PepsiCo (PEP) 8-K PepsiCo Reports 13% First-Quarter Earnings Per Share Increase, Driven by 9% Revenue Growth

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 26, 2006

PepsiCo, Inc.

(Exact Name of Registrant as Specified in its Charter)

North Carolina

(State or other jurisdiction of incorporation)

1-1183
(Commission File Number) 13-1584302
(IRS Employer Identification No.)

700 Anderson Hill Road, Purchase, New York 10577

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (914) 253-2000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written Communication 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))

Item 2.02 Results of Operations and Financial Condition.

The information contained in this Item 2.02, including the exhibit attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.

Attached as Exhibit 99.1 and incorporated by reference into this Item 2.02 is a copy of the press release issued by PepsiCo, Inc., dated April 26, 2006, reporting PepsiCo, Inc.’s financial results for the 12 weeks ended March 25, 2006.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits

99.1 Press Release issued by PepsiCo, Inc., dated April 26, 2006.

-2-

PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Income
(in millions except per share amounts)

	12 Weeks Ended
	3/25/06			3/19/05
	(unaudited)
Net Revenue	$	7,205		$	6,585
Cost and Expenses
Cost of sales		3,179			2,870
Selling, general and administrative expenses		2,647			2,439
Amortization of intangible assets		31			29
Operating Profit		1,348			1,247
Bottling Equity Income		84			65
Interest Expense		(62	)		(50	)
Interest Income		45			23
Income before Income Taxes		1,415			1,285
Provision for Income Taxes		396			373
Net Income	$	1,019		$	912
Diluted
Net Income Per Common Share	$	0.60		$	0.53
Average Shares Outstanding		1,695			1,713

A-1

PepsiCo, Inc. and Subsidiaries
Supplemental Financial Information
(in millions)

	12 Weeks Ended
	3/25/06			3/19/05
	(unaudited)
Net Revenue
Frito-Lay North America	$	2,393		$	2,263
PepsiCo Beverages North America		1,991			1,784
PepsiCo International		2,378			2,121
Quaker Foods North America		443			417
Total Net Revenue	$	7,205		$	6,585
Operating Profit
Frito-Lay North America	$	569		$	539
PepsiCo Beverages North America		428			415
PepsiCo International		371			307
Quaker Foods North America		151			145
Division Operating Profit		1,519			1,406
Corporate		(171	)		(159	)
Total Operating Profit	$	1,348		$	1,247

A-2

PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(in millions)

	12 Weeks Ended
	3/25/06			3/19/05
	(unaudited)
Operating Activities
Net income	$	1,019		$	912
Depreciation and amortization		286			282
Stock-based compensation expense		67			77
Excess tax benefits from share-based payment arrangements		(34	)		—
Cash payments for merger-related costs and other restructuring charges		—			(14	)
Pension and retiree medical plan contributions		(28	)		(48	)
Pension and retiree medical plan expenses		123			102
Bottling equity income, net of dividends		(70	)		(51	)
Deferred income taxes and other tax charges and credits		20			51
Change in accounts and notes receivable		(347	)		(237	)
Change in inventories		(179	)		(93	)
Change in prepaid expenses and other current assets		(39	)		3
Change in accounts payable and other current liabilities		(441	)		(522	)
Change in income taxes payable		(140	)		233
Other, net		9			54
Net Cash Provided by Operating Activities		246			749
Investing Activities
Snack Ventures Europe (SVE) minority interest acquisition		—			(750	)
Capital spending		(289	)		(181	)
Sales of property, plant and equipment		6			25
Other acquisitions and investments in noncontrolled affiliates		(275	)		(41	)
Cash proceeds from sale of The Pepsi Bottling Group (PBG) stock		85			47
Short-term investments, net		800			(528	)
Net Cash Provided by/(Used for) Investing Activities		327			(1,428	)
Financing Activities
Proceeds from issuances of long-term debt		—			13
Payments of long-term debt		(22	)		(3	)
Short-term borrowings, net		(691	)		733
Cash dividends paid		(432	)		(387	)
Share repurchases – common		(660	)		(494	)
Share repurchases – preferred		(2	)		(6	)
Proceeds from exercises of stock options		436			233
Excess tax benefits from share-based payment arrangements		34			—
Net Cash (Used for)/Provided by Financing Activities		(1,337	)		89
Effect of Exchange Rate Changes on Cash and Cash Equivalents		4			(9	)
Net Decrease in Cash and Cash Equivalents		(760	)		(599	)
Cash and Cash Equivalents – Beginning of year		1,716			1,280
Cash and Cash Equivalents – End of period	$	956		$	681

A-3

PepsiCo, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(in millions)

	3/25/06			12/31/05
	(unaudited)
Assets
Current Assets
Cash and cash equivalents	$	956		$	1,716
Short-term investments		2,373			3,166
Accounts and notes receivable, net		3,634			3,261
Inventories
Raw materials		764			738
Work-in-process		159			112
Finished goods		958			843
		1,881			1,693
Prepaid expenses and other current assets		658			618
Total Current Assets		9,502			10,454
Property, plant and equipment, net		8,754			8,681
Amortizable intangible assets, net		503			530
Goodwill		4,100			4,088
Other nonamortizable intangible assets		1,098			1,086
Nonamortizable Intangible Assets		5,198			5,174
Investments in noncontrolled affiliates		3,506			3,485
Other assets		3,531			3,403
Total Assets	$	30,994		$	31,727
Liabilities and Shareholders’ Equity
Current Liabilities
Short-term obligations	$	2,214		$	2,889
Accounts payable and other current liabilities		5,587			5,971
Income taxes payable		359			546
Total Current Liabilities		8,160			9,406
Long-term debt obligations		2,288			2,313
Other liabilities		4,427			4,323
Deferred income taxes		1,378			1,434
Total Liabilities		16,253			17,476
Commitments and Contingencies
Preferred stock, no par value		41			41
Repurchased preferred stock		(112	)		(110	)
Common Shareholders’ Equity
Common stock		30			30
Capital in excess of par value		567			614
Retained earnings		21,702			21,116
Accumulated other comprehensive loss		(989	)		(1,053	)
		21,310			20,707
Less: Repurchased common stock		(6,498	)		(6,387	)
Total Common Shareholders’ Equity		14,812			14,320
Total Liabilities and Shareholders’ Equity	$	30,994		$	31,727

A-4

PepsiCo, Inc. and Subsidiaries
Supplemental Share and Option Data
(in millions of shares, except average share and exercise prices, and unaudited)

	12 Weeks Ended
	3/25/06			3/19/05
Beginning Net Shares Outstanding		1,656			1,679
Options Exercised		12			7
Shares Repurchased		(12	)		(9	)
Ending Net Shares Outstanding		1,656			1,677
Weighted Average Basic		1,656			1,678
Dilutive securities:
Options		33			31
Restricted Stock Units		4			2
ESOP Convertible Preferred Stock/Other		2			2
Weighted Average Diluted		1,695			1,713
Average Share Price for the period	$	58.79		$	53.46
Growth Versus Prior Year		10	%		9	%
Options Outstanding		150			178
Options in the Money		150			166
Dilutive Shares from Options		33			31
Dilutive Shares from Options as a % of Options in the Money		22	%		19	%
Average Exercise Price of Options in the Money	$	43.55		$	40.31

A-5

Reconciliation of GAAP and Non-GAAP Information
(unaudited)

Operating Profit Growth Reconciliation

	Quarter
	Ended
	3/25/06
Total operating profit growth		8.1%
Impact of Corporate unallocated.		(0.1)
Division operating profit growth		8.0%

Division operating profit and division operating profit growth are not measures defined by generally accepted accounting principles (GAAP). However, we believe investors should consider these measures as they are consistent with how management evaluates our operational results and trends.

A-6

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 26, 2006	PepsiCo, Inc.
	By:	/s/ Robert E. Cox
		Robert E. Cox
		Vice President, Deputy General Counsel and Assistant Secretary

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release issued by PepsiCo, Inc., dated April 26, 2006.