2014

PepsiCo Reports First Quarter 2013 Results --Core1 EPS $0.77, up 12 percent. Reported EPS $0.69, a decline of 3 percent reflecting the impact of the devaluation of net monetary assets in Venezuela

--Organic1 revenue grew 4.4 percent. Reported net revenue increased 1 percent reflecting the impacts of foreign currency translation and structural changes

--Core operating margin expanded 80 basis points. Reported operating margin declined 70 basis points reflecting the Venezuela devaluation

--Company expects to return approximately $6.4 billion to shareholders through dividends and share repurchases in 2013

--Company reaffirms 7 percent core constant currency1 EPS growth guidance for 2013

PURCHASE, N.Y., April 18, 2013 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today reported core earnings per share of $0.77 for the first quarter, an increase of 12 percent on organic revenue growth of 4.4 percent.

(Logo: http://photos.prnewswire.com/prnh/20120424/NY93895LOGO )

"We're greatly encouraged by the strong start to 2013.  We delivered solid organic revenue growth and double-digit core EPS growth in the first quarter, driven by our balanced food and beverage product and global geographic portfolio. Our investments in creating this portfolio are paying off and our brand and innovation strategies are driving sustainable top-line growth," said Chairman and CEO Indra Nooyi.

"We are driving increased marketplace execution and making higher investments in marketing and innovation to drive future growth. In the first quarter, our advertising and marketing expense increased by 11 percent, while our core operating margin increased 80 basis points.  

"Importantly, we're laser focused on ramping up the effectiveness and efficiency of every aspect of our operating system, from procurement to manufacturing to selling and distribution.  For the full year 2013, we expect to deliver approximately $900 million in productivity savings as part of our three-year, $3 billion productivity program, which will fund future growth investments and further enhance our operating margins.  And, we've already begun to identify the next tranche of productivity savings to extend beyond our current program.

"We are squarely on track to deliver on our financial commitments for 2013, and remain committed to acting with urgency and intensity to create long-term value for our shareholders."

1Please refer to the Glossary for the definitions of Non-GAAP financial measures including core, constant currency, organic and management operating cash flow.

Operating and Marketplace Highlights

  • Achieved 4.4 percent organic revenue growth with a good balance between volume growth2 and price realization.
  • PepsiCo Americas Foods organic revenue grew 6 percent in the quarter driven by organic revenue growth in all divisions, including Frito-Lay North America, Quaker Foods North America and Latin America Foods. Reported net revenue increased 5 percent in the quarter.
  • Frito-Lay North America market share in the U.S. grew in the quarter, reflecting 4 percent volume growth driven by strategic investments and disciplined execution.
  • PepsiCo Americas Beverages core constant currency operating profit grew 4 percent in the quarter reflecting favorable effective net pricing and productivity gains. Reported operating profit was up 8 percent.
  • AMEA organic revenue grew 15 percent in the quarter driven by organic volume growth in both snacks and beverages. Reported net revenue in AMEA declined 14 percent, reflecting the impact of structural changes.
  • On an organic basis, emerging and developing market revenue grew 12 percent in the quarter. The refranchising of our beverage business in China and unfavorable foreign exchange impacted emerging and developing markets net revenue growth by 11 percentage points, resulting in 1 percent reported net revenue growth.     
  • On an organic basis, international beverage volume grew 6 percent and international snack volume grew 5 percent.
  • Core gross margin expanded 130 basis points and reported gross margin expanded 100 basis points.
  • Core operating margin expanded 80 basis points including an 11 percent increase in advertising and marketing expense.
  • On track to deliver targeted $900 million of productivity savings during 2013 and $3 billion in productivity savings by 2015.
  • Management operating cash flow (excluding certain items) was $464 million. Cash flow from operations was $702 million
  • Decreased net capital spending by $4 million in the quarter, with net capital spending of 4.0 percent of net sales over the past four quarters, an improvement of 70 basis points over the comparable prior four quarters.
  • On track to return a total of $6.4 billion to shareholders in 2013 through approximately $3.4 billion in dividends and approximately $3.0 billion in share repurchases.

2 All 2013 volume growth measures reflect an adjustment to the base year for divestitures that occurred in 2012.

Summary of First Quarter Financial Performance

  • Organic revenue grew 4.4 percent and reported net revenue grew 1 percent.  Organic revenue growth was driven by balanced volume growth and effective net pricing. Structural changes, primarily refranchising in China, negatively impacted reported net revenue performance by 3 percentage points and foreign exchange translation had a 0.5-percentage-point unfavorable impact in the quarter. 
  • Core constant currency operating profit increased 9 percent reflecting solid revenue growth and productivity gains, partially offset by increased advertising and marketing expense. Reported operating profit declined 4 percent and included the impact from the devaluation of net monetary assets in Venezuela, net impact of mark-to-market adjustments on commodity hedges, and certain restructuring and integration costs. 
  • The company's core effective tax rate was 24.5 percent, below the prior year quarter primarily due to income mix shift and the reversal of international tax reserves, partially offset by the lapping of a 2012 tax benefit related to prepayment of Medicare subsidy liabilities. The company's reported effective tax rate was 26.3 percent and included the impact related to the Venezuela devaluation, restructuring and integration costs and hedging losses.
  • Core EPS was $0.77 and reported EPS was $0.69. Core EPS excludes a $0.07 per share impact from the devaluation of net monetary assets in Venezuela, a net impact of $0.01 per share related to mark-to-market adjustments on commodity hedges, and a $0.01 impact from restructuring and integration charges. Mark-to-market gains and losses on commodity hedges are subsequently reflected in core division results when the divisions recognize the cost of the underlying commodity in net income.

Summary First Quarter 2013 Performance (Percent Growth)


 

 

Reported

Core Constant
Currency
a

 

 

Organicb

Volume




     Snacks

4


4

    Beverages

3


1

Net Revenue

1


4

Operating Profitc

(4)

9


EPS

(3)

13


 







 



 

 

Volume

 

 

 

Net Revenue

 

 

 

Operating
Profitc

 

 

 

Organic
Revenue

Core
Constant

Currency

Operating
Profit

PAF

3

5

6

6

7

    FLNA

4

4

6

4

5

    LAF

1

11

18

14

25

    QFNA

5

2

(4)

2

(6)







PAB

(3)

(1)

8

-

4

Europe

4/1d

5

10

4

14

AMEA

15/17d,e

(14)

24

15

19

Total
Divisions

4/3d

1

8

4

7

Total
PepsiCo

4/3d

1

(4)

4

9








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 2013 and 2012. 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.    
eAMEA beverage volume includes an estimated benefit of 6 percentage points relating to co-branded juice drinks in China, after adjustment to include co-branded juice drink volume in China for the first quarter of the base year (2012).

Division Operating Summaries

PepsiCo Americas Foods (PAF) 
Organic revenue grew 6 percent in the quarter driven by 3 percentage points of organic volume growth and 3 percentage points of effective net pricing. Reported net revenue increased 5 percent reflecting a 1-percentage-point unfavorable impact from foreign exchange translation.

Core constant currency operating profit increased 7 percent, reflecting effective net pricing and productivity initiatives, partially offset by increased advertising and marketing investments.

Frito-Lay North America (FLNA)

Organic and reported net revenue each increased 4 percent in the quarter, reflecting a 4-percentage-point increase in organic volume and even effective net pricing.

Core constant currency operating profit grew 5 percent in the quarter reflecting organic revenue gains and productivity initiatives.

Latin America Foods (LAF)

Organic revenue grew 14 percent in the quarter, reflecting 1 percentage point of organic volume growth and 13 percentage points of effective net pricing. Reported net revenue grew 11 percent in the quarter, reflecting a 3-percentage-point unfavorable foreign exchange translation impact.  

Core constant currency operating profit increased 25 percent. These results reflect the revenue growth and productivity gains partially offset by commodity cost inflation and increased advertising and marketing expense.

Quaker Foods North America (QFNA)

Organic revenue grew 2 percent, driven primarily by organic volume gains. Reported net revenue also grew 2 percent.

Core constant currency operating profit declined 6 percent, driven principally by increased advertising and marketing expense and investments in product innovation.

PepsiCo Americas Beverages (PAB)  
Organic revenue in the quarter was even with the prior year reflecting organic volume that declined 3 percent and the negative impact of concentrate shipment timing, offset by effective net pricing. Latin America beverage volume increased 1 percent. In North America, non-carbonated beverage volume declined 1 percent, and CSD volume declined mid-single digits.

Reported net revenue declined 1 percent reflecting a less than 1-percentage-point impact of unfavorable foreign exchange translation.

Core constant currency operating profit increased 4 percent primarily reflecting favorable effective net pricing and productivity gains.

Europe  
Organic revenue grew 4 percent, reflecting 2 percent organic volume growth and 2 percentage points of effective net pricing. Both snacks and beverages grew organic volume in the quarter. Reported net revenue grew 5 percent in the quarter, including a 1-percentage-point favorable impact from foreign exchange translation.

Core constant currency operating profit rose 14 percent in the quarter, reflecting organic revenue gains and continued productivity initiatives partially offset by higher commodity costs and increased advertising and marketing expense. 

Asia, Middle East & Africa (AMEA)  
Organic revenue grew 15 percent in the quarter, led by 15 percent organic volume growth in snacks and 10 percent organic volume growth in beverages.  Reported net revenue declined 14 percent, reflecting a 27-percentage-point negative impact from structural changes, principally the refranchising of bottling operations in China, and an unfavorable 2-percentage-point impact from foreign exchange translation.

Core constant currency operating profit increased 19 percent, reflecting the organic revenue gains, partially offset by higher advertising and marketing expense.

2013 Guidance and Outlook  
Consistent with its previous guidance for 2013, the company expects 7 percent core constant currency EPS growth versus its fiscal 2012 core EPS of $4.10. Based on the current foreign exchange market consensus, the company expects that foreign exchange translation will have an unfavorable impact of approximately 1 percentage point on the company's full-year core EPS performance in 2013. Excluding the impact of structural changes and foreign exchange translation, organic revenue is expected to grow mid-single digits, consistent with the company's long-term targets. The impact of structural changes, principally beverage refranchisings, are expected to reduce organic revenue growth by approximately 1 percentage point for the full year. 

For 2013, the company expects low-single-digit commodity inflation, and productivity savings of approximately $900 million. The company also expects advertising and marketing expense to increase at or above the rate of net revenue growth. Below the operating profit line, the company expects higher interest expense driven by increased debt balances and a core effective tax rate of approximately 27 percent.

The company is targeting over $9 billion in cash flow from operating activities and more than $7 billion in management operating cash flow (excluding certain items) in 2013.  Net capital spending is expected to be approximately $3 billion in 2013, 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 $6.4 billion to shareholders in 2013 through dividends of approximately $3.4 billion and share repurchases of approximately $3.0 billion.

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 2013. Further details, including a slide presentation accompanying the call, will be accessible on the company's website at www.pepsico.com/investors in advance of the call.







PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Income

(in millions except per share amounts, and unaudited)








Quarter Ended


3/23/2013


3/24/2012


Change







Net Revenue 

$ 12,581


$ 12,428


1%







Cost of sales

5,834


5,889


(1)%

Selling, general and administrative expenses 

5,066


4,792


6%

Amortization of intangible assets

23


25


(6)%







Operating Profit 

1,658


1,722


(4)%







Interest expense 

(214)


(198)


8%

Interest income and other 

27


23


18%







Income before income taxes 

1,471


1,547


(5)%







Provision for income taxes 

386


414


(6)%







Net income 

1,085


1,133


(4)%




6



Less:  Net income attributable to noncontrolling interests

10

66%







Net Income Attributable to PepsiCo 

$   1,075


$   1,127


(5)%







Diluted






  Net Income Attributable to PepsiCo per Common Share 

$    0.69


$    0.71


(3)%

  Weighted-average common shares outstanding

1,563


1,584









  Cash dividends declared per common share 

$ 0.5375


$   0.515





















A-1

 







PepsiCo, Inc. and Subsidiaries

Supplemental Financial Information

(in millions, unaudited)








Quarter Ended


3/23/2013


3/24/2012


Change

Net Revenue










Frito-Lay North America  

$   3,123


$   3,010


4%

Quaker Foods North America 

634


623


2%

Latin America Foods 

1,367


1,235


11%

  PepsiCo Americas Foods 

5,124


4,868


5%







PepsiCo Americas Beverages 

4,420


4,448


(1)%

Europe 

1,942


1,845


5%

Asia, Middle East & Africa 

1,095


1,267


(14)%

Total Net Revenue 

$ 12,581


$ 12,428


1%







Operating Profit












Frito-Lay North America 

$     828


$     780


6%

Quaker Foods North America 

180


187


(4)%

Latin America Foods 

216


183


18%

  PepsiCo Americas Foods 

1,224


1,150


6%







PepsiCo Americas Beverages 

565


525


8%

Europe 

88


81


10%

Asia, Middle East & Africa 

184


148


24%

Division Operating Profit 

2,061


1,904


8%







Corporate Unallocated






  Mark-to-Market Net Impact (Losses)/Gains

(16)


84


 n/m 

  Restructuring and Impairment Charges

(1)


2


 n/m 

  Venezuela Currency Devaluation

(124)


-


 n/m 

  Other 

(262)


(268)


(2)%


(403)


(182)


122%







Total Operating Profit 

$   1,658


$   1,722


(4)%













n/m = not meaningful












A-2

 







PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(in millions, unaudited)



 Quarter Ended 



3/23/2013


3/24/2012

Operating Activities





Net income 


$   1,085


$   1,133

Depreciation and amortization


551


555

Stock-based compensation expense 


77


56

Merger and integration charges 


1


2

Cash payments for merger and integration charges 


(11)


(20)

Restructuring and impairment charges 


11


33

Cash payments for restructuring charges 


(30)


(44)

Cash payments for restructuring and other charges related to the 

   transaction with Tingyi (Cayman Islands) Holding Corp. (Tingyi)


(1)


-

Non-cash foreign exchange loss related to Venezuela devaluation


111


-

Excess tax benefits from share-based payment arrangements 


(36)


(35)

Pension and retiree medical plan contributions 


(87)


(1,100)

Pension and retiree medical plan expenses 


149


129

Deferred income taxes and other tax charges and credits 


(23)


120

Change in accounts and notes receivable 


(175)


(71)

Change in inventories 


(351)


(266)

Change in prepaid expenses and other current assets 


(201)


(197)

Change in accounts payable and other current liabilities 


(578)


(960)

Change in income taxes payable 


244


90

Other, net


(34)


(115)

Net Cash Provided by/(Used for) Operating Activities 


702


(690)






Investing Activities





Capital spending 


(303)


(316)

Sales of property, plant and equipment 


8


17

Acquisitions and investments in noncontrolled affiliates 


(30)


(32)

Divestitures 


-


9

Short-term investments, net 


40


52

Other investing, net 


-


13

Net Cash Used for Investing Activities 


(285)


(257)






Financing Activities





Proceeds from issuances of long-term debt 


2,491


2,733

Payments of long-term debt 


(1,190)


(9)

Short-term borrowings, net 


(153)


(1,790)

Cash dividends paid 


(831)


(816)

Share repurchases – common 


(626)


(142)

Share repurchases – preferred 


(2)


(1)

Proceeds from exercises of stock options 


449


274

Excess tax benefits from share-based payment arrangements 


36


35

Other financing 


(1)


(1)

Net Cash Provided by Financing Activities 


173


283






Effect of exchange rate changes on cash and cash equivalents 


(172)


82







Net Increase/(Decrease) in Cash and Cash Equivalents


418


(582)

Cash and Cash Equivalents, Beginning of Year 


6,297


4,067

Cash and Cash Equivalents, End of Period


$   6,715


$   3,485











A-3






PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

(in millions except per share amounts)








3/23/2013


12/29/2012

Assets


(unaudited)



Current Assets





 Cash and cash equivalents 


$    6,715


$    6,297

 Short-term investments 


296


322

 Accounts and notes receivable, net 


7,234


7,041

 Inventories





Raw materials 


1,846


1,875

Work-in-process 


265


173

Finished goods 


1,809


1,533



3,920


3,581






Prepaid expenses and other current assets 


1,745


1,479

Total Current Assets  


19,910


18,720






Property, plant and equipment, net 


18,844


19,136

Amortizable intangible assets, net 


1,749


1,781






Goodwill 


16,915


16,971

Other nonamortizable intangible assets 


14,655


14,744

Nonamortizable Intangible Assets 


31,570


31,715






Investments in noncontrolled affiliates 


1,676


1,633

Other assets 


1,606


1,653

Total Assets 


$   75,355


$   74,638






Liabilities and Equity





Current Liabilities





 Short-term obligations 


$    6,175


$    4,815

 Accounts payable and other current liabilities 


11,244


11,903

 Income taxes payable 


575


371

Total Current Liabilities 


17,994


17,089






Long-term debt obligations 


23,225


23,544

Other liabilities 


6,621


6,543

Deferred income taxes 


5,051


5,063

Total Liabilities 


52,891


52,239






Commitments and Contingencies










Preferred stock, no par value 


41


41

Repurchased preferred stock 


(166)


(164)






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: 1,545 and 1,544 shares, respectively) 


26


26

Capital in excess of par value 


4,136


4,178

Retained earnings 


43,395


43,158

Accumulated other comprehensive loss 


(5,607)


(5,487)

Repurchased common stock, in excess of par value (321 and 322 shares, respectively) 


(19,474)


(19,458)

Total PepsiCo Common Shareholders' Equity 


22,476


22,417






Noncontrolling interests


113


105

Total Equity 


22,464


22,399

Total Liabilities and Equity 


$   75,355


$   74,638











A-4

 







PepsiCo, Inc. and Subsidiaries 

Supplemental Share and Stock-Based Compensation Data 

(in millions except dollar amounts, unaudited)






Quarter Ended


3/23/2013


3/24/2012

Beginning Net Shares Outstanding  

1,544


1,565

Options Exercised/Restricted Stock Units and PEPUnits Converted

10


8

Shares Repurchased  

(9)


(5)

Ending Net Shares Outstanding 

1,545


1,568





Weighted Average Basic 

1,544


1,568

Dilutive Securities:




  Options   

10


11

  Restricted Stock Units

8


4

  PEPUnits

-


-

  ESOP Convertible Preferred Stock/Other 

1


1

Weighted Average Diluted 

1,563


1,584





Average Share Price for the Period 

$              73.67


$   64.66

Growth Versus Prior Year 

14%


-%





Options Outstanding  

61


84

Options in the Money 

58


54

Dilutive Shares from Options 

10


11

Dilutive Shares from Options as a % of Options in the Money

17%


20%





Average Exercise Price of Options in the Money 

$              60.38


$   50.66





Restricted Stock Units Outstanding 

15


9

Dilutive Shares from Restricted Stock Units 

8


4

Dilutive Shares from PEPUnits 

-


-





Average Intrinsic Value of Restricted Stock Units Outstanding (a)

$              68.24


$   64.98

Average Intrinsic Value of PEPUnits Outstanding (a)

$              66.65


$           -









(a) Weighted-average intrinsic value at grant date.










A-5

  














PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information 

Organic Growth

Quarter Ended March 23, 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 &

Divestitures


Foreign Exchange

 Translation


Quarter Ended 3/23/13


Quarter Ended 3/23/13














Frito-Lay North America


4


-


-


-


4


4

Quaker Foods North America


3


(1)


-


-


2


2

Latin America Foods


1


13


-


(3)


11


14

   PepsiCo Americas Foods


3


3


-


(1)


5


6














PepsiCo Americas Beverages


(5)


5


-


-


(1)


-














Europe


2


2


-


1


5


4














Asia, Middle East & Africa


15


-


(27)


(2)


(14)


15














Total PepsiCo


1


3


(3)


(0.5)


1


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.


A-6

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Year over Year Growth Rates

Quarters Ended March 23, 2013 and March 24, 2012

(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


Quarter Ended 3/23/2013


Commodity mark-to-market net impact


Merger and integration charges


Restructuring and impairment charges


Venezuela currency devaluation


Quarter Ended 3/23/2013


Foreign exchange translation


Quarter Ended 3/23/2013

















Frito-Lay North America


6


-


-


(1)


-


5


-


5

Quaker Foods North America


(4)


-


-


(3)


-


(6)


-


(6)

Latin America Foods


18


-


-


(1)


-


17


8


25

  PepsiCo Americas  Foods


6


-


-


(1)


-


5


1


7


















PepsiCo Americas Beverages


8


-


-


(1.5)


(2.5)


3


-


4


















Europe


10


-


(1)


6


-


14


(0.5)


14


















Asia, Middle East & Africa


24


-


-


(5)


-


18


1


19


















Division Operating Profit


8


-


-


(1)


(1)


6


1


7


















Impact of Corporate Unallocated


(12)


6


-


-


7


1


-


1.5













.





Total Operating Profit


(4)


6


-


(1)


6


7


1


9



































Net income Attributable to PepsiCo


(5)










10


1


12

Net income Attributable to PepsiCo

      per common share - diluted


(3)










12


1


13





































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


Quarter Ended 3/24/2012 


Commodity mark-to-market net impact


Merger and integration charges


Restructuring and impairment charges


Inventory fair value adjustments


Quarter Ended 3/24/2012


Foreign exchange translation


Quarter Ended 3/24/2012



































Frito-Lay North America


1


-


-


1


-


2


-


2

Quaker Foods North America


(12)


-


-


2


-


(10)


-


(10)

Latin America Foods


7


-


-


3


-


10


8


18

  PepsiCo Americas Foods


(1)


-


-


2


-


1


1


2


















PepsiCo Americas Beverages


(6)


-


(4)


1.5


(2)


(9)


1


(9)


















Europe


29


-


16


(2)


(40)


2.5


2


4


















Asia, Middle East & Africa


2


-


-


6


-


7


(1)


6


















Division Operating Profit


(1)


-


(0.5)


2


(2)


(2)


1


(1)


















Impact of Corporate Unallocated


1


(3)


(2.5)


-


-


(4)


-


(4)


















Total Operating Profit


-


(3)


(3)


2


(2)


(6)


1


(5)



































Net income Attributable to PepsiCo


(1)










(9)


1


(8)

Net income Attributable to PepsiCo 
      per common share - diluted


-










(7)


1


(6)



































(a) Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above adjustments. See A-13 

      through A-15 for a discussion of each of these adjustments.


















Note - certain amounts above may not sum due to rounding.








A-7




 

  














PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Certain Line Items

Quarters Ended March 23, 2013 and March 24, 2012

(in millions except per share amounts, unaudited)
















GAAP Measure


Non-Core Adjustments


Non-GAAP Measure



Reported


Commodity mark-to-market net impact


Merger and integration charges






Core (a)



Quarter Ended 3/23/2013




Restructuring and impairment charges


Venezuela currency devaluation


Quarter Ended 3/23/2013














Cost of sales


$   5,834


$    (14)


$       -


$               -


$           -


$    5,820














Selling, general and administrative expenses


$   5,066


$      (2)


$     (1)


$           (11)


$     (111)


$    4,941














Operating profit


$   1,658


$      16


$      1


$            11


$      111


$    1,797














Provision for income taxes


$      386


$        5


$       -


$              3


$          -


$       394














Net income attributable to PepsiCo


$   1,075


$      11


$      1


$              8


$      111


$    1,206














Net income attributable to PepsiCo per
     common share - diluted


$     0.69


$   0.01


$      -


$         0.01


$     0.07


$      0.77














Effective tax rate


26.3%










24.5%





























GAAP Measure


Non-Core Adjustments


Non-GAAP Measure





Reported


Commodity

 mark-to-market

 net impact


Merger and integration charges




Core (a)





Quarter Ended 3/24/2012




Restructuring and impairment charges


Quarter Ended 3/24/2012
















Cost of sales


$   5,889


$        17


$         -


$               -


$    5,906
















Selling, general and administrative expenses


$   4,792


$        67


$       (2)


$           (33)


$    4,824
















Operating profit


$   1,722


$       (84)


$         2


$            33


$    1,673
















Provision for income taxes


$      414


$       (24)


$          -


$            10


$       400
















Net income attributable to PepsiCo 


$   1,127


$       (60)


$         2


$            23


$    1,092
















Net income attributable to PepsiCo per
     common share - diluted


$     0.71


$    (0.04)


$         -


$         0.01


$      0.69
















Effective tax rate


26.7%








26.7%





























(a)  Core results are financial measures that are not in accordance with GAAP and exclude the above adjustments.  See A-13 through

      A-15 for a discussion of each of these adjustments.














Note - certain amounts above may not sum due to rounding.












A-8

 














PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

Operating Profit by Division

Quarters Ended March 23, 2013 and March 24, 2012

(in millions, unaudited)
















GAAP Measure


Non-Core Adjustments


Non-GAAP Measure



Reported


Commodity mark-to-market net impact






Venezuela currency devaluation


Core (a)

Operating Profit


Quarter

Ended

3/23/2013



Merger and integration charges


Restructuring and impairment charges


Quarter

Ended

3/23/2013














Frito-Lay North America


$     828


$           -


$            -


$           2


$            -


$       830

Quaker Foods North America


180


-


-


(1)


-


179

Latin America Foods


216


-


-


4


-


220

   PepsiCo Americas Foods


1,224


-


-


5


-


1,229














PepsiCo Americas Beverages


565


-


-


-


(13)


552














Europe


88


-


1


4


-


93














Asia, Middle East & Africa


184


-


-


1


-


185














Division Operating Profit


2,061


-


1


10


(13)


2,059














Corporate Unallocated


(403)


16


-


1


124


(262)














Total Operating Profit


$   1,658


$       16


$           1


$          11


$        111


$    1,797





























GAAP Measure


Non-Core Adjustments


Non-GAAP Measure





Reported


Commodity mark-to-market net impact






Core (a)



Operating Profit


Quarter

Ended

3/24/2012



Merger and integration charges


Restructuring and impairment charges

Quarter

Ended

3/24/2012





























Frito-Lay North America


$     780


$          -


$            -


$              8


$          788



Quaker Foods North America


187


-


-


5


192



Latin America Foods


183


-


-


6


189



   PepsiCo Americas Foods


1,150


-


-


19


1,169
















PepsiCo Americas Beverages


525


-


-


8


533
















Europe


81


-


2


(1)


82
















Asia, Middle East & Africa


148


-


-


9


157
















Division Operating Profit


1,904


-


2


35


1,941
















Corporate Unallocated


(182)


(84)


-


(2)


(268)
















Total Operating Profit


$   1,722


$        (84)


$           2


$          33


$      1,673





























(a)  Core results are financial measures that are not in accordance with GAAP and exclude the above adjustments. 

      See A-13 through A-15 for a discussion of each of these adjustments.














A-9





PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information (cont.)

(unaudited)





Gross Margin Growth Reconciliation







Quarter Ended





3/23/2013


Reported Gross Margin Growth



102

bps

Commodity Mark-to-Market Net Impact



25


Core Gross Margin Growth



127

bps











Operating Margin Growth Reconciliation 








Quarter Ended





3/23/2013


Reported Operating Margin Growth 



(68)

bps

Commodity Mark-to-Market Net Impact 



81


Merger and Integration Charges 



(1)


Restructuring and Impairment Charges 



(18)


Venezuela Currency Devaluation 



88


Core Operating Margin Growth 



83

bps