PepsiCo Reports Fourth Quarter and Full Year 2012 Results

2/14/2013 |
SHARE share

— -- Fourth quarter core(1) EPS $1.09 and reported EPS $1.06

— -- Full year core EPS $4.10 and reported EPS $3.92

— - Organic(1) revenue grew 5 percent in the fourth quarter and in the full year.Reported net revenue declined 1 percent for the quarter and 1.5 percent for the full year, reflecting the impact of previously announced structural changes, a 53rd week in 2011 and unfavorable foreign exchange translation

— -- For 2013, company targets mid-single-digit organic revenue growth and 7 percent core constant currency(1) EPS growth

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

— -- Company announces quarterly dividend increase of 5.6 percent, starting in June 2013


Download press release (PDF)

PURCHASE, N.Y., Feb. 14, 2013 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today reported core earnings per share of $1.09 for the fourth quarter of 2012 and $4.10 for the full year, on organic revenue growth of 5 percent for both the quarter and the full year.

"In 2012, we delivered 5 percent organic revenue growth, reflecting PepsiCo's many strengths: we're well positioned in attractive and highly complementary growth categories, our portfolio is diversified with products that have broad appeal and a global footprint that is balanced, and we have an enviable portfolio of iconic brands," said Chairman and CEO Indra Nooyi.

"We also took a number of significant steps in 2012 that will even better position our business for sustainable, long-term growth; we increased our brand investment, stepped up our innovation, improved our marketplace execution and embarked on an aggressive productivity program that will contribute to our profitability and act as a funding source of future investment.

"Our recent brand-building initiatives and innovation across the portfolio, including Quaker Real Medleys, Gatorade Energy Chews, Pepsi Next and Doritos Locos Tacos, are translating into success in the marketplace."

"Just as importantly, we remain highly focused on generating attractive returns for our shareholders.  We returned $6.5 billion to shareholders in 2012 through a combination of share repurchases and dividends, and today announced an increase in our quarterly dividend that will take effect in June.

"We're encouraged by the progress we're making and expect performance in the coming year to be consistent with our long-term targets." 

(1) Please 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

(2) All 2012 volume growth measures reflect an adjustment to the base year (2011) for divestitures that occurred in 2012 and 2011, and exclude the impact of an extra reporting week in 2011.

Summary of Fourth Quarter Financial Performance

Summary Fourth Quarter 2012 Performance (Percent Growth)

 


 

 

Reported

 

Core Constant

Currencya

 

 

Organicb

Volumec




     Snacks



4.5

    Beverages



2

Net Revenue

(1)


5

Operating Profitd

(1.5)

(7)


EPS

19

(5)


 


 



 

 

Volumec

 

 

 

Net

Revenue

 

 

 

Operating

Profitd

 

 

 

Organic
Revenue

Core

Constant

Currency

Operating

Profit

PAF

6e

3.5

2

8

(2)

    FLNA

5

(1)

3.5

5

3

    LAF

8e

13

8

13

(4.5)

    QFNA

6

(0.5)

(17)

5

(18)







PAB

-

(4)

(1)

2.5

(8)

Europe

1/(1)f

1

38

3.5

(10)

AMEA

12/13f,g

(13)

(25)

8

(20)

Total Divisions

 

6/4f

 

(1)

 

2.5

 

5

 

(5)

Total PepsiCo


(1)

 

(1.5)

 

5

(7)








 

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, foreign exchange translation and a 53rd week in the fourth quarter of 2011. Please refer to the Glossary for additional information regarding organic results.

c Volume growth measures adjusted to exclude the impact of a 53rd week in the fourth quarter of the base year (2011).

d The 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".

e PAF and LAF volumes include 2 percentage points and 4 percentage points of benefit, respectively, related to acquisitions.

f Snacks/Beverages. 

g AMEA 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 fourth quarter of the base year (2011).

 

 

Summary Full Year 2012 Performance (Percent Growth)


 

Reported

 

Core Constant

 Currencya

 

Organicb

Volumec




     Snacks



3

    Beverages



1

Net Revenue

(1.5)


5

Operating Profitd

(5)

(5)


EPS

(3)

(5)









 









 

 

 

Volumec

 

 

 

Net

Revenue

 

 

 

Operating

Profitd

 

 

 

Organic
Revenue

Core

Constant

Currency

Operating

Profit

PAF

5e

4

(2)

7

-

    FLNA

1

2

1

4

2

    LAF

13e

9

(2)

14

4

    QFNA

1

(1)

(13)

1

(12)







PAB

(1)

(4.5)

(10)

1.5

(11)

Europe

3/1f,g

(1)

10

4

3

AMEA

14/10f,h

(10)

(16)

10

4

Total Divisions

 

6/2.5 f

 

(1.5)

 

(4)

 

5

 

(3)

Total PepsiCo


(1.5)

 

(5)

 

5

(5)








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, foreign exchange translation and a 53rd week in 2011. Please refer to the Glossary for additional information regarding organic results.

c Volume growth measures adjusted to exclude the impact of a 53rd week in the fourth quarter of the base year (2011).

d The 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".

e PAF and LAF volumes include 3 and 9 percentage points of benefit, respectively, related to acquisitions.

f Snacks/Beverages. 

g Europe snacks and beverage volumes include 2 percentage points and 1 percentage point of benefit, respectively, related to acquisitions.

h AMEA beverage volume includes an estimated benefit of 4 percentage points relating to co-branded juice drinks in China, after adjustment to include co-branded juice drink volume in China for the fourth quarter of the base year (2011).


Division Operating Summaries

 

PepsiCo Americas Foods (PAF)

Organic revenue grew 8 percent in the quarter driven by 5 percentage points of organic volume growth and 3 percentage points of effective net pricing. Reported net revenue increased 3.5 percent reflecting a 4-percentage-point negative impact from the extra reporting week in 2011, and a less than 1-percentage-point unfavorable impact from foreign exchange translation. Core constant currency operating profit declined 2 percent, reflecting higher commodity costs and increased advertising and marketing investments across all PAF divisions, partially offset by productivity initiatives and effective net pricing.

For the full year, organic revenue grew 7 percent driven by 2 percentage points of organic volume growth and 5 percentage points of effective net pricing. Reported net revenue grew 4 percent reflecting a 1-percentage-point negative impact from the extra reporting week in 2011, and a 2-percentage-point unfavorable impact from foreign exchange translation. Core constant currency operating profit was even with the prior year, reflecting revenue gains and productivity initiatives, offset by higher commodity costs and increased advertising and marketing investments across all PAF divisions.

 

Frito-Lay North America (FLNA)

Organic revenue increased 5 percent in the quarter, reflecting a 5-percentage-point increase in organic volume and even effective net pricing. Reported revenue declined 1 percent reflecting the impact from the extra reporting week in the prior year quarter. For the full year, organic revenue grew 4 percent, reflecting a 1-percentage-point contribution from organic volume and 3 percentage points of effective net pricing. Full year reported revenue grew 2 percent, including 2 percentage points of negative impact from the extra reporting week in 2011.

Core constant currency operating profit grew 3 percent in the quarter, and 2 percent for the full year. These results reflect organic revenue gains and productivity initiatives, partially offset by higher commodity costs and a significant increase in advertising and marketing investments.

Latin America Foods (LAF)

Organic revenue grew 13 percent in the quarter, reflecting 3 percentage points of organic volume growth and 10 percentage points of effective net pricing. Reported net revenue also grew 13 percent in the quarter, with a 1-percentage-point benefit from acquisitions and divestitures offset by a 1-percentage-point unfavorable foreign exchange translation impact.  

Full-year organic revenue grew 14 percent, reflecting 4 percentage points of organic volume growth and 10 percentage points of effective net pricing. Reported net revenue increased 9 percent and included a 2-percentage-point benefit from acquisitions and divestitures and a 7-percentage-point unfavorable impact from foreign exchange translation.

Core constant currency operating profit declined 4.5 percent in the quarter and rose 4 percent for the full year. These results reflect revenue growth and productivity gains offset by increased advertising and marketing expense and commodity cost inflation in both periods as well as lapping a gain from the sale of a fish business in Brazil in the fourth quarter of 2011.

 

Quaker Foods North America (QFNA)

Organic revenue grew 5 percent in the quarter and 1 percent for the full year driven primarily by organic volume gains. Reported net revenue declined 0.5 percent in the quarter and 1 percent for the full year, reflecting the impact from the extra reporting week in 2011.

Core constant currency operating profit declined 18 percent for the quarter and declined 12 percent for the full year. This was driven principally by higher commodity costs and increased advertising and marketing expense in the quarter and the full year, and by lapping gains from a divestiture and an asset sale in the fourth quarter of 2011. 

 

PepsiCo Americas Beverages (PAB)

Organic revenue grew 2.5 percent in the quarter reflecting organic volume that was even with the prior year and 2.5 percentage points of effective net pricing. Non-carbonated beverages volume grew low-single-digits led by mid-single-digit volume growth at Gatorade, and CSD volume declined approximately 1 percent in the quarter. 

For the full year, organic revenue grew 1.5 percent reflecting a 1-percentage-point organic volume decline, 3 percentage points of effective net pricing, and the impact of concentrate shipment timing. 

Reported net revenue declines included the impacts of refranchising the division's Mexican bottling operation in 2011, which had a negative 2-percentage-point impact for the quarter and a negative 5-percentage-point impact for the full year, and of the extra reporting week in 2011, which had a negative 5-percentage-point impact for the quarter, and a negative 1-percentage-point impact for the year.

Core constant currency operating profit declined 8 percent in the quarter and 11 percent for the full year, primarily reflecting increased commodity costs and higher advertising and marketing expense, partially offset by favorable effective net pricing and productivity initiatives. Operating profit comparisons were also impacted by a gain associated with the refranchising of the division's Mexico bottling operation in the fourth quarter of 2011.

Europe

Organic revenue grew 3.5 percent in the quarter and 4 percent for the full year. This reflected even organic volume and 3 percentage points of effective net pricing in the quarter and even organic volume performance on 4 percentage points of effective net pricing for the full year. Continued healthy volume growth in Russia and parts of Eastern Europe partially offset softer trends in Western Europe for the quarter and the full year. 

Reported net revenue grew 1 percent in the quarter, including a 1-percentage-point unfavorable impact from foreign exchange translation, and a 1-percentage-point negative impact from the extra reporting week in 2011. Reported net revenue declined 1 percent for the full year, including a 7-percentage-point unfavorable impact from foreign exchange translation.  

Core constant currency operating profit declined 10 percent in the quarter and grew 3 percent for the full year, reflecting significantly higher marketing investments and commodity cost inflation partially offset by productivity savings. 

Asia, Middle East & Africa (AMEA)

Organic revenue grew 8 percent in the quarter, led by low double-digit organic volume growth in snacks and mid-single-digit organic volume growth in beverages.  Reported net revenue declined 13 percent reflecting a 19-percentage-point negative impact from structural changes, principally the refranchising of bottling operations in China and an unfavorable 1-percentage-point impact from foreign exchange translation.

For the full year, organic revenue grew 10 percent led by double-digit organic volume growth in snacks and mid-single-digit organic volume growth in beverages. Including structural changes and foreign exchange translation, reported net revenue declined 10 percent reflecting a 17-percentage-point negative impact from structural changes, principally the refranchising of bottling operations in China, and an unfavorable 3-percentage-point impact from foreign exchange translation.

Core constant currency operating profit declined 20 percent for the fourth quarter and was up 4 percent for the full year. These results include the impact of lapping a gain on divestiture associated with the sale of the division's minority interest in its franchise bottler in Thailand in the fourth quarter of 2011.

 

2013 Outlook

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 up to 1 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 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.

Reflecting its commitment to return capital to shareholders, the company announced a new share repurchase program providing for the repurchase of up to $10 billion of PepsiCo common stock from July 1, 2013 through June 30, 2016, which will succeed the current repurchase program that expires on June 30, 2013. The company also announced a 5.6 percent increase in its annualized dividend to $2.27 per share from $2.15 per share, to take effect with the June 2013 payment. Under these programs, 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 fourth-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, unaudited, except year-ended 12/31/2011 amounts)

















Quarter Ended


Year Ended


12/29/2012


12/31/2011


Change


12/29/2012


12/31/2011


Change















Net Revenue 

$     19,954


$     20,158


(1)

%


$     65,492


$     66,504


(1.5)

%















Cost of sales

9,654


9,731


(1)

%


31,291


31,593


(1)

%

Selling, general and administrative 

8,050


8,150





24,970


25,145




expenses 

(1)

%

(1)

%

Amortization of intangible assets

37


30


24

%


119


133


(11)

%















Operating Profit 

2,213


2,247


(1.5)

%


9,112


9,633


(5)

%















Interest expense 

(288)


(272)


6

%


(899)


(856)


5

%

Interest income and other 

44


24


89

%


91


57


61

%















Income before income taxes 

1,969


1,999


(1)

%


8,304


8,834


(6)

%















Provision for income taxes 

302


597


(49)

%


2,090


2,372


(12)

%















Net income 

1,667


1,402


19

%


6,214


6,462


(4)

%















Less:  Net income (loss) attributable to 



(13)







19




noncontrolling interests 

6

n/m


36

92

%















Net Income Attributable to PepsiCo 

$      1,661


$      1,415


17

%


$      6,178


$      6,443


(4)

%















Diluted














  Net Income Attributable to PepsiCo per














 Common Share 

$        1.06


$        0.89


19

%


$        3.92


$        4.03


(3)

%

  Weighted-average common shares                         














     outstanding

1,564


1,584





1,575


1,597


















  Cash dividends declared per common














    share 

$     0.5375


$      0.515





$     2.1275


$      2.025
































n/m = not meaningful


A-1

 

 

PepsiCo, Inc. and Subsidiaries


Supplemental Financial Information


(in millions and unaudited, except year-ended 12/31/2011 amounts)

















Quarter Ended


Year Ended


12/29/2012


12/31/2011


Change


12/29/2012


12/31/2011


Change

Net Revenue























Frito-Lay North America  

$      4,102


$      4,155


(1)

%


$    13,574


$   13,322


2

%

Quaker Foods North America 

815


819


(0.5)

%


2,636


2,656


(1)

%

Latin America Foods 

2,714


2,399


13

%


7,780


7,156


9

%

   PepsiCo Americas Foods 

7,631


7,373


3.5

%


23,990


23,134


4

%















PepsiCo Americas Beverages 

6,078


6,311


(4)

%


21,408


22,418


(4.5)

%

Europe 

4,288


4,231


1

%


13,441


13,560


(1)

%

Asia, Middle East & Africa 

1,957


2,243


(13)

%


6,653


7,392


(10)

%

Total Net Revenue 

$    19,954


$    20,158


(1)

%


$    65,492


$   66,504


(1.5)

%















Operating Profit




























Frito-Lay North America 

$      1,114


$      1,076


3.5

%


$     3,646


$     3,621


1

%

Quaker Foods North America 

200


239


(17)

%


695


797


(13)

%

Latin America Foods 

386


358


8

%


1,059


1,078


(2)

%

   PepsiCo Americas Foods 

1,700


1,673


2

%


5,400


5,496


(2)

%















PepsiCo Americas Beverages 

735


740


(1)

%


2,937


3,273


(10)

%

Europe 

313


226


38

%


1,330


1,210


10

%

Asia, Middle East & Africa 

117


157


(25)

%


747


887


(16)

%

Division Operating Profit 

2,865


2,796


2.5

%


10,414


10,866


(4)

%















Corporate Unallocated














   Mark-to-Market net impact (Losses)/Gains

(61)


(71)


(14)

%


65


(102)


n/m


   Merger and Integration Charges

-


(14)


n/m



-


(78)


n/m


   Restructuring and Impairment Charges

(2)


(74)


(97)

%


(10)


(74)


(86)

%

   Pension Lump Sum Settlement Charge

(195)


-


n/m



(195)


-


n/m


   53rdWeek

-


(18)


n/m



-


(18)


n/m


   Other 

(394)


(372)


6

%


(1,162)


(961)


21

%


(652)


(549)


19

%


(1,302)


(1,233)


6

%















Total Operating Profit 

$      2,213


$      2,247


(1.5)

%


$     9,112


$     9,633


(5)

%





























n/m = not meaningful


A-2

 

 

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(in millions)



 Year Ended 



12/29/2012


12/31/2011




(unaudited)



Operating Activities





Net income 


$      6,214


$      6,462

Depreciation and amortization


2,689


2,737

Stock-based compensation expense 


278


326

Merger and integration charges 


16


329

Cash payments for merger and integration charges 


(83)


(377)

Restructuring and impairment charges 


279


383

Cash payments for restructuring charges 


(343)


(31)

Restructuring and other charges related to the transaction with Tingyi

   (Cayman Islands) Holding Corp. (Tingyi)






176


-

Cash payments for restructuring and other charges related to the

   transaction with Tingyi 






(109)


-

Excess tax benefits from share-based payment arrangements 


(124)


(70)

Pension and retiree medical plan contributions 


(1,865)


(349)

Pension and retiree medical plan expenses 


796


571

Deferred income taxes and other tax charges and credits 


321


495

Change in accounts and notes receivable 


(250)


(666)

Change in inventories 


144


(331)

Change in prepaid expenses and other current assets 


89


(27)

Change in accounts payable and other current liabilities 


548


520

Change in income taxes payable 


(97)


(340)

Other, net


(200)


(688)

Net Cash Provided by Operating Activities 


8,479


8,944






Investing Activities





Capital spending 


(2,714)


(3,339)

Sales of property, plant and equipment 


95


84

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 


(306)


-

Other acquisitions and investments in noncontrolled affiliates 


(121)


(601)

Divestitures 


(32)


780

Short-term investments, net 


61


66

Other investing, net 


12


(16)

Net Cash Used for Investing Activities 


(3,005)


(5,618)






Financing Activities





Proceeds from issuances of long-term debt 


5,999


3,000

Payments of long-term debt 


(2,449)


(1,596)

Debt repurchase 


-


(771)

Short-term borrowings, net 

(1,461)


303

Cash dividends paid 


(3,305)


(3,157)

Share repurchases – common 


(3,219)


(2,489)

Share repurchases – preferred 


(7)


(7)

Proceeds from exercises of stock options 


1,122


945

Excess tax benefits from share-based payment arrangements 


124


70

Acquisition of noncontrolling interests 


(68)


(1,406)

Other financing 


(42)


(27)

Net Cash Used for Financing Activities 


(3,306)


(5,135)






Effect of exchange rate changes on cash and cash equivalents 


62


(67)

Net Increase/(Decrease) in Cash and Cash Equivalents


2,230


(1,876)

Cash and Cash Equivalents – Beginning of Year 


4,067


5,943

Cash and Cash Equivalents – End of Year


$      6,297


$      4,067






A-3





 

 

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

(in millions except per share amounts)









12/29/2012


12/31/2011

Assets


(unaudited)



Current Assets





 Cash and cash equivalents 


$         6,297


$          4,067

 Short-term investments 


322


358

 Accounts and notes receivable, net 


7,041


6,912

 Inventories





Raw materials 


1,875


1,883

Work-in-process 


173


207

Finished goods 


1,533


1,737



3,581


3,827






Prepaid expenses and other current assets 


1,479


2,277

Total Current Assets  


18,720


17,441






Property, plant and equipment, net 


19,136


19,698

Amortizable intangible assets, net 


1,781


1,888






Goodwill 


16,971


16,800

Other nonamortizable intangible assets 


14,744


14,557

Nonamortizable Intangible Assets 


31,715


31,357






Investments in noncontrolled affiliates 


1,633


1,477

Other assets 


1,653


1,021

Total Assets 


$       74,638


$        72,882






Liabilities and Equity





Current Liabilities





 Short-term obligations 


$         4,815


$          6,205

 Accounts payable and other current liabilities 


11,903


11,757

 Income taxes payable 


371


192

Total Current Liabilities 


17,089


18,154






 Long-term debt obligations 


23,544


20,568

 Other liabilities 


6,543


8,266

 Deferred income taxes 


5,063


4,995

Total Liabilities 


52,239


51,983






 Commitments and Contingencies










 Preferred stock, no par value 


41


41

 Repurchased preferred stock 


(164)


(157)






 PepsiCo Common Shareholders' Equity





Common stock, par value 12/3¢ per share (authorized 3,600 shares, issued, net 


26


26

of repurchased common stock at par value: 1,544 and 1,565 shares, respectively) 

Capital in excess of par value 


4,178


4,461

Retained earnings 


43,158


40,316

Accumulated other comprehensive loss 


(5,487)


(6,229)

Repurchased common stock, in excess of par (322 and 301 shares, respectively) 


(19,458)


(17,870)

Total PepsiCo Common Shareholders' Equity 


22,417


20,704






Noncontrolling interests


105


311

Total Equity 


22,399


20,899

Total Liabilities and Equity 


$       74,638


$        72,882






A-4





 

 

PepsiCo, Inc. and Subsidiaries 

Supplemental Share and Stock-Based Compensation Data 

(in millions except dollar amounts, unaudited)














Quarter Ended


Year Ended


12/29/2012


12/31/2011


12/29/2012


12/31/2011

Beginning Net Shares Outstanding  

1,552


1,568


1,565


1,582

Options Exercised/Restricted Stock Units and PEPUnits Converted

4


5


26


22

Shares Repurchased  

(12)


(8)


(47)


(39)

Ending Net Shares Outstanding 

1,544


1,565


1,544


1,565









Weighted Average Basic 

1,546


1,564


1,557


1,576

Dilutive Securities:








  Options   

10


12


11


14

  Restricted Stock Units

7


7


6


6

  PEPUnits

-


-


-


-

  ESOP Convertible Preferred Stock/Other 

1


1


1


1

Weighted Average Diluted 

1,564


1,584


1,575


1,597









Average Share Price for the Period 

$              69.91


$             62.92


$              68.34


$             65.25

Growth Versus Prior Year 

11%


(4)%


5%


1%









Options Outstanding  

68


91


76


97

Options in the Money 

67


55


66


72

Dilutive Shares from Options 

10


12


11


14

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

15%


22%


16%


20%









Average Exercise Price of Options in the Money 

$              58.96


$             48.93


$              56.42


$             51.36









Restricted Stock Units Outstanding 

12


12


12


13

Dilutive Shares from Restricted Stock Units 

7


7


6


6

Dilutive Shares from PEPUnits 

-


-


-


-









Average Intrinsic Value of Restricted Stock Units Outstanding*

$              65.60


$             62.96


$              65.41


$             62.93

Average Intrinsic Value of PEPUnits Outstanding*

$              64.89


$                    -


$              64.78


$                     -




















* Weighted average intrinsic value at grant date.


A-5

 

 

PepsiCo, Inc. and Subsidiaries

Reconciliation of GAAP and Non-GAAP Information

Organic Growth

Quarters Ended December 29, 2012 and December 31, 2011

(unaudited)















GAAP Measure


Percent Impact


Non-GAAP Measure




Reported % Change








Organic % Change*


Net Revenue Year over Year % Change

Quarter Ended 12/29/2012


Acquisitions and

divestitures


Foreign exchange 

translation


53rd week


Quarter Ended 12/29/2012














Frito-Lay North America

(1)


-


-


7


5


Quaker Foods North America

(0.5)


-


(0.5)


5.5


5


Latin America Foods

13


(1)


1


-


13


   PepsiCo Americas Foods

3.5


-


-


4


8














PepsiCo Americas Beverages

(4)


2


-


5


2.5














Europe

1


-


1


1


3.5














Asia, Middle East & Africa

(13)


19


1


-


8














Total PepsiCo

(1)


3


0.5


3


5




























GAAP Measure


Percent Impact


Non-GAAP Measure




Reported % Change








Organic % Change*


Net Revenue Year over Year % Change

Quarter Ended

12/31/2011


Acquisitions and divestitures


Foreign exchange translation


53rd week


Quarter Ended 12/31/2011














Frito-Lay North America

13


-


-


(7)


6


Quaker Foods North America

4


-


-


(5)


(2)


Latin America Foods

7


-


6


-


13


   PepsiCo Americas Foods

10


-


2


(4.5)


8














PepsiCo Americas Beverages

-


4


-


(5)


-














Europe

32


(30)


3


(1)


4














Asia, Middle East & Africa

16


-


1


-


17














Total PepsiCo

11


(4)


1.5


(3)


5



























* 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, foreign exchange translation and a 53rd week in the fourth quarter of 2011 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.)


Organic Growth


Years Ended December 29, 2012 and December 31, 2011


(unaudited)
















GAAP Measure


Percent Impact


Non-GAAP Measure




Reported % Change








 Organic % Change*


Net Revenue Year over Year % Change

Year Ended 12/29/2012


Acquisitions and divestitures


Foreign exchange

translation


53rd week


Year Ended 12/29/2012














Frito-Lay North America

2


-


-


2


4


Quaker Foods North America

(1)


-


-


2


1


Latin America Foods

9


(2)


7


-


14


   PepsiCo Americas Foods

4


(0.5)


2


1


7














PepsiCo Americas Beverages

(4.5)


4.5


-


1


1.5














Europe

(1)


(2)


7


-


4














Asia, Middle East & Africa

(10)


17


3


-


10














Total PepsiCo

(1.5)


3


2.5


1


5








































GAAP Measure


Percent Impact


Non-GAAP Measure




Reported % Change








Organic % Change*


Net Revenue Year over Year % Change

Year Ended 12/31/2011


Acquisitions and divestitures


Foreign exchange translation


53rd week


Year Ended 12/31/2011














Frito-Lay North America

6


-


-


(2)


3.5


Quaker Foods North America

-


-


(1)


(2)


(2)


Latin America Foods

13


-


(2)


-


11


   PepsiCo Americas Foods

7


-


(1)


(1)


5














PepsiCo Americas Beverages

10


** 


(1)


(1)


** 














Europe

41


** 


(3)


-


** 














Asia, Middle East & Africa

17


-


(2)


-


16














Total PepsiCo

15


** 


(1)


(1)


** 



























* 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, foreign exchange translation and a 53rd week in the fourth quarter of 2011 from reported growth.

** It is impractical to separately determine and quantify the impact of our acquisitions of PBG and PAS from changes in our pre-existing

      beverage business since we now manage these businesses as an integrated system.


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


A-7

 

 

PepsiCo, Inc. and Subsidiaries




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




Year over Year Growth Rates




Quarters Ended December 29, 2012 and December 31, 2011




(unaudited)









GAAP

Measure
















Non-GAAP

Measure




Non-GAAP

Measure



Reported %

Change


Percent Impact of Non-Core Adjustments 


Core* % Change


Percent Impact of


Core Constant

Currency* %

Change


Operating Profit Year over Year % Change

Quarter

Ended

12/29/2012


Commodity

mark-to-

market net

impact


Merger and

 integration

charges


Restructuring and

impairment charges


 

Restructuring

and other

charges

related to the

transaction with 

Tingyi


Pension lump

sum

settlement

charge


53rd week


Inventory fair

value

adjustments


Quarter Ended

12/29/2012


 Foreign exchange translation


Quarter

Ended

12/29/2012
















































Frito-Lay North America

3.5


-


-


(7)


-


-


7


-


3


-


3


Quaker Foods North America

(17)


-


-


(7)


-


-


5


-


(18)


-


(18)


Latin America Foods

8


-


-


(11)


-


-


-


-


(2.5)


(2)


(4.5)


   PepsiCo Americas Foods

2


-


-


(8)


-


-


5


-


(1)


(1)


(2)

























PepsiCo Americas Beverages

(1)


-


(5)


(7)


-


-


5


(1)


(8)


-


(8)

























Europe

38


-


(38)


(12)


-


-


3


-


(10)


-


(10)

























Asia, Middle East & Africa

(25)


-


-


(3)


8


-


-


-


(19)


(1)


(20)

























Division Operating Profit

2.5


-


(5)


(8)


0.5


-


5


-


(5)


-


(5)

























Impact of Corporate Unallocated

(4)


-


(2)


(3)


-


8


-


-


(1.5)


-


(1.5)

























Total Operating Profit

(1.5)


-


(7)


(12)


0.5


8


5


-


(7)


-


(7)
















































Net income Attributable to PepsiCo

17
















(6)


-


(7)


Net income Attributable to PepsiCo per common share - diluted

19
















(5)


(0.5)


(5)

















































GAAP

Measure












Non-GAAP

Measure




Non-GAAP

Measure







Reported %

Change


Percent Impact of Non-Core Adjustments 


Core* % Change


Percent Impact of


Core Constant Currency* % Change






Operating Profit Year over Year % Change

Quarter

Ended

12/31/2011 


Commodity

mark-to-market net

impact


Merger and integration charges


 

Restructuring and

impairment charges


53rdweek


Inventory fair value adjustments


Quarter

Ended

12/31/2011


 Foreign exchange translation


Quarter

Ended

12/31/2011




















































Frito-Lay North America

10


-


-


8


(7)


-


10


-


10






Quaker Foods North America

9


-


-


8


(6)


-


11


-


11






Latin America Foods

(8)


-


-


12


-


-


4


7


12






   PepsiCo Americas Foods

5


-


-


9


(5)


-


9


2


11






























PepsiCo Americas Beverages

1


-


(13)


11


(5)


(3)


(7)


1


(6)






























Europe

-


-


13


26


(3)


-


36


2


38






























Asia, Middle East & Africa

209


-


-


19


-


-


227


5


232






























Division Operating Profit

7


-


(2)


12


(5)


(1)


10


1.5


12






























Impact of Corporate Unallocated

(7)


5


(3)


5


-


-


-


-


-






























Total Operating Profit

1


5


(5)


17


(5)


(1)


11


2


12






















































Net income Attributable to PepsiCo

4












8


2


9






Net income Attributable to PepsiCo per common share - diluted

5












9


2


11






















































* Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above adjustments.  See A-17 through A-19 for a discussion of each of these adjustments.








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


A-8

 

 

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

Year over Year Growth Rates

Years Ended December 29, 2012 and December 31, 2011

(unaudited)


GAAP

Measure
















Non-GAAP

Measure




Non-GAAP

Measure




Reported %

Change


Percent Impact of Non-Core Adjustments 


Core* % Change


Percent Impact of


Core Constant

Currency* %

Change



Operating Profit Year over Year % Change

Year Ended 12/29/2012


Commodity

mark-to-

market net

impact


Merger and

integration

charges


Restructuring

and

impairment

charges


 

Restructuring

and other

charges related

to the

transaction with

Tingyi


Pension lump

sum settlement

charge


53rd week


Inventory fair

value 

adjustments


 

Year Ended

12/29/2012


 Foreign

exchange

translation


Year Ended 12/29/2012





















































Frito-Lay North America

1


-


-


(1)


-


-


2


-


2


-


2



Quaker Foods North America 

(13)


-


-


(1)


-


-


2


-


(12)


-


(12)



Latin America Foods

(2)


-


-


-


-


-


-


-


(1.5)


5.5


4



   PepsiCo Americas Foods 

(2)


-


-


(1)


-


-


1.5


-


(1)


1


-




























PepsiCo Americas Beverages 

(10)


-


(3)


1


-


-


1


(1)


(12)


1


(11)




























Europe

10


-


(9)


(3)


-


-


1


(2)


(3)


6


3




























Asia, Middle East & Africa 

(16)


-


-


2


17


-


-


-


3


1


4




























Division Operating Profit 

(4)


-


(2)


-


1


-


1


-


(4)


2


(3)




























Impact of Corporate Unallocated 

(1)


(2)


(1)


(1)


-


2


-


-


(2)


-


(2)




























Total Operating Profit

(5)


(2)


(3)


(1)


1


2


1


(0.5)


(7)


2


(5)





















































Net income Attributable to PepsiCo 

(4)
















(8)


2


(6)



Net income Attributable to PepsiCo per common share - diluted   

(3)
















(7)


2


(5)























































GAAP

Measure


















Non-GAAP

Measure




Non-GAAP

Measure



Reported %

Change


Percent Impact of Non-Core Adjustments 


Core* % Change


Percent Impact of


Core Constant

Currency* %

Change

Operating Profit Year over Year % Change

Year Ended 12/31/2011


Commodity

mark-to-

market net

impact


Merger and

integration

charges


 

Restructuring

and

impairment

charges 


53rdweek


Inventory fair value adjustments


Venezuela currency devaluation


Asset write-off


Foundation contribution


Year Ended 12/31/2011


 Foreign exchange

translation


Year Ended 12/31/2011



















































Frito-Lay North America

7


-


-


2


(2)


-


-


-


-


7


-


7

Quaker Foods North America

8


-


-


2


(2)


-


-


-


-


8


(0.5)


8

Latin America Foods

7


-


-


5


-


-


-


-


-


12


(1)


11

   PepsiCo Americas Foods 

7


-


-


3


(2)


-


-


-


-


8


(0.5)


8


























PepsiCo Americas Beverages

18


-


(13)


3


(1)


(12)


-


-


-


(4)


(0.5)


(4)


























Europe

15


-


1


4


(1)


(1)


-


-


-


18


(4)


14


























Asia, Middle East & Africa

25


-


-


1


-


-


-


-


-


27


(2.5)


24


























Division Operating Profit

13


-


(4)


3


(1)


(4)


-


-


-


7


(1)


6


























Impact of Corporate Unallocated  

3


2


(2)


1


-


-


(1.5)


(2)


(1)


(0.5)


-


(0.5)


























Total Operating Profit

16


2


(6)


4


(1.5)


(4)


(1.5)


(2)


(1)


6


(1)


5



















































Net income Attributable to PepsiCo 

2


















5


(1)


4

Net income Attributable to PepsiCo per common share - diluted   

3


















7


(1)


5



















































* Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above adjustments.  See A-17 through A-19 for a discussion of each of these adjustments.


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


A-9

 

PepsiCo, Inc. and Subsidiaries

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

Certain Line Items

Quarters Ended December 29, 2012 and December 31, 2011

(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*



Quarter

Ended

12/29/2012




Restructuring

and

impairment

charges


 

Restructuring and other charges related to the transaction with Tingyi


Pension lump

sum

settlement

 charge


Tax benefit

related to tax

court

decision


Quarter

Ended

12/29/2012



































Cost of sales 


$   9,654


$      (43)


$          -


$          -


$          -


$          -


$          -


$   9,611


















Selling, general and administrative expenses 


$   8,050


$      (18)


$        (4)


$      (86)


$      (13)


$    (195)


$          -


$   7,734


















Operating profit 


$   2,213


$       61


$         4


$       86


$       13


$     195


$          -


$   2,572


















Interest expense 

$    (288)


$          -


$         5


$          -


$          -


$          -


$          -


$    (283)


















Provision for income taxes 


$     302


$       27


$         3


$       10


$          -


$       64


$     217


$     623


















Net income attributable to PepsiCo 


$   1,661


$       34


$         6


$       76


$       13


$     131


$    (217)


$   1,704


















Net income attributable to PepsiCo per common share - diluted 


$    1.06


$    0.02


$        -


$    0.05


$    0.01


$    0.08


$   (0.14)


$    1.09


















Effective tax rate 


15.4%














26.7%




















GAAP Measure


Non-Core Adjustments


Non-GAAP Measure





Reported


 

Commodity mark-

to-market net

impact


Merger and

integration

charges






Inventory fair

value

adjustments


Core*





Quarter

Ended

12/31/2011




 

Restructuring

and

impairment

charges


53rd week



Quarter

Ended

12/31/2011




















Cost of sales 


$   9,731


$        -


$        -


$        -


$    (265)


$        (5)


$   9,461




















Selling, general and administrative expenses 


$   8,150


$      (71)


$    (155)


$    (383)


$    (248)


$        -


$   7,293




















Amortization of intangible assets 

$       30


$        -


$        -


$        -


$        (1)


$        -


$       29




















Operating profit 


$   2,247


$       71


$     155


$     383


$    (109)


$         5


$   2,752




















Interest expense 


$    (272)


$        -


$        -


$        -


$       16


$        -


$    (256)




















Interest income and other 

$       24


$        -


$        -


$        -


$        (1)


$        -


$       23




















Provision for income taxes 


$     597


$       20


$       31


$       97


$      (30)


$         2


$     717




















Net income attributable to PepsiCo 


$   1,415


$       51


$     124


$     286


$      (64)


$         3


$   1,815




















Net income attributable to PepsiCo per common share - diluted 


$    0.89


$    0.03


$    0.08


$    0.18


$   (0.04)


$        -


$    1.15




















Effective tax rate 


29.9%












28.4%





































*Core results are financial measures that are not in accordance with GAAP and exclude the above non-core adjustments.  See A-17 through A-19 for a discussion of each of these non-core adjustments.


















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


A-10

 

 

PepsiCo, Inc. and Subsidiaries

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

Certain Line Items

Years Ended December 29, 2012 and December 31, 2011

(in millions except per share amounts, unaudited)




















GAAP Measure


Non-Core Adjustments


Non-GAAP

 Measure



Reported














Core*



Year Ended
12/29/2012


Commodity

mark-to-

market net

impact


Merger and

integration

charges


Restructuring

 and impairment

charges


 

Restructuring and

other charges

related to the

transaction with

 Tingyi


Pension

lump sum

settlement

charge 


Tax benefit

related to

tax court

decision


Year Ended

 12/29/2012


















Cost of sales


$ 31,291


$       25


$          -


$          -


$          -


$        -


$        -


$ 31,316


















Selling, general and administrative expenses


$ 24,970


$       40


$      (11)


$    (279)


$    (150)


$    (195)


$        -


$ 24,375


















Operating profit


$   9,112


$      (65)


$       11


$     279


$     150


$     195


$        -


$   9,682


















Interest expense

$    (899)


$          -


$         5


$          -


$          -


$        -


$        -


$    (894)


















Provision for income taxes


$   2,090


$      (24)


$         4


$       64


$      (26)


$       64


$     217


$   2,389


















Net income attributable to PepsiCo


$   6,178


$      (41)


$       12


$     215


$     176


$     131


$    (217)


$   6,454


















Net income attributable to PepsiCo per common share - diluted


$    3.92


$   (0.03)


$    0.01


$    0.14


$    0.11


$    0.08


$   (0.14)


$    4.10


















Effective tax rate


25.2%














26.9%




















GAAP Measure


Non-Core Adjustments


Non-GAAP

 Measure





Reported


Commodity mark-

to-market net

 impact








Inventory fair

value

adjustments


Core*





Year Ended

 12/31/2011