|
Notes to Consolidated Financial Statements
Note 16 - Business Segments
In 1998, we adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of a Business Enterprise and Related Information, which is generally based on our 1998 management reporting. The prior years' segment information presented in this footnote has been restated to present our five reportable segments as follows:
- Pepsi-Cola
- North America
- International
- Frito-Lay
- North America
- International
- Tropicana
The North American segments include the United States and Canada. The Tropicana segment includes its worldwide results.In contemplation of the proposed separation from PepsiCo of our bottling operation (see Note 18), we completed a reorganization of our Pepsi-Cola businesses in 1999. Our 1998 financial statements do not reflect the reorganization.
The accounting policies of the segments are the same as those described in Note 1 - Summary of Significant Accounting Policies. All intersegment net sales and expenses are immaterial and have been eliminated in computing net sales and operating profit.
Pepsi-Cola North America
Pepsi-Cola North America markets and distributes its Pepsi-Cola,
Diet Pepsi, Mountain Dew and other brands. PCNA manufactures concentrates of its brands for sale to franchised bottlers. PCNA operates bottling plants and distribution facilities for the production and distribution of company-owned and licensed brands. PCNA also manufactures and distributes ready-to-drink Lipton tea products through a joint venture and processes and distributes Aquafina bottled water.
Investments in unconsolidated affiliates are primarily in franchised bottling and distribution operations.
Pepsi-Cola International
Pepsi-Cola International markets and distributes its Pepsi-Cola, Diet Pepsi, Mountain Dew, 7UP, Diet 7UP, Mirinda, Pepsi Max and other brands internationally. PCI manufactures concentrates of its brands for sale to franchised bottlers. PCI operates bottling plants and distribution facilities in various international markets for the production and distribution of company-owned and licensed brands.
Principal international markets include Argentina, Brazil, China, India, Mexico, the Philippines, Saudi Arabia, Spain, Thailand and the United Kingdom. Investments in unconsolidated affiliates are
primarily in franchised bottling and distribution operations.
Frito-Lay North America
Frito-Lay North America primarily markets, manufactures and distributes salty snacks. Products manufactured and distributed in North America include Lay's and Ruffles brand potato chips, Doritos and Tostitos brand tortilla chips, Fritos brand corn chips, Cheetos brand cheese flavored snacks, Rold Gold brand pretzels, and a variety of dips and salsas. Low-fat and no-fat versions of several core brands are also manufactured and distributed in North America.
Frito-Lay International
Frito-Lay International markets, manufactures and distributes salty and sweet snacks. Products include Walkers brand snack foods in the United Kingdom, Sabritas brand snack foods in Mexico, and Alegro and Gamesa brand sweet snacks in Mexico. Many of our U.S. brands have been introduced internationally such as Lay's and Ruffles brand potato chips, Doritos and Tostitos brand tortilla chips, Fritos brand corn chips and Cheetos brand cheese flavored snacks.
Principal international snack markets include Australia, Brazil, Mexico, the Netherlands, South Africa, Spain and the United Kingdom.
Tropicana
Tropicana markets, produces and distributes its juices worldwide. Products include Tropicana Pure Premium, Season's Best, Dole, Tropicana Pure Tropics and Tropicana Twister brand juices primarily sold in the United States and many in Canada and brands such as Fruvita, Hitchcock, Looza and Copella available in Europe.
Principal international markets include Belgium, Canada, France and the United Kingdom. The investment in unconsolidated affiliates is a distribution operation.
Impairment and Other Items Affecting Comparability
Effects on segments of impairment and other items are as follows:
|
|
1998
|
1997
|
1996
|
|
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
16
|
$
|
52
|
$
|
-
|
|
|
- International
|
218
|
154
|
576
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
54
|
22
|
-
|
|
|
- International
|
-
|
62
|
-
|
|
|
|
|
Combined Segments
|
$
|
288
|
$
|
290
|
$
|
576
|
|
|
See Note 3 for details on the above unusual impairment and other items.
|
BUSINESS SEGMENTS
|
|
1998
|
.
|
1997
|
1996
|
|
|
|
|
|
NET SALES
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
8,266
|
.
|
$
|
7,899
|
|
$
|
7,788
|
|
|
|
- International
|
2,385
|
.
|
2,642
|
2,799
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
7,474
|
.
|
6,967
|
6,628
|
|
|
- International
|
3,501
|
.
|
3,409
|
3,122
|
|
Tropicana
|
722
|
.
|
-
|
-
|
|
|
|
|
|
$
|
22,348
|
.
|
$
|
20,917
|
|
$
|
20,337
|
|
|
|
|
|
OPERATING PROFIT (a)
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
1,211
|
.
|
$
|
1,274
|
|
$
|
1,428
|
|
|
|
- International
|
(219
|
)
|
(144
|
)
|
(846
|
)
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
1,424
|
.
|
1,388
|
1,286
|
|
|
|
- International
|
367
|
.
|
318
|
346
|
|
|
Tropicana
|
40
|
.
|
-
|
-
|
|
|
|
|
|
Combined Segments
|
2,823
|
.
|
2,836
|
2,214
|
|
|
Corporate (b)
|
(239
|
)
|
(174
|
)
|
(174
|
)
|
|
|
|
|
|
$
|
2,584
|
.
|
$
|
2,662
|
|
$
|
2,040
|
|
|
|
|
|
Total Assets
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
8,269
|
.
|
$
|
7,562
|
|
$
|
7,199
|
|
|
|
- International
|
2,536
|
.
|
3,134
|
3,487
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
3,915
|
.
|
3,650
|
3,116
|
|
|
|
- International
|
4,039
|
.
|
3,583
|
3,418
|
|
|
Tropicana
|
3,661
|
.
|
-
|
-
|
|
|
Corporate (c)
|
240
|
.
|
2,172
|
490
|
|
|
Net Assets of Discontinued Operations
|
-
|
.
|
-
|
4,450
|
|
|
|
|
|
|
$
|
22,660
|
.
|
$
|
20,101
|
|
$
|
22,160
|
|
|
|
|
|
Amortization of Intangible Assets
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
136
|
.
|
$
|
141
|
|
$
|
143
|
|
|
|
- International
|
14
|
.
|
14
|
22
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
7
|
.
|
6
|
5
|
|
|
- International
|
43
|
.
|
38
|
36
|
|
Tropicana
|
22
|
.
|
-
|
-
|
|
|
|
|
|
$
|
222
|
.
|
$
|
199
|
|
$
|
206
|
|
|
|
|
Depreciation and Other
Amortization Expense
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
369
|
.
|
$
|
337
|
|
$
|
323
|
|
|
|
- International
|
140
|
.
|
166
|
191
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
326
|
.
|
285
|
243
|
|
|
- International
|
142
|
.
|
112
|
103
|
|
Tropicana
|
27
|
.
|
-
|
-
|
|
Corporate
|
8
|
.
|
7
|
7
|
|
|
|
|
|
$
|
1,012
|
.
|
$
|
907
|
|
$
|
867
|
|
|
|
|
|
Significant Other Noncash Items (d)
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
-
|
.
|
$
|
52
|
|
$
|
-
|
|
|
|
- International
|
200
|
.
|
119
|
366
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
54
|
.
|
9
|
-
|
|
|
- International
|
-
|
.
|
53
|
-
|
|
|
|
|
|
$
|
254
|
.
|
$
|
233
|
|
$
|
366
|
|
|
|
|
|
Capital Spending
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
472
|
.
|
$
|
430
|
|
$
|
399
|
|
|
|
- International
|
138
|
.
|
188
|
249
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
402
|
.
|
622
|
760
|
|
|
- International
|
314
|
.
|
251
|
213
|
|
Tropicana
|
50
|
.
|
-
|
-
|
|
Corporate
|
29
|
.
|
15
|
9
|
|
|
|
|
|
$
|
1,405
|
.
|
$
|
1,506
|
|
$
|
1,630
|
|
|
|
|
Investments in
Unconsolidated Affiliates
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
326
|
.
|
$
|
340
|
|
$
|
308
|
|
|
|
- International
|
685
|
.
|
605
|
562
|
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
-
|
.
|
-
|
3
|
|
|
- International
|
341
|
.
|
234
|
252
|
|
Tropicana
|
22
|
.
|
-
|
-
|
|
Corporate
|
22
|
.
|
22
|
22
|
|
|
|
|
|
$
|
1,396
|
.
|
$
|
1,201
|
|
$
|
1,147
|
|
|
|
|
Equity Income/(Loss) from
Unconsolidated Affiliates (e)
|
.
|
|
|
Pepsi-Cola
|
.
|
|
|
|
- North America
|
$
|
50
|
.
|
$
|
41
|
|
$
|
32
|
|
|
|
- International
|
(21
|
)
|
(4
|
)
|
(341
|
)
|
|
Frito-Lay
|
.
|
|
|
|
- North America
|
-
|
.
|
(3
|
)
|
-
|
|
|
|
- International
|
(5
|
)
|
50
|
35
|
|
|
Tropicana
|
1
|
.
|
-
|
-
|
|
|
|
|
|
|
$
|
25
|
.
|
$
|
84
|
|
$
|
(274
|
)
|
|
|
|
|
GEOGRAPHIC AREAS
|
.
|
|
|
Net Sales
|
.
|
|
|
United States
|
$
|
15,381
|
.
|
$
|
13,878
|
|
$
|
13,408
|
|
|
International
|
6,967
|
.
|
7,039
|
6,929
|
|
|
|
|
|
Combined Segments
|
$
|
22,348
|
.
|
$
|
20,917
|
|
$
|
20,337
|
|
|
|
|
|
Long-Lived Assets (f)
|
.
|
|
|
United States
|
$
|
12,948
|
.
|
$
|
9,466
|
|
$
|
9,271
|
|
|
International
|
4,762
|
.
|
3,851
|
3,998
|
|
|
|
|
|
Combined Segments
|
$
|
17,710
|
.
|
$
|
13,317
|
|
$
|
13,269
|
|
|
(a) Includes Impairment and Other Items Affecting Comparability on page 35.
(b) Includes unallocated corporate headquarters expenses and costs of centrally managed insurance programs, minority interests and foreign exchange translation and transaction gains and losses.
(c) Corporate assets consist principally of cash and cash equivalents, short-term investments primarily held outside the U.S. and property and equipment.
(d) Represents the noncash portion of unusual items. See Note 3.
(e) Includes unusual charges of $256 million in 1996 in PCI related to the write down of our investment in Buenos Aires Embotelladora S.A. and our share of the unusual charges recorded by BAESA. In 1997, FLI included a gain of $22 million related to the sale of a non-core investment.
(f) Represents Property, Plant and Equipment, net, Intangible Assets, net and Investments in Unconsolidated Affiliates.
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