(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbols | Name of each exchange on which registered | ||
Exhibit No. | Description | |
99.1 | Press Release issued by PepsiCo, Inc., dated October 3, 2019. | |
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
Exhibit No. | Description | |
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
PEPSICO, INC. | |||
Date: | October 3, 2019 | By: | /s/ David Yawman |
Name: | David Yawman | ||
Title: | Executive Vice President, Government Affairs, General Counsel and Corporate Secretary | ||
Third Quarter | Year-to-Date | |
Net revenue growth | 4.3% | 3.1% |
Foreign exchange impact on net revenue | (1)% | (2)% |
Earnings per share (EPS) | $1.49 | $3.94 |
EPS performance | (15)% | (1)% |
Foreign exchange impact on EPS | (1)% | (2)% |
Third Quarter | Year-to-Date | |
Organic revenue growth | 4.3% | 4.6% |
Core EPS | $1.56 | $4.07 |
Core constant currency EPS change | (1)% | (0.5)% |
Revenue | Volume | ||||||
GAAP Reported % Change | Percentage Point Impact | Organic % Change | Organic Volume % Change | ||||
Foreign Exchange Translation | Acquisitions, Divestitures, and Other Structural Changes | Food/Snacks | Beverages | ||||
FLNA | 5.5 | — | — | 5.5 | 1.5 | ||
QFNA | 1.5 | — | — | 1 | (1) | ||
PBNA | 3.5 | — | (1) | 3 | (1) | ||
LatAm | 2 | 2 | — | 4 | (3) | 5 | |
ESSA | 6 | 4 | (5) | 4 | — | (1) | |
AMENA | 5 | 1 | 3.5 | 9 | 8 | 4 | |
Total | 4 | 1 | (1) | 4 | 1 | 2 |
Operating Profit and EPS | ||||
GAAP Reported % Change | Percentage Point Impact | Core Constant Currency % Change | ||
Items Affecting Comparability | Foreign Exchange Translation | |||
FLNA | 4 | 1 | — | 5 |
QFNA | (12) | 1 | — | (11) |
PBNA | (9) | 2 | — | (7) |
LatAm | (3) | 6 | 1 | 5 |
ESSA | 8 | 0.5 | 4 | 13 |
AMENA | 15 | 3 | 1 | 19 |
Corporate Unallocated Expenses | 10 | 10 | — | 20 |
Total | — | 1 | 1 | 3 |
EPS | (15) | 13 | 1 | (1) |
Revenue | Volume | ||||||
GAAP Reported % Change | Percentage Point Impact | Organic % Change | Organic Volume % Change | ||||
Foreign Exchange Translation | Acquisitions, Divestitures, and Other Structural Changes | Food/Snacks | Beverages | ||||
FLNA | 5 | — | — | 5 | 1 | ||
QFNA | 1 | — | (0.5) | 1 | (1) | ||
PBNA | 3 | — | (0.5) | 2 | (1.5) | ||
LatAm | 2 | 6 | — | 8 | — | 5 | |
ESSA | 3 | 7 | (5) | 5 | 1 | 1 | |
AMENA | 1 | 3 | 3 | 8 | 6 | 2 | |
Total | 3 | 2 | (1) | 5 | 1 | 1 |
Operating Profit and EPS | ||||
GAAP Reported % Change | Percentage Point Impact | Core Constant Currency % Change | ||
Items Affecting Comparability | Foreign Exchange Translation | |||
FLNA | 6 | 0.5 | — | 7 |
QFNA | (12) | — | — | (11) |
PBNA | (6) | 1 | — | (5) |
LatAm | 6 | 3.5 | 3 | 12 |
ESSA | (3) | 9 | 8 | 14 |
AMENA | (11) | 6 | 2.5 | (3) |
Corporate Unallocated Expenses | 3 | 9 | — | 12 |
Total | (1) | 2 | 2 | 2 |
EPS | (1) | (1.5) | 2 | (0.5) |
• | A core effective tax rate of approximately 21 percent. |
• | A decline in core constant currency EPS of approximately 1 percent, which incorporates lapping a number of 2018 strategic asset-sale and refranchising gains, the expected increased core effective tax rate, and expected 2019 incremental investments to strengthen the business. |
• | Approximately $9 billion in cash from operating activities and free cash flow of approximately $5 billion, which assumes net capital spending of approximately $4.5 billion. |
• | Total cash returns to shareholders of approximately $8 billion, comprised of dividends of approximately $5 billion and share repurchases of approximately $3 billion. |
Contacts: | Investors | Media | |
investor@pepsico.com | pepsicomediarelations@pepsico.com | ||
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||
9/7/2019 | 9/8/2018 | 9/7/2019 | 9/8/2018 | ||||||||||||
Net Revenue | $ | 17,188 | $ | 16,485 | $ | 46,521 | $ | 45,137 | |||||||
Cost of sales | 7,694 | 7,527 | 20,786 | 20,445 | |||||||||||
Gross profit | 9,494 | 8,958 | 25,735 | 24,692 | |||||||||||
Selling, general and administrative expenses | 6,639 | 6,114 | 18,143 | 17,013 | |||||||||||
Operating Profit | 2,855 | 2,844 | 7,592 | 7,679 | |||||||||||
Other pension and retiree medical benefits income | 38 | 74 | 163 | 231 | |||||||||||
Interest expense | (262 | ) | (302 | ) | (790 | ) | (904 | ) | |||||||
Interest income and other | 38 | 81 | 139 | 248 | |||||||||||
Income before income taxes | 2,669 | 2,697 | 7,104 | 7,254 | |||||||||||
Provision for income taxes | 559 | 188 | 1,529 | 1,562 | |||||||||||
Net income | 2,110 | 2,509 | 5,575 | 5,692 | |||||||||||
Less: Net income attributable to noncontrolling interests | 10 | 11 | 27 | 31 | |||||||||||
Net Income Attributable to PepsiCo | $ | 2,100 | $ | 2,498 | $ | 5,548 | $ | 5,661 | |||||||
Diluted | |||||||||||||||
Net income attributable to PepsiCo per common share | $ | 1.49 | $ | 1.75 | $ | 3.94 | $ | 3.97 | |||||||
Weighted-average common shares outstanding | 1,405 | 1,424 | 1,409 | 1,427 |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||
9/7/2019 | 9/8/2018 | 9/7/2019 | 9/8/2018 | ||||||||||||
Net Revenue | |||||||||||||||
Frito-Lay North America | $ | 4,105 | $ | 3,891 | $ | 11,930 | $ | 11,345 | |||||||
Quaker Foods North America | 576 | 567 | 1,710 | 1,695 | |||||||||||
PepsiCo Beverages North America | 5,643 | 5,456 | 15,475 | 15,064 | |||||||||||
Latin America | 1,904 | 1,868 | 5,031 | 4,935 | |||||||||||
Europe Sub-Saharan Africa | 3,347 | 3,161 | 8,173 | 7,945 | |||||||||||
Asia, Middle East and North Africa | 1,613 | 1,542 | 4,202 | 4,153 | |||||||||||
Total | $ | 17,188 | $ | 16,485 | $ | 46,521 | $ | 45,137 | |||||||
Operating Profit (a) | |||||||||||||||
Frito-Lay North America | $ | 1,286 | $ | 1,241 | $ | 3,694 | $ | 3,491 | |||||||
Quaker Foods North America | 126 | 143 | 391 | 443 | |||||||||||
PepsiCo Beverages North America | 640 | 703 | 1,719 | 1,838 | |||||||||||
Latin America | 277 | 284 | 785 | 742 | |||||||||||
Europe Sub-Saharan Africa | 474 | 439 | 965 | 995 | |||||||||||
Asia, Middle East and North Africa | 357 | 311 | 883 | 994 | |||||||||||
Corporate Unallocated Expenses | (305 | ) | (277 | ) | (845 | ) | (824 | ) | |||||||
Total | $ | 2,855 | $ | 2,844 | $ | 7,592 | $ | 7,679 |
(a) | For a discussion of reported operating profit performance, please refer to PepsiCo’s Quarterly Report on Form 10-Q for the 12 and 36 weeks ended September 7, 2019 (Q3 2019 Form 10-Q), filed with the U.S. Securities and Exchange Commission on October 3, 2019. |
PepsiCo, Inc. and Subsidiaries Condensed Consolidated Statement of Cash Flows (in millions, unaudited) | |||||||
36 Weeks Ended | |||||||
9/7/2019 | 9/8/2018 | ||||||
Operating Activities | |||||||
Net income | $ | 5,575 | $ | 5,692 | |||
Depreciation and amortization | 1,634 | 1,636 | |||||
Share-based compensation expense | 169 | 203 | |||||
Restructuring and impairment charges | 282 | 79 | |||||
Cash payments for restructuring charges | (248 | ) | (179 | ) | |||
Pension and retiree medical plan expenses | 165 | 147 | |||||
Pension and retiree medical plan contributions | (391 | ) | (1,664 | ) | |||
Deferred income taxes and other tax charges and credits | 195 | (609 | ) | ||||
Tax (benefits)/net tax expense related to the Tax Cuts and Jobs Act (TCJ Act) | (29 | ) | 854 | ||||
Tax payments related to the TCJ Act | (393 | ) | (41 | ) | |||
Change in assets and liabilities: | |||||||
Accounts and notes receivable | (1,716 | ) | (1,299 | ) | |||
Inventories | (573 | ) | (362 | ) | |||
Prepaid expenses and other current assets | (264 | ) | (158 | ) | |||
Accounts payable and other current liabilities | 80 | 116 | |||||
Income taxes payable | 347 | 674 | |||||
Other, net | 230 | (357 | ) | ||||
Net Cash Provided by Operating Activities | 5,063 | 4,732 | |||||
Investing Activities | |||||||
Capital spending | (1,959 | ) | (1,578 | ) | |||
Sales of property, plant and equipment | 63 | 119 | |||||
Acquisition of SodaStream International Ltd. (SodaStream) | (1,905 | ) | — | ||||
Other acquisitions and investments in noncontrolled affiliates | (723 | ) | (253 | ) | |||
Divestitures | 253 | 294 | |||||
Short-term investments, by original maturity: | |||||||
More than three months - purchases | — | (5,637 | ) | ||||
More than three months - maturities | 8 | 11,874 | |||||
More than three months - sales | 3 | 772 | |||||
Three months or less, net | 13 | 7 | |||||
Other investing, net | (38 | ) | — | ||||
Net Cash (Used for)/Provided by Investing Activities | (4,285 | ) | 5,598 | ||||
Financing Activities | |||||||
Proceeds from issuances of long-term debt | 3,098 | — | |||||
Payments of long-term debt | (2,954 | ) | (2,506 | ) | |||
Short-term borrowings, by original maturity: | |||||||
More than three months - proceeds | 6 | 2 | |||||
More than three months - payments | — | (17 | ) | ||||
Three months or less, net | 94 | (1,384 | ) | ||||
Cash dividends paid | (3,971 | ) | (3,621 | ) | |||
Share repurchases - common | (2,268 | ) | (1,442 | ) | |||
Share repurchases - preferred | — | (2 | ) | ||||
Proceeds from exercises of stock options | 282 | 215 | |||||
Withholding tax payments on restricted stock units, performance stock units and PepsiCo equity performance units converted | (100 | ) | (93 | ) | |||
Other financing | (16 | ) | (23 | ) | |||
Net Cash Used for Financing Activities | (5,829 | ) | (8,871 | ) | |||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (11 | ) | (73 | ) | |||
Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash | (5,062 | ) | 1,386 | ||||
Cash and Cash Equivalents and Restricted Cash, Beginning of Year | 10,769 | 10,657 | |||||
Cash and Cash Equivalents and Restricted Cash, End of Period | $ | 5,707 | $ | 12,043 |
PepsiCo, Inc. and Subsidiaries Condensed Consolidated Balance Sheet (in millions except per share amounts) | |||||||
(unaudited) | |||||||
9/7/2019 | 12/29/2018 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 5,494 | $ | 8,721 | |||
Short-term investments | 287 | 272 | |||||
Restricted cash | 127 | 1,997 | |||||
Accounts and notes receivable, net | 8,735 | 7,142 | |||||
Inventories: | |||||||
Raw materials and packaging | 1,509 | 1,312 | |||||
Work-in-process | 316 | 178 | |||||
Finished goods | 1,842 | 1,638 | |||||
3,667 | 3,128 | ||||||
Prepaid expenses and other current assets | 888 | 633 | |||||
Total Current Assets | 19,198 | 21,893 | |||||
Property, Plant and Equipment, net | 17,586 | 17,589 | |||||
Amortizable Intangible Assets, net | 1,437 | 1,644 | |||||
Goodwill | 15,338 | 14,808 | |||||
Other indefinite-lived intangible assets | 14,375 | 14,181 | |||||
Indefinite-Lived Intangible Assets | 29,713 | 28,989 | |||||
Investments in Noncontrolled Affiliates | 2,690 | 2,409 | |||||
Deferred Income Taxes | 4,340 | 4,364 | |||||
Other Assets | 2,480 | 760 | |||||
Total Assets | $ | 77,444 | $ | 77,648 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities | |||||||
Short-term debt obligations | $ | 2,924 | $ | 4,026 | |||
Accounts payable and other current liabilities | 17,207 | 18,112 | |||||
Total Current Liabilities | 20,131 | 22,138 | |||||
Long-Term Debt Obligations | 29,630 | 28,295 | |||||
Deferred Income Taxes | 3,643 | 3,499 | |||||
Other Liabilities | 9,816 | 9,114 | |||||
Total Liabilities | 63,220 | 63,046 | |||||
Commitments and contingencies | |||||||
PepsiCo Common Shareholders’ Equity | |||||||
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,396 and 1,409 shares, respectively) | 23 | 23 | |||||
Capital in excess of par value | 3,842 | 3,953 | |||||
Retained earnings | 61,514 | 59,947 | |||||
Accumulated other comprehensive loss | (15,126 | ) | (15,119 | ) | |||
Repurchased common stock, in excess of par value (471 and 458 shares, respectively) | (36,124 | ) | (34,286 | ) | |||
Total PepsiCo Common Shareholders’ Equity | 14,129 | 14,518 | |||||
Noncontrolling interests | 95 | 84 | |||||
Total Equity | 14,224 | 14,602 | |||||
Total Liabilities and Equity | $ | 77,444 | $ | 77,648 |
12 Weeks Ended 9/7/2019 | |||||||||||||||
Impact of | Impact of | ||||||||||||||
Net Revenue Year over Year % Change | Reported % Change, GAAP Measure | Foreign exchange translation | Acquisitions and divestitures | Organic % Change, Non-GAAP Measure | Volume(a) | Effective net pricing | |||||||||
Frito-Lay North America | 5.5 | % | — | — | 5.5 | % | 2 | 3.5 | |||||||
Quaker Foods North America | 1.5 | % | — | — | 1 | % | (1 | ) | 2 | ||||||
PepsiCo Beverages North America | 3.5 | % | — | (1 | ) | 3 | % | (1 | ) | 3 | |||||
Latin America | 2 | % | 2 | — | 4 | % | (3 | ) | 7 | ||||||
Europe Sub-Saharan Africa | 6 | % | 4 | (5 | ) | 4 | % | (2 | ) | 6 | |||||
Asia, Middle East and North Africa | 5 | % | 1 | 3.5 | 9 | % | 7 | 3 | |||||||
Total | 4 | % | 1 | (1 | ) | 4 | % | — | 4 |
36 Weeks Ended 9/7/2019 | |||||||||||||||
Impact of | Impact of | ||||||||||||||
Net Revenue Year over Year % Change | Reported % Change, GAAP Measure | Foreign exchange translation | Acquisitions and divestitures | Organic % Change, Non-GAAP Measure | Volume(a) | Effective net pricing | |||||||||
Frito-Lay North America | 5 | % | — | — | 5 | % | 2 | 3.5 | |||||||
Quaker Foods North America | 1 | % | — | (0.5 | ) | 1 | % | (1 | ) | 1 | |||||
PepsiCo Beverages North America | 3 | % | — | (0.5 | ) | 2 | % | (1.5 | ) | 4 | |||||
Latin America | 2 | % | 6 | — | 8 | % | — | 7 | |||||||
Europe Sub-Saharan Africa | 3 | % | 7 | (5 | ) | 5 | % | (1 | ) | 6 | |||||
Asia, Middle East and North Africa | 1 | % | 3 | 3 | 8 | % | 6 | 2 | |||||||
Total | 3 | % | 2 | (1 | ) | 5 | % | — | 4 |
(a) | Excludes the impact of acquisitions and divestitures. In certain instances, volume growth varies from the amounts disclosed in the Summary Third Quarter 2019 Performance and Summary Year-to-Date 2019 Performance tables on pages 2 and 3, respectively, due to nonconsolidated joint venture volume, and, for our beverage businesses, temporary timing differences between BCS and CSE, as well as the mix of beverage volume sold by our Company-owned and franchise-owned bottlers. Our net revenue excludes nonconsolidated joint venture volume, and, for our franchise-owned beverage businesses, is based on CSE. |
12 Weeks Ended 9/7/2019 | ||||||||||||||||||||||||
Impact of Items Affecting Comparability | Impact of | |||||||||||||||||||||||
Year over Year % Change | Reported % Change, GAAP Measure | Mark-to-market net impact | Restructuring and impairment charges | Inventory fair value adjustments and merger and integration charges | Provisional net tax expense related to the TCJ Act | Tax benefit | Core % Change, Non-GAAP Measure(a) | Foreign exchange translation | Core Constant Currency % Change, Non-GAAP Measure(a) | |||||||||||||||
Frito-Lay North America | 4 | % | — | 1 | — | — | — | 5 | % | — | 5 | % | ||||||||||||
Quaker Foods North America | (12 | )% | — | 1 | — | — | — | (11 | )% | — | (11 | )% | ||||||||||||
PepsiCo Beverages North America | (9 | )% | — | 2 | — | — | — | (7 | )% | — | (7 | )% | ||||||||||||
Latin America | (3 | )% | — | 6 | — | — | — | 4 | % | 1 | 5 | % | ||||||||||||
Europe Sub-Saharan Africa | 8 | % | — | — | 1 | — | — | 9 | % | 4 | 13 | % | ||||||||||||
Asia, Middle East and North Africa | 15 | % | — | 3 | — | — | — | 18 | % | 1 | 19 | % | ||||||||||||
Corporate Unallocated Expenses | 10 | % | 11 | (1 | ) | — | — | — | 20 | % | — | 20 | % | |||||||||||
Total Operating Profit | — | % | (1 | ) | 2 | — | — | — | 2 | % | 1 | 3 | % | |||||||||||
Net Income Attributable to PepsiCo | (16 | )% | (1 | ) | 2 | — | (3 | ) | 14 | (3 | )% | 1 | (2 | )% | ||||||||||
Net Income Attributable to PepsiCo per common share – diluted | (15 | )% | (1 | ) | 2 | — | (3 | ) | 14 | (2 | )% | 1 | (1 | )% |
36 Weeks Ended 9/7/2019 | |||||||||||||||||||||||
Impact of Items Affecting Comparability | Impact of | ||||||||||||||||||||||
Year over Year % Change | Reported % Change, GAAP Measure | Mark-to-market net impact | Restructuring and impairment charges | Inventory fair value adjustments and merger and integration charges | Tax benefits/provisional net tax expense related to the TCJ Act | Tax benefits | Core % Change, Non-GAAP Measure(a) | Foreign exchange translation | Core Constant Currency % Change, Non-GAAP Measure(a) | ||||||||||||||
Frito-Lay North America | 6 | % | — | 0.5 | — | — | — | 6 | % | — | 7 | % | |||||||||||
Quaker Foods North America | (12 | )% | — | — | — | — | — | (11 | )% | — | (11 | )% | |||||||||||
PepsiCo Beverages North America | (6 | )% | — | 1 | — | — | — | (5 | )% | — | (5 | )% | |||||||||||
Latin America | 6 | % | — | 3.5 | — | — | — | 9 | % | 3 | 12 | % | |||||||||||
Europe Sub-Saharan Africa | (3 | )% | — | — | 9 | — | — | 6 | % | 8 | 14 | % | |||||||||||
Asia, Middle East and North Africa | (11 | )% | — | 6 | — | — | — | (5 | )% | 2.5 | (3 | )% | |||||||||||
Corporate Unallocated Expenses | 3 | % | 14 | (5 | ) | — | — | — | 12 | % | — | 12 | % | ||||||||||
Total Operating Profit | (1 | )% | (1 | ) | 2 | 1 | — | — | 1 | % | 2 | 2 | % | ||||||||||
Net Income Attributable to PepsiCo | (2 | )% | (1 | ) | 2 | 1 | (14 | ) | 11 | (3.5 | )% | 2 | (2 | )% | |||||||||
Net Income Attributable to PepsiCo per common share – diluted | (1 | )% | (1 | ) | 3 | 1 | (14 | ) | 11 | (2 | )% | 2 | (0.5 | )% |
(a) | Core results and core constant currency results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-5 through A-6 for a discussion of each of these adjustments. |
12 Weeks Ended 9/7/2019 | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Other pension and retiree medical benefits income | Provision for income taxes(b) | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(c) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 7,694 | $ | 9,494 | $ | 6,639 | $ | 2,855 | $ | 38 | $ | 559 | $ | 2,100 | $ | 1.49 | 21.0 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Mark-to-market net impact | (13 | ) | 13 | 9 | 4 | — | 1 | 3 | — | — | ||||||||||||||||||||||||
Restructuring and impairment charges | (10 | ) | 10 | (83 | ) | 93 | 5 | 16 | 82 | 0.06 | (0.2 | ) | ||||||||||||||||||||||
Inventory fair value adjustments and merger and integration charges | — | — | (7 | ) | 7 | — | 1 | 6 | — | — | ||||||||||||||||||||||||
Core, Non-GAAP Measure (a) | $ | 7,671 | $ | 9,517 | $ | 6,558 | $ | 2,959 | $ | 43 | $ | 577 | $ | 2,191 | $ | 1.56 | 20.8 | % |
12 Weeks Ended 9/8/2018 | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Provision for income taxes(b) | Net income attributable to noncontrolling interests | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(c) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 7,527 | $ | 8,958 | $ | 6,114 | $ | 2,844 | $ | 188 | $ | 11 | $ | 2,498 | $ | 1.75 | 7.0 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Mark-to-market net impact | (31 | ) | 31 | 2 | 29 | 6 | — | 23 | 0.02 | — | ||||||||||||||||||||||||
Restructuring and impairment charges | — | — | (35 | ) | 35 | 3 | 1 | 31 | 0.02 | (0.1 | ) | |||||||||||||||||||||||
Provisional net tax expense related to the TCJ Act | — | — | — | — | (76 | ) | — | 76 | 0.05 | (2.8 | ) | |||||||||||||||||||||||
Tax benefit | — | — | — | — | 364 | — | (364 | ) | (0.26 | ) | 13.5 | |||||||||||||||||||||||
Core, Non-GAAP Measure (a) | $ | 7,496 | $ | 8,989 | $ | 6,081 | $ | 2,908 | $ | 485 | $ | 12 | $ | 2,264 | $ | 1.59 | 17.6 | % |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-5 through A-6 for a discussion of each of these adjustments. |
(b) | Provision for income taxes is the expected tax benefit/charge on the underlying item based on the tax laws and income tax rates applicable to the underlying item in its corresponding tax jurisdiction. |
(c) | The impact of items affecting comparability on our effective tax rate represents the difference in the effective tax rate resulting from a higher or lower tax rate applicable to the items affecting comparability. |
36 Weeks Ended 9/7/2019 | ||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Provision for income taxes(b) | Net income attributable to noncontrolling interests | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(c) | ||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 20,786 | $ | 25,735 | $ | 18,143 | $ | 7,592 | $ | 1,529 | $ | 27 | $ | 5,548 | $ | 3.94 | 21.5 | % | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||
Mark-to-market net impact | 19 | (19 | ) | 31 | (50 | ) | (12 | ) | — | (38 | ) | (0.03 | ) | — | ||||||||||||||||||||
Restructuring and impairment charges | (100 | ) | 100 | (182 | ) | 282 | 57 | 4 | 221 | 0.16 | (0.1 | ) | ||||||||||||||||||||||
Inventory fair value adjustments and merger and integration charges | (34 | ) | 34 | (12 | ) | 46 | 8 | — | 38 | 0.03 | — | |||||||||||||||||||||||
Tax benefits related to the TCJ Act | — | — | — | — | 29 | — | (29 | ) | (0.02 | ) | 0.4 | |||||||||||||||||||||||
Core, Non-GAAP Measure (a) | $ | 20,671 | $ | 25,850 | $ | 17,980 | $ | 7,870 | $ | 1,611 | $ | 31 | $ | 5,740 | $ | 4.07 | 21.8 | % |
36 Weeks Ended 9/8/2018 | ||||||||||||||||||||||||||||||||||||||
Cost of sales | Gross profit | Selling, general and administrative expenses | Operating profit | Other pension and retiree medical benefits income | Provision for income taxes(b) | Net income attributable to noncontrolling interests | Net income attributable to PepsiCo | Net income attributable to PepsiCo per common share - diluted | Effective tax rate(c) | |||||||||||||||||||||||||||||
Reported, GAAP Measure | $ | 20,445 | $ | 24,692 | $ | 17,013 | $ | 7,679 | $ | 231 | $ | 1,562 | $ | 31 | $ | 5,661 | $ | 3.97 | 21.5 | % | ||||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||||||||||||||||||||
Mark-to-market net impact | (51 | ) | 51 | (6 | ) | 57 | — | 14 | — | 43 | 0.03 | — | ||||||||||||||||||||||||||
Restructuring and impairment charges | — | — | (75 | ) | 75 | 4 | 12 | 1 | 66 | 0.05 | — | |||||||||||||||||||||||||||
Provisional net tax expense related to the TCJ Act | — | — | — | — | — | (854 | ) | — | 854 | 0.60 | (11.8 | ) | ||||||||||||||||||||||||||
Tax benefits | — | — | — | — | — | 678 | — | (678 | ) | (0.48 | ) | 9.3 | ||||||||||||||||||||||||||
Core, Non-GAAP Measure (a) | $ | 20,394 | $ | 24,743 | $ | 16,932 | $ | 7,811 | $ | 235 | $ | 1,412 | $ | 32 | $ | 5,946 | $ | 4.17 | 19.1 | % |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-5 through A-6 for a discussion of each of these adjustments. |
(b) | Provision for income taxes is the expected tax benefit/charge on the underlying item based on the tax laws and income tax rates applicable to the underlying item in its corresponding tax jurisdiction. |
(c) | The impact of items affecting comparability on our effective tax rate represents the difference in the effective tax rate resulting from a higher or lower tax rate applicable to the items affecting comparability. |
12 Weeks Ended 9/7/2019 | |||||||||||||||||||
Items Affecting Comparability | |||||||||||||||||||
Operating Profit | Reported, GAAP Measure | Mark-to-market net impact | Restructuring and impairment charges | Inventory fair value adjustments and merger and integration charges | Core, Non-GAAP Measure(a) | ||||||||||||||
Frito-Lay North America | $ | 1,286 | $ | — | $ | 16 | $ | — | $ | 1,302 | |||||||||
Quaker Foods North America | 126 | — | 2 | — | 128 | ||||||||||||||
PepsiCo Beverages North America | 640 | — | 26 | — | 666 | ||||||||||||||
Latin America | 277 | — | 22 | — | 299 | ||||||||||||||
Europe Sub-Saharan Africa | 474 | — | 14 | 7 | 495 | ||||||||||||||
Asia, Middle East and North Africa | 357 | — | 10 | — | 367 | ||||||||||||||
Corporate Unallocated Expenses | (305 | ) | 4 | 3 | — | (298 | ) | ||||||||||||
Total | $ | 2,855 | $ | 4 | $ | 93 | $ | 7 | $ | 2,959 |
12 Weeks Ended 9/8/2018 | |||||||||||||||
Items Affecting Comparability | |||||||||||||||
Operating Profit | Reported, GAAP Measure | Mark-to-market net impact | Restructuring and impairment charges | Core, Non-GAAP Measure(a) | |||||||||||
Frito-Lay North America | $ | 1,241 | $ | — | $ | — | $ | 1,241 | |||||||
Quaker Foods North America | 143 | — | — | 143 | |||||||||||
PepsiCo Beverages North America | 703 | — | 12 | 715 | |||||||||||
Latin America | 284 | — | 4 | 288 | |||||||||||
Europe Sub-Saharan Africa | 439 | — | 17 | 456 | |||||||||||
Asia, Middle East and North Africa | 311 | — | 2 | 313 | |||||||||||
Corporate Unallocated Expenses | (277 | ) | 29 | — | (248 | ) | |||||||||
Total | $ | 2,844 | $ | 29 | $ | 35 | $ | 2,908 |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-5 through A-6 for a discussion of each of these adjustments. |
36 Weeks Ended 9/7/2019 | |||||||||||||||||||
Items Affecting Comparability | |||||||||||||||||||
Operating Profit | Reported, GAAP Measure | Mark-to-market net impact | Restructuring and impairment charges | Inventory fair value adjustments and merger and integration charges | Core, Non-GAAP Measure(a) | ||||||||||||||
Frito-Lay North America | $ | 3,694 | $ | — | $ | 22 | $ | — | $ | 3,716 | |||||||||
Quaker Foods North America | 391 | — | 2 | — | 393 | ||||||||||||||
PepsiCo Beverages North America | 1,719 | — | 42 | — | 1,761 | ||||||||||||||
Latin America | 785 | — | 43 | — | 828 | ||||||||||||||
Europe Sub-Saharan Africa | 965 | — | 73 | 45 | 1,083 | ||||||||||||||
Asia, Middle East and North Africa | 883 | — | 63 | — | 946 | ||||||||||||||
Corporate Unallocated Expenses | (845 | ) | (50 | ) | 37 | 1 | (857 | ) | |||||||||||
Total | $ | 7,592 | $ | (50 | ) | $ | 282 | $ | 46 | $ | 7,870 |
36 Weeks Ended 9/8/2018 | |||||||||||||||
Items Affecting Comparability | |||||||||||||||
Operating Profit | Reported, GAAP Measure | Mark-to-market net impact | Restructuring and impairment charges | Core, Non-GAAP Measure(a) | |||||||||||
Frito-Lay North America | $ | 3,491 | $ | — | $ | 4 | $ | 3,495 | |||||||
Quaker Foods North America | 443 | — | — | 443 | |||||||||||
PepsiCo Beverages North America | 1,838 | — | 23 | 1,861 | |||||||||||
Latin America | 742 | — | 16 | 758 | |||||||||||
Europe Sub-Saharan Africa | 995 | — | 25 | 1,020 | |||||||||||
Asia, Middle East and North Africa | 994 | — | 6 | 1,000 | |||||||||||
Corporate Unallocated Expenses | (824 | ) | 57 | 1 | (766 | ) | |||||||||
Total | $ | 7,679 | $ | 57 | $ | 75 | $ | 7,811 |
(a) | Core results are financial measures that are not in accordance with GAAP and exclude the above items affecting comparability. See A-5 through A-6 for a discussion of each of these adjustments. |
12 Weeks Ended | 36 Weeks Ended | |||||
9/7/2019 | 9/7/2019 | |||||
Reported gross margin growth | 90 | bps | 61 | bps | ||
Mark-to-market net impact | (12 | ) | (15 | ) | ||
Restructuring and impairment charges | 6 | 22 | ||||
Inventory fair value adjustments and merger and integration charges | — | 7 | ||||
Core gross margin growth | 84 | bps | 75 | bps |
12 Weeks Ended | 36 Weeks Ended | |||||
9/7/2019 | 9/7/2019 | |||||
Reported operating margin growth | (64 | ) | bps | (69 | ) | bps |
Mark-to-market net impact | (15 | ) | (23 | ) | ||
Restructuring and impairment charges | 33 | 44 | ||||
Inventory fair value adjustments and merger and integration charges | 4 | 10 | ||||
Core operating margin growth | (42 | ) | bps | (39 | ) | bps |
Year Ended | |||
12/29/2018 | |||
Reported diluted EPS | $ | 8.78 | |
Mark-to-market net impact | 0.09 | ||
Restructuring and impairment charges | 0.18 | ||
Merger and integration charges | 0.05 | ||
Net tax benefit related to the TCJ Act | (0.02 | ) | |
Other net tax benefits | (3.55 | ) | |
Charges related to cash tender and exchange offers | 0.13 | ||
Core diluted EPS | $ | 5.66 |
2019 | ||||
Guidance | ||||
Net cash provided by operating activities | $ | ~ | 9 | |
Net capital spending | ~ | (4.5 | ) | |
Free cash flow | $ | ~ | 5 |