PepsiCo Reports Third Quarter 2012 Results
-- Third quarter reported EPS of $1.21 and core(1) EPS of $1.20
-- Company reaffirms 2012 core constant currency(1) net revenue and core constant currency EPS guidance
-- Reflecting the impact of previously announced structural changes and negative foreign exchange translation, reported net revenue declined 5 percent, in line with expectations. Excluding these impacts, organic(1) net revenue grew 5 percent
-- Company expects to return more than $6 billion to shareholders through dividends and share repurchases in 2012
-- Company expects to deliver more than $1 billion in productivity savings in 2012 and $3 billion in savings by 2015
PURCHASE, N.Y., Oct. 17, 2012 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today reported a decline in third quarter net revenue of 5 percent, reflecting a negative 5-percentage-point impact from previously announced structural changes (primarily beverage refranchisings in China and Mexico), and a negative 5-percentage-point impact from foreign exchange translation. Excluding these items, third quarter net revenue grew 5 percent on an organic basis.
(Logo: http://photos.prnewswire.com/prnh/20120424/NY93895LOGO )
Reported EPS was $1.21 and core EPS was $1.20. Management reaffirmed both its 2012 core constant currency net revenue and core constant currency EPS guidance and stated that its 2012 strategic initiatives are on track.
"PepsiCo is diligently executing the strategy we set forth at the start of the year, and we remain on track to achieve our full-year targets," said PepsiCo Chairman and CEO Indra Nooyi. "Our disciplined pricing and sustained investment in brand building drove 5 percent organic net revenue growth reflecting 1 percent organic volume growth and 4 percent effective net pricing.
"We remain focused on our five priorities. We will continue to invest aggressively to build our brands, accelerate innovation to drive growth, focus on execution and deliver our productivity agenda while returning cash to 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 5 percent organic net revenue growth with a good balance between volume growth and price realization.
- Grew global snacks net revenue on a reported basis. Grew both global snacks and global beverage net revenue on an organic basis.
- Emerging and developing market net revenue declined 13 percent, primarily due to beverage refranchisings in China and Mexico. On an organic basis, emerging and developing market net revenue grew 11 percent.
- While reported net revenue in AMEA and Europe declined 21 percent and 6 percent, respectively, organic net revenue grew 10 percent and 7 percent, respectively.
- PAF saw balanced revenue growth driven by volume growth and effective net price realization.
- Substantially increased advertising and marketing expense in the quarter, supporting the company's long-term brand building initiatives.
- Activated our expanded partnership with the NFL across snacks and beverages with retail programming in 22 of 32 team markets and announced that Pepsi will be the official sponsor of the 2013 Super Bowl halftime show. Doritos will again drive its highly popular Crash the Super Bowl program.
Summary of Third Quarter Financial Performance
- Organic net revenue growth was 5 percent. Reported net revenue benefited from 1 percentage point of volume growth and 4 percentage points of effective net pricing, offset by negative foreign exchange translation of 5 percentage points. Structural changes, primarily refranchisings in China and Mexico, negatively impacted reported net revenue performance by 5 percentage points.
- Reported operating profit declined 4 percent and core operating profit declined 8 percent. Core operating profit performance reflected the impact of increased commodity costs, increased advertising and marketing expense, higher corporate unallocated expenses reflecting increased pension expense and a negative 3 percentage point impact of foreign exchange translation. Core operating profit excluded mark-to-market net gains on commodity hedges, restructuring and certain impairment charges as well as merger and integration charges.
- Net interest expense was $181 million and included $24 million in mark-to-market gains on investments related to deferred compensation liabilities. There is a corresponding offset to these gains within selling, general and administrative expense resulting in no net benefit to earnings.
- The company's reported effective tax rate was 27 percent. The company's core effective tax rate was 26.3 percent, 90 basis points above the prior year quarter due to an adjustment to international deferred taxes, partially offset by tax benefits generated from an international acquisition.
- Reported EPS was $1.21 and core EPS was $1.20. Core EPS excludes a $0.04 per share impact of certain restructuring, impairment and integration charges and a $0.05 per share impact from mark-to-market net gains on commodity hedges. Mark-to-market gains and losses are subsequently reflected in core division results when the divisions take delivery of the underlying commodity.
- Operating cash flow was $5.1 billion year to date. Management operating cash flow (excluding certain items) was $4.9 billion. The company has returned $4.8 billion to shareholders through dividends and share repurchases through the end of the third quarter, and expects to return more than $6 billion to shareholders for the full year 2012.
|
Summary Third Quarter 2012 Performance (Percent Growth) |
|||||||||||
|
Reported |
Core USDa |
Core Constant |
Organicb | ||||||||
|
Volumec |
|||||||||||
|
Snacks |
6 |
3 | |||||||||
|
Beverages |
3 |
1 | |||||||||
|
Net Revenue |
(5) |
(5) |
- |
5 | |||||||
|
Operating Profitd |
(4) |
(8) |
(5) |
||||||||
|
EPS |
(3) |
(8) |
(4) |
||||||||
|
Summary Third Quarter 2012 Business Segment Performance (Percent Growth) | ||||||||||
|
Corea | ||||||||||
|
Constant Currencya |
||||||||||
|
|
Net Revenue |
Operating Profitd |
Organic Revenue |
Net Revenue |
Operating Profit |
Operating Profit | ||||
|
PAF |
6 |
2.5 |
(6) |
6 |
7 |
(1) |
(3) | |||
|
FLNA |
1 |
3 |
- |
3 |
3 |
1 |
1 | |||
|
LAF |
15e |
2 |
(21) |
13 |
15 |
- |
(10) | |||
|
QFNA |
2 |
- |
(13) |
1 |
0.5 |
(11) |
(12) | |||
|
PAB |
(3) |
(7) |
(16) |
- |
(6) |
(13) |
(15) | |||
|
Europe |
-/1f |
(6) |
(6) |
7 |
7 |
3 |
(7) | |||
|
AMEA |
13/15f |
(21) |
11 |
10 |
(17) |
14 |
13 | |||
|
Total Divisions |
6/3 |
(5) |
(7) |
5 |
- |
(3) |
(6) | |||
|
Total PepsiCo |
(5) |
(4) |
5 |
- |
(5) |
(8) | ||||
aThe above core results and core constant currency results are non-GAAP financial measures that exclude certain items affecting comparability. For more information about our core results and core constant currency results, see "Reconciliation of GAAP and Non-GAAP Information" in the attached exhibits. Please refer to the Glossary for definitions of "Constant Currency" and "Core".
bOrganic results are non-GAAP financial measures that exclude the impact of acquisitions and divestitures and foreign exchange translation. Please refer to the Glossary for additional information regarding organic results.
c Volume growth measures reflect an adjustment to the base year (2011) for divestitures that occurred in 2011 and 2012, as applicable.
dThe reported operating profit performance was impacted by certain items excluded from our core results in both 2012 and 2011. 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".
eLAF volume included 11 percentage points of benefit related to acquisitions.
fSnacks/Beverages. AMEA beverage volume includes 7 points of benefit related to co-branded juice drinks in China.
All comparisons are on a core year-over-year basis unless otherwise noted.
Division Operating Summaries
PepsiCo Americas Foods (PAF)
Organic net revenue grew 6 percent in the quarter, and reported net revenue grew 2.5 percent. Net revenue growth was driven by effective net pricing supported by contributions from innovation and increased media support. Core constant currency operating profit declined 1 percent, reflecting higher commodity costs and increased advertising and marketing investments across all PAF divisions, partially offset by productivity initiatives.
Frito-Lay North America (FLNA)
Organic net revenue increased 3 percent driven by a 1 percent increase in volume coupled with 2 percent effective net pricing. Volume was negatively impacted in the quarter by a calendar shift related to the Labor Day holiday. Net revenue growth was driven by the C-store, club, dollar and foodservice channels. Reported net revenue grew 3 percent.
Operating profit growth of 1 percent in the quarter reflected higher commodity costs and a significant increase in advertising and marketing investments offset by effective net pricing and productivity initiatives.
Latin America Foods (LAF)
On an organic basis, LAF net revenue grew 13 percent. Net revenue growth reflected 4 percentage points of organic volume growth and 9 percentage points of effective net pricing. Reported net revenue grew 2 percent, reflecting a 2-percentage-point benefit from acquisitions and divestitures, offset by a 13-percentage-point unfavorable foreign exchange translation impact.
Core constant currency operating profit was even with the prior year quarter reflecting increased advertising and marketing expense and commodity cost inflation.
Quaker Foods North America (QFNA)
Organic net revenue grew modestly. Reported net revenue performance was even with the prior year quarter, reflecting 2 percentage points of volume growth offset by lower pricing and mix.
Core constant currency operating profit in the quarter declined 11 percent driven principally by higher commodity costs and increased advertising and marketing expense.
PepsiCo Americas Beverages (PAB)
On an organic basis, net revenue was even with the prior year quarter. Effective net pricing increased by 3 percentage points and bottler case volume declined 3 percent. Volume was negatively impacted by 1 percentage point in the quarter due to a calendar shift related to the Labor Day holiday. Positive volume and pricing trends continued within the convenience and gas channel. Reported net revenue declined 7 percent, primarily reflecting a negative 6-percentage-point impact of the refranchising of the division's Mexican beverage business in the fourth quarter of 2011 and a negative 1-percentage-point impact from foreign exchange translation.
Operating profit declined in the quarter primarily reflecting increased commodity costs and higher advertising and marketing expense, partially offset by favorable effective net pricing and savings resulting from productivity initiatives. The refranchising of the division's Mexican beverage business negatively impacted operating profit performance by more than 2 percentage points.
Europe
On an organic basis, net revenue grew 7 percent with a focus on product mix management to drive margin accretion and healthy growth in Russia partially offset by softer trends in Western Europe. Reported net revenue declined 6 percent, reflecting 6 percentage points of effective net pricing which was more than offset by an unfavorable foreign exchange translation impact of 12 percentage points.
Core constant currency operating profit grew 3 percent in the quarter with significantly higher marketing investments and commodity cost inflation offset by productivity savings. Operating profit performance was negatively impacted by 4 percentage points due to an impairment charge associated with operations in Greece. Operating profit performance was positively impacted by 8 percentage points attributable to net favorable adjustments of certain operating items and favorable comparisons related to timing of concentrate shipments in connection with our global SAP implementation in the third quarter of 2011.
Asia, Middle East & Africa (AMEA)
On an organic basis, net revenue grew 10 percent, led by double-digit organic volume growth in snacks and high-single-digit organic volume growth in beverages. Reported net revenue declined 21 percent reflecting a 27-percentage-point negative impact from structural changes, principally the refranchising of bottling operations in China, and a negative 4-percentage-point impact from foreign exchange translation.
Core constant currency operating profit grew 14 percent, driven by volume growth and effective net pricing partially offset by higher commodity costs. The impact of acquisitions and divestitures reduced operating profit by 5 percent while a favorable comparison related to timing of concentrate shipments in connection with our global SAP implementation in the third quarter of 2011 increased operating profit by 7 percent.
Restructuring
As previously announced, the company has committed to a multi-year productivity program. The company incurred pre-tax, non-core restructuring charges of $83 million in the third quarter of 2012 and has incurred $193 million year to date. The company anticipates additional charges of approximately $205 million in the balance of 2012 and $129 million from 2013 through 2015. Charges under this program resulted in cash expenditures of $103 million in the third quarter of 2012 and $243 million year to date. The company anticipates additional cash expenditures of approximately $175 million in the remainder of 2012, with the balance of approximately $287 million of related cash expenditures expected in 2013 through 2015.
2012 Guidance and Outlook
Consistent with its previous guidance for 2012, the company expects a decline in core constant currency EPS of approximately 5 percent from its fiscal 2011 core EPS of $4.40. Based on the current foreign exchange market consensus, foreign exchange translation would have an unfavorable impact of approximately three percentage points on the company's full year core EPS performance in 2012. Consistent with its previous guidance, the company expects core constant currency net revenue growth of low-single-digits reflecting the impact of structural changes, principally refranchisings, which are expected to reduce core constant currency net revenue growth by approximately three percentage points for the full year. Excluding these structural changes, core constant currency net revenue is expected to grow mid-single-digits, consistent with the company's prior guidance.
The company is targeting approximately $8 billion in cash flow from operating activities and more than $6 billion in management operating cash flow (excluding certain items) in 2012, which includes the favorable impact of an expected 10 percent reduction in capital spending and improved working capital efficiency. The company also made a pre-tax discretionary pension and retiree medical contribution of $1 billion in the first quarter of 2012.
Reflecting its commitment to return capital to shareholders, the company anticipates more than $3 billion in share repurchases for 2012, and expects to pay $3.3 billion in dividends.
Conference Call
At 8 a.m. (Eastern Time) today, the company will host a conference call with investors to discuss third-quarter results and the outlook for 2012. 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, unaudited) | |||||||||||
|
12 Weeks Ended |
36 Weeks Ended | ||||||||||
|
9/8/2012 |
9/3/2011 |
Change |
9/8/2012 |
9/3/2011 |
Change | ||||||
|
Net Revenue |
$ 16,652 |
$ 17,582 |
(5)% |
$ 45,538 |
$ 46,346 |
(2)% | |||||
|
Cost of sales |
7,833 |
8,452 |
(7)% |
21,637 |
21,862 |
(1)% | |||||
|
Selling, general and administrative expenses |
5,992 |
6,186 |
(3)% |
16,920 |
16,995 |
–% | |||||
|
Amortization of intangible assets |
27 |
38 |
(29)% |
82 |
103 |
(21)% | |||||
|
Operating Profit |
2,800 |
2,906 |
(4)% |
6,899 |
7,386 |
(7)% | |||||
|
Interest expense |
(204) |
(205) |
–% |
(611) |
(584) |
5% | |||||
|
Interest income and other |
23 |
(4) |
n/m |
47 |
33 |
42% | |||||
|
Income before income taxes |
2,619 |
2,697 |
(3)% |
6,335 |
6,835 |
(7)% | |||||
|
Provision for income taxes |
706 |
686 |
3% |
1,788 |
1,775 |
1% | |||||
|
Net income |
1,913 |
2,011 |
(5)% |
4,547 |
5,060 |
(10)% | |||||
|
Less: Net income attributable to |
11 |
11 |
8% |
30 |
32 |
(6)% | |||||
|
noncontrolling interests |
|||||||||||
|
Net Income Attributable to PepsiCo |
$ 1,902 |
$ 2,000 |
(5)% |
$ 4,517 |
$ 5,028 |
(10)% | |||||
|
Diluted |
|||||||||||
|
Net Income Attributable to PepsiCo per Common Share |
$ 1.21 |
$ 1.25 |
(3)% |
$ 2.86 |
$ 3.14 |
(9)% | |||||
|
Average Shares Outstanding |
1,575 |
1,599 |
1,580 |
1,603 |
|||||||
|
Cash dividends declared per common share |
|||||||||||
|
$ 0.5375 |
$ 0.515 |
$ 1.59 |
$ 1.51 |
||||||||
|
n/m = not meaningful |
|||||||||||
|
A-1 | |||||||||||
|
PepsiCo, Inc. and Subsidiaries | |||||||||||
|
Supplemental Financial Information | |||||||||||
|
(in millions, unaudited) | |||||||||||
|
12 Weeks Ended |
36 Weeks Ended | ||||||||||
|
9/8/2012 |
9/3/2011 |
Change |
9/8/2012 |
9/3/2011 |
Change | ||||||
|
Net Revenue |
|||||||||||
|
Frito-Lay North America |
$ 3,269 |
$ 3,173 |
3% |
$ 9,472 |
$ 9,167 |
3% | |||||
|
Quaker Foods North America |
615 |
614 |
–% |
1,821 |
1,837 |
(1)% | |||||
|
Latin America Foods |
1,883 |
1,841 |
2% |
5,066 |
4,757 |
7% | |||||
|
PepsiCo Americas Foods |
5,767 |
5,628 |
2.5% |
16,359 |
15,761 |
4% | |||||
|
PepsiCo Americas Beverages |
5,530 |
5,947 |
(7)% |
15,330 |
16,107 |
(5)% | |||||
|
Europe |
3,691 |
3,909 |
(6)% |
9,153 |
9,329 |
(2)% | |||||
|
Asia, Middle East & Africa |
1,664 |
2,098 |
(21)% |
4,696 |
5,149 |
(9)% | |||||
|
Total Net Revenue |
$ 16,652 |
$ 17,582 |
(5)% |
$ 45,538 |
$ 46,346 |
(2)% | |||||
|
Operating Profit |
|||||||||||
|
Frito-Lay North America |
$ 917 |
$ 918 |
–% |
$ 2,532 |
$ 2,545 |
(0.5)% | |||||
|
Quaker Foods North America |
154 |
177 |
(13)% |
495 |
558 |
(11)% | |||||
|
Latin America Foods |
219 |
275 |
(21)% |
673 |
720 |
(7)% | |||||
|
PepsiCo Americas Foods |
1,290 |
1,370 |
(6)% |
3,700 |
3,823 |
(3)% | |||||
|
PepsiCo Americas Beverages |
837 |
992 |
(16)% |
2,202 |
2,533 |
(13)% | |||||
|
Europe |
483 |
514 |
(6)% |
1,017 |
984 |
3% | |||||
|
Asia, Middle East & Africa |
317 |
285 |
11% |
630 |
730 |
(14)% | |||||
|
Division Operating Profit |
2,927 |
3,161 |
(7)% |
7,549 |
8,070 |
(6)% | |||||
|
Corporate Unallocated |
|||||||||||
|
Net Impact of Mark-to-Market on Commodity Hedges |
121 |
(53) |
n/m |
126 |
(31) |
n/m | |||||
|
Merger and Integration Charges |
2 |
(10) |
n/m |
– |
(64) |
n/m | |||||
|
Restructuring and Impairment Charges |
(7) |
– |
n/m |
(8) |
– |
n/m | |||||
|
Other |
(243) |
(192) |
27% |
(768) |
(589) |
30% | |||||
|
(127) |
(255) |
(50)% |
(650) |
(684) |
(5)% | ||||||
|
Total Operating Profit |
$ 2,800 |
$ 2,906 |
(4)% |
$ 6,899 |
$ 7,386 |
(7)% | |||||
|
n/m = not meaningful |
|||||||||||
|
A-2 | |||||||||||
|
PepsiCo, Inc. and Subsidiaries | |||
|
Condensed Consolidated Statement of Cash Flows | |||
|
(in millions, unaudited) | |||
|
36 Weeks Ended | |||
|
9/8/2012 |
9/3/2011 | ||
|
Operating Activities |
|||
|
Net income |
$ 4,547 |
$ 5,060 | |
|
Depreciation and amortization |
1,837 |
1,877 | |
|
Stock-based compensation expense |
193 |
222 | |
|
Restructuring and impairment charges |
193 |
– | |
|
Cash payments for restructuring charges |
(243) |
(1) | |
|
Merger and integration charges |
7 |
174 | |
|
Cash payments for merger and integration charges |
(57) |
(293) | |
|
Restructuring and other charges related to the transaction with Tingyi (Cayman Islands) Holding Corp. (Tingyi) |
163 |
– | |
|
Cash payments for restructuring and other charges related to the transaction with Tingyi |
(98) |
– | |
|
Excess tax benefits from share-based payment arrangements |
(89) |
(56) | |
|
Pension and retiree medical plan contributions |
(1,253) |
(185) | |
|
Pension and retiree medical plan expenses |
414 |
389 | |
|
Deferred income taxes and other tax charges and credits |
283 |
132 | |
|
Change in accounts and notes receivable |
(1,300) |
(1,643) | |
|
Change in inventories |
(234) |
(466) | |
|
Change in prepaid expenses and other current assets |
(83) |
(54) | |
|
Change in accounts payable and other current liabilities |
281 |
142 | |
|
Change in income taxes payable |
736 |
936 | |
|
Other, net |
(179) |
(400) | |
|
Net Cash Provided by Operating Activities |
5,118 |
5,834 | |
|
Investing Activities |
|||
|
Capital spending |
(1,409) |
(1,962) | |
|
Sales of property, plant and equipment |
58 |
46 | |
|
Acquisition of Wimm-Bill-Dann Foods OJSC (WBD), net of cash and cash equivalents acquired |
– |
(2,428) | |
|
Investment in WBD |
– |
(164) | |
|
Cash payments related to the transaction with Tingyi |
(298) |
– | |
|
Other acquisitions and investments in noncontrolled affiliates |
(76) |
(160) | |
|
Divestitures |
7 |
10 | |
|
Short-term investments, net |
(21) |
(34) | |
|
Other investing, net |
11 |
(3) | |
|
Net Cash Used for Investing Activities |
(1,728) |
(4,695) | |
|
Financing Activities |
|||
|
Proceeds from issuances of long-term debt |
5,207 |
3,000 | |
|
Payments of long-term debt |
(1,357) |
(1,596) | |
|
Debt repurchase |
– |
(771) | |
|
Short-term borrowings, net |
(2,194) |
56 | |
|
Cash dividends paid |
(2,470) |
(2,349) | |
|
Share repurchases -- common |
(2,328) |
(1,929) | |
|
Share repurchases -- preferred |
(5) |
(5) | |
|
Proceeds from exercises of stock options |
927 |
724 | |
|
Excess tax benefits from share-based payment arrangements |
89 |
56 | |
|
Acquisition of noncontrolling interests |
(15) |
(1,327) | |
|
Other financing |
(18) |
(2) | |
|
Net Cash Used for Financing Activities |
(2,164) |
(4,143) | |
|
Effect of exchange rate changes on cash and cash equivalents |
16 |
144 | |
|
Net Increase/(Decrease) in Cash and Cash Equivalents |
1,242 |
(2,860) | |
|
Cash and Cash Equivalents – Beginning of Year |
4,067 |
5,943 | |
|
Cash and Cash Equivalents – End of Period |
$ 5,309 |
$ 3,083 | |
|
A-3 | |||
|
PepsiCo, Inc. and Subsidiaries | |||||
|
Condensed Consolidated Balance Sheet | |||||
|
(in millions except per share amounts) | |||||
|
9/8/2012 |
12/31/2011 |
||||
|
Assets |
(unaudited) |
||||
|
Current Assets |
|||||
|
Cash and cash equivalents |
$ 5,309 |
$ 4,067 |
|||
|
Short-term investments |
402 |
358 |
|||
|
Accounts and notes receivable, net |
7,998 |
6,912 |
|||
|
Inventories |
|||||
|
Raw materials |
1,930 |
1,883 |
|||
|
Work-in-process |
253 |
207 |
|||
|
Finished goods |
1,722 |
1,737 |
|||
|
3,905 |
3,827 |
||||
|
Prepaid expenses and other current assets |
1,656 |
2,277 |
|||
|
Total Current Assets |
19,270 |
17,441 |
|||
|
Property, plant and equipment, net |
18,530 |
19,698 |
|||
|
Amortizable intangible assets, net |
1,799 |
1,888 |
|||
|
Goodwill |
16,701 |
16,800 |
|||
|
Other nonamortizable intangible assets |
14,511 |
14,557 |
|||
|
Nonamortizable Intangible Assets |
31,212 |
31,357 |
|||
|
Investments in noncontrolled affiliates |
1,585 |
1,477 |
|||
|
Other assets |
1,621 |
1,021 |
|||
|
Total Assets |
$ 74,017 |
$ 72,882 |
|||
|
Liabilities and Equity |
|||||
|
Current Liabilities |
|||||
|
Short-term obligations |
$ 4,211 |
$ 6,205 |
|||
|
Accounts payable and other current liabilities |
11,722 |
11,757 |
|||
|
Income taxes payable |
287 |
192 |
|||
|
Total Current Liabilities |
16,220 |
18,154 |
|||
|
Long-term debt obligations |
23,732 |
20,568 |
|||
|
Other liabilities |
7,551 |
8,266 |
|||
|
Deferred income taxes |
4,930 |
4,995 |
|||
|
Total Liabilities |
52,433 |
51,983 |
|||
|
Commitments and Contingencies |
|||||
|
Preferred stock, no par value |
41 |
41 |
|||
|
Repurchased preferred stock |
(162) |
(157) |
|||
|
PepsiCo Common Shareholders' Equity |
|||||
|
Common stock, par value 12/3¢ per share (authorized 3,600 |
31 |
31 |
|||
|
shares, issued 1,865 shares) |
|||||
|
Capital in excess of par value |
4,179 |
4,461 |
|||
|
Retained earnings |
42,332 |
40,316 |
|||
|
Accumulated other comprehensive loss |
(6,086) |
(6,229) |
|||
|
Repurchased common stock, at cost (314 and 301 shares, respectively) |
(18,896) |
(17,875) |
|||
|
Total PepsiCo Common Shareholders' Equity |
21,560 |
20,704 |
|||
|
Noncontrolling interests |
145 |
311 |
|||
|
Total Equity |
21,584 |
20,899 |
|||
|
Total Liabilities and Equity |
$ 74,017 |
$ 72,882 |
|||
|
A-4 | |||||
|
PepsiCo, Inc. and Subsidiaries | ||||||||||
|
Supplemental Share and Stock-Based Compensation Data | ||||||||||
|
(in millions except dollar amounts, unaudited) | ||||||||||
|
12 Weeks Ended |
36 Weeks Ended | |||||||||
|
9/8/2012 |
9/3/2011 |
9/8/2012 |
9/3/2011 | |||||||
|
Beginning Net Shares Outstanding |
1,559 |
1,585 |
1,565 |
1,582 | ||||||
|
Options Exercised/Restricted Stock Units Converted |
9 |
2 |
22 |
17 | ||||||
|
Shares Repurchased |
(16) |
(19) |
(35) |
(31) | ||||||
|
Ending Net Shares Outstanding |
1,552 |
1,568 |
1,552 |
1,568 | ||||||
|
Weighted Average Basic |
1,556 |
1,578 |
1,562 |
1,581 | ||||||
|
Dilutive Securities: |
||||||||||
|
Options |
12 |
14 |
12 |
15 | ||||||
|
Restricted Stock Units |
6 |
6 |
5 |
6 | ||||||
|
ESOP Convertible Preferred Stock/Other |
1 |
1 |
1 |
1 | ||||||
|
Weighted Average Diluted |
1,575 |
1,599 |
1,580 |
1,603 | ||||||
|
Average Share Price for the Period |
$ 71.26 |
$ 66.17 |
$ 67.64 |
$ 66.29 | ||||||
|
Growth Versus Prior Year |
8% |
3% |
2% |
4% | ||||||
|
Options Outstanding |
73 |
96 |
80 |
100 | ||||||
|
Options in the Money |
72 |
74 |
66 |
79 | ||||||
|
Dilutive Shares from Options |
12 |
14 |
12 |
15 | ||||||
|
Dilutive Shares from Options as a % of Options in the Money |
||||||||||
|
16% |
20% |
17% |
19% | |||||||
|
Average Exercise Price of Options in the Money |
$ 58.37 |
$ 52.03 |
$ 55.28 |
$ 52.11 | ||||||
|
Restricted Stock Units Outstanding |
12 |
12 |
11 |
13 | ||||||
|
Dilutive Shares from Restricted Stock Units |
6 |
6 |
5 |
6 | ||||||
|
Average Intrinsic Value of Restricted Stock Units Outstanding* |
||||||||||
|
$ 65.51 |
$ 62.97 |
$ 65.33 |
$ 62.91 | |||||||
|
* Weighted average intrinsic value at grant date |
||||||||||
|
A-5 | ||||||||||
|
PepsiCo, Inc. and Subsidiaries | ||||||||||||
|
Reconciliation of GAAP and Non-GAAP Information | ||||||||||||
|
(in millions except per share amounts, unaudited) | ||||||||||||
|
Operating Profit Growth Reconciliation |
||||||||||||
|
12 Weeks Ended |
||||||||||||
|
9/8/2012 |
||||||||||||
|
Reported Total Operating Profit Growth |
(4) |
% |
||||||||||
|
Impact of Corporate Unallocated |
(4) |
|||||||||||
|
Division Operating Profit Growth |
(7) |
%* |
||||||||||
|
*Does not sum due to rounding |
||||||||||||
|
Operating Profit Growth Reconciliation |
||||||||||||
|
12 Weeks Ended |
||||||||||||
|
9/8/2012 |
9/3/2011 |
Growth |
||||||||||
|
Reported Total Operating Profit |
$ 2,800 |
$ 2,906 |
(4) |
% | ||||||||
|
Mark-to-Market Net (Gains)/Losses |
(121) |
53 |
||||||||||
|
Merger and Integration Charges |
2 |
45 |
||||||||||
|
Inventory Fair Value Adjustments |
- |
3 |
||||||||||
|
Restructuring and Impairment Charges |
83 |
- |
||||||||||
|
Core Total Operating Profit |
$ 2,764 |
$ 3,007 |
(8) |
% | ||||||||
|
Impact of Foreign Currency Translation |
3 |
|||||||||||
|
Core Constant Currency Operating Profit Growth |
(5) |
% | ||||||||||
|
Diluted EPS Reconciliation |
||||||||||||
|
12 Weeks Ended |
||||||||||||
|
9/8/2012 |
9/3/2011 |
Growth |
||||||||||
|
Reported Diluted EPS |
$ 1.21 |
$ 1.25 |
(3) |
% | ||||||||
|
Mark-to-Market Net (Gains)/Losses |
(0.05) |
0.02 |
||||||||||
|
Merger and Integration Charges |
- |
0.03 |
||||||||||
|
Restructuring and Impairment Charges |
0.04 |
- |
||||||||||
|
Core Diluted EPS |
$ 1.20 |
$ 1.31 |
* |
(8) |
% | |||||||
|
Impact of Foreign Currency Translation |
4 |
|||||||||||
|
Core Constant Currency Diluted EPS |
(4) |
% | ||||||||||
|
*Does not sum due to rounding |
||||||||||||
|
Year Ended |
||||||||||||
|
12/31/2011 |
||||||||||||
|
Reported Diluted EPS |
$ 4.03 |
|||||||||||
|
53rd Week |
(0.04) |
|||||||||||
|
Mark-to-Market Net Losses |
0.04 |
|||||||||||
|
Merger and Integration Charges |
0.17 |
|||||||||||
|
Restructuring and Impairment Charges |
0.18 |
|||||||||||
|
Inventory Fair Value Adjustments |
0.02 |
|||||||||||
|
Core Diluted EPS |
$ 4.40 |
|||||||||||
|
Net Cash Provided by Operating Activities Reconciliation |
||||||||||||
|
36 Weeks Ended |
||||||||||||
|
9/8/2012 |
||||||||||||
|
Net Cash Provided by Operating Activities |
$ 5,118 |
|||||||||||
|
Capital Spending |
(1,409) |
|||||||||||
|
Sales of Property, Plant and Equipment |
58 |
|||||||||||
|
Management Operating Cash Flow |
3,767 |
|||||||||||
|
Discretionary Pension and Retiree Medical Contributions (after-tax) |
770 |
|||||||||||
|
Payments Related to Restructuring Charges (after-tax) |
203 |
|||||||||||
|
Merger and Integration Payments (after-tax) |
44 |
|||||||||||
|
Capital Investments Related to the PBG/PAS Integration |
8 |
|||||||||||
|
Capital Investments Related to the Productivity Plan |
12 |
|||||||||||
|
Payments for Restructuring and Other Charges Related to |
||||||||||||
|
the Transaction with Tingyi |
98 |
|||||||||||
|
Management Operating Cash Flow excluding above Items |
$ 4,902 |
|||||||||||
|
Net Cash Provided by Operating Activities Reconciliation (in billions) |
||||||||||||
|
2012 Guidance |
||||||||||||
|
Net Cash Provided by Operating Activities |
$ ~8 |
|||||||||||
|
Net Capital Spending |
~(3) |
|||||||||||
|
Management Operating Cash Flow |
~5 |
|||||||||||
|
Certain Other Items* |
~1 |
|||||||||||
|
Management Operating Cash Flow excluding Certain Other Items |
$ ~6 |
|||||||||||
|
*Certain other items include discretionary pension and retiree medical contributions, payments related to restructuring charges, payments for restructuring and other charges related to the transaction with Tingyi, merger and integration payments, capital investments related to the Productivity Plan and capital investments related to the PBG/PAS integration | ||||||||||||
|
A-6 | ||||||||||||
|
PepsiCo, Inc. and Subsidiaries | ||||||
|
Reconciliation of GAAP and Non-GAAP Information (cont.) | ||||||
|
(unaudited) |
||||||
|
Global Beverages Net Revenue Growth Reconciliation |
||||||
|
12 Weeks Ended |
||||||
|
9/8/2012 |
||||||
|
Reported Global Beverages Net Revenue Growth. |
(10) |
% | ||||
|
Impact of Acquisitions and Divestitures |
10 |
|||||
|
Impact of Foreign Currency Translation |
4 |
|||||
|
Organic Global Beverages Net Revenue Growth |
3 |
%* | ||||
|
*Does not sum due to rounding |
||||||
|
Global Snacks Net Revenue Growth Reconciliation |
||||||
|
12 Weeks Ended |
||||||
|
9/8/2012 |
||||||
|
Reported Global Snacks Net Revenue Growth |
1 |
% | ||||
|
Impact of Foreign Currency Translation |
6 |
|||||
|
Organic Global Snacks Net Revenue Growth |
7 |
% | ||||
|
Emerging and Developing Market Net Revenue Growth Reconciliation |
||||||
|
12 Weeks Ended |
||||||
|
9/8/2012 |
||||||
|
Total Reported Emerging and Developing Market |
||||||
|
Net Revenue Growth |
(13) |
% | ||||
|
Impact of Acquisitions and Divestitures |
14 |
|||||
|
Impact of Foreign Currency Translation |
10 |
|||||
|
Emerging and Developing Markets Organic Net Revenue Growth |
11 |
% | ||||
|
A-7 | ||||||
|
PepsiCo, Inc. and Subsidiaries | ||||||||||
|
Reconciliation of GAAP and Non-GAAP Information (cont.) | ||||||||||
|
Certain Line Items | ||||||||||
|
12 Weeks Ended September 8, 2012 and September 3, 2011 | ||||||||||
|
(in millions except per share amounts, unaudited) | ||||||||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure |
||||||||
|
Reported |
Commodity mark- to-market net gains |
Restructuring and impairment charges |
Merger and integration charges |
Core* |
||||||
|
12 Weeks Ended 9/8/12 |
12 Weeks Ended 9/8/12 |
|||||||||
|
Cost of sales |
$ 7,833 |
$ 75 |
$ - |
$ - |
$ 7,908 |
|||||
|
Selling, general and administrative expenses |
$ 5,992 |
$ 46 |
$ (83) |
$ (2) |
$ 5,953 |
|||||
|
Operating profit |
$ 2,800 |
$ (121) |
$ 83 |
$ 2 |
$ 2,764 |
|||||
|
Provision for income taxes |
$ 706 |
$ (51) |
$ 24 |
$ - |
$ 679 |
|||||
|
Net income attributable to PepsiCo |
$ 1,902 |
$ (70) |
$ 59 |
$ 2 |
$ 1,893 |
|||||
|
Net income attributable to PepsiCo per common share - diluted |
$ 1.21 |
$ (0.05) |
$ 0.04 |
$ - |
$ 1.20 |
|||||
|
Effective tax rate |
26.9% |
26.3% |
||||||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure |
||||||||
|
Reported |
Commodity mark-to-market net losses |
Merger and integration charges |
Inventory fair value adjustments |
Core* |
||||||
|
12 Weeks Ended 9/3/11 |
12 Weeks Ended 9/3/11 |
|||||||||
|
Cost of sales |
$ 8,452 |
$ - |
$ - |
$ (3) |
$ 8,449 |
|||||
|
Selling, general and administrative expenses |
$ 6,186 |
$ (53) |
$ (45) |
$ - |
$ 6,088 |
|||||
|
Operating profit |
$ 2,906 |
$ 53 |
$ 45 |
$ 3 |
$ 3,007 |
|||||
|
Interest expense |
$ (205) |
$ - |
$ 16 |
$ - |
$ (189) |
|||||
|
Provision for income taxes |
$ 686 |
$ 19 |
$ 8 |
$ 1 |
$ 714 |
|||||
|
Net income attributable to PepsiCo |
$ 2,000 |
$ 34 |
$ 53 |
$ 2 |
$ 2,089 |
|||||
|
Net income attributable to PepsiCo per common share - diluted |
$ 1.25 |
$ 0.02 |
$ 0.03 |
$ - |
$ 1.31 |
** | ||||
|
Effective tax rate |
25.4% |
25.4% |
||||||||
|
*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 non-core adjustments. | ||||||||||
|
**Does not sum due to rounding. |
||||||||||
|
A-8 | ||||||||||
|
PepsiCo, Inc. and Subsidiaries | ||||||||||||
|
Reconciliation of GAAP and Non-GAAP Information (cont.) | ||||||||||||
|
Certain Line Items | ||||||||||||
|
36 Weeks Ended September 8, 2012 and September 3, 2011 | ||||||||||||
|
(in millions except per share amounts, unaudited) | ||||||||||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure |
||||||||||
|
Reported |
Commodity mark- to-market net gains |
Restructuring and impairment charges |
Merger and integration charges |
Restructuring and other charges related to the transaction with Tingyi |
Core* |
|||||||
|
36 Weeks Ended 9/8/12 |
36 Weeks Ended 9/8/12 |
|||||||||||
|
Cost of sales |
$ 21,637 |
$ 68 |
$ - |
$ - |
$ - |
$ 21,705 |
||||||
|
Selling, general and administrative expenses |
$ 16,920 |
$ 58 |
$ (193) |
$ (7) |
$ (137) |
$ 16,641 |
||||||
|
Operating profit |
$ 6,899 |
$ (126) |
$ 193 |
$ 7 |
$ 137 |
$ 7,110 |
||||||
|
Provision for income taxes |
$ 1,788 |
$ (51) |
$ 54 |
$ 1 |
$ (26) |
$ 1,766 |
||||||
|
Net income attributable to PepsiCo |
$ 4,517 |
$ (75) |
$ 139 |
$ 6 |
$ 163 |
$ 4,750 |
||||||
|
Net income attributable to PepsiCo per common share - diluted |
$ 2.86 |
$ (0.05) |
$ 0.09 |
$ - |
$ 0.10 |
$ 3.01 |
** | |||||
|
Effective tax rate |
28.2% |
27.0% |
||||||||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure |
||||||||||
|
Reported |
Commodity mark-to-market net losses |
Merger and integration charges |
Inventory fair value adjustments |
Core* |
||||||||
|
36 Weeks Ended 9/3/11 |
36 Weeks Ended 9/3/11 |
|||||||||||
|
Cost of sales |
$ 21,862 |
$ - |
$ - |
$ (41) |
$ 21,821 |
|||||||
|
Selling, general and administrative expenses |
$ 16,995 |
$ (31) |
$ (158) |
$ - |
$ 16,806 |
|||||||
|
Operating profit |
$ 7,386 |
$ 31 |
$ 158 |
$ 41 |
$ 7,616 |
|||||||
|
Interest expense |
$ (584) |
$ - |
$ 16 |
$ - |
$ (568) |
|||||||
|
Provision for income taxes |
$ 1,775 |
$ 11 |
$ 27 |
$ 10 |
$ 1,823 |
|||||||
|
Noncontrolling interests |
$ 32 |
$ - |
$ - |
$ 6 |
$ 38 |
|||||||
|
Net income attributable to PepsiCo |
$ 5,028 |
$ 20 |
$ 147 |
$ 25 |
$ 5,220 |
|||||||
|
Net income attributable to PepsiCo per common share - diluted |
$ 3.14 |
$ 0.01 |
$ 0.09 |
$ 0.02 |
$ 3.26 |
|||||||
|
Effective tax rate |
26.0% |
25.8% |
||||||||||
|
*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 non-core adjustments. |
||||||||||||
|
**Does not sum due to rounding. |
||||||||||||
|
A-9 | ||||||||||||
|
PepsiCo, Inc. and Subsidiaries | ||||||||||
|
Reconciliation of GAAP and Non-GAAP Information (cont.) | ||||||||||
|
Operating Profit by Division | ||||||||||
|
12 Weeks Ended September 8, 2012 and September 3, 2011 | ||||||||||
|
(in millions, unaudited) | ||||||||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure | ||||||||
|
Reported |
Commodity mark- to-market net gains |
Restructuring and impairment charges |
Merger and integration charges |
Core* | ||||||
|
Operating Profit |
12 Weeks Ended 9/8/12 |
12 Weeks Ended 9/8/12 | ||||||||
|
Frito-Lay North America |
$ 917 |
$ - |
$ 8 |
$ - |
$ 925 | |||||
|
Quaker Foods North America |
154 |
- |
1 |
- |
155 | |||||
|
Latin America Foods |
219 |
- |
29 |
- |
248 | |||||
|
PepsiCo Americas Foods |
1,290 |
- |
38 |
- |
1,328 | |||||
|
PepsiCo Americas Beverages |
837 |
- |
33 |
- |
870 | |||||
|
Europe |
483 |
- |
(1) |
4 |
486 | |||||
|
Asia, Middle East & Africa |
317 |
- |
6 |
- |
323 | |||||
|
Division Operating Profit |
2,927 |
- |
76 |
4 |
3,007 | |||||
|
Corporate Unallocated |
(127) |
(121) |
7 |
(2) |
(243) | |||||
|
Total Operating Profit |
$ 2,800 |
$ (121) |
$ 83 |
$ 2 |
$ 2,764 | |||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure | ||||||||
|
Reported |
Commodity mark-to-market net losses |
Merger and integration charges |
Inventory fair value adjustments |
Core* | ||||||
|
Operating Profit |
12 Weeks Ended 9/3/11 |
12 Weeks Ended 9/3/11 | ||||||||
|
Frito-Lay North America |
$ 918 |
$ - |
$ - |
$ - |
$ 918 | |||||
|
Quaker Foods North America |
177 |
- |
- |
- |
177 | |||||
|
Latin America Foods |
275 |
- |
- |
- |
275 | |||||
|
PepsiCo Americas Foods |
1,370 |
- |
- |
- |
1,370 | |||||
|
PepsiCo Americas Beverages |
992 |
- |
24 |
3 |
1,019 | |||||
|
Europe |
514 |
- |
11 |
- |
525 | |||||
|
Asia, Middle East & Africa |
285 |
- |
- |
- |
285 | |||||
|
Division Operating Profit |
3,161 |
- |
35 |
3 |
3,199 | |||||
|
Corporate Unallocated |
(255) |
53 |
10 |
- |
(192) | |||||
|
Total Operating Profit |
$ 2,906 |
$ 53 |
$ 45 |
$ 3 |
$ 3,007 | |||||
|
*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 non-core adjustments | ||||||||||
|
A-10 | ||||||||||
|
PepsiCo, Inc. and Subsidiaries | ||||||||||||
|
Reconciliation of GAAP and Non-GAAP Information (cont.) | ||||||||||||
|
Operating Profit by Division | ||||||||||||
|
36 Weeks Ended September 8, 2012 and September 3, 2011 | ||||||||||||
|
(in millions, unaudited) | ||||||||||||
|
GAAP Measure |
Non-Core Adjustments |
Non-GAAP Measure | ||||||||||
|
Reported |
Commodity mark- to-market net gains |
Restructuring and impairment charges |
||||||||||