PepsiCo Annual Report 2001

Click here to download the 2001 Annual Report as a PDF file.

Liquidity and Capital Resources

Our strong cash-generating capability and financial condition give us ready access to capital markets throughout the world. Our principle source of liquidity is operating cash flows, which are derived from net sales. Macroeconomic conditions may impact the demand for and pricing of our products. Our debt rating of A1 from Moody's and A from Standard & Poor's contributes to our accessibility to global capital markets. These ratings reflect our strong operating cash flows and include the impact of the cash flows and debt of our anchor bottlers. We have maintained these healthy ratings since 1989 demonstrating the stability of our operating cash flows.

At year-end 2001, we maintained $750 million of revolving credit facilities. Of the $750 million, approximately $375 million expires in June 2002 with the remaining $375 million expiring in June 2006. Annually, these facilities are extendable for an additional year upon the mutual consent of PepsiCo and the lending institutions. The credit facilities exist largely to support issuances of short-term debt and remain unused at year-end 2001. At year-end 2001, $375 million of short-term borrowings were reclassified as long-term, reflecting our intent and ability, through the existence of the unused credit facilities, to refinance these borrowings on a long-term basis.

Quaker integration costs will require cash, of which $228 million was paid in 2001. We expect the balance will be paid in 2002 and 2003.

Long-term financial obligations and other commercial commitments
Long-term financial obligations:

long-term financial obligations

Our other commercial commitments at December 29, 2001 include:

the unconditional guarantee of $2.3 billion of Bottling Group, LLC's long-term debt (see Notes 13 and 20 to our consolidated financial statements);
guarantees of approximately $45 million of debt and other obligations of unconsolidated affiliates;
commitments for the purchase of goods and services used in the production of our products approximating $2 billion with terms up to 5 years;
obligations, with terms up to 5 years, related to our bottlers and certain unconsolidated affiliates approximating $425 million that, if triggered, will result in increasing our ownership;
guarantees approximating $90 million with terms that extend over 5 years related primarily to leases of Tricon Global Restaurants, Inc. (which we spun-off in 1997) and
other commitments in the normal course of business, including obligations for customer promotional incentives, approximating $60 million with terms primarily extending up to 5 years.

Our commitments for goods and services purchases do not exceed our projected requirements over the related terms and are in the normal course of business.