
the LAF segment, $33 million recorded
in the PAB segment, $13 million
recorded in the Europe segment,
$7 million recorded in the AMEA
segment and $7 million recorded in
corporate unallocated expenses. In the 24 weeks ended June 14, 2014, we incurred restructuring and
impairment charges of $173 million in
conjunction with the 2014 Productivity Plan, including $24 million recorded in the FLNA segment,
$2 million recorded in the QFNA
segment, $6 million recorded in the
LAF segment, $115 million recorded in
the PAB segment, $15 million recorded
in the Europe segment,
$9 million recorded in the AMEA
segment and $2 million recorded in
corporate unallocated expenses. In the year ended December 28, 2013, we incurred restructuring and
impairment charges of $53 million in
conjunction with the 2014 Productivity Plan, including $11 million recorded in the FLNA segment,
$3 million recorded in the QFNA
segment, $5 million recorded in the
LAF segment, $10 million recorded in
the PAB segment, $10 million recorded
in the Europe segment,
$1 million recorded in the AMEA
segment and $13 million recorded in
corporate unallocated expenses. The 2014 Productivity Plan includes
the next generation of productivity initiatives that we believe
will strengthen our food, snack and beverage businesses by
accelerating our investment in manufacturing automation; further
optimizing our global manufacturing footprint, including closing
certain manufacturing facilities; re-engineering our go-to-market
systems in developed markets; expanding shared services; and
implementing simplified organization structures to drive
efficiency.
2012 Multi-Year Productivity Plan
In the 12 weeks ended June 14,
2014, we incurred restructuring and impairment charges of
$15 million in conjunction with the
multi-year productivity plan we publicly announced on February 9, 2012 (2012 Productivity Plan),
including $1 million recorded in the
FLNA segment, $3 million recorded in
the PAB segment, $10 million recorded
in the Europe segment and
$1 million recorded in corporate
unallocated expenses. In the 24 weeks ended June 14, 2014, we incurred restructuring and
impairment charges of $17 million in
conjunction with the 2012 Productivity Plan, including $2 million recorded in the FLNA segment,
$7 million recorded in the PAB
segment, $8 million recorded in the
Europe segment, $2 million recorded in the AMEA segment and
$3 million recorded in corporate
unallocated expenses, partially offset by income of $5 million recorded in the LAF segment
representing adjustments of previously recorded amounts.
In the 12 weeks ended June 15,
2013, we incurred restructuring and impairment charges of
$19 million in conjunction with the
2012 Productivity Plan, including $2
million recorded in the FLNA segment, $1 million recorded in the QFNA segment,
$1 million recorded in the LAF
segment, $5 million recorded in the
PAB segment, $8 million recorded in
the Europe segment, $1 million recorded in the AMEA segment and
$1 million recorded in corporate
unallocated expenses. In the 24 weeks ended June 15, 2013, we incurred restructuring and
impairment charges of $30 million in
conjunction with the 2012 Productivity Plan, including $4 million recorded in the FLNA segment,
$5 million recorded in the LAF
segment, $5 million recorded in the
PAB segment, $12 million recorded in
the Europe segment, $2 million recorded in the AMEA segment and
$2 million recorded in corporate
unallocated expenses. In the 12 weeks ended June 16, 2012, we incurred restructuring and
impairment charges of $77 million in
conjunction with the 2012 Productivity Plan, including $24 million recorded in the FLNA segment,
$1 million recorded in the QFNA
segment, $6 million recorded in the
LAF segment, $35 million recorded in
the PAB segment, $8 million recorded
in the AMEA segment and $3 million
recorded in corporate unallocated expenses. In the 24 weeks ended
June 16, 2012, we incurred
restructuring and impairment charges of $110
million in conjunction with the 2012 Productivity Plan,
including $32 million recorded in the
FLNA segment, $6 million recorded in
the QFNA segment, $12 million
recorded in the LAF segment, $43
million recorded in the PAB segment, $17 million recorded in the AMEA segment,
$1 million recorded in corporate
unallocated expenses and income of $1
million recorded in the Europe segment representing adjustments of
previously recorded amounts. In the year ended December 28, 2013, we incurred restructuring and
impairment charges of $110 million in
conjunction with the 2012 Productivity Plan, including $8 million recorded in the FLNA segment,
$1 million recorded in the QFNA
segment, $7 million recorded in the
LAF segment, $21 million recorded in
the PAB segment, $50 million recorded
in the Europe segment,
$25 million recorded in the AMEA
segment and income of $2 million
recorded in corporate unallocated expenses, representing
adjustments of previously recorded amounts. The 2012 Productivity
Plan includes actions in every aspect of our business that we
believe will strengthen our complementary food, snack and beverage
businesses by leveraging new technologies and processes across
PepsiCo's operations, go-to-market and information systems;
heightening the focus on best practice sharing across the globe;
consolidating manufacturing, warehouse and sales facilities; and
implementing simplified organization structures, with wider spans
of control and fewer layers of management.
Venezuela currency
devaluation
In the 24 weeks ended June 15,
2013, we recorded a $111
million net charge related to the devaluation of the bolivar
for our Venezuelan businesses. $124
million of this charge was recorded in corporate unallocated
expenses, with the balance (equity income of $13 million) recorded in our PAB segment.
Restructuring and other charges related to the transaction
with Tingyi
In the 12 and 24 weeks ended June 16,
2012, we recorded restructuring and other charges of
$137 million in the AMEA segment
related to the transaction with Tingyi.
Tax benefits
In the year ended December 28,
2013, we recognized a non-cash tax benefit of $209 million associated with our agreement with
the IRS resolving all open matters related to the audits for
taxable years 2003 through 2009, which reduced our reserve for
uncertain tax positions for the tax years 2003 through 2012.
Free cash flow, excluding certain items
Additionally, free cash flow (excluding the items noted in the
Net Cash Provided by Operating Activities Reconciliation table) 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. Additionally, we consider
certain other items (included in the Net Cash Provided by Operating
Activities Reconciliation table) in evaluating free cash flow that
we believe investors should consider in evaluating our free cash
flow results.
2014 guidance and long-term targets
Our 2014 core tax rate guidance and our 2014 core constant
currency EPS growth guidance exclude the commodity mark-to-market
net impact included in corporate unallocated expenses and
restructuring and impairment charges. Our 2014 organic revenue
growth guidance and our long-term organic revenue growth target
exclude the impact of acquisitions, divestitures and other
structural changes. In addition, our 2014 organic revenue growth
guidance, our 2014 core constant currency EPS growth guidance and
our long-term organic revenue growth target exclude the impact of
foreign exchange. We are not able to reconcile our full-year
projected 2014 core tax rate to our full-year projected 2014
reported tax rate or our full-year projected 2014 core constant
currency EPS growth to our full-year projected 2014 reported EPS
growth because we are unable to predict the 2014 impact of foreign
exchange or the mark-to-market net impact on commodity hedges due
to the unpredictability of future changes in foreign exchange rates
and commodity prices. We are also unable to reconcile our full-year
projected 2014 organic revenue growth to our full-year projected
2014 reported net revenue growth or our long-term organic revenue
growth to our long-term reported net revenue growth because we are
unable to predict the 2014 and long-term impacts of foreign
exchange due to the unpredictability of future changes in foreign
exchange rates. Therefore, we are unable to provide a
reconciliation of these measures.
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SOURCE PepsiCo